[Congressional Record Volume 140, Number 79 (Tuesday, June 21, 1994)]
[Senate]
[Page S]
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[Congressional Record: June 21, 1994]
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                              S E N A T E


Vol. 140


WASHINGTON, TUESDAY, JUNE 21, 1994

No. 79--Part II


Senate


(Legislative day of Tuesday, June 7, 1994)

          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

                              (Continued)

                                S. 2224

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Work and Responsibility Act 
     of 1994''.

     SEC. 2. TABLE OF CONTENTS; REFERENCES.

       (a) Table of Contents.--This Act contains the following 
     titles and sections:

                             TITLE I--JOBS

Sec. 101. Requirement to Participate in Enhanced JOBS Program.
Sec. 102. Establishment of Enhanced JOBS Program Under Part F.
Sec. 103. Amendments Pertaining to Services and Activities Under JOBS 
              Program.
Sec. 104. Twenty-four Month Limit.
Sec. 105. Responsibilities of Assistant Secretary for Family Support.

                             TITLE II--WORK

Sec. 201. Establishment of Program.
Sec. 202. Federal Funding for the JOBS and Work Programs; Participation 
              Requirements.
Sec. 203. Administration of the JOBS and Work Programs.
Sec. 204. Special Provisions Relating to Indian Tribes and Alaska 
              Native Organizations.
Sec. 205. Special Rules for the Territories.
Sec. 206. Training and Employment for Non-Custodial Parents.
Sec. 207. Federal Tax Treatment of Work Wages.

                         TITLE III--CHILD CARE

Sec. 301. Child Care for JOBS and Work Program Participants and At-Risk 
              Families.
Sec. 302. Related Amendments.
Sec. 303. Limitation of At-Risk Child Care to Families Ineligible for 
              Recipient or Transitional Child Care.
Sec. 304. Option to Consolidate State Responsibility for Child Care.
Sec. 305. Funding for Quality Improvement and Licensing Activities 
              Benefitting Children Receiving AFDC or At-Risk Child 
              Care.
Sec. 306. Funding of Child Care for Families At-Risk of Welfare 
              Dependency.
Sec. 307. Supplement to Income Disregard.

         TITLE IV--PROVISIONS WITH MULTI-PROGRAM APPLICABILITY

Sec. 401. Performance Standards.
Sec. 402. AFDC Quality Control System Amendments.
Sec. 403. National Welfare Receipt Registry; State Information Systems.
Sec. 404. Research and Evaluation; Technical Assistance; Demonstration 
              Projects.
Sec. 405. Offsets to Mandatory Spending From Fraud, Waste, and Abuse.

                   TITLE V--PREVENTION OF DEPENDENCY

Sec. 501. Supervised Living Arrangements for Minors.
Sec. 502. State Option to Limit Benefit Increases for Additional Family 
              Members.
Sec. 503. Case Management for Parents Under Age 20.
Sec. 504. State Option to Provide Additional Incentives and Penalties 
              to Encourage Teen Parents to Complete High School and 
              Participate in Parenting Activities.
Sec. 505. Adolescent Pregnancy Prevention Grants.
Sec. 506. Demonstration Projects to Provide Comprehensive Services to 
              Prevent Adolescent Pregnancy in High-Risk Communities.

                  TITLE VI--CHILD SUPPORT ENFORCEMENT

Sec. 600. References in Title.

  Part A--Eligibility and Other Matters Concerning Title IV-D Program 
                                Clients

Sec. 601. Cooperation Requirement and Good Cause Exception.
Sec. 602. State Obligation to Provide Paternity Establishment and Child 
              Support Enforcement Services.
Sec. 603. Distribution of Payments.
Sec. 604. Due Process Rights.
Sec. 605. Privacy Safeguards.
Sec. 606. Requirement to Facilitate Access to Services.

               Part B--Program Administration and Funding

Sec. 611. Federal Matching Payments.
Sec. 612. Performance-Based Incentives and Penalties.
Sec. 613. Federal and State Reviews and Audits.
Sec. 614. Automated Data Processing Requirements.
Sec. 615. Director of OSCE Program; Training and Staffing.
Sec. 616. Funding for Secretarial Assistance to State Programs.
Sec. 617. Data Collection and Reports by the Secretary.

                    Part C--Locate and Case Tracking

Sec. 621. Central State Case Registry.
Sec. 622. Centralized Collection and Disbursement Support Payments.
Sec. 623. Amendments Concerning Income Withholding.
Sec. 624. Locator Information From Interstate Networks and Labor 
              Unions.
Sec. 625. National Welfare Reform Information Clearinghouse.
Sec. 626. Expanded Locate Authority.
Sec. 627. Studies and Demonstrations Concerning Federal Parent Locator 
              Service.
Sec. 628. Use of Social Security Numbers.

           Part D--Streamlining and Uniformity of Procedures

Sec. 635. Adoption of Uniform State Laws.
Sec. 636. State Laws Providing Expedited Procedures.

                    Part E--Paternity Establishment

Sec. 640. State Laws Concerning Paternity Establishment.
Sec. 641. Outreach for Voluntary Paternity Establishment.
Sec. 642. Penalty for Failure to Establish Paternity Promptly.
Sec. 643. Incentives to Parents to Establish Paternity.

        Part F--Establishment and Modification of Support Orders

Sec. 651. National Commission on Child Support Guidelines.
Sec. 652. State Laws Concerning Modification of Child Support Orders.
Sec. 653. Study on Use of Tax Return Information for Modification of 
              Child Support Orders.

                 Part G--Enforcement of Support Orders

Sec. 661. Revolving Loan Fund for Program Improvements to Increase 
              Collections.
Sec. 662. Federal Income Tax Refund Offset.
Sec. 663. Internal Revenue Service Collection of Arrears.
Sec. 664. Authority to Collect Support From Employment-Related Payments 
              by United States.
Sec. 665. Motor Vehicle Liens.
Sec. 666. Voiding of Fraudulent Transfers.
Sec. 667. State Law Authorizing Suspension of Licenses.
Sec. 668. Reporting Arrearages to Credit Bureaus.
Sec. 669. Extended Statute of Limitation for Collection of Arrearages.
Sec. 670. Charges for Arrearages.
Sec. 671. Visitation Issue Barred.
Sec. 672. Treatment of Support Obligations Under Bankruptcy Code.
Sec. 673. Denial of Passports for Nonpayment of Child Support.

                         Part H--Demonstrations

Sec. 681. Child Support Enforcement and Assurance Demonstrations.
Sec. 682. Social Security Act Demonstrations.

                  Part I--Access and Visitation Grants

Sec. 691. Grants to States for Access and Visitation Programs.

                      Part J--Effect of Enactment

Sec. 695. Effective Dates.
Sec. 696. Severability.

    TITLE VII--IMPROVING GOVERNMENT ASSISTANCE AND PREVENTING FRAUD

                        Part A--AFDC Amendments

Sec. 701. Permanent Requirement for Unemployed Parent Program.
Sec. 702. State Options Regarding Unemployed Parent Program.
Sec. 703. Definition of Essential Person.
Sec. 704. Expanded State Option for Retrospective Budgeting.
Sec. 705. Disregards of Income.
Sec. 706. Stepparent Income.
Sec. 707. Increase in Resource Limit.
Sec. 708. Exclusions From Resources.
Sec. 710. Transfer of Resources.
Sec. 711. Limitation on Underpayments.
Sec. 712. Collection of AFDC Overpayments From Federal Tax Refunds.
Sec. 713. Verification of Status of Citizens and Aliens.
Sec. 714. Repeal of Requirement to Make Certain Supplement Payments in 
              States Paying Less Than Their Needs Standards.
Sec. 715. Calculation of 185 Percent of Need Standard.
Sec. 716. Territories.

                   Part B--Food Stamp Act Amendments

Sec. 721. Inconsequential Income.
Sec. 722. Educational Assistance.
Sec. 723. Earnings of Students.
Sec. 724. Training Stipends and Allowances; Income From On-The-Job 
              Training Programs.
Sec. 725. Earned Income Tax Credits.
Sec. 726. Resources Necessary for Self-Employment.
Sec. 727. Lump-Sum Payments for Medical Expenses or Replacement of Lost 
              Resources.
Sec. 728. Individual Development Accounts.
Sec. 729. Conforming Amendment.

                     Part C--Economic Independence

Sec. 731. Short Title.
Sec. 732. Declaration of Policy and Statement of Purpose.
Sec. 733. Individual Development Account Demonstration Projects.
Sec. 734. Individual Development Accounts.

               Part D--Advance EITC State Demonstrations

Sec. 741. Advance Payment of Earned Income Tax Credit Through State 
              Demonstration Programs.

       TITLE VIII--SELF EMPLOYMENT/MICROENTERPRISE DEMONSTRATIONS

Sec. 801. Demonstration Program to Provide Self-Employment 
              Opportunities to Welfare Recipients and Low-Income 
              Individuals.

                          TITLE IX--FINANCING

Sec. 901. Limitation on Federal Payments for Emergency Assistance.
Sec. 902. Uniform Alien Eligibility Criteria for Public Assistance 
              Programs.
Sec. 903. Eligibility of Sponsored Aliens for Certain Programs.
Sec. 904. National School Lunch Program.
Sec. 905. State Retention of Amounts Recovered.
Sec. 906. Commodity Program Income Ineligibility.
Sec. 907. Amendments Related to Superfund Tax Extension.
Sec. 908. Federal Railroad Administration User Fees.
Sec. 909. Special Earned Income Tax Credit Rules for Military 
              Personnel.
Sec. 910. Nonresident Aliens not Eligible for Earned Income Tax Credit.
Sec. 911. Extension of Certain Custom Fees.

                        TITLE X--EFFECTIVE DATES

Sec. 1001. Effective Dates.
       (b) Reference.--References herein to the ``Act'' are 
     references to the Social Security Act except where otherwise 
     provided or when the context otherwise requires.

                             TITLE I--JOBS

     SEC. 101. REQUIREMENT TO PARTICIPATE IN ENHANCED JOBS 
                   PROGRAM.

       (1) Section 402(a)(19) of the Act is amended by striking 
     out all down through subparagraph (E)(i) and inserting in 
     lieu thereof the following:
       ``(19) provide--
       ``(A) that the State has in effect and operation a job 
     opportunities and basic skills training program (hereafter in 
     this title referred to as the `JOBS' program which meets the 
     requirements of part F), and a program of employment 
     (hereafter in this title referred to as the `WORK' program) 
     which meets the requirements of part G;
       ``(B) that the State will (except as otherwise provided in 
     this paragraph or in part F), to the extent the program is 
     available in the political subdivision involved, apply the 
     requirements and conditions of this paragraph to ``(i) each 
     applicant for or recipient of aid to families with dependent 
     children who--
       ``(I)(a) was born after 1971, or
       ``(b) is the parent of a dependent child and is living with 
     such child's other parent who is an individual born after 
     1971 (or was living with such an individual during any month 
     after September 1995 in which they received aid under this 
     part), and
       ``(II) is the parent of a dependent child,

     (but not including any individual who is eligible by 
     application of section 407, in a State which exercises the 
     option to limit eligibility under section 407(b)(2)(B), and 
     (ii) thereafter any additional classes of parents of 
     dependent children to whom the State chooses to make section 
     417 applicable (and identified in the State plan by date of 
     birth, date of application, or other reasonable basis), and 
     (iii) to any other applicants for or recipients of aid who 
     the State chooses to require to participate in the program 
     under part F and identifies in its State plan approved under 
     this part;
       ``(C) that the State will, except as otherwise provided in 
     this paragraph or part F--
       ``(i) require all individuals described in subparagraph (B) 
     other than a child who is not a custodial parent and is under 
     age 16 or attending full time an elementary, secondary, or 
     vocational (or technical) school) to participate in the 
     program under part F, and
       ``(ii) to the extent that Federal financial participation 
     under section 404(k) is available, allow individuals who are 
     not required to participate in such program, or to whom 
     subparagraph (D) applies, to participate in such program, 
     except that such individual shall, in a month in which he or 
     she meets a condition of any of clauses (i) through (vii) of 
     subparagraph (D), be permitted to cease participation in such 
     program, and be subject to the provisions of subparagraph (D) 
     (for so long as they remain applicable) and the State may, at 
     its option, apply section 417 to individuals described in 
     subparagraph (B)(ii) and who choose to participate in the 
     program under part F (even though they meet one of the 
     criteria under subparagraph (D) for deferral from 
     participation);
       ``(iii) with respect to individuals who wish to 
     participate, but whom the State is not required to include 
     under clause (ii), consider such individuals request for 
     approval of a self-initiated education and training program 
     and apply criteria generally applicable to approval of such 
     activities under the State's JOBS program, but approval of 
     such application shall only guarantee child care pursuant to 
     subsection (g)(1)(A)(i)(II);
       ``(D) that participation in the program under part F will 
     not be required and the provisions of such part, other than 
     paragraph (1) and (2) of section 481(a) (relating to personal 
     responsibility agreements and employability plans) will not 
     apply, but the State may provide for participation in 
     appropriate cases in one or more types of activities designed 
     as preparation for participation in the program under part F, 
     in the case of any individual described in subparagraph (B) 
     who--
       ``(i) is the custodial parent of a child--
       ``(I) born less than one year earlier, or,
       ``(II) (in the case of either a child conceived during a 
     month in which such parent received aid under this part or a 
     child whose custodial parent is under the age of 20 and does 
     not have a high school diploma or equivalent) born more 
     recently than within the preceding 12 weeks (or, if greater) 
     the number of weeks specified in section 102(a)(1) of the 
     Family and Medical Leave Act of 1993 establishing the period 
     of leave to which certain employees are entitled following 
     the birth of a child, but this clause may only be applied to 
     one parent of a child for any month;
       ``(ii) is a woman in the third trimester of pregnancy;
       ``(iii) is 60 years of age or older;
       ``(iv) is needed in the home because of the illness or 
     incapacity (as confirmed by a licensed physician, 
     psychologist, or mental health professional (from a list of 
     such professionals approved for this purpose by the State)) 
     of another member of the household and no other appropriate 
     household member is available to provide the needed care;
       ``(v) is found, on the basis of a certification by a 
     licensed physician, psychologist, or mental health 
     professional (from a list of such professionals approved for 
     this purpose by the State) to have an illness or 
     incapacitating condition, that at least temporarily, prevents 
     the individuals from engaging in employment or training;
       ``(vi) resides in an area of the State where the time 
     required to travel to and from the site where the 
     individual's participation in the program under part F would 
     take place would exceed a total of two hours (or, if greater, 
     the generally accepted commuting time in that area) in a day; 
     or
       ``(viii) meets such other criteria as the State may specify 
     in its plan that reasonably suggest an inability to 
     participate in the program under part F, except that the 
     average monthly number of individuals to whom this clause is 
     applied for months in any fiscal year shall not exceed 5 
     percent of the average monthly number of all individuals 
     (described in clauses (i) and (ii) of subparagraph (B)) for 
     months in such fiscal year (or, in the case of fiscal years 
     after 1999, 10 percent of such average monthly number) 
     together with the average monthly number of individuals 
     registered in the WORK program under part G for months in 
     such year, unless the Secretary, upon a showing by the State 
     of extraordinary or unforeseeable circumstances, allows the 
     application of this clause to a greater number of individuals 
     for a specified period of time;
       ``(E) that the State will promptly advise each applicant 
     and recipient of the participation requirements under this 
     paragraph and of the limitation on the number of months of 
     eligibility for aid under this part that may be applied (as 
     required by the provisions of section 417) to such applicant 
     or recipient;
       ``(F) that--
       ``(i) in the case of a custodial parent who has not 
     attained 20 years of age, does not have a high school diploma 
     (or its equivalent), and is required to participate in the 
     program under part F, the State will require such parent to 
     participate in an educational activity; and''.
       (2) Section 402(a)(19)(E)(ii) of the Act (as in effect on 
     the date of enactment of this Act) is amended by striking out 
     ``(notwithstanding the part-time requirement in subparagraph 
     (C)(iii)(II))''.
       (3) Section 402(a)(19) of the Act is further amended--
       (A) by striking out paragraph (F) (as in effect on the date 
     of enactment of this Act),
       (B) by striking out so much of subparagraph (G) as precedes 
     clause (ii) and inserting in lieu thereof the following:
       ``(G) that--
       ``(i) if an individual who is required to participate in 
     the program under part F refuses without good cause to accept 
     employment of 20 hours per week or more (or such greater 
     number of hours as the State plan provides pursuant to 
     section 417(b)(4)(i)(IV)) in which such individual is able to 
     engage which is offered through the public employment offices 
     of the State, or is otherwise offered by an employer if the 
     offer of such employer is determined to be a bona fide offer 
     of employment, the family of which such individual is a 
     member shall be ineligible for aid for six months or if 
     sooner, until the first month following the month in which 
     such individual accepts such an offer of employment; and
       ``(ii) if an individual who is required to participate in 
     the program under part F fails without good cause to do so, 
     the needs of such individual shall not be taken into account 
     in making the determination under paragraph (7), and if such 
     individual is the parent or other caretaker relative, at the 
     option of the State, payments of aid for any dependent child 
     in the family in the form of payments of the type described 
     in section 406(b)(2) (which in such case shall be without 
     regard to clauses (A) through (D) thereof) may be made;''.
       (4) Section 402 (a)(19)(G) of the Act is further amended--
       (A) by redesignating clauses (ii), (iii), and (iv) as 
     clauses (iii), (iv), and (v), respectively,
       (B) by striking out in clause (iii) (as redesignated) 
     ``clause (i)'' and inserting in lieu thereof ``clause (ii)'',
       (C) by striking out in clause (v) (as redesignated) the 
     dash and all that follows down through ``(II)'', and placing 
     the text of clause (II) immediately after ``this 
     subparagraph'', and
       (D) by adding at the end thereof the following new clause:
       ``(vi) the State agency shall conduct an evaluation of the 
     circumstances in any case in which an individual to whom a 
     sanction is being applied under clause (iii)(I) continues 
     after three months to fail or refuse to comply with the 
     requirement that occasioned the imposition of the sanction, 
     and in the case of any other individual to whom a sanction is 
     being applied under clause (iii), and provide appropriate 
     counseling and other supportive services to assist the 
     individual to address the cause of the failure or refusal; 
     and''.
       ``(vii) during months in which a sanction is applied under 
     this subparagraph, the family of which the sanctioned 
     individual is a member shall be considered to be receiving 
     aid for purposes of title XIX, and for purposes of any other 
     Federal or Federally-assisted program, such family shall be 
     considered to be receiving the amount of such aid that would 
     be payable if such individual were not being sanctioned;
       ``(viii) during months in which a sanction is applied under 
     this subparagraph, the family of which the sanctioned 
     individual is a member shall be considered to be receiving 
     aid for purpose of title XIX, and for purposes of any other 
     Federal or Federally-assisted program, such family shall be 
     considered to be receiving the amount of such aid that would 
     be payable if such individual were not being sanctioned; 
     and''.
       (5) Section 402(a)(42) of the Act is amended by inserting 
     before the semicolon the following: ``and if an individual is 
     being sanctioned under section 402(a)(19)(G), such individual 
     and all members of the family shall not become ineligible for 
     such medical assistance by reason of such sanction''.

     SEC. 102. ESTABLISHMENT OF ENHANCED JOBS PROGRAM UNDER PART 
                   F.

       (1) Section 481 of the Act is amended--
       (A) by amending the heading of such section to read:

``PURPOSE; REQUIREMENT TO ESTABLISH AND OPERATE PROGRAM; DEFINITIONS'';

       (B) by redesignating subsection (b) as subsection (c);
       (C)(i) by transferring subsection (a) of section 482 to 
     section 481, and redesignating it as subsection (b); and
       (ii) by amending section 481(b) (as so redesignated) by 
     striking out ``Secretary of Labor'' in paragraph (1)(C) and 
     inserting in lieu thereof ``Secretary of Labor and the 
     Secretary of Education''.
       (2) Section 482 of the Act is amended by striking out all 
     that precedes subsection (c) and adding the following new 
     heading and subsections (a) and (b):

                 ``OPERATION OF ENHANCED STATE PROGRAMS

     ``SEC. 482.

       (a) Required Elements of Enhanced JOBS Program.--
       ``(1)(A) Personal responsibility agreement.--Each 
     individual who is a parent or other caretaker relative of a 
     dependent child and a representative of the State agency 
     shall, at the time of application for aid under part A, sign 
     a personal responsibility agreement. The agreement shall, in 
     the case of individuals to whom section 417 applies, set 
     forth in clear terms, understandable by all parties, an 
     acknowledgment that aid under the State plan is subject to a 
     general 24-month limit and should be considered transitional 
     in nature. The agreement, in all cases, should acknowledge 
     that the goal of both the individual and the State is to 
     enable the individual to achieve maximum economic 
     independence and self sufficiency. To this end, the 
     individual will participate in appropriate activities, and 
     the State will furnish necessary enabling services and 
     assistance.
       ``(B) The State agency shall provide the program and 
     employment information required by subsection (c) as promptly 
     as possible, but in no event later than 90 days after the 
     earliest date for which payment is made. In the case of 
     individuals to whom section 417 applies, the information 
     shall be provided in person, on either an individual or group 
     basis, and the State agency shall obtain written confirmation 
     from the individual that the individual received and 
     understood the program and employment information.
       ``(2) Employability plan.--
       ``(A)(i) The State agency shall, with respect to each 
     individual required to participate in the program under this 
     part, other than an individual to whom section 402(a)(19)(D) 
     applies, conduct an assessment of the educational, child 
     care, and other supportive services needs, as well as the 
     skills, literacy, prior work experience and employability of 
     each participant in the JOBS program, including a review of 
     the family circumstances. The agency may also review the 
     needs of any child of the participant.
       ``(ii) On the basis of such assessment, the State agency 
     and the individual shall, within 90 days from the earliest 
     date for which payment is made, jointly develop an 
     employability plan for such individual. The purpose of the 
     employability plan is to lay out the fastest and most 
     effective way to help the participant find employment and 
     become self-sufficient. The plan shall indicate the overall 
     period of time that is expected to be necessary to achieve 
     the individual's employment goal, taking into consideration, 
     in the case of individuals to whom the provisions of section 
     417 apply, the maximum remaining period of time for which aid 
     may be paid to such individual under the plan approved 
     under part A. The plan will detail the activities in which 
     the individual will be expected to engage in order to find 
     employment, including job search, employment training and 
     preparation, or education. The plan must be reasonable in 
     light of the individual's literacy, skills, and needs, and 
     the resources and opportunities for employment (including 
     self-employment) within the community where the individual 
     resides, and shall, to the maximum extent possible and 
     consistent with this section, reflect the preferences of 
     such individual. The employability plan shall also 
     describe the child care and other social services and 
     assistance which the State agency will provide in order to 
     allow the individual to take full advantage of the 
     activities under the program operated under this part, and 
     the steps the individual should take to bring promptly to 
     the attention of the State agency any difficulties the 
     individual is encountering in participating in the program 
     under this part. The employability plan shall not be 
     considered a contract.
       ``(iii) The State plan shall provide that, if an individual 
     works an average of 20 hours a week (or such greater number, 
     but not more than 30, as the State plan may provide) or more 
     in a position of employment, work in such position shall 
     constitute the primary activity under such individual's 
     employability plan.
       ``(B) The State plan under this part must provide for a 
     review mechanism that will be available should the individual 
     and the State agency be unable to agree on the content of the 
     employability plan. The review process shall, at the least, 
     provide for prompt involvement of another employee (or 
     designee) of the State agency with supervisory or greater 
     responsibilities than the person with whom the individual is 
     in disagreement to provide further negotiation support. If 
     agreement still cannot be reached, the State agency shall, in 
     accordance with regulations of the Secretary, afford the 
     individual access to arbitration or a mediation process, to a 
     more formal review or hearing, or to a combination of such 
     processes.
       ``(C) Failure or refusal by an individual to sign an agreed 
     upon employability plan, or to sign a plan with respect to 
     which the applicable processes under subparagraph (B) have 
     been completed and under which the employability plan has 
     been found appropriate, shall result in denial of aid with 
     respect to such individual, except that no sanction or other 
     penalty shall continue under this subparagraph after the 
     individual has signed an appropriate plan.
       ``(3) Employability plan for deferred individuals.--The 
     State agency and each individual for whom participation in 
     activities has been found appropriate under section 
     402(a)(19)(D) shall jointly develop an employability plan. 
     The plan shall place primary emphasis on the activities in 
     which the individual is able to engage that, together with 
     any services provided by the State, will best prepare the 
     individual for full participation in the program under this 
     part. Plans under this paragraph are not subject to the 
     procedures of paragraph (2).
       ``(4) Case manager.--the State agency may assign a case 
     manager to each participant and the participant's family who 
     will be responsible for assisting the family to obtain any 
     services which may be needed to assure effective 
     participation in the program.
       ``(5) Periodic assessment.--At such intervals as the State 
     agency finds appropriate, but not less frequently than once 
     every 6 months, a representative of the State agency and the 
     individual shall conduct a review of the individual's 
     employability plan (including the plan of an individual to 
     whom paragraph (3) applies) and the progress that is being 
     made to achieve the goals set in the plan. The State agency 
     shall consider, in conducting the assessment, whether an 
     individual participating in activities under section 
     402(a)(19)(D) has become ready to participate in the program 
     under this part, or whether an individual required to 
     participate under this part should no longer be so required 
     and instead should participate in such activities. If it is 
     concluded that there should be any such change in status, the 
     individual's employability plan shall be revised accordingly 
     effective with the month following the month in which the 
     revision is made. In the case of an individual participating 
     in the program under this part, the assessment shall 
     specifically address both the individual's participation and 
     the State agency's delivery of services as agreed to in the 
     employability plan. If it is found in the course of an 
     assessment that there has been a substantial failure to 
     provide services to the recipient in accordance with the 
     employability plan, the plan (or some other State agency 
     record) must document that finding, and the period during 
     which the failure occurred.
       ``(6) Revision of employability plan.--The employability 
     plan may be revised as necessary following an assessment 
     under paragraph (5) or at any other time that events warrant 
     it, upon the agreement of the individual and the State 
     agency. If there is disagreement about the need for revision, 
     or the respects in which the plan will be revised or the new 
     content of the plan, the procedures described in paragraph 
     (2)(B) will be applicable.
       ``(7) The State agency may require that, in the case of an 
     individual described in section 402(a)(19)(B) and whose 
     employability plan, including an employability plan under 
     paragraph (3), reflects the need for treatment for substance 
     abuse, such individual participate in substance abuse 
     treatment that is available without charge to the individual. 
     The State plan may, notwithstanding any other provision of 
     law, make applicable to any individual required to 
     participate in such treatment activities the provisions of 
     section 402(a)(19)(G), and if so, shall advise the individual 
     of the consequences of failure or refusal to accept 
     treatment,
       ``(b) Transition to WORK Program.--(1) The State agency 
     shall schedule a meeting with each individual subject to the 
     time limit under section 417, with adequate advance notice to 
     the individual, not later than 90 days prior to the first 
     month for which such individual will become ineligible for 
     aid under part A by reason of such time limit. The State 
     agency shall evaluate the individual's progress under the 
     employability plan, determine whether any extensions (as 
     allowed under section 417) are necessary and available, and 
     advise the individual about the job search requirement 
     (described in paragraph (2)) and the steps that must be taken 
     thereafter to register for the program under part G. If a 
     meeting is held with the individual in connection with a 
     redetermination of eligibility, periodic assessment, or for 
     any other purpose, within the 6-month period preceding the 
     first month of ineligibility by reason of section 417, the 
     State agency may take the steps required by this paragraph at 
     such meeting in satisfaction of this requirement.
       ``(2) Not later than 45 days prior to the close of the 
     twenty-fourth month of receipt of aid under part A (or, at 
     the option of the State, at an earlier date after the twenty-
     first month of receipt of such aid), the individual shall be 
     required to engage in job search to the extent consistent 
     with the goals of such individual's employability plan. 
     Engaging in job search for the period of time required by the 
     State under the preceding sentence shall be a prerequisite to 
     receipt of a work assignment under the WORK program 
     established and operated under part G. For purposes of this 
     subparagraph, `month of receipt of aid under part A' shall 
     not include any month prior to the first month in which this 
     subparagraph was in effect.
       ``(3) References to applicants, or to actions that must 
     occur at the time of application or from the earliest date 
     for which payment is made, in the amendments made by this 
     section, shall be construed to include references to 
     recipients, and actions that must occur at the time of the 
     first redetermination of eligibility by a State for aid to 
     families with dependent children occurring after the 
     effective date of such amendments in such State.''.

     SEC. 103. AMENDMENTS PERTAINING TO SERVICES AND ACTIVITIES 
                   UNDER JOBS PROGRAM

       (a) Repeal of Redundant Provision.--Section 482(c) of this 
     Act is amended by repealing paragraph (5).
       (b) Requirement to Provide Job Search Services.--Section 
     482(d)(1)(A) of the Act is amended--
       (1) in clause (i), by redesignating subclauses (I through 
     (IV) as (II) through (V), respectively,
       (2) by inserting before subclause (II) (as redesignated) 
     the following:
       ``(I) group and individual job search as described in 
     subsection (g);'', and
       (3) in clause (ii), by repealing subclause (I) and 
     redesignating subclauses (II) through (IV) as subclauses (I) 
     through (III), respectively.
       (c) Employment-Oriented Education.--Section 
     482(d)(1)(A)(i)(II) of the Act as redesignated is amended by 
     striking out ``basic and remedial education to achieve a 
     basic literary level'' and inserting in lieu thereof 
     ``employment-related education to achieve literacy levels 
     needed for economic self-sufficiency''.
       (d) Self-Employment Programs.--Section 482(d)(1)(A)(ii) of 
     the Act (as redesignated) is amended--
       (1) by striking out ``and'' after clause (II) (as 
     redesignated), and
       (2) by adding ``and'' after clause (III), and
       (3) by adding after and below clause (III) (as 
     redesignated), the following:
       ``(IV) programs to prepare for self-employment or to enable 
     individuals to establish a microenterprise.''.
       (e) Child Care Provider Training and Nontraditional 
     Employment.--Section 482(d)(1)(B) of the Act is amended by 
     adding at the end thereof the following new sentence: ``The 
     State shall include in its plan a description of whether and 
     how it will provide training to prepare individuals to be 
     child care providers. The State shall also include in its 
     plan a description of the steps it will take to encourage the 
     training and placement of participants in nontraditional 
     positions of employment, including steps to increase program 
     participants' awareness of the availability of such training 
     and placement opportunities.''.
       (f) Work Supplementation Extension.--Section 482(e) of the 
     Act (as redesignated) is amended--
       (1) in paragraph (2)(G)--
       (A) by striking out ``9 months'' and inserting in lieu 
     thereof ``12 months'', and
       (B) by striking out ``without regard to the provisions of 
     subparagraph (b)(ii)(II) of such section''; and
       (2) in paragraph (4)(A), striking out ``9 months'' and 
     inserting in lieu thereof ``12 months''.
       (g) Amendments to Job Search Program.--Section 482(g) of 
     the Act is amended--
       (1) in paragraph (1) by striking out ``may'' and inserting 
     in lieu thereof ``shall'';
       (2) by amending so much of paragraph (2) as precedes 
     subparagraph (A) to read as follows:
       ``(2) The State agency may require job search by an 
     individual who is applying for and shall upon approval of the 
     application require job search by an individual who is 
     receiving aid to families with dependent children and is 
     determined by the State to have non-negligible work 
     experience, or to have a high school diploma or equivalent, 
     including individuals required by the State's exercise of its 
     option under section 402(a)(19)(B) (i) and (ii) to 
     participate in the program under this part--'';
       (3) in paragraph (2)(A), by striking out ``8 weeks'' and 
     inserting in lieu thereof ``12 weeks'', and
       (4) by amending paragraph (2)(B) to read as follows:
       ``(B) at such time or times thereafter as the State agency 
     many determine, but not to exceed a total of 4 months in any 
     12-month period (and for this purpose, there shall be 
     included the time that the individual engaged in job search 
     pursuant to both subparagraph (A) and section 482(c), but not 
     any period of job search that occurred at the same time that 
     the individual was participating in another activity under 
     this part.''.
       (h) Procedures to Resolve Disputes.--Section 482(h) of the 
     Act is amended by striking out ``shall establish'' and all 
     that follows down to ``shall provide an opportunity for a 
     hearing'' and inserting in lieu thereof ``shall establish 
     either (A) a conciliation procedure, meeting standards 
     established by the Secretary, for the resolution of disputes 
     involving an individual's participation in the program, or 
     (B) a procedure that includes advance notice to the 
     individual of an apparent failure to comply with a program 
     requirement, and 10 days in which to contact and meet with a 
     State agency representative in order to resolve the dispute 
     (or to comply with the requirements) and make unnecessary the 
     imposition of a sanction. If the dispute is not resolved 
     through whichever of these procedures the State adopts, the 
     State agency''.
       (i) Coordination Requirements.--Section 483(a)(1) of the 
     Act is amended by inserting immediately following ``the 
     Job Training Partnership Act'' in the first sentence'', 
     the Adult Education Act, the Carl D. Perkins Vocational 
     and Applied Technology Education Act Amendments of 
     1990,''.
       (j) Provisions Generally Applicable to Provision of 
     Services Under JOBS and WORK.--Section 484 of the Act, 
     including the heading, is amended to read as follows:


 ``PROVISIONS GENERALLY APPLICABLE TO PROVISION OF SERVICES UNDER JOBS 
                                OR WORK

       ``Sec. 484. (a) In assigning participants in the program 
     under this part to any program activity, or in assigning 
     individuals registered with the program under part G to a 
     position of employment, the State agency shall assure that--
       ``(1) each assignment takes into account the capacity, 
     health and safety, family responsibilities, and place of 
     residence of the participant;
       ``(2) no participant will be required, without his or her 
     consent, to travel an unreasonable distance from his or her 
     home or remain away from such home overnight;
       ``(3) individuals are not discriminated against on the 
     basis of race, color, sex, national origin, religion, age, or 
     disability, and all participants will have such rights as are 
     available under any applicable Federal, State, or local law 
     prohibiting discrimination;
       ``(4) no such assignment will--
       ``(A) result in the displacement of any currently employed 
     worker, including partial displacement such as a reduction in 
     the hours of non-overtime work, wages, or employment 
     benefits;
       ``(B) impair existing contracts for services or collective 
     bargaining agreements;
       ``(C) infringe upon the promotional opportunities of any 
     currently employed worker;
       ``(D) result in the employment of the participant or 
     filling of a position when--
       ``(i) any other person is on layoff, on strike or has been 
     locked out from, or has recall rights to, the same or a 
     substantially equivalent job or position with the employer; 
     or
       ``(ii) the employer has terminated any regular employee or 
     otherwise reduced its workforce with the effect of filling 
     the vacancy so created with such participant; or
       ``(E) result in filling a vacancy for a position in a State 
     or local government agency for which State or local funds 
     have been budgeted, unless such agency has been unable to 
     fill such vacancy with a qualified applicant through such 
     agency's regular employee selection procedure during a period 
     of not less than 60 days;
       ``(5) no participant shall be assigned to a position to 
     perform work under a contract for services for the first 90 
     days after the commencement of such contract if such contract 
     immediately succeeds a contract for services under which an 
     employee covered by a collective bargaining agreement 
     performed the same or substantially similar work for another 
     employer;''
       ``(6) no participant shall be assigned to a position with a 
     private nonprofit entity to carry out activities that are the 
     same or substantially equivalent to activities that have been 
     regularly carried out by a State or local government agency 
     in the same local area, unless such placement meets the 
     nondisplacement requirements of paragraph (4);
       ``(7) to the extent that a State workers' compensation law 
     is applicable, workers' compensation benefits in accordance 
     with such law shall be available with respect to injuries 
     suffered by participants, and, to the extent that such law is 
     not applicable, participants shall be provided with medical 
     and accident protection for on-site injuries in accordance 
     with regulations issued by the Secretary;
       ``(8) health and safety standards established under State 
     and Federal law that are otherwise applicable to the working 
     conditions of employees shall be equally applicable to the 
     working conditions for participants; and
       ``(9) the State will establish and maintain grievance 
     procedures, meeting the requirements of subsection (c), for 
     resolving complaints by regular employees or their 
     representatives alleging violations of the nondisplacement 
     provisions described in paragraph (4), or of the requirements 
     relating to wages, benefits and working conditions under this 
     title.
       ``(b) A grievance procedure that meets the requirements of 
     this subsection must include the following procedures:
       ``(1) Deadlines.--Hearings on any grievance filed pursuant 
     to subsection (a)(8) shall be conducted within 30 days of the 
     filing of such grievance and a decision shall be made not 
     later than 60 days after the filing of such grievance. A 
     grievance shall be made not later than 45 days after the date 
     of the alleged occurrence.
       ``(2) Appeals.--Upon receiving a decision under paragraph 
     (1), or if 60 days has elapsed without a decision being made, 
     a grievant may either--
       ``(A) file an appeal as provided for in the State's 
     procedures or in regulations promulgated by the Secretary, or
       ``(B) submit such grievance to binding arbitration in 
     accordance with paragraph (3).
       ``(3) Arbitration.--
       ``(A) In general.--
       ``(i) Jointly selected arbitrator.--In accordance with 
     paragraph (2) on the occurrence of an adverse grievance 
     decision, or 60 days after the filing of such grievance if no 
     decision has been reached, the party filing the grievance 
     shall be permitted to submit such grievance to binding 
     arbitration before a qualified arbitrator who is jointly 
     selected and independent of the interested parties.
       ``(ii) Impasse procedures.--If the parties are unable to 
     agree on an arbitrator within 20 days from when the request 
     for arbitration is filed, the parties shall request the 
     Federal Mediation and Conciliation Service or the American 
     Arbitration Association to submit a list of arbitrations. The 
     parties shall alternately strike names from such list until 
     the name of one person remains, who shall be the arbitrator.
       ``(B) Deadlines.--An arbitration proceeding conducted 
     pursuant to subparagraph (A)(i) shall be held not later than 
     45 days after the request for such arbitration, or if the 
     arbitrator is appointed pursuant to paragraph (A)(ii), not 
     later than 30 days after such appointment, and a decision 
     concerning such grievance shall be made not later than 30 
     days after the date of such arbitration proceeding.
       ``(C) Cost.--
       ``(i) In general.--The cost of the arbitration proceeding 
     conducted under this subsection shall be divided evenly 
     between the parties to the arbitration.
       ``(ii) Exception.--If a grievant prevails under the 
     arbitration proceeding conducted under this subsection, the 
     party found in violation of the requirements of this part 
     shall pay the total cost of such proceeding and the 
     attorney's fees of the grievant.
       ``(D) Enforcement.--Suits to enforce arbitration awards 
     under this subsection may be brought in any district court of 
     the United States having jurisdiction over the parties, 
     without regard to the amount in controversy and without 
     regard to the citizenship of the parties.
       ``(4) Remedies.--Remedies for a grievance filed under this 
     subsection include--
       ``(A) suspension of payments to employers;
       ``(B) the termination of such payments;
       ``(C) the prohibition of the placement of a participant;
       ``(D) reinstatement of a displaced employee to the position 
     held by such employee prior to displacement;
       ``(E) payment of lost wages and benefits of the displaced 
     employee;
       ``(F) reestablishment of other relevant terms, conditions, 
     and privileges of the displaced employee; and
       ``(G) such equitable relief as is necessary to correct a 
     violation or to make a displaced employee whole.
       ``(c) Written Notification of Labor Organizations.--
       ``(1) No position of employment with an employer may be 
     established under title part unless the local labor 
     organization representing employees of such employer who are 
     engaged in the same or substantially similar work as that 
     proposed to be carried out under such position have been 
     provided written notification of the initial assignment of a 
     participant to such position not less than 30 days prior to 
     the commencement of such assignment. No such notification 
     shall be required with respect to the subsequent assignment 
     of participants to the same position with the same employer.
       ``(2) If a local organization provided notice of an 
     assignment pursuant to paragraph (1) objects to an assignment 
     of a participant pursuant to paragraph (1) objects to an 
     assignment of a participant on the basis that such assignment 
     would violate the requirements relating to nondisplacement, 
     wages, benefits, or working conditions under this title, such 
     organization may, as an alternative to the grievance 
     procedures provided pursuant to subsection (b), file a 
     complaint pursuant to an expedited grievance procedure. Such 
     expedited procedure shall be carried out in accordance with 
     the binding arbitration procedures described in subsection 
     (b)(3), except that--
       ``(A) the request for arbitration shall be filed within 30 
     days of receiving written notice,
       ``(B) the arbitrator shall be jointly selected by the 
     parties not later than 10 days after the request for 
     arbitration, or, if the parties are unable to agree, 
     appointed by the Federal Mediation and Conciliation Service 
     (or another entity is agreed to by both parties) not later 
     than 15 days after the request for arbitration, and
       ``(C) the proceeding shall be conducted and a decision 
     issued not later than 30 days after the request for 
     arbitration.
       ``(3) If a local organization files a complaint pursuant to 
     the expedited grievance procedure under paragraph (2), a 
     participant shall not be placed in the position that is the 
     subject of the complaint until it is determined pursuant to 
     the expedited procedure that such placement would not be in 
     violation of this title.
       ``(d) In assigning participants in the JOBS program under 
     this part to any program activity, the State agency shall, in 
     addition to the assurances required under subsection (a), 
     assure that--
       ``(1) the conditions of participation are reasonable, 
     taking into account in each case the experience and 
     proficiency of the participant and the child care and other 
     supportive services needs of the participant; and
       ``(2) each assignment is based on available resources, the 
     participant's circumstances, and local employment 
     opportunities.
       ``(e) In assigning individuals registered with the State's 
     WORK program under part G to a position of employment, the 
     State agency shall, in addition to the assurance required 
     under subsection (a), assure that--
       ``(1) no individual eligible to register for the State's 
     WORK program, determined in accordance with the provisions of 
     part A and this part, shall be excluded from such program;
       ``(2) no family with a member eligible to participate in 
     the State's program under part G will, by reason of such 
     assignment, and upon participating the full number of hours 
     provided by such assignment, have income less than the amount 
     such family would have if it were receiving aid under the 
     State's plan approved under part A and had no other income 
     (except if a sanction is applied under section 496(f));
       ``(3) each family with a member participating in the 
     program under part G shall be considered to be receiving aid 
     to families with dependent children for purpose of the 
     State's plan approved under title XIX;
       ``(4) where a labor organization represents a substantial 
     number of employees who are engaged in similar work in the 
     same area as that proposed to be funded under part G, an 
     opportunity shall be provided for such organization to submit 
     comments with respect to such proposal;
       ``(5) participants employed under the WORK program shall be 
     compensated for such employment in accordance with 
     appropriate law, but in no event at a rate less than the 
     highest of--
       ``(A) the Federal minimum wage rate specified in section 
     6(a)(1) of the Fair Labor Standards Act of 1938;
       ``(B) the rate specified by the appropriate State or local 
     minimum wage law; or
       ``(C) the rate paid to employees of the same employer 
     performing the same type of work and having similar 
     employment tenure with such employer; and
       ``(6) except as otherwise provided under this paragraph, 
     participants employed under the WORK program shall be 
     provided benefits (including health benefits, unless the 
     State agency concludes that it would impose an undue 
     financial burden on either the employer or the State), 
     working conditions and rights at the same level and to the 
     same extent as other employees of the same employer 
     performing the same type of work and having similar 
     employment tenure with employer.
       ``(f) Funds available to carry out the program under this 
     part, or under part G, may not be used to assist, promote, or 
     deter union organizing.
       ``(g) The provisions of this section apply to any work-
     related programs and activities under this part or under part 
     G (as provided herein), and under any other work-related 
     programs and activities authorized (in connection with the 
     AFDC program) under section 1115.''.

     SEC. 104. TWENTY-FOUR MONTH LIMIT.

       Part A of title IV of the Social Security Act is amended by 
     redesignating section 417 as section 419 and adding after and 
     below section 416 the following new section:

     ``SEC. 417. TWENTY-FOUR MONTH LIMIT.

       ``(a) Limitation.--(1) In general.--Notwithstanding any 
     other provision of law, a State plan approved under this part 
     must provide that, except as otherwise provided in this 
     title, aid to families with dependent children will not be 
     payable to an individual to whom section 402(a)(19)(B)(i) or 
     (ii) applies or to individuals who have chosen to participate 
     in the program under part F and to whom the State has elected 
     under section 402(a)(19)(C) to apply this section, or to his 
     or her dependent child or children living in the same home 
     with such individual for any month after the twenty-fourth 
     month (whether or not such months are consecutive) for which 
     such individual has, together with his or her dependent child 
     or children, received aid under the State's plan, or under 
     the plan of any other State, approved under this part. The 
     limitation in the preceding sentence shall not apply to (A) 
     an individual who has received such aid for 24 months and who 
     is working to the extent described in clause (IV) or (V) of 
     paragraph (2)(B)(i), whichever may be applicable, or (B) an 
     individual's dependent child or children if they are living 
     with another relative specified in section 406(a)(1) who is 
     not subject to, or has not received aid for months in excess 
     of, the limit prescribed by, this section.
       ``(2) Applicability.--In applying paragraph (1)--
       ``(A) if an individual has previously received aid under a 
     State plan approved under this part for more than 18 months, 
     the number of months for which an individual is considered to 
     have previously been paid aid under such a State plan shall 
     be reduced by one month for every period of four months 
     throughout which no such aid was paid, and no wages under the 
     program under part G were paid but such number of months 
     shall never be reduced to fewer than 18 (regardless of 
     whether such periods of four months were consecutive); and
       ``(B)(i) there shall not be included, as a month in which 
     an individual received aid under a State plan approved under 
     this part--
       ``(I) any month prior to the first month for which this 
     section is in effect in such State, or in the case of a 
     recipient of aid in such State for the month preceding such 
     month, the first month in which such individual's eligibility 
     is redetermined by such State;
       ``(II) any month prior to the first month in which payment 
     of aid under this part was authorized with respect to such 
     individual;
       ``(III) any month prior to the month in which such 
     individual attains age eighteen;
       ``(IV) any month during which the individual worked 20 
     hours a week (or such greater number, but not more than 30, 
     as the State plan under part F provides) or more;
       ``(V) any month during which the total average number of 
     hours worked per week by both parents, in a family eligible 
     by reason of section 407 and in which section 402(a)(19)(D) 
     is applicable to neither parent, exceeds 30 hours (or such 
     greater number, but not more than 40, as the State plan under 
     part F provides); or
       ``(VI) any month during which section 402(a)(19)(D) was 
     applicable to such individual; and
       ``(ii) there shall be included each month for which aid 
     would have been paid but for the applicability to such 
     individual of a sanction under section 402(a)(19)(G) or 
     402(a)(26).

     For purposes of clauses (i)(IV) and (V), there shall not be 
     excluded any month in which the individual fails to accept an 
     offer of additional hours of employment, or in which 
     such individual reduces the hours of employment and 
     thereby becomes eligible for additional amounts of aid 
     under this part.
       ``(b) Notice to Individuals.--A State plan approved under 
     this part shall provide that notice will be given to each 
     member of a family to whom the time limit under subsection 
     (a) applies, not less frequently than once every six months, 
     concerning the number of months of eligibility remaining for 
     each such member. The notice required by this subsection may 
     be given together with the payment of aid.
       ``(c) Extension of Limit.--
       ``(1) Extension by reason of failure to provide services.--
     The State agency shall extend the twenty-four-month limit 
     referred to in subsection (a) in the case of an individual 
     who has been unable to complete the education, training, or 
     other activities intended to prepare such individual for 
     employment by reason of the substantial failure of the State 
     agency to provide or arrange for the provision of child care 
     or any other service agreed upon in the individual's 
     employability plan. A finding of failure to provide services 
     shall be based on the documentation made at the semi-annual 
     assessment (required by section 482(a)(5)), together with any 
     reports or information either the individual or the State 
     agency may have with respect to the period between the 
     assessment and the close of the twenty-fourth month. The time 
     limit shall be extended for so many months as are necessary 
     to allow the individual to complete the activities agreed 
     upon in the employability plan, but in no event may such 
     extension exceed an additional 24 months.
       ``(2) Extension to complete course of education.--
       ``(A) The State agency shall extend the twenty-four-month 
     limit referred to in subsection (a)--
       ``(i) in the case of an individual receiving services under 
     the Individuals with Disabilities Education Act, for so long 
     as necessary to permit such individual to attain a high 
     school education (or the equivalent) or, if sooner, until 
     such individual reaches age 22; and
       ``(ii) in the case of an individual in a structured 
     learning program (as defined in paragraph (4)), including a 
     program under the School-to-Work Opportunities Act of 1993, 
     for so long as necessary to permit such individual to 
     complete the program or, if sooner, until such individual 
     reaches age 22.
       ``(B) Subject to subsection (e), the State agency may 
     extend the twenty-four-month limit referred to in subsection 
     (a)--
       ``(i) for no more than 12 additional months in order to 
     allow an individual to complete high school (or an equivalent 
     program of education), so long as the individual is making 
     satisfactory progress toward obtaining a high school diploma 
     (or equivalent);
       ``(ii) for no more than 24 additional months in order to 
     allow an individual to complete a post-secondary program so 
     long as the individual is enrolled in a work-study program, 
     or is employed at least 15 hours per week, and is making 
     satisfactory progress toward completing a degree-granting or 
     certificate-granting education or training program, or 
     structured microenterprise or self-employment program likely 
     to improve the individual's economic self-sufficiency; or
       ``(iii) for such additional number of months as it finds 
     appropriate in any case, determined on an individual basis, 
     where such extension is necessary to afford an individual 
     with significant learning disabilities or other substantial 
     barriers to employment additional time to obtain the remedial 
     education, job skills training, or other services specified 
     in the employability plan needed to enable the individual to 
     secure employment.
       ``(3) Extension of employability plan.--The State agency 
     shall extend, and if appropriate revise, the employability 
     plan of each individual with respect to whom an extension is 
     provided under this subsection, and shall continue to 
     furnish, through the months of the extension, the supportive 
     services for which the extended plan provides.
       ``(4) As used in this subsection, a `structured learning 
     program' means one that begins at the secondary school level, 
     continues into a post-secondary program, and is designed to 
     lead to a degree or recognized skills certificate.
       ``(d) Exception for Transition to Unsubsidized 
     Employment.--The State may, at its option, provide for 
     continuing for one additional month the payment of aid to an 
     individual (and his or her dependent child or children) under 
     the State plan, notwithstanding subsection (a), in any case 
     where such continued payment is necessary to assist the 
     individual who is about to commence a position of employment 
     (other than as a participant in the program under part G) 
     until receipt of the first payment of wages. The State plan 
     shall describe the evidence of employment that the State will 
     require in order that payment may be continued under this 
     subsection.
       ``(e) Limitation on Average Monthly Number of Extensions.--
     If the average monthly number of individuals with respect to 
     whom the State has extended the twenty-four month limit by 
     application of subsection (c)(1) or (c)(2)(B) in any fiscal 
     year exceeds 10 percent of the average monthly number of 
     individuals to whom this section applies (and who are 
     required to participate in the program under part F) in the 
     fiscal year involved, the provisions of section 403(k)(6) 
     (reducing Federal payments under section 403(a)) shall apply, 
     unless the Secretary, upon a showing by the State of 
     extraordinary or unforeseeable circumstances, allows the 
     application of such subsections to a greater number of 
     individuals for a specified period of time.
       ``(f) Alternative Time Limit Demonstrations.--
     Notwithstanding any other provision of this part, the 
     Secretary may permit not more than five States to conduct 
     demonstrations to determine what effects, if any, application 
     of time limits of other than twenty-four months would have in 
     promoting the objectives of the part. The Secretary shall 
     approve a demonstration only if the proposed time limit is 
     consistent with both the purpose of making AFDC a 
     transitional program and affording recipients with support to 
     enable them to prepare themselves to obtain unsubsidized 
     employment. Any State applying a time limit other than that 
     specified in subsection (a) shall evaluate both the short and 
     long term effects of such time limit in enabling recipients 
     to become self-sufficient and shall report the results of 
     such evaluation to the Secretary.''.

     SEC. 105. RESPONSIBILITIES OF ASSISTANT SECRETARY FOR FAMILY 
                   SUPPORT.

       Section 419 of the Act, as redesignated by section 104 of 
     this Act, is amended by striking out ``and part F'' and 
     inserting in lieu thereof ``part F, and part G''.

                             TITLE II--WORK

     SEC. 201. ESTABLISHMENT OF PROGRAM.

       (a) Title IV of the Act is amended by adding at the end 
     thereof the following new part:

                             ``Part G--WORK

     ``SEC. 491. PURPOSE AND DEFINITIONS.

       ``(a) Purpose.--It is the purpose of this part to assist 
     States in developing and providing positions of employment 
     for individuals who have received aid to families with 
     dependent children for 24 months, and participated in the 
     program under part F, but have not been able to secure 
     unsubsidized employment.
       ``(b) Definition.--As used in this part, a `WORK position' 
     is a position of employment to which an individual is 
     assigned under this part.

     ``SEC. 492. ESTABLISHMENT AND OPERATION OF STATE PROGRAMS.

       ``(a) Requirement.--Each State shall establish and operate 
     a program to locate and create temporary positions of 
     employment (in this part referred to as the `WORK program') 
     for individuals who have received aid for 24 months, as 
     provided in section 417. The WORK program shall be in effect 
     in each political subdivision of the State not later than 2 
     years after the State's program under part F is in effect in 
     such subdivision.
       ``(b) State Plan.--The State shall establish and operate 
     its WORK program under a plan approved by the Secretary which 
     describes how the State will implement the plan, and 
     indicates, through cross-references to the appropriate 
     provisions of this part and of parts A and F, that the 
     program will be operated in accordance with such provisions 
     of law. The State plan shall describe the strategies and 
     activities to be undertaken by the State to identify and 
     develop WORK positions. Such strategies shall, to the extent 
     practicable, be designed to identify and develop positions 
     likely to result in the placement of participants in 
     unsubsidized employment. The strategies and activities may 
     include--
       ``(1) wage subsidies or other incentives to for-profit, 
     nonprofit, and public employers to employ participants;
       ``(2) performance-based contracts with public or nonprofit 
     or other private organizations to place participants in 
     unsubsidized employment;
       ``(3) payments to nonprofit employers to assist in 
     supervising participants employed by such employers;
       ``(4) assistance to participants in establishing 
     microenterprises and other self-employment efforts;
       ``(5) payments to nonprofit employers and public agencies 
     to employ participants in temporary projects designed to 
     address community needs, such as projects to enhance 
     neighborhood infrastructure and provide other community 
     services; and
       ``(6) payments to employers to employ participants as child 
     care providers.''.
       ``(c) Coordination With Job Opportunities and Basic Skills 
     Training Program.--The State plan submitted to the Secretary 
     to carry out the requirements of this part shall, together 
     with the State plan required to carry out part F, constitute 
     a single plan and shall, to the maximum extent feasible, 
     reflect an integrated strategy to assist the individuals and 
     families served under the plan to achieve economic self-
     sufficiency.
       ``(d) Work Advisory Boards.--
       ``(1) Designation.--The State plan shall designate, or 
     describe a process for establishing or designating, a WORK 
     advisory board for each local area in the State to provide 
     advice and guidance in the administration of the program 
     under this part. The State shall ensure the participation of 
     local elected officials in the designation or establishment 
     of such boards.
       ``(2) Local Area.--The local areas for which WORK advisory 
     boards shall be designated or established pursuant to 
     paragraph (1) may be--
       ``(A) service delivery areas established under section 101 
     of the Job Training Partnership Act;
       ``(B) the geographic boundaries of the labor market areas 
     in the State; or
       ``(C) such other areas as the Governor determines are 
     appropriate to promote the effective administration of the 
     WORK program.
       ``(3) Composition.--Each WORK advisory board designated or 
     established pursuant to paragraph (1) shall consist of--
       ``(A) representatives of private sector employers,
       ``(B) representatives of organized labor;
       ``(C) representatives of not-for-profit organizations, 
     including community-based organizations;
       ``(D) representatives of local government, such as local, 
     elected officials and representatives of economic development 
     agencies, human service agencies, and educational agencies; 
     and
       ``(E) such other community leaders as the State determines 
     are appropriate.
       ``(4) Functions.--Each WORK advisory board shall provide 
     comments to the State agency relating to the State plan 
     developed pursuant to subsection (b) of this section. In 
     addition, each WORK advisory board shall provide advice and 
     guidance to the agency administering the WORK program in the 
     local area relating to)--
       ``(A) the identification of potential WORK positions;
       ``(B) opportunities for placing WORK participants in 
     unsubsidized employment;
       ``(C) methods for ensuring compliance with the requirements 
     of this part relating to nondisplacement and working 
     conditions;
       ``(D) methods for carrying out the coordination 
     requirements specified in subsection (e) of this section; and
       ``(E) such other aspects of the WORK program that such 
     board determines are appropriate.
       ``(e) Coordination with Other Programs and Entities.
       ``(1) In general.--The State plan shall include a 
     description of the cooperative arrangements established with 
     appropriate programs and agencies to enhance the 
     administration of the program under this part, including 
     arrangements with--
       ``(A) the Employment Service, and
       ``(B) other relevant employment and public service programs 
     administered through public and private entities, such as 
     programs supported under the Job Training Partnership Act and 
     the National and Community Service Act and with programs 
     under the CCDBG Act to explore the development of positions 
     in child care for WORK program participants.
       ``(2) Local coordination.--The entity administering the 
     WORK program in local areas shall, in addition to 
     establishing linkages with the programs and agencies 
     described in paragraph (1), establish cooperative 
     arrangements with other appropriate entities to enhance the 
     administration of the program under this part. Such 
     arrangements may be established with local government and 
     service agencies, public housing agencies, community-based 
     organizations, business and labor organizations, voluntary 
     organizations, and other appropriate entities.

     ``SEC. 493. ELIGIBILITY FOR WORK PROGRAM; REGISTRATION.

       ``(a) Eligibility.--(1) In General. An individual--
       ``(A) to whom section 417 applies, who has received aid 
     under the State plan approved under part A for twenty-four 
     months, and with respect to whom no extension under section 
     417 has been provided,
       ``(B) who is not an individual to whom section 
     402(a)(19)(D) applies, and
       ``(C) who meets the eligibility criteria for aid to 
     families with dependent children (but for section 417) under 
     the State's plan approved under part A,

     shall be permitted to register for participation in the 
     State's WORK program and, upon registration and continuing 
     compliance with the requirements applicable to individual's 
     awaiting assignment to a WORK position, be eligible for such 
     an assignment and, in accordance with the succeeding 
     provisions of this part, a payment of aid to families with 
     dependent children.
       ``(2) Special rules.--The State plan shall specify whether 
     one or both parents will be required to register with and 
     participate in the WORK program as a condition of eligibility 
     for an assignment for either parent under the WORK program 
     and a payment of aid to the family, in the case of a family 
     in which both parents are subject to the limit in section 
     417.
       ``(b) Registration.--The State plan shall establish a 
     simple procedure under which an individual who meets the 
     criteria of subsection (a) may register with and participate 
     in the WORK program so that the individual will receive wages 
     (if an appropriate assignment is available) or aid, or (if 
     applicable) both, in the month following the final month of 
     the time limit under section 417. The State plan must 
     describe the methods that will be employed to assure the 
     uninterrupted provision of aid for the family of an 
     individual who has complied with all applicable requirements 
     and conditions of this part.
       ``(c) Work Program Assessment.--The State plan shall 
     provide for the prompt assessment of each individual 
     registering with the program, in order to determine an 
     appropriate assignment for such individual. The assessment 
     must include a review of the individual's education, 
     training, and employment experience while participating in 
     the program under part F, as well as any employment 
     experience the individual may have had thereafter.
       ``(d) Limitations on Assignments.--
       ``(1) Hours of work.--The State plan shall--
       ``(A) ensure, to the extent practicable, that participants' 
     wages earned from WORK positions provide on the average 75 
     percent of the sum of wages together with aid paid to 
     participants in the States WORK program;
       ``(B) ensure no assignment will result in an average number 
     of hours of work over any four-week period that is less than 
     15 hours per week or greater than 35 hours per week; and
       ``(C) provide that in making WORK assignments the State 
     agency shall, to the maximum extent feasible, ensure that an 
     assignment to a WORK position will not interfere with any 
     hours of unsubsidized employment in which the individual is 
     already engaged at the time of the assignment.
       ``(2) Length of assignment.--An assignment to a WORK 
     position shall be for no longer than 12 months and may not be 
     reassigned to the same position.
       ``(e) Payment of Aid.--The State agency administering the 
     State's plan approved under part A shall pay for each month 
     to each family with an individual registered with the WORK 
     program the amount of aid that would be payable to such 
     family under such plan, except that--
       ``(1) wages earned by a family member from employment in a 
     WORK position shall not be considered in determining 
     eligibility for continued participation in the WORK program;
       ``(2) in determining the amount of aid that is payable, the 
     State agency may determine whether to disregard from 
     the wages received from the WORK position any amounts that 
     may be disregarded under section 402(a)(8)(A)(iv);
       ``(3) if a family member has been assigned to and is 
     employed in a WORK position, the amount of the family's aid 
     will not be subject to increase by reason of the individual's 
     failure to perform the full number of hours per week for 
     which the assignment was made.
       ``(f) Treatment Under Other Laws.--;
       ``(1) Individuals participating in the WORK program, and 
     their families, whether or not any aid is payable in addition 
     to wages from a WORK position, shall be considered to be 
     receiving such aid for purposes of the State's plan for 
     medical assistance approved under title XIX.
       ``(2) Wages paid for employment in a WORK position shall be 
     treated as if they were wages from unsubsidized employment 
     for purpose of any other Federal law unless it is expressly 
     provided otherwise in Federal law.
       ``(g) Program Participants.--The Secretary may by 
     regulation prescribe criteria for determining when an 
     individual's employment no longer constitutes participation 
     in the WORK program.

     ``SEC. 494. PROVISIONS GENERALLY APPLICABLE TO WORK 
                   POSITIONS.

       ``(a) In General.--In addition to the applicable provisions 
     of section 484, the conditions described in this section 
     shall be applicable to WORK positions.
       ``(b) Prohibition on Contributions for Retirement 
     Benefits.--No funds available under this title may be used 
     for contributions to a retirement plan on behalf of any 
     participant.
       ``(c) Exclusion from Unemployment Compensation.--The 
     employment of participants under the WORK program shall not 
     be subject to the provisions of any Federal or State 
     unemployment compensation law.
       ``(d) Sick and Personal Leave.--The Secretary is authorized 
     to issue regulations establishing a minimum number of hours 
     that a participant may be on leave from a WORK position due 
     to illness or other reasons specified by the Secretary 
     without having the amount of wages payable to such 
     participant reduced to account for such leave. In accordance 
     with paragraph (1) of this subsection, the regulations shall 
     provide that if the employer provides, to similarly situated 
     regular employees, paid leave that is equal to or exceeds the 
     minimum prescribed by the Secretary, the employer shall also 
     provide such paid leave to a participant. If the employer 
     does not provide such paid leave, the State agency shall 
     implement such leave.
       ``(e) Records on Retention of Participants.--The entity 
     administering the WORK program shall maintain records on the 
     extent to which each employer receiving assistance under this 
     part retains participants in unsubsidized employment 
     subsequent to the completion of WORK assignments.

     ``SEC. 495. PRE-ASSIGNMENT ACTIVITIES AND SERVICES; PRIORITY 
                   OF ASSIGNMENTS; POST-ASSIGNMENT ASSESSMENT

       ``(a) Assignments.--The State plan approved under this part 
     shall provide for the establishment and maintenance of a 
     registry, updated regularly and frequently, of all registered 
     individuals who are awaiting assignment to a WORK position. 
     The State plan shall describe the criteria that will 
     generally be applied for determining the order in which 
     registered individuals will be assigned to positions. Such 
     criteria must provide for assigning, as promptly as an 
     appropriate position becomes available, and individual to 
     whom a sanction is being applied under section 496(f)(2)(A) 
     (in the case of a first failure to comply with a requirement 
     of the WORK program) or who has ended a period of time during 
     which a sanction has been applied under section 496(f)(2)(B), 
     (C), or (D) (in the case of a second or subsequent such 
     failure), and thereafter preference will be given to 
     individuals who have not previously received a WORK 
     assignment during a period of consecutive months while 
     registered for the WORK program.
       ``(b) JOB Search; Other WORK Preparatory Activities.--
       ``(1)(A) Job Search.--The State plan under this part shall 
     describe any requirements the State applies to individuals 
     registered for and awaiting assignment to a WORK position, 
     including the extent to which the individual must participate 
     in individual or group job search (not to exceed 35 hours per 
     week) and the period for which the job search must continue 
     or the number of contacts that must be made, or such other 
     measure as the State finds appropriate.
       ``(B) The State agency may require an individual employed 
     in a WORK position or in regular employment to engage in job 
     search but the number of hours per week of required job 
     search (or of the time needed to comply with the job search 
     requirement if measured differently from hours per week) 
     together with the hours per week for which the individual is 
     employed may not exceed 35.
       ``(C) The State agency shall require each individual who 
     has completed an assignment to perform supervised job search 
     (in accordance with the time limits established under 
     paragraph (1)) while awaiting another assignment.
       ``(2) Other Activities.--If the State requires that an 
     individual registered under this part and awaiting assignment 
     to a WORK position engage in any activities in addition to 
     job search that would prepare the individual to carry out 
     successfully the assignment or otherwise support achievement 
     of the purposes of this part, the State plan shall describe 
     those activities and the maximum periods of time for which 
     they may be required (or other measure that the State finds 
     appropriate), which may not exceed 35 hours per week.
       ``(3) Child Care and Other Supportive Services.--(A) The 
     State agency shall notify each individual registered with the 
     WORK program of the availability (under sections 402(g)(1) 
     and (2)) of child care and other supportive services 
     necessary to permit the individual to participate 
     successfully in the WORK program (during both a pre-
     assignment period and a period of employment under the WORK 
     program).
       ``(B) A State may, at its option, provide child care and 
     other supportive services (and include an appropriate 
     provision in its plan under this part) to an individual 
     employed in a WORK position to enable or assist such 
     individual also to engage in education or training 
     activities, approved for this purpose by the State agency as 
     likely to enhance such individual's ability to secure and 
     retain permanent, unsubsidized employment, and if the State 
     chooses to provide any one or more such services under this 
     subparagraph, shall notify all registered individuals who are 
     potentially eligible therefor of the availability of such 
     services.
       ``(c) Comprehensive Post-Assignment Assessment.--The State 
     agency shall conduct a comprehensive assessment of each 
     individual registered with the WORK program after every 
     second assignment completed by such individual (or of an 
     individual who has been registered for two years). On the 
     basis of this assessment, the State may
       ``(1) reassign the individual to activities under section 
     402(a)(19)(D) or to the JOBS program (for such period of 
     training and other activities as may be appropriate), or
       ``(2) assign the individual to another WORK position if the 
     individual was unable to find unsubsidized employment either 
     because there were no jobs available that such individual had 
     the necessary skills to fill or because such individual is 
     incapable of working outside of a sheltered environment.

     Notwithstanding the preceding sentence, in such cases where 
     the State finds that the individual is employable and living 
     in an area where there are jobs available to match the 
     individual's skills, the State may require the individual to 
     engage in intensive job search, supervised by a job developer 
     who may require the individual to apply for appropriate job 
     openings to determine if the individual is making a good 
     faith effort to find unsubsidized employment. An 
     individual who fails without good cause to apply for 
     appropriate job openings, cooperate with the job developer 
     or employer, or accept a private sector job opening, shall 
     be ineligible for aid under part A or an assignment under 
     the State's WORK program for 6 months. Following such a 
     period of ineligibility, the State shall reassess such 
     individual's status, and may take such steps under this 
     subsection as it finds appropriate.

     ``SEC. 496. FAILURE TO MEET WORK PROGRAM REQUIREMENTS.

       ``(a) Actions That Constitute Failure To Meet WORK Program 
     Requirements.--The following actions, without good cause, 
     constitute failure by an individual to meet the requirements 
     of the WORK program--
       ``(1) failing or refusing to accept a bona fide offer of 
     unsubsidized employment of at least 20 hours per week (or 
     less if the offered employment meets the criteria specified 
     in section 482(d)(2));
       ``(2) failing or refusing to accept or report for a WORK 
     position to which the individual has been assigned;
       ``(3) voluntarily leaving such a position;
       ``(4) failing or refusing to engage, to the extent required 
     under the State plan, in the job search or other activities 
     required pursuant to section 495 or subsection (e).
       ``(b) Misconduct Resulting in Discharge from WORK 
     Position.--In addition to the actions described in subsection 
     (a), a participant will be deemed to have failed to meet the 
     requirements of the WORK program if, prior to the completion 
     of an assignment, such participant is discharged by an 
     employer from a WORK position due to misconduct.
       ``(c) Definitions of Good Cause and Misconduct.--The 
     Secretary shall issue regulations establishing criteria for 
     determining what constitutes good cause for purposes of 
     subsections (a) and (g) and misconduct for purposes of 
     subsection (b). Such regulations shall, at a minimum, 
     include--
       ``(1) with respect to the actions described in paragraph 
     (3) of subsection (a), a requirement that a participant 
     voluntarily leaving a WORK position promptly notify the 
     entity administering the WORK program of the reasons for 
     leaving; and
       ``(2) with respect to discharge for misconduct, a provision 
     allowing the State, with the approval of the Secretary, to 
     apply the criteria relating to misconduct applicable to the 
     disqualification of an individual for benefits under the 
     State unemployment compensation law.
       ``(d) Opportunity for Hearing.--The State plan shall 
     provide advance notice to an individual when the State agency 
     determines that a sanction should be imposed, and shall 
     advise the individual of the right to a hearing. The State 
     agency shall provide a hearing, upon request by the 
     individual, in accordance with procedures established by the 
     Secretary (which shall allow the State to adopt procedures 
     followed in hearings on unemployment compensation claims that 
     meet the standards set forth by the United States Supreme 
     Court in Goldberg v. Kelly, 397 U.S. 254 (1970).).
       ``(e) Interim Activities.--The State agency may require, 
     pending the hearing referred to in subsection (d), 
     participation by the individual in appropriate activities 
     under the WORK program.
       ``(f) Sanctions.--If, in accordance with the preceding 
     provisions of the section, an individual is found to have 
     failed without good cause to meet a requirement of the WORK 
     program--
       ``(1) if the failure involves subsection (a)(1) (relating 
     to an offer of unsubsidized employment), the family of which 
     such individual is a member shall be ineligible for aid to 
     families with dependent children (if any such aid were 
     otherwise payable) for a period of six months and such 
     individual may not be assigned to a WORK position during such 
     period; and
       ``(2) if the failure involves paragraph (2), (3), or (4), 
     of subsection (a) or involves subsection (b)--
       ``(A) in connection with the first of any such failures, 
     the amount of aid for which the family (of which such 
     individual is a member) is eligible shall for one month equal 
     one-half of the amount that would be payable to the family if 
     the individual were awaiting assignment to a WORK position, 
     but such reduction shall cease upon the acceptance by such 
     individual of an assignment of a new WORK position or, in 
     cases involving job search or other required activities (as 
     described in subsection (a)(4)), the individual's engaging in 
     the required program activities;
       ``(B) in connection with the second of any such failures, 
     the amount of aid so payable shall be reduced as described in 
     subparagraph (A) for a 3-month period and the individual may 
     not be assigned during such period to a new WORK position;
       ``(C) in connection with the third of any such failure, 
     such family shall be ineligible for any such aid for a 3-
     month period and the individual may not be reassigned during 
     such period; and
       ``(D) in connection with the fourth or any subsequent such 
     failure, such family shall be ineligible for any such aid for 
     a 6-month period and the individual may not be reassigned 
     during such period;

     but during the months in which a sanction is applied under 
     this subsection, the family of which the sanctioned 
     individual is a member shall be considered, for purposes of 
     the State's plan approved under part A, its plan approved 
     under title XIX, to be receiving aid to families with 
     dependent children and for purposes of any other Federal or 
     Federally-assisted program based on need, such family shall 
     be considered to be receiving the amount that would be 
     payable to such family if the individual were awaiting 
     assignment to a WORK position. Notwithstanding the preceding 
     sentence, if at any time an individual subject to a sanction 
     under this subsection accepts an offer of unsubsidized 
     employment in a position that meets the criteria for WORK 
     positions prescribed by section subsection (a)(1), the 
     sanction shall cease at that time and both the individual and 
     the family shall be considered, for purposes of part A, to be 
     an individual and family no longer subject to sanction under 
     this program.
       ``(g) Notwithstanding section 493, no individual who 
     without good cause leaves an unsubsidized position that 
     provides 20 hours or more per week (or such greater number as 
     the State has elected under section 482(a)(2)(A)(iii)) on the 
     average, may register under section 493(b) for the WORK 
     program (of any State) until after the 3-month period 
     beginning on the date on which the individual left the 
     position.
       ``(h) Evaluation Following Second WORK Sanction.--The State 
     plan must provide that the State will promptly conduct a 
     thorough evaluation of an individual (and family) against 
     whom a second sanction must be imposed to determine whether 
     there are particular circumstances, not previously recognized 
     by the State agency, that are contributing to the 
     individual's failure to meet the requirements of the WORK 
     program, and to provide, where appropriate, any additional 
     social services, evaluations, or other diagnostic or remedial 
     services or take such other actions as may be necessary to 
     assist the individual and protect the other family members. 
     In conducting the evaluation, the State agency shall consider 
     whether the individual is appropriately registered in the 
     WORK program, or whether the individual should be referred to 
     the State plan approved under part A to be considered an 
     individual to whom section 402(a)(19)(D) applies.''.
       (b) Requirement to Provide Supportive Services to 
     Individuals Registered for WORK Program.--Section 402(g)(2) 
     is amended, by striking out ``part F'' and inserting in lieu 
     thereof ``part F or part G''.

     SEC. 202. FEDERAL FUNDING FOR THE JOBS AND WORK PROGRAMS; 
                   PARTICIPATION REQUIREMENTS; MAINTENANCE OF 
                   EFFORT AND SUBSTANTIAL IMPLEMENTATION.

       (a) Amount of State's Entitlement for JOBS.--Paragraphs (1) 
     through (4) of section 403(k) of the Act are amended to read 
     as follows:
       ``(k)(1) In addition to payments under subsection (a), the 
     Secretary shall pay to each State with a plan approved under 
     part F an amount equal to the product of--
       ``(A) the State's enhanced Federal medical assistance 
     percentage as defined in subsection (m)(6), and
       ``(B) its expenditures to carry out the program under part 
     F (other than expenditures required by section 402(g)(1)(A) 
     in the case of the 50 States and the District of Columbia),

     but payments to a State under this title for any fiscal year 
     for such activities may not exceed the limitation under 
     paragraph (2) with respect to such State.
       ``(2) The limitation under this paragraph with respect to a 
     State for any fiscal year is the amount that bears the same 
     ratio to the amount specified in paragraph (3) for such 
     fiscal year as the average monthly number of adult recipients 
     (as defined in paragraph (4)) in the State in the preceding 
     fiscal year bears to the average monthly number of such 
     recipients in all the States for such preceding year.
       ``(3) The amount specified in this paragraph is--
       ``(A) $1,750,000,000 for fiscal year 1996,
       ``(B) $1,700,000,000 for fiscal year 1997,
       ``(C) $1,800,000,000 for fiscal year 1998,
       ``(D) $1,900,000,000 for each of fiscal years 1999 through 
     2004, and
       ``(E) $1,900,000,000, adjusted by the CPI as prescribed by 
     section 406(i), for fiscal year 2005 and each fiscal year 
     thereafter,

     reduced by 2 percent (for direct grants to Indian tribes and 
     Alaska Native organizations under section 482(i)), and 
     further reduced by 2 percent (of the amount specified in each 
     subparagraph) (or, in the case of fiscal years after 1998, 1 
     percent) for carrying out section 404 of the Work and 
     Responsibility Act of 1994 (relating to demonstrations, 
     research and evaluation, and technical assistance) and 
     further reduced in fiscal year 1996 by the amount available 
     to the Secretary for purposes of special adjustments under 
     subsection (p).
       ``(4) For purposes of this subsection, the term `adult 
     recipient' in the case of any State means an individual other 
     than a dependent child (unless such child is the custodial 
     parent of another dependent child) whose needs are met in 
     whole or in part with payments of aid to families with 
     dependent children or wages from a position under the WORK 
     program, or a combination of such aid and wages.''.
       (B) Participation Standards for JOBS Program.--Section 
     403(k) of the Act is further amended by adding at the end 
     thereof the following new paragraphs:
       ``(6)(A) Notwithstanding any other provision of this 
     subsection--
       ``(i) if, with respect to a State in a fiscal year, the 
     average monthly number of individuals receiving aid to 
     families with dependent children who are described in 
     subparagraph (B)(i) or (ii) of section 402(a)(19) but are not 
     included in subparagraph (D) thereof who participate in an 
     activity under the JOBS program (including individuals who 
     are employed for the minimum number of hours adopted by the 
     State under section 482(a)(2)(A)(iii) or are being sanctioned 
     pursuant to section 402(a)(19)(G)) exceeds 55 percent of the 
     average monthly number of all such individuals, the Secretary 
     shall pay to such State an additional amount (without the 
     requirement of any additional nonfederal share) for use in 
     carrying out its program under part F, and
       ``(ii) if, with respect to a State, such average monthly 
     number in such year does not exceed 45 percent, then the 
     Secretary shall reduce by 25 percent the Federal matching 
     rate generally applicable to such State's expenditures for 
     aid for each month in such year with respect to the number 
     of individuals by which the average monthly number is less 
     than 45 percent of the total.

     The Secretary shall determine the amount of the additional 
     payments for performance exceeding the standard and shall 
     make such additional payments for a fiscal year by increasing 
     as appropriate the amount payable to such State under 
     subsection (a) up to the amount of the reductions under 
     clause (ii), together with the reductions under subparagraph 
     (C) and subsection (l)(4)(A) for such fiscal year, and if the 
     additional payments exceed such reductions the amount 
     available to the Secretary for such fiscal year under 
     subsection (p) shall be reduced by the amount of such excess.
       ``(B) The Secretary shall issue regulations prescribing 
     criteria for determining what constitutes participation by an 
     individual for purposes of this section, the periods of time 
     over which participation will be measured, and any other 
     matters necessary to implement the provisions of this 
     subsection or of subsection (l).
       ``(C) If the average monthly number of individuals in a 
     fiscal year to whom the State applies section 
     402(a)(19)(D)(vii) exceeds the limit prescribed therein (or 
     such greater limit as the Secretary may have allowed), or if 
     the average monthly number of individuals with respect to 
     whom the State extends the time limit under section 417 
     exceeds the limit prescribed in section 417(e) (or such 
     greater limit as the Secretary may have allowed), the 
     Secretary shall, notwithstanding any other provision of this 
     section, reduce by 25 percent for each month in such fiscal 
     year the Federal matching rate generally applicable to such 
     State's expenditures for aid with respect to the total number 
     of individuals by which such average monthly numbers exceeds 
     such limits.
       ``(D) Notwithstanding subparagraph (A)(i), the Federal 
     payment shall not be increased if the Secretary determines 
     that the State has not accurately recorded the number of 
     months for which individuals to whom section 417 applies have 
     received aid, or has not accurately recorded or reported to 
     the Secretary other required data, to an extent inconsistent 
     with standards for accuracy prescribed in regulations by the 
     Secretary.''.
       (c)(1) Amount of State's Entitlement for WORK.--Section 
     403(l) of the Act is amended by striking out paragraphs (1) 
     through (3) and inserting in lieu thereof the following:
       ``(l)(1) In addition to payments under subsections (a) and 
     (k), the Secretary shall pay to each State with a plan 
     approved under part G an amount to carry out its program 
     under such plan equal to the sum of--
       ``(A) an amount equal to--
       ``(i) such State's expenditures to operate its WORK program 
     (other than expenditures to which subparagraph (B) applies 
     and expenditures to which section 402(g)(1)(A) applies in the 
     case of the 50 States and the District of Columbia), 
     multiplied by
       ``(ii) the State's enhanced Federal medical assistance 
     percentage as defined in subsection (m)(6), but such amount 
     with respect to a State for any fiscal year may not exceed 
     the limitation under paragraph (2) applicable to such State 
     for such fiscal year, and
       ``(B) an amount equal to--
       ``(i) the State's expenditures for wages to participants in 
     its program under part G (whether paid directly to the 
     participant, or in the form of wage subsidies to the 
     participant's employer), multiplied by
       ``(ii) such State's Federal medical assistance percentage, 
     as defined in section 1905(b) (or, where applicable, the last 
     sentence of section 1118).
       ``(2) The limitation under this paragraph with respect to a 
     State for any fiscal year is the amount that bears the same 
     ratio to the amount specified in paragraph (3) for such 
     fiscal year as the sum of (i) the average monthly number of 
     individuals subject to the time limit in section 417 (and who 
     are subject to the requirement to participate in the program 
     under part F) in such State, and (ii) the average monthly 
     number of individuals registered in such State's WORK 
     program, bears to the total of such sums of all the states 
     for months in the preceding fiscal year.
       ``(3) The amount specified in this paragraph is----
       ``(A) $200,000,000 for fiscal year 1998,
       ``(B) $700,000,000 for fiscal year 1999,
       ``(C) $1,100,000,000 for fiscal year 2000,
       ``(D) $1,300,000,000 for fiscal year 2001,
       ``(E) $1,400,000,000 for fiscal year 2002,
       ``(F) $1,600,000,000 for fiscal year 2003,
       ``(G) $1,700,000,000 for fiscal year 2004, and
       ``(H) $1,700,000,000 adjusted by the CPI as prescribed by 
     section 406(i), and then multiplied by the WORK program 
     factor, as defined in paragraph (4).

     reduced by 2 percent (for direct grants to Indian tribes and 
     Alaska Native organizations under section 482(i)) and further 
     reduce by 2 percent (of the amount specified in each 
     subparagraph) (or in the case of fiscal years after 1998, 1 
     percent) for carrying out section 404 of the Work and 
     Responsibility Act of 1994 (relating to demonstrations, 
     research and evaluation, and technical assistance).
       ``(4) For purposes of determining the amount specified in 
     paragraph (3) for any fiscal year, the `WORK program factor' 
     is the ratio of--
       ``(i) the sum of the average monthly number of recipients 
     of aid who are individuals described in section 
     402(a)(19)(B)(i) and WORK registrants (who are not receiving 
     aid) for months in the preceding fiscal year, divided by the 
     sum of the average monthly number of all recipients of such 
     aid and WORK registrants (who are not receiving aid) for 
     months in such preceding fiscal year, to
       ``(ii) such quotient with respect to the average monthly 
     numbers for months in fiscal year 2004.''.
       (2) Paragraph (4) of section 403(l) (as in effect prior to 
     enactment of this Act) is redesignated as subsection (k)(7) 
     of section 403.
       (d) Participation Standards for WORK Program.--Section 
     403(i) of the Act is further amended by adding at the end 
     thereof the following new paragraphs:
       ``(4)(A) Notwithstanding any other provision of this 
     paragraph, the Federal matching rate applicable to a State's 
     expenditures for aid to families with dependent children for 
     a fiscal year shall be reduced for each month in such year by 
     25 percent with respect to the average monthly number 
     of individuals by which such State fails to meet its WORK 
     participation standard for such year.
       ``(B) For purposes of this paragraph, a State's WORK 
     participation standard is met if--
       ``(i) the average monthly number of positions to which WORK 
     registrants are assigned is not fewer than the number of such 
     positions that the Secretary requires that the State 
     establish, taking into account the limitation applicable to 
     such State under paragraph (2) for the fiscal year involved, 
     and the amounts of assistance necessary to locate or create 
     WORK positions; or
       ``(ii) the ratio of--
       ``(I) the average monthly number of individuals assigned to 
     positions in the WORK program, participating in job search as 
     required by the State plan under part G following an 
     assignment to a WORK position, but for a period of no longer 
     than 3 consecutive months, being sanctioned pursuant to 
     section 496(f) or in unsubsidized employment and not 
     receiving aid (but who at some time within the preceding 3 
     months were participating in the WORK program), to
       ``(II) the sum of the average monthly number of individuals 
     registered with the State's WORK program and the average 
     monthly number of individuals in unsubsidized employment and 
     not receiving aid (but who at some time within the preceding 
     3 months were participating in the State's WORK program), is 
     not less than 0.80.''.
       (e) Provisions Applicable to Jobs, Work, and Child Care 
     Funding.--Section 403(m) of the Act is amended to read as 
     follows:
       ``(m)(1) If a State so requests, the limitation applicable 
     to such State under subsection (k)(2) for a fiscal year, or 
     the limitation applicable to such State under subsection 
     (l)(2) for such fiscal year, may be increased (and the other 
     limit decreased equally) by an amount up to 10 percent of the 
     sum of such limits for such fiscal year or, if less, by the 
     amount of the limit to be decreased. In the case of fiscal 
     1997, the State may request that its limit under subsection 
     (k)(2) be reduced by up to 10 percent and the amount made 
     available for preparing to conduct its WORK program.
       ``(2) If the sum of the amount specified in any fiscal year 
     under subsection (k)(3), and the amount specified for such 
     fiscal year under subsection (l)(3), exceeds (or if the 
     Secretary estimates that it will exceed) the total amount 
     paid (or estimated to be payable) under subsections (k)(1) 
     and (l)(1)(A) for such fiscal year, then the Secretary shall 
     adjust the maximums applicable to payments to those States to 
     which the limits under such subsections have made additional 
     payment unavailable under either subsection (k)(1) or 
     (l)(1)(A), and to which payments for such fiscal year under 
     either or both such subsections would be greater but for the 
     applicability to such States of such limits. The Secretary 
     shall by regulation provide for the equitable adjustment of 
     such limits in the case where all States' requests for 
     adjustment of limits, and additional payments, for a fiscal 
     year under this paragraph exceed the amount available for 
     reallotment.
       ``(3)(A) If in any fiscal year--
       ``(i) the average rate of total unemployment in a State for 
     such fiscal year equals or exceeds 6.5 percent, and
       ``(ii) the average rate of total unemployment in such State 
     for such fiscal year equals or exceeds 110 percent of such 
     rate for either of the two preceding fiscal years, the 
     percent applicable to such State for such fiscal year, for 
     purposes of applying each of subsections (k)(1)(A), 
     (l)(1)(A)(i), and (n)(1)(A), to the extent made possible by 
     the availability of additional amounts to such State pursuant 
     to paragraph (2), shall be applied as if it had been 
     increased by 10 percent of the difference between 100 percent 
     and the rate otherwise applicable in each of such 
     subsections, respectively, from the beginning of such fiscal 
     year (but if no such additional amount is made available, 
     such rates shall be unaffected by this subparagraph).
       ``(B) The amounts specified in subsections (k)(3), (l)(3), 
     and (n)(3) for any fiscal year are each increased, if, for 
     either the last two quarters of the fiscal year involved (but 
     not such last two quarters), the average rate of total 
     unemployment in the United States equals or exceeds 7 
     percent, by 2.5 percent plus an additional 0.25 percent for 
     each one-tenth of a percentage point by which the average 
     rate of total unemployment in the United States (for such 
     two-quarter period) exceeds 7 percent.
       ``(4) Notwithstanding the provisions of subsections (k) and 
     (l), no amount of a State's expenditures as aid to families 
     with dependent children shall be excluded for purposes of 
     payment under subsection (a) by reason of the State's failure 
     to meet the participation standards or the limit on deferrals 
     (under section 402(a)(19)(D)(vii)) or extensions of the time 
     limit (under section 417(e)) applicable to the State's 
     program under part F for months in the first year that such 
     program is in effect, or by reason of the State's failure to 
     meet the participation standard applicable to its program 
     under part G during the first year that such program is in 
     effect.
       ``(5) Prior to the general effective date of the amendments 
     to part F made by the Work and Responsibility Act of 1994, or 
     the general effective date of part G, as the case may be, the 
     Secretary shall issue regulations containing the necessary 
     information to permit implementation of such standards and 
     application of reductions in Federal payment for failure to 
     meet such standards. Not later than 12 months after such 
     amendments become effective with respect to a State, such 
     State shall be required to begin reporting data as required 
     by the Secretary in order to determine whether the 
     participation standards have been met.
       ``(6) As used in this part, a `State's enhanced Federal 
     medical assistance percentage' with respect to expenditures 
     for a fiscal year means such State's Federal medical 
     assistance percentage as defined in section 1905(b) (or, 
     where applicable as defined in the last sentence of section 
     1118), plus
       ``(A) 5 percentage points, but not less than 65 percent, 
     with respect to fiscal years 1996 and 1997,
       ``(B) 7 percentage points, but not less than 67 percent, 
     with respect to fiscal year 1998,
       ``(C) 9 percentage points, but not less than 69 percent, 
     with respect to fiscal year 1999, and
       ``(D) 10 percentage points, but not less than 70 percent, 
     with respect to fiscal year 2000, and each fiscal year 
     thereafter.''.
       (f)(1) Section 402(g)(3)(A)(i) of the Act is amended by 
     striking out ``Federal medical assistance percentage (as 
     defined in section 1905(b))'' and inserting in lieu thereof 
     ``State's enhanced Federal medical assistance percentage (as 
     defined in section 403(m)(6))''.
       (2) Section 402(g)(B)(A)(ii) of the Act is amended by 
     striking out ``Federal medical assistance percentage (as 
     defined in section 1118)'' and inserting in lieu thereof 
     ``State's enhanced Federal medical assistance percentage (as 
     defined in section 403(m)(6))''.
       (g) Section 403 of the Act is amended by adding at the end 
     thereof the following new subsection:
       ``(o) Notwithstanding the preceding provisions of this 
     section, the percentage applicable to a State for purposes of 
     section 402(g)(3)(A) and subsections (k)(1)(A), 
     (l)(1)(A)(ii), and (n)(1)(A) (for determining the Federal 
     payment with respect to a State's JOBS program expenditures, 
     portions of its WORK program expenditures, and its child care 
     expenditures, respectively) shall be the State's Federal 
     medical assistance percentage, but not less than 60 percent 
     (or, in the case of section 402(g)(3)(A) and subsection 
     (n)(1)(A), the State's Federal medical assistance percentage) 
     for any fiscal year--
       ``(1) in which the nonfederal share of the sum of its 
     expenditures that may be included for purposes of subsection 
     (a)(3) and its expenditures for its program under part F, its 
     program under part G, and child care services under 
     subsections (g) and (i) of section 402 (not included under 
     subsection (a)(3)) is less than the nonfederal share of 
     expenditures for purposes of subsection (a)(3) and of 
     expenditures (for which Federal matching was provided) under 
     its program under part F and child care services (not 
     included under subsection (a)(3)) under subsections (g) and 
     (i) of section 402 for fiscal year 1994 (or fiscal year 1993 
     if such nonfederal share were greater for such year), or
       ``(2) in which the number of individuals to whom the 
     provisions of section 417 are being applied is less than 90 
     percent of the number of individuals in the State who are 
     custodial parents described in subparagraph (B)(i) of section 
     402(a)(19) (but not included under subparagraph (D) thereof) 
     unless the State has submitted an approvable plan amendment 
     that provides for implementing all statutory requirements to 
     its JOBS program, and meeting related requirements with 
     respect to 90 percent of such individuals within two years of 
     the date such requirements first become effective.''.
       (h) Secretary's Special Adjustment Fund.--Section 403 of 
     the Act is amended by adding at the end thereof the following 
     new subsection:
       ``(p)(1) There shall be available to the Secretary from the 
     amount appropriated for payments under subsection (k) for 
     States' JOBS programs for fiscal year 1996, $300,000,000 for 
     special adjustments to States' limitations on Federal 
     payments for their JOBS and WORK programs. Amounts made 
     available to the Secretary pursuant to this subsection shall 
     also be available for carrying out subsection (k)(6) and 
     section 404(c).
       ``(2) A State may, not later than March 1 and September 1 
     of each fiscal year, submit to the Secretary a request to 
     adjust the limitation on payments under this section with 
     respect to its JOBS (and, in fiscal years after 1997) its 
     WORK programs for the following fiscal year. The Secretary 
     shall only consider such a request from a State which has, or 
     which demonstrates convincingly on the basis of estimates 
     that it will, submit allowable claims for Federal payment in 
     the full amount available to it under subsections (k) and (l) 
     in the current fiscal year and obligated 95% of its full 
     amount in the prior fiscal year. The Secretary shall by 
     regulation prescribe criteria for the equitable allocation 
     among the States of Federal payments pursuant to adjustments 
     of the limitations referred to in the preceding sentence 
     in the case where the requests of all States that the 
     Secretary finds reasonable exceed the amount available, 
     and, within 30 days following the dates specified in this 
     paragraph, will notify each State whether one or more of 
     its limitations will be adjusted in accordance with the 
     State's request and the amount of the adjustment (which 
     may be some or all of the amount requested).
       ``(3) The Secretary may adjust the limitation on Federal 
     payments to a State for a fiscal year under subsection (k) 
     and under subsection (l), and upon a determination by the 
     Secretary that (and the amount by which) a State's limitation 
     should be raised, the amount specified in either such 
     subsection, or both, shall be considered to be so increased 
     for the following fiscal year.
       ``(4) The amount made available under subsection (a) for 
     special adjustments shall remain available to the Secretary 
     until expended. That amount shall be reduced by the sum of 
     the adjustments approved by the Secretary in any fiscal year, 
     and the amount shall be increased in a fiscal year by the 
     amount by which all States' limitations under subsection (k), 
     (l), and (n) for a fiscal year exceeded the sum of the 
     Federal payments under such subsections for such fiscal year 
     (after application of subsection (m)(2)), but for fiscal 
     years after 1977, such amount at the end of such fiscal year 
     shall not exceed $400,000,000.''.

     SEC. 203. ADMINISTRATION OF THE JOBS AND WORK PROGRAMS

       (a) State Option.--Part G of title IV of the Act is amended 
     by adding at the end thereof the following new section:


                            ``administration

       ``Sec. 497. (a) The chief executive officer of any State 
     with a plan approved under part A may designate a State 
     agency (hereinafter referred to as the `JOBS/WORK agency'), 
     other than the agency established or designated under section 
     402(a)(3) (hereafter referred to as the `part A agency') to 
     administer (or supervise the administration of) the JOBS 
     program under part F and the WORK program under this part in 
     such State.
       ``(b) The JOBS/WORK agency designated under this section 
     and the part A agency shall jointly submit the State plan 
     required by parts F and G, and shall enter into and provide 
     to the Secretary an agreement setting out the 
     responsibilities of each agency. Any such agreement shall 
     provide--
       ``(1) that the part A agency will retain responsibility 
     for--
       ``(A) determining initial and continuing eligibility of 
     applicants for and recipients of (and the amount of) aid to 
     families with dependent children;
       ``(B) maintaining accurate records of the number of months 
     for which each individual received aid, and notify 
     individuals of the remaining months of eligibility, in 
     accordance with the preceding provisions of this title;
       ``(C) applying sanctions when appropriate under the 
     provisions of section 402(a)(19)(G) or 496(f);
       ``(D) affording an opportunity for a fair hearing as 
     required by section 402(a)(4), or in connection with any 
     disagreement (with adverse consequences) about the 
     application of section 417 (other than matters about which 
     the JOBS/WORK agency provides a hearing);
       ``(2) that each agency agrees to cooperate with the other 
     in order to exchange all information necessary to carry out 
     the programs involved in a manner that simplifies as much as 
     possible the burden on recipients of aid under part A, and 
     participants in the programs under part F and G, and allows 
     the most effective administration of all programs involved;
       ``(3) a specific description of how responsibility will be 
     allocated and coordinated between the two agencies for the 
     following functions:
       ``(A) determining to which individuals section 
     402(a)(19)(D) is applicable;
       ``(B) determining the individuals to whom extensions under 
     section 417(e) are to be granted (and the length of such 
     extensions);
       ``(C) conducting reviews, and providing dispute resolution 
     measures, including fair hearings in appropriate cases, on 
     disagreements arising out of requirements under the JOBS or 
     WORK program; and
       ``(4) that the requirements of paragraphs (4), (5), (6), 
     (9), (19), and (21)(A) of section 402(a) will be applicable 
     as appropriate to the joint plan submitted under this section 
     to the same extent (and together with all relevant 
     regulations issued thereunder by the Secretary) as they are 
     to a State plan submitted under part A.
       ``(c) In each State in which the chief executive officer 
     designates an agency under subsection (a), the Secretary 
     shall make payment to the agency so designated in the case of 
     payments required under subsections (k) and (l) of section 
     403, rather than to the State's part A agency, and the JOBS/
     WORK agency so designated shall be responsible for the proper 
     expenditure of such funds.
       ``(d) Upon designation by the chief executive officer under 
     subsection (a), and approval by the Secretary of the State 
     plan submitted in accordance with this section, all 
     references (whether direct or by context) in this Act to the 
     State agency responsible for the State plan under part A 
     shall be deemed to be references to the agency designated 
     under this section when referring to a function or 
     responsibility of such agency.
       ``(e) In any State administering a Statewide one-stop 
     career center system for the provision of employment and 
     training services, as defined by the Secretary in conjunction 
     with the Secretary of Labor, the Governor shall ensure that 
     the programs under parts F and G--
       ``(1) participate in the operation of such system, and
       ``(2) make employment and training services available to 
     participants through the one-stop career centers.''.

     SEC. 204. SPECIAL PROVISIONS RELATING TO INDIAN TRIBES AND 
                   ALASKA NATIVE ORGANIZATIONS.

       (a) Authority to Administer JOBS and WORKS Programs.--
     Section 482(i) of the Act is amended--
       (1) by redesignating paragraphs (5), (6), (7), and (8) as 
     paragraphs (6), (7), (8), and (9), respectively, and
       (2) by amending paragraphs (1) through (4) of such 
     subsection to read as follows:
       ``(1)(A) An Indian tribe or Alaska Native organization may 
     apply to the Secretary to conduct both a JOBS program under 
     this part, and a WORK program under part G. An application to 
     conduct these programs in a fiscal year must be submitted not 
     later than July 1 of the preceding fiscal year. Upon approval 
     of the application, payment in the amount determined in 
     accordance with the succeeding provisions of this subsection 
     shall be made directly to the tribe or organization involved.
       ``(B) Neither the JOBS program nor the WORK program set 
     forth in the application of an Indian tribe or Alaska Native 
     organization submitted under subparagraph (A) need meet any 
     requirement under this part or part G or under section 
     402(a)(19) that the Secretary determines is inappropriate for 
     such program.
       ``(C) The JOBS and WORK programs of any Indian tribe or 
     Alaska Native organization may be terminated voluntarily by 
     such tribe or organization or may be terminated by the 
     Secretary upon a finding that such programs are not being 
     conducted in substantial conformity with the terms of the 
     application approved under subparagraph (A). Following 
     voluntary termination of an application, or termination by 
     the Secretary of an application of an Indian tribe or Alaska 
     Native organization, such tribe or organization shall not be 
     eligible to submit a new application under subparagraph (A) 
     with respect to any year before the sixth year following such 
     termination.
       ``(2) The Secretary shall pay directly to each Indian tribe 
     or Alaska Native organization with an application approved to 
     conduct a JOBS program under this part and a WORK program 
     under part G for a fiscal year an amount (without the 
     requirement of any nonfederal share) which bears the same 
     ratio to 2 percent of the sum of the amounts specified in 
     sections 403(k)(3) and 403(l)(3) for such fiscal year as 
     the adult Indian or Alaska Native population receiving aid 
     to families with dependent children residing within the 
     area to be served by the tribe or organization bears to 
     the total of such adults receiving such aid residing 
     within all areas which any such tribe or organization 
     could serve. The Secretary shall from time to time review 
     the components of the ratios established under the first 
     sentence of this subparagraph to determine whether the 
     individual payments under this subsection continue to 
     reflect accurately the distribution of population among 
     the grantees, and shall make adjustments necessary to 
     maintain the correct distribution of funding.
       ``(3) A grantee under this subsection may use up to 20 
     percent of its payment for the JOBS program, or for the WORK 
     program, as the case may be, for a fiscal year to carry out 
     such program in the following fiscal year, and up to 10 
     percent of such payment for either such program to carry out 
     the other such program in the fiscal year for which the 
     payment was made.
       ``(4) At the request of a grantee, the Secretary may 
     approve use of up to 10 percent (or, if less, $5000) of the 
     payment for the JOBS program in connection with an economic 
     development project upon a demonstration by the grantee that 
     such project will include provision for training JOBS program 
     participants in skills necessary for employment on the 
     project.
       ``(5) An application under this subsection shall provide 
     that (upon approval) the grantee will be responsible for 
     determining whether an individual (within the grantee's 
     service area) to whom the time limits of section 417 apply is 
     one to whom section 402(a)(19)(D) is applicable, and whether 
     (and for how long) extensions of the time limit under section 
     417 should be provided and for reporting to the State agency 
     making payments of aid to the individuals served by the 
     grantee the determinations made under this paragraph.''.
       (b) Child Care.--Section 403 is amended by adding after and 
     below subsection (b) the following new subsection:
       ``(c)(1) Each Indian tribe and Alaska Native organization 
     submitting an application under section 482(i) to administer 
     its JOBS and WORK programs under parts F and G, respectively, 
     may also submit to the Secretary (as a part of the 
     application) a description of the child care needs of its 
     JOBS and WORK program participants, and of the program that 
     it will implement to meet such needs, and request direct 
     funding for the provision of all such child care. The child 
     care program described need not meet any requirement of this 
     part (other than the requirements of section 
     402(g)(1)(A)(viii)) that the Secretary determines is 
     inappropriate with respect to such child care program.
       ``(2) The Secretary shall pay to each Indian tribe and each 
     Alaska Native organization whose application approved under 
     section 482(i) includes a request for direct funding for 
     child care an amount (without the requirement of a nonfederal 
     share) to provide child care for recipients of AFDC and for 
     participants in the tribe's or organization's JOB and WORK 
     programs, and to provide transitional child care with respect 
     to an individual who is eligible for child care under section 
     402(g)(1)(A)(ii). The amount of the payment provided under 
     the preceding sentence for a fiscal year shall not exceed the 
     total amount payable directly to such tribe or organization 
     under section 482(i).
       ``(3) The provisions of sections 402(g)(1)(A) (i) and (ii) 
     shall not be construed as imposing any obligation upon a 
     State to provide child care for the children of JOBS or WORK 
     program participants included within an approved application 
     under section 482(i) that includes a request for direct 
     funding of child care, during the period for which such 
     direct funding is provided.
       ``(4) The Secretary shall establish data collection and 
     reporting requirements, and performance standards, with 
     respect to child care programs implemented under this 
     subsection.''.

     SEC. 205. SPECIAL RULES FOR THE TERRITORIES.

       ``(a) Exclusion From General Ceiling of JOBS, WORK, and 
     ``At-Risk'' Child Care.--Section 1108(a) of the Act is 
     amended by striking out, in the matter preceding paragraph 
     (1), ``section 403(k)'' and inserting in lieu thereof 
     ``subsection (k), (l)(1), or (n) of section 403''.
       (b) Section 482 of the Act is amended by adding at the end 
     thereof the following new subsection:
       ``(j) Options for Territories.--(1) In general.--Puerto 
     Rico, the Virgin Islands, Guam, and American Samoa may each 
     determine whether the provisions of section 417 shall be 
     applicable under its State plan approved under part A, and, 
     if so, part G shall be applicable. Each State exercising the 
     option in the preceding sentence shall submit the necessary 
     plan amendments and plans to the Secretary for approval. Any 
     such plan or plan amendment must also describe with respect 
     to such section 417 and part G (and all related amendments) a 
     phase-in strategy and a timetable for achieving full 
     implementation.
       ``(2) Secretarial waivers.--The Secretary may waive or 
     modify any requirement pertaining to the provisions of 
     section 417, the program required under part G, or the 
     requirements of part A (including participation rates and 
     performance standards) that, as established with reference to 
     the 50 States and the District of Columbia, would be 
     inappropriate for a State to which this subsection applies.
       ``(3) Termination.--The applicability of section 417 and 
     part G to a State to which this section applies may be 
     terminated voluntarily by such State, but following any such 
     termination, such State shall not be eligible to exercise the 
     option with respect to any year before the sixth year 
     following such termination.''.

     SEC. 206. TRAINING AND EMPLOYMENT FOR NON-CUSTODIAL PARENTS.

       Section 482 of the Act is amended by adding at the end 
     thereof the following new subsection:
       ``(j) Training and Employment for Non--Custodial Parents.--
       ``(1) The Secretary shall approve the application of a 
     State to conduct a program of training and employment 
     opportunities for noncustodial parents that meets the 
     requirements of this subsection.
       ``(2) An application to conduct a program under this 
     subsection shall--
       ``(A) describe the political subdivision or subdivisions, 
     or other identifiable areas of the State where the program 
     will be conducted,
       ``(B) describe the services that will be provided to 
     participants, including the training, job readiness services, 
     and employment opportunities that will be available, and 
     indicate whether these will be provided through the program 
     under this part or under part G (or both) or whether some or 
     all of the activities under this subsection will be conducted 
     as a separate program,
       ``(C) describe the supportive services that will be 
     provided to enhance the participant's involvement in the 
     program and ability to obtain employment and meet his or her 
     child support obligations,
       ``(D) indicate whether the State will conduct a random 
     assignment evaluation of the effects of the program on 
     improved responsibility in meeting child support obligations, 
     and
       ``(E) provide assurance that the State's program will 
     comply with the requirements of this subsection.
       ``(3) The application must provide that a noncustodial 
     parent will be eligible to commence participation in the 
     program under this subsection if his or her child is 
     receiving aid to families with dependent children (or the 
     child's custodial parent is receiving wages in connection 
     with the program under part G), or if the noncustodial parent 
     owes past-due child support which has been assigned to the 
     State agency administering the State plan approved under part 
     A and is unemployed. Paternity must be established before a 
     noncustodial father may enter the program, and the 
     noncustodial parent must be cooperating in the establishment 
     of a child support obligation and the entry of an award. If a 
     parent who has been participating in the program ceases to 
     be eligible therefor because the child with respect to 
     whom the support obligation exists is no longer eligible 
     for aid to families with dependent children (and the 
     custodial parent is not receiving wages in connection with 
     the program under part G), the State must nonetheless 
     allow the participant to complete the training or program 
     activity.
       ``(4) A State conducting a program under this subsection 
     shall not be required--
       ``(A) to accept all applicants even though they meet the 
     criteria of paragraph (3), or
       ``(B) to provide the same training, services, or employment 
     opportunities to all participants,

     and the State shall not require--
       ``(C) that individuals participate in the JOBS program (or 
     in education or training activities comparable or similar to 
     the JOBS program) as a prerequisite to participation in the 
     WORK program (or comparable program of subsidized 
     employment), or
       ``(D) that the custodial parent of an individual's child be 
     participating in the JOBS program under part F or the WORK 
     program under part G as a condition of such individual's 
     eligibility to participate in the program under this 
     subsection.
       ``(5) The State agency shall assure that wages will be paid 
     for work performed by the participant and may provide for the 
     payment of training stipends.
       ``(6)(A) The State agency shall garnish subsidized wages, 
     or any stipends, paid in connection with a non-custodial 
     parent's participation in the program under this subsection, 
     and remit them to the State agency administering the State 
     plan approved under part D for distribution as a child 
     support collection in accordance with the provisions of that 
     part.
       ``(B) The State may provide, if, with respect to an 
     individual participating in the program under this 
     subsection, it has jurisdiction over the child support 
     obligation being enforced that hours of participation in 
     program activities may, or a reasonable basis, be credited to 
     reduce amounts of past-due child support owed to such State 
     agency by the individual.
       ``(7)(A) A State with an application approved under this 
     subsection may use, for carrying out the program described in 
     such application in any fiscal year, up to 10 percent of the 
     sum of the amounts available to it for such fiscal year under 
     subsection (k)(2) and (l)(2) of section 403. The State shall 
     be entitled to so much of such amount as equals the 
     percentage specified in section 403(k)(1)(A) multiplied by 
     its expenditures necessary to carry out its approved 
     applications.
       ``(B) A State may include, as expenditures necessary to 
     carry out its approved application, amounts expended for 
     stipends, wage subsidies, supportive services, training, and 
     administrative costs of the State agency directly related to 
     the program under this subsection.''.

     SEC. 207. FEDERAL TAX TREATMENT OF WORK REMUNERATION.

       (a) Work Remuneration Ineligible for Earned Income Tax 
     Credit.--Subparagraph (B) of section 32(c)(2) (defining 
     earned income for purposes of the Earned Income Tax Credit) 
     of the Internal Revenue Code of 1986 is amended by striking 
     ``and'' at the end of clause (ii), by striking the period at 
     the end of clause (iii) and inserting in lieu thereof ``, 
     and'', and by inserting after clause (iii) the following 
     clause:
       ``(iv) no amount of remuneration received for services 
     provided in WORK position to which the taxpayer was assigned 
     under Part G of title IV of the Social Security Act shall be 
     taken into account.''.
       (b) WORK Remuneration Ineligible for Targeted Jobs Tax 
     Credit.--Section 51(b) (defining qualified wages for purposes 
     of the Targeted Jobs Tax Credit) of the Internal Revenue Code 
     of 1986 is amended by inserting after paragraph (3) the 
     following new paragraph (4):
       ``(4) Special rules for work positions.--
       ``(A) Qualified wages.--No amount of remuneration received 
     for services provided in a WORK position to which an employee 
     was assigned under Part G of title IV of the Social Security 
     Act shall be treated as qualified wages.
       ``(B) Qualified first-year wages.--The 1-year period 
     described in paragraph (2) is determined without regard to 
     the period in which the employee provided services in a WORK 
     position to which the employee was assigned under Part G of 
     title IV of the Social Security Act.''.
       (c) WORK Remuneration Not Subject to FUTA.--Section 3306(b) 
     (defining wages for purposes of the federal unemployment tax) 
     of the Internal Revenue Code of 1986 is amended by striking 
     ``or'' at the end of paragraph (15), by striking the period 
     at the end of paragraph 16 and inserting in lieu thereof ``, 
     or'', and by inserting after paragraph (16) the following 
     paragraph:
       ``(17) remuneration paid for services provided in a WORK 
     position to which the employee was assigned under Part G of 
     title IV of the Social Security Act.''.
       (d) WORK Remuneration Excluded From Gross Income.--The 
     Internal Revenue Code of 1986 is amended by redesignating 
     section 137 (containing certain cross references) as section 
     138, and by inserting after section 136 the following 
     section:
       Sec. 137. WORK Program Remuneration.--Gross income shall 
     not include any remuneration received for services provided 
     in a WORK position to which the individual was assigned under 
     Part G of title IV of the Social Security Act.''.

                         TITLE III--CHILD CARE

     SEC. 301. CHILD CARE FOR JOBS AND WORK PROGRAM PARTICIPANTS 
                   AND AT-RISK FAMILIES.

       (a) Guarantee While in WORK or JOBS Program.--(1) Section 
     402(g)(1)(A)(i)(I) of the Act is amended by striking out the 
     semicolon and inserting in lieu thereof ``(including 
     employment under part G, or other required activities under 
     such part);''.
       (2) Section 402(g)(1)(A)(i) of the Act is amended--
       (A) by striking out ``(including participation in a program 
     that meets the requirements of subsection (a)(19) and part 
     (F))'', and
       (B) by striking out ``approves the activity'' and inserting 
     in lieu thereof ``approves the activity as part of the 
     individual's employability plan under part F (regardless of 
     whether resources are available to provide other services or 
     pay for other activities to carry out such plan)''.
       (b) Transitional Child Care After Leaving Work Program.--
       (1) Section 402(g)(1)(A)(ii) of the Act is amended 
     immediately following ``aid to families with dependent 
     children'' by inserting ``or wages under the program under 
     part G''.
       (2)(A) Clause (iii) of section 402(g)(1)(A) of the Act is 
     amended by inserting before the period at the end thereof 
     ``or wages under part G''.
       (B) Clause (iv) of such section is amended immediately 
     after ``aid to families with dependent children'' by 
     inserting ``or wages under part G''.
       (c) Health and Safety Standards; Continuity of Care.--(1) 
     For recipients.--Section 402(g)(1)(A) of the Act is amended 
     by adding at the end thereof the following new subparagraphs:
       ``(viii) Child care guaranteed under this section, whether 
     provided by a method permitted under subparagraph (B) or by 
     means of an agreement under subsection (j) with the lead 
     agency designated under the Child Care and Development Block 
     Grant Act of 1990 (hereafter referred to as the `CCDBG Act'), 
     must meet all health and safety standards established by the 
     lead agency (for purposes of the CCDBG Act), and, in addition 
     to any other requirements imposed pursuant to that Act, the 
     State agency must establish immunization requirements and 
     assure (and any such agreement must provide) that, consistent 
     with regulations of the Secretary (I) children whose child 
     care is paid for, in whole or in part, under this 
     subsection will be required to have received all 
     immunizations, at the appropriate times, as currently 
     recommended by the Advisory Committee on Immunization 
     Practices (as advisory committee established by the 
     Secretary, acting through the director of the Centers for 
     Disease Control and Prevention) as specified on the 
     pediatric vaccines list referred to in section 1928(e), 
     and (II) child care providers used will take steps to 
     assure that toxic substances, weapons, and any other items 
     at the location where the child care is provided that 
     could be harmful to young children, will be secured and 
     unobtainable by the children.
       ``(ix) The State plan must assure that child care provided 
     under this subsection will conform in all ways to the 
     provisions for parental choice, unlimited parental access, 
     handling of parental complaints, and consumer education, as 
     well as to all the other standards, criteria, and 
     requirements applicable to child care provided under the 
     CCDBG Act.
       ``(x) The State agency may, at its option, provide or 
     authorize the provision of child care under this subsection 
     (and if it exercises this option, shall so advise the lead 
     agency designated under the CCDBG Act, if it has an agreement 
     with such agency under subsection (j)) to a child for such 
     periods of time as are necessary to assure continuity of care 
     even though, for such periods, the individual whose 
     participation in the program under part F or page G or whose 
     employment is enabled by the child care may have temporary 
     interruptions in employment or training.''.
       (2) For at-risk families.--Section 402(i) of the Act is 
     amended by redesignating paragraphs (5) and (6) as paragraphs 
     (8) and (9), respectively, and by inserting after paragraph 
     (4) the following new paragraphs:
       ``(5) Child care provided under this subsection, whether 
     provided by a method permitted under paragraph (2) or by 
     means of an agreement under subsection (j) with the lead 
     agency designated under CCDBG Act, must meet all health and 
     safety standards established by the lead agency (for purposes 
     of the CCDGB Act), and, in addition to any other requirements 
     imposed pursuant to that Act, the State agency must establish 
     immunization requirements and assure (and any such agreement 
     must provide) that, consistent with the regulations of the 
     Secretary (i) children whose child care is paid for, in whole 
     or in part under this subsection will be required to have 
     received all immunizations, at the appropriate times, as 
     currently recommended by the Advisory Committee on 
     Immunization Practices (as advisory committee established by 
     the Secretary, acting through the director of the Centers for 
     Disease Control and Prevention) as specified on the pediatric 
     vaccines list referred to in section 1928(e), and (ii) child 
     care providers used will take steps to assure that toxic 
     substances, weapons, and any other items at the location 
     where the child care is provided that could be harmful to 
     young children, will be secured and unobtainable by the 
     children.
       ``(6) The State plan must assure that child care provided 
     under this subsection will conform in all ways to the 
     provisions for parental choice, unlimited parental access, 
     handling of parental complaints, and consumer education, as 
     well as to all other standards, criteria, and requirements 
     applicable to child care provided under the CCDBG Act.
       ``(7) The State agency may, at its option, provide or 
     authorize the provision of child care under this subsection 
     (and if it exercises this option, shall so advise the lead 
     agency designated under the CCDBG Act, if it has an agreement 
     with such agency under subsection (j)) to a child for such 
     periods of time as are necessary to assure continuity of care 
     even though, for such periods, the individual whose 
     employment is enabled by the child care may have temporary 
     interruptions in employment.''.

     SEC. 302. RELATED AMENDMENTS.

       (a) Child Care for Participants in the JOBS or WORK 
     Program, and Transitional Child Care.--Section 402(g) of the 
     Act is amended--
       (1) by striking out in paragraph (1)(A)(vii), ``a sliding 
     scale formula'' and all that follows and inserting in lieu 
     thereof ``the sliding fee scales established by the lead 
     agency designated under the Child Care and Development Block 
     Grant Act of 1990 as required by section 658E(c)(5) of that 
     Act.'';
       (2) by amending paragraph (1)(C)(i) by striking out clause 
     (II) and inserting in lieu thereof ``an amount not less than 
     the amount provided in the State plan pursuant to this clause 
     for January 1994.'';
       (3) by amending paragraph (3)(B) by adding ``and'' after 
     clause (i), striking out ``applicable standards'' and all 
     that follows in clause (ii) and inserting in lieu thereof 
     ``all requirements, standards, and criteria applicable to 
     child care funded under the CCDBG Act.'', and by repealing 
     clause (iii); and
       (4) by repealing paragraphs (4) and (5).
       (b) At-Risk-Child Care.--Section 402(i) of the Act is 
     amended--
       (1) in paragraph (3)(A), by striking out ``a sliding scale 
     formula'' and all that follows and inserting in lieu thereof 
     ``the sliding fee scales referred to in subsection 
     (g)(1)(A)(vii).'';
       (2) in paragraph (8)(B) (as redesignated by section 
     401(c)(2)), by striking out ``applicable standards of State 
     and local law;'' and inserting in lieu thereof ``all 
     requirements, standards, and other criteria applicable to 
     child care funded under the CCDBG Act;
       (3) by repealing subparagraphs (C) and (D) of such 
     paragraph (8); and
       (4) by amending paragraph (9) (as redesignated) to read as 
     follows:
       ``(9) In order to facilitate more accurate analysis of the 
     supply and quality of child care resources, the demand for 
     such resources that cannot currently be satisfied, and the 
     effectiveness and relationship of Federal programs providing 
     support for child care and child development activities, the 
     Secretary shall specify by regulation a core set of 
     consistently defined data elements for child care which must 
     be used by each State with respect to all reports relating to 
     child care or child development activities supported in whole 
     or in part under this Act or under the CCDBG Act.''.

     SEC. 303. LIMITATION OF AT-RISK CHILD CARE TO FAMILIES 
                   INELIGIBLE FOR RECIPIENT OR TRANSITIONAL CHILD 
                   CARE

       Section 402(i)(1)(A) of the Act is amended to read as 
     follows:
       ``(A) is not eligible for child care under subsection 
     (g);''.

     SEC. 304. OPTION TO CONSOLIDATE STATE RESPONSIBILITY FOR 
                   CHILD CARE.

       (a) State Option.--Section 402 of the Act is amended by 
     adding at the end thereof the following new subsection:
       ``(j)(1) In order to provide the child care which must be 
     guaranteed pursuant to subsection (g) or which may be 
     furnished pursuant to subsection (i), the State agency may 
     enter into an agreement with the lead agency designated under 
     section 658D of the CCDBG Act under which--
       ``(A) subject to paragraph (2), the State agency will pay 
     (either in advance or as reimbursement) the lead agency for 
     the cost of providing child care for any child with respect 
     to whom care must be guaranteed under subsection (g) or is to 
     be furnished under subsection (i), and the lead agency agrees 
     that care for all such children will only be paid for from 
     such reimbursement; and
       ``(B) that (i) all child care provided by the lead agency 
     under the agreement, whether directly or by contractual or 
     other arrangements, will be subject to the same 
     requirements, standards, and other criteria as are 
     applicable to child care funded under the CCDBG Act, and 
     (ii) parents and children to whom such care is provided 
     will be offered all the same protections and procedural 
     safeguards as are applicable to child care furnished under 
     the CCDBG Act.
       ``(2) Limits of reimbursement.--The State agency shall not 
     pay the lead agency for care provided to a child an amount 
     (A) less than the minimum permitted under subsection 
     (g)(1)(C)(i)(II) and specified by the State for fiscal year 
     1994 in its plan approved under this part nor (B) in excess 
     of the amount described in subsection (g)(1)(C) or (i)(3)(B), 
     whichever may be applicable to the child involved, and, with 
     respect to children to whom subsection (i)(3)(B) applies, the 
     State agency shall be obligated to pay the lead agency for 
     child care furnished in a fiscal year only to the extent of 
     appropriations available for such purpose for such fiscal 
     year.
       ``(3) Single state agency.--Nothing in this subsection 
     shall be construed as precluding the designation of the 
     agency established or designated under section 402(a)(3) as 
     the lead agency for purposes of the CCDBG Act. No agreement 
     shall be necessary in the case where the same agency is 
     designated under both the CCDBG Act and this Act, but the 
     agency shall, as lead agency, comply with all the provisions 
     of this subsection.''.

     SEC. 305. FUNDING FOR QUALITY IMPROVEMENT AND LICENSING 
                   ACTIVITIES BENEFITTING CHILDREN RECEIVING AFDC 
                   OR AT-RISK CHILD CARE.

       (a)(1) Licensing and monitoring costs.--Section 402(g)(3) 
     of the Act is amended by adding at the end thereof the 
     following new subparagraph:
       ``(C) In determining the amount expended by a State for 
     purposes of section 403(a)(3), the Secretary shall allow the 
     State to include an amount, determined in accordance with a 
     formula prescribed by the Secretary, to reimburse the State 
     for expenditures in connection with licensing, monitoring, 
     and similar activities with respect to child care providers 
     in the State. The formula adopted by the Secretary shall 
     reflect either the number of children for whom child care is 
     reimbursed under section 403(a), the number of child care 
     providers in the State furnishing such child care, or both, 
     and any other factors which the Secretary determines it would 
     be equitable to consider. The total payment to all States 
     pursuant to this subparagraph shall not exceed $15,000,000 
     for any fiscal year.''.
       (2) The amendment made by paragraph (1) shall be effective 
     for fiscal years after 1995.
       (b) Supply and Quality Improvement Activities.--Section 
     402(i) of the Act is amended by redesignating paragraph (9) 
     (as previously redesignated) as paragraph (10) and inserting 
     after and below paragraph (8) the following:
       ``(9) Of the amount available to a State for any fiscal 
     year under section 403(n), 10 percent of such amount may be 
     paid by the Secretary with respect to expenditures for those 
     activities to improve the quality of child care in the State 
     described in section 458G of the Child Care and Development 
     Block Grant Act (referred to in this subsection as the 
     `CCDBG' Act) and to increase the availability in low-income 
     communities of child care appropriate for infants and very 
     young children in a variety of settings. Either the State 
     agency administering the plan approved under this part or the 
     lead agency designated under the CCDBG Act may conduct such 
     activities (in which case the State agency shall pay to the 
     lead agency the amount provided by the Secretary for this 
     purpose pursuant to the preceding sentence).''.

     SEC. 306. FUNDING OF CHILD CARE FOR FAMILIES AT RISK OF 
                   WELFARE DEPENDENCY.

       (a) Federal Funding.--Section 403(n) is amended--
       (1) in paragraph (1)(A), by striking out ``the Federal 
     medical assistance percentage as defined in section 
     1905(b))'' and inserting in lieu therof ``the State's 
     enhanced Federal medical assistance percentage (as defined in 
     subsection (m)(6))''; and
       (2) in paragraph (2), by amending subparagraph (B) to read 
     as follows;
       ``(B) The amount specified in this subparagraph is--
       ``(i) $300,000,000 for fiscal year 1995,
       ``(ii) $500,000,000 for fiscal year 1996,
       ``(iii) $600,000,000 for fiscal year 1997,
       ``(iv) $700,000,000 for fiscal year 1998, and
       ``(v) $1,000,000,000 for fiscal year 1999,
       ``(vi) $1,050,000,000 for fiscal year 2000,
       ``(vii) $1,100,000,000 for fiscal year 2001,
       ``(viii) $1,150,000,000 for fiscal year 2002,
       ``(ix) $1,200,000,000 for fiscal year 2003,
       ``(x) $1,300,000,000 for fiscal year 2004, and
       ``(xi) the product of $1,300,000,000 adjusted by the CPI as 
     prescribed in section 406(i) and the ratio of the child 
     population in the United States for the most recent preceding 
     fiscal year for which such data are available, to such 
     population for the second most recent preceding fiscal year,

     reduced by 2 percent (or, in the case of fiscal years after 
     1998, 1 percent) for carrying out section 404 of the Work and 
     Responsibility Act of 1994.''.
       (b) Reallotment of At-Risk Child Care Funds.--Section 
     403(n)(3)(C) of the Act (permitting a one-year carryover by a 
     State of unclaimed Federal funds for at-risk child care) is 
     amended to read as follows:
       ``(C) If the amount specified in subparagraph (B) for any 
     fiscal year exceeds (or if the Secretary estimates that it 
     will exceed) the total amount paid (or estimated to be 
     payable) under paragraph (1) for such fiscal year, then the 
     Secretary shall provide additional payments to States whose 
     expenditures pursuant to section 402(i) for such year exceed 
     their limitation on Federal payment under paragraph (2). The 
     Secretary shall by regulation provide for the equitable 
     reallotment of any amounts available in the case where all 
     States' claims for a fiscal year under this subparagraph 
     exceed the amount available for reallotment.''.

     SEC. 307. SUPPLEMENT TO INCOME DISREGARD.

       (a) Requirement.--Section 402(g)(1)(B) of the Act is 
     amended by adding at the end thereof the following new 
     sentence: ``If the State agency guarantees child care by 
     applying the income disregard provision in subsection 
     (a)(8)(A)(iii) in determining the amount of aid to be paid 
     for a month, the State agency shall offer the caretaker 
     relative the option of receiving care under another 
     arrangement pursuant to this subparagraph, or, alternatively, 
     the State agency shall reimburse the caretaker relative for 
     expenditures for child care for such month in an amount equal 
     to the excess of such expenditures (or, if less, the maximum 
     amount that may be paid for the type of child care involved, 
     as determined under subparagraph (C)) over the amount that is 
     disregarded under such subsection.''.
       (b) Notice.--Section 402(g)(1)(A)(i) of the Act is amended 
     by striking out the period at the end and inserting in lieu 
     thereof a semicolon and adding after and below clause (II) 
     the following:

     ``and if the State agency applies the income disregard 
     provision in subsection (a)(8)(A)(iii) without reimbursement 
     under subparagraph (B) for any additional cost, it shall 
     advise each such family that they also have the option to 
     have the State agency provide child care under another 
     arrangement pursuant to subparagraph (B).''.

         TITLE IV--PROVISIONS WITH MULTI-PROGRAM APPLICABILITY

     SEC. 401. PERFORMANCE STANDARDS.

       Section 487 of the Act is amended to read as follows:

     ``SEC. 487. PERFORMANCE STANDARDS.

       ``(a) Development of Factors to be Measured.--In order to 
     specify a set of outcome-based performance measures to which 
     the Secretary can thereafter apply standards of achievement 
     to define successful State JOBS and WORK programs (with 
     appropriate variations in the factors to be measured, and the 
     standards applied, among the States and for programs directly 
     administered by Indian tribes or Alaska Native 
     organizations), the Secretary shall develop 
     recommendations for factors to be measured in assessing 
     such programs, together with specific elements to be 
     examined and the methodology for collecting the necessary 
     data. Factors to be recommended shall include the 
     percentage of a State's AFDC caseload subject to the time 
     limits in section 417 who receive aid for 24 cumulative 
     months and may include factors such as those considered 
     under section 106 of the Job Training Partnership Act, as 
     well as--
       ``(1) the increase in employment and level of earnings of 
     program participants after leaving the JOBS and WORK 
     programs,
       ``(2) the retention of program participants for significant 
     periods of time in unsubsidized employment,
       ``(3) the decrease in the rate of dependency on welfare of 
     participants' families,
       ``(4) the improvement in the long-term economic well-being 
     of families with children with a family member who previously 
     participated in one or both such programs, and
       ``(5) such other factors as the Secretary finds 
     appropriate.

     The Secretary shall solicit views on the recommendations from 
     the Secretary of Labor, the Secretary of Education, and other 
     Federal, State, and local officials (and representatives of 
     associations of such officials) from both the executive and 
     the legislative branches of government, and from other 
     individuals and organizations with expertise in the fields of 
     social welfare, education and training programs for children 
     and adults, employment-related programs and social and 
     supportive services related to these areas, as well as from 
     community-based organizations and former and current program 
     participants. Based upon the consultations and consideration 
     of the views provided regarding the recommended factors, the 
     Secretary shall, not later than October 1, 1996, publish in 
     the Federal Register the factors to be measured in assessing 
     States' performance in administering the programs established 
     under parts F and G.
       ``(b) Development of Performance Standards.--(1) 
     Recommendations.--In order to set standards of achievement to 
     be applied to each of the factors to be measured as defined 
     in accordance with subsection (a), the Secretary shall, not 
     later than April 1, 1998, develop recommended standards to be 
     applied to each of the factors. Views on these recommended 
     standards shall be solicited from officials, organizations, 
     and individuals broadly representative of the groups 
     described in subsection (a). Based upon the consultations and 
     consideration of the comments received from these sources, 
     the Secretary shall, not later than October 1, 1998, publish 
     in the Federal Register the standards to be applied to the 
     measurement factors.
       ``(2) Requirements.--The performance standards described in 
     paragraph (1) shall include provisions governing cost-
     effective methods for obtaining such data as are necessary to 
     carry out this section which, notwithstanding any other 
     provision of law, may include access to earnings records, 
     State employment security records, records collected under 
     the Federal Insurance Contributions Act (chapter 21 of the 
     Internal Revenue Code of 1986), State aid to families with 
     dependent children records, and the use of statistical 
     sampling techniques, and similar records or measures, with 
     appropriate safeguards to protect the confidentiality of the 
     information obtained.
       ``(c) Incentives and Penalties.--The Secretary shall 
     recommend and, not later than October 1, 1998, issue 
     regulations prescribing incentives for States meeting or 
     exceeding the performance standards adopted pursuant to 
     subsection (b), and penalties for States failing to meet such 
     standards. In developing such regulations, the Secretary 
     shall study and consider the relationship between penalties 
     and incentives as a means of achieving the proposed 
     standards. The Secretary will consider whether the penalties 
     and incentives set are sufficient to insure that a State 
     which incurs the costs necessary to obtain the desired 
     outcomes is financially better off than one that does not. 
     Such regulations shall also include provisions for delay of 
     any penalty when the Secretary finds it appropriate to afford 
     a State sufficient time to develop and (with the Secretary's 
     approval) implement a corrective action plan which, if 
     successful, will obviate the application of a penalty, and 
     provision for furnishing technical assistance to any State in 
     order to improve its program and avoid the application of a 
     penalty.
       ``(d) The Secretary shall, from time to time, and in 
     consultation with officials, organizations, and individuals 
     broadly representative of the groups referred to in 
     subsection (a), review and, if appropriate, propose 
     modifications to the factors to be measured, the standards of 
     performance, or the incentives and penalties, and after 
     opportunity for review and comment, modify any one or more of 
     such items.
       ``(e) The Secretary shall on an annual basis make public 
     the level of performance achieved by each State as compared 
     to the applicable standard.
       ``(f)(1) Each State with a plan approved under this part 
     shall collect and furnish such data as the Secretary may 
     require to assist in the development of the factors to 
     measure performance (pursuant to subsection (a)) and the 
     development of standards to be applied to those factors 
     (pursuant to subsection (b)).
       ``(2) Each State with a plan approved under this part shall 
     establish methods to solicit, on a regular and ongoing basis, 
     the views of participants in the program under this part, and 
     in the WORK program under part G, and of employers of 
     participants from both programs, on the quality and 
     effectiveness of the services provided under the program. 
     Participants and employers may provide either oral or 
     written views, and the State should use a range of methods 
     to obtain such views, including written questionnaires and 
     group interviews and discussions. The information obtained 
     from participants and employers shall be analyzed by the 
     State and a summary of the information, together with the 
     State's analysis, made available for use in improving the 
     administration of the JOBS and WORK programs.

     SEC. 402. AFDC QUALITY CONTROL SYSTEM AMENDMENTS.

       (a) Expanded Purpose.--Section 408(a) of the Act is amended 
     to read as follows:
       ``(a) In General.--In order (1) to improve the accuracy of 
     payments of aid to families with dependent children, and 
     wages under the WORK program under part G, to assess the 
     accuracy of State reported data relating to its JOBS and WORK 
     programs and to its implementation of the time limits 
     established by section 417, (2) to determine the number of 
     individuals to whom the State found applicable section 
     402(a)(19)(D) (by each of the categories enumerated within 
     such section) and the number of individuals with respect to 
     whom an extension of the time limit under section 417 was 
     provided (by each of the categories enumerated within section 
     417(e)), (3) to determine whether participation standards 
     under section 403 have been met, (4) to assess the 
     effectiveness of the State's program by applying the 
     performance standards developed under section 487, and (5) to 
     serve such other purposes as the Secretary finds appropriate 
     for a performance measurement system, the Secretary shall 
     establish and operate a quality control system to secure the 
     accurate data needed to measure performance, identify areas 
     in which corrective action is necessary, and determine the 
     amount (if any) of the disallowance required to be repaid to 
     the Secretary because of erroneous payments of aid made by 
     the State, or its failure to meet such participation or 
     performance standards.''.
       (b) Additional Data Required To Be Sampled.--Section 408(h) 
     of the Act is amended--
       (1) by redesignating paragraphs (2) through (6) as 
     paragraph (3) through (7), respectively,
       (2) by adding after and below paragraph (1) the following 
     new paragraph:
       ``(2) payments of aid that will be considered, for purposes 
     of this section, to be erroneous payments because of a 
     State's exceeding the limits specified in section 
     402(a)(19)(D) or 417(e), and the State's failure to achieve 
     the participation rates specified in section 403, or to meet 
     the performance standards developed pursuant to section 487, 
     and the additional data elements to be included in a sample 
     (and whether as part of the sample review under 
     subsection (b) or separately) in order to determine 
     whether such participation rates have been achieved, and 
     the extent to which the State has met such performance 
     standards;''; and
       (3) by amending paragraph (3) (as redesignated) by 
     inserting before the semicolon ``and matters relating to the 
     size and selection of samples and relating to the methodology 
     for making statistically valid estimates of the State's 
     compliance with the limits referred to in paragraph (2) and 
     its achievement of participation rates and performance 
     (measured against such standards) achieved by the State''.
       (c) State Studies.--Section 408(h) is amended by adding at 
     the end thereof the following new sentence: ``Expenditures by 
     a State to conduct studies approved by the Secretary to test 
     and improve its quality control system, and adapt it to the 
     full range of purposes described in subsection (a) shall, 
     notwithstanding any other provision of law, be considered for 
     purposes of section 403(a)(3) to be necessary for the proper 
     and efficient administration of the State's plan approved 
     under this part.''.
       (d) Conforming Amendment.--Section 408(b)(5) of the Act is 
     amended--
       (1) in subparagraph (A), by striking out ``subsection 
     (h)(3)'' and inserting in lieu thereof ``subsection (h)(4)'', 
     and
       (2) in subparagraph (B), by striking out ``subsection 
     (h)(4)'' and inserting lieu thereof ``subsection (h)(5)''.
       (e) Consultation.--The Secretary of Health and Human 
     Services shall consult with the State agencies administering 
     programs under parts A, F, and G of title IV of the Act, and 
     with others knowledgeable about design and administration of 
     quality control systems and performance measurements systems, 
     and thereafter, but not later than April 1, 1995, report to 
     the Congress and publish in the Federal Register the proposed 
     rules necessary to effectuate the amendments to section 408 
     of the Act made by this section.

     SEC. 403. NATIONAL WELFARE RECEIPT REGISTRY; STATE 
                   INFORMATION SYSTEMS

       (a) Federal Responsibilities.--Part A of title IV of the 
     Act is amended by adding after section 410 the following new 
     section:


                  ``national welfare receipt registry

       ``Sec. 411. (a) Establishment.--In order to assist States 
     in administering their State plans approved under this part, 
     part F, and part G, the Secretary shall establish and 
     maintain an automated registry, to be known as the National 
     Welfare Receipt Registry, containing information reported by 
     each State agency administering a plan approved under this 
     part concerning individuals receiving (or who have 
     received) aid to families with dependent children or wages 
     under a State's WORK program under part G.
       ``(b) Information to be Maintained.--There shall be 
     maintained in the Registry, at a minimum, the following 
     information with respect to each individual in the family who 
     has received aid to families with dependent children:
       ``(1) the individual's name, date of birth, and social 
     security account number;
       ``(2) the months for which aid was provided (with respect 
     to such individual), including months in which no aid was 
     paid with respect to such individual because a sanction was 
     being applied pursuant to section 402(a)(19)(G), section 
     402(a)(26), or section 496(f);
       ``(3) months in which section 402(a)(19)(D) was applicable 
     to the individual;
       ``(4) months during which an extension under section 417 
     (e) was provided with respect to an individual;
       ``(5) months in which an individual was registered with the 
     State's WORK program under part G and months in which the 
     individual was assigned to a position under part G; and
       ``(6) such other information as the Secretary may determine 
     would assist in the administration of the programs involved, 
     including the performance measurement of one or more of such 
     programs.
       ``(c) Use of Information.--(1) To whom provided.--The 
     Secretary shall promptly respond to requests by a State 
     agency administering a plan approved under this part for 
     information with respect to one or more individuals, 
     identified by name and social security number. The Secretary 
     shall furnish such information electronically, and if such an 
     individual has previously received (or is receiving) aid to 
     families with dependent children, or was registered under a 
     program pursuant to part G, identify the State making payment 
     of aid or administering the program under part G for each 
     month involved or indicate that the requested information is 
     not in the Registry.
       ``(2) Regulations.--The Secretary shall prescribe rules 
     pertaining to--
       ``(A) the format in which and process by which States must 
     submit the information maintained under subsection (b);
       ``(B) the format in which and process by which States must 
     submit requests (and responses will be furnished to such 
     requests) for information under this subsection;
       ``(C) the safeguards that the State must adopt to assure 
     that requests are submitted, and responses received, only by 
     personnel authorized by the State agency to perform these 
     functions; and
       ``(D) steps that the State must take to safeguard any 
     information received from the Registry, and assure that it 
     will not be redisclosed except to the extent permitted under 
     section 402(a)(9) or under this section.

     The Secretary shall take into consideration in developing and 
     issuing rules under this subsection the varying levels of 
     capability among the States to monitor, provide, and receive 
     by electronic means the information to be maintained in the 
     Registry, and shall allow in such rules a State to adopt 
     alternatives to the generally applicable requirements if the 
     State demonstrates that its alternative will be effective in 
     reporting, receiving and using the information to be 
     maintained in the Registry and the State has in effect an 
     advance planning document approved under section 402(e).
       ``(d) The Secretary shall not be liable to either a State 
     or an individual for inaccurate information provided to the 
     Registry by one State and reported by the Secretary to a 
     second State.
       ``(e) The Secretary may disclose information in the 
     Registry, in addition to disclosure to States for the 
     purposes described above, only--
       ``(1) to the Social Security Administration in order to 
     verify the accuracy of, and as necessary to correct, the 
     social security account numbers of individuals about whom 
     information has been reported, and for use by the Social 
     Security Administration in determining the accuracy of 
     payments under the Supplemental Security Income program under 
     title XVI, or for use in connection with benefits under title 
     II, as may be relevant,
       ``(2) to the Internal Revenue Service for purposes directly 
     connected with the administration of the earned income tax 
     credit under section 32 of the Internal Revenue Code of 1986, 
     or the advance payment of such credit under section 3507 of 
     such Code or for verification of a dependency exemption claim 
     in an individual's tax return or in connection with the 
     dependent care tax credit,
       ``(3) to the Secretary of Labor (or the State agency 
     administering the State's program under title III of the Act) 
     for purposes directly connected with the administration of 
     the unemployment compensation program under title III (or 
     under a State law with respect to which the Secretary of 
     Labor certifies payment under such title), and
       ``(4) for research purposes found by the Secretary to be 
     likely to contribute to achieving the purposes of this part 
     or part F or G, but without personal identifiers.
       ``(f) There are authorized to be appropriated to establish 
     the National Welfare Receipt Registry, $6,000,000 for fiscal 
     year 1995, and to operate the Registry, $4,000,000 for each 
     of fiscal years 1996 through 1999.''.
       (b) State Responsibilities.--Section 402(a) of the Act is 
     amended by adding after paragraph (28) the following new 
     paragraph:
       ``(29) provide--
       ``(A) that information will be reported to the National 
     Welfare Receipt Registry, at such times, in such format and 
     by such process as the Secretary shall prescribe pursuant to 
     section 411;
       ``(B) that the State agency will request from such 
     Registry, and from the other Registries maintained as part of 
     the National Welfare Reform Information Clearinghouse 
     established pursuant to section 453A, in such manner as the 
     Secretary may prescribe, and will use all information that 
     would facilitate the proper and efficient operation of the 
     State's programs under this part and parts F and G, and
       ``(C) that the State agency will cooperate with any other 
     State agency administering or supervising the administration 
     of a plan approved under this part in order to resolve any 
     disagreement between an individual seeking aid under such a 
     plan (or seeking to participate in a program under part G) 
     and the State about the correctness of information it 
     reported to the Registry and report to the Registry any 
     corrections to be made in the data contained in the 
     Registry;''.
       (c) State Automated Information System.--Section 402(a)(30) 
     of the Act is amended to read as follows:
       ``(30)(A) provide for an automated system which manages, 
     monitors, and reports the information in paragraph (29) 
     efficiently and economically, and for security against 
     unauthorized access to, or use of, the data in such system; 
     and
       ``(B) at the option of the State, provide for the 
     establishment and operation, in accordance with an (initial 
     and annually updated) advance planning document approved 
     under subsection (e), of a statewide automated information 
     system to assist in the administration of the State 
     plan approved under this part through automated procedures 
     and processes in any one or more of the following areas--
       ``(i) to assist in performing intake and referral 
     functions;
       ``(ii) to assist in providing the child care services 
     required under subsection (g)(1), and available under 
     subsection (i), and coordinating the provision of such 
     services with those provided in the State under the Child 
     Care and Development Block Grant Act, in an efficient manner 
     that eliminates (or at least minimizes) the disruption of 
     service to children and families and assists the State in 
     monitoring the quality, cost, and delivery of such services; 
     or
       ``(iii) to assist in the administration of the State's plan 
     approved under part F, including monitoring the delivery of 
     employment and training services and related support 
     services, and to manage the information necessary to 
     administer and assess its programs under parts F and G;

     and to provide for security against unauthorized access to, 
     or use of, the data in such system and, if the State elects 
     to implement any such automated system, may also develop and 
     implement a system (or, if more cost-effective, enhance an 
     existing system) for determining eligibility for any payment 
     amount of aid under this part;''.
       (d) Development of Model Automated Information Management 
     Systems.--Section 413 of the Act (including its heading) is 
     amended to read as follows:


            ``model automated information management systems

       ``Sec. 413. (a)(1) The Secretary shall, in partnership with 
     States, design and develop model automated support and case 
     management systems to assist States in the operation, 
     managing, tracking, and reporting in each of the program 
     areas described in section 402(a)(30)(A) and clauses (i), 
     (ii), and (iii) of section 402(a)(30)(B), and thereafter 
     provide necessary technical assistance to States choosing to 
     adopt such model.
       ``(2) Two or more States may determine to collaborate in 
     developing model automated support and case management 
     systems to assist them in operating, managing, tracking, and 
     reporting in each of the program areas described in section 
     402(a)(30) and, in such case, the Secretary shall provide all 
     appropriate technical assistance, and otherwise cooperate 
     with the States' collaboration to develop systems that meet 
     all the requirements of this part.
       ``(b) The model system developed by the Secretary under 
     subsection (a)(1), or the system developed collaboratively by 
     States under subsection (a)(2), must meet the following 
     criteria:
       ``(1) with respect to payment of aid under the State's plan 
     approved under this part, the system must be capable of 
     assisting in performing the intake and federal function;
       ``(2) with respect to the State's child care programs under 
     this part, as well as under the CCDBG Act, the system must be 
     capable of assisting in--
       ``(A) identifying and establishing the eligibility of 
     families with children in need of child care, and determining 
     the appropriate program under which to pay for such care;
       ``(B) determining the continuing eligibility of such 
     families for such care, and planning for and monitoring 
     services provided to such families;
       ``(C) processing payments and other financial data needed 
     for the management of the child care programs, and
       ``(D) producing necessary management reports for the 
     efficient and effective administration of the child care 
     programs, including the generating of required financial and 
     statistical reports;
       ``(3) with respect to the State's JOBS and WORK programs 
     under parts F and G respectively, the system must be capable 
     of assisting in--
       ``(A) assessing a participant's service needs in relation 
     to stated goals,
       ``(B) developing an appropriate employability plan, and
       ``(C) monitoring and recording the individual's attendance 
     at or participation in all required program activities.

     In the case of each of the State's systems described in 
     paragraphs (1), (2), and (3), the system must also be capable 
     of exchanging data electronically with related Federal 
     electronic data systems and other such systems of the State, 
     and providing such other information necessary to assess the 
     State's program performance against the standards established 
     by the Secretary under section 487.
       ``(c) There are authorized to be appropriated to carry out 
     subsection (a), $7,500,000 for each of fiscal years 1995 and 
     1996.
       ``(d)(1) In addition to the technical assistance required 
     in connection with the model systems described in subsection 
     (a)(1), the Secretary shall provide for such training, and 
     furnish such technical assistance as may be appropriate to 
     enable States to develop and implement automated management 
     systems as promptly and in as cost-effective a manner as 
     possible.
       ``(2) There are authorized to be appropriated $1,000,000 
     for each fiscal years 1995 through 1999 to carry out this 
     subsection.''.
       (e) Enhanced Matching.--Section 403(a) of the Act is 
     amended--
       (1) by redesignating paragraph (3) as paragraph (3)(A) and 
     striking out ``and'' at the end thereof, and
       (2) by adding after and below such paragraph the following:
       ``(B) if the Secretary determines that the modification of 
     a State's system that meets the requirements of section 
     402(a)(3)(A) will be cost-effective, or that a State's 
     automated management information system uses any one or more 
     of the Secretary's models developed under section 413(a)(1), 
     or is based on a State collaboration under section 413(a)(2), 
     Federal payments with respect to such systems shall equal 80 
     percent (or, if greater, the State's enhanced Federal medical 
     assistance percentage, as defined in subsection (m)(6)) of a 
     State's expenditures under its approved advance planning 
     document for the cost of developing and implementing any such 
     system collaborative project; and
       ``(C) notwithstanding any other provision of this section, 
     the total amount payable by the Secretary with respect to 
     expenditures, (during the five-year period) to which 
     subparagraph (B) applies shall not exceed $800,000,000 to be 
     distributed among the States, and to make available at such 
     time or times over the five-year period, as is provided in 
     regulations issued by the Secretary, taking into account the 
     relative size of State caseloads and the levels of automation 
     needed to meet the requirements of this title, and payments 
     under subparagraph (B) shall be made at such times and in 
     such manner as provided in subsection (b) and the advance 
     planning document approved under section 402(e).'', and
       (3) by striking out ``section 403(a)(3)'' in subparagraph 
     (C) of section 402(g)(3) of this Act, as added by section 
     305(a)(1) of this Act, and inserting in lieu thereof 
     ``section 403(a)(3)(A)''.
       (d)(1) Revision of Advance Planning Document Requirement.--
     Section 402(e) of the Act is amended to read as follows:
       ``(e)(1) The Secretary shall not approve the Advance Data 
     Planning document referred to in subsection (a)(30), unless 
     such document, when implemented, will economically, 
     efficiently, and effectively carry out the objectives of the 
     automated, statewide, management information systems referred 
     to in such subsection, and such document provides a plan to 
     address the State's approach, schedule, needed resources, and 
     cost-benefit of the project.
       ``(2) The Secretary shall, on a continuing basis, review, 
     access, and inspect the planning, design, and operation of 
     the statewide management information systems approved under 
     subsection 403(a)(3)(B), to determine whether, and to what 
     extent, such systems meet and will continue to meet 
     requirements imposed under this part.''.

     SEC. 404. RESEARCH AND EVALUATION; TECHNICAL ASSISTANCE; 
                   DEMONSTRATION PROJECTS.

       (a) Funding.--There shall be available to the Secretary of 
     Health and Human Services (hereafter in this section referred 
     to as the ``Secretary'') for carrying out the projects and 
     other activities specified in this section, and other such 
     activities related to the provisions of this Act, in a fiscal 
     year an amount equal to 2 percent (or, in the case of fiscal 
     years after 1998, 1 percent) of the sum of the amounts 
     specified in subsections (k)(3), (l)(3), and (n)(2)(B) of 
     section 403 of the Social Security Act for such fiscal year.
       (b) Research and Evaluation.--In addition to any other 
     research and evaluation found appropriate by the Secretary 
     pertaining to the new programs and amendments to existing 
     programs added to the Social Security Act by the provisions 
     of this Act, the Secretary shall, in consultation with the 
     Secretary of Labor and the Secretary of Education conduct, in 
     accordance with scientifically-acceptable methodology, the 
     following studies of the time-limited program of assistance 
     together with training and preparation for employment, 
     followed by a program of required employment or employment-
     related activities:
       (1) a two-phase implementation study of--
       (A) the initial steps taken by States and political 
     subdivisions to implement the new programs and requirements 
     established by the amendments made by this Act, as well as 
     the obstacles faced, institutional arrangements entered into, 
     and recommendations of such States and political subdivisions 
     based on their experiences, and thereafter
       (B) the experiences of States and localities after the new 
     programs and requirements have been substantially 
     implemented, including a study of the program design, 
     services provided, funding levels, participation rates, and 
     recommendations of the administering agencies, and a review 
     of the impact of these new programs and requirements on the 
     State and local administration of the programs, including 
     management systems, staffing structures, and the culture of 
     the welfare programs;
       (2) an evaluation in a variety of States and localities, 
     using random assignment of individuals to treatment and 
     control groups, and other appropriate rigorous methods, to 
     examine the effectiveness of time-limited assistance in 
     helping participants achieve self-sufficiency, and the 
     corresponding effect on unemployment rates, reduction of 
     welfare dependency and teen pregnancy, the effects on income 
     levels, family structure, and children's well-being among 
     participant groups; and
       (3) together with the Secretary of Labor, a comprehensive 
     national study after the WORK program (under part G of title 
     IV of the Act) has been in effect for 2 years to measure the 
     program's success in assisting participants to obtain 
     unsubsidized employment, and to evaluate skill levels and 
     barriers to employment in the case of individuals who have 
     not, after participating in such program for 2 years, been 
     able to obtain unsubsidized employment.
       (c) Technical Assistance.--In addition to any other 
     specific authorization in the Social Security Act for 
     technical assistance, the Secretary is authorized to offer a 
     broad range of technical assistance to States (including 
     Indian tribes and Alaska Native organizations) and 
     territories, including training, consultations, and fostering 
     the exchange of information among States and others about 
     practices, strategies, and techniques that are proving 
     effective.
       (d) Placement Demonstration Projects.--The Secretary is 
     authorized to approve up to 10 demonstrations of innovative 
     techniques to increase the number of placements of 
     participants in the JOBS program (under part F of title IV of 
     the Social Security Act) in positions of unsubsidized 
     employment with significant retention rates. No more than 5 
     such demonstrations shall test the use by the State of a 
     private organization, pursuant to a contractual arrangement 
     under which the organization will place JOBS program 
     participants in employment, and no more than 5 such 
     demonstrations shall involve the use of placement bonuses 
     payable to State or local agency employees who effectuate 
     successful placements. All the projects shall specify 
     performance standards (based on placement and retention 
     rates) to measure successful performance, and, in the case of 
     projects involving the use of private agencies, shall also 
     specify the services that must be made available to clients, 
     both before and after the placement, and indicate whether the 
     organization will also serve participants in the State's WORK 
     program (under part G of title IV of the Social Security 
     Act.)
       (e) Work-for-Wages Demonstration Projects.--The Secretary 
     is authorized to approve up to 5 local demonstration projects 
     to test the development, implementation, and effectiveness of 
     WORK programs conducted outside the context of the State's 
     AFDC program. Any project approved under this subsection must 
     include the following elements:
       (1) the State agency administering the State's AFDC program 
     (under part A of title IV of the Social Security Act) must 
     close the case when an individual to whom section 417 applies 
     (as added by section 104 of this Act) reaches the time limit 
     specified in such section;
       (2) each individual involved in the demonstration must be 
     advised of the procedures that must be followed to apply for 
     the WORK-for-Wages Project, and may not be denied an 
     opportunity to participate if such individual would be 
     eligible to participate in the State's WORK program under 
     part G of such title;
       (3) each individual will be afforded the opportunity to 
     earn wages in a position of employment and WORK stipends if 
     necessary to provide at least the income level of the State's 
     AFDC program (after application of the $120 per month earned 
     income disregard for work expenses) in the case of a 
     similarly situated family (and States conducting projects 
     will be encouraged to standardize, to the extent consistent 
     with the preceding provisions of this paragraph, the amount 
     of the stipends), but no payment of either wages or the 
     stipend will occur unless the individual has worked or 
     participated in an alternative project-specified activity 
     such as job search, interim community service, or other 
     activity designed by the project; and
       (4) those elements of the WORK program under part G of 
     title IV of the Act which this Secretary determines are 
     essential to achieve its objectives, while protecting the 
     interests of participants in the program and others involved 
     in or affected by the project, will be retained and applied 
     in the project.
       (f) WORK Support Agency Demonstrations.--The Secretary is 
     authorized, in consultation with the Secretary of Labor, the 
     Secretary of Agriculture, and the Secretary of the Treasury, 
     to approve demonstration projects in up to 5 States, under 
     which the State establishes a Work Support Agency to provide 
     a broad and coordinated array of services and assistance to 
     individuals who are former recipients of aid to families with 
     dependent children to assist them in retaining unsubsidized 
     employment. Services may include assistance in obtaining 
     other benefits or payments for which the individual is still 
     eligible, assistance in dealing with short-term family 
     problems which could otherwise jeopardize continuation of the 
     employment relationship, short-term or one-time financial aid 
     to meet unusual employment-related needs and any other aid or 
     services that support the individual's ability to retain or, 
     where necessary, secure employment.
       (g) Demonstration Projects for Noncustodial Parents.--In 
     order to encourage the development of innovative parenting 
     programs for noncustodial parents that build upon existing 
     programs for high-risk families, such as the Head Start 
     program, the Healthy Start program, the Even Start program, 
     and the Family Preservation and Support program, the 
     Secretary is authorized to make grants to States, Indian 
     tribes and Alaska Native organizations, or community-based 
     organizations to conduct demonstration projects designed to 
     improve the parenting skills of noncustodial parents with 
     particular emphasis on matters such as the importance of 
     parental involvement and economic security in the healthy 
     development of children. The applicant shall describe the 
     services to be provided, and the way in which project 
     services will be coordinated with one or more of the programs 
     or initiates referred to in the preceding sentence.
       (h) The Secretary shall, with respect to all demonstrations 
     authorized under this section, prescribe--
       (1) the minimum length of such projects in order to assure 
     the value of the project,
       (2) the assignment techniques and other requirements for 
     the methodologies so that the results will be scientifically 
     acceptable,
       (3) the required financial contribution by the project 
     applicant,
       (4) types of expenditures that may be included under the 
     project,
       (5) the timing and nature of required reports and the 
     procedures to be followed in conducting the evaluation and 
     review of project results, and
       (6) any other rules that the Secretary finds appropriate to 
     assure the integrity of the demonstration, and to protect the 
     rights and interests of program participants who are assigned 
     to the demonstration.

     SEC. 405. OFFSETS TO MANDATORY SPENDING FROM REDUCED FRAUD, 
                   WASTE, AND ABUSE.

       (a) Certifications.--In order to assure achievement of the 
     reductions in mandatory spending assumed in the cost 
     estimates accompanying this Act, beginning in fiscal year 
     1998, and each of the five succeeding fiscal years is--
       (1) the Secretary of Health and Human Services shall 
     certify to the Director of the Office of Management and 
     Budget that each of the systems of data bases included in the 
     National Welfare Reform Information Clearinghouse established 
     by Section 453A of the Social Security Act, (as added by 
     section 625 of this Act) are both receiving data from and 
     providing data to State and Federal agencies, and otherwise 
     fully complying with all requirements imposed by or pursuant 
     to the provisions of the Social Security Act establishing, 
     and requiring use of the components, of the Clearinghouse, 
     and
       (2) the Director of the Office of Management and Budget 
     shall determine whether, and if so certify that, all such 
     data were used fully and by the Federal agencies to which it 
     was supplied in order to reduce fraud, waste, and abuse in 
     the programs it administers and in compliance with the 
     requirements imposed by or pursuant to the Social Security 
     Act and subsection (d).
       (b) Alternative Reductions in Mandatory Spending.--If the 
     Director of the Office of Management and Budget, after 
     consultation with the Secretary of Health and Human Services, 
     certifies, prior to the close of a fiscal year, as provided 
     in subsection (a)(2), that, notwithstanding the full use of 
     data as described in subsection (a) and States' 
     implementation of applicable requirements of the Social 
     Security Act, mandatory spending was not reduced (when 
     compared to the levels estimated had the Clearinghouse not 
     been established and used) by the amount projected in the 
     cost estimates, then in the succeeding fiscal year the 
     following reductions in spending shall occur, in the sequence 
     stated, to the extent necessary to reduce mandatory spending 
     by the difference between the amount that it was estimated 
     would be saved (or avoided) in the year (in which the 
     certifications are made) and the amount certified by the 
     Director as having been saved (or avoided):
       (1) the amount made available to the Secretary of Health 
     and Human Services under section 404(a) of this Act for 
     research, demonstrations, and technical assistance, and the 
     amount available under section 452(j) of the Social Security 
     Act (as added by section 616 of this Act) for technical 
     assistance to States with respect to child support 
     enforcement programs (each such amount being reduced 
     proportionately); and, if necessary,
       (2) amounts otherwise payable under section 403(a)(3) of 
     the Social Security Act (as amended by this Act) to States 
     which have not fully implemented all the requirements imposed 
     by or pursuant to the Social Security Act for full use of the 
     data available from any part of the National Welfare Reform 
     Information Clearinghouse shall be reduced by 3 percent (or 
     such lesser amount as is necessary to achieve the necessary 
     reductions in mandatory spending).
       (c) Related Amendments.--Section 1137(a)(2) of the Act is 
     amended by striking out ``such Code,'' and inserting in lieu 
     thereof ``such Code, and information available from any 
     Registry maintained under the National Welfare Reform 
     Information Clearinghouse established under section 453(A) 
     (or, prior to the full establishment and operation of the 
     Director of New Hires, from systems of similar information 
     maintained by any other State, where cost-effective),''.
       (d) The Social Security Administration and the Secretary of 
     the Treasury shall each request and fully use all information 
     in the registries maintained under the National Welfare 
     Reform Information Clearinghouse established under Section 
     453A of the Social Security Act to the extent that such 
     information may be useful in carrying out their statutory 
     responsibilities and reducing fraud, waste, and abuse.

                   TITLE V--PREVENTION OF DEPENDENCY

     SEC. 501. SUPERVISED LIVING ARRANGEMENTS FOR MINORS.

       (1) Section 402(a)(43) of the Act is amended by striking 
     out ``at the option of the State,''.
       (2) Such section is further amended in subparagraph (A)(i) 
     by striking out ``, or reside in a foster home'' and all that 
     follows down to the semicolon.
       (3) Such section is further amended--
       (A) by amending so much of subparagraph (B) as precedes 
     clause (i) to read ``(B) in the case where--'',
       (B) by striking out the semicolon at the end of each 
     numbered clause in such subparagraph and inserting in lieu 
     thereof a comma, and
       (C) by adding after and below clause (v) of such 
     subparagraph the following:

     ``subparagraph (A) shall not be applicable, but the State 
     agency shall assist the individual in locating an appropriate 
     adult-supervised supportive living arrangement taking into 
     consideration the needs and concerns of the minor, (or may 
     determine that the individual's current living arrangement is 
     appropriate) and thereafter shall require that the individual 
     (and child, if any) reside in such living arrangement as a 
     condition of the continued receipt of aid under the plan (or 
     in an alternative appropriate arrangement, should 
     circumstances change and the current arrangement cease to be 
     appropriate) or, if the State agency is unable, after making 
     diligent efforts, to locate any such appropriate living 
     arrangement, it shall provide for comprehensive case 
     management, monitoring, and other social services consistent 
     with the best interests of the individual (and child) while 
     living independently;''.

     SEC. 502. STATE OPTION TO LIMIT BENEFIT INCREASES FOR 
                   ADDITIONAL FAMILY MEMBERS.

       (a) State Option.--Section 402(a) of the Act is amended--
     (A) by striking out ``and'' after paragraph (44);
       (B) by striking out the period after paragraph (45) and 
     inserting in lieu thereof ``; and''; and
       (C) by adding at the end thereof the following new 
     paragraph:
       ``(46) at the option of the State, provide that--
       ``(A) subject to subparagraphs (B), (C), and (D), the 
     amount of aid to families with dependent children paid to a 
     family under the plan will not be increased by reason of the 
     birth of a child to an individual included in such family for 
     purposes of making the determination under paragraph (7) and 
     applying paragraph (8), or will be increased less than the 
     amount that would be paid with respect to such child if such 
     child had been a member of the family when the family first 
     applied for aid, (but any such child will be considered to be 
     a recipient of aid for all other purposes, including title 
     XIX) if--
       ``(i) in the case where the individual is a custodial 
     parent of a dependent child, the child was conceived in a 
     month for which the individual received aid under the plan, 
     or
       ``(ii) in the case where the individual is a dependent 
     child, the individual is the parent of another child who is a 
     member of the same family and whose needs are included for 
     purposes of making such determination;
       ``(B) services will be offered under paragraph (15) to all 
     appropriate family members;
       ``(C) there will be disregarded, in making the 
     determination under paragraph (7) and before applying the 
     provisions of paragraph (8), an amount of income equal to any 
     increase in aid that would have been paid but for 
     subparagraph (A) that is derived from child support collected 
     with respect to the child referred to in paragraph (A), 
     earned income of a member of the family referred to in such 
     subparagraph, or from any other source specified in the plan 
     that the Secretary may approve as consistent with the 
     objectives of this paragraph; and
       ``(D) the provisions of subparagraph (A) will not be 
     applied in case of rape or in any other cases that the State 
     agency finds would violate standards of fairness and good 
     conscience.''.
       (b) Matching for Related Administrative Costs.--Section 
     403(a)(3) of the Act is amended by striking out the semicolon 
     and inserting in lieu thereof ``or counseling or referral 
     services (but no other types of family planning services) 
     furnished pursuant to section 402(a)(15);''.

     SEC. 503. CASE MANAGEMENT FOR PARENTS UNDER AGE 20.

       Section 482(b) of the Act, as amended by section 102(2) of 
     this Act, is further amended by--
       (1) redesignating paragraph (4) as paragraph (4)(A),
       (2) striking out ``The State agency'' in such paragraph
       (4)(A) and inserting in lieu thereof ``Except as provided 
     in subparagraph (B), the State agency'', and
       (3) by inserting after and below paragraph (4)(A) the 
     following:
       ``(B) The State agency shall--
       ``(i) assign a case manager to each custodial parent 
     receiving aid under part A who is under age 20;
       ``(ii) provide that case managers will have the training 
     necessary) taking into consideration the recommendations of 
     appropriate professional organizations) to enable them to 
     carry out their responsibilities and will be assigned a 
     caseload the size of which permits effective case management; 
     and
       ``(iii) provide that the case manager will be responsible 
     for--
       ``(I) assisting such parent in obtaining appropriate 
     services, including at a minimum, parenting education, family 
     planning services, education and vocational training, and 
     child care and transportation services,
       ``(II) making the determinations required to implement the 
     provision of paragraph (43),
       ``(III) monitoring such parent's compliance with all 
     program requirements, and, where appropriate, providing 
     incentives and applying sanctions, and
       ``(IV) providing general guidance, encouragement and 
     support to assist such parent in his or her role as a parent 
     and in achieving self-sufficiency.''.

     SEC. 504. STATE OPTION TO PROVIDE ADDITIONAL INCENTIVES AND 
                   PENALTIES TO ENCOURAGE TEEN PARENTS TO COMPLETE 
                   HIGH SCHOOL AND PARTICIPATE IN PARENTING 
                   ACTIVITIES.

       (a) State Plan.--Section 402(a)(19)(E) of the Act (as 
     amended by section 101 of this Act) is amended by adding 
     ``and'' after clause (ii) and adding after and below clause 
     (ii) the following new clause:
       ``(iii) at the option of the State, some or all custodial 
     parents who are under age 20 (and pregnant women under age 
     20) who are receiving aid under this part will be required to 
     participate in a program of monetary incentives and 
     penalties, consistent with subsection (k);''.
       (b) Elements of Program.--Section 402 of the Act is amended 
     by adding at the end thereof the following new subsection:
       ``(k)(1) If a State chooses to conduct a program of 
     monetary incentives and penalties to encourage custodial 
     parents (and pregnant women) who are under age 20 to complete 
     their high school (or equivalent) education, and participate 
     in parenting activities, the State shall amend its State 
     plan--
       ``(A) to specify the one or more political subdivisions in 
     which the State will conduct the program (or other clearly 
     defined geographic area or areas), and
       ``(B) to describe its program in detail.
       ``(2) A program under this subsection--
       ``(A) may, at the option of the State, include all such 
     parents who are under age 21;
       ``(B) may, at the option of the State, require full-time 
     participation in secondary school or equivalent educational 
     activities, or participation in a course or program leading 
     to a skills certificate found appropriate by the State agency 
     or parenting education activities (or any combination of such 
     activities and secondary education);
       ``(C) shall require that the case manager assigned to the 
     custodial parent pursuant to section 492(b)(3) will review 
     the needs of such parent and will assure that, either in 
     the initial development or revision of the parent's 
     employability plan, there will be included a description 
     of the services that will be provided to the parent and 
     the way in which the case manager and service providers 
     will coordinate with the educational or skills training 
     activities in which the custodial parent is participating;
       ``(D) shall provide monetary incentives for more than 
     minimally acceptable performance of required educational 
     activities; and
       ``(E) shall provide penalties (which may be those required 
     by subsection (a)(19)(G) or, with the approval of the 
     Secretary, other monetary penalties that the State finds will 
     better achieve the objectives of the program.
       ``(3) When a monetary incentive is payable because of the 
     more than minimally acceptable performance of required 
     educational activities by a custodial parent, the incentive 
     shall be paid directly to such parent, regardless of whether 
     the State agency makes payment of aid under the State plan 
     directly to such parent.
       ``(4)(A) For purposes of this part, monetary incentives 
     paid under this subsection shall be considered aid to 
     families with dependent children.
       ``(B) For purposes of any other Federal or Federally-
     assisted program based on need, no monetary incentive paid 
     under this subsection shall be considered income in 
     determining a family's eligibility for or amount of benefits 
     under such program, and if aid is reduced by reason of a 
     penalty under this subsection, such other program shall treat 
     the family involved as if no such penalty has been applied.
       ``(5) The State agency shall from time to time provide such 
     information as the Secretary may request, and otherwise 
     cooperate with the Secretary, in order to permit evaluation 
     of the effectiveness on a broad basis of the State's program 
     conducted under this subsection.''.

     SEC. 505. ADOLESCENT PREGNANCY PREVENTION GRANTS.

       (a) Adolescent Pregnancy Prevention.--
       Title XX (42 U.S.C. 1397-1397F) is amended by adding at the 
     end the following:

     ``SEC. 2008. ADOLESCENT PREGNANCY PREVENTION GRANTS.

       ``(a) Purpose.--The purpose of this section is to encourage 
     and provide financial assistance for the development of 
     intensive and sustained school-linked and school-based 
     pregnancy prevention programs for adolescents and their 
     families in areas of high poverty or high unmarried 
     adolescent birth rates that build upon other Federal, State, 
     and local pregnancy prevention and youth development 
     programs.
       ``(b) General Authority.--Notwithstanding section 
     2005(a)(6), the Secretary of Health and Human Services, the 
     Secretary of Education, and the Chief Executive Officer of 
     the Corporation for National and Community Service 
     (hereinafter referred to as the `responsible Federal 
     officials'), in consultation with other relevant Federal 
     agencies, shall jointly make grants to eligible entities, to 
     carry out programs in accordance with this section.
       ``(c) Federal Administration.--
       ``(1) Notwithstanding the Department of Education 
     Organization Act (20 U.S.C. 3401 et seq.) and the General 
     Education Provisions Act (20 U.S.C. 1221 et seq.), the 
     responsible Federal officials shall jointly provide for the 
     administration of this section, and shall jointly issue 
     whatever regulations, procedures, and guidelines, the 
     responsible Federal officials consider necessary and 
     appropriate to administer and enforce the provisions of this 
     section.
       ``(2) The responsible Federal officials may enter into 
     agreements with any other Federal entity with expertise in 
     youth development activities to administer the program under 
     this section and may provide such entity with appropriate 
     reimbursement.
       ``(d) Funding.--
       ``(1) In general.--To achieve the purposes of this section, 
     the responsible Federal officials shall make grants to 
     eligible entities under subsection (b) and conduct activities 
     under subsections (m) and (n) so that in the aggregate the 
     expenditures for such grants and activities do not exceed 
     $20,000,000 for fiscal year 1995, $40,000,000 for fiscal year 
     1996, $60,000,000 for fiscal year 1997, $80,000,000 for 
     fiscal year 1998, and $100,000,000 for fiscal year 1999 and 
     each subsequent fiscal year.
       ``(2) Payments to grantees.--Upon approval by the 
     responsible Federal officials, each grant applicant shall be 
     entitled to payment of at least $50,000 and not more than 
     $400,000 for each fiscal year based on an assessment by the 
     responsible Federal officials of the scope and quality of the 
     proposed program and the number of adolescents to be served 
     by the program. Payments to a grantee for any fiscal year 
     shall be available for expenditure by such grantee in such 
     fiscal year or the succeeding fiscal year.
       ``(3) Reservation for evaluation, training, technical 
     assistance, and national clearinghouse.--The responsible 
     Federal officials shall reserve, with respect to each fiscal 
     year, up to 10 percent of the aggregate amount described in 
     paragraph (1) for expenditure by the responsible Federal 
     officials of evaluation, training, and technical assistance 
     related to the programs under this section, and for the 
     establishment and operation of a National Clearinghouse on 
     Adolescent Pregnancy Prevention Programs under subsection 
     (n).
       ``(4) Excess amount.--If in any fiscal year the aggregate 
     amount specified in paragraph (1) for such fiscal year 
     exceeds the amount required to carry out approved grant 
     applications and other functions under paragraph (3), then 
     the amount specified in section 2003(c)(5) shall be increased 
     by the excess.
       ``(e) Definitions.--As used in this section:
       ``(1) Adolescents.--The term `adolescents' means youth who 
     are ages 10 through 19.
       ``(2) Eligible entity.--The term `eligible entity' means a 
     partnership that includes--
       ``(A) a local education agency, acting on behalf of one or 
     more schools, together with
       ``(B) one or more community-based organizations, 
     institutions of higher education, or public or private 
     agencies and organizations.
       ``(3) Eligible area.--The term `eligible area' means a 
     school attendance area in which--
       ``(A) at least 75 percent of the children are from low-
     income families as that term is used in part A of title I of 
     the Elementary and Secondary Education Act of 1965; or
       ``(B) the number of children receiving Aid to Families with 
     Dependent Children under part A of title IV is substantial as 
     determined by the responsible Federal officials; or
       ``(C) the unmarried adolescent birth rate is high, as 
     determined by the responsible Federal officials.
       ``(4) School.--The term `school' means a public elementary, 
     middle, or secondary school.
       ``(5) Responsible federal officials.--The term `responsible 
     Federal officials' means the Secretary of Education, the 
     Secretary of Health and Human Services, and the Chief 
     Executive Officer of the corporation for National and 
     Community Service.
       ``(f) Uses of Funds.--Grants under this section--
       ``(1) shall be used to--
       ``(A) develop, operate, expand, and improve a sequential, 
     age-appropriate program of instruction and counseling 
     services for adolescents designed to promote personal 
     responsibility and a healthy drug free lifestyle, and to 
     prevent adolescent pregnancy, through such activities as 
     counseling and instruction in the full range of consequences 
     of premature sexual behavior and adolescent pregnancy, 
     training in decision-making, and activities to promote 
     involvement of parents and families in adolescent development 
     and personal responsibility; and
       ``(B) provide opportunities for youth at-risk to develop 
     sustained contact with one or more volunteer or 
     professionally trained adults to provide character 
     development, through such activities as mentoring, group 
     coaching, or after-school activities; and
       ``(2) may be used to conduct other related activities that 
     promote the purposes of this section.
       ``(g) Application.--Each applicant for a grant under 
     subsection (b) must submit an application that--
       ``(1) includes a plan, based on local needs, for 
     accomplishing the purposes of this section that--
       ``(A) sets forth specific, measurable goals intended to be 
     accomplished under the program, and describes the methods to 
     be used in measuring progress toward accomplishment of such 
     goals;
       ``(B) describes the components of the program, including--
       ``(i) the role in the program of any national service 
     participants supported by the National and Community Service 
     Act of 1990 (42 U.S.C. 12501 et seq.) or by any other 
     national service law as defined in such Act, and
       ``(ii) the activities, in accordance with subsection (f), 
     that will be made available under the program,

     and the manner in which such components will be implemented, 
     including the extent to which activities will take place 
     after school, on weekends, or during the summer;
       ``(C) describes the manner in which one or more 
     professional staff will administer the program, and, where 
     appropriate or feasible, the manner in which national service 
     participants will be involved in the development or delivery 
     of services and in the coordination of during or after-school 
     activities;
       ``(2) demonstrates the manner in which the program will be 
     based on research concerning effective means of reducing 
     adolescent pregnancy, including reducing risk-taking 
     behaviors correlated with adolescent pregnancy;
       ``(3) demonstrates that the program will serve male and 
     female adolescents and, where feasible, out-of-school 
     adolescents, and describes the steps the applicant will take 
     to serve such adolescents;
       ``(4) demonstrates the manner in which the applicant will 
     provide, to the extent feasible, a continuity of services for 
     adolescents until age 19;
       ``(5) demonstrates the extent to which school personnel, 
     parents, community organizations, and the adolescents to be 
     served have participated in the development of the 
     application and will participate in the planning and 
     implementation of the program;
       ``(6) describes the applicant's partnership, including the 
     relationship of the partners, the role of each partner in the 
     development and implementation of the program, and the manner 
     in which the partners will coordinate their resources;
       ``(7) describes the nature and scope of commitment to the 
     program by other community institutions, such as religious 
     organizations, community groups, institutions of higher 
     education, business, and labor;
       ``(8) describes the methods to be used in coordinating the 
     provision of services under the program with the provision of 
     services or benefits under other Federal or federally 
     assisted programs, State and local programs, and private 
     programs serving the same population;
       ``(9) demonstrates that the area to be served is an 
     eligible area;
       ``(10) contains assurances that at least one activity will 
     be located in a school in the area to be served and describes 
     the activities that will be school-based;
       ``(11) contains assurances that the amounts provided under 
     this section will not be used to supplant Federal, State, or 
     local funds for services and activities that promote the 
     purposes of this section;
       ``(12) contains assurances that the applicant will provide 
     a non-Federal share, in cash or in kind, of at least 20 
     percent of the cost of carrying out the approved program;
       ``(13) describes the applicant's plan for continuation of 
     the program following completion of the grant period and 
     termination of Federal support under this section;
       ``(14) contains assurances that the applicant will furnish 
     such reports, containing such information, and participate in 
     such evaluations, as the responsible Federal officials may 
     require; and
       ``(15) includes such other information and assurances as 
     the responsible Federal officials may reasonably require.
       ``(h) Priorities.--In making awards under this section, the 
     responsible Federal officials shall give priority to 
     applicants that--
       ``(1) provide for non-Federal resources significantly in 
     excess of those required in subsection (g)(12) or for an 
     increasing ratio of non-Federal resources over the term of 
     the grant; and
       ``(2) participate in other Federal and non-Federal programs 
     that relate to the purposes of this section.
       ``(i) Treatment as Non-Federal Share.--For purposes of the 
     National and Community Service Act of 1990 (42 U.S.C. 12501 
     et seq.), the funds provided to a grantee under this section 
     shall not be considered Federal funds.
       ``(j) Prohibition on Use of Funds.--No assistance made 
     available under this section shall be used to provide 
     religious instruction, to conduct worship services, or to 
     promote any religious view or teaching in any manner.
       ``(k) Geographic Diversity.--The responsible Federal 
     officials shall, to the extent feasible, ensure that 
     applications are approved from both urban and rural areas and 
     reflect nationwide geographic diversity.
       ``(l) Application Period.--An application approved under 
     this section shall be for a term of 5 years; except that 
     approval may be terminated before the end of such period if 
     the responsible Federal officials determine that the grantee 
     conducting the program has failed substantially to carry out 
     the program as described in the approved application.
       ``(m) Evaluation, Training, and Technical Assistance.--
       ``(1) Evaluation.--The responsible Federal officials shall 
     evaluate the effectiveness of programs conducted under this 
     section, directly or by grant or contract, and may require 
     each grantee conducting such a program to provide such 
     information as the responsible Federal officials determine is 
     necessary for such evaluations.
       ``(2) Training and technical assistance.--The responsible 
     Federal officials may provide training and technical 
     assistance with respect to the development, implementation, 
     or operation of programs under this section.
       ``(3) Coordination with national clearinghouse.--The 
     responsible Federal officials shall coordinate the activities 
     conducted under this subsection with the activities conducted 
     by the National Clearinghouse on Adolescent Pregnancy 
     Prevention Programs under subsection (n).
       ``(n) National Clearinghouse on Adolescent Pregnancy.--
       ``(1) Establishment.--The responsible Federal officials 
     shall establish, through grant or contract, a national center 
     for the collection and provision of programmatic information 
     and technical assistance that relates to adolescent pregnancy 
     prevention programs, to be known as the `National 
     Clearinghouse on Adolescent Pregnancy Prevention Programs'.
       ``(2) Functions.--The national center established under 
     paragraph (1) shall serve as a national information and data 
     clearinghouse, and as a training, technical assistance, and 
     material development source for adolescent pregnancy 
     prevention programs. Such center shall--
       ``(A) develop and maintain a system for disseminating 
     information on all types of adolescent pregnancy prevention 
     programs and on the state of adolescent pregnancy prevention 
     program development, including information concerning the 
     most effective model programs;
       ``(B) develop and sponsor a variety of training institutes 
     and curricula for adolescent pregnancy prevention program 
     staff;
       ``(C) identify model programs representing the various 
     types of adolescent pregnancy prevention programs;
       ``(D) develop technical assistance materials and activities 
     to assist other entities in establishing and improving 
     adolescent pregnancy prevention programs;
       ``(E) develop networks of adolescent pregnancy prevention 
     programs for the purpose of sharing and disseminating 
     information; and
       ``(F) conduct such other activities as the responsible 
     Federal officials find will assist in developing and carrying 
     out programs or activities to reduce adolescent pregnancy.''.
       (b) Effective Date.--The amendment made by this section 
     shall become effective October 1, 1994.

     SEC. 506. DEMONSTRATION PROJECTS TO PROVIDE COMPREHENSIVE 
                   SERVICES TO PREVENT ADOLESCENT PREGNANCY IN 
                   HIGH-RISK COMMUNITIES.

       (a) Demonstraton Projects.--Title XX (42 U.S.C. 1397-1397f) 
     is amended by adding at the end the following:

     ``SEC. 2009. DEMONSTRATION PROJECTS TO PROVIDE COMPREHENSIVE 
                   SERVICES TO PREVENT ADOLESCENT PREGNANCY IN 
                   HIGH-RISK COMMUNITIES.

       ``(a)(1) Purpose.--In order to stimulate the development of 
     innovative approaches for the effective delivery of 
     comprehensive services, with particular emphasis on pregnancy 
     prevention, to certain youth and their families in high-risk 
     communities and the promotion of community involvement in 
     improving the environment in which such youth live, the 
     Secretary of Health and Human Services shall conduct 
     demonstration projects in accordance with this section.
       ``(2) Approval of projects.--The Secretary of Health and 
     Human Services, in consultation with the Secretary of 
     Education, the Secretary of Housing and Urban Development, 
     the Attorney General, the Director of the Office of National 
     Drug Control Policy, and the Secretary of Labor, shall 
     approve at least 5 and not more than 7 projects, in 
     accordance with subsection (c). Upon approval by the 
     Secretary, each project applicant shall be entitled to 
     payment of up to $3,600,000 for each of fiscal years 1995 
     through 1999 for the purpose of conducting approved 
     demonstration projects.
       ``(b) Funding.--
       ``(1) In general.--There shall be made available to the 
     Secretary not to exceed 420,000,000 for each of fiscal years 
     1995 through 1999 for carrying out the projects under this 
     section. Payments to a grantee for any fiscal year must be 
     expended by the grantee in such fiscal year or the succeeding 
     fiscal year.
       ``(2) Evaluation training, and technical assistance.--The 
     Secretary shall reserve, with the respect to each fiscal 
     year, ten percent of the amount described in paragraph (1) 
     for expenditure by the Secretary for training and technical 
     assistance related to the demonstration projects under 
     this section and for evaluation of such projects. The 
     amount so reserved shall remain available for obligation 
     through fiscal year 1999.
       ``(3) Excess amounts.--If in any fiscal year the amount 
     specified in paragraph (1) for such fiscal year exceeds the 
     amount required to carry out approved projects and 
     evaluation, training, and technical assistance under this 
     section, then the amount specified in section 2003(c)(5) 
     shall be increased by the excess.
       ``(c) Application; Eligibility Criteria.--A local public or 
     private nonprofit organization, including a unit of 
     government, or any combination of such entities, shall be 
     eligible to submit a project application. In order that an 
     application be approved under subsection (a), the application 
     must--
       ``(1) demonstrate that the geographic area to be served by 
     the project satisfies the following criteria:
       ``(A) it includes a population of 20,000 to 35,000 
     residents,
       ``(B) it has an identifiable boundary and is recognizable 
     as a community by its residents, and
       ``(C) within the community, there is a poverty rate of not 
     less than 20 percent;
       ``(2) include a plan for accomplishing the purposes of this 
     section that--
       ``(A) describes the comprehensive, integrated services, in 
     accordance with subsection (e), that will be made available 
     under the project;
       ``(B)(i) sets forth the goals intended to be accomplished 
     under the project, and
       ``(ii) describes the methods to be used in measuring 
     progress toward accomplishment of such goals and the outcomes 
     to be measured, including unmarried adolescent birth rates, 
     rates of youth alcohol and drug use, rates of youth violence, 
     high school graduation rates, and such other outcomes as the 
     Secretary finds appropriate;
       ``(C) describes the process by which the affected community 
     (including parents, the youth to be served, schools, local 
     government, religious organizations, community groups, 
     business, and labor) is a full partner in the process of 
     developing and implementing the project and the extent to 
     which parents, the youth to be served, and local institutions 
     and organizations have contributed to the planning process;
       ``(D) identifies the private and public partnerships to be 
     used;
       ``(E) describes the methods to be used in coordinating the 
     provision of services under the project and the provision of 
     services or benefits under other Federal or federally 
     assisted programs, State and local programs, and private 
     programs serving the same population; and
       ``(F) describes the manner in which other Federal funds and 
     non-Federal funds will be used to further the purpose of the 
     program;
       ``(3) demonstrate strong State and local government 
     commitment to the project and involvement in the planning and 
     implementation of the project;
       ``(4) demonstrate the ability of the applicant to carry out 
     the project;
       ``(5) describe the methods to be used for maintaining 
     accurate records regarding the activities carried out with 
     funds under this section;
       ``(6) contain assurances that the amounts provided under 
     this section will not be used to supplant Federal, State, and 
     local funds for services and activities that promote the 
     purposes of this section;
       ``(7) contain assurances that the applicant will provide a 
     non-Federal share, in cash or in kind, of 10 percent of the 
     cost of carrying out the approved project and describe the 
     capacity of the applicant to provide the non-Federal share;
       ``(8) contain assurances that the applicant will furnish 
     such reports, containing such information, and participate in 
     such evaluations, as the Secretary may require; and
       ``(9) include such other information as the Secretary may 
     require.
       ``(d) Priority.--In making awards under this section, the 
     Secretary shall give priority to applicants that provide for 
     non-Federal resources significantly in excess of those 
     required in subsection (c)(7).
       ``(e) Use of Grants.--Under each demonstration project 
     conducted under this section, the grantee shall develop a 
     community-wide strategy to address the causes and factors of 
     risk-taking tendencies among youth, to positively affect 
     community norms, to increase community health and safety, and 
     to generally improve the social environment to enhance the 
     life choice of community youth. The strategy shall be used to 
     provide a comprehensive set of coordinated services designed 
     to saturate the community and shall include, but not be 
     limited to, the following areas:
       ``(1) health education and access services designed to 
     promote physical and mental well-being and personal 
     responsibility (with particular emphasis on pregnancy 
     prevention), such as school health services, family 
     planning services, alcohol and drug abuse prevention 
     services and referral for treatment, life skills training, 
     and decision-making skills training;
       ``(2) educational and employability development services 
     designed to promote educational advancement leading to a high 
     school diploma or its equivalent and opportunities for high 
     skill, high wage job attainment and productive employment, to 
     establish a lifelong commitment to learning and achievement, 
     and to increase self-confidence, such as academic tutoring, 
     literacy training, drop-out prevention programs, career and 
     college counseling, mentoring programs, job skills training, 
     apprenticeships, and part-time paid work opportunities;
       ``(3) social support services designed to provide youth 
     with a stable environment, opportunities for a sustained 
     relationship with one or more adults, and opportunities for 
     participation in safe and productive activities, such as 
     cultural, recreational and sports activities, leadership 
     development, peer counseling and crisis intervention, 
     mentoring programs, parenting skills training, and family 
     counseling;
       ``(4) community activities designed to improve community 
     stability, and to encourage youth to participate in community 
     service and establish a stake in the community, such as 
     community policing, community service programs, community 
     activities in partnership with less distressed neighborhoods, 
     local media campaigns, and establishment of community 
     advisory councils with youth representation; and
       ``(5) employment opportunity development activities 
     designed to be coordinated with educational and employability 
     development services, social support services, and community 
     activities described in paragraphs (2) through (4). Emphasis 
     shall be on development of linkages with employers within and 
     outside the community to help create employment opportunities 
     and foster an understanding by community youth of the 
     relationship between productive employment, healthy 
     development, and sound life choices.
       ``(f) Evaluation, Training, and Technical Assistance.--
       ``(1) Evaluation.--The Secretary shall evaluate the 
     effectiveness of each demonstration project conducted under 
     this section and may require each grantee conducting such a 
     project to provide such information as the Secretary 
     determines is necessary for such evaluations.
       ``(2) Training and Technical Assistance.--The Secretary 
     shall provide training and technical assistance with respect 
     to the development, implementation, or operation of projects 
     under this section.
       ``(3) Coordination with national clearinghouse.--The 
     Secretary shall coordinate the activities conducted under 
     this subsection with activities conducted by the National 
     Clearinghouse on Adolescent Pregnancy Prevention Programs 
     under section 2008(n).
       ``(g) Funding Period.--Each demonstration project supported 
     under this section shall be conducted for a 5-year period; 
     except that the Secretary may terminate a project before the 
     end of such period if the Secretary determines that the 
     grantee conducting the project has failed substantially to 
     carry out the project as described in the approved 
     application.
       ``(h) Definitions and Special Rules.--As used in this 
     section:
       ``(1) Youth.--The term ``youth'' means an individual who is 
     not less than 10 years of age and not more than 21 years of 
     age.
       ``(2) Use of census data.--Population and poverty rate 
     shall be determined by the most recent decennial census data 
     available.''.
       (b) Effective Date.--The amendment made by this section 
     shall become effective October 1, 1994.

                  TITLE VI--CHILD SUPPORT ENFORCEMENT

     SEC. 600. REFERENCES IN TITLE.

       References in this title to a section or other provision 
     refer to a section or other provision of the Social Security 
     Act, unless the context otherwise requires.

  PART A--ELIGIBILITY AND OTHER MATTERS CONCERNING TITLE IV-D PROGRAM 
                                CLIENTS

     SEC. 601. COOPERATION REQUIREMENT AND GOOD CAUSE EXCEPTION.

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

     SEC. 602. STATE OBLIGATION TO PROVIDE PATERNITY ESTABLISHMENT 
                   AND CHILD SUPPORT ENFORCEMENT SERVICES.

       (a) State Law Requirements.--Section 466(a) is amended by 
     adding at the end the following new paragraph:
       ``(12) Use of central case registry and centralized 
     collections unit.--Procedures under which--
       ``(A) every child support order established or modified in 
     the State on or after October 1, 1997 is recorded in the 
     central case registry established in accordance with section 
     454A(e); and
       ``(B) child support payments are collected through the 
     centralized collections unit established in accordance with 
     section 454B--
       ``(i) on and after October 1, 1997, under each order 
     subject to wage withholding under section 466(b); and
       ``(ii) on and after October 1, 1998, under each other order 
     required to be recorded in such central case registry under 
     this paragraph or section 454A(e), except as provided in 
     subparagraph (C); and
       ``(C)(i) parties subject to a child support order described 
     in subparagraph (B)(ii) may opt out of the procedure for 
     payment of support through the centralized collections unit 
     (but not the procedure for inclusion in the central case 
     registry) by filing with the State agency a written 
     agreement, signed by both parties, to an alternative payment 
     procedure; and
       ``(ii) an agreement described in clause (i) becomes void, 
     and may not be renewed, whenever--
       ``(I) the party owing support fails to make a timely 
     payment; or
       ``(II) either party advises the State agency of an intent 
     to vacate the agreement.''.
       (b) State Plan Requirements.--Section 454 is amended--
       (1) in paragraph (4), to read as follows:
       ``(4) provide that such State will undertake--
       ``(A) to provide appropriate services under this part to--
       ``(i) each child with respect to whom an assignment is 
     effective under section 402(a)(26), 471(a)(17), or 1912 
     (except in cases where the State agency determines, in 
     accordance with paragraph (25), that it is against the best 
     interests of the child to do so); and
       ``(ii) each child not described in clause (i)--
       ``(I) with respect to whom an individual applies for such 
     services; and
       ``(II) (on and after October 1, 1997) each child with 
     respect to whom a support order is recorded in the central 
     State case registry established under section 454A, 
     regardless of whether application is made for services under 
     this part; and
       ``(B) to enforce the support obligation established with 
     respect to the custodial parent of a child described in 
     subparagraph (A).'';
       (2) in paragraph (6)--
       (A) by striking all that precedes subparagraph (C) and 
     inserting the following:
       ``(6) provide that--
       ``(A) services under the State plan shall be made available 
     to non-residents on the same terms as to residents;
       ``(B) no fees or costs shall be imposed on any absent or 
     custodial parent or other individuals--
       ``(i) on or after October 1, 1997, for application for 
     child support enforcement services under this part; or
       ``(ii) for inclusion in the central State registry 
     maintained pursuant to section 454A(e);''; (B) in each of 
     subparagraphs (C) and (D)--
       (i) by indenting such subparagraph and aligning its left 
     margin with the left margin of paragraph (B); and
       (ii) by striking the final comma and inserting a semicolon;
       (C) by striking subparagraph (E) and inserting the 
     following subparagraphs:
       ``(E) no other fees or costs may be imposed on the 
     custodial parent; and
       ``(F) any other fees or costs may be imposed on the 
     noncustodial parent (but fees for child support collection 
     services provided through the central collections unit 
     operated pursuant to section 454B, or for related automated 
     procedures pursuant to section 454A(g), may be imposed only 
     if such fees or costs are added to, and not deducted from, 
     amounts collected as child support);''.
       (c) Conforming Amendments.--
       (1) Section 452(g)(2)(A) is amended by striking ``454(6)'' 
     each place it appears and inserting ``454(4)(A)(ii)''.
       (2) Section 454(23) is amended, effective October 1, 1997, 
     by striking ``information as to any application fees for such 
     services and''.
       (3) Section 466(a)(3)(B) is amended by striking ``in the 
     case of overdue support which a State has agreed to collect 
     under section 454(6)'' and inserting ``in any other case''.
       (4) Section 466(e) is amended by striking ``or (6)''.

     SEC. 603. DISTRIBUTION OF PAYMENTS.

       (a) Distributions Through State Child Support Enforcement 
     Agency to Former Assistance Recipients.--Section 454(5) is 
     amended--
       (1) in subparagraph (A)--
       (A) by inserting ``except as otherwise specifically 
     provided in section 464 or 466(a)(3),'' after ``is 
     effective,''; and
       (B) by striking ``except that'' and all that follows 
     through the semicolon; and
       (2) in subparagraph (B), by striking ``, except'' and all 
     that follows through ``medical assistance''.
       (b) Distribution to a Family Currently Receiving AFDC.--
     Section 457 is amended--
       (1) by striking subsection (a) and redesignating subsection 
     (b) as subsection (a);
       (2) in subsection (a), as redesignated--
       (A) in the matter preceding paragraph (2), to read as 
     follows:
       ``(a) In the Case of a Family Receiving AFDC.--Amounts 
     collected under this part during any month as support of a 
     child who is receiving assistance under part A (or a parent 
     or caretaker relative of such a child) shall (except in the 
     case of a State exercising the option under subsection (b)) 
     be distributed as follows:
       ``(1) an amount equal to the amount specified in section 
     402(a)(8)(A)(vi) shall be taken from each of--
       ``(A) amounts received in a month which represent payments 
     for that month; and
       ``(B) amounts received in a month which represent payments 
     for a prior month which were made by the absent parent in the 
     month when due;

     and shall be paid to the family without affecting its 
     eligibility for assistance or decreasing any amount otherwise 
     payable as assistance to such family during such month;'';
       (B) in paragraph (4), by striking ``or (B)'' and all that 
     follows and inserting''; then (B) from any remainder, amounts 
     equal to arrearages of such support obligations assigned, 
     pursuant to part A, to any other State or States shall be 
     paid to such other State or States and used to pay any such 
     arrearages (with appropriate reimbursement of the Federal 
     Government to the extent of its participation in the 
     financing); and then (C) any remainder shall be paid to the 
     family.''.
       (3) by inserting after subsection (a), as redesignated, the 
     following new subsection:
       ``(b) Alternative Distribution in Case of Family Receiving 
     AFDC.--In the case of a State electing the option under this 
     subsection, amounts collected as described in subsection (a) 
     shall be distributed as follows:
       ``(1) an amounts equal to the amount specified in section 
     402(a)(8)(A)(vi) shall be taken from each of--
       ``(A) amounts received in a month which represent payments 
     for that month; and
       (B) amounts received in a month which represent payments 
     for a prior month which were made by the absent parent in the 
     month when due;

     and shall be paid to the family without affecting its 
     eligibility for assistance or decreasing any amount otherwise 
     payable as assistance to such family during such month;
       ``(2) second, from any remainder, amounts equal to the 
     balance of support owed for the current month shall be paid 
     to the family;
       ``(3) third, from any remainder, amounts equal to 
     arrearages of such support obligations assigned, pursuant to 
     part A, to the State making the collection shall be retained 
     and used by such State to pay any such arrearages (with 
     appropriate reimbursement of the Federal Government to the 
     extent of its participation in the financing);
       ``(4) fourth, from any remainder, amounts equal to 
     arrearages of such support obligations assigned, pursuant to 
     part A, to any other State or States shall be paid to such 
     other State or States and used to pay any such arrearages 
     (with appropriate reimbursement of the Federal Government to 
     the extent of its participation in the financing); and
       ``(5) fifth, any remainder shall be paid to the family.''.
       (c) Distribution to a Family Not Receiving AFDC.--Section 
     457(c) is amended to read as follows:
       ``(c) In Case of Family Not Receiving AFDC.--Amounts 
     collected by a State agency under this part during any month 
     as support of a child who is not receiving assistance under 
     part A (or of a parent or caretaker relative of such a child) 
     shall (subject to the remaining provisions of this section) 
     be distributed as follows:
       ``(1) first, amounts equal to the total of such support 
     owed for such month shall be paid to the family;
       ``(2) second, from any remainder, amounts equal to 
     arrearages of such support obligations for months during 
     which such child did not receive assistance under part A 
     shall be paid to the family;
       ``(3) third, from any remainder, amounts equal to 
     arrearages of such support obligations assigned to the State 
     making the collection pursuant to part A shall be retained 
     and used by such State to pay any such arrearages (with 
     appropriate reimbursement of the Federal Government to the 
     extent of its participation in the financing);
       ``(4) fourth, from any remainder, amounts equal to 
     arrearages of such support obligations assigned to any other 
     State pursuant to part A shall be paid to such other State or 
     States, and used to pay such arrearages, in the order in 
     which such arrearages accrued (with appropriate reimbursement 
     of the Federal Government to the extent of its participation 
     in the financing).''.
       (d) Distribution to a Child Receiving Assistance Under 
     Title IV-E.--Subsection (d) is amended, in the matter 
     preceding paragraph (1), by striking ``Notwithstanding the 
     preceding provisions of this section, amounts'' and 
     inserting ``In Case of a Child Receiving Assistance under 
     Title IV-E.--Amounts''.
       (e) Suspension or Cancellation of Debts Upon Marriage of 
     Parents.--Section 457 is further amended by adding at the end 
     the following new subsection:
       ``(e) Suspension or Cancellation of Debts to State Upon 
     Marriage of Parents.--
       ``1. Circumstances requiring suspension or cancellation.--
     In any case in which a State has been assigned rights to 
     support owed with respect to a child who is receiving or has 
     received assistance under part A and--
       ``(A) the parent owing such support marries (or remarries) 
     the parent with whom such child is living and to whom such 
     support is owed and applies to the State for relief under 
     this subsection;
       ``(B) the State determines (in accordance with procedures 
     and criteria established by the Secretary) that the marriage 
     is not a sham marriage entered into solely to satisfy this 
     subsection; and
       ``(C) the combined income of such parents is less than 
     twice the Federal poverty line,

     the State shall afford relief to the parent owing such 
     support in accordance with paragraph (2).
       ``(2) Suspension or cancellation.--In the case of a 
     marriage or remarriage described in paragraph (1), the State 
     shall either--
       ``(A) cancel all debts owed to the State pursuant to such 
     assignment, or
       ``(B) suspend collection of such debts for the duration of 
     such marriage, and cancel such debts if such duration extends 
     beyond the end of the period with respect to which support is 
     owed.
       ``(3) Notice required.--The State shall notify custodial 
     parents of children who are receiving aid under part A of the 
     relief available under this subsection to individuals who 
     marry (or remarry).''.
       (f) Regulations.--The Secretary shall promulgate 
     regulations--
       (1) under title IV-D of the Social Security Act, 
     establishing a uniform nationwide standard for allocation of 
     child support collections from an obligor owing support to 
     more than one family; and
       (2) under title IV-A of such Act, establishing standards 
     applicable to States electing the alternative formula under 
     section 457(b) of the Social Security Act for distribution of 
     collections on behalf of families receiving Aid to Families 
     with Dependent Children, designed to minimize irregular 
     monthly payments to such families.
       (g) Clerical Amendment.--Section 454 is amended--
       (1) in paragraph (11), by striking ``(11)'' and inserting 
     ``(11)(A)''; and
       (2) by redesignating paragraph (12) as subparagraph (B) of 
     paragraph (11).
       (h) Conforming Amendment.--Section 402(a)(26)(A)(i), as 
     redesignated by section 601(b)(2)(A), is amended--
       (1) by striking ``(I)''; and
       (2) by striking ``, and (II)'' and all that follows before 
     the semicolon.

     SEC. 604. DUE PROCESS RIGHTS.

       (a) Section 454, as amended by section 603(g), is further 
     amended by inserting after paragraph (11) the following new 
     paragraph:
       ``(12) provide for procedures to ensure that--
       ``(A) individuals who are parties to cases in which 
     services are being provided under this part--
       ``(i) receive notice of all proceedings in which support 
     obligations might be established or modified; and
       ``(ii) receive a copy of any order establishing or 
     modifying a child support obligation within 14 days after 
     issuance of such order; and
       ``(B) individuals receiving services under this part have 
     access to a fair hearing or other formal complaint procedure, 
     meeting standards established by the Secretary, that ensures 
     prompt consideration and resolution of complaints (but the 
     resort to such procedure shall not stay the enforcement of 
     any support order);''.
       (b) Effective Date.--The amendments made by this section 
     shall become effective on October 1, 1996.

     SEC. 605. PRIVACY SAFEGUARDS.

       (a) State Plan Requirement.--Section 454, as amended by 
     section 601, is further amended--
       (1) by striking ``and'' at the end of paragraph (24);
       (2) by striking the period at the end of paragraph (25) and 
     inserting ``; and''; and
       (3) by adding after paragraph (25) the following new 
     paragraph;
       ``(26) will have in effect safeguards applicable to all 
     sensitive and confidential information handled by the State 
     agency designed to protect the privacy rights of the parties, 
     including--
       ``(A) safeguards against unauthorized use or disclosure of 
     information relating to proceedings or actions to establish 
     paternity, or to establish or enforce support; and
       ``(B) prohibitions on the release of information on the 
     whereabouts of one party to another party against whom a 
     protective order with respect to such party has been 
     entered.''.
       (b) The amendments made by this section shall become 
     effective on October 1, 1996.

     SEC. 606. REQUIREMENT TO FACILITATE ACCESS TO SERVICES.

       (a) State Plan Requirement.--Section 454(23) is amended--
       (1) by striking ``the State will regularly'' and inserting 
     ``the State will--
       ``(A) regularly'';
       (2) by incorporating the remainder of the text within 
     subparagraph (A);
       (3) by striking ``and'' at the end; and
       (4) by adding after and below subparagraph (A) the 
     following new subparagraph:
       ``(B) have a plan for outreach to parents designed to 
     disseminate information about and increase access to child 
     support enforcement services, including plans responding to 
     needs--
       ``(i) of working parents to obtain such services without 
     taking time off work; and
       ``(ii) of parents with limited proficiency in English for 
     elimination of language barriers to use of such services; 
     and''.
       (b) The amendments made by this section shall become 
     effective on October 1, 1996.

               PART B--PROGRAM ADMINISTRATION AND FUNDING

     SEC. 611. FEDERAL MATCHING PAYMENTS.

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

     SEC. 612. PERFORMANCE-BASED INCENTIVES AND PENALTIES.

       (a) Incentive Adjustments to Federal Matching Rate.--(1) In 
     general.--Section 458 is amended to read as follows:


                ``incentive adjustments to matching rate

       ``Sec. 458. (a) Incentive Adjustment.--(1) In general.--In 
     order to encourage and reward State child support enforcement 
     programs which perform in an effective manner, the Federal 
     matching rate for payments to a State under section 
     455(a)(1)(A), for each fiscal year beginning on or after 
     October 1, 1997, shall be increased by a factor reflecting 
     the sum of the applicable incentive adjustments (if any) 
     determined in accordance with regulations under this section 
     with respect to Statewide paternity establishment and to 
     overall performance in child support enforcement.
       ``(2) Standards.--(A) In general.--The Secretary shall 
     specify in regulations--
       ``(i) the levels of accomplishment, and rates of 
     improvement as alternatives to such levels, which States must 
     attain to qualify for incentive adjustments under this 
     section; and
       ``(ii) the amounts of incentive adjustment that shall be 
     awarded to States achieving specified accomplishment or 
     improvement levels, which amounts shall be graduated, ranging 
     up to--
       ``(I) 5 percentage points, in connection with Statewide 
     paternity establishment; and
       ``(II) 10 percentage points, in connection with overall 
     performance in child support enforcement.
       ``(B) Limitation.--In setting performance standards 
     pursuant to subparagraph (A)(i) and adjustment amounts 
     pursuant to subparagraph (A)(ii), the Secretary shall ensure 
     that the aggregate number of percentage point increases as 
     incentive adjustments to all States do not exceed such 
     aggregate increases as assumed by the Secretary in estimates 
     of the cost of this section as of June 1994, unless the 
     aggregate performance of all States exceeds the projected 
     aggregate performance of all States in such cost estimates.
       ``(3) Determination of incentive adjustment.--The Secretary 
     shall determine the amount (if any) of incentive adjustment 
     due each State on the basis of the data submitted by the 
     State pursuant to section 454(15)(B) concerning the levels of 
     accomplishment (and rates of improvement) with respect 
     to performance indicators specified by the Secretary 
     pursuant to this section.
       ``(4) Fiscal year subject to incentive adjustment.--The 
     total percentage point increase determined pursuant to this 
     section with respect to a State program in a fiscal year 
     shall apply as an adjustment to the applicable percent under 
     section 455(a)(2) for payments to such State for the 
     succeeding fiscal year.
       ``(b) Meaning of Terms.--For purposes of this section--
       ``(1) the term `Statewide paternity establishment 
     percentage' means, with respect to a fiscal year, the ratio 
     (expressed as a percentage) of--
       ``(A) the total number of out-of-wedlock children in the 
     State under one year of age for whom paternity is established 
     or acknowledged during the fiscal year, to
       ``(B) the total number of children born out of wedlock in 
     the State during such fiscal year; and
       ``(2) the term `overall performance in child support 
     enforcement' means a measure or measures of the effectiveness 
     of the State agency in a fiscal year which takes into account 
     factors including--
       ``(A) the percentage of cases requiring a child support 
     order in which such an order was established;
       ``(B) the percentage of cases in which child support is 
     being paid;
       ``(C) the ratio of child support collected to child support 
     due; and
       ``(D) the cost-effectiveness of the State program, as 
     determined in accordance with standards established by the 
     Secretary in regulations.''.
       (b) Title IV-D Payment Adjustment.--Section 455(a)(2), as 
     amended by section 611, is further amended--
       (1) by striking the period at the end of subparagraph 
     (C)(ii) and inserting a period; and
       (2) by adding after and below subparagraph (C), flush with 
     the left margin of the subsection, the following:

     ``increased by the incentive adjustment factor (if any) 
     determined by the Secretary pursuant to section 458.''.
       (c) Conforming Amendments.--Section 454(22) is amended--
       (A) by striking ``incentive payments'' the first place it 
     appears and inserting ``incentive adjustments''; and
       (B) by striking ``any such incentive payments made to the 
     State for such period'' and inserting ``any increases in 
     Federal payments to the State resulting from such incentive 
     adjustments''.
       (d) Calculation of IV-D Paternity Establishment 
     Percentage.--(A) Section 452(g) is amended in paragraph (1), 
     in the matter preceding subparagraph (A), by inserting ``its 
     overall performance in child support enforcement is 
     satisfactory (as defined in section 458(b) and regulations of 
     the Secretary), and'' after ``1994,''.
       (B) Section 452(g)(2) is amended--
       (i) in subparagraph (A), in the matter preceding clause 
     (i)--
       (I) by striking ``paternity establishment percentage'' and 
     inserting ``IV-D paternity establishment percentage''; and
       (II) by striking ``(or all States, as the case may be)'';
       (ii) in subparagraph (A)(i), by striking ``during the 
     fiscal year'';
       (iii) in subclause (I) of subparagraph (A)(ii), by striking 
     ``as of the end of the fiscal year'' and inserting ``in the 
     fiscal year or, at the option of the State, as of the end of 
     such year'';
       (iv) in subclause (II) of subparagraph (A)(ii), by striking 
     ``or (E) as of the end of the fiscal year'' and inserting 
     ``in the fiscal year or, at the option of the State, as of 
     the end of such year'';
       (v) in subparagraph (A)(iii)--
       (I) by striking ``during the fiscal year''; and
       (II) by striking ``and'' at the end; and (vi) in the matter 
     following subparagraph (A)--
       (I) by striking ``who were born out of wedlock during the 
     immediately preceding fiscal year'' and inserting ``born out 
     of wedlock'';
       (II) by striking ``such preceding fiscal year'' both places 
     it appears and inserting ``the preceding fiscal year''; and
       (III) by striking ``or (E)'' the second place it appears.
       (C) Section 452(g)(3) is amended--
       (i) by striking subparagraph (A) and redesignating 
     subparagraphs (B) and (C) as subparagraphs (A) and (B), 
     respectively;
       (ii) in subparagraph (A), as redesignated, by striking 
     ``the percentage of children born out-of-wedlock in the 
     State'' and inserting ``the percentage of children in the 
     State who are born out of wedlock or for whom support has not 
     been established''; and
       (iii) in subparagraph (B), as redesignated--
       (I) by inserting ``and overall performance in child support 
     enforcement'' after ``paternity establishment percentages''; 
     and
       (II) by inserting ``and securing support'' before the 
     period.
       ``(e) Title IV-A Payment Reduction.--Section 403 is 
     amended--
       (1) in subsection (a), by striking ``1958--'' and inserting 
     ``1958--'' (subject to subsection (h))--'';
       (2) in subsection (h), by striking all that precedes 
     paragraph (3) and inserting the following:
       ``(h)(1) If the Secretary finds, with respect to a State 
     program under this part in a fiscal year beginning on or 
     after October 1, 1996--
       ``(A)(i) on the basis of data submitted by a State pursuant 
     to section 454(15)(B), that the State program in such fiscal 
     year failed to achieve the IV-D paternity establishment 
     percentage (as defined in section 452(g)(2)(A)) or the 
     appropriate level of overall performance in child support 
     enforcement (as defined in section 458(b)(2)), or to meet 
     other performance measures that may be established by the 
     Secretary, or
       ``(ii) on the basis of an audit or audits of such State 
     data conducted pursuant to section 452(a)(4)(C), that the 
     State data submitted pursuant to section 454(15)(B) is 
     incomplete or unreliable; and
       ``(B) that, with respect to the succeeding fiscal year--
       ``(i) the State failed to take sufficient corrective action 
     to achieve the appropriate performance levels as described in 
     subparagraph (A)(i), or
       ``(ii) the data submitted by the State pursuant to section 
     454(15)(B) is incomplete or unreliable,

     the amounts otherwise payable to the State under this part 
     for quarters following the end of such succeeding fiscal 
     year, prior to quarters following the end of the first 
     quarter throughout which the State program is in compliance 
     with such performance requirement, shall be reduced by the 
     percentage specified in paragraph (2).
       ``(2) The reductions required under paragraph (1) shall 
     be--
       ``(A) not less than one nor more than two percent, or
       ``(B) not less than two nor more than three percent, if the 
     finding is the second consecutive finding made pursuant to 
     paragraph (1), or
       ``(C) not less than three nor more than five percent, if 
     the finding is the third or a subsequent consecutive such 
     finding.''; and
       (3) in subsection (h)(3), by striking ``not in full 
     compliance'' and all that follows and inserting ``determined 
     as a result of an audit to have submitted incomplete or 
     unreliable data pursuant to section 454(15)(B), shall be 
     determined to have submitted adequate data if the Secretary 
     determines that the extent of the incompleteness or 
     unreliability of the data is of a technical nature which does 
     not adversely affect the determination of the level of the 
     State's performance.''.
       (f) Effective Dates.--
       (1) Incentive adjustments.--(A) The amendments made by 
     subsections (a), (b), and (c) shall become effective October 
     1, 1996, except to the extent provided in subparagraph (B).
       (B) The provisions of section 458 of the Act, as in effect 
     prior to the enactment of this section, shall be effective 
     for purposes of incentive payments to States for fiscal years 
     prior to fiscal year 1998.
       (2) Penalty reductions.--(A) The amendments made by 
     subsection (d) shall become effective with respect to 
     calendar quarters beginning on and after the date of 
     enactment of this Act.
       (B) The amendments made by subsection (e) shall become 
     effective with respect to calendar quarters beginning on and 
     after the date one year after the date of enactment of this 
     Act.

     SEC. 613. FEDERAL AND STATE REVIEWS AND AUDITS.

       (a) State Agency Activities.--Section 454 is amended--
       (1) in paragraph (14), by striking ``(14)'' and inserting 
     ``(14)(A)'';
       (2) by inserting paragraph (15) as subparagraph (B) of 
     paragraph (14); and
       (3) by inserting after paragraph (14) the following new 
     paragraph:
       ``(15) provide for--
       ``(A) a process for annual reviews of and reports to the 
     Secretary on the State program under this part, using such 
     standards and procedures as are required by the Secretary, 
     under which the State agency will determine the extent to 
     which such program is in conformity with applicable 
     requirements with respect to the operation of State programs 
     under this part (including the status of complaints filed 
     under the procedure required under paragraph (12)(B)); and
       ``(B) a process of extracting from the State automated data 
     processing system and transmitting to the Secretary data and 
     calculations concerning the levels of accomplishment (and 
     rates of improvement) with respect to applicable performance 
     indicators (including IV-D paternity establishment 
     percentages and overall performance in child support 
     enforcement) to the extent necessary for purposes of sections 
     452(g) and 458.''.
       (b) Federl Activities.--Section 452(a)(4) is amended to 
     read as follows:
       ``(4)(A) review data and calculations transmitted by State 
     agencies pursuant to section 454(15)(B) on State program 
     accomplishments with respect to performance indicators for 
     purposes of section 452(g) and 458, and determine the amount 
     (if any) of penalty reductions pursuant to section 403(h) to 
     be applied to the State;
       ``(B) review annual reports by State agencies pursuant to 
     section 454(15)(A) on State program conformity with Federal 
     requirements; evaluate any elements of a State program in 
     which significant deficiencies are indicated by such report 
     on the status of complaints under the State procedure under 
     section 454(12)(B); and, as appropriate, provide to the State 
     agency comments, recommendations for additional or 
     alternative corrective actions, and technical assistance; and
       ``(C) conduct audits, in accordance with the government 
     auditing standards of the United States Comptroller General--
       ``(i) at least once every 3 years (or more frequently, in 
     the case of a State which fails to meet requirements of this 
     part, or of regulations implementing such requirements, 
     concerning performance standards and reliability of program 
     data) to assess the completeness, reliability, and security 
     of the data, and the accuracy of the reporting systems, used 
     for the calculations of performance indicators specified in 
     subsection (g) and section 458;
       ``(ii) of the adequacy of financial management of the State 
     program, including assessments of--
       ``(I) whether Federal and other funds made available to 
     carry out the State program under this part are being 
     appropriately expended, and are properly and fully accounted 
     for; and
       ``(II) whether collections and disbursements of support 
     payments and program income are carried out correctly and are 
     properly and fully accounted for; and
       ``(iii) for such other purposes as the Secretary may find 
     necessary;''.
       (c) Effective Date.--The amendments made by this section 
     shall be effective with respect to calendar quarters 
     beginning on or after the date one year after enactment of 
     this section.

     SEC. 614. AUTOMATED DATA PROCESSING REQUIREMENTS.

       ``(a) Revised Requirements.--(1) Section 454(16) is 
     amended--
       (A) by striking ``, at the option of the State,'';
       (B) by inserting ``and operation by the State agency after 
     ``for the establishment'';
       (C) by inserting ``meeting the requirements of section 
     454A'' after ``information retrieval system'';
       (D) by striking ``in the State and localities thereof, so 
     as (A)'' and inserting ``so as'';
       (E) by striking ``(i)''; and
       (F) by striking ``(including'' and all that follows and 
     inserting a semicolon.
       ``(2) Part D of title IV is amended by inserting after 
     section 454 the following new section:


                      ``automated data processing

       ``Sec. 454A. (a) In General.--In order to meet the 
     requirements of this section, for purposes of the requirement 
     of section 454(16), a State agency shall have in operation a 
     single statewide automated data processing and information 
     retrieval system which has the capability to perform the 
     tasks specified in this section, and performs such tasks with 
     the frequency and in the manner specified in this part or in 
     regulations or guidelines of the Secretary.
       ``(b) Program Management.--The automated system required 
     under this section shall perform such functions as the 
     Secretary may specify relating to management of the program 
     under this part, including--
       ``(1) controlling and accounting for use of Federal, State, 
     and local funds to carry out such program; and
       ``(2) maintaining the data necessary to meet Federal 
     reporting requirements on a timely basis.
       ``(c) Calculation of Performance Indicators.--In order to 
     enable the Secretary to determine the incentive and penalty 
     adjustments required by sections 452(g) and 458, the State 
     agency shall--
       ``(1) use the automated system--
       ``(A) to maintain the requisite data on State performance 
     with respect to paternity establishment and child support 
     enforcement in the State; and
       ``(B) to calculate the IV-D paternity establishment 
     percentage and overall performance in child support 
     enforcement for the State for each fiscal year; and
       ``(2) have in place systems controls to ensure the 
     completeness, and reliability of, and ready access to, the 
     data described in paragraph (1)(A), and the accuracy of the 
     calculations described in paragraph (1)(B).
       ``(d) Information Integrity and Security.--The State agency 
     shall have in effect safeguards on the integrity, accuracy, 
     and completeness of, access to, and use of data in the 
     automated system required under this section, which shall 
     include the following (in addition to such other safeguards 
     as the Secretary specifies in regulations):
       ``(1) Policies restricting access.--Written policies 
     concerning access to data by State agency personnel, and 
     sharing of data with other persons, which--
       ``(A) permit access to and use of data only to the extent 
     necessary to carry out program responsibilities;
       ``(B) specify the data which may be used for particular 
     program purposes, and the personnel permitted access to such 
     data; and
       ``(C) ensure that data obtained or disclosed for a limited 
     program purpose is not used or redisclosed for another, 
     impermissible purpose.
       ``(2) Systems controls.--Systems controls (such as 
     passwords or blocking of fields) to ensure strict adherence 
     to the policies specified under paragraph (1).
       ``(3) Monitoring of access.--Routine monitoring of access 
     to and use of the automated system, through methods such as 
     audit trails and feedback mechanisms, to guard against and 
     promptly identify unauthorized access or use.
       ``(4) Training and information.--The State agency shall 
     have in effect procedures to ensure that all personnel 
     (including State and local agency staff and contractors) who 
     may have access to or be required to use sensitive or 
     confidential program data are fully informed of applicable 
     requirements and penalties, and are adequately trained in 
     security procedures.
       ``(5) Penalties.--The State agency shall have in effect 
     administrative penalties (up to and including dismissal from 
     employment) for unauthorized access to, or disclosure or use 
     of, confidential data.''.
       (3) Implementation timetable.--Section 454(24) is amended 
     to read as follows:
       ``(24) provide that the State will have in effect an 
     automated data processing and information retrieval system--
       ``(A) by October 1, 1995, meeting all requirements of this 
     part which were enacted on or before the date of enactment of 
     the Family Support Act of 1988; and
       ``(B) by October 1, 1998, meeting all requirements of this 
     part enacted on or before the date of enactment of the Work 
     and Responsibility Act of 1994 (but this provision shall not 
     be construed to alter earlier deadlines specified for 
     elements of such system);''.
       (b) Special Federal Matching Rate for Development Costs of 
     Automated Systems.--Section 455(a) is amended--
       (1) in paragraph (1)(B)--
       (A) by striking ``90 percent'' and inserting ``the percent 
     specified in paragraph (3)'';
       (B) by striking ``so much of''; and
       (C) by striking ``which the Secretary'' and all that 
     follows and inserting ``, and''; and
       (2) by adding at the end the following new paragraph:
       ``(3)(A) The Secretary shall pay to each State, for each 
     quarter in fiscal year 1995, 90 percent of so much of State 
     expenditures described in subparagraph (1)(B) as the 
     Secretary finds are for a system meeting the requirements 
     specified in section 454(16), or meeting such requirements 
     without regard to clause (D) thereof.
       ``(B)(i) The Secretary shall pay to each State, for each 
     quarter in fiscal years 1996 through 2000, the percentage 
     specified in clause (ii) of so much of State expenditures 
     described in subparagraph (1)(B) as the Secretary finds are 
     for a system meeting the requirements specified in section 
     454(16) and 454A, subject to clause (iii).
       ``(ii) The percentage specified in this clause, for 
     purposes of clause (i), is the higher of--
       ``(I) 80 percent, or
       ``(II) the percentage otherwise applicable to Federal 
     payments to the State under subparagraph (A) (as adjusted in 
     pursuant to section 458).
       ``(iii) Notwithstanding any other provision of this 
     section, the total amount payable by the Secretary with 
     respect to expenditures during fiscal years specified in 
     clause (i) shall not exceed $260,000,000, to be distributed 
     among the States, and to be made available at such time or 
     times over the five-year period, as is provided in 
     regulations issued by the Secretary, taking into account the 
     relative size of State caseloads and the level of automation 
     needed to meet the requirements of this part, and payments 
     under clause (i) shall be made to a State at such times and 
     in such a manner as provided in the advanced planning 
     document approved under section 452(d).''.
       (c) Conforming Amendment.--Section 123(c) of the Family 
     Support Act of 1988 is repealed.
       (d) Additional Provisions.--For additional provisions of 
     section 454A, as added by subsection (a), see sections 621, 
     622, and 636 of this Act.

     SEC. 615. DIRECTOR OF CSE PROGRAM; TRAINING AND STAFFING.

       (a) Reporting to Secretary.--Section 452(a) is amended, in 
     the matter preceding paragraph (1), by striking ``directly''.
       (b) Training Program.--Section 452(a)(7) is amended by 
     striking ``paternity;'' and inserting ``paternity, through 
     activities including--
       ``(A) development of a core curriculum and training 
     standards to be used by States in the development of State-
     specific training guides; and
       ``(B) development of a national training program for 
     directors of State programs under this part;''.
       (c) State Plan Requirement.--Section 454, as amended by 
     sections 602 and 604, is further amended--
       (1) by striking ``and'' at the end of paragraph (25);
       (2) by striking the period at the end of paragraph (26) and 
     inserting ``; and''; and
       (3) by adding after paragraph (26) the following new 
     paragraph:
       (27) provide that the State agency will develop and 
     implement a training program which--
       ``(A) is consistent with the national training standards 
     and core curriculum developed by the Secretary pursuant to 
     section 452(a)(7), and uses a State-specific training guide 
     incorporating such core curriculum;
       ``(B) provides for initial and ongoing training of all 
     staff (including State and local agency staff and 
     contractors) of the program under this part, including annual 
     training for case workers and special training when 
     significant changes are made in statutes, regulations, 
     policies, or procedures; and
       ``(C) may provide (subject to approval by the Secretary) 
     for appropriate training of other persons with 
     responsibilities relating to the implementation of the State 
     program under this part (including staff administering 
     programs under part A, part E, title XIX, and other related 
     and complementary programs; judges and other staff of 
     judicial and administrative tribunals; law enforcement 
     personnel; staff of social services organizations; and the 
     private bar).
       (d) Staffing Studies.--(1) Scope of study.--The Secretary 
     of Health and Human Services shall, directly or by contract, 
     conduct studies of the staffing of each State child support 
     enforcement program under title IV-D of the Act. Such studies 
     shall include a review of the staffing needs created by 
     requirements for automated data processing, maintenance of a 
     central case registry, and centralized collections of child 
     support, and of changes in these needs resulting from changes 
     in such requirements.
       (2) Frequency of studies.--The Secretary shall complete the 
     first staffing study required under paragraph (1) by October 
     1, 1996, and may conduct additional studies subsequently at 
     appropriate intervals.
       (3) Report to congress.--The Secretary shall submit a 
     report to the Congress stating the findings and conclusions 
     of each study conducted under this subsection.

     SEC. 616. FUNDING FOR SECRETARIAL ASSISTANCE TO STATE 
                   PROGRAMS.

       Section 452 is amended by adding at the end the following 
     new subsection:
       ``(j) Funding for Federal Activities Assisting State 
     programs.--(1) There shall be available to the Secretary, 
     from amounts appropriated for fiscal year 1995 and each 
     succeeding fiscal year for payments to States under this 
     part, the amount specified in paragraph (2) for the costs to 
     the Secretary for--
       ``(A) information dissemination and technical assistance to 
     States, training of State and Federal staff, staffing 
     studies, and related activities needed to improve programs 
     (including technical assistance concerning State automated 
     systems);
       ``(B) research, demonstration, and special projects of 
     regional or national significance relating to the operation 
     of State programs under this part; and
       `'(C) operation of the Federal parent Locator Service under 
     section 453 and the National Welfare Reform Information 
     Clearinghouse under section 453A, to the extent such costs 
     are not recovered through user fees.
       ``(2) The amount specified in this paragraph for a fiscal 
     year is the amount equal to a percentage of the reduction in 
     Federal payments to States under part A on account of child 
     support (including arrearages) collected in the preceding 
     fiscal year on behalf of children receiving aid under such 
     part A in such preceding fiscal year (as determined on the 
     basis of the most recent reliable data available to the 
     Secretary as of the end of the third calendar quarter 
     following the end of such preceding fiscal year), equal to--
       ``(A) 1 percent, for the activities specified in 
     subparagraphs (A) and (B) of paragraph (1); and
       ``(B) 2 percent, for the activities specified in 
     subparagraph (C) of paragraph (1).''.

     SEC. 617. DATA COLLECTION AND REPORTS BY THE SECRETARY.

       (a) Annual Report to Congress.--(1) Section 452(a)(10)(A) 
     is amended--
       (A) by striking ``this part;'' and inserting ``this part, 
     including--''; and
       (B) by adding at the end the following indented clauses:
       ``(i) the total amount of child support payments collected 
     as a result of services furnished during such fiscal year to 
     individuals receiving services under this part;
       ``(ii) the cost to the States and to the Federal Government 
     of furnishing such services to those individuals; and
       ``(iii) the number of cases involving families--
       ``(I) who became ineligible for aid under part A during a 
     month in such fiscal year; and
       ``(II) with respect to whom a child support payment was 
     received in the same month;''.
       (2) Section 452(a)(10)(C) is amended--
       (A) in the matter preceding clause (i)--
       (i) by striking ``with the data required under each clause 
     being separately stated for cases'' and inserting 
     ``separately stated for (1) cases'';
       (ii) by striking ``cases where the child was formerly 
     receiving'' and inserting ``or formerly received'';
       (iii) by inserting ``or 1912'' after ``471(a)(17)''; and
       (iv) by inserting ``(2)'' before ``all other'';
       (B) in each of clauses (i) and (ii), by striking ``, and 
     the total amount of such obligations'';
       (C) in clause (iii), by striking ``described in'' and all 
     that follows and inserting ``in which support was collected 
     during the fiscal year;'';
       (D) by striking clause (iv);
       (E) by redesignating clause (v) as clause (vii), and 
     inserting after clause (iii) the following new clauses:
       ``(iv) the total amount of support collected during such 
     fiscal year and distributed as current support;
       ``(v) the total amount of support collected during such 
     fiscal year and distributed as arrearages;
       ``(vi) the total amount of support due and unpaid for all 
     fiscal years; and''.
       (3) Section 452(a)(10)(G) is amended by striking ``on the 
     use of Federal courts and''.
       (4) Section 452(a)(10) is further amended by striking the 
     matter following the end of subparagraph (I).
       (b) Data Collection and Reporting.--Section 469 is 
     amended--
       (1) in subsections (a) and (b), to read as follows:
       ``(a) The Secretary shall collect and maintain, on a fiscal 
     year basis, up-to-date statistics, by State, with respect to 
     services to establish paternity and services to establish 
     child support obligations, the data specified in subsection 
     (b), separately stated, in the case of each such service, 
     with respect to--
       ``(1) families (or dependent children) receiving aid under 
     plans approved under part A (or E); and
       ``(2) families not receiving such aid.
       ``(b) The data referred to in subsection (a) are--
       ``(1) the number of cases in the caseload of the State 
     agency administering the plan under this part in which such 
     service is needed; and
       ``(2) the number of such cases in which the service has 
     been provided.''; and
       (2) in subsection (c), by striking ``(a)(2)'' and inserting 
     ``(b)(2)''.
       (c) Effective Date.--The amendments made by this section 
     shall be effective with respect to fiscal year 1995 and 
     succeeding fiscal years.

                    PART C--LOCATE AND CASE TRACKING

     SEC. 621. CENTRAL STATE AND CASE REGISTRY.

       Section 454A, as added by section 614, is further amended 
     by adding at the end the following new subsections:
       ``(e) Central Case Registry.--(1) In general.--The 
     automated system required under this section shall perform 
     the functions, in accordance with the provisions of this 
     subsection, of a single central registry containing records 
     with respect to each case in which services are being 
     provided by the State agency (including, on and after October 
     1, 1997, each order specified in section 466(a)(12)), using 
     such standardized date elements (such as names, social 
     security numbers or other uniform identification numbers, 
     dates of birth, and case identification numbers), and 
     containing such other information (such as information on 
     case status)as the Secretary may require.
       ``(2) Payment records.--Each case record in the central 
     registry shall include a record of--
       ``(A) the amount of monthly (or other periodic) support 
     owed under the support order, and other amounts due or 
     overdue (including arrears, interest or late payment 
     penalties, and fees);
       ``(B) the date on which the support obligation will 
     terminate under such order;
       ``(C) all child support and related amounts collected 
     (including such amounts as fees, late payment penalties, and 
     interest on arrearages); and
       ``(D) the distribution of such amounts collected.
       ``(3) Updating and monitoring.--The State agency shall 
     promptly establish and maintain, and regularly monitor, case 
     records in the registry required by this subsection, on the 
     basis of--
       ``(A) information on administrative actions and 
     administrative and judicial proceedings and orders relating 
     to paternity and support;
       ``(B) information obtained from matches with Federal, 
     State, or local data sources;
       ``(C) information on support collections and distributions; 
     and
       ``(D) any other relevant information.
       ``(f) Data Matches and Other Disclosures of Information.--
     The automated system required under this section shall have 
     the capacity, and be used by the State agency, to extract 
     data at such times, and in such standardized format or 
     formats, as may be required by the Secretary, and to share 
     and match data with, and receive data from, other data bases 
     and data matching services, in order to obtain (or provide) 
     information necessary to enable the State agency (or 
     Secretary or other State or Federal agencies) to carry out 
     responsibilities under this part. Data matching activities of 
     the State agency shall include at least the following:
       ``(A) National child support registry.--Furnish to the 
     National Child Support Registry established under section 
     453A (and update as necessary, with information including 
     notice of expiration of orders) minimal information (to be 
     specified by the Secretary) on each child support case in the 
     central case registry.
       ``(B) Federal parent locator service.--Exchange data with 
     the Federal Parent Locator Service for the purposes specified 
     in section 453.
       ``(C) AFDC and medicaid agencies.--Exchange data with State 
     agencies (of the State and of other States) administering the 
     programs under part A and title XIX, as necessary for the 
     performance of State agency responsibilities under this part 
     and under such programs.
       ``(D) Intra- and interstate data matches.--Exchange data 
     with other agencies of the State, agencies of other States, 
     and interstate information networks, as necessary and 
     appropriate to carry out (or assist other States to carry 
     out) the purposes of this part.''.

     SEC. 622. CENTRALIZED COLLECTION AND DISBURSEMENT OF SUPPORT 
                   PAYMENTS.

       (a) State Plan Requirement.--Section 454, as previously 
     amended by sections 601, 605, and 615, is further amended--
       (A) by striking ``and'' at the end of paragraph (26);
       (B) by striking the period at the end of paragraph (27) and 
     inserting ``; and''; and
       (C) by adding after paragraph (27) the following new 
     paragraph:
       ``(28) provide that the State agency, on and after October 
     1, 1997--
       ``(A) will operate a centralized, automated unit for the 
     collection and disbursement of child support under orders 
     being enforced under this part, in accordance with section 
     454B; and
       ``(B) will have sufficient State staff (consisting of State 
     employees, and (at State option) contractors reporting 
     directly to the State agency) to monitor and enforce support 
     collections through such centralized unit, including carrying 
     out the automated data processing responsibilities specified 
     in section 454A(g) and to impose, as appropriate in 
     particular cases, the administrative enforcement remedies 
     specified in section 466(c)(1).''.
       (b) Establishment of Centralized Collection Unit.--Part D 
     of title IV is amended by adding after section 454A the 
     following new section:


     ``centralized collection and disbursement of support payments

       ``Sec. 454B. (a) In General.--In order to meet the 
     requirement of section 454(28), the State agency must operate 
     a single centralized, automated unit for the collection and 
     disbursement of support payments, coordinated with the 
     automated data system required under section 454A, in 
     accordance with the provisions of this section, which shall 
     be--
       ``(1) operated directly by the State agency (or by two or 
     more State agencies under a regional cooperative agreement), 
     or by a single contractor responsible directly to the State 
     agency; and
       ``(2) used for the collection and disbursement (including 
     interstate collection and disbursement) of payments under 
     support orders in all cases being enforced by the State 
     pursuant to section 454(4).
       ``(b) Required Procedures.--The centralized collections 
     unit shall use automated procedures, electronic processes, 
     and computer-driven technology to the maximum extent 
     feasible, efficient, and economical, for the collection and 
     disbursement of support payments, including procedures--
       ``(1) for receipt of payments from parents, employers, and 
     other States, and for disbursements to custodial parents and 
     other obligees, the State agency, and the State agencies of 
     other States;
       ``(2) for accurate identification of payments;
       ``(3) to ensure prompt disbursement of the custodial 
     parent's share of any payment; and
       ``(4) to furnish to either parent, upon request, timely 
     information on the current status of support payments.''.
       (c) Use of Automated System.--Section 454A, as added by 
     section 614 and amended by section 621, is further amended by 
     adding at the end the following new subsection:
       ``(g) Centralized Collection and Distribution of Support 
     Payments.--The automated system required under this section 
     shall be used, to the maximum extent feasible, to assist and 
     facilitate collections and disbursement of support payments 
     through the centralized collections unit operated pursuant to 
     section 454B, through the performance of functions including 
     at a minimum--
       ``(1) generation of orders and notices to employers (and 
     other debtors) for the withholding of wages (and other 
     income)--
       ``(A) within two working days after receipt (from the 
     National Directory of New Hires or any other source) of 
     notice of and the income source subject to such 
     withholding; and
       ``(B) using uniform formats directed by the Secretary;
       ``(2) ongoing monitoring to promptly identify failures to 
     make timely payment; and
       ``(3) automatic use of enforcement mechanisms (including 
     mechanisms authorized pursuant to section 466(c)) where 
     payments are not timely made.''.
       (d) The amendments made by this section shall become 
     effective on October 1, 1997.

     SEC. 623. AMENDMENTS CONCERNING INCOME WITHHOLDING.

       (a) Mandatory Income Withholding.--(1) Section 466(a)(1) is 
     amended to read as follows:
       ``(1) Income withholding.--(A) Under orders enforced under 
     the state plan.--Procedures described in subsection (b) for 
     the withholding from income of amounts payable as support in 
     cases subject to enforcement under the State plan.
       ``(B) Under certain orders predating change in 
     requirement.--Procedures under which all child support orders 
     issued (or modified) before October 1, 1995, and which are 
     not otherwise subject to withholding under subsection (b), 
     shall become subject to withholding from wages as provided in 
     subsection (b) if arrearages occur, without the need for a 
     judicial or administrative hearing.''.
       (2) Section 466(a)(8) is repealed.
       (3) Section 466(b) is amended--
       (A) in the matter preceding paragraph (1), by striking 
     ``subsection (a)(1) and inserting ``subsection (a)(1)(A)'';
       (B) in paragraph (5), by striking all that follows 
     ``administered by'' and inserting ``the State through the 
     centralized collections unit established pursuant to section 
     454B, in accordance with the requirements of such section 
     454B.'';
       (C) in paragraph (6)(A)(i)--
       (i) by inserting '', in accordance with timetables 
     established by the Secretary,'' after ``must be required''; 
     and
       (ii) by striking ``to the appropriate agency'' and all that 
     follows and inserting ``to the State centralized collections 
     unit within 5 working days after the date such amount would 
     (but for this subsection) have been paid or credited to the 
     employee, for distribution in accordance with this part.'';
       (D) in paragraph (6)(A)(ii), by inserting ``be in a 
     standard format prescribed by the Secretary, and'' after 
     ``shall''; and
       (E) in paragraph (6)(D)--
       (i) by striking ``employer who discharges'' and inserting 
     ``employer who--(A) discharges'';
       (ii) by relocating subparagraph (A), as designated, as an 
     indented subparagraph after and below the introductory 
     matter;
       (iii) by striking the period at the end; and
       (iv) by adding after and below subparagraph (A) the 
     following new subparagraph:
       ``(B) fails to withhold support from wages, or to pay such 
     amounts to the State centralized collections unit in 
     accordance with this subsection.
       (b) Conforming Amendment.--Section 466(c) is repealed.
       (c) Definition of Terms.--The Secretary shall promulgate 
     regulations providing definitions, for purposes of title IV-D 
     of the Act, for the term ``income'', and for such other terms 
     relating to income withholding under section 466(b) of the 
     Act as the Secretary may find it necessary or advisable to 
     define.

     SEC. 624. LOCATOR INFORMATION FROM INTERSTATE NETWORKS AND 
                   LABOR UNIONS.

       State Law Requirement.--Section 466(a), as amended by 
     section 623, is amended by adding after paragraph (7) the 
     following new paragraph:
       ``(8) Locator information.--(A) Interstate networks.--
     Procedures ensuring that the State will neither provide 
     funding for, nor use for any purpose (including any purpose 
     unrelated to the purposes of this part), any automated 
     interstate network or system used to locate individuals--
       ``(i) for purposes relating to the use of motor vehicles; 
     or
       ``(ii) providing information for law enforcement purposes 
     (where child support enforcement agencies are otherwise 
     allowed access by State and Federal law),

     unless all Federal and State agencies administering programs 
     under this part (including the entities established under 
     sections 453 and 453A) have access to information in such 
     system or network to the same extent as any other user of 
     such system or network.
       ``(B) Labor unions.--Procedures under which labor unions, 
     and their hiring halls, must furnish to the State agency, 
     upon request, with respect to any union member against whom 
     paternity or a support obligation is sought to be established 
     or enforced, such information as the union or hiring hall may 
     have on such member's residential address and telephone 
     number, employer's name, address, and telephone number, and 
     wages and medical insurance benefits.''.

     SEC. 625. NATIONAL WELFARE REFORM INFORMATION CLEARINGHOUSE.

       (a) Part D of title IV is amended by adding after section 
     453 the following new section:


          ``national welfare reform information clearinghouse

       ``Sec. 453A. (a)(1) In order to assist States in 
     administering their State plans under this part and parts A, 
     F, and G, and for the other purposes specified in this 
     section, the Secretary shall establish and operate a National 
     Welfare Reform Information Clearinghouse, performing the 
     functions and meeting the requirements specified in this 
     section, and containing the registries and directory 
     specified in paragraph (2).
       ``(2) Components specified.--The registries and directory 
     specified in this paragraph, for purposes of paragraph (1), 
     are:
       ``(A) the National Child Support Registry established 
     pursuant to subsection (b);
       ``(B) the National Directory of New Hires established 
     pursuant to subsection (c);
       ``(C) the Federal Parent Locater Service established 
     pursuant to section 453; and
       ``(D) the National Welfare Receipt Registry established 
     pursuant section 411.
       ``(3) Used for term.--For purposes of this section, 
     references to registries maintained under this section shall 
     be considered to include the National Directory of New Hires 
     and the Federal Parent Locator Service.
       ``(b) National Child Support Registry.--(1) In general.--
     The Secretary shall establish by October 1, 1997, and 
     maintain thereafter, an automated registry, to be known as 
     the National Child Support Registry, containing minimal 
     information (in accordance with paragraph (2)) on each case 
     in each State central case registry maintained pursuant to 
     section 454A(e), as furnished (and regularly updated), 
     pursuant to section 454A(f), by State agencies administering 
     programs under this part.
       ``(2) Case information.--The case information required to 
     be furnished pursuant to this subsection, as specified by the 
     Secretary, shall include sufficient information (including 
     names, social security numbers or other uniform 
     identification numbers, and State case identification 
     numbers) to identify the individuals who owe or are owed 
     support (or with respect to or on behalf of whom support 
     obligations are sought to be established), and the State or 
     States which have established or modified, or are enforcing 
     or seeking to establish, such an order.
       ``(c) National Directory of New Hires.--(1) In General.--
     The Secretary shall establish by October 1, 1997, and 
     maintain thereafter, an automated directory, to be known as 
     the National Directory of New Hires, containing--
       ``(A) information supplied by employers on each newly hired 
     individual, in which paragraph (2); and
       ``(B) information supplied by State agencies administered 
     State unemployment compensation laws, in accordance with 
     paragraph (3).
       ``(2) Employer information.--(A) Information required.--
     Subject to subparagraph (D), each employer shall furnish to 
     the Secretary, for inclusion in the directory under this 
     subsection, not later than 10 days after the date (on or 
     after October 1, 1997) on which the employer hires a new 
     employee (as defined in subparagraph (C)), a report 
     containing the name, date of birth social security number of 
     each employee, and the employer identification number of the 
     employer.
       ``(B) Reporting method and format.--The Secretary shall 
     provide for transmission of the reports required under 
     subparagraph (A) using formats and methods which minimize the 
     burden on employers, which shall include--
       ``(i) automated or electronic transmission of such reports;
       ``(ii) transmission by regular mail; and
       ``(iii) transmission of a copy of the form required for 
     purposes of compliance with section 3402 of the Internal 
     Revenue Code 1986.
       ``(C) Employee defined.--For purposes of this paragraph, 
     the term `employee'--
       ``(i) means (subject to clause (ii)) any individual subject 
     to the requirement of section 3402(f)(2) of the Internal 
     Revenue Code of 1986; and
       ``(ii) does not include an employee of a Federal or State 
     agency performing law enforcement functions, or of a Federal 
     agency performing intelligence or counterintelligence 
     functions, where the head of such agency has determined that 
     reporting pursuant to this paragraph with respect to such 
     employee could endanger the safety of the employee or 
     compromise an ongoing investigation or intelligence mission.
       ``(D) Paper reduction requirement.--As required by the 
     information resources management policies published by the 
     Director of the Office of Management and Budget pursuant to 
     44 U.S.C. 3504(b)(1), the Secretary, in order to minimize the 
     cost and reporting burden on employers, shall not require 
     reporting pursuant to this paragraph if an alternative 
     reporting mechanism can be developed that either relies on 
     existing Federal or State reporting or enables the Secretary 
     to collect the needed information in a more cost-effective 
     and equally expeditious manner, taking into account the 
     reporting costs on employers.
       ``(E) Civil money penalty on noncomplying employers.--(i) 
     Any employer that fails to make a timely report in accordance 
     with this paragraph with respect to an individual shall be 
     subject to a civil money penalty, for each calendar year in 
     which the failure occurs, of the lesser of $500 or 1 percent 
     of the wages or other compensation paid by such employer to 
     such individual during such calendar year.
       ``(ii) Subject to clause (iii), the provisions of section 
     1128A (other than subsections (a) and (b) thereof) shall 
     apply to a civil money penalty under clause (i) in the same 
     manner as they apply to a civil money penalty or proceeding 
     under section 1128A(a).
       ``(iii) Any employer with respect to whom a penalty under 
     this paragraph is upheld after an administrative hearing 
     shall be liable to pay all costs of the Secretary with 
     respect to such hearing.
       ``(3) Employment security information.--(A) Reporting 
     requirement.--Each State agency administering a State 
     unemployment compensation law approved by the Secretary of 
     Labor under the Federal Unemployment Tax Act shall furnish to 
     the Secretary of Health and Human Services extracts of the 
     reports to the Secretary of Labor concerning the wages and 
     unemployment compensation paid to individuals required under 
     section 303(a)(6), in accordance with subparagraph (B).
       ``(B) Manner of compliance.--The extracts required under 
     subparagraph (A) shall be furnished to the Secretary of 
     Health and Human Services on a quarterly basis, with respect 
     to calendar quarters beginning on and after October 1, 1995, 
     by such dates, in such format, and containing such 
     information as required by that Secretary in regulations.
       ``(d) Data Matches and Other Disclosures.--(1) Verification 
     by social security administration.--(A) The Secretary shall 
     transmit data on individuals and employers in the registries 
     maintained under this section to the Social Security 
     Administration to the extent necessary for verification in 
     accordance with subparagraph (B).
       ``(B) The Social Security Administration shall verify the 
     accuracy of, correct or supply to the extent necessary and 
     feasible, and report to the Secretary, the following 
     information in data supplied by the Secretary pursuant to 
     subparagraph (A):
       ``(i) the name, social security number, and birth date of 
     each individual; and
       ``(ii) the employer identification number of each employer.
       ``(2) Child support locator matches.--For the purpose of 
     locating individuals for purposes of paternity establishment 
     and establishment and enforcement of child support, the 
     Secretary shall--
       ``(A) match data in the New Hire Directory against data in 
     the Child Support Registry not less often than every 2 
     working days; and
       ``(B) report information obtained from such a match to 
     concerned State agencies operating programs under this part 
     not later than 2 working days after such match.
       ``(3) Data matches and disclosures of data in all 
     registries.--(A) For title IV program purposes.--The 
     Secretary shall--
       ``(i) perform matches of data in each registry maintained 
     under this section against data in each other such registry 
     (other than the matches required pursuant to paragraph (1)), 
     and report information resulting from such matches to State 
     agencies operating programs under this part and parts A, F, 
     and G; and
       ``(ii) disclose data in such registries to such State 
     agencies--

     to the extent, and with the frequency, that the Secretary 
     determines to be effective in assisting such States to carry 
     out their responsibilities under such programs.
       ``(B) for income eligibility verification system.--The 
     Secretary shall disclose data in the registries maintained 
     under this section to the programs specified in section 
     1137(b), to the extent necessary to enable such programs to 
     meet requirements for an income eligibility verification 
     system under such section 1137.
       ``(c) To social security administration.--The Secretary 
     shall disclose data in the registries maintained under this 
     section to the Social Security Administration.
       ``(i) for the purpose of determining the accuracy of 
     payments under the supplemental security income program under 
     title XVI; or
       ``(ii) for use in connection with benefits under title II.
       ``(4) Other disclosures of new hire data.--The Secretary 
     shall disclose data in the New Hire Directory under 
     subsection (c)--
       ``(A) to the Secretary of the Treasury for purposes 
     directly connected with--
       ``(i) the administration of the earned income tax credit 
     under section 32 of the Internal Revenue Code of 1986, or the 
     advance payment of such credit under section 3507 of such 
     Code; or
       ``(ii) verification of a claim with respect to employment 
     in an individual tax return; and
       ``(B) to State agencies operating employment security and 
     workers compensation programs, for the purpose of assisting 
     such agencies to determine the allowability of claims for 
     benefits under such programs.
       ``(5) Disclosures for research purposes.--The Secretary is 
     authorized to disclose data in registries maintained under 
     this section for research purposes found by the Secretary to 
     be likely to contribute to achieving the purposes of this 
     part or part A, F, or G, but without personal identifiers.
       ``(f) Fees.--(1) For ssa verification.--The Secretary shall 
     reimburse the Commissioner of Social Security, at a rate 
     negotiated between the Secretary and the Commissioner, the 
     costs incurred by the Commissioner in performing the 
     verification services specified in subsection (d).
       ``(2) For information from sesas.--The Secretary shall 
     reimburse costs incurred by State employment security 
     agencies in furnishing data as required by subsection (c)(3), 
     at rates which the Secretary determines to be reasonable 
     (which rates shall not include payment for the costs of 
     obtaining, compiling, or maintaining such data).
       ``(3) For information furnished to state and federal 
     agencies.--State and Federal agencies receiving data or 
     information from the Secretary pursuant to this section shall 
     reimburse the costs incurred by the Secretary in furnishing 
     such data or information, at rates which the Secretary 
     determines to be reasonable (which rates shall include 
     payment for the costs of obtaining, verifying, maintaining, 
     and matching such data or information).
       ``(g) Restriction on Disclosure and Use.--Data in 
     registries maintained pursuant to this section, and 
     information resulting from matches using data maintained in 
     such registries, shall not be used or disclosed except as 
     specifically provided in this section.
       ``(h) Retention of Data.--Data in registries maintained 
     pursuant to this title, and data resulting from matches 
     performed pursuant to this section, shall be retained for 
     such period (determined by the Secretary) as appropriate for 
     the data uses specified in this section.
       ``(i) Information Integrity and Security.--The Secretary 
     shall establish and implement safeguards with respect to the 
     entities established under this section designed to
       ``(1) ensure the accuracy and completeness of information 
     in the system; and
       ``(2) restrict access to confidential information in the 
     registries to authorized persons, and restrict use of such 
     information to authorized purposes.
       ``(j) Limit on Liability.--The Secretary shall not be 
     liable to either a State or an individual for inaccurate 
     information provided to a registry maintained under this 
     section and disclosed by the Secretary in accordance with 
     this section.
       (b) Conforming Amendments.--
       (1) To title iv-d.--Section 454(8) is amended--
       (A) by striking ``, and'' at the end of subparagraph (A);
       (B) in subparagraph (B), to read as follows:
       ``(B) the Federal Parent Locator Service established under 
     section 453; and''; and
       (C) by adding at the end the following new subparagraph:
       ``(C) the National Welfare Reform Information Clearinghouse 
     established under section 453A;''.
       (2) To federal unemployment tax act.--26 U.S.C. 3304 is 
     amended in paragraph (16)--
       (A) by striking ``Secretary of Health, Education, and 
     Welfare'' each place it appears and inserting ``Secretary of 
     Health and Human Services'';
       (B) in subparagraph (B), by striking ``such information'' 
     and all that follows and inserting ``information furnished 
     under subparagraph (A) or (B) is used only for the purposes 
     authorized under such subparagraph;'';
       (C) by striking ``and'' at the end of subparagraph (A);
       (D) by redesignating subparagraph (B) as subparagraph (C); 
     and
       (E) by inserting after subparagraph (A) the following new 
     subparagraph:
       ``(B) wage and unemployment compensation information 
     contained in the records of such agency shall be furnished to 
     the Secretary of Health and Human Services (in accordance 
     with regulations promulgated by such Secretary) as necessary 
     for the purposes of the National Directory of New Hires 
     established under section 453(b) of the Social Security Act, 
     and''.
       (3) To state grant program under title iii of the social 
     security act.--Section 303(a) is amended--
       (A) by striking ``and'' at the end of paragraph (8);
       (B) by striking the period at the end of paragraph (9) and 
     inserting ``; and''; and
       (C) by adding after paragraph (9) the following new 
     paragraph:
       ``(10) The making of quarterly electronic reports, at such 
     dates, in such format, and containing such information, as 
     required by the Secretary of Health and Human Services under 
     section 453A(b)(3), and compliance with such provisions as 
     such Secretary may find necessary to ensure the correctness 
     and verification of such reports.''.

     SEC. 626. EXPANDED LOCATE AUTHORITY.

       (a) Expanded Authority To Locate Individuals and Assets.--
     Section 453 is amended--
       (1) in subsection (a), by striking all that follows 
     ``subsection (c))'' and inserting the following:

     ``, for the purpose of establishing, setting the amount of, 
     or enforcing child support obligations--
       ``(1) information on, or facilitating the discovery of, the 
     location of any individual--
       ``(A) who is under an obligation to pay child support;
       ``(B) against whom such an obligation is sought; or
       ``(C) to whom such an obligation is owed, including such 
     individual's social security number (or numbers), most recent 
     residential address, and the name, address, and employer 
     identification number of such individual's employer; and
       ``(2) information on the individual's wages (or other 
     income) from, and benefits of, employment (including rights 
     to or enrollment in group health care coverage); and
       ``(3) information on the type, status, location, and amount 
     of any assets of, or debts owed by or to, any such 
     individual.''; and
       (2) in subsection (b)--
       (A) in the matter preceding paragraph (1), by striking 
     ``social security'' and all that follows through ``absent 
     parent'' and inserting ``information specified in subsection 
     (a)''; and
       (B) in paragraph (2), by inserting before the period ``, or 
     from any consumer reporting agency (as defined in section 
     603(f) of the Fair Credit Reporting Act (15 U.S.C. 
     1681a(f))'';
       (3) in subsection (e)(1), by inserting before the period 
     ``, or by consumer reporting agencies''.
       (b) Reimbursement for Data From Federal Agencies.--Section 
     453(e)(2) is amended in the fourth sentence by inserting 
     before the period ``in an amount which the Secretary 
     determines to be reasonable payment for the data exchange 
     (which amount shall not include payment for the costs of 
     obtaining, compiling, or maintaining the data)''.
       (c) Access to Consumer Reports Under Fair Credit Reporting 
     Act.--(1) Section 608 of the Fair Credit Reporting Act (15 
     U.S.C. 1681f) is amended--
       (A) by striking ``, limited to'' and inserting ``to a 
     governmental agency (including the entire consumer report, in 
     the case of a Federal, State, or local agency administering a 
     program under part D of title IV of the Social Security Act, 
     and limited to''; and
       (B) by striking ``employment, to a governmental agency'' 
     and inserting ``employment, in the case of any other 
     governmental agency)''.
       (2) Reimbursement for reports by state agencies and credit 
     bureaus.--Section 453 is amended by adding at the end the 
     following new subsection:
       ``(g) The Secretary is authorized to reimburse costs to 
     State agencies and consumer credit reporting agencies the 
     costs incurred by such entities in furnishing information 
     requested by the Secretary pursuant to this section in an 
     amount which the Secretary determines to be reasonable 
     payment for the data exchange (which amount shall not include 
     payment for the costs of obtaining, compiling, or maintaining 
     the data).''.
       (d) Disclosure of Tax Return Information.--(1) Section 
     6103(1)(6)(A)(ii) of the Internal Revenue Code of 1986 (26 
     U.S.C. 6103(1)(6)(A)(ii) is amended by striking ``, but only 
     if'' and all that follows and inserting a period.
       (2) Section 6103(1)(8)(A) of the Internal Revenue Code of 
     1986 (26 U.S.C. 6103(1)(8)(A)) is amended by inserting 
     ``Federal,'' before ``State or local''.
       (e) Technical Amendments.--
       (1) Sections 452(a)(9), 453(a), 453(b), 463(a), and 463(e) 
     are each amended by inserting ``Federal'' before ``Parent'' 
     each place it appears.
       (2) Section 453 is amended in the heading by adding 
     ``FEDERAL'' before ``PARENT''.

     SEC. 627. STUDIES AND DEMONSTRATIONS CONCERNING LOCATOR 
                   ACTIVITIES.

       (a) Studies.--The Secretary of Health and Human Services 
     shall study, and report and make recommendations to the 
     Congress concerning--
       (1) whether access to information available through the 
     Federal Parent Locator Service under section 453 of the 
     Social Security Act should be afforded to noncustodial 
     parents seeking to locate their children and, if so, whether 
     custodial parents at risk of harm by such noncustodial 
     parents could be adequately protected; and
       (2) the feasibility, implications, and costs of 
     establishing and operating electronic data interchanges 
     between such Service and major consumer credit reporting 
     bureaus.
       (b) Demonstrations.--The Secretary shall make grants to 
     States, from funds available under section 452(j) of the 
     Social Security Act, for demonstrations designed to test the 
     utility of automated data exchanges with State data bases 
     that have the potential to improve the States' effectiveness 
     in locating individuals and resources for purposes of 
     establishing paternity and establishing and enforcing support 
     obligations.

     SEC. 628. USE OF SOCIAL SECURITY NUMBERS.

       (a) State Law Requirement.--Section 466(a) is amended by 
     adding at the end the following new paragraph:
       ``(13) Social security numbers required.--Procedures 
     requiring the recording of social security numbers--
       ``(A) of both parties on marriage licenses and divorce 
     decrees; and
       ``(B) of both parents, on birth records and child support 
     and paternity orders.''.
       (b) Clarification of Federal Policy.--Section 
     205(c)(2)(C)(ii) is amended by striking the third sentence 
     and inserting ``This clause shall not bc considered to 
     authorize disclosure of such numbers except as provided in 
     the preceding sentence.''.

           Part D--Streamlining and Uniformity of Procedures

     SEC. 635. ADOPTION OF UNIFORM STATE LAWS.

       (a) Section 466(a) is amended by adding at the end the 
     following new paragraph:
       ``(14) Interstate enforcement.--(A) Adoption of uifsa.--
     Procedures under which the State adopts in its entirety (with 
     the modifications and additions specified in this paragraph) 
     not later than January 1, 1996, and uses on and after such 
     date, the Uniform Interstate Family Support Act, as approved 
     by the National Conference of Commissioners on Uniform 
     State Laws in August, 1992.
       ``(B) Expanded application of uifsa.--The State law adopted 
     pursuant to subparagraph (A) shall be applied to any case--
       ``(i) involving an order established or modified in one 
     State and for which a subsequent modification is sought in 
     another State; or
       ``(ii) in which interstate activity is required to enforce 
     an order.
       ``(C) Long-arm jurisdiction, based on residence of child.--
     The State law adopted pursuant to subparagraph (A) shall 
     presume that, in the case where a child meets the criteria 
     for residence in the State, a tribunal of the State having 
     jurisdiction over such child has jurisdiction over both 
     parents of such child, if parentage has been legally 
     established or acknowledged, or may be presumed under the 
     laws of the State.
       ``(D) Jurisdiction to modify orders.--For purposes of the 
     State law adopted pursuant to subparagraph (A), section 
     611(a)(1) of such Uniform Act shall be amended to read as 
     follows:
       ``(1) the following requirements are met:
       ``(i) the child, the individual obligee, and the obligor--
       ```(I) do not reside in the issuing State; and
       ```(II) either reside in this State or are subject to the 
     jurisdiction of this State pursuant to section 201; and
       ```(ii) (in any case where another State is exercising or 
     seeks to exercise jurisdiction to modify the order) the 
     conditions of section 204 are met to the same extent as 
     required for proceedings to establish orders; or'.
       ``(E) Parties' option concerning jurisdiction.--The State 
     laws adopted pursuant to subparagraph (A) shall allow 
     parties, by agreement, to permit a State that issued an order 
     to retain jurisdiction which the State would otherwise lose 
     under the provisions of such law.;
       ``(F) Service of process.--The State law adopted pursuant 
     to subparagraph (A) shall recognize as valid, for purposes of 
     any proceeding subject to such State law, service of process 
     upon persons in the State (and proof of such service) by any 
     means acceptable in another State which is the initiating or 
     responding State in such proceeding.
       ``(G) Cooperation by employers.--The State law adopted 
     pursuant to subparagraph (A) shall provide for the use 
     of procedures (including sanctions for noncompliance) 
     under which all entities in the State (including for-
     profit, nonprofit, and governmental employers) are 
     required to provide promptly, in response to a request by 
     the State agency of that or any other State administering 
     a program under this part, information on the employment, 
     compensation, and benefits of any individual employed by 
     such entity as an employee or contractor.''.
       (b) Expedited Appeal of Constitutional Challenge.--(1) An 
     appeal may be taken directly to the Supreme Court of the 
     United States from any interlocutory or final judgment, 
     decree, or order issued by a United States district court 
     ruling upon the constitutionality of section 466(a)(14)(C) of 
     the Act, as added by subsection (a).
       (2) The Supreme Court shall, if it has not previously ruled 
     on the question, accept jurisdiction over, and advance on the 
     docket, and expedite to the greatest extent possible, such 
     appeal. All cases raising such question shall be consolidated 
     to the maximum extent permissible under applicable rules of 
     civil procedure.

     SEC. 636. STATE LAWS PROVIDING EXPEDITED PROCEDURES.

       (a) State Law Requirements.--Section 466 is amended--
       (1) in subsection (a)(2), in the first sentence, to read as 
     follows: ``Expedited administrative and judicial procedures 
     (including the procedures specified in subsection (c)) for 
     establishing paternity and for establishing, modifying, and 
     enforcing support obligations.''; and
       (2) by adding after subsection (b) the following new 
     subsection:
       ``(c) Expedited Procedures.--(1) Administrative action by 
     state agency.--Procedures which give the State agency the 
     authority (and recognize and enforce the authority of State 
     agencies of other States), without the necessity of obtaining 
     an order from any other judicial or administrative tribunal 
     (but subject to due process safeguards, including (as 
     appropriate) requirements for notice, opportunity to contest 
     the action, and opportunity for an appeal on the record to an 
     independent administrative or judicial tribunal), to take the 
     following actions relating to establishment or enforcement of 
     orders:
       ``(A) Establish or modify support amount.--To establish the 
     amount of support awards in all cases in which services are 
     being provided under this part, and to modify the amount of 
     such awards under all orders included in the central case 
     registry established under section 454A(e) (including orders 
     entered by a court), in accordance with the guidelines 
     established under section 467.
       ``(B) Genetic testing.--To order genetic testing for the 
     purpose of paternity establishment as provided in section 
     466(a)(5).
       ``(C) Default orders.--To enter a default order, upon a 
     showing of service of process and any additional showing 
     required by State law--
       ``(i) establishing paternity, in the case of any putative 
     father who refuses to submit to genetic testing; and
       ``(ii) establishing or modifying a support obligation, in 
     the case of a parent (or other obligor or obligee) who fails 
     to respond to notice to appear at a proceeding for such 
     purpose.
       ``(D) Supoenas.--To subpoena any financial or other 
     information needed to establish, modify, or enforce an order, 
     and to sanction failure to respond to any such subpoena.
       ``(E) Access to personal and financial information.--To 
     obtain access, subject to safeguards on privacy and 
     information security, to the following records (including 
     automated access, in the case of records maintained in 
     automated data bases):
       ``(i) records of other State and local government agencies, 
     including:
       ``(I) vital statistics (including records of marriage, 
     birth, and divorce);
       ``(II) State and local tax and revenue records (including 
     information on residence address, employer, income and 
     assets);
       ``(III) records concerning real and titled personal 
     property;
       ``(IV) records of occupational and professional licenses, 
     and records concerning the ownership and control of 
     corporations, partnerships, and other business entities;
       ``(V) employment security records;
       ``(VI) records of agencies administering public assistance 
     programs;
       ``(VII) records of the motor vehicle department; and
       ``(VIII) corrections records; and ``(ii) certain records 
     held by private entities, including--
       ``(I) customer records of public utilities and cable 
     television companies; and
       ``(II) information (including information on assets and 
     liabilities) on individuals who owe or are owed support (or 
     against or with respect to whom a support obligation is 
     sought) held by financial institutions (subjection to 
     limitations or liability of such entities arising from 
     affording such access).
       ``(F) Income withholding.--To order income withholding in 
     accordance with section 466(a)(1) and (b).
       ``(G) Change in payee.--(In cases where support is subject 
     to an assignment under section 402(a)(26), 471(a)(17), or 
     1912, or to a requirement to pay through the centralized 
     collections unit under section 454B) upon providing notice to 
     obligor and obligee, to direct the obligor or other payor to 
     change the payee to the appropriate government entity.
       ``(H) Secure assets to satisfy arrearages.--For the purpose 
     of securing overdue support--
       ``(i) to intercept and seize any periodic or lumpsum 
     payment to the obligor by or through a State or local 
     government agency, including--
       ``(I) unemployment compensation, workers' compensation, and 
     other benefits;
       ``(II) judgments and settlements in cases under the 
     jurisdiction of the State or local government; and
       ``(III) lottery winnings;
       ``(ii) to attach and seize assets of the obligor held by 
     financial institutions;
       ``(iii) to attach public and private retirement funds in 
     appropriate cases, as determined by the Secretary; and
       ``(iv) to impose liens in accordance with paragraph (a)(4) 
     and, in appropriate cases, to force sale of property and 
     distribution of proceeds.
       ``(I) Increase monthly payments.--For the purpose of 
     securing overdue support, to increase the amount of monthly 
     support payments to include amounts for arrearages (subject 
     to such conditions or restrictions as the State may provide).
       ``(J) Suspension of drivers' licenses.--To suspend drivers' 
     licenses of individuals owing past-due support, in accordance 
     with subsection (a)(16).
       ``(2) Substantive and procedural rules.--The expedited 
     procedures required under subsection (a)(2) shall include the 
     following rules and authority, applicable with respect to all 
     proceedings to established paternity or to establish, modify, 
     or enforce support orders:
       ``(A) Locator information; presumptions concerning 
     notice.--Procedures under which--
       ``(i) the parties to any paternity or child support 
     proceedings are required (subject to privacy safeguards) to 
     file with the tribunal before entry of an order, and to 
     update as appropriate, information on location and identity 
     (including social security number, residential and mailing 
     addresses, telephone number, driver's license number, and 
     name, address, and telephone number of employer); and
       ``(ii) in any subsequent child support enforcement action 
     between the same parties, the tribunal shall be authorized, 
     upon sufficient showing that deligent effort has been made to 
     ascertain such a party's current location, to deem due 
     process requirements for notice and service of process to be 
     met, with respect to such party, by delivery to the most 
     recent residential or employer address so filed pursuant to 
     clause (i).
       ``(B) Statewide jurisdiction.--Procedures under which--
       ``(i) the State agency and any administrative or judicial 
     tribunal with authority to hear child support and paternity 
     cases exerts statewide jurisdiction over the parties, and 
     orders issued in such cases have statewide effect; and
       ``(ii) (in the case of a State in which orders in such 
     cases are issued by local jurisdictions) a case may be 
     transferred between jurisdictions in the State without need 
     for any additional filing by the petitioner, or service of 
     process upon the respondent, to retain jurisdiction over the 
     parties.''.
       (c) Exceptions from State Law Requirements.--Section 466(d) 
     is amended--
       (1) by striking ``(d) If'' and inserting ``(d) Exemptions 
     From Requirements.--(1) In General.--Subject to paragraph 
     (2), if''; and
       (2) by adding at the end the following new paragraph:
       ``(2) Non-exempt requirements.--The Secretary shall not 
     grant an exemption from the requirements of--
       ``(A) subsection (a)(5) (concerning procedures for 
     paternity establishment);
       ``(B) subsection (a)(10) (concerning modification of 
     orders);
       ``(C) subsection (a)(12) (concerning recording of orders in 
     the central State case registry);
       ``(D) subsection (a)(13) (concerning recording of social 
     security numbers);
       ``(E) subsection (a)(14) (concerning interstate 
     enforcement); or
       ``(F) subsection (c) (concerning expedited procedures), 
     other than paragraph (1)(A) thereof (concerning establishment 
     or modification of support amount).''.
       (d) Automation of State Agency Functions.--Section 454A, as 
     added by section 614 and amended by sections 621 and 622, is 
     further amended by adding at the end the following new 
     subsection:
       ``(h) Expedited Administrative Procedures.--The automated 
     system required under this section shall be used, to the 
     maximum extent feasible, to implement the expedited 
     administrative procedures required under section 466(c).''.

                    PART E--PATERNITY ESTABLISHMENT

     SEC. 640. STATE LAWS CONCERNING PATERNITY ESTABLISHMENT.

       (a) State Laws Required.--Section 466(a)(5) is amended--
       (1) by striking ``(5)'' and insert ``(5) Procedures 
     concerning paternity establishment.--
       (2) in subparagraph (A)--
       (A) by striking ``(A)'' and inserting ``(A) Establishment 
     process available from before birth until age eighteen.--'';
       (B) by indenting clause (ii) an additional unit of 
     indentation from the left margin; and
       (C) by adding after and below clause (ii) the following new 
     clause:
       ``(iii) Procedures which permit the initiation of 
     proceedings to establish paternity before the birth of the 
     child concerned.'';
       (3) in subparagraph (B)--
       (A) by striking ``(B)'' and inserting ``(B) Procedures 
     concerning genetic testing.--(i)'';
       (B) in clause (i), as redesignated, by inserting before the 
     period ``, where such request is supported by a sworn 
     statement by such party setting forth facts establishing a 
     reasonable possibility of the requisite sexual contact'';
       (C) by inserting after and below clause (i) (as 
     redesignated) the following new clause:
       ``(ii) Procedures which require the State agency, in any 
     case in which such agency orders genetic testing--
       ``(I) to pay costs of such tests, subject to recoupment 
     (where the State so elects) from the putative father if 
     paternity is established; and
       ``(II) to obtain additional testing in any case where an 
     original test result is disputed, upon request and advance 
     payment by the disputing party.'';
       (4) in subparagraph (C), to read as follows:
       ``(C) Voluntary acknowledgment procedure.--Procedures for a 
     simple civil process for voluntarily acknowledging paternity 
     under which--
       ``(i) the benefits, rights and responsibilities of 
     acknowledging paternity are explained to unwed parents;
       ``(ii) due process safeguards are afforded; and
       ``(iii) hospitals and other health care facilities 
     providing inpatient or outpatient maternity and pediatric 
     services are required, as a condition of participation in the 
     State program under title XIX--
       ``(I) to explain to unwed parents the matters specified in 
     clause (i);
       ``(II) to make available the voluntary acknowledgment 
     procedure required under this subparagraph; and
       ``(III) (in the case of hospitals providing maternity 
     services) to have facilities for obtaining blood or other 
     genetic samples from the mother, putative father, and child 
     for genetic testing; to inform the mother and putative father 
     of the availability of such testing (at their expense); and 
     to obtain such samples upon request of both such 
     individuals;'';
       (5) in subparagraphs (D) and (E), to read as follows:
       ``(D) Legal status of acknowledgment.--Procedures under 
     which--
       ``(i) a voluntary acknowledgment of paternity creates, at 
     State option, either--
       ``(I) a conclusive presumption of paternity, or
       ``(II) a rebuttable presumption which becomes a conclusive 
     presumption within one year, unless rebutted or invalidated 
     by an intervening determination which reaches a contrary 
     conclusion;
       ``(ii) (at State option), notwithstanding clause (i), upon 
     the request of a party, a determination of paternity based on 
     an acknowledgment may be vacated on the basis of new 
     evidence, the existence of fraud, or the best interests of 
     the child; and
       ``(iii) a voluntary acknowledgment of paternity is 
     admissible as evidence of paternity, and as a basis for 
     seeking a support order, without requiring any further 
     proceedings to establish paternity.
       ``(E) Bar on acknowledgment ratification proceedings.--
     Procedures under which no judicial or administrative 
     proceedings are required or permitted to ratify an 
     unchallenged acknowledgment of paternity.'';
       (6) in subparagraph (F), to read as follows:
       ``(F) Admissibility of genetic testing results.--
     Procedures--
       ``(i) requiring that the State admit into evidence, for 
     purposes of establishing paternity, results of any genetic 
     test that is--
       ``(I) of a type generally acknowledged, by accreditation 
     bodies designated by the Secretary, as reliable evidence of 
     paternity; and
       ``(II) performed by a laboratory approved by such an 
     accreditation body;
       ``(ii) that any objection to genetic testing results must 
     be made in writing not later than a specified number of days 
     before any hearing at which such results may be introduced 
     into evidence (or, at State option, not later than a 
     specified number of days after receipt of such results); and
       ``(iii) that, if no objection is made, the test results are 
     admissible as evidence of paternity without the need for 
     foundation testimony or other proof of authenticity or 
     accuracy.''; and
       ``(7) by adding after subparagraph (H) the following new 
     paragraphs:
       ``(I) No right to jury trial.--Procedures providing that 
     the parties to an action to establish paternity are not 
     entitled to jury trial.
       ``(J) Temporary support order based on probable paternity 
     in contested cases.--Procedures which required that a 
     temporary order be issued, upon motion by a party, requiring 
     the provision of child support pending an administrative or 
     judicial determination of parentage, where there is clear and 
     convincing evidence of paternity (on the basis of genetic 
     tests or other evidence).
       ``(K) Proof of certain support and paternity establishment 
     costs.--Procedures under which bills for pregnancy, 
     childbirth, and genetic testing are admissible as evidence 
     without requiring third-party foundation testimony, and shall 
     constitute prima facie evidence of amounts incurred for such 
     services and testing on behalf of the child.
       ``(L) Waiver of state debts for cooperation.--Procedures 
     under which the tribunal establishing paternity and support 
     has discretion to waive rights to all or part of amounts owed 
     to the State (but not to the mother) for costs related to 
     pregnancy, childbirth, and genetic testing and for public 
     assistance paid to the family where the father cooperates or 
     acknowledges paternity before or after genetic testing.
       ``(M) Standing of putative fathers.--Procedures ensuring 
     that the putative father has a reasonable opportunity to 
     initiate a paternity action.''.
       (b) Technical Amendment.--Section 468 is amended by 
     striking ``a simple civil process for voluntary acknowledging 
     paternity and''.

     SEC. 641. OUTREACH FOR VOLUNTARY PATERNITY ESTABLISHMENT.

       (a) State Plan Requirement.--Section 454(23), as amended by 
     section 606, is further amended by adding at the end the 
     following new subparagraph:
       ``(C) publicize the availability and encourage the use of 
     procedures for voluntary establishment of paternity and child 
     support through a variety of means, which--
       ``(i) include distribution of written materials at health 
     care facilities (including hospitals and clinics), and other 
     locations such as schools;
       ``(ii) may include pre-natal programs to educate expectant 
     couples on individual and joint rights and responsibilities 
     with respect to paternity (and may require all expectant 
     recipients of assistance under part A to participate in such 
     pre-natal programs, as an element of cooperation with efforts 
     to establish paternity and child support);
       ``(iii) include, with respect to each child discharged from 
     a hospital after birth for whom paternity or child support 
     has not been established, reasonable follow-up efforts 
     (including at least one contact of each parent whose 
     whereabouts are known, except where there is reason to 
     believe such follow-up efforts would put mother or child at 
     risk), providing--
       ``(I) in the case of a child for whom paternity has not 
     been established, information on the benefits of and 
     procedures for establishing paternity; and
       ``(II) in the case of a child for whom paternity has been 
     established but child support has not been established, 
     information on the benefits of and procedures for 
     establishing a child support order, and an application for 
     child support services;''.
       (b) Enhanced Federal Matching.--Section 455(a)(1)(C) is 
     amended--
       (1) by inserting ``(i)'' before ``laboratory costs'', and
       (2) by inserting before the semicolon ``, and (ii) costs of 
     outreach programs designed to encourage voluntary 
     acknowledgment of paternity''.
       (c) Effective Dates.--(1) The amendments made by subsection 
     (a) shall become effective October 1, 1996.
       (2) The amendments made by subsection (b) shall be 
     effective with respect to calendar quarters beginning on and 
     after October 1, 1995.

     SEC. 642. PENALTY FOR FAILURE TO ESTABLISH PATERNITY 
                   PROMPTLY.

       Section 403 is amended--
       (1) in subsection (a), as amended by section 612(e), by 
     striking ``subsection (h)'' and inserting ``subsections (h) 
     and (i)--''; and
       (2) by adding after subsection (h) the following new 
     subsection:
       ``(i) Penalty for Failure to Establish Paternity 
     Promptly.--(1) In general.--The amounts otherwise payable to 
     a State under subsection (a) for any calendar quarter 
     beginning 10 months or more after enactment of this 
     subsection shall be reduced by an amount, determined pursuant 
     to regulations in accordance with paragraph (2), for certain 
     children for whom paternity has not been established.
       ``(2) Reduction formula.--The Secretary shall promulgate 
     regulations specifying the formula for the reduction 
     required under this subsection, which formula shall 
     provide for a reduction in Federal matching payments to a 
     State under this section by an amount equal to the product 
     of--
       ``(A) the number (after allowing for the tolerance level 
     established under paragraph (3)) of children born on or after 
     the date 10 months after enactment of this provision who are 
     receiving aid under the State plan under part A, whose 
     custodial relatives have, throughout the preceding 12-month 
     period, complied with the cooperation requirements specified 
     in section 454(25)(D), but for whom paternity has not been 
     established;
       ``(B) the average monthly assistance payment under the 
     State plan under this part; and
       ``(C) the Federal matching rate applicable to such 
     assistance payment.
       ``(3) Tolerance level.--(A) The tolerance level, for 
     purposes of paragraph (2)(A), shall not be higher than the 
     percentage specified in subparagraph (B) of children in the 
     State described in paragraph (1), and may decrease over time 
     to make allowance for a State's inability to establish 
     paternity in all cases.
       ``(B) The percentage specified in this paragraph shall be 
     25 percent for fiscal years 1997 and 1998, 20 percent for 
     fiscal years 1999 and 2000, 15 percent for fiscal years 2001 
     and 2002, and 10 percent for fiscal year 2003 and each 
     succeeding fiscal year.''.

     SEC. 643. INCENTIVES TO PARENTS TO ESTABLISH PATERNITY.

       (a) Optional State Activities.--Section 455 is amended by 
     adding at the end the following new subsection:
       ``(f) Paternity Establishment Incentives to Families.--(1) 
     The Secretary, in accordance with regulations, may approve 
     proposals by States to amend State plans under this part to 
     provide for incentive payments to families to encourage 
     paternity establishment.
       ``(2) Federal financial participation shall be available in 
     accordance with subsection (a) for expenditures by a State 
     pursuant to a plan amendment approved under paragraph (1).
       (b) Demonstrations.--(1) Projects Authorized.--The 
     Secretary shall authorize up to 3 States to conduct 
     demonstrations providing financial incentives to families for 
     establishment of paternity.
       (2) Federal funding.--(A) Subject to subparagraph (B), a 
     State participating in a demonstration under this section 
     shall be entitled to Federal payments pursuant to section 
     455(f) of the Social Security Act for 90 percent of the 
     payments to families under such demonstration.
       (B) Funding limitation.--Total Federal expenditures for 
     demonstrations under this section shall not exceed 
     $1,000,000.

        PART F--ESTABLISHMENT AND MODIFICATION OF SUPPORT ORDERS

     SEC. 651. NATIONAL COMMISSION ON CHILD SUPPORT GUIDELINES.

       (a) Establishment.--The Secretary is authorized to 
     establish, in accordance with this section, a commission to 
     be known as the ``National Commission on Child Support 
     Guidelines'' (in this section referred to as the 
     ``Commission'').
       (b) General Duties.--The Commission shall consider whether 
     a national child support guideline is advisable and, if it so 
     determines, shall develop and propose for congressional 
     consideration such a guideline (or parameters for State 
     guidelines), reflecting the Commission's study of various 
     guideline models and its conclusions concerning their 
     strengths and deficiencies, and specifically reflecting 
     consideration of the need for simplicity and ease of 
     application of guidelines, and of the matters enumerated in 
     subsection (c).
       (c) Matters for Consideration by the Commission.--In making 
     the recommendations concerning guidelines required pursuant 
     to subsection (b), the Commission shall consider--
       (1) the adequacy of State child support guidelines 
     established pursuant to section 467;
       (2) matters generally applicable to all support orders, 
     including--
       (A) the feasibility of adopting uniform terms in all child 
     support orders;
       (B) how to define income and under what circumstances 
     income should be imputed; and
       (C) tax treatment of child support payments;
       (3) the appropriate treatment of cases in which either or 
     both parents have financial obligations to more than one 
     family, including the effect (if any) to be given to--
       (A) the income of either parent's spouse; and
       (B) the financial responsibilities of either parent for 
     other children or stepchildren;
       (4) the appropriate treatment of expenses for child care 
     (including care of the children of either parent, and work-
     related or job-training-relate child care);
       (5) the appropriate treatment of expenses for health care 
     (including uninsured health care) and other extraordinary 
     expenses for children with special needs;
       (6) the appropriate duration of support by one or both 
     parents, including--
       (A) support (including shared support) for post-secondary 
     or vocational education; and
       (B) support for disabled adult children; and
       (7) whether, or to what extent, support levels should be 
     adjusted in cases where custody is shared or where the 
     noncustodial parent has extended visitation rights.
       (d) Membership.--
       (1) Number; appointment--
       (A) In general.--The Commission shall be composed of 12 
     individuals appointed not later than March 1, 1995, of 
     which--
       (i) two shall be appointed by the Chairman of the Senate 
     Committee on Finance, and one shall be appointed by the 
     Ranking Minority Member of such Committee;
       (ii) two shall be appointed by the Chairman of the House 
     Committee on Ways and Means, and one shall be appointed by 
     the Ranking Minority Member of such Committee; and
       (iii) six shall be appointed by the Secretary of Health and 
     Human Services.
       (B) Qualifications of members.--Members of the Commission 
     shall have expertise and experience in the evaluation and 
     development of child support guidelines. At least one member 
     shall represent advocacy groups for custodial parents, at 
     least one member shall represent advocacy groups for 
     noncustodial parents, and at least one member shall be the 
     director of a State program under title IV-D of the Social 
     Security Act.
       (2) Terms of office.--Each member shall be appointed for 
     the life of the Commission. A vacancy in the Commission shall 
     be filled in the manner in which the original appointment was 
     made.
       (e) Commission Powers, Compensation, Access to Information, 
     and Supervision.--The first sentence of subparagraph (C), the 
     first and third sentences of subparagraph (D), subparagraph 
     (F) (except with respect to the conduct of medical studies), 
     clauses (ii) and (iii) of subparagraph (G), and subparagraph 
     (H) of section 1886(e)(6) of the Social Security Act shall 
     apply to the Commission in the same manner in which such 
     provisions apply to the Prospective Payment Assessment 
     Commission, except that references in such section to the 
     Office of Technology Assessment shall be disregarded.
       (f) Report.--Not later than July 1, 1997, the Commission 
     shall report to the President and the Congress on the results 
     of the studies required under this section.
       (g) The Commission shall terminate 6 months after 
     submission of the report required under subsection (f).
       (h) Authorization of Appropriations.--There are authorized 
     to be appropriated to carry out this section $1,000,000 for 
     each of fiscal years 1995 and 1996, to remain available until 
     expended.

     SEC. 652. STATE LAWS CONCERNING MODIFICATION OF CHILD SUPPORT 
                   ORDERS.

       (a) State Law Requirements.--Section 466(a)(10) is 
     amended--
       (1) by inserting ``Procedures for modification of support 
     orders.--'' after ``(10)'';
       (2) by redesignating subparagraph (C) as subparagraph (E) 
     and inserting after subparagraph (B) the following new 
     subparagraphs:
       ``(C)(i) Procedures to ensure that, beginning October 1, 
     1999 (or such earlier date as the State may select), the 
     State agency (or, at the option of the State, the local 
     agency) reviews and adjusts, in accordance with guidelines 
     established pursuant to section 467(a), judicial and 
     administrative child support orders included in the State 
     registry established pursuant to section 454A(d), under which 
     (subject to clauses (ii) and (iii) the order--
       ``(I) is to be reviewed not later than 36 months after the 
     establishment of the order or the most recent adjustment of 
     (or determination not to adjust) such order; and
       ``(II) (at State option) may not be reviewed during a 
     minimum period established by the State following the 
     establishment or most recent review of the order.
       ``(ii) The requirement of clause (i)(I) shall not apply in 
     any case where--
       ``(I) the State has determined, in accordance with 
     regulations of the Secretary, that such a review would not be 
     in the best interests of the child; or
       ``(II) both parents have been informed of the modified 
     support amount that would be imposed under the guidelines and 
     have declined such modification in writing.
       ``(iii) The State shall provide for review of a child 
     support order upon the request of either parent, 
     notwithstanding the requirement of clause (i)(II), whenever, 
     subsequent to the establishment or most recent review--
       ``(I) either parent's income has changed by more than 20 
     percent, or
       ``(II) other substantial changes have occurred in either 
     parent's circumstances.
       ``(D) Amount of modification based on guidelines.--
     Procedures under which support orders reviewed in accordance 
     with subparagraph (C) must be adjusted in accordance with the 
     guidelines established pursuant to section 467(a), without a 
     requirement for any other change in circumstances (except 
     that the State may refuse to modify an order in any case 
     where the change in the support amount, if so modified, would 
     not exceed a threshold percentage (which may not be greater 
     than 10 percent)).'';
       (3) in subparagraph (E), as redesignated--
       (i) by striking ``(E)'' and inserting ``(E) Due Process 
     Safeguards.--'';
       (ii) in the matter preceding clause (i), by striking ``this 
     part--'' and inserting ``this part, in accordance with State 
     due process requirements--'';
       (iii) in clause (i), by striking ``, at least 30 days 
     before the commencement of such review''; and
       (iv) in clause (iii), by striking ``not less than 30 days'' 
     and inserting ``a reasonable time''.
       (b) Automated Procedures.--Section 454A, as previously 
     added and amended by this Act, is further amended by adding 
     at the end the following new subsection:
       ``(i) Modification of Support Orders.--The automated system 
     required under this section shall be used, to the maximum 
     extent feasible, to assist in the review and modification of 
     support orders in accordance with the timetable under section 
     466(a)(10) and the guidelines under section 467.''.

     SEC. 653. STUDY ON USE OF TAX RETURN INFORMATION FOR 
                   MODIFICATION OF CHILD SUPPORT ORDERS.

       (a) Requirement for Study.--The Secretary of Health and 
     Human Services and the Secretary of the Treasury shall 
     conduct a study to determine how return information (as 
     defined in section 6103(b) of the Internal Revenue Code of 
     1986) filed with the Secretary of the Treasury might be used 
     to facilitate the process of determining the amount (if any) 
     by which child support award amounts should be modified in 
     accordance with guidelines established under section 467.
       (b) Amendment to Internal Revenue Code.--Section 6103(1)(6) 
     of the Internal Revenue Code of 1986 is amended by adding at 
     the end the following new subparagraph:
       ``(C) Upon written request by the Secretary of Health and 
     Human Services, the Secretary may disclose return information 
     to officers and employees of the Department of the Treasury 
     and the Department of Health and Human Services, as may be 
     specified in such written request, to be used in conducting 
     the study required under section 653 of the Work and 
     Responsibility Act of 1994. Return information disclosed 
     pursuant to this subparagraph shall be used only for purposes 
     of conducting such study.''.

                 PART G--ENFORCEMENT OF SUPPORT ORDERS

     SEC. 661. REVOLVING LOAN FUND FOR PROGRAM IMPROVEMENTS TO 
                   INCREASE COLLECTIONS.

       Part D of title IV is amended by inserting after section 
     455 the following new section:


   ``revolving fund for program improvements to increase collections

       ``Sec. 455A. (a) Purpose; Authorization of 
     Appropriations.--The Secretary is authorized to establish a 
     revolving fund for loans to States operating programs under 
     this part, for short-term projects by such States (and 
     political subdivisions of such States) for making operational 
     improvements in such programs with the potential for 
     achieving substantial increases in child support collections. 
     There are authorized to be appropriated for payment to such 
     fund $10,000,000 for each of fiscal years 1998 and 1999, and 
     $20,000,000 for each of fiscal years 2000 through 2003: 
     Provided, That payment may be made to this fund only to the 
     extent, and in such amounts, as are provided for in advance 
     in appropriations Acts.
       ``(b) Criteria for Loan Awards.--Criteria for evaluating 
     applications for loans under this section must include--
       ``(1) the likelihood that the proposed project will 
     increase child support collections, and
       ``(2) the availability to the State (or political 
     subdivision) of funding for the project from other sources.
       ``(c) Amount and Duration of Loans.--
       ``(1) Amount.--Loans may be made to a State under this 
     section in amounts not to exceed $5,000,000 per State or 
     $1,000,000 per project (or $5,000,000 for a single Statewide 
     project in a large State). States may supplement loan funds 
     under this section with funds from other sources, and may 
     require contributions from local jurisdictions served by the 
     project.
       ``(2) Duration.--Loan payments to a State for a project 
     under this section may not be made for a period longer than 3 
     years.
       ``(d) Recoupment.--A loan to a State under this section 
     shall be recovered from the State over 3 fiscal years, 
     beginning in the fourth calendar quarter beginning after the 
     project ends (or, if earlier, the sixteenth calendar quarter 
     beginning after loan payments for the project began) 
     through--
       ``(1) an offset of one-half of the increase in incentive 
     payments due to the State under section 458 for each calendar 
     quarter until funds are fully repaid, plus
       ``(2) an offset from payments due to the State under 
     section 455(a) for each calendar quarter equal to the amount, 
     if any, by which one-twelfth of the total loan (plus 
     interest) exceeds the amount described under paragraph (1),

     with such amounts recovered being credited to the revolving 
     fund under this section.
       ``(e) Availability as State Share.--Funds received by a 
     State under this section may be used by the State as the non-
     Federal share of expenditures under the State program under 
     this part.''.

     SEC. 662. FEDERAL INCOME TAX REFUND OFFSET.

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

     SEC. 663. INTERNAL REVENUE SERVICE COLLECTION OF ARREARS.

       (a) Amendment to Internal Revenue Code.--Section 6305(a) of 
     the Internal Revenue Code of 1986 is amended--
       (1) in paragraph (1), by inserting ``except as provided in 
     paragraph (5)'' after ``collected'';
       (2) by striking ``and'' at the end of paragraph (3);
       (3) by striking the period at the end of paragraph (4) and 
     inserting a comma;
       (4) by adding after paragraph (4) the following new 
     paragraph:
       ``(5) no additional fee may be assessed for adjustments to 
     an amount previously certified pursuant to such section 
     452(b) with respect to the same obligor.''; and
       (6) by striking ``Secretary of Health, Education, and 
     Welfare'' each place it appears and inserting ``Secretary of 
     Health and Human Services''.
       (b) Effective Date.--The amendments made by this section 
     shall become effective October 1, 1996.

     SEC. 664. AUTHORITY TO COLLECT SUPPORT FROM EMPLOYMENT-
                   RELATED PAYMENTS BY UNITED STATES.

       (a) Consolidation and Streamlining of Authorities.--
       (1) Section 459 is amended in the caption by inserting 
     ``INCOME WITHHOLDING,'' before ``GARNISHMENT''.
       (2) Section 459(a) is amended--
       (A) by striking ``(a)'' and inserting ``(a) Consent To 
     Support Enforcement.--
       (B) by striking ``section 207'' and inserting ``section 207 
     of this Act and 38 U.S.C. 5301''; and
       (C) by striking all that follows ``a private person,'' and 
     inserting ``to withholding in accordance with State law 
     pursuant to subsections (a)(1) and (b) of section 466 and 
     regulations of the Secretary thereunder, and to any other 
     legal process brought, by a State agency administering a 
     program under this part or by an individual obligee, to 
     enforce the legal obligation of such individual to provide 
     child support or alimony.''.
       (3) Section 459(b) is amended to read as follows:
       ``(b) Consent to Requirements Applicable to Private 
     Person.-- Except as otherwise provided herein, each entity 
     specified in subsection (a) shall be subject, with respect to 
     notice to withhold income pursuant to section 466(a)(1) or 
     (b), or to any other order or process to enforce support 
     obligations against an individual (if such order or process 
     contains or is accompanied by sufficient data to permit 
     prompt identification of the individual and the moneys 
     involved), to the same requirements as would apply if such 
     entity were a private person.''.
       (4) Section 459(c) is redesignated and relocated as 
     paragraph (2) of subsection (f), and is amended--
       (A) by striking ``responding to interrogatories pursuant to 
     requirements imposed by section 461(b)(3)'' and inserting 
     ``taking actions necessary to comply with the requirements of 
     subsection (A) with regard to any individual''; and
       (B) by striking ``any of his duties'' and all that follows 
     and inserting ``such duties.''.
       (5) Section 461(b) is relocated and redesignated as section 
     459(c)(1), and is amended to read as follows:
       ``(c) Designation of Agent; Response to Notice or 
     Process.--(1) The head of each agency subject to the 
     requirements of this section shall--
       ``(A) designate an agent or agents to receive orders and 
     accept service of process; and
       ``(B) publish (i) in the appendix of such regulations, (ii) 
     in each subsequent republication of such regulations, and 
     (iii) annually in the Federal Register, the designation of 
     such agent or agents, identified by title of position, 
     mailing address, and telephone number.''.
       (6) Section 459(d) is redesignated as paragraph (2) of 
     section 459(c), and is amended to read as follows:
       ``(2) Whenever an agent designated pursuant to paragraph 
     (1) receives notice pursuant to section 466(a)(1) or (b), or 
     is effectively served with any order, process, or 
     interrogatories, with respect to an individual's child 
     support or alimony payment obligations, such agent shall--
       ``(A) as soon as possible (but not later than fifteen days) 
     thereafter, send written notice of such notice or service 
     (together with a copy thereof) to such individual at his duty 
     station or last-known home address;
       ``(B) within 30 days (or such longer period as may be 
     prescribed by applicable State law) after receipt of a notice 
     pursuant to section 466(a)(1) or (b), comply with all 
     applicable provisions of such section 466; and
       ``(C) within 30 days (or such longer period as may be 
     prescribed by applicable State law) after effective service 
     of any other such order, process, or interrogatories, respond 
     thereto.''.
       (7) Section 461(c) is relocated and redesignated as section 
     459(d), and is amended to read as follows:
       ``(d) Priority of Claims.--In the event that a governmental 
     entity receives notice or is served with process, as provided 
     in this section, concerning amounts owed by an individual to 
     more than one person--
       ``(A) support collection under section 466(b) must be given 
     priority over any other process, as provided in section 
     466(b)(7);
       ``(B) allocation of moneys due or payable to an individual 
     among claimants under section 466(b) shall be governed by the 
     provisions of such section 466(b) and regulations thereunder; 
     and
       ``(C) such moneys as remain after compliance with 
     subparagraphs (A) and (B) shall be available to satisfy any 
     other such processes on a first-come, first-served basis, 
     with any such process being satisfied out of such moneys as 
     remain after the satisfaction of all such processes which 
     have been previously served.''.
       (8) Section 459(e) is amended by striking ``(e)'' and 
     inserting ``(e) No Requirement to Vary Pay Cycles.--''.
       (9) Section 459(f) is amended by striking ``(f)'' and 
     inserting ``(f) Relief from Liability.--(1)''.
       (10) Section 461(a) is redesignated and relocated as 
     section 459(g), and is amended--
       (A) by striking ``(g)'' and inserting ``(g) Regulations.--
     ''; and
       (B) by striking ``section 459'' and inserting ``this 
     section''.
       (11) Section 462(f) is relocated and redesignated as 
     section 459(h), and is amended to read as follows:
       ``(h) Moneys Subject to Process.--(1) Subject to subsection 
     (i), moneys paid or payable to an individual which are 
     considered to be based upon remuneration for employment, for 
     purposes of this section--
       ``(A) consist of--
       ``(i) compensation paid or payable for personal services of 
     such individual, whether such compensation is denominated as 
     wages, salary, commission, bonus, pay, allowances, or 
     otherwise (including severance pay, sick pay, and incentive 
     pay); and
       ``(ii) periodic benefits (including a periodic benefit as 
     defined in section 228(h)(3)) or other payments--
       ``(I) under the insurance system established by title II; 
     and
       ``(II) under any other system or fund established by the 
     United States which provides for the payment of pensions, 
     retirement or retired pay, annuities, dependents' or 
     survivors' benefits, or similar amounts payable on account of 
     personal services performed by the individual or any other 
     individual;
       ``(B) do not include any payment--
       ``(i) as compensation for death under any Federal program;
       ``(ii) under any Federal program established to provide 
     `black lung' benefits;
       ``(iii) by the Secretary of Veterans Affairs as pension, or 
     as compensation for a service-connected disability or death 
     (except any compensation paid by such Secretary to a former 
     member of the Armed Forces who is in receipt of retired or 
     retainer pay if such former member has waived a portion of 
     his retired pay in order to receive such compensation);
       ``(iv) by way of reimbursement or otherwise, to defray 
     expenses incurred by such individual in carrying out duties 
     associated with his employment; or
       ``(v) as allowances for members of the uniformed services 
     payable pursuant to chapter 7 of 37 U.S.C., as prescribed by 
     the Secretaries concerned (defined by 37 U.S.C. 101(5)) as 
     necessary for the efficient performance of duty.''.
       (12) Section 462(g) is redesignated and relocated as 
     section 459(i).
       (13)(A) Section 462 is amended--
       (i) in subsection (e)(1), by redesignating subparagraphs 
     (A), (B), and (C) as clauses (i), (ii), and (iii); and
       (ii) in subsection (e), by redesignating paragraphs (1) and 
     (2) as subparagraphs (A) and (B).
       (B) Section 459 is amended by adding at the end the 
     following:
       ``(j) Definitions.--For purposes of this section--''.
       (C) Subsections (a) through (e) of section 462, as amended 
     by subparagraph (A), are relocated and redesignated as 
     paragraphs (1) through (4) of section 459(j), and are 
     indented accordingly.
       (b) Conforming Amendments.--
       (1) To title iv-d.--Sections 461 and 462 are repealed.
       (2) To 5 u.s.c.--5 U.S.C. 5520a is amended, in subsections 
     (h)(2) and (i), by striking ``sections 459, 461, and 462 of 
     the Social Security Act (42 U.S.C. 659, 661, and 662)'' and 
     inserting ``section 459 of the Social Security Act (42 U.S.C. 
     659)''.
       (D) Military retired and retainer pay.--(1) Definition of 
     court.--10 U.S.C. 1408(a)(1) is amended--
       (A) by striking ``and'' at the end of subparagraph (B);
       (B) by striking the period at the end of subparagraph (C) 
     and inserting ``; and''; and
       (C) by adding after subparagraph (C) the following new 
     paragraph:
       ``(D) any administrative or judicial tribunal of a State 
     competent to enter orders for support or maintenance 
     (including a State agency administering a State program under 
     part D of title IV of the Social Security Act).'';
       (2) Definition of court order.--10 U.S.C. 1408(a)(2) is 
     amended by inserting ``or a court order for the payment of 
     child support not included in or accompanied by such a decree 
     or settlement,'' before ``which--''.
       (3) Public payee.--10 U.S.C. 1408(d) is amended--
       (A) in the heading, by striking ``to spouse'' and inserting 
     ``to (or for benefit of)''; and
       (B) in paragraph (1), in the first sentence, by inserting 
     ``(or for the benefit of such spouse or former spouse to a 
     State central collections unit or other public payee 
     designated by a State, in accordance with part D of title IV 
     of the Social Security Act, as directed by court order, or as 
     otherwise directed in accordance with such part D)'' before 
     ``in an amount sufficient''.
       (4) Relationship to title iv-d.--10 U.S.C. 1408 is amended 
     by adding at the end the following new subsection:
       ``(j) Relationship to Other Laws.--In any case involving a 
     child support order against a member who has never been 
     married to the other parent of the child, the provisions of 
     this section shall not apply, and the case shall be subject 
     to the provisions of section 459 of the Social Security 
     Act.''.
       (e) Effective Date.--The amendments made by this section 
     shall become effective on the date six months after enactment 
     of this Act.

     SEC. 665. MOTOR VEHICLE LIENS.

       Section 466(a)(4) is amended--
       (A) by striking ``(4) Procedures'' and inserting ``(4) 
     Liens.--(A) In general.--''; and
       (B) by adding at the end the following new subparagraph:
       ``(B) Motor vehicle liens.--Procedures for placing liens 
     for arrears of child support on motor vehicle titles of 
     individuals owing such arrears equal to or exceeding two 
     months of support, under which--
       ``(i) any person owed such arrears may place such a lien;
       ``(ii) the State agency administering the program under 
     this part shall systematically place such liens;
       ``(iii) expedited methods are provided for--
       ``(I) ascertaining the amount of arrears;
       ``(II) affording the person owing the arrears or other 
     titleholder to contest the amount of arrears or to obtain a 
     release upon fulfilling the support obligation;
       ``(iv) such a lien has precedence over all other 
     encumbrances on a vehicle title other than a purchase money 
     security interest; and
       ``(v) the individual or State agency owed the arrears may 
     execute on, seize, and sell the property in accordance with 
     State law.''.

     SEC. 666. VOIDING OF FRAUDULENT TRANSFERS.

       Section 466(a) is amended by adding at the end the 
     following new paragraph:
       ``(15) Fraudulent transfers.--Procedures under which--
       ``(A) the State has in effect--
       ``(i) the Uniform Fraudulent Conveyance Act of 1981,
       ``(ii) the Uniform Fraudulent Transfer Act of 1984, or
       ``(iii) another law, specifying indicia of fraud which 
     create a prima facie case that a debtor transferred income or 
     property to avoid payment to a child support creditor, which 
     the Secretary finds affords comparable rights to child 
     support creditors; and
       ``(B) in any case in which the State knows of a transfer by 
     a child support debtor with respect to which such a prima 
     facie case is established, the State must--
       ``(i) seek to void such transfer; or
       ``(ii) obtain a settlement in the best interests of the 
     child support creditor.''.

     SEC. 667. STATE LAW AUTHORIZING SUSPENSION OF LICENSES.

       Section 466(a) is amended by adding at the end the 
     following new paragraph:
       ``(16) Authority to withhold or suspend licenses.--
     Procedures under which the State has (and uses in appropriate 
     cases) authority (subject to appropriate due process 
     safeguards) to withhold or suspend, or to restrict the use 
     of driver's licenses, professional and occupational 
     licenses, and recreational licenses of individuals owing 
     overdue child support or failing, after receiving 
     appropriate notice, to comply with subpoenas or warrants 
     relating to paternity or child support proceedings.''.

     SEC. 668. REPORTING ARREARAGES TO CREDIT BUREAUS.

       Section 466(a)(7) is amended to read as follows:
       ``(7) Reporting arrearages to credit bureaus.--(A) 
     Procedures (subject to safeguards pursuant to subparagraph 
     (B)) requiring the State to report periodically to consumer 
     reporting agencies (as defined in section 603(f) of the Fair 
     Credit Reporting Act (15 U.S.C. 1681a(f)) the name of any 
     absent parent who is delinquent by one month or more in the 
     payment of support, and the amount of overdue support owed by 
     such parent.
       ``(B) Procedures ensuring that, in carrying out 
     subparagraph (A), information with respect to an absent 
     parent is reported--
       ``(i) only after such parent has been afforded all due 
     process required under State law, including notice and a 
     reasonable opportunity to contest the accuracy of such 
     information; and
       ``(ii) only to an entity that has furnished evidence 
     satisfactory to the State that the entity is a consumer 
     reporting agency.''.

     SEC. 669. EXTENDED STATUTE OF LIMITATION FOR COLLECTION OF 
                   ARREARAGES.

       (a) Amendments.--Section 466(a)(9) is amended--
       (1) by striking ``(9) Procedures'' and inserting ``(9) 
     Legal treatment of arrears.--(A) Finality.--
       (2) by redesignating indented subparagraphs (A), (B), and 
     (C) as clauses (i), (ii), and (iii), respectively; and
       (3) by adding after and below subparagraph (A), as 
     redesignated, the following new subparagraph:
       ``(B) Statute of limitations.--Procedures under which the 
     statute of limitations on any arrearages of child support 
     extends at least until the child owed such support is 30 
     years of age.''.
       (b) Application of Requirement.--The amendment made by this 
     section shall not be read to require any State law to revive 
     any payment obligation which has lapsed prior to the 
     effective date of such State law.

     SEC. 670. CHARGES FOR ARREARAGES.

       (a) State Law Requirement.--Section 466(a) is amended by 
     adding at the end the following new paragraph:
       ``(17) Charges for Arrearages.--Procedures providing for 
     the calculation and collection of interest or penalties for 
     arrearages of child support, and for distribution of such 
     interest or penalties collected for the benefit of the child 
     (except where the right to support has been assigned to the 
     State).''.
       (b) Regulations.--The Secretary of Health and Human 
     Services shall establish by regulation a rule to resolve 
     choice of law conflicts arising in the implementation of the 
     amendment made by subsection (a).
       (c) Conforming Amendment.--Section 454(21) is repealed.
       (d) Effective Date.--The amendments made by this section 
     shall be effective with respect to arrearages accruing on or 
     after October 1, 1997.

     SEC. 671. VISITATION ISSUES BARRED.

       Section 466(a) is amended by adding at the end the 
     following new paragraph:
       ``(18) Visitation Issue Barred.--Procedures under which 
     failure to pay child support is not a defense to denial of 
     visitation rights, and denial of visitation rights is not a 
     defense to failure to pay child support.''.

     SEC. 672. TREATMENT OF SUPPORT OBLIGATIONS UNDER BANKRUPTCY 
                   CODE.

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

     SEC. 673. DENIAL OF PASSPORTS FOR NONPAYMENT OF CHILD 
                   SUPPORT.

       (a) HHS Certification Procedure.--(1) Secretarial 
     responsibility.--Section 452 is amended by adding at the end 
     of the following new subsection:
       ``(k) Certifications for Purposes of Passport 
     Restrictions.--(1) In general.--Where the Secretary receives 
     a certification by a State agency in accordance with the 
     requirements of section 454(29) that an individual owes 
     arrearages of child support in excess of $5,000, the 
     Secretary shall transmit such certification to the Secretary 
     of State for action (with respect to denial, revocation, or 
     limitation of passports) pursuant to 22 U.S.C. 219.
       ``(2) Limit on liability.--The Secretary shall not be 
     liable to an individual for any action with respect to a 
     certification by a State agency under this section.''.
       (2) State cse agency responsibility.--Section 454, as 
     previously amended by sections 601, 605, 615, and 622, is 
     further amended--
       (1) by striking ``and'' at the end of paragraph (27);
       (2) by striking the period at the end of paragraph (28) and 
     inserting ``; and''; and
       (3) by adding after paragraph (28) the following new 
     paragraph:
       ``(29) provide that the State agency will have in effect a 
     procedure (which may be combined with the procedure for tax 
     refund (which may be combined with the procedure for tax 
     refund offset under section 464) for certifying to the 
     Secretary, for purposes of the procedure under section 452(k) 
     (concerning denial of passports) determinations that 
     individuals owe child support arrearages of $5,000 or more, 
     under which procedure--
       ``(A) each individual concerned is afforded notice of such 
     determination and the consequences thereof, and an 
     opportunity to contest the determination; and
       ``(B) the certification by the State agency is furnished to 
     the Secretary in such format, and accompanied by such 
     supporting documentation, as the Secretary may require.''.
       (b) State Department Procedure for Denial of Passports.--
     Chapter 4 of 22 U.S.C. is amended by adding at the end the 
     following new section:

     ``Sec. 219. Denial of passport for nonpayment of child 
       support.

       ``(a) In General.--The Secretary, upon certification by the 
     Secretary of Health and Human Services, in accordance with 
     section 452(k) of the Social Security Act, that an individual 
     owes arrearages of child support in excess of $5,000, shall 
     refuse to issue a passport to such individual, and may 
     revoke, restrict, or limit a passport issued previously to 
     such individual.
       ``(b) Limit on Liability.--The Secretary shall not be 
     liable to an individual for any action with respect to a 
     certification by a State agency under this section.''.
       (b) Effective Date.--The amendments made by this section 
     shall become effective October 1, 1995.

                         PART H--DEMONSTRATIONS

     SEC. 681. CHILD SUPPORT ENFORCEMENT AND ASSURANCE 
                   DEMONSTRATIONS.

       (a) Demonstrations Authorized.--(1) Initial projects.--The 
     Secretary shall make grants to three States for 
     demonstrations under this section to determine the 
     effectiveness of programs to provide assured levels of child 
     support to custodial parents of children for whom paternity 
     and support obligations have been established.
       (b) Duration of Projects.--(1) Total project period.--The 
     Secretary shall make grants to States for demonstrations 
     under this section beginning in fiscal year 1997, for periods 
     of from 7 to 10 years.
       (2) Phasedown period.--Each State implementing a 
     demonstration project under this section shall--
       (A) phase out activities under such demonstration during 
     the final two years of the project; and
       (B) obtain the Secretary's approval, before the beginning 
     of such phasedown period, of a plan for accomplishing such 
     phasedown.
       (c) Considerations in Selection of Projects.--(1) Scope.--
     Projects under this section may, but need not, be statewide 
     in scope.
       (2) State Administration.--(A) Responsible state agency.--A 
     State demonstration project under this section shall be 
     administered either by the State agency administering the 
     program under title IV-D of the Social Security Act or the 
     State department of revenue and taxation.
       (3) Controls.--At least one demonstration project under 
     this section shall include randomly assigned control groups.
       (B) Automation.--The State agency described in subparagraph 
     (A) shall operate (or have automated access to) the automated 
     data system required under section 454(16) of the Social 
     Security Act, and shall have adequate automated capacity to 
     carry out the project under this section (including the 
     timely distribution of child support assurance benefits).
       (d) Eligibility.--(1) In general.--Child support assurance 
     payments under projects under this section shall be available 
     only to children for whom paternity and support obligations 
     have been established (or with respect to whom a 
     determination has been made that efforts to establish 
     paternity or support would not be in the best interests of 
     the child).
       (2) Families with shared custody.--In cases where both 
     parents share custody of a child, a parent and child shall 
     not be eligible for benefits under a demonstration under this 
     section unless--
       (A) a support order is in effect entitling such parent to 
     support payments in excess of the minimum benefit; or
       (B) the agency or tribunal which issued the order certifies 
     that the child support award would be below such minimum 
     benefit if either parent was awarded sole custody and the 
     guidelines under section 467 were applied.
       (3) State option to base eligibility on need.--At State 
     option, eligibility for benefits under a demonstration under 
     this section may be limited to families with incomes and 
     resources below a standard of need established by the State.
       (f) Benefit Amounts.--(1) Range of benefit levels.--States 
     shall have flexibility to set annual benefit levels under 
     demonstrations under this section, provided that (subject to 
     the remaining provisions of this subsection) such levels--
       (A) are now lower than $1,500 for a family with one child 
     or $3,000 for a family with four or more children; and
       (B) are not higher than $3,000 for a family with one child 
     or $4,500 for a family with four or more children;
       (2) Indexing.--Annual benefit levels for each fiscal year 
     after fiscal year 1996 shall be indexed to reflect the change 
     in the Consumer Price Index.
       (3) Unmatched excess benefits.--The Secretary may permit 
     States to pay benefits higher than a maximum specified in 
     paragraphs (1) and (2), but Federal matching of such payments 
     shall not be available for benefits in excess of the amounts 
     specified in paragraph (1) (as adjusted in accordance with 
     paragraph (2)) by more than $25 per month.
       (g) Treatment of Benefits.--(1) For Purposes of AFDC.--The 
     amount of aid otherwise payable to a family under title IV-A 
     of the Social Security Act shall be reduced by an amount 
     equal to the amount of child support assurance paid to such 
     family (or, at the Secretary's discretion, by a percentage of 
     such amount paid specified by the Secretary).
       (2) For purposes of other benefit programs.--(A) In 
     general.--Except as provided in subparagraph (B), child 
     support assurance paid to a family shall be considered 
     ordinary income for purposes of determining eligibility for 
     and benefits under any Federal or State program.
       (B) Deemed afdc eligibility.--At State option, a child (or 
     family) that is ineligible for aid under title IV-A of the 
     Social Security Act because of payments under a demonstration 
     under this section may be deemed to be receiving such aid for 
     purposes of determining eligibility for the Federal and State 
     programs.
       (3) For tax purposes.--Child support assurance which is 
     paid to a family under this section and is not reimbursed 
     from a child support collection from a noncustodial parent 
     shall be considered ordinary income for purposes of Federal 
     and State tax liability.
       (h) Work Program Option.--At the option of the State 
     grantee, a demonstration under this section may include a 
     work program for unemployed noncustodial parents of eligible 
     children.
       (i) Availability of Appropriations for Payments to 
     States.--(1) State entitlement to iv-d funding.--A State 
     administering an approved demonstration under this section in 
     a calendar quarter shall be entitled to payments for such 
     quarter, pursuant to section 455 of the Social Security Act 
     for the Federal share of reasonable and necessary 
     expenditures (including expenditures for benefit payments and 
     for associated administrative costs) under such project, in 
     an amount (subject to paragraphs (2) and (3)) equal to--
       (A) with respect to that portion of such expenditures equal 
     to the reduction of expenditures under title IV-A of the 
     Social Security Act pursuant to subsection (g)(1), a 
     percentage equal to the percentage that would have been paid 
     if such expenditures had been made under such title IV-A; and
       (B) 90 percent of the remainder of such expenditures.
       (2) States with low afdc benefits.--In the case of a State 
     in which benefit levels under title IV-A of the Act are below 
     the national median for such payments, the Secretary may 
     elect to provide 90 percent Federal matching of a portion of 
     expenditures under a project under this section that would 
     otherwise be matched at the rate specified in paragraph 
     (1)(A).
       (3) Funding Limits; Pro Rata Reductions of State 
     Matching.--(A) Funds Available.--There shall be available to 
     the Secretary, from amounts appropriated to carry our part D 
     of title IV of the Social Security Act, for purposes of 
     carrying out demonstrations under this section, amounts not 
     to exceed--
       (i) $27,000,000 for fiscal year 1997;
       (ii) $55,000,000 for fiscal year 1998;
       (iii) $70,000,000 for each of fiscal years 1999 through 
     2002; and
       (iv) $55,000,000 for fiscal year 2003.
       (B) Pro rata reductions.--The Secretary shall make pro rata 
     reductions in the amounts otherwise payable to States under 
     this section as necessary to comply with the funding 
     limitation specified in subparagraph (A).
       (j) Distribution of Child Support Collections.--
     Notwithstanding section 457 of the Social Security Act, 
     support payments collected from the noncustodial parent of a 
     child receiving (or who has received) child support assurance 
     payments under this section shall be distributed as follows:
       (1) first, amounts equal to the total support owed for such 
     month shall be paid to the family;
       (2) second, from any remainder, amounts owed to the State 
     on account of child support assurance payments to the family 
     shall be paid to the State (with appropriate reimbursement to 
     the Federal Government of its share to such payments);
       (3) third, from any remainder, arrearages of support owed 
     to the family shall be paid to the family; and
       (4) fourth, from any remainder, amounts owed to the State 
     on account of current or past payments of aid under title IV-
     A of the Social Security Act shall be paid to the State (with 
     appropriate reimbursement to the Federal Government of its 
     share of such payments).
       (k) Evaluations and Reports.--(1) State Evaluations.--Each 
     State administering a demonstration project under this 
     section shall--
       (A) provide for ongoing and retrospective evaluation of the 
     project, meeting such conditions and standards as the 
     Secretary may require; and
       (B) submit to the Secretary such reports (at such times, in 
     such format, and containing such information) as the 
     Secretary may require, including at least an interim report 
     not later than 90 days after the end of the fourth year of 
     the project, and a final report not later than one year after 
     the completion of the project, which shall include 
     information on and analysis of the effect of the project with 
     respect to--
       (i) the economic circumstances of both noncustodial and 
     custodial parents;
       (ii) the rate of compliance by noncustodial parents with 
     support orders;
       (iii) work-force participation by both custodial and 
     noncustodial parents;
       (iv) need for or amount of aid to families with dependent 
     children under title IV-A of the Social Security Act;
       (v) paternity establishment rates; and
       (vi) any other matters the Secretary may specify.
       (2) Reports to congress.--The Secretary shall, on the basis 
     of reports received from States administering projects under 
     this section, make the following reports, containing an 
     assessment of the effectiveness of the projects and any 
     recommendations the Secretary considers appropriate:
       (A) an interim report, not later than six months following 
     receipt of the interim State reports required by subsection 
     (c); and
       (B) a final report, not later than six months following 
     receipt of the final State reports required under subsection 
     (i).
       (3) Funding for Costs to Secretary.--There are authorized 
     to be appropriated $10,000,000 for fiscal year 1997, to 
     remain available under expended for payment of the cost of 
     evaluations by the Secretary of demonstrations under this 
     section.

     SEC. 682. SOCIAL SECURITY ACT DEMONSTRATIONS.

       Section 1115(c)(3) is amended by striking ``increased 
     cost'' and all that follows and inserting ``an increase in 
     total costs to the Federal Government.''.

                  PART I--ACCESS AND VISITATION GRANTS

     SEC. 691. GRANTS TO STATES FOR ACCESS AND VISITATION 
                   PROGRAMS.

       (a) In General.--Part D of title IV is amended by adding at 
     the end the following new section:


         ``grants to states for access and visitation programs

       ``Sec. 469A. (a) Purposes; Authorization of 
     Appropriations.--For the purposes of enabling States to 
     establish and administer programs to support and facilitate 
     absent parents' access to and visitation of their children, 
     by means of activities including mediation (both voluntary 
     and mandatory), counseling, education, development of 
     parenting plans, visitation enforcement (including 
     monitoring, supervision and neutral drop-off and pickup), and 
     development of guidelines for visitation and alternative 
     custody arrangements, there are authorized to be appropriated 
     $5,000,000 for each of fiscal years 1996 and 1997, and 
     $10,000,000 for each succeeding fiscal year.
       ``(b) Payments to States.--(1) Each State shall be entitled 
     to payment under this section for each fiscal year in an 
     amount equal to its allotment under subsection (c) for such 
     fiscal year, to be used for payment of 90 percent of State 
     expenditures for the purposes specified in subsection (a).
       (2) Payments under this section shall be used by a State to 
     supplement (and not to substitute for) expenditures by the 
     State, for activities specified in subsection (a), at a level 
     at least equal to the level of such expenditures for fiscal 
     year 1994.
       ``(c) Allotments to States.--(1) In general.--For purposes 
     of subsection (b), each State shall be entitled (subject to 
     paragraph (1)) to an amount for each fiscal year bearing the 
     same ratio to the amount authorized to be appropriated 
     pursuant to subsection (a) for such fiscal year as the number 
     of children in the State living with only one biological 
     parent bears to the total number of such children in all 
     States.
       ``(2) Minimum allotment.--Allotments to States under 
     subparagraph (A) shall be adjusted as necessary to ensure 
     that no State is allotted less than $50,000 for fiscal year 
     1996 or 1997, or $100,000 for any succeeding fiscal year.
       ``(d) Federal Administration.--The program under this 
     section shall be administered by the Administration for 
     Children and Families.
       ``(e) State Program Administration.--(1) Each State may 
     administer the program under this section directly or through 
     grants to or contracts with courts, local public agencies, or 
     non-profit private entities.
       ``(2) State programs under this section may, but need not, 
     be Statewide.
       ``(3) States administering programs under this section 
     shall monitor, evaluate, and report on such programs in 
     accordance with requirements established by the Secretary.

                      PART J--EFFECT OF ENACTMENT

     SEC. 695. EFFECTIVE DATES.

       (a) In General.--Except as otherwise specifically provided 
     (but subject to subsections (b) and (c))--
       (1) provisions of this title requiring enactment or 
     amendment of State laws under section 466 of the Act, or 
     revision of State plans under section 454 of the Act, shall 
     be effective with respect to periods beginning on and after 
     October 1, 1995; and
       (2) all other provisions of this title shall become 
     effective upon enactment.
       (b) Grace Period for State Law Changes.--The provisions of 
     this title shall become effective with respect to a State on 
     the later of--
       (1) the date specified in this title, or
       (2) the effective date of laws enacted by the legislature 
     of such State implementing such provisions,

     but in no event later than the first day of the first 
     calendar quarter beginning after the close of the first 
     regular session of the State legislature that begins after 
     the date of enactment of this Act. For purposes of the 
     previous sentence, in the case of a State that has a 2-year 
     legislative session, each year of such session shall be 
     deemed to be a separate regular session of the State 
     legislature.
       (c) Grace Period for State Constitutional Amendment.--A 
     State shall not be found out of compliance with any 
     requirement enacted by this title if it is unable to comply 
     without amending the State constitution until the earlier 
     of--
       (1) the date one year after the effective date of the 
     necessary State constitutional amendment or
       (2) the date five years after enactment of this title.

     SEC. 696. SEVERABILITY.

       If any provision of this title or the application thereof 
     to any person or circumstance is held invalid, the invalidity 
     shall not affect other provisions or applications of this 
     title which can be given effect without regard to the invalid 
     provision or application, and to this end the provisions of 
     this title shall be severable.

    TITLE VII--IMPROVING GOVERNMENT ASSISTANCE AND PREVENTING FRAUD

                        PART A--AFDC AMENDMENTS

     SEC. 701. PERMANENT REQUIREMENT FOR UNEMPLOYED PARENT 
                   PROGRAM.

       (a) In General.--Section 401(h) of the Family Support Act 
     of 1988 (terminating the requirement that States provide 
     benefits to two-parent families based on the unemployment of 
     the principal earner) is repealed.
       (b) Applicability to Puerto Rico, American Samoa, Guam, and 
     the Virgin Islands.--Section 401(g)(2) of the Family Support 
     Act of 1988 is amended, effective on the date of enactment of 
     such Act, to read as follows:
       ``(2) The amendments made by this section (other than those 
     made by subsection (c)) shall not become effective with 
     respect to Puerto Rico, American Samoa, Guam, or the Virgin 
     Islands unless the jurisdiction involved notifies the 
     Secretary of Health and Human Services that it chooses to 
     have such amendments apply and submits the necessary plan 
     amendment.''.

     SEC. 702. STATE OPTIONS REGARDING UNEMPLOYED PARENT PROGRAM.

       (a) Duration of Unemployment and Recency-of-Work Tests.--
     (1) Section 407(b)(1)(A) of the Act (in the matter preceding 
     clause (i)) is amended to read as follows:
       ``(A) subject to paragraph (2), shall provide for the 
     payment of aid to families with dependent children with 
     respect to a dependent child  within  the  meaning  of  
     subsection  (a)--''.
       (2) Such section is further amended--
       (A) by striking out ``whichever'' in clause (i) and 
     inserting in lieu thereof ``when, if the State chooses to so 
     require (and specifies in its State plan), whichever'',
       (B) by inserting ``when'' before such parent in clause 
     (ii), and
       (C) by striking out ``(iii)(I)'' and inserting in lieu 
     thereof ``(iii) when, if the State chooses to so require (and 
     specifies in its State plan) (I)''.
       (b) State Option to Define ``Unemployment''.--At its 
     option, a State may provide aid under part A to children of 
     employed parents and may apply, for purposes of section 407 
     of the Act, as definition of unemployment that includes some 
     or all of the individuals who, solely by reasons of the 
     standards prescribed by the Secretary of Health and Human 
     Services under subsection (a) of such section and in effect 
     on the date of enactment of this Act, would not have been 
     eligible for aid to families with dependent children, and 
     shall include such definition in its State plan approved 
     under part A of title IV of the Act.
       (c) Effective Date.--The amendments made by this section 
     and the provisions of this section shall become effective 
     October 1, 1996.

     SEC. 703. DEFINITION OF ESSENTIAL PERSON.

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

     SEC. 704. EXPANDED STATE OPTION FOR RETROSPECTIVE BUDGETING.

       Section 402(a)(13) of the Act is amended--
       (1) by striking out in the matter that precedes 
     subparagraph (A) ``but only with respect to any one or more 
     categories of families required to report monthly to the 
     State agency pursuant to paragraph (14),''; and
       (2) by striking out in each of subparagraphs (A) and (B) 
     ``(but only where the Secretary determines it to be 
     appropriate, in the case of families who are required to 
     report monthly to the State agency pursuant to paragraph 
     (14),''.

     SEC. 705. DISREGARDS OF INCOME.

       ``(a) Student Earnings.--(1) In General.--Section 
     402(a)(8)(A)(i) of the Act is amended by striking out 
     ``dependent child'' and all that follows and inserting in 
     lieu thereof ``individual under age 19 who is an elementary 
     or secondary school student''.
       ``(2) Conforming Amendments.--Section 402(a) of the Act is 
     amended--
       (A)(i) by striking out ``a dependent child who is a full-
     time student'' in paragraph (8)(A)(vii) and inserting in lieu 
     thereof ``an individual under age 19 who is an elementary or 
     secondary school student'', and
       (ii) by striking out ``such child'' in such paragraph and 
     inserting in lieu thereof ``such individual'', and
       (B) by striking out in paragraph (18) ``of a dependent 
     child'' and inserting in lieu thereof ``of an individual 
     under age 19''.
       ``(b) Standard Earned Income Disregard Amount.--(1) Section 
     402(a)(8)(a)(ii) of the Act is amended by striking out 
     ``$90'' and inserting in lieu thereof ``$120, or if greater, 
     $120 adjusted by the CPI (as prescribed in section 406(i))''.
       (2) The amendment made by this subsection shall become 
     effective October 1, 1996.
       (c) State Option To Disregard Earned Income.--(1) In 
     General.--Section 402(a)(8)(A)(iv) of the Act is amended to 
     read as follows:
       ``(iv) may, at its option, disregard amounts of earned 
     income in addition to those required or permitted to 
     disregarded under this paragraph, and shall specify in its 
     State plan any such additional amounts and the circumstances 
     (including whether they will be disregarded for applicants as 
     well as for recipients) under which they will be 
     disregarded;''
       (2) Conforming amendments.--
       (A) Clause (ii) of section 402(a)(8)(B) of the Act is 
     repealed.
       (B)(i) Section 402(a)37) of the Act is amended by striking 
     out ``or because of paragraph (8)(B)(ii)(II)''.
       (ii) Section 1925(a) of the Act is amended by striking out 
     ``or because of section 402(a)(8)(ii)(II) (providing for a 
     time-limited earned income disregard)''.
       (C) Section 402(g)(1)(A)(ii) of the Act is amended by 
     striking out ``increased income'' and all that follows down 
     to the period and inserting lieu thereof ``amount of earnings 
     from such employment''.
       (3) Effective date.--The amendments made by this subsection 
     shall become effective October 1, 1996.
       (d) Disregard of Training Stipends.--Section 
     402(a)(8)(A)(v) of the Act is amended to read as follows:
       ``(v) shall disregard from the income of any individual 
     applying for or receiving aid to families with dependent 
     children any amount received as a stipend or allowance under 
     the Job Training Partnership Act or under any other training 
     or similar program;''.
       (e) Mandatory Child Support Pass-Through.--(1) Section 
     402(a)(8)(A)(vi) of the Act is amended--
       (A) by striking out ``$50'' (in two places) and inserting 
     in lieu thereof ``$50, or, if greater, $50 adjusted by the 
     CPI (as prescribed in section 406(i))'';, and
       (B) by striking out the semicolon at the end and inserting 
     in lieu thereof ``or, in lieu of the amount specified in two 
     places in this clause, such greater amount as the State many 
     choose (and provide for in its State plan);''.
       (2) CPI adjustment.--Section 406 of the Act is amended by 
     adding at the end thereof the following new subsection:
       ``(i) For purposes of this part, an amount is `adjusted by 
     the CPI' for any month in a calendar year by multiplying the 
     amount involved by the ratio of--
       ``(1) the Consumer Price Index (as prepared by the 
     Department of Labor) for the third quarter of the preceding 
     calendar year, to
       ``(2) such Consumer Price Index for the third quarter of 
     calendar year 1996,

     and rounding the product, if not a multiple of $10, to the 
     nearer multiple of $10.''.
       (f) Lump-Sum Income.--(1) In General.--Section 402(a)(8)(A) 
     of the Act is amended--
       (1) by striking out ``and'' after clause (viii), and
       (2) by adding after and below clause (viii) the following 
     new clause:
       ``(ix) shall disregard from the income of any family member 
     any amounts of income received in the form of nonrecurring 
     lump-sum payments;''.
       (2) Repeal.--Section 402(a)(17) of the Act is repealed.
       (g) Educational Assistance.--Section 402(a)(8)(A) of the 
     Act is further amended by adding after and below clause (ix) 
     the following new clause:
       ``(x) shall disregard all educational assistance provided 
     to a family member;''.
       (h) In-Kind Income.--Such section is further amended by 
     adding after and below clause (x) the following new clause:
       ``(xi) shall disregard all in-kind income provided to a 
     family member;''
       (i) Benefits Under the National and Community Service 
     Act.--Such section is further amended by adding after and 
     below clause (xi) the following new clause;
       ``(xii) shall disregard any living allowance, child care 
     allowance, stipend, or educational award paid under section 
     140 of the National and Community Service Act of 1990 to a 
     family member participating in a national service program 
     carried out with assistance from the Corporation for National 
     and Community Service;''.
       (j) ``Fill-the-Gap'' Disregards.--(1) Such section is 
     further amended by adding after and below clauses (xii) the 
     following new clause:
       ``(xiii) may disregard, in addition to any other amounts 
     required or permitted by this paragraph, income described in 
     the State plan by type or source and by amount, but no amount 
     in excess of the difference between the State's standard of 
     need applicable to the family involved and the State's 
     payment amount for a family of the same size with no other 
     income;''.
       (2) The amendment made by this subsection shall become 
     effective October 1, 1996.

     SEC. 706. STEPPARENT INCOME.

       (a) Section 402(a)(31) of the Act is amended by striking 
     out ``$90'' and inserting in lieu thereof ``$120'' and by 
     striking out the semicolon at the end and inserting in lieu 
     thereof ``, or, at the option of the State, so much of such 
     income as exceeds any greater amount or amounts as the State 
     agency finds appropriate to strengthen family life and 
     provide incentives to increase earnings;''.
       (b) The amendment made by this section shall become 
     effective October 1, 1996.

     SEC. 707. INCREASE IN RESOURCE LIMIT.

       Section 402(a)(7)(B) of the Act is amended (in the matter 
     preceding clause (i)) by striking out ``$1000 or such lower 
     amount as the State may determine ``and inserting in lieu 
     thereof ``$2000 or, in the case of a family with a member who 
     is 60 years of age or older, $3000''.

     SEC. 708. EXCLUSIONS FROM RESOURCES.

       (a) Life Insurance.--Section 402(a)(7)(B)(ii) of the Act is 
     amended by striking out the semicolon at the end and 
     inserting in lieu thereof'', and the cash value of life 
     insurance policies;''.
       (b) Real Property Which Must be Disposed of.--Section 
     402(a)(7)(B)(iii) of the Act is amended to read as follows: 
     ``real property which the family is making a good faith 
     effort to dispose of at a reasonable price;''.
       (c) Exclusion of Payments of the EITC.--Section 
     402(a)(7)(B) of the Act is amended--
       (1) by striking out ``or'' after clause (iii), and
       (2) by amending clause (iv) (pertaining to payments by 
     reason of the Earned Income Tax Credit) by striking out ``the 
     following month'' and inserting in lieu thereof ``the 
     following eleven-month period'', and by striking out the 
     semicolon at the end and inserting in lieu thereof ``and any 
     lump-sum payment of State earned income tax credits and any 
     payments described in this clause shall be deemed to be 
     expended prior to other resources that are not excluded;''.
       (d) Lump-Sum Payments for Medical Expenses or Replacement 
     of Lost Resources.--Section 402(a)(7)(B) of the Act is 
     amended--
       (1) by striking out ``and'' after clause (iv), and
       (2) by adding after clause (iv) the following new clause: 
     ``(v) for the month of receipt and the following eleven-month 
     period, amounts that have been paid as reimbursement (or 
     payment in advance) for medical expenses or for the cost of 
     repairing or replacing resources of the family;''.
       (e) Individual Development Accounts.--Section 402(a)(7)(B) 
     of the Act is amended by adding after clause (v) the 
     following new clause: ``(vi) amounts, not to exceed $10,000 
     (including interest) in total, in one or more Individual 
     Development Accounts established in accordance with (I) 
     section 529 of the Internal Revenue Code of 1986 by any 
     member of a family receiving aid to families with dependent 
     children, or (II) under a demonstration project conducted 
     under the Individual Development Account Demonstration Act of 
     1994, but only such amounts (including interest) that were 
     credited to such account in a month for which such aid was 
     paid, or food stamps provided, with respect to such 
     individual or in any month after such a month;''.
       (f) Resources for Self-Employment.--Section 402(a)(7)(B) of 
     the Act is amended by adding after clause (vi) the following 
     new clause: ``(vii) liquid and nonliquid resources that are 
     or will be used for the self-employment of a family member, 
     to the extent and under the circumstances allowed by the 
     State agency in accordance with regulations issued by the 
     Secretary after consultation with the Secretary of 
     Agriculture;''.

     SEC. 710. TRANSFER OF RESOURCES.--

       Section 402(a)(7) of the Act is amended--
       (1) by adding ``and'' after subparagraph (C), and
       (2) by adding after and below subparagraph (C) the 
     following new subparagraph:
       ``(D) shall determine ineligible for aid any family member 
     who knowingly transfers resources for the purpose of 
     qualifying or attempting to qualify for such aid for such 
     period, not in excess of one year from the date of discovery 
     of the transfer, determined in accordance with regulations of 
     the Secretary;''.

     SEC. 711. LIMITATION ON UNDERPAYMENTS.

       Section 402(a)(22)(C) of the Act is amended by striking out 
     ``an underpayment'' and inserting in lieu thereof ``an 
     underpayment, the corrective payment shall be made regardless 
     of whether the family is, at the time payment is made, 
     receiving current payment of aid under the State plan but 
     such payment shall not exceed the amount necessary to correct 
     for the underpayment of aid during the twelve-month period 
     immediately preceding the month in which the State agency 
     first learned of the underpayment, and''.

     SEC. 712. COLLECTION OF AFDC OVERPAYMENTS FROM FEDERAL TAX 
                   REFUNDS.

       (a) Authority to Intercept Tax Refund.--(1) Part A of title 
     IV of the Act is amended by adding at the end thereof the 
     following new section:


         ``collection of overpayments from federal tax refunds

       ``Sec. 418.(a). Upon receiving notice from a State agency 
     administering a plan approved under this part that a named 
     individual has been overpaid under the State plan approved 
     under this part, the Secretary of the Treasury shall 
     determine whether any amounts as refunds of Federal taxes 
     paid are payable to such individual, regardless of whether 
     such individual filed a tax return as a married or unmarried 
     individual. If the Secretary of the Treasury finds that any 
     such amount is payable, he shall withhold from such refunds 
     an amount equal to the overpayment sought to be collected by 
     the State and pay such amount to the State agency.
       ``(b) The Secretary of the Treasury shall issue 
     regulations, approved by the Secretary of Health and Human 
     Services, that provide--
       ``(1) that a State may only submit under subsection (a) 
     requests for collection of overpayments with respect to 
     individuals (A) who are no longer receiving aid under the 
     State plan approved under this part, (B) with respect to whom 
     the State has already taken appropriate action under State 
     law against the income or resources of the individuals or 
     families involved as required under section 402(a)(22)(B), 
     and (C) to whom the State agency has given notice of its 
     intent to request withholding by the Secretary of the 
     Treasury from their income tax refunds;
       ``(2) that the Secretary of the Treasury will give a timely 
     and appropriate notice to any other person filing a joint 
     return with the individual whose refund is subject to 
     withholding under subsection (a); and
       ``(3) the procedures that the State and the Secretary of 
     the Treasury will follow in carrying out this section which, 
     to the maximum extent feasible and consistent with the 
     specific provisions of this section, will be the same as 
     those issued pursuant to section 464(b) applicable to 
     collection of past-due child support.
       (2) Section 6402 of the Internal Revenue Code of 1986 (as 
     previously amended by section 662 of this Act) is further 
     amended--
       (A) in subsection (a), by striking ``(c) and (d)'' and 
     inserting ``(c), (d), and (e)'';
       (B) by redesignating subsections (e) through (i) as 
     subsections (f) through (j), respectively; and
       (C) by inserting after subsection (d) the following new 
     subsection:
       ``(g) Collection of overpayments under title IV-A of Social 
     Security Act. The amount of any overpayment to be refunded to 
     the person making the overpayment shall be reduced (after 
     reductions pursuant to subsections (c) and (d), but before a 
     credit against future liability for an internal revenue tax) 
     in accordance with section 418 of the Social Security Act 
     (concerning recovery of overpayments to individuals under 
     State plans approved under part A of title IV of such 
     Act).''.
       (b) Conforming Amendment.--Section 552a(a)(8)(B)(iv)(III) 
     of title 5 of the United States Code is amended by striking 
     out ``section 464 or 1137 of the Social Security Act'' and 
     inserting in lieu thereof ``section 419, 464, or 1137 of the 
     Social Security Act.''

     SEC. 713. VERIFICATION OF STATUS OF CITIZENS AND ALIENS.

       (A) In General.--Section 1137(d) of the Act is amended by 
     adding at the end thereof the following:
       ``(6) A State shall be deemed to meet the requirements of 
     paragraph (1) with respect to the eligibility of each member 
     of a family applying for aid under the State plan approved 
     under part A of title IV, if the State requires, as a 
     condition for such eligibility, a declaration in writing by 
     an adult member of the family, under penalty or perjury, that 
     each family member is a citizen of the United States or an 
     alien eligible for aid under such State plan (and, with 
     respect to a child born into a family receiving such aid, 
     such declaration must be made no later than the time of the 
     next redetermination of such family's eligibility following 
     the birth of such child).''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall become effective upon enactment.

     SEC. 714. REPEAL OF REQUIREMENT TO MAKE CERTAIN SUPPLEMENTAL 
                   PAYMENTS IN STATES PAYING LESS THAN THEIR NEEDS 
                   STANDARDS.

       Section 402(a)(28) of the Act is repealed.

     SEC. 715. CALCULATION OF 185 PERCENT OF NEED STANDARD.

       Section 402(2)(18) of the Act is amended by striking out 
     ``without application of paragraph (8)(A)(viii),'' and 
     inserting in lieu thereof ``applying only the disregard 
     provisions of paragraph (8)(A) that appear in clauses 
     (v)(income from a program under the Job Training Partnership 
     Act and similar programs), (viii)(payments related to the 
     Earned Income Tax Credit), (ix)(certain lump-sum payments), 
     (x) (educational assistance), (xi) (in-kind income), and 
     (xii)(certain payments under the National and Community 
     Service Act of 1990),''.

     SEC. 716. TERRITORIES.

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

                   PART B--FOOD STAMP ACT AMENDMENTS

     SEC. 721. INCONSEQUENTIAL INCOME.

       Section 5(d)(2) of the Food Stamp Act of 1977 (7 U.S.C. 
     2014(d)(2)) is amended to read as follows--
       ``(2) any inconsequential payments, as defined by the 
     Secretary, received during the certification period, but not 
     to exceed a total of such payments of $30 per household 
     member in any quarter, whether the household's income is 
     calculated on a prospective or retrospective basis,''.

     SEC. 722. EDUCATIONAL ASSISTANCE.

       Section 5 of the Food Stamp Act of 1977 (7 U.S.C. 2014) is 
     amended by--
       (1) striking clause (3) of subsection (d) and inserting in 
     lieu thereof the following--
       ``(3) all educational assistance provided to a household 
     member,'';
       (2) in the proviso of clause (5) of subsection (d), 
     striking ``and no portion of any educational loan'' and all 
     that follows through ``provided for living expenses,''; and
       (3) striking clause (3) of subsection (k).

     SEC. 723. EARNINGS OF STUDENTS.

       Effective on and after September 1, 1994, section 5(d)(7) 
     of the Food Stamp Act of 1977 (7 U.S.C. 2014(d)(7)) is 
     amended by--
       (1) striking ``a child who is a member of the household, 
     who is''; and
       (2) striking ``, and who is 21'' and inserting in lieu 
     thereof ``who is 18''.

     SEC. 724. TRAINING STIPENDS AND ALLOWANCES; INCOME FROM ON-
                   THE-JOB TRAINING PROGRAMS.

       Section 5 of the Food Stamp Act of 1977 (7 U.S.C. 2014) is 
     amended by--
       (1) striking ``and (16)'' in subsection (d) and inserting 
     in lieu thereof ``(16)'';
       (2) inserting before the period at the end of subsection 
     (d) ``, and (17) any amount received by any member of a 
     household as a stipend or allowance under the Job training 
     Partnership Act (29 U.S.C. 1501 et seq.) or under any other 
     training or similar program''; and
       (3) striking in subsection (1) the language beginning with 
     ``under section 204(b)(1)(C)'' and all that follows through 
     ``19 years of age.'' and inserting in lieu thereof ``shall be 
     considered earned income for purposes of the food stamp 
     program.''.

     SEC. 725. EARNED INCOME TAX CREDITS.

       Effective on and after September 1, 1994, the second 
     sentence of section (5)(g)(3) of the Food Stamp Act of 1977 
     (7 U.S.C. 2014(g)(3)) is amended by--
       (1) inserting ``Federal or State lump-sum'' immediately 
     preceding ``earned income tax credits''; and
       (2) striking the language beginning with ``if such member 
     was participating'' and all that follows through ``the 12-
     month period''.

     SEC. 726. RESOURCES NECESSARY FOR SELF EMPLOYMENT.

       Section 5(g)(3) of the Food Stamp Act of 1977 (7 U.S.C. 
     2014(g)(3)) is amended by adding the following new third and 
     fourth sentences--
       ``The Secretary shall also exclude from financial resources 
     loans obtained for the purposes of starting or operating a 
     business. The Secretary may exclude from financial resources 
     liquid or nonliquid resources that are or will be used for 
     the self employment of any member of a household to the 
     extent and under the circumstances allowed in regulations 
     issued by the Secretary after consultation with and the 
     Secretary of Health and Human Services.''.

     SEC. 727. LUMP-SUM PAYMENTS FOR MEDICAL EXPENSES OR 
                   REPLACEMENT OF LOST RESOURCES.

       Section 5(g)(3) of the Food Stamp Act of 1977 (7 U.S.C. 
     2014(f)(3)) as amended by this Act is further amended by 
     adding the following new fifth sentence--

     ``The Secretary shall also exclude from financial resources, 
     for a period of one year from their receipt, amounts that 
     have been paid as reimbursements (or payment in advance) for 
     medical expenses or for the cost of repairing or replacing 
     resources of the family.''.

     SEC. 728. INDIVIDUAL DEVELOPMENT ACCOUNTS.

       Section 5(g)(3) of the Food Stamp act of 1977 (7 U.S.C. 
     2014(f)(3)) as amended by this Act is further amended by 
     adding the following new sixth and seventh sentences--

     ``The Secretary shall also exclude from financial resources 
     amounts, not to exceed $10,000 (including interest) in total, 
     in one or more Individual Development Accounts established in 
     accordance with (A) section 529 of the Internal Revenue Code 
     of 1986 (26 U.S.C. 1 et seq.) by any member of a household 
     applying for or receiving assistance under this Act or (B) a 
     demonstration project conducted under the Individual 
     Development Account Demonstration Act of 1994, but only such 
     amounts (including interest) that were credited to such 
     account in a month for which assistance was provided under 
     this act or aid to families with dependent children was 
     provided pursuant to part A of the title IV of the Social 
     Security Act, with respect to such individual, or in any 
     month after such a month. The Secretary shall also exclude 
     from financial resources, for the month of its receipt and 
     the following month, a nonrecurring lump-sum payment received 
     by any household member if the household member represents 
     that the payment will be deposited in an Individual 
     Development Account established as described in the preceding 
     sentence.''.

     SEC. 729. CONFORMING AMENDMENT.

       Section 5(d)(8) of the Food Stamp Act of 1977 (7 U.S.C 
     2014(d)(8)) is amended in the proviso by inserting 
     ``paragraph (3) of subsection (g) of this section or'' 
     immediately preceding ``other laws''.

                     PART C--ECONOMIC INDEPENDENCE

     SEC. 731. SHORT TITLE.

       This title may be cited as the ``Individual Development 
     Account Demonstration Act of 1994''.

     SEC. 732. DECLARATION OF POLICY AND STATEMENT OF PURPOSE.

       (a) Declaration of Policy.--It is the policy of the United 
     States--
       (1) to eliminate barriers that prevent recipients of Aid to 
     Families with Dependent Children (AFDC) from becoming self-
     sufficient through self-employment and asset accumulation;
       (2) to identify and implement cost-effective strategies to 
     encourage saving and entrepreneurship among the broadest 
     possible range of low-income families, particularly families 
     eligible for AFDC, and that have the potential to reduce 
     Federal spending on transfers and services to the 
     disadvantaged;
       (3) to enhance private-sector opportunities for low-income 
     families by enabling them to use their own human and 
     financial resources through expansion of business investment, 
     job creation, home ownership, and human capital investment; 
     and
       (4) to expand the capacity of local organizations to 
     provide asset-related services that help people to help 
     themselves such as savings mechanisms, loan funds, technical 
     assistance, and entrepreneurial training.
       (b) Statement of Purpose.--The purpose of the demonstration 
     projects authorized under this title is to provide for a 
     means of determining--
       (1) the social, psychological, and economic effects of 
     providing low-income individuals the opportunity to 
     accumulate assets and develop and utilize entrepreneurial 
     skills; and
       (2) the extent to which an asset-based assistance policy 
     may be used to enable individuals with low-income to achieve 
     economic self-sufficiency.

     SEC. 733. INDIVIDUAL DEVELOPMENT ACCOUNT DEMONSTRATION 
                   PROJECTS.

       (a) In General.--Not later than one year after the date of 
     enactment of this Act, any State or local government, or any 
     qualified organization may apply to the Administrator/
     Chairperson of the Community Development Bank and Financial 
     Institutions Fund (hereinafter the Administrator/Chairperson) 
     for a grant to conduct individual development account 
     demonstration projects for eligible persons.
       (b) Contents.--Each application shall--
       (1) describe the demonstration project;
       (2) describe the persons who will participate in the 
     project;
       (3) demonstrate the ability of the applicant--
       (A) to assist project participants in achieving economic 
     self-sufficiency through the project; and
       (B) to assist project participants in developing greater 
     knowledge about savings, investments, and other financial 
     matters;
       (C) to oversee the use of grant funds, including the 
     documentation and verification of start-up expenses in the 
     case of entrepreneurial assistance; and
       (D) to effectively administer the project;
       (4) in the case of a qualified organization, document a 
     commitment by the State in which the project is to be 
     conducted to provide a specified amount of funds to the 
     qualified organization for the project, and any similar 
     commitment made to the qualified organization by any other 
     non-Federal public entity or any private entity;
       (5) contain a plan for maintaining data and other 
     information concerning assistance provided to project 
     participants sufficient to evaluate the project and a 
     certification that the applicant will fully cooperate and 
     provide access to all information concerning the project in 
     connection with any evaluation of the project conducted 
     pursuant to subsection (1); and
       (6) contain such other information as the Administrator/
     Chair may prescribe.
       (c) Criteria.--In considering whether to approve an 
     application, the Administrator/Chairperson shall assess the 
     following:
       (1) The degree to which the project described in the 
     application is likely to aid project participants in 
     achieving economic self-sufficiency through activities 
     requiring qualified expenses. In making such assessment, the 
     Administrator/Chairperson shall consider the overall quality 
     of project activities and shall not consider any particular 
     kind or combination of such qualified expenses to be an 
     essential feature of any project.
       (2) The ability of the applicant to responsibly administer 
     the project.
       (3) The amount of funds from non-Federal sources that are 
     committed to the project.
       (4) The adequacy of the plan for maintaining information 
     necessary to evaluate the project.
       (d) Approval.--
       (1) The Administrator/Chairperson shall, on a competitive 
     basis, approve such applications to conduct demonstration 
     projects under this section as the Administrator/Chairperson 
     deems appropriate on the basis of the criteria described in 
     subsection (c).
       (2) No court shall have jurisdiction to review the approval 
     or nonapproval of any application by the Administrator/
     Chairperson.
       (e) Demonstration Authority; Annual Grants.--
       (1) Demonstration authority.--The approval by the 
     Administrator of an application shall authorize the applicant 
     (hereinafter the grantee) to conduct the project for five 
     project years in accordance with the approved application and 
     the requirements of this section.
       (2) Annual grants.--The Administrator/Chairperson shall 
     make a grant to each grantee on the first day of each project 
     year.
       (f) Reserve Fund.--
       (1) Establishment.--Each grantee shall establish a reserve 
     fund that shall be used in accordance with this subsection.
       (2) Deposits.--
       (A) as soon after receipt as is practicable, a grantee 
     shall deposit into the reserve fund--
       (i) all annual grants made by the Administrator/
     Chairperson;
       (ii) all funds provided to the grantee by any non-Federal 
     public or private entity to conduct the demonstration 
     project;
       (iii) all proceeds from any investments made pursuant to 
     paragraph (4); and
       (iv) all amounts title to which vests in the grantee 
     pursuant to subsection (h)(5).
       (3) Expenditures.--A grantee shall use amounts in the 
     reserve fund only--
       (A) to assist project participants in obtaining the skills 
     and information necessary to achieve economic self-
     sufficiency through activities requiring the payment of 
     qualified expenses;
       (B) to provide financial assistance in accordance with 
     subsection (h) to project participants;
       (C) to administer the project; and
       (D) to maintain and provide information necessary for the 
     evaluation of the project pursuant to subsection (1).
       (4) Accounting standards.--The Administrator/Chairperson 
     shall prescribe regulations governing the accounting of 
     amounts deposited in and withdrawn from reserve funds.
       (5) Termination of project.--Notwithstanding paragraph (3), 
     upon the termination of any demonstration project approved 
     under this section, remaining amounts in the reserve fund 
     established with respect to such project and remaining 
     investments made from amounts in the reserve fund shall be 
     distributed to the Administrator/Chairperson and each non-
     Federal public or private entity that contributed to the 
     project in proportion to their contributions.
       (g) Selection of Eligible Persons To Receive Assistance.--A 
     grantee shall provide individual development account 
     assistance to eligible persons whom the grantee deems to be 
     best situated to benefit from such assistance, taking into 
     account the amount of grants made by the Administrator/
     Chairperson and other funds available to the grantee for 
     such assistance.
       (h) Financial Assistance for Individual Development 
     Accounts.--
       (1) In general.--A grantee shall provide initial financial 
     assistance to a project participant who establishes an 
     individual development account, not to exceed $500 per 
     participant. Such financial assistance shall be deposited in 
     the individual development account established by a project 
     participant.
       (2) Matching contributions.--The Administrator/Chairperson 
     or a grantee may make matching contributions of not less than 
     50 cents and not more than $4 for every $1 deposited into an 
     individual development account by a project participant, not 
     to exceed $2,500 for any project participant.
       (3) Limitation on use.--
       (A) Financial assistance provided pursuant to paragraph (1) 
     shall not be available for use by a project participant 
     until--
       (i) the individual development account is closed; and
       (ii) a project participant has deposited into the 
     individual development account an amount equal to the initial 
     financial assistance provided pursuant to paragraph (1).
       (B) Financial assistance provided pursuant to paragraph (1) 
     or (2) shall be used by a project participant only for the 
     payment of qualified expenses.
       (4) Applicability of other law.--The provisions of section 
     529 of the Internal Revenue Code of 1986 (26 U.S.C. 529) and 
     such rules, regulations and procedures as may be prescribed 
     by the Secretary of the Treasury under such Code shall apply 
     to an individual development account for which financial 
     assistance is provided pursuant to this subsection.
       (5) Effect of prohibited transactions.--In the event that 
     an individual development account ceases to be an individual 
     development account under the provisions of section 529(e)(2) 
     of the Internal Revenue Code of 1986 (26 U.S.C. 529(e)(2)), 
     or any portion of an individual development account is 
     treated as distributed under the provisions of section 
     529(e)(3) of the Internal Revenue Code of 1986 (26 U.S.C. 
     529(e)(3)), title to all amounts in such an account, or such 
     portion of an account, attributable to financial assistance 
     provided pursuant to paragraph (1) or (2) shall vest in the 
     grantee providing financial assistance pursuant to paragraph 
     (1) and such amounts shall be paid to such grantee.
       (i) Local Control Over Demonstration.--
       (1) Each grantee shall, subject to the provisions of 
     subsection (k), have sole responsibility for the 
     administration of demonstration projects approved by the 
     Administrator/Chairperson.
       (2) The Administrator/Chairperson may prescribe such 
     regulations as may be necessary to ensure that grantees 
     comply with the terms of approved applications and the 
     requirements of this section.
       (j) Annual Reports.--
       (1) In general.--Each grantee shall annually report to the 
     Administrator/Chairperson concerning the progress of each 
     approved demonstration project administered by such grantee. 
     The report shall, at a minimum--
       (A) describe project participants;
       (B) contain an audited financial statement for the reserve 
     fund established with respect to the project;
       (C) provide information on amounts deposited in individual 
     development accounts of project participants to whom such 
     assistance is provided under the project; and
       (D) such other information as the Administrator/Chairperson 
     may require with respect to the evaluation of the project 
     pursuant to subsection (1).
       (2) Submission.--Reports required by paragraph (1) shall be 
     submitted annually not later than the anniversary of the date 
     the Administrator/Chairperson approved the application for 
     the demonstration project.
       (3) Coordination with state government.--A grantee shall 
     transmit a copy of each report required by paragraph (1) to 
     the Treasurer (or equivalent official) of the State in which 
     the project is conducted at the time prescribed by paragraph 
     (2).
       (k) Sanctions.--
       (1) Revocation of demonstration authority.--If the 
     Administrator/Chairperson determines a grantee not conducting 
     a demonstration project in accordance with the approved 
     application and the requirements of this section, and has 
     failed to undertake corrective action satisfactory to the 
     Administrator/Chairperson, the Administrator/Chairperson may 
     revoke the approval for a demonstration project shall not be 
     subject to review by any court.
       (2) Actions required upon revocation.--
       (A) If the Administrator/Chairperson revokes approval to 
     conduct a demonstration project pursuant to paragraph (1), 
     the Administrator/Chairperson--
       (i) shall suspend the project;
       (ii) shall take control of the reserve fund established 
     pursuant to subsection (f) with respect to such project; and
       (iii) shall solicit applications from entities described in 
     subsection (a) to conduct the suspended project in accordance 
     with the approved application (or under such terms and 
     conditions as the Administrator may prescribe) and the 
     requirements of this section.
       (B) If the Administrator/Chairperson approves an 
     application to conduct the suspended project, the 
     Administrator/Chairperson shall transfer to the new grantee 
     control of the reserve fund established pursuant to 
     subsection (f) for the project, and such grantee shall be 
     considered to be the original grantee for purposes of this 
     section. The date the Administrator/Chairperson approved the 
     application of the new grantee to conduct the suspended 
     project shall apply for purposes of the annual reports 
     required by subsection (j).
       (C) If the Administrator/Chairperson has not approved an 
     application to conduct a project by the date that is one year 
     after approval to conduct the project was revoked, the 
     Administrator/Chairperson shall--
       (i) terminate the project; and
       (ii) distribute remaining amounts in the reserve fund for 
     such project and investments made from amounts in the reserve 
     fund in accordance with the provisions of subsection (f)(6).
       (l) Project Evaluations.--
       (1) In general.--Not later than six months after the date 
     of enactment of this Act, the Administrator/Chairperson, in 
     consultation with the Secretary of the Treasury and the 
     Secretary of the Department of Health and Human Services, 
     shall enter into a contract with an independent organization 
     (hereinafter `'evaluator'') for the evaluation of individual 
     demonstration projects conducted pursuant to this section and 
     the effectiveness of assistance provided to eligible persons 
     pursuant to this section.
       (2) Evaluations.--In entering into the contract provided 
     for in paragraph (1), the Administrator/Chairperson should 
     consider providing for evaluation of--
       (A) the types of information and public education efforts 
     that attract project participants;
       (B) the accessibility of the demonstration project by 
     participants and the ease of participation;
       (C) the level of financial assistance required to stimulate 
     participation in the demonstration project, and whether such 
     level varies among different demographic populations;
       (D) whether project features utilized in conjunction with 
     individual development accounts (such as peer support, 
     structured planning exercises, mentoring, and case 
     management) contribute to participation in the project;
       (E) the level of self-sufficiency achieved by project 
     participants as measured by employment or self-employment 
     rates, earned and investment income, exit rates, poverty 
     rates, and recidivism rates, particularly for program 
     participants eligible for food stamp benefits and AFDC;
       (F) the reduction in the level of public expenditure on 
     project participants as measured by changes in overall 
     support payments including AFDC, food stamp benefits, Federal 
     child care assistance, Federal housing assistance, JOBS, and 
     other benefits, taking into account costs incurred by the 
     Federal Government in support of demonstration projects;
       (G) the level of asset accumulation by project participants 
     as measured by savings rates, net worth, business start-ups, 
     human capital investments, new homes, number of loans to low-
     income and AFDC eligible families, and whether asset 
     accumulation continued after a subsidy or other assistance;
       (H) the economic, psychological, and social effects of 
     asset accumulation; and
       (I) the circumstances concerning and the extent to which 
     asset accumulation by project participants contributes to--
       (i) a greater sense of security and control and positive 
     outlook;
       (ii) greater household stability;
       (iii) increased long-term planning;
       (iv) increased efforts to maintain and develop assets;
       (v) greater knowledge about savings, investments, and other 
     financial matters;
       (vi) increased effort and success in educational 
     achievement within the household;
       (vii) increased specialization in career development;
       (viii) improved social status;
       (ix) increased political participation;
       (x) increased community involvement;
       (xi) increased earned income;
       (xii) decreased reliance on traditional forms of public 
     assistance, with particular emphasis on food stamp benefits 
     and AFDC; and
       (xiii) increased tendency to save during and after the 
     period of project participation.
       (3) Methodological requirement.--In evaluating any 
     demonstration project conducted under this section, the 
     evaluator should obtain such quantitative data before, 
     during, and after the project, as is necessary to evaluate 
     the project and include randomly assigned control groups.
       (m) Definitions.--As used in this section:
       (1) Household.--The term ``household'' means all 
     individuals who share use of a dwelling unit as primary 
     quarters for living and eating separately from other 
     individuals in the living quarters.
       (2) Net worth.--
       (A) In general.--Except as provided in subparagraph (B), 
     the term ``net worth'' means, with respect to a household, 
     the aggregate fair market value of all assets that are owned 
     in whole or in part by any member of the household, less the 
     obligations or debts of any member of the household.
       (B) Assets excluded.--Net worth shall be determined without 
     taking into account the fair market value and the obligations 
     or debts of--
       (i) the primary dwelling unit of the household;
       (ii) the motor vehicle having the greatest equity value; 
     and
       (iii) items essential for daily living, such as clothes, 
     furniture, and similar items of limited value.
       (3) Individual development account.--The term ``individual 
     development account'' shall have the same meaning given such 
     term in section 529 of the Internal Revenue Code of 1986 (26 
     U.S.C. 529).
       (4) Project year.--The term ``project year'' means with 
     respect to a demonstration project, any of the six 
     consecutive 12-month periods beginning on the date the 
     project is approved by the Administrator.
       (5) Qualified organization.--The term ``qualified 
     organization'' means a community development 
     financial institution as defined in section      of the 
     Community Development Banking and Financial Institutions 
     Act of 1994.
       (6) Eligible person defined.--The term ``eligible person'' 
     means any person who is a member of a household that meets 
     all of the following requirements:
       (A) EITC test.--The household has at least one individual 
     who is an eligible individual within the meaning of section 
     32(c)(1) of the Internal Revenue Code of 1986 for purposes of 
     the earned income tax credit.
       (B) Income test.--The household did not have adjusted gross 
     income (as determined pursuant to the Internal Revenue Code 
     of 1986) in the immediately preceding calendar year in excess 
     of $18,000.
       (C) Net worth test.--The net worth of the household, as of 
     the close of the immediately preceding calendar year, did not 
     exceed $20,000.
       (7) Qualified expenses.--The term ``qualified expenses'' 
     shall have the same meaning as provided in section 529(c)(1) 
     of the Internal Revenue Code of 1986 (26 U.S.C. 529(C)(1)).
       (n) Authorization of Appropriations.--To carry out the 
     purposes of this section there are authorized to be 
     appropriated to the Administrator/Chairperson--
       (1) $10,000,000 for fiscal year 1997,
       (2) $20,000,000 for each of fiscal years 1998, 1999, 2000, 
     and 2001, and
       (3) $10,000,000 for fiscal year 2002.

     SEC. 734. INDIVIDUAL DEVELOPMENT ACCOUNTS.

       (a) In General.--Subchapter F of chapter 1 of the Internal 
     Revenue Code of 1986 (relating to additional itemized 
     deductions for individuals) is amended by adding at the end 
     of the following new part:

              ``PART VIII--INDIVIDUAL DEVELOPMENT ACCOUNTS

     ``SEC. 529. INDIVIDUAL DEVELOPMENT ACCOUNTS.

       ``(a) Establishment of Accounts.--
       ``(1) In general.--An individual development account may be 
     established by or on behalf of an eligible individual for the 
     purpose of accumulating funds to pay the qualified expenses 
     of such individual.
       ``(2) Eligible individual.--The term `eligible individual' 
     means an individual--
       ``(A) for whom assistance is provided under section 733(h) 
     of the Individual Development Account Demonstration Act;
       ``(B) receiving assistance under 42 U.S.C. 601 et seq.; or
       ``(C) receiving assistance under 7 U.S.C. 2011 et seq.
       ``(b) Limitations.--
       ``(1) Account to benefit one individual.--An individual 
     development account may not be established for the benefit of 
     more than one individual.
       ``(2) Multiple accounts.--If, at any time during a calendar 
     year, two or more individual development accounts are 
     maintained for the benefit of an eligible individual, such 
     individual shall be treated as an eligible individual for 
     such year only with respect to the account first established.
       ``(3) Who may contribute.--Contributions to an individual 
     development account, other than contributions made pursuant 
     to section 733(h) of the Individual Development Account 
     Demonstration Act, may be made only by an eligible individual 
     and in the case of an eligible individual described in 
     subsection (e)(2)(A), by another eligible individual who is a 
     member of the same household as the eligible individual.
       ``(4) Annual limit.--Contributions to an individual 
     development account by or on behalf of an eligible individual 
     for any taxable year shall not exceed the lesser of $1,000 or 
     100% of the earned income, within the meaning of section 
     32(c)(2), of the eligible individual making such 
     contribution. No contribution to the account under section 
     733(h) of the Individual Development Account Demonstration 
     Act shall be taken into account for the purposes of this 
     limitation. No contribution may be made to an individual 
     development account by or on behalf of any individual after 
     such individual has ceased to be an eligible individual.
       ``(5) Limit on total contributions.--Total contributions to 
     an individual development account for all years may not 
     exceed $10,000.
       ``(c) Definitions and Special Rules.--For the purposes of 
     this section--
       ``(1) Qualified expenses.--In the case of an eligible 
     individual described in subsection (a)(2)(A), the term 
     `qualified expenses' means one or more of the expenses 
     described in subparagraphs (A), (B), (C), and (D), as 
     provided by the entity providing assistance to the eligible 
     individual under section 733(h) of the Individual Development 
     Account Demonstration Act. In the case of any other eligible 
     individual, the term `qualified expenses' means one or more 
     of the expenses described in subparagraphs (A), (B), (C), and 
     (D).
       ``(A) Post-secondary education expenses.--Post-secondary 
     educational expenses paid from an individual development 
     account directly to an eligible educational institution. 
     For the purposes of this subparagraph--
       ``(i) the term `post-secondary educational expenses' 
     means--
       ``(I) tuition and fees required for the enrollment or 
     attendance of a student at an eligible educational 
     institution;
       ``(II) fees, books, supplied, equipment required for 
     courses of instruction at an eligible educational 
     institution; and
       ``(III) a reasonable allowance for meals, lodging, 
     transportation, and child care, while attending an eligible 
     educational institution; and
       ``(ii) the term `eligible educational institution' means--
       ``(I) an institution described in section 481(a)(1) or 
     1201(a) of the Higher Education Act of 1965 (20 U.S.C. 
     1088(a)(1) or 1141(a)), as such sections are in effect on the 
     date of the enactment of this section; and
       ``(II) an area vocational education school (as defined in 
     subparagraph (C) or (D) of section 521(4) of the Carl D. 
     Perkins Vocational and Applied Technology Education Act 
     Amendments of 1990 (20 U.S.C. 2471 (4))) in any State (as 
     defined in section 521(33) of such Act), as such section is 
     in effect on the date of the enactment of this section.
       ``(B) First-home purchase.--Qualified acquisition costs 
     with respect to a qualified principal residence for a 
     qualified first-time homebuyer, if paid from an individual 
     development account directly to the persons to whom the 
     amounts are due. For purposes of this subparagraph--
       ``(i) the term `qualified acquisition costs' means the 
     costs of acquiring, construction, or reconstructing a 
     residence, and includes any usual or reasonable settlement, 
     financing, or other closing costs;
       ``(ii) the term `qualified principal residence' means a 
     principal residence (within the meaning of section 1034), the 
     qualified acquisition costs of which do not exceed 80 percent 
     of the average area purchase price applicable to such 
     residence (determined in accordance with paragraphs (2) and 
     (3) of section 143(e));
       ``(iii) the term `qualified first-time home-buyer' means a 
     taxpayer (and, if married, the taxpayer's spouse) who has no 
     present ownership interest in a principal residence during 
     the three-year period ending on the date on which a binding 
     contract was entered into to acquire, construct, or 
     reconstruct the principal residence to which this 
     subparagraph applies.
       ``(C) Business capitalization.--Amounts paid from an 
     individual development account directly into a business 
     capitalization account which is established in a federally 
     insured financial institution and is restricted to use solely 
     for qualified business capitalization expenses. For purposes 
     of this subparagraph--
       ``(i) the term `qualified business capitalization expenses' 
     means qualified expenditures for the capitalization of a 
     qualified business pursuant to a qualified plan;
       ``(ii) the term `qualified expenditures' means expenditures 
     included in a qualified plan, including capital, plant, 
     equipment, working capital, and inventory expenses;
       ``(iii) the term `qualified business' means any business 
     that does not contravene any law or public policy (as 
     determined by the Administrator of the Community Development 
     Bank and Financial Institutions Fund);
       ``(iv) the term `qualified plan' means a business plan
       ``(I) that is approved by a financial institution, or any 
     other institution designated as a community development 
     financial institution, having demonstrated fiduciary 
     integrity;
       ``(II) that includes a description of services or goods to 
     be sold, a marketing plan, and projected financial 
     statements; and
       ``(III) that may require the eligible individual to obtain 
     assistance of an experienced entrepreneurial advisor.
       ``(D) Transfers to IDAs of family members.--Amounts in an 
     individual development account may be paid or transferred 
     directly into another such account established for the 
     benefit of an eligible individual who is--
       ``(i) the taxpayer's spouse; or
       ``(ii) any dependent of the taxpayer with respect to whom 
     the taxpayer is allowed a deduction under section 151.
       ``(2) Individual development account.--The term `individual 
     development account' means a trust created or organized in 
     the United States exclusively for the purpose of paying the 
     qualified expenses of an individual who was an eligible 
     individual at the time when contributions were made to such 
     trust, but only if the written instrument creating the trust 
     meets the following requirements:
       ``(A) No contribution will be accepted unless it is in cash 
     or check.
       ``(B) The trustee is a financial institution insured by an 
     instrumentality of the Federal Government.
       ``(C) The assets of the account will be invested only in 
     federally insured deposits and/or stock of a regulated 
     investment company within the meaning of section 851(a), in 
     accordance with the direction of the eligible individual.
       ``(D) The assets of the trust will not be commingled with 
     other property except in a common trust fund or common 
     investment fund.
       ``(E) Except as provided in subparagraph (F), any amount in 
     the account which is attributable to assistance provided 
     under section 733(h) of the Individual Development Account 
     Demonstration Act may be paid or distributed out of the 
     account only for the purpose of paying the qualified expenses 
     of the eligible individual.
       ``(F)(i) Any balance in the account on the day after the 
     date on which the individual for whose benefit the trust is 
     established dies will be transferred within 60 days of such 
     date as directed by such individual to another individual 
     development account established for the benefit of an 
     individual who is a family member described in subsection 
     (c)(1)(D) and who is an eligible individual, or who was an 
     eligible individual on the day immediately preceding the date 
     on which the individual for whose benefit the trust is 
     established dies.
       ``(ii) In any case where clause (i) does not apply, the 
     portion of the account attributable to contributions other 
     than those provided under section 733(h) of the Individual 
     Development Account Demonstration Act shall be paid out 
     within five years of the date of death to the beneficiaries 
     of the individual for whose benefit the account was 
     established, and the balance shall vest in the 
     grantee providing assistance under section 733(h) of the 
     Individual Development Account Demonstration Act and shall 
     be paid to such grantee within 60 days of the day after 
     the date of death.
       ``(3) Time when contributions deemed made.--A taxpayer 
     shall be deemed to have made a contribution to an individual 
     development account on the last day of the preceding taxable 
     year if the contribution is made on account of such taxable 
     year and is made not later than the time prescribed by law 
     for filing the return for such taxable year (not including 
     extensions thereof).
       ``(d) Tax Treatment of Distributions.--
       ``(1) In general.--Except as otherwise provided in this 
     subsection, any amount paid or distributed out of an 
     individual development account shall be included in gross 
     income of the payee or distributee for the taxable year in 
     the manner provided in section 72.
       ``(2) Treatment of assistance contributions.--
       ``(A) Distributions used to pay qualified expenses.--If a 
     distribution or payment from an individual development 
     account is used exclusively to pay the qualified expenses 
     incurred by the individual for whose benefit the account is 
     established, then, for purposes of section 72, assistance 
     contributions made to such individual development account 
     under section 733(h) of the Individual Development Account 
     Demonstration Act shall be treated in the same manner as 
     contributions made by the individual.
       ``(B) Distributions not used to pay qualified expenses.--If 
     a distribution or payment from an individual development 
     account is not used exclusively to pay the qualified expenses 
     incurred by the individual for whose benefit the account is 
     established, then, for purposes of section 72, assistance 
     contributions made to such individual development account 
     under section 733(h) of the Individual Development Account 
     Demonstration Act shall be treated in the same manner as 
     earnings on the account.
       ``(e) Tax Treatment of Accounts.--
       ``(1) Exemption from tax.--An individual development 
     account is exempt from taxation under this subtitle unless 
     such account has ceased to be an individual development 
     account by reason of paragraph (2). Notwithstanding the 
     preceding sentence, any such account is subject to the taxes 
     imposed by section 511 (relating to imposition of tax on 
     unrelated business income of charitable, etc. organizations).
       ``(2) Loss of exemption of account where individual engages 
     in prohibited transaction.--
       ``(A) In general.--If the individual for whose benefit an 
     individual development account is established or any 
     individual who contributes to such account engages in any 
     transaction prohibited by section 4975 with respect to the 
     account, the account shall cease to be an individual 
     development account as of the first day of the taxable year 
     (of the individual so engaging in such transaction) during 
     which such transaction occurs.
       ``(B) Account treated as distributing all its assets.--In 
     any case in which any account ceases to be an individual 
     development account by reason of subparagraph (A) as of the 
     first day of any taxable year--
       ``(i) all assets in the account on such first day that are 
     attributable to assistance provided under section 733(h)(1) 
     and (2) of the Individual Development Account Demonstration 
     Act shall be paid as provided in section 733(h)(5) of such 
     Act; and
       ``(ii) the provisions of subsection (d)(1) shall apply as 
     if there was a distribution on such first day in an amount 
     equal to the fair market value of all other assets in the 
     account on such first day.
       ``(3) Effect of pledging account as security.--If, during 
     any taxable year, the individual for whose benefit an 
     individual development account is established, or any 
     individual who contributes to such account, uses the account 
     or any portion thereof as security for a loan--
       ``(A) an amount equal to the part of the portion so used 
     which is attributable to assistance provided under section 
     733(h)(1) and (2) of the Individual Account Demonstration Act 
     shall be paid as provided in section 733(h)(5) of such Act; 
     and
       ``(B) the remaining part of the portion so used shall be 
     treated as distributed under the provisions of subsection 
     (d)(1) to the individual so using such portion.
       ``(f) Additional Tax on Certain Amounts Included in Gross 
     Income.--
       ``(1) Distribution not used for qualified expenses.--In the 
     case of any payment or distribution that is not used 
     exclusively to pay qualified expenses incurred by the 
     eligible individual for whose benefit the account is 
     established, the tax liability of each payee or distributee 
     under this chapter for the taxable year in which the payment 
     or distribution is received shall be increased by an amount 
     equal to 10 percent of the amount of the distribution that 
     is included in the gross income of such payee or 
     distributee for such taxable year.
       ``(2) Disqualification cases.--If any amount includible in 
     the gross income of an individual for a taxable year because 
     such amount is required to be treated as a distribution under 
     paragraph (2) or (3) of subsection (e), the tax liability of 
     such individual under this chapter for such taxable year 
     shall be increased by an amount equal to 10 percent of such 
     amount required to be treated as a distribution and included 
     in the gross income of such individual.
    
    
       ``(3) Disability or death cases.--Paragraphs (1) and (2) 
     shall not apply if the payment or distribution is made after 
     the individual for whose benefit the individual development 
     account becomes disabled within the meaning of section 
     72(m)(7) or dies.
       ``(g) Community Property Laws.--This section shall be 
     applied without regard to any community property laws.
       ``(h) Custodial Accounts.--For purposes of this section, a 
     custodial account shall be treated as a trust if the assets 
     of such account are held by a bank (as defined in section 
     408(n)) or another person who demonstrates, to the 
     satisfaction of the Administrator of the Community 
     Development Bank and Financial Institutions Fund, that the 
     manner in which he will administer the account will be 
     consistent with the requirements of this section, and if the 
     custodial account would, except for the fact that it is not a 
     trust, constitute an individual development account described 
     in subsection (c)(2). For purposes of this title, in the case 
     of a custodial account treated as a trust by reason of the 
     preceding sentence, the custodian of such account shall be 
     treated as the trustee thereof.
       ``(i) Reports.--
       ``(1) The trustee of an individual development account 
     established by or on behalf of an eligible individual 
     described in subsection (a)(2)(A) shall--
       ``(A) prepare reports regarding the account with respect to 
     contributions, distributions, and any other matter required 
     by the Administrator of the Community Development Bank and 
     Financial Institutions Fund under regulations; and
       ``(B) submit such reports, at the time and in the manner 
     prescribed by the Administrator of the Community Development 
     Bank and Financial Institutions Fund in regulations; to--
       ``(i) the individual for whose benefit the account is 
     maintained;
       ``(ii) the organization providing assistance to the 
     individual under section 733(h) of the Individual Development 
     Account Demonstration Act; and
       ``(iii) the Administrator of the Community Development Bank 
     and Financial Institutions Fund.
       ``(2) The trustee of any individual development account 
     shall make such reports regarding such account to the 
     Secretary and to the individual for whom the account is, or 
     is to be, maintained with respect to contributions (and the 
     years to which they relate), distributions, and such other 
     matters as the Secretary may require under forms or 
     regulations. The reports required by this subsection--
       ``(A) shall be filed at such time and in such manner as the 
     Secretary prescribes in such forms or regulations, and
       ``(B) shall be furnished to individuals--
       ``(i) not later than January 31 of the calendar year 
     following the calendar year to which such reports relate, and
       ``(ii) in such manner as the Secretary prescribes in such 
     forms or regulations.''.
       (b) Contribution Not Subject to the Gift Tax.--Section 2503 
     of the Internal Revenue Code of 1986 (26 U.S.C. 2503) 
     (relating to taxable gifts) is amended by adding at the end 
     thereof the following new subsection:
       ``(h) Individual Development Accounts.--Any contribution 
     made by an individual to an individual development account 
     described in section 529(c)(2) shall not be treated as a 
     transfer of property by gift for purposes of this chapter.''.
       (c) Tax on Prohibited Transactions.--Section 4975 of the 
     Internal Revenue Code of 1986 (26 U.S.C. 4975) (relating to 
     prohibited transactions) is amended--
       (1) by adding at the end of subsection (c) the following 
     new paragraph:
       ``(4) Special rule for individual development accounts.--An 
     individual for whose benefit an individual development 
     account is established and any contributor to such account 
     shall be exempt from tax imposed by this section with respect 
     to any transaction concerning such account (which would 
     otherwise be taxable under this section) if, with respect to 
     such transaction, the account ceases to be an individual 
     development account by reason of section 529(e)(2)(A) to such 
     account.''; and
       (2) in subsection (e)(1), by inserting ``, an individual 
     development account described in section 529(c)(2)'' after 
     ``section 408(a)''.
       (d) Information Reporting.--Section 6047 of the Internal 
     Revenue Code of 1986 (26 U.S.C. 6693) (Relating to 
     information returns) is amended by adding at the end of 
     subsection (c) the following new sentence: ``To the extent 
     provided by forms or regulations prescribed by the Secretary, 
     the provisions of this section shall apply to any transaction 
     of any trust described in section 529.''.
       (e) Failure to Provide Reports on Individual Development 
     Accounts.--Section 6693 of the Internal Revenue Code of 1986 
     (26 U.S.C. 6693) (relating to failure to provide reports on 
     individual retirement accounts or annuities) is amended--
       (1) in the heading of such section, by inserting ``OR ON 
     INDIVIDUAL DEVELOPMENT ACCOUNTS'' after ``ANNUITIES''; and
       (2) by adding at the end of subsection (a) the following 
     new sentence: ``The person required by section 529(i) to file 
     a report regarding an individual development account at the 
     time and in the manner required by such section shall pay a 
     penalty of $50 for each failure, unless it is shown that such 
     failure is due to reasonable cause.''.
       (f) Special Rule for Determining Amounts of Support for 
     Dependent.--Section 152(b) of the Internal Revenue Code of 
     1986 (26 U.S.C. 152(b)) (relating to definition of dependent) 
     is amended by adding at the end of following new paragraph:
       ``(6) A distribution from an individual development account 
     described in section 529(c)(2) used exclusively to pay 
     qualified expenses described in section 529(c)(1) of the 
     individual for whose benefit the account is established shall 
     not be taken into account in determining support for such 
     individual for purposes of this section.''.
       (g) Clerical Amendments.--
       (1) The table of parts for subchapter F of chapter 1 of 
     such Code is amended by inserting at the end the following 
     new item:

``Part VIII. Individual Development Accounts.''.

       (2) The table of sections for subchapter B of chapter 68 of 
     such Code is amended by amending the item relating to section 
     6693 to read as follows:

``Sec. 6693. Failure to provide reports on individual development 
              accounts or annuities or on individual development 
              accounts.''.

       (h) Effective Date.--The amendments made by this section 
     shall apply to contributions made after the enactment of the 
     Act.
               PART D--ADVANCE EITC STATE DEMONSTRATIONS

     SEC. 741. ADVANCE PAYMENT OF EARNED INCOME TAX CREDIT THROUGH 
                   STATE DEMONSTRATION PROGRAMS.

       (A) In General.--Section 3507 (relating to the advance 
     payment of the earned income tax credit) of the Internal 
     Revenue Code of 1986 is amended by adding at the end the 
     following subsection (g);
       ``(g) State Demonstrations.--
       ``(1) In general.--In lieu of receiving earned income 
     advance amounts from an employer under subsection (a), a 
     participating resident shall receive advance earned income 
     payments from a responsible State agency pursuant to a State 
     Advance Payment Program that is designated pursuant to 
     paragraph (2).
       ``(2) Designations.--
       ``(A) In general.--From among the States submitting 
     proposals satisfying the requirements of subsection (g)(3), 
     the Secretary (in consultation with the Secretary of Health 
     and Human Services) may designate not more than 4 State 
     Advance Payment Demonstrations. States selected for the 
     demonstrations may have, in the aggregate, no more than 5 
     percent of the total number of household participating in the 
     program under the Food Stamp program in the immediately 
     preceding fiscal year, Administrative costs of a State in 
     conducting a demonstration under this section may be included 
     for matching under section 403(a) of the Social Security Act 
     and section 16(a) of the Food Stamp Act of 1977.
       ``(B) When designation may be made.--Any designation under 
     this paragraph shall be made no later than December 31, 1995.
       ``(C) Period for which designation is in effect.--
       ``(i) In general.--Designations made under this paragraph 
     shall be effective for advance earned income payments made 
     after December 31, 1995, and before January 1, 1999.
       ``(ii) Special rules.--
       ``(I) Revocation of designations.--The Secretary may revoke 
     the designation under this paragraph if the Secretary 
     determines that the State is not complying substantially with 
     the proposal described in paragraph (3) submitted by the 
     State.
       ``(II) Automated termination of designations.--Any failure 
     by a State to comply with the reporting requirements 
     described in paragraphs (3)(F) and (3)(G) has the effect of 
     immediately terminating the designation under this 
     paragraph (2) and rendering paragraph (5)(A)(ii) 
     inapplicable to subsequent payments.
       ``(3) Proposals.--No State may be designated under 
     subsection (g)(2) unless the State's proposal for such 
     designation--
       ``(A) identifies the responsible State agency,
       ``(B) describes how and when the advance earned income 
     payments will be made by that agency, including a description 
     of any other State or federal benefits with which such 
     payments will be coordinated,
       ``(C) describes how the State will obtain the information 
     on which the amount of advance earned income payments made to 
     each participating resident will be determined in accordance 
     with paragraph (4),
       ``(D) describes how State residents who will be eligible to 
     receive advance earned income payments will be selected, 
     notified of the opportunity to receive advance earned income 
     payments from the responsible State agency, and given the 
     opportunity to elect to participate in the program,
       ``(E) describes how the State will verify, in addition to 
     receiving the certifications and statement described in 
     paragraph (7)(D)(iv), the eligibility of participating 
     residents for the earned tax credit,
       ``(F) commits the State to furnishing to each participating 
     resident to the Secretary by January 31 of each year a 
     written statement showing--
       ``(i) the name and taxpayer identification number of the 
     participating resident, and
       ``(ii) the total amount of advance earned income payments 
     made to the participating resident during the prior calendar 
     year,
       ``(G) commits the State to furnishing to the Secretary by 
     December 1 of each year a written statement showing the name 
     and taxpayer identification number of each participating 
     resident,
       ``(H) commits the State to treat the advanced earned income 
     payments as described in subsection (g)(5) and any repayments 
     of excessive advance earned income payments as described in 
     subsection (g)(6),
       ``(I) commits the State to assess the development and 
     implementation of its State Advance Payment Program, 
     including an agreement to share its findings and lessons with 
     other interested States in a manner to be described by the 
     Secretary, and
       ``(J) is submitted to the Secretary on or before June 30, 
     1995.
       ``(4) Amount and timing of advance earned income 
     payments.--
       ``(A) Amount.--
       ``(i) In general.--The method for determining the amount of 
     advance earned income payments made to each participating 
     resident is to conform to the full extent possible with the 
     provisions of subsection (c).
       ``(ii) Special rule.--A State may, at its election, apply 
     the rules of subsection (c)(2)(B) by substituting `between 60 
     percent and 75 percent of the credit percentage in effect 
     under section 32(b)(1) for an individual with the 
     corresponding number of qualifying children' for `60 percent 
     of the credit percentage in effect under section 32(b)(1) for 
     such an eligible individual with 1 qualifying child' in 
     clause (i) and `the same percentage (as applied in clause 
     (i))' for `60 percent' in clause (ii).
       ``(B) Timing.--The frequency of advance earned income 
     payments may be made on the basis of the payroll periods of 
     participating residents, on a single Statewide schedule, or 
     on any other reasonable basis prescribed by the State in its 
     proposal; however, in no event may advanced earned income 
     payments be made to any participating resident less 
     frequently than on a calendar-quarter basis.
       ``(5) Payments to be treated as payments of withholding and 
     fica taxes.--
       ``(A) In general.--For purposes of this title, advanced 
     earned income payments during any calendar quarter--
       ``(i) shall neither be treated as a payment of compensation 
     nor be included in gross income, and
       ``(ii) shall be treated as made out of--
       ``(I) amounts required to be deducted by the State and 
     withheld for the calendar quarter by the State under section 
     3401 (relating to wage withholding), and
       ``(II) amounts required to be deducted for the calendar 
     quarter under section 3102 (relating to FICA employee taxes), 
     and
       ``(III) amounts of the taxes imposed on the State for the 
     calendar quarter under section 3111 (relating to FICA 
     employer taxes),
     as if the State had paid to the Secretary, on the day on 
     which payments are made to participating residents, an amount 
     equal to such payments.
       ``(B) Advance payments exceed taxes due.--If for any 
     calendar quarter the aggregate amount of advance earned 
     income payments made by the responsible State agency under a 
     State Advance Payment Program exceeds the sum of the amounts 
     referred to in subparagraph (A)(ii) (without regard to 
     paragraph (6)(A)), each such advance earned income payment 
     shall be reduced by an amount which bears the same ratio to 
     such excess as such advance earned income payment bears to 
     the aggregate amount of all such advance earned income 
     payments.
       ``(6) State repayment of excessive advance earned income 
     payments.--
       ``(A) In general.--Notwithstanding any other provision of 
     law, in the case of an excessive advance earned income 
     payment a State shall be treated as having deducted and 
     withheld under section 3401 (relating to wage withholding), 
     and therefore is required to pay to the United States, the 
     repayment amount during the repayment calendar quarter.
       ``(B) Excessive advance earned income payment.--For 
     purposes of this section, an excessive advance income payment 
     is that portion of any advance earned income payment that, 
     when combined with other advance earned income payments 
     previously made to the same participating resident during the 
     same calendar year, exceeds the amount of earned income tax 
     credit to which that participating resident is entitled under 
     section 32 for that year.
       ``(C) Repayment amount.--The repayment amount is equal to 
     50 percent of the excess of--
       ``(i) excessive advance earned income payments made by a 
     State during a particular calendar year, over
       ``(ii) the sum of--
       ``(I) 4 percent of all advance earned income payments made 
     by the State during that calendar year, and
       ``(II) the excessive advance earned income payments made by 
     the State during that calendar year that have been collected 
     from participating residents by the Secretary.
       ``(D) Repayment calendar quarter.--The repayment calendar 
     quarter is the second calendar quarter of the third calendar 
     year after the calendar year in which an excessive earned 
     income payment is made.
       ``(7) Definitions.--For purposes of this section--
       ``(A) State advance payments program.--The term `State 
     Advance Payment Program' means the program described in a 
     proposal submitted for designation under paragraph (1) and 
     designated by the Secretary under paragraph (2).
       ``(B) Responsible state agency.--The term `responsible 
     State agency' means the single State agency that will be 
     making the advance earned income payments to residents of the 
     State who elect to participate in a State Advance Payment 
     Program.
       ``(C) Advance earned income payments.--The term `advance 
     earned income payments' means an amount paid by a responsible 
     State agency to residents of the State pursuant to a State 
     Advance Payment Program.
       ``(D) Participating resident.--The term `participating 
     resident' means an individual who--
       ``(i) is a resident of a State that has in effect a 
     designated State Advance Payment Program.
       ``(ii) makes the election described in paragraph (3)(C) 
     pursuant to guidelines prescribed by the State,
       ``(iii) certifies to the State the number of qualifying 
     children the individual has, and
       ``(iv) provides to the State the certifications and 
     statement set forth in subsections (b)(1), (b)(2), (b)(3), 
     and (b)(4) (except that for purposes of this clause (iv), the 
     term `any employer' shall be substituted for `another 
     employer' in subsection (b)(3)), along with any other 
     information required by the State.''.
       (b) Technical Assistance.--The Secretaries of Treasury and 
     Health and Human Services shall jointly ensure that technical 
     assistance is provided to State Advance Payment Programs and 
     that these programs are rigorously evaluated.
       (c) Annual Reports.--The Secretary shall issue annual 
     reports detailing the extent to which--
       (1) residents participate in the State Advance Payment 
     Programs,
       (2) participating residents file federal and State tax 
     returns,
       (3) participating residents report accurately the amount of 
     the advance earned income payments made to them by the 
     responsible State agency during the year, and
       (4) recipients of excessive advance earned income payments 
     repaid those amounts.

     The report shall also contain an estimate of the amount of 
     advance earned income payments made by each responsible State 
     agency but not reported on the tax returns of a participating 
     resident and the amount of excessive advance earned income 
     payments.
       (d) Authorization of Appropriations.--For purposes of 
     providing technical assistance described in subsection (b), 
     preparing the reports described in subsection (c), and 
     providing grants to States in support of designated State 
     Advance Payment Programs, there are authorized to be 
     appropriated in advance to the Secretary of the Treasury and 
     the Secretary of Health and Human Services a total of 
     $1,400,000 for fiscal year 1996 through 1999.

       TITLE VIII--SELF EMPLOYMENT/MICROENTERPRISE DEMONSTRATIONS

     SEC. 801. DEMONSTRATION PROGRAM TO PROVIDE SELF-EMPLOYMENT 
                   OPPORTUNITIES TO WELFARE RECIPIENTS AND LOW-
                   INCOME INDIVIDUALS.

       (a) In General.--The Secretary of Health and Human Services 
     (hereinafter in this section referred to as the 
     ``Secretary'') and the Administrator of the Small Business 
     Administration (hereinafter in this section referred to as 
     the ``Administrator''), shall, subject to the availability of 
     appropriations in advance for this purpose, jointly develop a 
     self-employment/microenterprise demonstration program for at 
     least five years in length that will build on the experience 
     of microenterprise and self-employment programs previously 
     carried out by the Federal Government and other entities. The 
     program shall be designed--
       (1) to identify regulatory and other barriers that prevent 
     welfare recipients and low-income individuals from increasing 
     self-sufficiency through self-employment and microenterprise 
     development, and to identify and test effective means to 
     eliminate such barriers;
       (2) to develop and evaluate promising program models, based 
     upon existing effective practices, which have the potential 
     to (A) increase the number of welfare recipients and low-
     income individuals who become self-sufficient or increase 
     self-sufficiency through self-employment and microenterprise 
     development and (B) reduce Federal spending on transfer 
     payments and services to welfare recipients and low-income 
     individuals; and
       (3) to demonstrate the potential for expanding the capacity 
     of local organizations to provide services, technical 
     assistance and loans which help welfare recipients and 
     low-income individuals start or expand self-employment or 
     microenterprises.
       (b) Use of Intermediaries.--To carry out such program, the 
     Secretary and Administrator shall jointly enter into 
     agreements with local intermediaries that--
       (1) apply to participate in such program, and
       (2) demonstrate that they are capable of implementing the 
     provisions of the agreement.
       (c) Program Design.--In order to facilitate a randomized 
     evaluation, as provided for in subsection (i)(1) below, the 
     Secretary and Administrator shall identify those predominant 
     and effective program models currently used by existing 
     intermediaries to provide self-employment and related 
     services to low-income individuals, and shall design the 
     demonstration program in order to evaluate at least two 
     distinct types of program models with contrasting levels of 
     technical assistance. In designing the demonstration program, 
     the Secretary and Administrator shall consult with 
     appropriate parties, such as--
       (1) state and local agencies and private, nonprofit 
     organizations with experience in administering self-
     employment programs that serve low-income individuals; and
       (2) other persons with recognized expertise in conducting 
     randomized evaluations of self-employment programs or other 
     related programs.
       (d) Assistance to Intermediaries.--
       (1) In general.--To carry out the program, the Secretary 
     and Administrator may provide the following assistance to 
     intermediaries selected to participate in the program--
       (A) grants for providing technical assistance to eligible 
     individuals, for operating costs and for costs associated 
     with participating in the evaluation provided for in 
     subsection (i)(1) below;
       (B) loans guarantees; and
       (C) loans.
       (2) Technical assistance to intermediaries.--The Secretary 
     and Administrator may provide grants to intermediaries or 
     third-party technical assistance providers for the provision 
     of technical assistance to intermediaries selected to 
     participate in this program.
       (3) Termination of assistance.--Assistance awarded pursuant 
     to this section may fully fund project periods of up to five 
     years. The Secretary and Administrator may revoke, terminate 
     or reduce assistance to an intermediary if the intermediary 
     fails to comply with the terms of any agreement it enters 
     into with the Secretary and Administrator.
       (e) Selection of Intermediaries.--
       (1) In general.--In determining whether to enter into an 
     agreement with an intermediary under this section, the 
     Secretary and Administrator shall take into consideration--
       (A) the intermediary's record of success in serving low-
     income individuals;
       (B) the intermediary's record of success in providing 
     technical assistance or loans to low-income individuals for 
     the purpose of self-employment;
       (C) the nature, types, and cost of technical assistance 
     and/or lending methods the intermediary will employ in 
     serving the target population;
       (D) the intermediary's ability to obtain matching funds 
     from private sources; and
       (E) such other matters as the Secretary and Administrator 
     deem appropriate.
       (2) Additional programs.--In addition to the demonstration 
     program provided for in subsection (c) above, the Secretary 
     and Administrator may select up to five intermediaries that 
     would employ program models that would operate independently 
     of the randomized evaluation provided for in subsection 
     (i)(1) below, where such program models demonstrate 
     promising, innovative strategies that could not readily be 
     evaluated by a randomized experimental design.
       (f) Eligible Individuals.--An individual eligible to 
     participate in a program conducted under this section is any 
     low-income individual or welfare recipient. The Secretary and 
     Administrator shall ensure that an appropriate minimum 
     percentage of welfare recipients will participate in each 
     demonstration program funded under this section.
       (g) Provisions of Agreements.--Any agreement entered into 
     with an intermediary under this section shall provide that--
       (1) the intermediary has or will have an agreement with the 
     State agency responsible for administering the job 
     opportunities and basic skills training program (as provided 
     for under part F of title IV of the Social Security Act) 
     (hereinafter in this section referred to as the ``JOBS'' 
     programs) and the Work Program (as provided under part G of 
     title IV of such Act) such that JOBS and Work program funds 
     will be used to provide support services, including training 
     and technical assistance, to welfare recipients who are 
     participating in the demonstration programs funded under this 
     section;
       (2) the intermediary will implement a program that is 
     approved by the Secretary and Administrator;
       (3) the intermediary will cooperate with any independent 
     evaluator(s) selected pursuant to subsection (i) below; and
       (4) the intermediary will meet any other obligations 
     required by the Secretary and Administrator, including any 
     fund matching requirements.
       (h) Program Administration.--
       (1) In general.--The Secretary and Administrator shall 
     enter into a memorandum of understanding for the joint 
     administration of the demonstration programs provided for by 
     this section. The designation of intermediaries to 
     participate in the program shall be completed no later than 
     12 months after the date of appropriation of funds for this 
     Act.
       (2) Coordination with other agencies.--The Secretary and 
     Administrator shall also coordinate and consult with the 
     Secretaries of the Department of Agriculture, the Department 
     of Housing and Urban Development, and the Department of 
     Labor, on regulatory or other reforms or coordinated efforts 
     by such agencies that may further eliminate barriers to self-
     employment and legitimize microenterprise development by low-
     income individuals and welfare recipients.
       (i) Evaluation and Report.--
       (1) In general.--The Secretary, in consultation with the 
     Administrator, shall conduct or provide for an evaluation of 
     the effectiveness of the demonstration program provided for 
     in subsection (c) above and shall prepare and submit to the 
     President and Congress a preliminary report of the evaluation 
     no later than three years following the designation of 
     intermediaries and a final report no later than seven years 
     following such designation, together with such 
     recommendations, including recommendations for legislation, 
     as the Secretary and Administrator deem appropriate. Such 
     evaluation shall be based on an experimental design with 
     random assignment between a treatment group and a control 
     group. In designing the evaluation, the Secretary shall 
     consider testing for--
       (A) greater self-sufficiency as measured by employment and 
     self-employment rates, amount of earned income, poverty 
     rates, and exit and recidivism rates for Aid to Families With 
     Dependent Children (hereinafter in this section referred to 
     as ``AFDC''), Food Stamps and other public assistance 
     programs;
       (B) reduced costs of public support as measured by changes 
     in overall support payments for items such as income 
     maintenance, food, child care, health care, housing, job 
     training and other benefits;
       (C) number of businesses and jobs created, number of loans 
     to welfare recipients and low-income individuals, repayment 
     rates for loans, and business performance after welfare or 
     other public assistance ends;
       (D) the relative effectiveness, cost-to-benefit ratio, and 
     degree of financial self-sufficiency of the different program 
     models employed by the intermediaries participating in the 
     demonstration program; and
       (E) the program's impact and effectiveness in serving 
     participants in a time-limited welfare system, as compared to 
     other low-income individuals.
       (2) Evaluation of additional programs.--The Secretary, in 
     consultation with the Administrator, shall also conduct or 
     provide for an independent evaluation of the effectiveness of 
     any program models selected pursuant to subsection (e)(2) 
     above and shall prepare and submit to the President and 
     Congress a preliminary report of the evaluation no later than 
     three years following the designation of intermediaries, and 
     a final report no later than five years following such 
     designation, together with such recommendations, including 
     recommendations for legislation, as the Secretary and 
     Administrator deem appropriate.
       (3) Preliminary reports to congress.--The preliminary 
     reports provided for in paragraphs (1) and (2) of this 
     subsection shall include an analysis of any regulatory or 
     other barriers that prevent welfare recipients and low-income 
     individuals from becoming self-sufficient through self-
     employment and microenterprise development.
       (4) Required information.--The Secretary may require each 
     intermediary selected pursuant to this section to provide the 
     Secretary with such information as the Secretary determines 
     is necessary to carrying out the duties of this subsection.
       (5) Early and regular information sharing with 
     intermediaries.--The Secretary, in consultation with the 
     Administrator, shall provide early and regular feedback and 
     summaries to intermediaries selected to participate pursuant 
     to this section of the progress of the evaluation, the data 
     collected during the evaluation, preliminary findings and 
     such other information as the Secretary deems appropriate. 
     The Secretary shall provide such feedback and summaries at 
     least once a year for the life of the demonstration.
       (j) Authorization of Appropriations.--To carry out the 
     purposes of this section there are authorized to be 
     appropriated to the Secretary and Administrator--
       (1) $4,000,000 for fiscal year 1997,
       (2) $8,000,000 for each of fiscal years 1998, 1999, 2000, 
     and 2001, and
       (3) $4,000,000 for fiscal year 2002.
       (k) Definitions.--For the purposes of this section--
       (1) the term ``intermediary'' means an organization, 
     partnership, or consortium of organizations that acts as a 
     lender and/or as a technical assistance provider to 
     individuals who wish to start or expand a microenterprise;
       (2) the term ``low-income individual'' means an individual 
     whose income level does not exceed 130 percent of the 
     official poverty line as defined by the Office of Management 
     and Budget;
       (3) the term ``microenterprise'' generally means a business 
     that has a net worth of less than $15,000;
       (4) the term ``technical assistance'' as it relates to 
     assisting a welfare recipient or low-income individual to 
     become self-employed includes business technical assistance, 
     entrepreneurial training, and/or personal development 
     services; and
       (5) the term ``welfare recipient'' means a participant in a 
     time-limited welfare program who is eligible for the JOBS or 
     Work program or a person who is receiving assistance from 
     AFDC.

                          TITLE IX--FINANCING

     SEC. 901. LIMITATION ON FEDERAL PAYMENTS FOR EMERGENCY 
                   ASSISTANCE.

       Section 403(a)(5) of the Act is amended to read as follows:
       ``(5)(A) Each State shall be entitled to payment from the 
     Secretary in an amount equal to 50 percent of the total 
     amounts expended under the State plan in a fiscal year as 
     emergency assistance to needy families with children, but 
     such payment may not exceed the greater of--
       ``(i) such State's share of the limitation in subparagraph 
     (B) for such fiscal year, or
       ``(ii) the amount paid by the Secretary with respect to 
     such State's expenditures for emergency assistance to needy 
     families with children for fiscal year 1991.
       ``(B) The limitation referred to in subparagraph (A) is 
     $418,000,000 for fiscal year 1995, and for fiscal year 1996 
     and for each fiscal year thereafter, $418,000,000 multiplied 
     by the ratio of the Consumer Price Index (prepared by the 
     Department of Labor) for the third quarter of the preceding 
     fiscal year to such Index for the third quarter of fiscal 
     year 1994.
       ``(C) For purposes of this paragraph, a `State's share of 
     the limitation in subparagraph (B)' for a fiscal year means--
       ``(i) such State's share of the EA portion of the 
     limitation (as defined in subparagraph (D)), plus
       ``(ii) such State's share of the AFDC portion of the 
     limitation (as defined in subparagraph (E)) for the fiscal 
     year involved.
       ``(D) For the purposes of this paragraph, the EA portion of 
     the limitation is--
       ``(i) for fiscal year 1995 and each fiscal year thereafter, 
     the limitation for such year, multiplied by--
       ``(I) 90 percent, minus
       ``(II) 10 percentage points for each year after 1995.

     but never less than zero.
       ``(E) For purposes of this paragraph, the AFDC portion of 
     the limitation is--
       ``(i) for fiscal year 1995, the limitation for such year, 
     multiplied by 10 percent, and
       ``(ii) for fiscal year 1996 and each fiscal year 
     thereafter, the limitation for such year multiplied by--
       ``(I) 10 percent, plus
       ``(II) 10 percentage points for each year after 1995,

     but never more than 100.
       ``(F) For purposes of this paragraph--
       ``(i) a State's share of the EA portion of the limitation 
     for a fiscal year is the limitation for such year multiplied 
     by the ratio of the estimated expenditures in such State for 
     emergency assistance to needy families with children for 
     quarters in fiscal year 1994 to the sum of such estimated 
     expenditures in all the States for quarters in such year, and
       ``(ii) a State's share of the AFDC portion of the 
     limitation for a fiscal year is the limitation for such year 
     multiplied by the ratio of the estimated expenditures in such 
     State for aid to families with dependent children for 
     quarters in the preceding fiscal year to the sum of such 
     expenditures in all the States for quarters in such preceding 
     fiscal year.

     SEC. 902. UNIFORM ALIEN ELIGIBILITY CRITERIA FOR PUBLIC 
                   ASSISTANCE PROGRAMS.

       (a) Federal and Federally-Assisted Programs.--
       (1) Program eligibility criteria.--
       (A) Aid to Families with Dependent Children.--Section 
     402(a)(33) of the Social Security Act is amended by striking 
     ``(A) a citizen'' and all that follows and inserting the 
     following:
       ``(A) a citizen or national of the United States,
       ``(B) a qualified alien (as defined in section 
     1101(a)(10)), provided that such alien is not disqualified 
     from receiving aid under a State plan approved under a State 
     plan approved under this part by or pursuant to section 
     210(f) or 245A(h) of the Immigration and Nationality Act or 
     any other provision of law;''.
       (B) Supplemental security income.--Section 1614(a)(1)(B)(i) 
     of such Act is amended to read as follows:
       ``(B)(i) is a resident of the United States, and is either 
     (I) a citizen or national of the United States, or (II) a 
     qualified alien (as defined in section 1101(a)(10)), or''.
       (C) Medicaid--
       (i) Section 1903(v)(1) of such Act is amended to read as 
     follows:
       ``(v)(1) Notwithstanding the preceding provisions of this 
     section, (A) no payment may be made to a State under this 
     section for medical assistance furnished to an individual who 
     is disqualified from receiving such assistance by or pursuant 
     to section 210(f) or 245A(h) of the Immigration and 
     Nationality Act or any other provision of law, and (B) except 
     as provided in paragraph (2), no such payment may be made for 
     medical assistance furnished to an individual who is not a 
     (i) citizen or national of the United States, or (ii) 
     qualified alien (as defined in section 1101(a)(10)).''.
       (ii) Section 1902(v)(2) of such Act is amended by--
       (I) striking ``paragraph (1)'' and inserting ``paragraph 
     (1)(B)''; and
       (II) striking ``alien'' each place it appears and inserting 
     ``individual''.
       (iii) Section 1902(a) of such Act is amended in the last 
     sentence by striking ``alien'' and all that follows and 
     inserting ``individual who is not (A) a citizen or national 
     of the United States, or (B) a qualified alien (as defined in 
     section 1101(a)(10)) only in accordance with section 
     1903(v).''.
       (iv) Section 1902(b)(3) of such act is amended by inserting 
     ``or national'' after ``citizen''.
       (2) Definition of term ``qualified alien''--Section 1101(a) 
     of such Act is amended by adding at the end the following new 
     paragraph:
       ``(10) The term `qualified alien' means an alien--
       ``(A) who is lawfully admitted for permanent residence 
     within the meaning of section 101(a)(20) of the Immigration 
     and Nationality Act;
       ``(B) who is admitted as a refugee pursuant to section 207 
     of such Act;
       ``(C) who is granted asylum pursuant to section 208 of such 
     Act;
       ``(D) whose deportation is withheld pursuant to section 
     243(h) of such Act;
       ``(E) whose deportation is suspended pursuant to section 
     255 of such Act;
       ``(F) who is granted conditional entry pursuant to section 
     203(a)(7) of such Act as in effect prior to April 1, 1980;
       ``(G) who is lawfully admitted for temporary residence 
     pursuant to section 210 or 245A of such Act;
       ``(H) who is within a class of aliens lawfully present 
     within the United States pursuant to any other provision of 
     such Act, provided that--
       ``(i) the Attorney General determines that the continued 
     presence of such class of aliens serves a humanitarian or 
     other compelling public interest, and
       ``(ii) the Secretary of Health and Human Services 
     determines that such interest would be further served by 
     treating each alien within such class as a `qualified alien' 
     for purposes of this Act; or
       ``(I) who is the spouse or unmarried child under 21 years 
     of age of a citizen of the United States, or the parent of 
     such a citizen if the citizen is 21 years of age or older, 
     and with respect to whom an application for adjustment to 
     lawful permanent residence is pending;

     such status not having changed.''.
       (3) Conforming amendment.--Section 244A(f)(1) of the 
     Immigration and Nationality Act is amended by inserting ``and 
     shall not be considered to be a `qualified alien' within the 
     meaning of section 1101(a)(10) of the Social Security Act'' 
     immediately before the semi-colon.
       (b) State and Local Programs.--A State or political 
     subdivision therein may provide that an alien is not eligible 
     for any program of assistance based on need that is furnished 
     by such State or political subdivision unless such alien is a 
     ``qualified alien'' within the meaning of section 1101(a)(10) 
     of the Social Security Act (as added by subsection (a)(2) of 
     this section).
       (c) Effective Date.--
       (1) The amendments made by subsection (a) are effective 
     with respect to benefits payable on the basis of any 
     application filed after the date of enactment of this Act.
       (2) Subsection (b) is effective upon the date of enactment 
     of this Act.

     SEC. 903. ELIGIBILITY OF SPONSORED ALIENS FOR CERTAIN 
                   PROGRAMS.

       (a) Deeming of Sponsor's Income and Resources to an Alien 
     Under the Supplemental Security Income, Aid to Families with 
     Dependent Children, and Food Stamp Programs.
       (1) Length of deeming period.--
       (A) Making the ssi 5-year period permanent.--Subsection (b) 
     of section 7 of the Unemployment Compensation Amendments of 
     1993 (Public Law 103-152) is repealed.
       (B) Increasing the afdc period from 3 to 5 years--Section 
     415 of the Social Security Act is amended by striking ``three 
     years'' each place such phrase appears and inserting ``5 
     years.''.
       (C) Inceasing the food stamp period from 3 to 5 years.--
     Section 5(i) of the Food Stamp Act of 1977 is amended by 
     striking ``three years'' each place such phase appears and 
     inserting ``5 years''.
       (2) Inapplicability in the case of any alien whose sponsor 
     receives SSI or afdc benefits.--
       (A) SSI.--Section 1621(f) of the Social Security Act is 
     amended by adding at the end the following new paragraph:
       ``(3) The provisions of this section shall not apply to any 
     alien for any month for which such alien's sponsor receives a 
     benefit under this title (which includes, for purposes of 
     this paragraph, the program of federally administered State 
     supplementary payments made pursuant to section 1616(a) of 
     this Act of section 212(b) of Public Law 93-66) or the 
     program of aid to families with dependent children authorized 
     by part A of title IV of this Act.''.
       (B) AFDC.--Section 415(f) of the Social Security Act is 
     amended--
       (i) by redesignating paragraph (1) through (5) as 
     subparagraphs (A) through (E), respectively;
       (ii) by striking ``(f)'' and inserting ``(f)(1)''; and
       (iii) by adding at the end the following new paragraph:
       ``(2) The provisions of this section shall not apply to any 
     alien for any month for which such alien's sponsor receives a 
     benefit under the program authorized by this part, or the 
     program of supplemental security income authorized by title 
     XVI of this Act (which includes, for purposes of this 
     paragraph, the program of federally administered States 
     supplementary payments made pursuant to section 1616(a) of 
     this Act or section 212(b) of Public Law 93-66).''.
       (C) Food stamps.--Section 5(i)(2)(E) of the Food Stamp Act 
     of 1977 is amended--
       (i) by striking ``(E)'' and inserting ``(E)(i)''; and
       (ii) by adding at the end the following:
       ``(ii) The provisions of this subsection shall not apply to 
     any alien for any month for which such alien's sponsor 
     receives a benefit under the program of aid to families with 
     dependent children authorized by part A of title IV of the 
     Social Security Act or the program of supplemental security 
     income authorized by title XVI of such Act (which includes, 
     for purposes of this paragraph, the program of federally 
     administered State supplementary payments made pursuant to 
     section 1616(a) of such Act or section 212(b) of Public Law 
     93-66).''.
       (3) Inequitable circumstances.--
       (A) SSI.--Section 1621 of the Social Security Act is 
     amended by adding at the end the following new subsection:
       ``(g) The Secretary may, pursuant to regulations 
     promulgated after consultation with the Secretary of 
     Agriculture, alter or suspend the application of this section 
     in any case in which the Secretary determines that such 
     application would be inequitable under the circumstances.''
       (B) AFDC.--Section 415 of the Social Security Act is 
     amended by adding at the end the following new subsection:
       ``(g) The Secretary may, pursuant to regulations 
     promulgated after consultation with the Secretary of 
     Agriculture, alter or suspend the application of this section 
     in any case in which the Secretary determines that such 
     application would be inequitable under the circumstances.''
       (C) Food stamps.--Section 5(i)(2) of the Food Stamp Act of 
     1977 is amended by adding at the end the following new 
     subparagraph:
       ``(F) The Secretary may, pursuant to regulations 
     promulgated after consultation with the Secretary of Health 
     and Human Services, alter or suspend the application of this 
     section in any case in which the Secretary determines that 
     such application would be inequitable under the 
     circumstances.''
       (4) Food stamps exemption for blind or disabled aliens.--
     Section 5(i)(2)(E) of the Food Stamp Act of 1977 (as 
     previously amended by subsection (a)(2)(C)) is further 
     amended by adding at the end the following:
       ``(iii) The provisions of this subsection shall not apply 
     with respect to any individual for any month for which such 
     individual receives a benefit under the program of 
     supplemental security income authorized by title XVI of the 
     Social Security Act by reason of blindness (as determined 
     under section 1614(a)(2) of such Act) or disability ( as 
     determined under section 1614(a)(3) of such Act), provided 
     that such blindness or disability commenced after the date of 
     such individual's admission into the United States for 
     permanent residence.''.
       (5) Increase in food stamp resource limitation.--Section 
     5(i)(2)(B)(ii) of the Food Stamp Act of 1977 is amended by 
     striking ``$1,500'' and inserting ``$2,000''.
       (b) Disqualification of Certain Sponsored Aliens After the 
     60th Month After Entry into the United States Under the 
     Supplemental Security Income, Aid to Families with Dependent 
     Children, and Food Stamp Programs.--
       (1) In general.
       (A) SSI.--Section 1611(e) of the Social Security Act is 
     amended by inserting between paragraphs (3) and (5) a new 
     paragraph (4) as follows:
       ``(4)(A) No individual (other than an individual described 
     in section 1621(f)(1)) who is an alien shall be an eligible 
     individual or eligible spouse for purposes of this title with 
     respect to any month beginning after the 60th month after 
     such individual's entry into the United States if the 
     adjusted gross income (as defined in section 62 of the 
     Internal Revenue Code of 1986) of any person who (as a 
     sponsor of such individual's entry into the United States) 
     executed an affidavit of support with respect to such 
     individual plus the adjusted gross income of such person's 
     spouse and dependent children (if any) for the most recently 
     completed year for which--
       ``(i)(I) a return has been filed in connection with the 
     taxes imposed by subtitle A of the Internal Revenue Code of 
     1986 by or on behalf of such person (and such person's spouse 
     and dependent children, if any), or (II) no such return is 
     required by such Code to be so filed, and
       ``(ii) the Secretary has published the U.S. median income 
     for all families pursuant to subparagraph (B)(i)(I), exceeds 
     the applicable measure of U.S. median income for all families 
     (determined in accordance with subparagraph (B)(i)(II)) for 
     such year.
       ``(B)(i) The Secretary shall publish twice yearly in the 
     Federal Register a notice--
       ``(I) setting out the U.S. median income for all families 
     for not fewer than five of the years immediately preceding 
     the year in which such notice is published, and
       ``(II) identifying the months for which each such figure 
     shall be deemed to be the applicable measure for the purpose 
     of making the determination required by subparagraph (A).
       ``(ii) The U.S. median income for all families for any year 
     published by the Secretary pursuant to clause (i) shall be 
     the amount reported for such year by the Census Bureau 
     pursuant to its Current Population Survey, except that if 
     such amount has not been so reported for such year at the 
     time such notice is published, then the measure of the U.S. 
     median income for all families for such year shall be derived 
     by increasing the amount reported by the Census Bureau for 
     the immediately preceding year by a percentage equal to the 
     percentage (rounded to the nearest one-tenth of one percent), 
     if any, by which the Consumer Price Index (as prepared by the 
     Department of Labor) for such year has increased over such 
     immediately preceding year.''.
       (B) AFDC.--Section 402(a) of the Social Security Act is 
     amended by--
       (i) striking ``and'' at the end of paragraph (44);
       (ii) striking the period at the end of paragraph (45) and 
     inserting ``; and''; and
       (iii) adding at the end a new paragraph as follows:
       ``(46) provide that an individual who is an alien may not 
     be considered a dependent child, a caretaker relative whose 
     needs are to be taken into account in making the 
     determination under paragraph (7), or any other person whose 
     needs should be taken into account in making such a 
     determination with respect to the child or relative, with 
     respect to any month beginning after the 60th month after 
     such individual's entry into the United States if the 
     adjusted gross income (as defined in section 62 of the 
     Internal Revenue Code of 1986) of any person who (as a 
     sponsor of such individual's entry into the United States) 
     executed an affidavit of support with respect to such 
     individual plus the adjusted gross income of such person's 
     spouse and dependent children (if any) for the most recently 
     completed year for which--
       ``(A)(i) a return has been filed in connection with the 
     taxes imposed by subtitle A of the Internal Revenue Code of 
     1986 by or on behalf of such person (and such person's spouse 
     and dependent children, if any), or (ii) no such return is 
     required by such Code to be so filed, and
       ``(B) the U.S. median income for all families has been 
     published, exceeds the applicable measure of U.S. median 
     income for all families for such year. For purposes of the 
     preceding sentence, the requirement for the publication of 
     the U.S. median income for all families for any year shall 
     be satisfied by the publication of such data for such year 
     pursuant to section 1611(e)(4)(B)(i)(I), and the 
     `applicable measure of U.S. median income for all 
     families' for any year shall be the measure applicable for 
     such year pursuant to section 1611(e)(4)(B)(i)(II).''.
       (C) Food stamps.--Section 6 of the Food Stamp Act of 1977 
     is amended by adding at the end a new subsection as follows:
       ``(i) No alien who is a member of a household otherwise 
     eligible to participate in the food stamp program under this 
     section shall be eligible to participate in such program as a 
     member of that or any other household with respect to any 
     month beginning after the 60th month after such alien's entry 
     into the United States if the adjusted gross income (as 
     defined in section 62 of the Internal Revenue Code of 1986) 
     of any person who (as a sponsor of such alien's entry into 
     the United States) executed an affidavit of support with 
     respect to such alien plus the adjusted gross income of such 
     person's spouse and dependent children (if any) for the most 
     recently completed year for which--
       ``(1)(A) a return has been filed in connection with the 
     taxes imposed by subtitle A of the Internal Revenue Code of 
     1986 by or on behalf of such person (and such person's spouse 
     and dependent children, if any), or (B) no such return is 
     required by such Code to be so filed, and
       ``(2) the U.S. median income for all families has been 
     published,

     exceeds the applicable measure of U.S. median income for all 
     families for such year. For purposes of the proceeding 
     sentence, the requirement for the publication of the U.S. 
     median income for all families for any year shall be 
     satisfied by the publication of such data for such year 
     pursuant to section 1611(e)(4)(B)(i)(I) of the Social 
     Security Act, and the `applicable measure of U.S. median 
     income for all families' for any year shall be the measure 
     applicable for such year pursuant to section 
     1611(e)(4)(B)(i)(II) of such Act.''.
       (2) Conforming amendments.--
       (A) Cooperation requirement.--
       (ii) SSI.--Section 1621(d)(1) of the Social Security Act is 
     amended in the first sentence by--
       (I) striking ``during the period of 5 years after entry 
     into the United States,''; and
       (II) inserting ``or section 1611(e)(4)'' after ``this 
     section''.
       (ii) AFDC.--The second sentence of section 415(c)(1) of the 
     Social Security Act (as previously amended by subsection 
     (a)(1)(B) of this section) is further amended by--
       (I) striking ``during the period of 5 years after his or 
     her entry into the United States''; and
       (II) inserting ``or section 402(a)(46)'' after ``this 
     section''.
       (iii) Food stamps.--The first sentence of section 
     5(i)(2)(C)(i) of the Food Stamp Act of 1977 (as previously 
     amended by subsection (a)(1)(C) of this section) is further 
     amended by--
       (I) striking ``during the period of 5 years after entry 
     into the United States,''; and
       (II) inserting ``or section 6(i)'' after ``this section''.
       (B) Liability for overpayments.--
       (i) SSI.--Section 1621(e) of the Social Security Act is 
     amended by--
       (I) striking ``during the period of 5 years after such 
     alien's entry into the United States,'';
       (II) inserting ``or section 1611(e)(4)'' after ``this 
     section''; and
       (III) adding at the end the following sentence: ``If an 
     individual who is an alien subject to this subsection is 
     naturalized as a citizen of the United States, such 
     naturalization shall have no effect upon the continued 
     application of this subsection to such individual or to such 
     individual's sponsor.''.
       (ii) AFDC.--Section 415(d) of the Social Security Act (as 
     previously amended by subsection (a)(1)(B)) is further 
     amended by--
       (I) striking ``during the period of 5 years after such 
     alien's entry into the United States,'';
       (II) inserting ``or section 402(a)(46)'' after ``this 
     section''; and
       (III) adding at the end the following sentence: ``If an 
     individual who is an alien subject to this subsection is 
     naturalized as a citizen of the United States, such 
     naturalization shall have no effect upon the continued 
     application of this subsection to such individual or to 
     such individual's sponsor.''.
       ``(iii) Food stamps.--Section 5(i)(2)(D) of the Food Stamp 
     Act of 1977 (as previously amended by subsection (a)(1)(C)) 
     is further amended by--
       (I) striking ``during the period of 5 years after such 
     alien's entry into the United States,'';
       (II) inserting ``or section 6(i)'' after ``this section''; 
     and
       (III) adding at the end the following sentence: ``If an 
     individual who is an alien subject to this subparagraph is 
     naturalized as a citizen of the United States, such 
     naturalization shall have no effect upon the continued 
     application of this subparagraph to such individual or to 
     such individual's sponsor.''.
       ``(3) Disclosure of tax return information.--Section 
     6103(1)(7)(B) of the Internal Revenue Code of 1986 is amended 
     by designating the existing matter as clause (i) and adding 
     at the end the following:
       ``(ii) The Secretary shall disclose, upon request, return 
     information with respect to adjusted gross income (as defined 
     in section 62) from returns filed by, or with respect to, any 
     individual (and such individual's spouse and dependent 
     children, if any) who (as a sponsor of an alien's entry into 
     the United States) executed an affidavit of support with 
     respect to such alien and whose income is considered in 
     connection with determining such alien's eligibility for a 
     program described in clause (i), (iii), or (vi) of 
     subparagraph (D) to any Federal, State, or local agency 
     administering such program, but only for the purpose of, and 
     to the extent necessary, in determining the eligibility of 
     such alien for benefits under such program.
       ``(iii) Information regarding any determination made 
     pursuant to section 402(a)(46) of 415 of the Social Security 
     Act (relating to the aid to families with dependent children 
     program), section 1611(e)(4) or 1621 of such Act (relating to 
     the supplemental security income program), or section 5(i) or 
     6(i) of the Food Stamp Act of 1977 (relating to the program 
     of assistance under that Act) in connection with determining 
     an alien's eligibility for benefits under any such program 
     shall not be considered to be return information subject to 
     the limitations on disclosure or redisclosure imposed by this 
     section.''.
       (c) State and Local Programs.--A State or political 
     subdivision therein may provide that an alien is not eligible 
     for any program of assistance based on need that is furnished 
     by such State or political subdivision for any month if such 
     alien has been determined to be ineligible for such month for 
     benefits under----
       (A) the program of aid to families with dependent children 
     authorized by part A of title IV of the Social Security Act, 
     as a result of the application of section 402(a)(46) or 415 
     of such Act;
       (B) the program of supplemental security income authorized 
     by title XVI of the Social Security Act, as a result of the 
     application of section 1611(e)(4) or 1621 of such Act; or
       (C) the Food Stamp Act of 1977, as a result of the 
     application of section 5(i) or 6(i) of such Act.
       (d) Effective Date.--
       (1) Except as otherwise provided in paragraph (2), the 
     amendments made by subsections (a) and (b) are effective with 
     respect to benefits under the program of aid to families with 
     dependent children authorized by part A of title IV of the 
     Social Security Act, the program of supplemental security 
     income authorized by title XVI of the Social Security Act, 
     and the program authorized by the Food Stamp Act of 1977, 
     payable for months beginning after September 30, 1994, on the 
     basis of--
       (A) an application filed after such date, or
       (B) an application filed on or before such date by or on 
     behalf of an individual subject to the provisions of section 
     1621(a) or section 415(a) of the Social Security Act or 
     section 5(i)(1) of the Food Stamp Act of 1977 (as the case 
     may be) on such State.
       (2) The amendments made by clauses (i)(III), (ii)(III), and 
     (iii)(III) of subsection (b)(2)(B) are effective upon the 
     date of enactment of this Act.
       (3) Subsection (c) is effective on October 1, 1994.

     SEC. 904. FAMILY DAY CARE HOMES.

       (a) Section 17(c) of the National School Lunch Act (42 
     U.S.C. 1766(c)) is amended--
       (1) in paragraph (1), by inserting ``except as provided in 
     paragraphs (4) and (5) of this subsection,'' after ``For 
     purposes of this section,'';
       (2) in paragraph (2), by inserting ``except as provided in 
     paragraphs (4) and (5) of this subsection,'' after ``For 
     purposes of this section,'';
       (3) in paragraph (3), by inserting ``except as provided in 
     paragraphs (4) and (5) of this subsection,'' after ``For 
     purposes of this section,'';
       (4) by redesignating paragraph (4) as paragraph (6); and
       (5) by inserting after paragraph (3) the following new 
     paragraphs:
       ``(4) For purposes of this section, the level one 
     reimbursement factor for family or group day care homes shall 
     be $1.5050 for lunches or suppers, $.8275 for breakfasts, and 
     $.4475 for supplements. The reimbursement factor under this 
     paragraph shall be adjusted on July 1, 1996, to reflect 
     changes in the Consumer Price Index for food away from home 
     for the most recent 24-month period for which data are 
     available, and on July 1 of each year, starting July 1, 1997, 
     to reflect changes in the Consumer Price Index for food away 
     from home for the most recent 12-month period for which data 
     are available. The reimbursement factor under this paragraph 
     shall be rounded to the nearest one-fourth cent.
       ``(5) For purposes of this section, the level two 
     reimbursement factor for family or group day care homes shall 
     be $1.2675 for lunches or suppers, $.5375 for breakfasts, and 
     $.25 for supplements. The reimbursement factor under this 
     paragraph shall be adjusted on July 1, 1996, to reflect 
     changes in the Consumer Price Index for food away from home 
     for the most recent 24-month period for which date are 
     available, and on July 1 of each year, starting July 1, 
     1997, to reflect changes in the Consumer Price Index for 
     food away from home for the most recent 12-month period 
     for which data are available. The reimbursement factor 
     under this paragraph shall be rounded to the nearest one-
     fourth cent.''.
       (b) Section 17(f)(3) of the National School Lunch Act (42 
     U.S.C. 1766(f)(3)) is amended--
       (1) by adding after subparagraph (C) the following new 
     subparagraph:
       ``(D) The Secretary shall make payments, totalling not more 
     than $2,000,000 in fiscal year 1995 and $5,000,000 in fiscal 
     year 1996, to provide grants to States: for the purpose of 
     providing assistance, including grants to family or group day 
     care home sponsoring organizations and other appropriate 
     organizations; for securing and providing training, 
     materials, automated data processing assistance, and other 
     assistance for the staff of such sponsoring organizations; 
     and for providing training and other assistance to family or 
     group day care homes in order to assist in the implementation 
     of the requirements contained in this subsection. Of the 
     amount of funds made available to each State under this 
     subparagraph an amount not to exceed 30 percent may be 
     retained by the State to carry out the purposes of this 
     subparagraph;'';
       (2) In subparagraph (A), by deleting ``, except that 
     reimbursement shall not be provided'' and all that follows 
     through ``nearest one fourth cent.'' and inserting in lieu 
     thereof ``as set forth in subparagraphs (B) and (C).'';
       (3) by redesignating subparagraphs (B), (C) and (D) (as 
     added by paragraph (1)) as subparagraphs (D), (E), and (L) 
     respectively;
    
    
       (4) by inserting subparagraph (A) the following new 
     subparagraphs:
       ``(B) Sponsoring organizations of family or group day care 
     homes located in low-income areas shall be reimbursed for 
     meals or supplements served to children in those homes at the 
     level one reimbursement rates established in subsection 
     (c)(4) of this section.
    
    
       ``(C) Sponsoring organizations of family or group day care 
     homes, except family or group day care homes covered under 
     subparagraph (B) of this subsection, shall be reimbursed for 
     meals or supplements served to children in those homes, at 
     the election of the family or group day care home, either--
       ``(i) at the level two reimbursement rates established in 
     subsection (c)(5) of this section; or
       ``(ii)(I) for meals and supplements served to children from 
     households that meet the income eligibility guidelines for 
     free or reduced price meals and supplements set forth in 
     section 9(b) of this Act, at the level one reimbursement 
     rates established in subsection (c)(4) of this section; and
       ``(II) for meals and supplements served to children from 
     families who do not meet the requirements of paragraph 
     (C)(ii)(I) of this subsection, at the level two reimbursement 
     rates established in subsection (c)(5); or
       (iii) for meals and supplements served to children in 
     family or group day care homes in which the family or group 
     day care home provider meets the income eligibility 
     guidelines for free or reduced price meals and supplements 
     set forth in section 9(b) of this Act, at the level one 
     reimbursement rates established in section (c)(4) of this 
     section.'';
       (5) by adding at the end of subparagraph (D) (as 
     redesignated by paragraph (3)) the following: ``In addition, 
     family or group day care home sponsoring organizations shall 
     receive for their administrative expenses an additional $10 
     per month for each home located in a low-income area.''; and
       (6) by adding after subparagraph (E) (as redesignated by 
     paragraph (3)) the following new subparagraphs:
       ``(F) Notwithstanding subparagraph (C), reimbursement shall 
     not be provided for meals or supplements served to the 
     children of a person acting as a family or group day care 
     home provider unless such children meet the income 
     eligibility guidelines for free or reduced price meals under 
     section 9(b) of this Act. Where so qualifying, the family or 
     group day care home sponsoring organization shall be 
     reimbursed for those meals and supplements at the level one 
     rates established in subsection (c)(4).
       ``(G) For family or group day care home providers who elect 
     to use the procedures under paragraph (3)(C)(ii) of this 
     subsection, the Secretary shall implement streamlined and 
     simplified counting and claiming procedures, provided that 
     such procedures do not compromise program accountability.
       ``(H) Sponsoring organizations of family or group day care 
     homes (other than those located in low-income areas) may 
     receive the level one reimbursement rates for meals and 
     supplements established in subsection (c)(4) of this 
     section for those children with a parent participating in 
     the programs established under part F or G of title IV of 
     the Social Security Act, the at-risk child care program 
     under title IV of such Act, or a Federal or a State child 
     care program with an income eligibility limit that does 
     not exceed the income eligibility guidelines for free or 
     reduced price meals and supplements set forth in section 
     9(b) of this Act.
       ``(I) For purposes of this section, `low-income areas' is 
     defined to mean ``areas in which poor economic conditions 
     exist'' as defined in Section 13(a)(1)(C) of this Act.
       ``(J) For purposes of this section, determinations made by 
     the State agency which establish that a family or a group day 
     care home is located in a `low income area' shall be in 
     effect for 3 years, unless the State agency determines that 
     the area in which the home is located is no longer a `low 
     income area'.
       ``(K) The Secretary shall make payments, totalling not more 
     than $5,000,000 in each of fiscal years 1997, 1998, 1999, and 
     2000 to provide grants to States for the purpose of providing 
     assistance, including grants to family or group day care home 
     sponsoring organizations, to assist family or group day care 
     homes in low-income areas to become licensed or approved for 
     the program under this section. Of the amount of funds 
     available to each State under this subparagraph, an amount 
     not to exceed 30 percent may be retained by the State to 
     carry out the purposes of this subparagraph. Any payments 
     received under this subparagraph shall be in addition to 
     payments which States receive under subsection (b) of this 
     section.''.
       (c) Effective Dates.--
       (1) Except as provided in paragraph (2), the amendments 
     made by subsections (a) and (b) shall take effect on July 1, 
     1996.
       (2) The amendment made by subsection (b)(1) shall take 
     effect on the date of enactment of this Act.

     SEC. 905. STATE RETENTION OF AMOUNTS RECOVERED.

       Section 16(a) of the Food Stamp Act of 1977 (7 U.S.C. 
     2025(a)) is amended by striking ``1995'' both places it 
     appears in the proviso of the first sentence and inserting in 
     both places in lieu thereof ``2004''.

     SEC. 906. COMMODITY PROGRAM INCOME INELIGIBILITY.

       Notwithstanding any other provision of law, a person with 
     annual off-farm adjusted gross income in excess of $100,000, 
     as determined by the Secretary of Agriculture, shall not be 
     eligible to receive from the Commodity Credit Corporation 
     income support and price support through loans, purchases, 
     payments, and other operations. The Secretary of 
     Agriculture shall issue regulations defining the term 
     ``person'' which shall conform, to the extent practicable, 
     to the regulations issued in accordance with section 1001 
     of the Food Security Act of 1985, as amended.

     SEC. 907. AMENDMENTS RELATED TO SUPERFUND TAX EXTENSION.

       (a) Extension of Termination Date.--Paragraph (1) of 
     section 59A(e) of the Internal Revenue Code of 1986 (26 
     U.S.C. 59A(e)(1)) is amended by striking ``January 1, 1996'' 
     and inserting ``February 1, 1998''.
       (b) Adjustments to Amounts Collected.--Paragraph (3) of 
     section 4611(e) of the Internal Revenue Code of 1986 (26 
     U.S.C. 4611(e)(3)) is amended--
       (1) by striking ``December 31, 1995'' and inserting 
     ``September 30, 1998'';
       (2) by striking ``$11,970,000,000'' each time it appears 
     and inserting ``$15,500,000,000''; and
       (3) by striking ``January 1, 1996'' and inserting ``October 
     1, 1998''.
       (c) Effective Date.--The amendments made by subsections (a) 
     and (b) shall apply to amounts collected and amounts credited 
     after the date of the enactment of this Act.

     SEC. 908. FEDERAL RAILROAD ADMINISTRATION USER FEES.

       Section 216 of the Federal Railroad Safety Act of 1970 (45 
     U.S.C. 447) is amended--
       (1) by striking subsection (a)(3) and inserting the 
     following:
       ``(3) Fees established under this section shall be assessed 
     to railroads subject to this chapter and shall cover all 
     costs incurred by the Federal Railroad Administration in 
     administering this chapter, and those laws transferred to the 
     jurisdiction of the Secretary of Transportation by subsection 
     (e)(1), (2), and (6)(A) of section 1655 of Title 49, other 
     than activities described in section 431(a)(2) of this 
     title.'';
       (2) by inserting before the period in subsection (c) ``, 
     and those laws transferred to the jurisdiction of the 
     Secretary of Transportation by subsection (e)(1), (2), and 
     (6)(A) of section 1655 of Title 49''; and
       (3) by striking subsections (e) and (f).

     SEC. 909. SPECIAL EARNED INCOME TAX CREDIT RULES FOR MILITARY 
                   PERSONNEL.

       (a) Modified Residency Requirement.--Subparagraph (E) of 
     section 32(c)(3) (defining qualifying child) of the Internal 
     Revenue Code of 1986 is amended by adding at the end the 
     following sentence: ``The preceding sentence does not apply 
     during any period during which the taxpayer is stationed 
     outside  the United States while serving on extended active 
     duty (as defined in section 1034(h)(3)) with Armed Forces 
     of the United States.''
       (b) Reporting Military Earned Income.--Subsection (a) of 
     section 6051 (relating to receipts for employees) of the 
     Internal Revenue Code of 1986 is amended by striking ``and'' 
     at the end of paragraph (8), by striking the period at the 
     end of paragraph (9) and inserting in lieu thereof ``, and'', 
     and by inserting after paragraph (9) the following paragraph:
       ``(10) in the case of an employee who is a member of the 
     Armed Forces of the United States, the total amount of earned 
     income (as defined in section 32(c)(2)).''.
       (c) Advance Payment of Earned Income tax Credit.--Paragraph 
     (1) of section 3507(c) (defining earned income advance 
     amount) of the Internal Revenue Code of 1986 is amended by 
     adding at the end the following sentence: ``For purposes of 
     subparagraph (A) in the case of an employee who is a member 
     of the Armed Forces of the United States, the employee's 
     earned income (as defined in section 32(c)(2)) shall be taken 
     into account rather than the employee's wages.''.
       (d) Effective Dates.--The amendments made by this section 
     shall apply to taxable years beginning and remuneration paid 
     after December 31, 1994.

     SEC. 910. NONRESIDENT ALIENS NOT ELIGIBLE FOR EARNED INCOME 
                   TAX CREDIT.

       (a) In General.--Section 32(c)(1) (defining eligible 
     individual) of the Internal Revenue Code of 1986 is amended 
     by adding at the end the following new subparagraph:
       ``(E) Exception for nonresident aliens.--The term `eligible 
     individual' does not include a nonresident alien unless an 
     election under section 6013(g) (relating to treating a 
     nonresident alien individual as a resident of the United 
     States) or section 6013(h) (relating to the year in which a 
     nonresident alien becomes a resident of the United States) is 
     in effect for the taxable year with respect to the 
     nonresident alien.
       Effective Date.--The amendment made by this section shall 
     apply to taxable years beginning after December 31, 1994.

     SEC. 911. EXTENSION OF CERTAIN CUSTOMS FEES.

       Subsection (j)(3) of section 13031 of the Consolidated 
     Omnibus Budget Reconciliation Act of 1985, as amended, (19 
     U.S.C. 58c), is amended to read as follows:
       ``(3) Fees may not be charged under subsection (a) of this 
     section after September 30, 2004.''.

                        TITLE X--EFFECTIVE DATES

     SEC. 1001. EFFECTIVE DATES.

       (a) In General.--Except as otherwise provided and subject 
     to subsection (b), the amendments and repeals made by this 
     Act, other than title VI, shall become effective with respect 
     to periods beginning on or after October 1, 1995.
       (b) The Secretary of Health and Human Services may, upon 
     the request of a State, delay the effective date prescribed 
     by subsection (a) with respect to such State upon a showing 
     of circumstances beyond the State's control, but such 
     extension may not extend beyond October 1, 1996.
       (c) Notwithstanding any other provision of law, no State 
     shall be found to have failed to comply with any requirement 
     imposed on such State's programs by or pursuant to the 
     amendments made by titles I and II of this Act by reason of 
     its failure to have such program (or requirements) in effect 
     Statewide if such program is in effect Statewide not later 
     than 2 years after the effective date specified in subsection 
     (a), or 2 years after such later date as is approved by the 
     Secretary pursuant to subsection (b).
                                  ____


            Work and Responsibility Act of 1994--Fact Sheet

       The President today sent to the Congress the ``Work and 
     Responsibility Act of 1994''. This legislation represents a 
     fundamental reform of the Nation's welfare system, based on 
     the values of work and responsibility. When this bill is 
     enacted, welfare will be a transitional system leading to 
     work. The combination of expanded education and training, 
     work opportunities and requirements, improved child support 
     enforcement, and streamlined government assistance will make 
     the lives of millions of low-income families and their 
     children demonstrably better.
       This legislation will:
       Replace the Aid to Families with Dependent Children (AFDC) 
     program with a transitional assistance program followed by 
     work. Job training, support, and child care will be provided 
     to help people move from dependence to independence;
       Make work pay for low-income families. In addition to the 
     expanded Earned Income Tax Credit and better coverage under 
     health care reform, child care programs for families on 
     public assistance and poor working families will be improved;
       Promote parental responsibility through a national effort 
     to prevent teen pregnancies, incentives to encourage 
     responsible parenting, and improvements in child support 
     enforcement; and
       Improve government assistance by increasing conformity 
     between the AFDC and Food Stamp programs, creating new fraud 
     control measures, linking funding incentives and penalties to 
     the performance of States and caseworkers in service 
     provision, job placement, and child support collection.
       The cost of the proposal to the Federal Government is 
     estimated at $9.3 billion over five years and is fully 
     offset, primarily through reductions in entitlements and 
     without new tax increases.


                               background

       In 1993, a record number of Americans received AFDC 
     benefits--14.1 million persons each month. Two-thirds of AFDC 
     recipients are children. Although State and Federal 
     expenditures for assistance payments set an all-time high of 
     $22.6 billion in 1993, real AFDC benefit levels (which 
     average $377 per month for a family of three) have actually 
     declined by 42 percent in the last two decades.
       The current welfare system does little to help people find 
     work and does not encourage those who go to work. Instead of 
     strengthening families and instilling personal 
     responsibility, the system imposes stricter rules on two-
     parent families and lets too many noncustodial parents who 
     owe child support off the hook. Instead of promoting self-
     sufficiency, the culture of the welfare offices seems to 
     create an expectation of dependence. Taxpayers, program 
     administrators, and recipients alike are frustrated with the 
     current system and seek change.


                          legislative proposal

       Welfare reform must accomplish multiple and varied 
     objectives. Through its focus on work, responsibility, 
     family, and opportunity, the plan will change the values, 
     expectations, and incentives within the current welfare 
     system. Ultimately, the plan is about improving the lives of 
     children and families by rewarding work and responsibility to 
     make families stronger and children and society better off.


                transitional assistance followed by work

       This reform proposal calls for fundamentally replacing the 
     AFDC program with a transitional assistance program to be 
     followed by work. The phase-in of the new requirements will 
     begin with all recipients (including new applicants) born 
     after December 31, 1971. All persons of the same age and 
     circumstances will then face the same rules, regardless of 
     when they entered the system. The new program includes four 
     key elements: a simple compact; training, education, and 
     placement assistance to move people from welfare to work; a 
     two-year time limit; and work requirements.
       Everyone who receives cash support will be expected to do 
     something to help themselves and their community. Recipients 
     will sign a personal responsibility agreement indicating what 
     is expected of them and of the Government in order to prepare 
     them for self-sustaining employment. Persons who are not yet 
     in a position to work or to train (for example, because of 
     disability or the need to care for an infant or disabled 
     child) will be deferred until they are ready for the time-
     limited Job Opportunities and Basic Skills (JOBS) program.
       The core of the transitional support program will be an 
     expanded and improved JOBS to provide training, education, 
     and job placement services to AFDC recipients focused on 
     moving people into work. Every aspect of the new JOBS program 
     will be designed to help recipients find and keep jobs. The 
     enhanced program will include a personal responsibility 
     agreement and an employability plan designed to move persons 
     from welfare to work as rapidly as possible. For most 
     applicants, supervised job search will be required from the 
     date the application for AFDC is approved. JOBS participants 
     will be required to accept a job if offered. The new effort, 
     rather than creating an employment training system for 
     welfare recipients alone, will seek close coordination with 
     Job Training Partnership Act (JTPA) programs and other 
     mainstream training programs and educational resources.
       Young recipients will be limited to two years of cash 
     assistance, after which they will be expected to work. While 
     two years will be the maximum period for the receipt of cash 
     aid, the goal will be to help persons find jobs long before 
     the end of the two-year period. Mothers with infants, 
     individuals with disabilities that limit work, and those 
     caring for a disabled child will be deferred from these 
     requirements and will not be subject to the time limit while 
     such conditions exist. In a very limited number of cases, and 
     at the discretion of States, extensions of the time limit 
     will be granted for completion of an education or training 
     program or in unusual circumstances.
       Those persons who are not able to find employment before 
     reaching the two-year time limit will be required to take a 
     job in the WORK program. WORK jobs will be paid employment, 
     rather than ``workfare'' and will include subsidized private 
     sector jobs, as well as positions with local not-for-profit 
     organizations and in the public sector. The positions are 
     intended to be short-term, last-resort jobs, designed neither 
     to displace existing workers, nor to serve as substitutes for 
     unsubsidized employment. Provisions will be put in place to 
     discourage lengthy stays in the WORK program. Among these 
     will be limits on the duration of any one WORK assignment, 
     frequent periods of job search, denial of the Earned 
     Income Tax Credit (EITC) to persons in WORK assignments, 
     and a comprehensive reassessment after a second WORK 
     assignment. People will be required to make a good-faith 
     effort to find unsubsidized work, and anyone who turns 
     down a job offer will be removed from the welfare rolls 
     for six months. The primary emphasis of the WORK program 
     will be on securing unsubsidized employment. States will 
     be given considerable flexibility in the operation of the 
     WORK program in order to achieve this goal.


                       Making Work Pay/Child Care

       Although they are not part of this legislative proposal, 
     the EITC and health care reform are two of the three major 
     components of making work pay; the final component is 
     affordable, accessible child care. This proposal will 
     continue to guarantee child care assistance to families on 
     public assistance while they are working or in education or 
     training and to those who are in transition after leaving 
     welfare, and it will extend the guarantee to the WORK 
     program. Funding for child care for low-income working 
     families will be significantly increased. At-Risk Child Care 
     Program funds will be set aside to address quality 
     improvements and supply issues. Rules across all child care 
     programs will be coordinated to create seamless coverage for 
     persons who leave welfare for work.
       In addition, the proposal includes provisions to simplify 
     the rules regarding the amount of earnings and child support 
     that can be disregarded before calculating the AFDC benefit. 
     Finally, demonstrations will be permitted to provide advance 
     payments of the EITC through State agencies.


    Preventing Teen Pregnancy and Promoting Parental Responsibility

       The bill includes provisions aimed at reducing teen 
     pregnancy and out-of-wedlock births, including a national 
     campaign against teen pregnancy, a national clearinghouse on 
     teen pregnancy prevention, teen pregnancy prevention grants, 
     and comprehensive service demonstrations of various 
     prevention approaches. The bill also provides incentives for 
     responsible behavior that would require minor parents to live 
     at home, require school-age parents to stay in school, allow 
     States to limit additional benefits for additional children 
     conceived while on AFDC, and give States options to use a 
     variety of incentives to reward responsible behavior.
       The bill also includes a number of proposals to address the 
     shortcomings in the current child support enforcement system. 
     The scope and effectiveness of the current State paternity 
     establishment process will be expanded by provisions 
     including streamlining the paternity establishment process, 
     requiring cooperation from mothers as a condition of 
     receiving AFDC benefits, conducting paternity outreach aimed 
     at voluntary paternity establishment, and giving States the 
     administrative authority to establish the child support award 
     in appropriate cases, based on State guidelines.
       In order to ensure fair award levels, this proposal will: 
     (1) require universal, periodic, administrative updating of 
     awards; (2) re-order the distribution of child support 
     payments to enable families to more easily move from welfare 
     to work; and (3) establish a National Commission on Child 
     Support Guidelines. This proposal also includes provisions 
     for central registries and other tools to improve both intra- 
     and interstate enforcement. States will be required to use 
     the threat of revoking professional, occupational, and 
     drivers' licenses to make delinquent parents pay child 
     support. The proposal will give States additional enforcement 
     tools such as universal wage withholding to 
     increase collections. States will also have the option of 
     developing JOBS and/or WORK programs for noncustodial 
     parents who have children receiving AFDC or who have child 
     support arrearages owed to the State from prior periods of 
     AFDC receipt by their children.
       The proposal also calls for a limited number of time-
     limited Child Support Enforcement and Assurance 
     demonstrations which will attempt to link expanded efforts at 
     child support collections to some level of guarantee that a 
     child will receive a child support payment on a consistent 
     basis. Finally, this proposal will focus more attention on 
     noncustodial parents by establishing demonstration grants for 
     paternity and parenting programs and grants for success and 
     visitation programs.


                    Improving Government Assistance

       This bill includes provisions to increase coordination and 
     simplification in the operation of the AFDC and Food Stamp 
     programs, and improve the incentives in income support 
     programs, including allowing States to eliminate special 
     requirements for two-parent families, allowing families to 
     own a reliable automobile and accumulate savings and a number 
     of other coordination and simplification proposals to 
     encourage work and family formation. The proposal will also 
     increase the current cap on funding for certain assistance 
     programs operating in the territories, create self-
     employment/microenterprise demonstrations, and 
     limit the definition of essential persons.
       Measures to enhance accountability and efficiency and 
     reduce fraud include a nationwide public assistance 
     clearinghouse and state tracking systems to follow people in 
     the JOBS and WORK programs. Finally, the proposal seeks to 
     transform the culture of the welfare system into a 
     performance-based system through the adoption of new 
     performance measures and service delivery standards, an 
     improved quality assurance system, and funding for research, 
     demonstrations, evaluation and technical assistance.


                               financing

       The cost of the proposal to the Federal Government is $9.3 
     billion and is fully offset. The financing comes from three 
     areas: (1) reductions in entitlement programs; (2) extensions 
     of various savings provisions set to expire in the future; 
     and (3) better EITC targeting and compliance measures. 
     Estimated Federal savings for all proposals are roughly $9.3 
     billion over five years.
       Entitlement Reforms. The current Emergency Assistance (EA) 
     program would be modified by establishing a Federal cap for 
     each State's EA expenditures (saves $1.6 billion over five 
     years). Sponsorship and benefit eligibility rules for non-
     citizens under Supplemental Security Income (SSI), AFDC, and 
     Food Stamps would be tightened; the deeming of sponsors' 
     income in the SSI program would be permanently extended to 
     five years; the same deeming rules would be extended to AFDC 
     and Food Stamps; and eligibility would be limited to aliens 
     with sponsors below median income (saves $2.8 billion over 
     five years). In addition, more consistent eligibility 
     criteria under SSI, AFDC, Food Stamps and Medicaid would be 
     established for all categories of immigrants who are not 
     legal permanent residents (saves $900 million over five 
     years). Once immigrants become citizens, they will be 
     eligible for benefits on the same basis as are other 
     Americans.
       Congress is in the process of enacting strengthened 
     sanctions and new time limits for individuals receiving SSI 
     and Social Security Disability Insurance (SSDI) benefits who 
     have substance abuse problems that are material to disability 
     finding and these savings would be referenced for welfare 
     reform (saves an estimated $800 million over five years). 
     Family day care food program funding to low-income children 
     would be better targeted (saves $500 million over five 
     years). Producers receiving $100,000 or more in off-farm 
     adjusted gross income would be made ineligible for Commodity 
     Credit Corporation (CCC) crop subsidies (saves $500 million 
     over five years).
       Extended Expiring Provisions. The 1990 Farm Bill provision 
     which changed the percentage of recovered Food Stamp 
     overissuances retainable by State agencies for fiscal years 
     1991-95 would be extended (saves $100 million over five 
     years). Fees for passenger processing and other custom 
     services would be extended (increases receipts by $1 billion 
     in 2004). Railroad safety inspection fees would be extended 
     permanently (increases receipts by $200 million over five 
     years). The Corporate Environmental Income (CEI) tax used to 
     finance Superfund would be extended through fiscal year 1998 
     (increases receipts by $1.6 billion over five years). Using 
     these extensions to help finance welfare reform will in no 
     way threaten the funding of the programs involved.
       EITC Targeting and Compliance Measures. The proposal would 
     deny the EITC to non-resident aliens completely, affecting 
     50,000 taxpayers, mainly visiting foreign students and 
     professors (saves $100 million over five years). The proposal 
     would extend the EITC to active military families living 
     overseas, and the Department of Defense would be required to 
     report the nontaxable earned income paid to military 
     personnel (both overseas and States-side) on Form W-2 (saves 
     $200 million over five years).
                                  ____


    Work and Responsibility Act of 1994--Legislative Specifications


                              introduction

       It is time to end welfare as we know it and replace it with 
     a system that is based on work and responsibility--a system 
     that will help people help themselves. This legislation 
     reinforces the fundamental values of work, responsibility, 
     family, and community. It rewards work over welfare. It 
     signals that people should not have children until they are 
     ready to support them, and that parents--both parents--who 
     bring children into the world must take responsibility for 
     supporting them. It gives people access to the skills they 
     need and expects work in return. Most important, it will give 
     people back the dignity that comes from work and 
     independence. The cost of the proposal to the Federal 
     Government is estimated at $9.3 billion over five years and 
     is fully offset, primarily through reductions in entitlements 
     and without new tax increases.
       The ``Work and Responsibility Act of 1994'' will replace 
     welfare with work. Under this legislation, welfare will be 
     about a paycheck, not a welfare check. Our approach is based 
     on a simple compact designed to reinforce and reward work. 
     Each recipient will be required to develop a personal 
     employability plan designed to move that individual into the 
     workforce as quickly as possible. Support, job training, and 
     child care will be provided to help people move from 
     dependence to independence. Time limits will ensure that 
     anyone who can work, must work--in the private sector if 
     possible, in a temporary subsidized job if necessary.
       This legislation includes several provisions aimed at 
     creating a new culture of mutual responsibility. It includes 
     provisions to promote parental responsibility and ensure that 
     both parents contribute to their children's well-being. This 
     legislation establishes the toughest child support 
     enforcement program ever. It recognizes that preventing teen 
     pregnancy and out-of-wedlock births is critical part of 
     welfare reform. To prevent welfare dependency, teenagers must 
     get the message that staying in school, postponing pregnancy, 
     and preparing to work are the right things to do. The 
     legislation also includes: incentives directly tied to the 
     performance of the welfare office; extensive efforts to 
     detect and prevent welfare fraud; sanctions to prevent gaming 
     of the welfare system; and a broad array of incentives that 
     States can use to encourage responsible behavior.
       The ``Work and Responsibility Act of 1994'' proposes 
     dramatic changes in our welfare system, changes so bold that 
     they cannot be accomplished overnight. We phase in these 
     changes by focusing on young people, to send a clear message 
     to the next generation that we are ending welfare as we know 
     it.


             jobs, time limits and work [title I, title II]

       Definition: A ``subsidized job'' is defined as a position 
     subsidized under either the JOBS or the WORK program.

                          JOBS and Time Limits

          1. Effective Date and Definition of Phased-in Group

                             Specifications

       (a) The effective date for the legislation would be October 
     1, 1995. States could petition to delay implementation for up 
     to one year after the effective date (i.e., until, at the 
     latest, October 1, 1996) for circumstances beyond the control 
     of the State IV-A agency (e.g., no meeting of State 
     legislature that year). States would be required to have the 
     program implemented statewide (in each political subdivision 
     of the State where it is feasible to do so) within two years 
     of initial implementation.
       (b) The phased-in group would be define as custodial 
     parents, including minor custodial parents, who were born 
     after 1971 (in 1972 or later).
       (c) State would have the option to define the phased-in 
     group more broadly (e.g., custodial parents born after 1969; 
     born after 1971 and all first-time applicants), provided the 
     phased-in group included at least the population described in 
     (b).
       (d) State would be required to apply the new rules, 
     including the time limit, to all applicants in the phase-in 
     group as of the effective date of the legislation. Recipients 
     (parents) in the phased-in group who were on AFDC prior to 
     the effective date would be subject to the new rules, 
     including the time limit, as of their first redetermination 
     following the effective date.

                           2. Program Intake

                              Current law

       The Family Support Act requires a State agency to make an 
     initial assessment of JOBS participants with respect to 
     employability, skills, prior work experience and educational, 
     child care and supportive service needs.

                                 Vision

       At the point of intake, applicants would learn of their 
     specific responsibilities and expectations regarding the JOBS 
     program, the two-year time limit and its relationship to JOBS 
     participation and AFDC benefits not conditioned upon work. 
     Each applicant would now be required to enter into a personal 
     responsibility agreement with the State agency broadly 
     outlining the obligations of each party. While the personal 
     responsibility agreement would serve as a general accord, the 
     employability plan would be focused on the specific 
     employment-related needs of each applicant.

                               Rationale

       States must change the culture of the welfare system by 
     changing the expectations of both the recipient and the State 
     agency. This calls for modifying the mission of the welfare 
     system beginning at the point of intake to stress employment 
     and access to needed services rather than eligibility and 
     benefit determination. The mutual obligations of the State 
     agency and the participant must be spelled out and enforced. 
     JOBS programs must continue to link clients to services in 
     the community.

                             Specifications

       (a) All parents and other caretaker relatives would be 
     required as part of the application/redetermination process 
     to sign a Personal Responsibility Agreement with the State 
     IV-A agency. The Agreement would state the overall goal of 
     achieving maximum self-sufficiency and would describe the 
     general responsibilities of both the applicant and the State 
     agency (for the applicant, following the employability plan; 
     for the State, making available the services in the plan). 
     Current recipients (parents), if they had not previously 
     signed the Agreement, would be required to sign the Agreement 
     as part of the redetermination process. The Personal 
     Responsibility Agreement for persons in the not-phased-in 
     group would make no reference to the time limit.
       (b) The Personal Responsibility Agreement would not be a 
     legal contract.
       (c) The State IV-A agency would be required to orient each 
     applicant to the AFDC program by providing information about 
     the AFDC program, which would include (among other items) the 
     nature and applicability of the two-year time limit, the JOBS 
     participation requirement, the services provided under JOBS 
     and the availability of such services to persons not in the 
     phased-in group. Each applicant in the phased-in group would 
     be informed of the number of months of cash assistance/JOBS 
     participation for which he or she was eligible (e.g., 24 for 
     first-time applicants). The orientation information could be 
     provided as part of the eligibility determination process or 
     in a subsequent one-on-one or group orientation session. 
     States would be required to provide the orientation 
     information prior to or as part of the development of the 
     employability plan. The information would be imparted in the 
     recipient's primary language pursuant to Federal law and 
     regulation. Child care would be available as needed to enable 
     an individual to receive the orientation information (as 
     under 45 CFR 255.2).
       (d) The State would have to obtain confirmation in writing 
     from each applicant in the phased-in group that he or she had 
     received and understood the requisite orientation 
     information.
       (e) Recipients who were already on assistance as of the 
     effective date of the legislation would be provided with the 
     requisite orientation at the earliest possible date but in no 
     event later than at the development or revision of the 
     employability plan (see below) or as part of the 
     redetermination process, whichever came first.

                         3. Employability Plan

                              Current law

       On the basis of the assessment described above, the State 
     agency must develop an employability plan for the 
     participant. The State agency may require participants to 
     enter into a formal agreement which specifies the 
     participant's obligations under the program and the 
     activities and services to be provided by the State agency. 
     The employability plan is not considered a contract.

                                 Vision

       The employability plan would be designed so as to help 
     individuals secure lasting employment as soon as possible. 
     Employability plans could be for less than 24 months and may 
     include assignment, through JOBS, to work programs such as 
     On-the-Job Training, Work Supplementation and CWEP.

                             Specifications

       (a) The State agency would be required to complete the 
     assessment and employability plan (for new recipients) within 
     90 days from the earliest date for which payment was made. 
     For recipients on assistance as of the effective date, the 
     employability plan would have to be developed (or revised, if 
     such a plan were already in place) within 90 days of the date 
     the recipient became subject to the time limit (i.e., within 
     90 days of the redetermination; see above).
       (b) The employability plan would be developed jointly by 
     the State agency and the recipient. In designing the 
     employability plan, the agency and the recipient would 
     consider, among other elements, the months of eligibility 
     (for JOBS participation/AFDC benefits not contingent upon 
     work; see Definition of the Time Limit below) remaining for 
     that recipient (if that recipient were subject to time 
     limit).
       (c) An employability plan would be required for all JOBS 
     participants, including those not in the phased-in group 
     (e.g., volunteers). Employability plans would also be 
     developed, when appropriate, for persons who were deferred 
     from JOBS participation.
       (d) The employability plan for persons required to 
     participate in JOBS would include an expected time frame for 
     achieving self-sufficiency and the activities intended to 
     assist the participant in obtaining employment within that 
     time period. The time frame would, in the case of many JOBS 
     participants, be shorter than 24 months. For persons who were 
     deferred, an employability plan could detail the activities 
     needed to remove the obstacles to JOBS participation (see 
     below).
       (e) Amend section 483(b)(1)(A) by adding ``literacy'' after 
     the word ``skills.''
       (f) The State agency would provide that if the recipient 
     and the State agency staff member or members responsible for 
     developing the employability plan could not reach agreement 
     on the plan, a supervisory level staff member or other State 
     agency employee trained to mediate these disputes would 
     intervene to provide further advocacy, counseling or 
     negotiation support.
       (g) To resolve disputes (regarding the employability plan) 
     not settled by the intervention in (f), a State could elect 
     one or more of the following processes:
       i. Permit the agency to establish an internal review board 
     to arbitrate disputes. This board would have the final say. 
     The Secretary would establish regulations for such boards.
       ii. Permit agencies to employ mediation using trained 
     personnel, rather than arbitration, to resolve the dispute. 
     HHS would be responsible for providing technical assistance 
     to States that wished to use mediation.
       iii. Allow the recipient a fair hearing contesting whether 
     the State agency had followed the established process for 
     developing the employability plan. A fair hearing could be 
     the exclusive remedy or could be allowed in addition to the 
     procedure in (i) or (ii).
       (h) Persons who refused to sign or otherwise agree to the 
     employability plan after the completion of the process 
     described above would be subject to sanction, curable by 
     agreeing to the plan. In the event of an adverse ruling at a 
     fair hearing concerning the employability plan, the 
     individual would not have the right to a second fair hearing 
     prior to imposition of the sanction for continued refusal to 
     agree to such plan.

                              4. Deferrals

                              Current law

       States must require non-exempt AFDC recipients to 
     participate in the JOBS program to the extent that resources 
     are available. Exemptions under the current JOBS program are 
     for those recipients who are ill, incapacitated, or of 
     advanced age; needed in the home because of the illness or 
     incapacity of another family member; the caretaker of a child 
     under age 3 (or, at State option, under age 1); employed 30 
     or more hours per week; a dependent child under age 16 or 
     attending an educational program full time; women in the 
     second and third trimester of pregnancy; and residing in an 
     area where the program is not available. The parent of a 
     child under age 6 (but older than the age for an exemption) 
     who is personally providing care for the child may be 
     required to participate only if participation does not exceed 
     20 hours per week and necessary child care is guaranteed. For 
     AFDC-UP families, the exemption due to the age of a child may 
     be applied to only one parent, or to neither parent if child 
     care is guaranteed.

                                 Vision

       Under the new provisions, a much greater percentage of AFDC 
     recipients would be required to participate in JOBS. Single-
     parent and two-parent families would be treated similarly 
     under the new JOBS system. Persons not yet ready for 
     participation in JOBS would be deferred, temporarily in many 
     cases, from such participation. The State agency would, when 
     appropriate, assist such individuals in filing for 
     Supplemental Security Income (SSI) or Disability Insurance 
     (DI). Some of the criteria for deferral are based on current 
     regulations concerning exemptions, but in a number of 
     instances the definition is tightened significantly.

                               Rationale

       In order to change the culture of welfare, it is necessary 
     to maximize participation in the JOBS program. It is also 
     critical to ensure that all welfare recipients who are able 
     to participate in JOBS have such services made available to 
     them by the States. The deferral policy does, however, 
     give States the flexibility to consider differences in the 
     ability to work and to participate in education and 
     training activities in determining whether to require an 
     individual to enter the JOBS program.

                             Specifications

       (a) Adult recipient (see Teen Parents below for treatment 
     of minor custodial parents) who were not able to work or 
     participate in education or training activities (e.g., due to 
     care of a disabled child) could be deferred either prior to 
     or after entry into the JOBS program (or after entry into the 
     WORK program; see WORK specifications below). For example, if 
     an individual became seriously ill after entering the JOBS 
     program, he or she would then be deferred.
       (b) The State agency would be required to make an initial 
     determination with respect to deferral prior to or as part of 
     the development of the employability plan, since the 
     determination would in turn affect the content of the 
     employability plan. recipient who was required to participate 
     in JOBS rather than deferred could request a fair hearing 
     focusing on whether the individual meets one of the deferral 
     criteria (see below). The time frame for completion of the 
     employability plan (see above) would be waived in instances 
     of a dispute concerning deferral from JOBS.
       (c) Persons who were deferred from JOBS would be expected 
     when possible to engage in activities intended to prepare 
     them for employment and/or the JOBS program. An employability 
     plan for a deferred recipient could detail the steps, such as 
     referral to a vocational rehabilitation program or arranging 
     for an appropriate day care or school setting for a child 
     with a disability, needed to enable the adult to enter the 
     JOBS program and/or find employment.
       Recipients not likely to ever participate in the JOBS 
     program (e.g., those of advanced age) would not be expected 
     to engage in activities to prepare for JOBS participation. An 
     employability plan for such a person might include steps 
     intended to, for example, improve the family's health status 
     or housing situation. For individuals who were expected to 
     enter the JOBS program shortly (e.g., mothers of young 
     children), services could be provided to address any 
     outstanding barriers to successful participation in JOBS 
     (e.g., arranging for child care).
       (d) States could provide program services to deferred 
     individuals, using JOBS funds, but would not be required to 
     do so. Likewise, States could provide child care or other 
     supportive services to persons who were deferred, but would 
     not be required to do so--there would be no child care 
     guarantee for individuals in the deferred status. Persons who 
     were deferred would not be subject to sanction for failure to 
     participate in activities. In other words, in order to 
     actually require an individual to participate in an activity, 
     a State would have to classify the individual as JOBS-
     mandatory (except with respect to participation in substance 
     abuse treatment; see Substance Abuse and Deferral from JOBS 
     or WORK below).
       (e) Persons who were deferred would not be subject to the 
     time limit, i.e., months in which a recipient was in deferred 
     status would not count against the two-year limit.
       (f) The criteria for deferral from JOBS would be the 
     following:
       (1) Is a parent of a child under age one, provided the 
     child was not conceived while the parent was on assistance. A 
     parent of a child conceived while on assistance would be 
     deferred for a twelve-week period following the birth of the 
     child (consistent with the Family and Medical Leave Act).
       (Under current law, a parent of a child under age three, 
     under age one at State option, is exempted from JOBS 
     participation, and no distinction is made according to 
     whether or not the parent was on assistance when the child 
     was conceived)
       (2) Is ill or incapacitated, when it is certified by a 
     licensed physician, psychologist or mental health 
     professional (from a list of such professionals approved by 
     the State) that the illness or incapacitating condition is 
     serious enough to prevent, at least temporarily, entry into 
     employment or training;
       (3) Is 60 years of age or older;
       (4) Is needed in the home because another member of the 
     household requires the individual's presence due to illness 
     or incapacity as determined by a licensed physician, 
     psychologist or mental health professional (from a list of 
     such professionals approved by the State), and no other 
     appropriate member of the household is available to provide 
     the needed care;
       (5) Is in the third trimester of pregnancy; or
       (Under current law and regulations, pregnant women are 
     exempted from JOBS participation for both the second and 
     third trimesters)
       (6) Lives in a remote area. An individual would be 
     considered remote if a round trip of more than two hours by 
     reasonably available public or private transportation would 
     be required for a normal work or training day. If the normal 
     round-trip commuting time in the area is more than 2 hours, 
     the round-trip commuting time could not exceed generally 
     accepted standards for the area.
       (Same as current regulations, CFR 250.30))
       (g) Only one parent in an AFDC-UP family could be deferred 
     under f(1).
       (h) Each State would be permitted to defer from JOBS for 
     good cause, as determined by the State, a number of persons 
     up to a fixed percentage of the total number of persons in 
     the phased-in group, which would include adult recipients 
     (parents), minor custodial parents and persons in the WORK 
     program. These good cause deferrals would be in addition to 
     those meeting the deferral criteria defined in (f). Good 
     cause could include substantial barriers to employment--for 
     example, a severe learning disability or serious emotional 
     instability. The percentage cap on such deferrals would be 
     set, in statute, at 5% through FY 99 and 10% thereafter. A 
     State would be able, in the event of extraordinary 
     circumstances, to apply to the Secretary to increase the 
     percentage cap on good cause placements. The Secretary would 
     be required to respond to such request in a timely manner 
     (time frame to be established by regulation).
       (i) The Secretary would develop and transmit to Congress, 
     by a specified date, recommendations regarding the level of 
     the cap on good cause deferrals; the Secretary could 
     recommend that the cap be raised, lowered or maintained at 
     ten percent.
       (j) The State agency would be required to reevaluate the 
     status of persons in deferred status at such time as the 
     condition is expected to terminate (if the condition is 
     expected to be temporary) but no less frequently than at each 
     semiannual assessment (see Semiannual Assessment below) to 
     determine if the individual should remain in deferred status 
     or should enter (or re-enter) the JOBS or WORK programs.
       (k) Recipients who met one (or more) of the deferral 
     criteria would be permitted to volunteer for the JOBS 
     program, subject to available Federal resources (see JOBS 
     Participation below). Such a volunteer JOBS participant would 
     in general be treated as other JOBS participants except that 
     he or she would not be subject to sanction or to the time 
     limit. These volunteers would be distinct from volunteers 
     from the not-phased-in group (see JOBS Participation below), 
     who could at State option be subjected to the time limit.
       (l) A State agency would be required to promptly inform a 
     recipient of any change in his or her status with respect to 
     JOBS participation and/or the time limit (e.g., movement from 
     the deferred status into the JOBS program).
       (m) The criteria for deferring persons from WORK 
     participation (see WORK below) would be identical to the 
     deferral criteria for persons who had not yet reached the 
     two-year time limit. Persons who were deferred from the WORK 
     program after reaching the time limit would be eligible for 
     AFDC benefits. Such individuals would be treated exactly the 
     same as persons deferred from the JOBS program before 
     reaching the time limit, except that if the condition 
     necessitating deferral ended, they would enter or re-enter 
     the WORK program, rather than the JOBS program. Adult 
     recipients deferred from the WORK program for good cause 
     would count against the cap on the number of deferrals for 
     good cause.

           5. Substance Abuse and Deferral from JOBS or WORK

                              Current law

       Current law does not specifically mention substance abuse. 
     Under JOBS regulations, a recipient whose only activity is 
     alcohol or drug treatment would not be counted toward a 
     State's participation rate. Alcohol or drug treatment may, 
     however, be provided as a supportive service using JOBS funds 
     should a State choose to do so. Oregon currently has a waiver 
     that permits the JOBS program to require participation in 
     substance abuse diagnostic, counseling, and treatment 
     programs if they are determined to be necessary for self-
     sufficiency.

                                 Vision

       States would be given flexibility to require recipients 
     they determine to be unable to engage in employment or 
     training because of a substance abuse problem to participate 
     in substance abuse treatment while in the deferred status. 
     Sanctions may be imposed for non-participation in substance 
     abuse treatment provided that both treatment and supportive 
     services, including child care, are made available.

                               Rationale

       States report (on an anecdotal basis) substance abuse as a 
     problem they encounter in their JOBS populations. It is a 
     barrier to self-sufficiency for a number of AFDC recipients 
     who will require treatment if they are to successfully 
     participate in employment or training activities. It is 
     estimated that approximately 4.5% of AFDC recipients have 
     substance abuse problems sufficiently debilitating to 
     preclude immediate participation in employment or training 
     activities. Nearly one-third of these have participated in 
     some form of alcohol or drug treatment in the past year.

                             Specifications

       (a) States may require persons found unable to engage in 
     employment or training due to substance abuse to participate 
     in appropriate substance abuse treatment while in deferred 
     status.
       (b) Sanctions, equivalent to JOBS sanctions, may be levied 
     for non-participation in treatment, provided such treatment 
     is available at no cost to the recipient.
       (c) Child care and/or other supportive services must be 
     made available to an individual required to participate in 
     substance abuse treatment.
       (d) Provisions concerning the semiannual reassessment apply 
     to deferred persons participating in substance abuse 
     treatment as described in this section.
       (e) States may also require individuals in JOBS to 
     participate in substance abuse treatment (in conjunction with 
     another JOBS activity or activities) as part of the 
     employability plan.

                    6. Definition of the Time Limit

                              Current Law

       Some States (those which did not have an AFDC-UP program in 
     place as of September 26, 1988) are permitted to place a type 
     of time limit on participation in the AFDC-UP program, 
     restricting eligibility for AFDC-UP to as few as 6 months in 
     any 13-month period (Section 407(b)). Thirteen states 
     presently impose time limits on AFDC-UP eligibility. Under 
     current law, however, no other type of time limits may be 
     placed on participation in the AFDC program.

                                 Vision

       Most of the people who enter the welfare system do not stay 
     on AFDC for many consecutive years. It is much more common 
     for recipients to move in and out of the welfare system, 
     staying a relatively brief period each time. Two out of every 
     three persons who enter the welfare system leave within two 
     years and fewer than one in ten spends five consecutive years 
     on AFDC. Half of those who leave welfare return within two 
     years, and three of every four return at some point in the 
     future. Most recipients use the AFDC program not as a 
     permanent alternative to work, but as temporary assistance 
     during times of economic difficulty.
    
    
       While persons who remain on AFDC for long periods at a time 
     represents only a modest percentage of all people who ever 
     enter the system, however, they represent a high proportion 
     of those on welfare at any given time. Although many face 
     very serious barriers to employment, including physical 
     disabilities, others are able to work but are not moving in 
     the direction of self-sufficiency. Most long- term recipients 
     are not on a track toward obtaining employment that would 
     enable them to leave AFDC.
       The proposal would establish, for adult recipients who were 
     not deferred, a cumulative time limit of two years on the 
     receipt of AFDC benefits not contingent upon work, with 
     extensions to the time limit to be granted under certain 
     circumstances. Months in which an individual was deferred 
     would not count against the time limit. Individuals who have 
     left welfare for extended periods of time would be eligible 
     for a cushion of a few months of AFDC benefits.
       The two-year time limit is part of the overall effort to 
     shift the focus of the welfare system from disbursing funds 
     to promoting self-sufficiency through work. This time limit 
     gives both the recipient and the welfare agency a structure 
     that necessitates steady progress in the direction of 
     employment and economic independence. As discussed in the 
     WORK specifications below, recipients who reach the two-year 
     time limit without finding an unsubsidized job would be 
     offered publicly subsidized jobs to enable them to support 
     their families.

                             Specifications

       (a) The time limit would be a limit of 24 on the cumulative 
     number of months of AFDC benefits an adult (parent) could 
     receive before being required to participate in the WORK 
     program (see Teen Parents for treatment of young custodial 
     parents). In other words, the 24 months would begin with the 
     initial AFDC payment (or with the first payment following 
     redetermination, in the case of persons on AFDC prior to the 
     effective date of the legislation). Months in which an 
     individual was receiving assistance but was deferred rather 
     than in JOBS would not count against the 24-month time limit 
     (see Deferral above).
       (b) The 24-month time clock would not begin to run until a 
     custodial parent's 18th birthday. In other words, months of 
     receipt as a custodial parent before the age of 18 would not 
     be counted against the time limit.
       (c) A record of the number of months of eligibility 
     remaining would be kept for each individual subject to the 
     time limit. Non-parent caretaker relatives would not be 
     subject to the time limit.
       (d) The State agency would be required to advise each 
     recipient subject to the time limit as to the number of 
     months of eligibility remaining for him or her no less 
     frequently than once every six months (see Semiannual 
     Assessment below). In addition, the State agency would be 
     required to contact and schedule a meeting with any recipient 
     who was approaching the 24-month time limit at least 90 days 
     prior to the end of the 24 months (see Transition to Work/
     WORK below).

                 7. AFDC-UP Families and the Time Limit

                             Specifications

       (a) In an AFDC-UP family, both parents would be subject to 
     the time limit if either parent were in the phased-in group 
     (see below). A separate record of months of eligibility 
     remaining would be kept for each parent. If one parent in an 
     AFDC-UP family were deferred, that parent would not be 
     subject to the time limit--months in deferred status would 
     not count against that individual's 24-month limit. The other 
     parent, however, would still be subject to the time limit. A 
     deferral of one parent in an AFDC-UP family would not 
     count against the cap on deferral for good cause.
       (b) If one parent had reached the time limit and the other 
     had not, the parent who had reached the time limit would be 
     required to enter the WORK program. If the parent who had 
     reached the limit declined to participate in the WORK 
     program, that parent's needs would no longer be considered in 
     calculating the family's grant. His or her income and 
     resources would still be taken into account. The family would 
     still be eligible for the remainder of the benefit 
     (essentially, the other parent and the children's portion) 
     until the other parent reached the two-year limit.
       (c) If a parent in an AFDC-UP family reached the time limit 
     but declined to enter the WORK program, the needs of that 
     individual would (as above) not be taken into account in 
     calculating the AFDC benefit. If such a parent subsequently 
     reversed course and entered the WORK program, he or she would 
     be considered part of the assistance unit for the purpose of 
     determining any supplemental AFDC benefit and would also be 
     eligible for a WORK assignment. As discussed in the WORK 
     specifications below, a State would not be required to 
     provide WORK assignments to both parents in an AFDC-UP 
     family.
       (d) Months in which a parent in an AFDC-UP family met the 
     minimum work standard would not count against that parent's 
     time limit. If the combined hours of work for both parents 
     were equal to an average of 30 or more per week (up to 40 at 
     State option), neither parent would be subject to the time 
     limit (see Minimum Work Standard).
       (e) If one of the two parents in an AFDC-UP family were 
     sanctioned under the WORK program or under JOBS for refusing 
     to accept an unsubsidized job, the sanctions described below 
     (see Sanctions/Penalties) apply, regardless of the status of 
     the second parent.
       (f) With respect to the phase-in, both parents in an AFDC-
     UP family would be considered subject to the new rules if 
     either parent were in the phased-in group. If the parents in 
     an AFDC-UP family subject to the new rules subsequently 
     separated, both would still be subject to the new rules.
       (g) States which placed separate limits on AFDC-UP 
     eligibility (e.g., 6 months in any 13-month period) would not 
     be permitted to apply the two-year limit or any related 
     provisions to AFDC-UP families. In these States, all AFDC-UP 
     families would be treated as part of the not-phased-in group.

                            8. Teen Parents

                                 Vision

       Persons under 18 are not ready to be independent and should 
     generally be in school. Under the proposed law, minor parents 
     would not be allowed to set up independent households. They 
     would receive case management and be expected to remain in 
     school. A teen parents's time clock would not begin to run 
     until he or she turned 18 (and could establish an independent 
     household).

                             Specifications

       (a) States would be required to provide case management 
     services to all custodial parents under 20.
       (b) All custodial parents under 20 who has not completed 
     high school or the equivalent would be required to 
     participate in the JOBS program, with education as the 
     presumed activity. The 24-month time clock, however, would 
     not begin to run until a custodial parent turned 18. In other 
     words, months of receipt as a custodial parent before the age 
     of 18 would not be counted against the time limit.
       (c) Custodial parents under 20 who had not completed high 
     school or the equivalent and who had a child under one would 
     be required to participate in JOBS as soon as the child 
     reached twelve weeks of age. States would be permitted to 
     defer custodial parents under 20 in the event of a serious 
     illness or other condition which precluded school attendance.
       (d) Custodial parents who were eligible for and receiving 
     services under the Individuals with Disabilities Education 
     Act would receive an automatic extension up to age 22 if 
     needed to complete high school. These extensions would not be 
     counted against the cap on extensions.

                            9. JOBS Services

                              Current Law

       A range of services and activities must be offered by 
     States under the current JOBS program, but States are not 
     required to implement JOBS uniformly in all parts of the 
     State and JOBS programs vary widely among States. The 
     services which must be provided as part of a State's JOBS 
     program are the following: educational activities, including 
     high school and equivalent education, basic and remedial 
     education, and education for persons with limited English 
     proficiency; job skills training; job readiness activities; 
     job development and job placement; and supportive services to 
     the extent that these services are necessary for 
     participation in JOBS. Supportive services include child 
     care, transportation and other work-related supportive 
     services. States must also offer, in addition to the 
     aforementioned services, at least 2 of the following 
     services: group and individual job search, on-the-job 
     training (OJT), work supplementation programs and community 
     work experience programs.

                                 Vision

       The definition of satisfactory participation in the JOBS 
     program would be broadened to include additional activities 
     that are necessary for individuals to achieve self-
     sufficiency. States would continue to have broad latitude in 
     determining which services were provided under JOBS. Greater 
     emphasis, however, would be placed on job search activities, 
     to promote work and employment.

                             Specifications

                          Up-Front Job Search

       (a) All adult new recipients in the phased-in group (and 
     minor parents who had completed high school) who were judged 
     job-ready would be required to perform job search from the 
     date assistance began. Job ready would be in general defined 
     as having either non-eligible work experience, or a high 
     school diploma or the equivalent. States would include a more 
     detailed definition of job-ready in the State plan. The 
     definition would have to exclude persons who met or appeared 
     likely to meet one of the deferral criteria. A formal 
     determination as to deferral, however, would not be required 
     at this point.
       (b) States would have the option of requiring all job-ready 
     new recipients, including those in the not-phased-in group, 
     to perform up-front job search. States would also be 
     permitted to require job search from the date of application 
     (as under current law, this requirement could not be used as 
     a reason for a delay in making the eligibility determination 
     or issuing the payment).
       (c) The permissible period of initial job search would be 
     extended from 8 weeks to 12.

               Other Provisions Concerning JOBS Services

       (d) States would be required to include job search among 
     the JOBS services offered.
       (e) Clarify the rules so as to limit job search (as the 
     exclusive activity, i.e., not in conjunction with other 
     services) to 4 months in any 12-month period. The up-front 
     job search (described above) and the 45-90 days of job search 
     required immediately before the end of the two-year time 
     limit (see Transition to Work/WORK below) would both be 
     counted against the 4-month limit.
       (f) Amend section 482(d)(1)(A)(i)(I) by replacing ``basic 
     and remedial education to achieve a basic literacy level'' 
     with ``employment-oriented education to achieve literacy 
     levels needed for economic self-sufficiency''.
       (g) Self-employment programs, including microenterprise 
     training and activities, would be added to the list of 
     optional JOBS activities.
       (h) Increase the limit on Federal reimbursement for work 
     supplementation program expenditures from the current 
     ceiling, which is essentially based on a maximum length of 
     participation in a work supplementation program of 9 months, 
     to a level based on a maximum length of participation of 12 
     months.
       (i) Change the nondisplacement language to permit work 
     supplementation participants to be assigned to unfilled 
     vacancies in the private sector, provided such placements did 
     not violate the other nondisplacement provisions in current 
     law.
       (j) Alternative Work Experience would be limited to 90 days 
     within any 12-month period.
       (k) The State plan would be required to include a 
     description of efforts to be undertaken to encourage the 
     training and placement of women and girls in nontraditional 
     employment, including steps to increase the awareness of such 
     training and placement opportunities.
       (l) States would be required to indicate in the State plan 
     whether and how they will make training as child care 
     providers available to participants.
       (m) The State plan would include procedures to ensure that, 
     to the extent possible, (external) service providers promptly 
     notify the State agency in the event of noncompliance by a 
     JOBS participant, e.g., failure to attend a JOBS activity.
       (n) Amend the language in Social Security Act section 
     483(a)(1) which requires that there be coordination between 
     JPTA, JOBS and education programs available in the State to 
     specifically require coordination with the Adult Education 
     Act and Carl D. Perkins Vocational Educational Act.
       (o) Where no appropriate review were made (e.g., by an 
     interagency board), the State council on vocational education 
     and the State advisory council on adult education would 
     review the State JOBS plan and submit comments to the 
     Governor.
       (p) The agency administering the JOBS and WORK program 
     would be prohibited by regulation from referring participants 
     to, contracting with or otherwise making IV-F of IV-G funds 
     available to a provider of education and training services if 
     such institution were disqualified from participation in a 
     program under Title IV of the Higher Education Act or under 
     the Reemployment Act. A State would be provided, by 
     regulation, the option of applying the alternative 
     eligibility procedure established under the Reemployment Act 
     of potential providers of JOBS or WORK services.

                       10. Minimum Work Standard

                             Specifications

       (a) The minimum work standard would be an average of 20 
     hours of (unsubsidized) work per week during the month, with 
     a State option to increase to up to an average of 30 hours 
     per week. States would also have the option to set different 
     minimum work standards for different subgroups (e.g., mothers 
     of children under 6), provided that the standard for each 
     subgroup were at least 20 and no more than 30 hours per week.
       (b) Months in which an individual met the minimum work 
     standard would not count against the time limit. In an AFDC-
     UP family, if one parent met the minimum work standard, he or 
     she would not be subject to the time limit. Months in which 
     the combined hours of both parents equaled or exceeded 30 (up 
     to 40 at State option) would not count against the time limit 
     for either parent.
       (c) An individual who had not reached the time limit and 
     was meeting the minimum work standard would be counted as a 
     JOBS participant (see JOBS Participation below).
       (d) A person who had reached the time limit but was meeting 
     the minimum work standard would be eligible for supplemental 
     AFDC benefits, if otherwise eligible for FDS (see Earnings 
     Supplementation below).
       (e) A State would be required to offer a WORK assignment to 
     an individual working in an unsubsidized job for a number of 
     hours less than the minimum work standard (provided the 
     person were otherwise eligible for the WORK program; e.g., 
     met income and resource tests). The WORK assignment would be 
     structured, to the extent possible, not to interfere with 
     the unsubsidized employment.
       (f) Persons meeting the minimum work standard would be 
     required to accept additional hours of unsubsidized work if 
     offered, provided such work met the relevant standards (e.g., 
     health and safety) for unsubsidized employment and the total 
     number of hours did not exceed an average of 35 per week. 
     Such Individuals would also be prohibited from reducing the 
     number of hours worked with the intent of receiving 
     additional benefits.

                         11. Jobs Participation

                              Current Law

       Under the Family Support Act of 1988, which created the 
     JOBS program, minimum JOBS participation standards (the 
     percentage of the non-exempt AFDC caseload participating in 
     JOBS at a point in time) were established for fiscal years 
     1990 through 1995. States face a reduced Federal match rate 
     if those standards are not met. In FY 1993 States were 
     required to ensure that at least 11% of the non-exempt 
     caseload in the State was participating in JOBS (in an 
     average month). The standard increased to 15% for FY 1994 and 
     will rise to 20% for FY 1995. There are no standards 
     specified for the fiscal years after FY 1995. Individuals who 
     are scheduled for an average of 20 hours of JOBS activities 
     per week and attend for at least 75% of the scheduled hours 
     are countable for participation rate purposes. States are 
     required to meet separate, higher participation standards for 
     principal earners in AFDC-UP families. For FY 1994, a number 
     of AFDC-UP parents equal to 40 percent of all AFDC-UP 
     principal earners are required to participate in work 
     activities for at least 16 hours per week. The standards 
     rises to 50 percent for FY 1995, 60 percent for FY 1996 and 
     75 percent for each of the fiscal years 1997 and 1998.

                                 Vision

       To transform the welfare system from an income support 
     system into a work support system, the JOBS program must be 
     expanded significantly. This substantial increase in the 
     number of JOBS participants would be phased in over time.

                             Specifications

       (a) The JOBS program targeting requirements would be 
     eliminated. The separate AFDC-UP participation standards in 
     current law would remain in place.
       (b) Individuals in self-initiated education and training 
     activities (including, but not limited to, post-secondary 
     education) would receive child care benefits if and only if 
     such activities were approved through the JOBS program. Costs 
     of such education and training would not be reimbursable 
     under JOBS. Child care and supportive services expenditures, 
     however, would be matchable through IV-A and JOBS, 
     respectively.
       (c) The definition of participation would be altered by 
     regulation such that an individual enrolled half-time in a 
     degree-granting post-secondary educational institution who 
     was making satisfactory academic progress (as defined by the 
     Higher Education Act) and whose enrollment was consistent 
     with an approved employability plan would be considered to be 
     participating satisfactorily in JOBS, even if such a person 
     were scheduled for fewer than 20 hours of class per week.
       (d) The definition of JOBS participation would be broadened 
     to include working in jobs that met the minimum work standard 
     (see above).
       (e) The broadened definition of participation would include 
     participation in a structured microenterprise program. As 
     above, satisfactory participation in such a microenterprise 
     program would meet the JOBS participation requirement, even 
     if the scheduled hours per week were fewer than 20.

             JOBS Participation for the Not-Phased-in Group

                             Specifications

       (f) A State would be required to continue providing 
     services to a person already participating in JOBS as of the 
     effective date, consistent with the employability plan in 
     place as of that date.
       (g) States would be given substantial flexibility regarding 
     JOBS services for persons not in the Federally-defined 
     phased-in group (custodial parents born after 1971), as 
     discussed below:
       i. A State would be required to serve volunteers from the 
     not-phased-in group to the extent that Federal JOBS funding 
     was available (i.e., the State had not drawn down its full 
     JOBS allotment). States would have the option of subjecting 
     such JOBS volunteers to the time limit. A State would be 
     required to describe in the State plan its policy with 
     respect to volunteers.
       ii. States could define the phased-in group more broadly, 
     e.g., parents born after 1971 and all new applicants (see 
     Effective Date and Definition of the Phased-in Group above). 
     In addition, a State could require recipients who were not in 
     its phased-in group to participate in JOBS, and sanction such 
     an individual for failure to comply, but that person would 
     not be subject to the time limit. An individual in either the 
     phased-in or the not-phased-in groups who met one of the 
     deferral criteria could not be required to participate in 
     JOBS.

                            12. JOBS Funding

                              Current law

       Under current law, the capped entitlement for JOBS is 
     distributed according to the number of adult recipients in a 
     State, relative to the number in all States. State 
     expenditures on JOBS are currently matched at three different 
     rates. States receive Federal matching funds, up to the 
     State's 1987 WIN allocation, at a 90 percent Federal match 
     rate. Expenditures above the amount reimbursable at 90 
     percent are reimbursed at 50 percent, in the case of spending 
     on administrative and work-related supportive service costs, 
     and at the higher of 60 percent or FMAP in the case of the 
     cost of full-time JOBS program staff and other program 
     expenditures (apart from spending on child care, which does 
     not count against the jobs capped allotment and is matched at 
     FMAP). The JOBS entitlement (Federal funding) is capped at 
     $1.1 billion for FY 94, $1.3 billion for FY 95, and $1 
     billion for FY 96 and each subsequent fiscal year.

                             Specifications

       (a) The capped entitlement of JOBS would be allocated 
     according to the average monthly number of adult recipients 
     (which would include WORK participants) in the State relative 
     to the number in all States (similar to current law).
       (b) The JOBS capped entitlement (Federal) would be set at 
     $1.75 billion for FY 1996 ($300 million of which would be 
     designated for the Secretary's Fund; see below), $1.7 billion 
     for FY 1997, $1.8 billion for FY 1998 and $1.9 billion for 
     fiscal years 1999 through 2004. For fiscal year 2005 and each 
     fiscal year thereafter, the level of the cap would be set at 
     $1.9 billion adjusted for inflation using the Consumer Price 
     Index.
       (c) The Federal match rate (for each State) for all JOBS 
     expenditures under the proposed law would be set at the 
     following levels: FMAP plus five percentage points, with a 
     floor of 65 percent, for fiscal years 1996 and 1997; at FMAP 
     plus seven percentage points, with a floor of 67 percent, for 
     FY 1998; at FMAP plus nine percentage points, with a floor of 
     69 percent, for FY 1999; and at FMAP plus ten percentage 
     points, with a floor of 70 percent, for FY 2000 and each 
     fiscal year thereafter. Spending for direct program costs, 
     for administrative costs and for the costs of transportation 
     and other work-related supportive services (apart from child 
     care) would all be matched at this single rate. The current 
     law hold harmless provision, under which expenditures up to a 
     certain level are matched at 90 percent, would be eliminated. 
     The enhanced match rate would become effective upon statewide 
     implementation of the new legislation. Statewide for this 
     purpose would be defined as a number of persons subject to 
     the time limit that equaled or exceeded 90% of the federally 
     defined phased-in group. The numerator for this calculation 
     would be individuals in the State's phased-in group who were 
     subject to the time limit; the denominator would be custodial 
     parents born after 1971. A State would be eligible for the 
     enhanced match rate prior to reaching the 90 percent level if 
     it had in place an approved plan for achieving, within two 
     years of initial implementation, that target.
       (d) To qualify for the enhanced match rate, a State's total 
     spending (State share) for JOBS, WORK (matchable from the 
     WORK capped entitlement) and for IV-A, Transitional and At-
     Risk Child Care for a fiscal year would have to equal or 
     exceed the State's total spending for JOBS and the IV-A, 
     Transitional and At-Risk Child Care for Fiscal Year 1994 but 
     could in no event be less than the total of such spending for 
     Fiscal Year 1993.
       (e) If a State did not qualify for the enhanced match rate 
     by meeting the requirements in (c) and (d) above, its Federal 
     match rate for JOBS and WORK (WORK operational costs) for the 
     fiscal year in question would be reduced to a rate equal to 
     the higher of FMAP and 60 percent (for all JOBS spending) and 
     its Federal match rate for spending on the child care 
     programs for that fiscal year would be reduced to FMAP.
       (f) A State would be permitted, beginning in FY 97, to 
     reallocate an amount up to 10% of its combined JOBS and WORK 
     allotments (WORK allotments from the capped entitlement) from 
     its JOBS program to its WORK program and vice versa. The 
     amount transferred could not exceed the allotment for the 
     program from which the transfer was made.
       Example: A State with a $5 million JOBS allotment and a $6 
     million allotment from the WORK capped entitlement (see WORK 
     Funding below) can allocate $1.1 million from JOBS to WORK or 
     vice versa. The State finds that spending on the JOBS program 
     is running higher than expected and so it opts to reallocate 
     $600,000 from WORK to JOBS. The State can now draw down up to 
     $5.6 million, rather than $5 million, in Federal funding for 
     JOBS expenditures. On the other hand, the State can now 
     receive only $5.4 million in Federal matching funds, at WORK 
     match rate (capped entitlement), for spending on WORK costs.
       (g) If the States did not claim all available Federal JOBS 
     and WORK funding (WORK capped entitlement) for a fiscal year, 
     a State could draw down Federal funds for JOBS and/or WORK in 
     excess of its allotments. The additional Federal funding 
     would be drawn from the unobligated balance (JOBS and WORK 
     money not spent by other States). A State would have to draw 
     down its full allocations for both JOBS and WORK to be able 
     to draw down unspent funds beyond these allotments (for 
     spending on either program). This would require legislative 
     authority to distribute unobligated funds from one fiscal 
     year during the subsequent fiscal year and to distribute 
     unliquidated obligations from a fiscal year during, not the 
     succeeding fiscal year, but the one after that (two years 
     afterward).
       Example: During FY 99, seven States spend on JOBS and WORK 
     at a level that would draw down Federal funding in excess of 
     their allotments. The FY 99 JOBS and WORK allotments for the 
     seven States total $100 million, but the level of State match 
     contributed for the two programs would enable the seven to 
     draw down $110 million in Federal funds, absent the 
     limitations on State allocations, for a difference of $10 
     million. The total amount of unobligated JOBS and WORK 
     funding for FY 99 (based on States' drawing down JOBS and 
     WORK funding only up to the level of their allotments) is $7 
     million. Each of the seven States would receive 70 cents for 
     each dollar of Federal funding it could potentially have 
     drawn down beyond the level of its JOBS and WORK allotments. 
     State A, which would have drawn down an additional $1 million 
     in Federal funding above its allocations, in the absence of 
     any limitations, would receive $700,000 in additional Federal 
     funding. If the amount of unobligated JOBS and WORK funding 
     exceeded $10 million, the seven States would receive the full 
     $10 million in additional Federal funding.
       (h) If the rate of total unemployment in a State for a 
     fiscal year equaled or exceeded the (total unemployment rate) 
     trigger for extended unemployment compensation (currently 6.5 
     percent), and the State's total unemployment rate for that 
     fiscal year equaled or exceeded 110 percent of that rate for 
     either (or both) of the two preceding fiscal years, the State 
     match rate for JOBS, WORK and At-Risk Child Care for that 
     fiscal year would be reduced by ten percent (not by ten 
     percentage points; e.g., from 30 percent to 27 percent, not 
     from 30 percent to 20 percent). The adjustment to the match 
     rate would become effective only if the State obligated 
     sufficient funding to draw down its full allotments for JOBS, 
     WORK and At-Risk Child Care at the pre-adjustment match rate. 
     The State could then, as described above, draw down unspent 
     JOBS and WORK funds at the higher match rate.
       Example: State A obligates sufficient funding to draw down 
     its full allocations for JOBS, WORK and At-Risk Child Care at 
     the pre-adjustment match rates. The State match rate for JOBS 
     and WORK is 25%, the total State contribution to both 
     programs is $1 million and its total Federal allotment for 
     both programs is $3 million. If the unemployment rate in 
     State A for the fiscal year exceeded the trigger level 
     (described above), the State match rate would be reduced from 
     25 to 22.5 percent. State A could then potentially draw down 
     an additional $450,000 ($3.45 million minus $3 million) in 
     Federal funds. Referring to the example above, the $450,000 
     would be placed in the pool with the $10 million the seven 
     aforementioned States could potentially draw down beyond the 
     level of their allotments. If the unobligated balance for the 
     fiscal year were sufficient, State A would receive the full 
     $450,000 and the seven other States would receive the full 
     $10 million. If not, each of the eight States would receive a 
     pro-rated amount (e.g., 65 cents on the dollar).
       (i) The capped entitlement for JOBS for a fiscal year would 
     rise by 2.5 percent if the average national total 
     unemployment rate for the last two quarters of the previous 
     fiscal year or the first two quarters of that fiscal year 
     equaled 7 percent. For each tenth of a percentage point by 
     which the national unemployment rate for either of those 
     two-quarter periods exceeded 7 percent, the cap would be 
     increased by an additional .25 percent. For example, if 
     the unemployment rate for the last two quarters of the 
     preceding fiscal year were 8.1 percent, the JOBS cap for 
     the fiscal year would be increased by a total of 5.25 
     percent (2.5 percent for reaching 7 percent plus an 
     additional 2.75 percent for the 1.1 percentage points over 
     7). Each State's allotment would increase accordingly.
       In other words, a determination would be made at the 
     beginning and in the middle of the Federal fiscal year as to 
     whether the JOBS cap should be increased (i.e., whether the 
     unemployment trigger level had been reached). If the cap were 
     increased at the beginning of the year, an adjustment would 
     not also be made at the middle of the year.
       The same provision would apply to the capped entitlement of 
     WORK (as described below) and to At-Risk Child Care.
       (j) Funding for teen case management (see Teen Parents 
     above) would be provided not as a set-aside, but as 
     additional dollars within the JOBS capped entitlement.

                       13. Semiannual Assessment

                             Specifications

       (a) The State agency would be required, on at least a 
     semiannual basis, to conduct a review of the employability 
     plan for both JOBS participants and for deferred persons who 
     had an employability plan in place, to evaluate progress 
     toward achieving the goals in the plan. This assessment, 
     which would be done in person, could be integrated with the 
     annual AFDC eligibility redetermination. Persons in deferred 
     status found to be ready for participation in employment and 
     training could be assigned to the JOBS program following the 
     assessment. Conversely, persons in the JOBS program 
     discovered to be facing very serious obstacles to 
     participation could be deferred. Other revisions to the 
     employability plan would be made as needed.
       (b) The assessment would entail an evaluation of the extent 
     to which the State was providing the services called for in 
     the employability plan. In instances in which the State was 
     found not to be delivering the specified education, training 
     and/or supportive services, the agency would be required to 
     take steps to ensure that the services would be delivered 
     from that point forward.

                      14. Transition to Work/WORK

                             Specifications

       (a) Persons would be required to engage in job search 
     during a period of not less than 45 days (up to 90 days, at 
     State option) before taking a WORK assignment. The 
     employability plan would be modified accordingly. In most 
     cases, the job search would be performed during the 45-90 
     days immediately preceding the end of the time limit.
       (b) The State agency would be required to schedule a 
     meeting with any recipient approaching the end of the 24-
     month time limit at least 90 days in advance of that 
     individual's reaching the limit. The State agency would, as 
     part of the 90-day assessment, evaluate the recipient's 
     progress and employability to determine if an extension were 
     appropriate to, for example, complete a training program in 
     which the recipient was currently enrolled (see 
     Extensions below). The State agency would be required to 
     inform the recipient, both in writing and at the face-to-
     face meeting, of the consequences of reaching the time 
     limit--the need to register for the WORK program in order 
     to be eligible for further support, in the form of a WORK 
     assignment. Recipients would also be apprised of the 
     requirement to engage in job search for the final 45-90 
     days and of the State's extension policy.
       (c) States would have the option of providing an additional 
     month of AFDC benefits to individuals who found employment 
     just as their eligibility for AFDC benefits/JOBS 
     participation ended, if necessary to tide them over until the 
     first paycheck.
       (d) The State agency would notify the recipient, either by 
     phone or in writing, of the purpose and need for the 90-day 
     meeting, and the State agency would be required to make 
     additional attempts at notification if the recipient failed 
     to appear.
       (e) For persons re-entering the JOBS program (including 
     those previously assigned deferred) with fewer than six 
     months of eligibility remaining, the development/revision of 
     the employability plan could be considered the 90-day 
     meeting, if the requisite information were provided at that 
     point. In the case of an individual re-entering with fewer 
     than 90 days of eligibility, the meeting would be held at the 
     earliest possible date.
       (f) The semiannual assessment could be treated as the 90-
     day meeting, provided it fell within the final six months of 
     eligibility. Conversely, the 90-day assessment would meet the 
     requirement for a semiannual assessment.

                             Worker Support

       (g) States would be encouraged to use JOBS or WORK funds 
     (from the capped WORK allocation; see below), to provide 
     services designed to help persons who had left the JOBS or 
     WORK programs for employment keep those jobs.
       Services could include case management, work-related 
     supportive services, and job search and job placement 
     assistance for former recipients who had lost their jobs. 
     Case management could entail assistance with money 
     management, mediation between employer and employee and aid 
     in applying for advance payments of the EITC. Work-related 
     supportive services could include payments for licensing or 
     certification fees, clothing or uniforms, auto repair or 
     other transportation expenses and emergency child care 
     expenses.

                             15. Extensions

                             Specifications

       (a) States would be required to grant extensions to persons 
     who reached the time limit without having had adequate access 
     to the services specified in the employability plan. In 
     instances in which a State failed to substantially provide 
     the services, including child care, called for in the 
     employability plan, the State would be required to grant an 
     extension equal to the number of months needed to complete 
     the activities in the employability plan (up to a limit of 24 
     months). States would be mandated to take the results of the 
     semiannual assessment(s) into account in determining if 
     services were delivered satisfactorily. If an extension were 
     granted on the grounds of inadequate service delivery, the 
     employability plan could be revised, as appropriate, at that 
     point. Disagreements about revisions to the plan would be 
     subject to the same dispute resolution and sanctioning 
     procedures as was the initial development of the plan.
       (b) If the State agency and the recipient disagreed with 
     respect to whether services were substantially provided and 
     hence as to whether the recipient was entitled to an 
     extension, the State agency would be mandated to inform the 
     recipient of her or his right to a fair hearing on the issue. 
     All hearings would be held prior to the end of the 
     individual's 24 months of eligibility.
       (c) In a fair hearing regarding a recipient's claim that he 
     or she was entitled to an extension due to State failure to 
     make available the services in the employability plan, the 
     State would have to show what services were provided. A 
     recipient would be entitled to an extension if the hearing 
     officer found that the recipient was unable to complete the 
     elements of the employability plan because services, 
     including necessary supportive services, were not available 
     for a significant period of time. If it were determined that 
     adequate services were not provided, an extension would be 
     granted and the recipient and State agency would revise the 
     employability plan, as appropriate (see above).
       (d) Persons enrolled in a structured learning program 
     (including, but not limited to, those created under the 
     School-to-Work Opportunities Act) would be granted an 
     extension up to age 22 for completion of such a program. A 
     structured learning program would be defined as a program 
     that begins at the secondary school level and continues into 
     a post-secondary program and is designed to lead to a degree 
     and/or recognized skills certificate. Such extensions would 
     not count against the cap on extensions (see below).
       (e) States would also be permitted, but not required, to 
     grant extensions of the time limit under the circumstances 
     listed below, up to 10% of all adults and minor parents 
     required to participate in JOBS and subject to the time 
     limit. Extensions due to State failure to deliver services, 
     as discussed above, would be counted against the cap. A State 
     would, however, be required to grant an extension if services 
     were not provided, regardless of whether the State was above 
     or below the 10% cap.
       (1) For completion of a GED program (extension limited to 
     12 months).
       (2) For completion of a certificate-granting training 
     program or education activity, including post-secondary 
     education or a structured microenterprise program expected to 
     enhance employability or income. Extensions to complete a two 
     or four-year college degree would be conditioned on 
     simultaneous participation in a work-study program, or other 
     part-time work (for at least an average of 15 hours per 
     week).
       The extension is contingent on the individual's making 
     satisfactory academic progress, as defined by the Higher 
     Education Act (extension limited to 24 months).
       (3) In cases of persons who are learning disabled, 
     illiterate or who face language barriers or other substantial 
     obstacles to employment. This would include a person with a 
     serious learning disability whose employability plan to date 
     has been designed to address that impediment and who 
     consequently has not yet obtained the job skills training 
     needed to secure employment (extension not limited in 
     duration).
       The State agency would be required to set a duration for 
     each extension granted, sufficient to, for example, finish a 
     training program already underway or, in the event of a State 
     failure to provide services, to complete the activities in 
     the employability plan.
       (f) States would be required to continue providing 
     supportive services as needed to persons who had received 
     extensions of the time limit.
       (g) A State would be permitted, in the event of 
     extraordinary circumstances, to apply to the Secretary to 
     have its cap on extensions raised. The Secretary would be 
     required to make a timely response to such requests (see 
     Deferral above).
       (h) The Secretary would develop and transmit to Congress 
     (see Deferral above), by a specified date, recommendations 
     regarding the level of the cap on extensions; the Secretary 
     could, as mentioned above, recommended that the cap be 
     raised, lowered or maintained at ten percent.

          16. Qualifying for Additional Months of Eligibility

                             Specifications

       (a) Persons who had left AFDC with fewer than six months of 
     eligibility for AFDC benefits/JOBS participation remaining 
     would qualify for a limited number of additional months of 
     eligibility, to serve as a cushion. An individual in this 
     category (fewer than 6 months of eligibility remaining) would 
     qualify for one additional month of eligibility for every 
     four months during which the individual did not receive AFDC 
     and was not in the WORK program, up to a limit of six months 
     of eligibility at any time.
       (b) Persons who left the WORK program would also be able to 
     qualify for up to 6 months of eligibility for AFDC benefits/
     JOBS participation, just as described in (a).
       (c) Individuals re-entering the AFDC program would be 
     subject to the up-front job search requirement, as described 
     above under JOBS Services.

                      Administration of JOBS/WORK

                              Current law

       By statute JOBS must be administered by the IV-A agency. 
     State IV-A agencies may delegate to or contract (either 
     through financial or non-financial agreements) with other 
     entities such as JTPA to provide a broad range of JOBS 
     services. The IV-A agency must retain overall responsibility 
     for the program (including program design, policy-making, 
     establishing program participation requirements) and any 
     actions that involve individuals (including determination of 
     exemption status, determination of good cause, application of 
     sanctions, and fair hearings).
       HHS/ACF makes grants to the IV-A agency based on the 
     allocation formula outlined in the statute and holds the IV-A 
     agency accountable for meeting participation and target group 
     expenditure requirements as well as submitting all necessary 
     program and financial reports.

                                 Vision

       JOBS and WORK would be administered by the IV-A agency 
     unless the Governor designates another entity to administer 
     the programs. If the Governor designates an agency other than 
     the IV-A agency to administer JOBS/WORK, then any plan or 
     other document submitted to HHS to operate the programs would 
     be jointly submitted by the administering entity and the IV-A 
     agency.
       Based on the Governor's designation. HHS/ACF would make 
     grants to the administering entity and hold that entity 
     responsible for submitting program and financial reports and 
     meeting appropriate performance standards.
       In a State that elects to operate one-stop career centers, 
     JOBS/WORK would be required components of the one-stop career 
     centers.

                       17. Overall Administration

                             Specifications

       (a) JOBS and WORK must be designated by the same State 
     entity.
       (b) The Governor may designate the agency to administer 
     JOBS/WORK. In the absence of the designation of another 
     agency, the IV-A agency would administer JOBS/WORK.
       (c) The Governor would determine whether the State had a 
     State-wide one-stop career center system. The determination 
     would be made at least every two years. If the Governor 
     determined that the State had such a system, the JOBS/WORK 
     program would participate in the operation of the one-stop 
     career centers. The Governor would make one-stop career 
     center services available to the participants in the JOBS/
     WORK components.
       (d) If the Governor designated an entity other than the IV-
     A agency, then that agency and the IV-A agency would have to 
     enter into a written agreement outlining their respective 
     roles in carrying out JOBS/WORK.
       (e) If the IV-A agency retained administration of JOBS, it 
     would have the option of contracting with another entity or 
     entities to carry out any and all functions related to JOBS/
     WORK. All contracts and agreements with such entities would 
     be written.
       (f) If the Governor designated an entity other than the IV-
     A agency, then that agency and the IV-A agency would be 
     required to jointly submit any plan required to operate JOBS/
     WORK to the Secretary of HHS.
       (g) Upon notification by the Governor of the designation of 
     an entity other than the IV-A agency to administer JOBS/WORK, 
     the Department of Health and Human Services would make all 
     grant awards and hold accountable for all financial and 
     reporting requirements the designated entity.

            18. Specific Responsibilities of the IV-A Agency

                             Specifications

       (a) No matter which entity has responsibility for JOBS/
     WORK, the IV-A agency must retain responsibility for:
       (1) Determining eligibility for AFDC;
       (2) Tracking and notifying families subject to the time 
     limit of months left of eligibility;
       (3) Applying sanctions;
       (4) Making supplemental payments to eligible WORK 
     participants and determining continuing eligibility for WORK 
     and for AFDC payments;
       (5) Notifying the JOBS/WORK agency at least 120 days before 
     an individual's two-year limit was up so that appropriate 
     steps (e.g., job search) could be taken; and
       (6) Holding fair hearings regarding time limits and cash 
     benefits.

                   19. Other Areas of Responsibility

                             Specifications

       (a) In States where an entity other than the IV-A agency is 
     responsible for JOBS/WORK, we propose to give States the 
     flexibility to determine how the following functions are 
     carried out. The State plan would have to contain specific 
     information detailing how the State intended to carry out the 
     following functions:
       (1) Determining deferral status;
       (2) Granting extensions to the time limits; and
       (3) Providing secondary reviews and hearings on issues 
     specifically related to JOBS or WORK participation.


                                  work

                              Current law

       There is at present under Title IV no work program of the 
     type envisioned here. States are presently permitted to 
     operate on-the-job training, work supplementation and 
     community work experience programs as part of the JOBS 
     program (Section 482(e) and 482(f), Social Security Act, 45 
     CFR 250.61, 250.62, 250.63). Regulations, however, explicitly 
     prohibit States from operating a program of public service 
     employment under the JOBS umbrella (45 CFR 250.47).

                                 Vision

       The focus of the transitional assistance program would be 
     helping people move from welfare to unsubsidized employment. 
     The two-year time limit for cash assistance not contingent on 
     work is part of this effort. Some recipients will, however, 
     reach the two-year time limit without having found a job, 
     despite having participated satisfactorily in the JOBS 
     program. We are committed to providing them with the 
     opportunity to work to help support their families. The 
     design of the WORK program will be guided by a principle 
     central to the reform effort, that persons who work should be 
     no worse off than those who are not working.
       The WORK program would make work assignments (hereafter 
     WORK assignments) in the public, private and non-profit 
     sectors available to persons who had reached the time limit. 
     States would be required to create a minimum number of WORK 
     assignments, but would otherwise be given considerable 
     flexibility in the expenditure of WORK program funds. For 
     example, States would be permitted to contract with private 
     firms and not-for-profits to place persons in subsidized or 
     unsubsidized private sector jobs.
       The WORK program would take the form of a work-for-wages 
     structure. Participants in WORK assignments would be paid for 
     hours worked; individuals who missed work would not be paid 
     for those hours.
       Definition: The terms ``WORK assignment'' and ``WORK 
     position'' are defined as a job in the public, private or 
     not-for-profit sectors to which an individual is currently 
     assigned under the WORK program.

                  20. Establishment of a WORK Program

                             Specifications

       (a) Each State would be required to operate a WORK program 
     making WORK assignments available to persons who had reached 
     the 24-month time limit for AFDC benefits not conditioned 
     upon work.

                            21. WORK Funding

                             Specifications

       (a) There would be two WORK program funding streams:
       (1) A capped entitlement which would be distributed to 
     States according to the sum of the average monthly number of 
     persons required to participate in JOBS (and subject to the 
     time limit) and the average monthly number of persons in the 
     WORK program in a State relative to the number in all States.
       (2) An uncapped entitlement to reimburse States for wages 
     paid to WORK program participants, which would include wage 
     subsidies to private, for-profit employers.
       The capped entitlement would be for WORK operational costs, 
     which would include expenditures to develop WORK assignments, 
     placement bonuses to contractors and spending on other WORK 
     program services such as supervised job search.
       (b) A State would receive matching funds, up to the amount 
     of the capped allocation, for expenditures for WORK 
     operational costs at the WORK match rate, which would be set 
     at the same level as the JOBS match rate (as described in 
     JOBS Funding above). For expenditures on wages to WORK 
     participants, including wage subsidies to private employers, 
     a State would be reimbursed at its FMAP.
       Example: State A's allocation (annual) from the capped WORK 
     entitlement for FY 99 is $1.5 million. The State's WORK (and 
     JOBS) match rate is 75 percent and its FMAP is 50 percent. 
     The State spends a total of $5.2 million on the WORK 
     program--$1.6 million to develop the WORK assignments, make 
     performance-based payments to placement contractors, and 
     provide jobs search services and $3.6 million on wage 
     subsidies to private employers and wages for WORK 
     participants in the public and not-for-profit sectors. State 
     A would be reimbursed for the $1.6 million in spending on 
     operational costs at the 75 percent capped allocation match 
     rate, for a total of $1.2 million in reimbursement at that 
     rate. For the $3.6 million in expenditures on WORK wages, the 
     State would be reimbursed at the FMAP, for $1.8 million in 
     Federal dollars from the uncapped stream and a total of $3 
     million in Federal matching funds.
       As discussed in JOBS Funding above, the enhanced match rate 
     would become effective upon statewide implementation of the 
     new legislation, provided the State met the maintenance of 
     effort requirement concerning its total spending for JOBS, 
     WORK and for IV-A, Transitional and At-Risk Child Care. Prior 
     to statewide implementation, the WORK match rate would be set 
     at the higher of FMAP and 60 percent.
       (c) The WORK capped entitlement would be set at $200 
     million for FY 1998, $700 million for FY 1999, $1.1 billion 
     for FY 2000, $1.3 billion for FY 2001, $1.4 billion for FY 
     2002, $1.6 billion for FY 2003 and $1.7 billion for FY 2004. 
     For fiscal year 2005 and each fiscal year thereafter, the 
     level of the WORK capped entitlement would be set at $1.7 
     billion adjusted for inflation by the Consumer Price Index 
     (CPI) and for the increase over time in the relative size of 
     the phased-in group.
       (d) As discussed above (see JOBS Funding), a State would be 
     permitted to reallocate up to 10% of the combined total of 
     its JOBS and WORK allotments from its JOBS program to its 
     WORK program, and vice versa. A State would be permitted to 
     reallocate up to 10% of its JOBS funding for FY 97 (the year 
     prior to implication of the WORK program) to cover WORK 
     program start-up costs.
       (e) If, as described in JOBS Funding, the States were not 
     able to claim all available Federal JOBS and WORK funding 
     (WORK capped entitlement) for a fiscal year, a State would be 
     able to draw down Federal funds, for WORK spending on 
     operational costs, in excess of its allotment from the capped 
     entitlement.
       (f) As discussed in JOBS Funding above, if the rate of 
     total unemployment in a State for a fiscal year equaled or 
     exceeded the (total unemployment rate) trigger for an 
     extended benefit period (currently 6.5 percent), and the 
     State's total unemployment rate for that fiscal year equaled 
     or exceeded 110 percent of that rate for either (or both) of 
     the two preceding fiscal years, the State match rate for 
     JOBS, WORK and At-Risk Child Care for that fiscal year would 
     be reduced by ten percent.
       (g) The capped entitlement for WORK for a fiscal year would 
     rise by 2.5 percent if the average national total 
     unemployment rate for the last two quarters of the previous 
     fiscal year or the first two quarters of that fiscal year 
     equaled 7 percent. For each tenth of a percentage point by 
     which the national unemployment rate for either of those two-
     quarters periods exceeded 7 percent, the WORK cap would be 
     increased by an additional .25 percent. (identical to the 
     provision concerning lifting the cap on JOBS funding; see 
     JOBS Funding)

                            22. Flexibility

                             Specifications

       (a) States would enjoy wide discretion concerning the 
     spending of WORK program funds. A State could pursue any of a 
     wide range of strategies to provide work to those who had 
     reached the two-year time limit, including:
       Offer wage subsidies and other incentives to for-profit, 
     not-for-profit and public employers;
       Execute performance-based contracts with private firms, 
     not-for-profit or public organizations to place WORK 
     participants in unsubsidized jobs;
       Make payments to not-for-profit employers to defray the 
     cost of supervising WORK participants;
       Support microenterprise and self-employment efforts; or
       Make payments to not-for-profit employers and public 
     agencies to employ participants in temporary projects 
     designed to address community needs, such as projects to 
     enhance neighborhood infrastructure and provide other 
     community services, or to employ participants as, for 
     example, mentors to teen parents on assistance.
       Employ WORK participants as child care workers or home 
     health aides.
       The approaches above would be listed in statute as 
     examples, but States would not be restricted to these 
     strategies.

                  23. Limits on Subsidies to Employers

                             Specifications

       (a) An individual could hold a particular WORK assignment 
     (i.e., the WORK subsidy could be paid) for no more than 12 
     months. Ideally, after the subsidy ended, the employer would 
     retain the WORK participant in unsubsidized employment. After 
     completing an assignment, an individual could not be 
     reassigned to the same WORK position.
       (b) The Secretary may adopt, as necessary, regulations to 
     assure the appropriate use of the wage subsidy (e.g., to 
     prevent fraud and abuse).

                            24. Coordination

                             Specifications

       (a) The agency administering the WORK program would be 
     required to coordinate delivery of WORK services with the 
     public, private and not-for-profit sectors, including local 
     government, large and small businesses, United Ways, 
     voluntary agencies and community-based organizations (CBOs). 
     Particular attention should be paid to involving the breadth 
     of the community in the development of the WORK program in 
     that locality.
       (b) The State would be required to designate in the State 
     plan, or describe a process for designating, bodies to serve 
     as WORK advisory/planning boards for each JTPA Service 
     Delivery Area in the State (or for such larger or smaller 
     area as the State deems appropriate). The WORK planning 
     board, which could be either an existing or a new body, would 
     assist the administering entity in operating the WORK program 
     in that area. The State would be mandated to involve local 
     elected officials in the designation or establishment of such 
     boards.
       The planning board would work in conjunction with the WORK 
     program agency to identify potential WORK assignments and 
     opportunities for movement into unsubsidized employment, and 
     to develop methods to ensure compliance with the requirements 
     relating to nondisplacement, working conditions and 
     coordination (as described in this section). WORK planning 
     boards would have to include union and private, public 
     (including units of general purpose local government) and 
     not-for-profit (including CBOs) sector representation.
       (c) States would have to establish a process by which WORK 
     planning boards could submit comments regarding the 
     development of the State plan.
       (d) The WORK agency would be required to include in the 
     State plan provisions for coordination with the State 
     comprehensive reemployment system (including the Employment 
     Service) and other relevant employment and public service 
     programs in the public, private and not-for-profit sectors, 
     including efforts supported by the Job Training Partnership 
     Act or the National and Community Service Trust Act of 1993.

                         25. Retention Records

                             Specifications

       (a) States would be required to keep a record of the rate 
     at which employers (public, private and not-for-profit) 
     retained WORK program participant (after the subsides ended). 
     Similarly, States would be mandated to monitor the 
     performance of placement firms.

                          26. Nondisplacement

                             Specifications

       (a) The assignment of a participant to a subsidized job 
     under the WORK program would not--
       (1) result in the displacement of any currently employed 
     worker, including partial displacement such as a reduction in 
     the hours of non-overtime work, wages or employment benefits;
       (2) impair existing contracts for services or collective 
     bargaining agreements;
       (3) infringe upon the promotional opportunities of any 
     currently employed worker;
       (4) result in the employment of the participant or filing 
     of a position when--
       (a) any other person is on layoff, on strike or has been 
     locked out from, or has recall rights to, the same or a 
     substantially equivalent job or position with the same 
     employer; or
       (b) the employer has terminated any regular employee or 
     otherwise reduced its work force with the effect of filing 
     the vacancy so created with such participant; or
       (5) result in filling a vacancy for a position in a State 
     or local government agency for which State or local funds 
     have been budgeted and are available, unless such agency has 
     been unable to fill such vacancy with a qualified applicant 
     through such agency's regular employee selection procedure 
     during a period of not less than 60 days.
       (b) A participant would not be assigned to a position with 
     a private, non-for-profit entity to carry out activities that 
     are the same or substantially equivalent to activities that 
     have been regularly carried out by a State or local 
     government agency in the same local area, unless such 
     placement meets the nondisplacement requirements described in 
     this section of the specifications.
       (c) No participant would be assigned to a position to 
     perform work under a contract for services for the first 90 
     days after the commencement of such contract if such contract 
     immediately succeeds a contract for services under which an 
     employee covered by a collective bargaining agreement 
     performed the same or substantially similar work for another 
     employer.

                27. Grievance, Arbitration and Remedies

                             Specifications

       (a) Each State would establish and maintain grievance 
     procedures for resolving complaints by regular employees or 
     their representatives alleging violations of the 
     nondisplacement provisions described above and the 
     requirements relating to wages, benefits or working 
     conditions described in these specifications.
       (b) Hearings on any grievance filed pursuant to the 
     provision above would be conducted within 30 days of the 
     filing of such grievance and a decision would have to be made 
     within 60 days of the filing. Except for complaints alleging 
     fraud or criminal activity, a grievance would be made not 
     later than 45 days after the date of the alleged occurrence.
       (c) Upon receiving a decision, or if 60 days has elapsed 
     without a decision being made, a grievant may do either of 
     the following:
       (1) file an appeal as provided for the State's procedures 
     or in regulations promulgated by the Secretary, or
       (2) submit such grievance to binding arbitration in 
     accordance with the provisions of this section.

                              Arbitration

       (d) In accordance with the appeal/arbitration provision 
     above, on the occurrence of an adverse grievance decision, or 
     60 days after the filing of such grievance if no decision has 
     been reached, the party filing the grievance would be 
     permitted to submit such grievance to binding arbitration 
     before a qualified arbitrator who was jointly selected and 
     independence of the interested parties.
       (e) If the parties could not agree on an arbitrator, the 
     Governor would appoint an arbitrator from a list of qualified 
     arbitrators within 15 days of receiving a request for such 
     appointment from one of the parties to the grivence.
       (f) An arbitration proceeding conducted as described here 
     would be held not later than 45 days after the request for 
     such arbitration, or if the arbitrator were appointed by the 
     Governor (as described above) not later than 30 days after 
     such appointment, and a decision concerning such grievance 
     would be made not later than 30 days after the date of such 
     arbitration proceeding.
       (g) The cost of the arbitration proceeding conducted as 
     described here would in general be divided evenly between the 
     parties to the arbitration. If a grievant prevails in such an 
     arbitration proceeding, the party found in violation would 
     pay the total cost of such proceeding and the attorney's fees 
     of the grievant.
       (h) Suits to enforce arbitration awards under this section 
     may be brought in any district court of the United States 
     having jurisdiction over the parties, without regard to the 
     amount in controversies and without regard to the citizenship 
     of the parties.

                                Remedies

       (i) Remedies for a grievance filed under this section 
     include--
       (1) suspension of payment for assistance under this title;
       (2) the termination of such payments;
       (3) the prohibition of the placement of a participant;
       (4) reinstatement of a displaced employee to the position 
     held by such employee prior to displacement;
       (5) payment of lost wages and benefits of the displaced 
     employee;
       (6) reestablishment of other relevant terms, conditions and 
     privileges of the displaced employee; and
       (7) such equitable relief as is necessary to correct a 
     violation or to make a displaced employee whole.

            28. Written Notification of Labor Organizations

                             Specifications

       (a) No WORK position could be established with an employer 
     unless the local labor organization representing employees of 
     such employer who were engaged in the same or substantially 
     similar work as that proposed to be carried out under such 
     position has been provided written notification of the 
     initial assignment of a participant to such position not less 
     than 30 days prior to the commencement of such an assignment. 
     No such notification would be required with respect to the 
     subsequent assignment of participants to the same position 
     with the same employer.
       (b) If a local organization which was provided notice of an 
     assignment pursuant to (a) above objected to an assignment of 
     a participant on the basis that such assignment would violate 
     the requirements relating to nondisplacement, wages, benefits 
     or working conditions as described in these specifications, 
     such organizations could, as an alternative to the grievance 
     procedures as described above, file a complaint pursuant to 
     an expedited grievance procedure. Such expedited procedure 
     would be carried out in accordance with the binding 
     arbitration procedures described above, expect that--
       (1) the request for arbitration would have to be filed 
     within 30 days of receiving written notice.
       (2) the arbitrator would be jointly selected by the parties 
     not later than 10 days after the request for arbitration, or, 
     if the parties were unable to agree, appointed by the Federal 
     Mediation and Conciliation Service (or another entity, if 
     agreed to by the parties) not later than 15 days after the 
     request for arbitration, and
       (3) the arbitration proceeding would be conducted and a 
     decision issued not later than 30 days after the request for 
     arbitration.
       (c) If a local organization filed a complaint pursuant to 
     the expedited grievance procedure described in this section 
     of the specifications, a participant could not be placed in 
     the prospective WORK position that was the subject of the 
     complaint until it was determined, pursuant to the expedited 
     grievance procedure, that such placement would not be in 
     violation of any of the relevant provisions in these 
     specifications.

         29. WORK Eligibility Criteria and Registration Process

                             Specifications

       (a) Recipients who had reached the two-year time limit for 
     AFDC benefits not contingent upon work and who otherwise met 
     the AFDC eligibility criteria (e.g., income and asset limits) 
     would be eligible to enter the WORK program.
       (b) States would be mandated to describe the WORK program, 
     including the terms and conditions of participation, to all 
     recipients at least 90 days before they were slated to reach 
     the 24-month time limit (see Transition to Work/WORK above). 
     Recipients who had reached the 24-month time limit would be 
     required to register for the WORK program in order to be 
     eligible for either a WORK assignment or for AFDC benefits 
     while awaiting a WORK position (see Allocation of WORK 
     Assignments/Interim Activities below).
       (c) States would be required to establish a registration 
     process for the WORK program. The registration process would 
     in general include an assessment for the purpose of matching 
     the participant with a WORK assignment which the individual 
     had the ability to perform and which would assist him or her 
     in securing unsubsidized employment. The agency would be 
     expected to draw upon an individual's JOBS case record in 
     making such an assessment. States would be prohibited from 
     denying an eligible individual (as described above) entry 
     into the WORK program, provided he or she followed the 
     registration procedure.
       (d) Only one parent in an AFDC-UP family would be required 
     to participate in the WORK program. States would, however, 
     have the option of requiring both parents to participate.
       (e) An individual who had exited the system after having 
     reached the time limit or after having entered the WORK 
     program, but had not qualified for any additional months of 
     AFDC benefits/JOBS participation (see Qualifying for 
     Additional Months of Eligibility above) would be permitted to 
     enroll, or re-enroll, in the WORK program.
       Example: A WORK program participant finds a private sector 
     job and leaves the WORK program, but is laid off after just 
     one month, before qualifying for any months of AFDC benefits/
     JOBS participation (see above). This person would be eligible 
     for the WORK program.
       (f) States would be required, for persons in WORK 
     assignments, to conduct a WORK eligibility determination 
     (similar to an AFDC eligibility determination in all 
     respects, except that WORK wages would not be included in 
     countable income; see below) on a semiannual basis. If the 
     circumstances of an individual in a WORK assignment changed 
     (e.g., increase in earned income, marriage) such that the 
     family were no longer eligible for AFDC, the participant 
     would be permitted to remain in the WORK assignment until the 
     semiannual redetermination. An individual found to be 
     ineligible for the WORK program as of the redetermination, 
     however, would not be permitted to continue in that WORK 
     assignment. Persons found to the ineligible for the WORK 
     program would not have access to a WORK assignment, other 
     WORK program services or to the AFDC benefits provided to 
     persons in the WORK program who were not in WORK assignments.
    
    
       (g) WORK wages would not be included in countable income 
     for purposes of determining WORK eligibility. WORK wages 
     would be included in countable income for purposes of 
     calculating any supplemental AFDC benefit (see below).

         30. Allocation of WORK Assignments/Interim Activities

                             Specifications

       (a) The entity administering the WORK program in a locality 
     would be required to keep an updated tally of all WORK 
     registrants awaiting WORK assignments (as opposed to, for 
     example, WORK participants who had been referred to a 
     placement contractor). WORK positions would not be allocated 
     strictly on a first-come, first-served basis. An individual 
     whose sanction period had just ended would be placed in a new 
     WORK assignment as rapidly as possible. Among other WORK 
     participants, persons new to the WORK program would have 
     priority for WORK assignments over persons who had previously 
     held a WORK position.
       (b) States would have the option of requiring persons who 
     were awaiting WORK assignments to participate in other WORK 
     program activities (e.g., individual or group job search, 
     arranging for child care, self-initiated activities), and to 
     establish mechanisms for monitoring participation in such 
     activities. Persons in this waiting status could include WORK 
     participants who had completed an initial WORK assignment 
     without finding unsubsidized employment, participants whose 
     assignments ended prematurely for reasons other than the 
     participant's misconduct, and individuals awaiting a hearing 
     concerning misconduct. Individuals who failed to comply with 
     such participation requirements would be subject to sanction 
     as described below (see Sanctions).
       (c) States would be required to provide child care and 
     other supportive services as needed to participate in the 
     interim WORK program activities (described above).
       (d) The family of a person who was in the WORK program but 
     not in a WORK assignment (e.g., awaiting an assignment or in 
     an alternate WORK activity) would receive AFDC benefits, 
     provided that the individual were complying with any 
     applicable requirements (as described above).
       (e) Participants who left a WORK assignment for good cause 
     (see Sanctions below) would be placed in another WORK 
     assignment or enrolled in an interim or alternate WORK 
     program activity (e.g., job search until a WORK assignment 
     became available). Such persons and their families would be 
     eligible for AFDC benefits (as outlined above).
       (f) In localities in which the WORK program was 
     administered by an entity other than the IV-A agency, the IV-
     A agency would still be responsible for AFDC benefits to 
     families described in 10(d). States would not be permitted to 
     distinguish between such families and other AFDC recipients 
     with respect to the determination of eligibility and 
     calculation of benefits-States could not apply a stricter 
     standard or provide a lower level of benefits to persons on 
     the waiting list.

                           31. Hours of Work

                             Specifications

       (a) States would have the flexibility to determine the 
     number of hours for each WORK assignment. The number of hours 
     for a WORK assignment could vary depending on the nature of 
     the position. WORK assignments would have to be for at least 
     an average of 15 hours per week during a month and for no 
     more than an average of 40 hours per week during a month.
       Each State would be required, to the extent possible, to 
     set the hours and wage rates for WORK assignments such that 
     the wages from a WORK assignment represented at least 75 
     percent of the total of the wages and AFDC benefits received 
     by a WORK participant. This would be a State plan 
     requirement.
    
    

                      32. Earnings Supplementation

                             Specifications

       (a) In instances in which the family income of an 
     individual who had reached the time limit and was working in 
     either a WORK assignment or an unsubsidized job that met the 
     minimum work standard was not equal to the AFDC benefit for a 
     family of that size, the individual and his/her family would 
     receive an AFDC benefit sufficient to leave the family no 
     worse off than a family of the same size that was on AFDC and 
     had no earned income.
       (b) With respect to eligibility and benefit determination, 
     AFDC benefits for families described in (a) above would be 
     identical to AFDC benefits for persons who had not reached 
     the two-year time limit, except that the supplemental AFDC 
     benefit would not be adjusted up due to failure to work the 
     set number of hours for a WORK assignment.
       (c) The work expense disregard for the purpose of 
     calculating any supplemental AFDC benefit would be set at the 
     same level as the standard $120 work expense disregard. 
     States which opted for more generous earnings disregard 
     policies would be permitted but not required to apply these 
     policies to WORK wages.

     33. Treatment of Work Wages with Respect to Benefits and Taxes

                             Specifications

       (a) Except as otherwise provided in these specifications, 
     wages from WORK assignments would be treated as earned income 
     with respect to Federal and Federal-State assistance programs 
     other than AFDC (e.g., food stamps, SSI, Medicaid, public and 
     Section 8 housing).
       (b) WORK registrants and their families would be treated as 
     AFDC recipients with respect to Medicaid eligibility, i.e., 
     they would be categorically eligible for Medicaid (pending 
     implementation of the Health Security Act). Persons who left 
     the WORK program for unsubsidized employment would, as with 
     former AFDC recipients, be eligible for transitional 
     Medicaid.
       (c) Persons in WORK assignments would be subject to FICA 
     taxes. States would be required to ensure that the 
     corresponding employer contribution for OASDI and HI was 
     made, either by the employer or by the entity administering 
     the WORK program (or through another method).
       (d) Earnings from WORK positions would not be subject to 
     tax, would not be treated as earned income or included in 
     adjusted gross income for purposes of calculating the Earned 
     Income Tax Credit, and would not be treated as qualified 
     wages for purposes of the Targeted Jobs Tax Credit.
       (e) The employment of participants under the WORK program 
     would not be subject to the provisions of any Federal or 
     State unemployment compensation law.
       (f) To the extent that a State workers' compensation law 
     were applicable, workers' compensation in accordance with 
     such law would be available with respect to WORK 
     participants. To the extent that such law were not 
     applicable, WORK participants would be provided with medical 
     and accident protection for on-site injury at the same level 
     and to the same extent as that required under the relevant 
     State workers' compensation statute.
       (g) WORK program funds would not be available for 
     contributions to a retirement plan on behalf of any 
     participant.
       (h) With respect to the distribution of child support, WORK 
     participants would be treated exactly as individuals who had 
     reached the time limit and were working in unsubsidized jobs 
     meeting the minimum work standard. In instances in which the 
     WORK participant were receiving AFDC benefits in addition to 
     WORK wages, child support would be treated just as it would 
     for any other family receiving AFDC benefits (generally, a 
     $50 pass-through, with the IV-A agency retaining the 
     remainder to offset the cost of the supplemental AFDC 
     benefits).

                 34. Supportive Services/Worker Support

                             Specifications

       (a) States would be required to guarantee child care for 
     any person in a WORK assignment, as with JOBS program 
     participants under current law (Section 402(g)(1), Social 
     Security Act). Similarly, States would be mandated to provide 
     other work-related supportive services as needed for 
     participation in the WORK program (as with JOBS participants, 
     Section 402(g)(2), Social Security Act).
       (b) States would be permitted to make supportive services 
     available to WORK participants who were engaged in approved 
     education and training activities in addition to a WORK 
     assignment or other WORK program activity. In other words, a 
     State could, but would not be required to, provide child care 
     or other supportive services to enable a WORK participant to, 
     for example, also take a vocational education course at a 
     community college.

                    35. Wages and Working Conditions

                             Specifications

       (a) Participants employed under the WORK program would be 
     compensated for such employment in accordance with 
     appropriate law, but in no event at a rate less than the 
     highest of--
       (1) the Federal minimum wage specified in section 6(a)(1) 
     of the Fair Labor Standards Act of 1938;
       (2) the rate specified by the appropriate State or local 
     minimum wage law;
       (3) the rate paid to employees of the same employer 
     performing the same type of work and having similar 
     employment tenure with such employer.
       (b) Except as otherwise provided in these specifications, 
     participants employed under the WORK program would be 
     provided benefits, working conditions and rights at the same 
     level and to the same extent as other employees of the same 
     employer performing the same type of work and having similar 
     employment tenure with such employer.
       (c) Employers would be expected to provide WORK 
     participants health insurance coverage comparable to that 
     provided other employees of that same employer performing the 
     same type of work (with Medicaid serving as the secondary 
     payer). WORK program funds would be available to subsidize 
     the employer share of the cost of health insurance coverage. 
     Exceptions to this requirement could be made in cases in 
     which the provision of such coverage would be inordinately 
     expensive or otherwise onerous.
       NOTE: Under current law, a Medicaid recipient is required 
     (if cost effective) to enroll in a health plan offered by an 
     employer, and the State is required to use Medicaid funds to 
     cover the full employee share (e.g., premiums, deductibles, 
     copayments) of the cost of such health care coverage. Cost 
     effective is defined as resulting in a net reduction in 
     Medicaid expenditures.
       (d) Employers would not be required to make contributions 
     to retirement systems or plans on behalf of WORK 
     participants.
       (e) All participants would be entitled to a minimum number 
     of sick and personal leave days, to be established by the 
     Secretary. These would be provided by the employer, if they 
     were provided to other comparable employees (employers may 
     offer more days). The agency administering the WORK program 
     would be required to design a method of providing the minimum 
     number of sick and personal days to WORK participants whose 
     employers did not provide such a minimum number. A person in 
     a WORK assignment who became ill and exhausted her or his 
     sick leave, or whose child required extended care, would be 
     deferred from the WORK program if he or she met the deferral 
     criteria.
       (f) A parent of a child conceived while the parent was in 
     the WORK program (and/or on AFDC) would be deferred for a 
     twelve-week period following the birth of the child (or such 
     longer period as is consistent with the Family and Medical 
     Leave Act of 1993).
       (g) Health and safety standards established under State and 
     Federal law that are otherwise applicable to the working 
     conditions of employees would be equally applicable to the 
     working conditions of WORK participants.

                36. Sanctions/Penalties (JOBS and WORK)

                           Current law (JOBS)

       The sanction for the first instance of failure to 
     particiate in JOBS as required (or failure to accept a 
     private sector job or other occurrence of noncompliance) is 
     the loss of the non-compliant individual's share of the grant 
     until the failure to comply ceases. The same sanction is 
     imposed, but for a minimum of 3 months, for the second 
     failure to comply and for a minimum of 6 months, for all 
     subsequent instances of non-compliance. The State, however, 
     cannot sanction an individual for refusing to accept an offer 
     of employment if that employment would result in a net loss 
     of income for the family.
       For sanctioned AFDC-UP families, both parents' shares are 
     deducted from the family's grant, unless the second parent is 
     participating in the JOBS program.

                             Specifications

                             JOBS Sanctions

       (a) A State's conciliation policy (to resolve disputes 
     concerning JOBS participation only) could take one of the 
     following two forms:
       (i) A conciliation process that meets standards established 
     by the Secretary; or
       (ii) A process whereby a recipient is notified, prior to 
     the issuing of a sanction notice, that he or she in apparent 
     violation of a program requirement and that he or she has 10 
     days to contact the State agency to explain why he or she is 
     not out of compliance or to indicate intent to comply. Upon 
     contact from the recipient, the State agency would attempt to 
     resolve the issue and would have option of not imposing the 
     sanction.
       (b) Individuals sanctioned within the JOBS program would 
     still have access to other available services, including JOBS 
     activities, child care and Medicaid. Sanctioned months would 
     be counted against the 24-month time limit.
       (c) The sanction for refusing, without good cause, an offer 
     of an unsubsidized job meeting the minimum work standard 
     would be changed from the current penalty (removal of the 
     adult from the grant) to loss of the family's entire AFDC 
     benefit for 6 months or until the adult accepts a job offer, 
     whichever is shorter. The Secretary would promulgate 
     regulations concerning good cause for refusing a private 
     sector job offer (see Sanctions below).
       (d) Current law would be changed such that for sanctioned 
     AFDC-UP families, the second parent's share of the benefit 
     would not also be deducted from the grant, unless the second 
     parent were also required to participant in JOBS and were 
     similarly non-compliant.
       (e) States would be required to conduct an evaluation of 
     any individual who failed to cure a first sanction within 3 
     months or received a second sanction, in order to determine 
     why the parent is not complying with the program 
     requirements. Following such an evaluation, the State 
     would, if necessary, provide counseling or other 
     appropriate support services to help the recipient address 
     the causes of the non-compliance.

                  Ineligibility for a WORK Assignment

       (f) Persons may be declared ineligible for a WORK 
     assignment due to misconduct related to the program. 
     Misconduct would include any of the following, provided good 
     cause does not exist:
       i. Failure to accept an offer of unsubsidized employment;
       ii. Failure to accept a WORK assignment;
       iii. Quitting a WORK assignment;
       iv. Dismissal from a WORK assignment;
       v. Failure to engage in job search or other required WORK 
     activity (see Allocation of WORK Assignments/Interim 
     Activities above).
       (g) The Secretary would establish regulations defining good 
     cause for each of the following:
       i. Refusal to Accept an Offer of Unsubsidized Employment or 
     a WORK Assignment or to Participate in Other WORK Program 
     Activity.
       ii. Quitting a WORK Assignment or Unsubsidized Job. These 
     regulations would include the provision that an employee must 
     notify the WORK agency upon quitting a WORK assignment.
       iii. Dismissal from a WORK Assignment. The regulations 
     would allow a State, subject to the approval of the 
     Secretary, to apply in such instances the definition of 
     misconduct utilized in its unemployment insurance program. (A 
     IV-A agency might be allowed to contract with the State 
     Unemployment Insurance hearing system to adjudicate these 
     cases.)
       (h) A WORK participant would be notified of the agency's 
     intent to impose a penalty and would have a right to request 
     a hearing prior to the imposition of the penalty. The 
     Secretary would establish regulations for the conduct of such 
     hearings, which would include setting time frames for 
     reaching decisions (e.g., 30 days from the date of request 
     for hearing). A State would be permitted to follow the same 
     procedures it utilizes in hearings regarding claims for 
     unemployment compensation.
       (i) Recipients awaiting a hearing for alleged misconduct 
     may be required to participate in interim WORK program 
     activities. Refusal, pending the hearing, to participate in 
     such WORK program activities on the same grounds (e.g., 
     bedridden due to illness) claimed as cause for the original 
     alleged misconduct would not constitute a second occurrence 
     of potential misconduct.
       (j) Penalties imposed would be as follows:
       i. Refusal to Accept an Offer of Unsubsidized Employment. A 
     WORK participant who without good cause turned down an offer 
     of an unsubsidized job that met the minimum work standard 
     would be ineligible for a WORK assignment, and the family 
     ineligible for AFDC benefits, for a period of 6 months 
     (consistent with the JOBS sanction for refusing a job offer). 
     Such an individual would be eligible for services, such as 
     job search assistance, during this period.
       ii. Quitting, Dismissal from or Refusal to Accept a WORK 
     Assignment without Good Cause. A person who quit a WORK 
     assignment without good cause, who was fired from a WORK 
     assignment for misconduct related to the job, or who refused 
     to take an assignment without good cause would be subject to 
     the penalties described below.
       For a first occurrence: The family would receive 50% of the 
     AFDC grant that would otherwise be provided (i.e., if the 
     individual were not sanctioned and were awaiting a WORK 
     assignment) for one month or until the individual accepts a 
     WORK assignment, whichever is sooner.
       For a second occurrence: Fifty percent (50%) reduction in 
     the family's grant for 3 months. The individual would not be 
     eligible for a WORK assignment during this period--this 
     penalty would not be curable upon acceptance of a WORK 
     assignment.
       For a third occurrence: Elimination of the family's grant 
     for a period of 3 months. As with a second occurrence, the 
     individual would not be eligible for a WORK assignment during 
     this period.
       For a fourth and subsequent occurrence: Same as the penalty 
     for a third occurrence, except that the duration would be 6 
     months.
       The State would be required to make job search assistance 
     available to such penalized persons (any occurrence, first or 
     subsequent) if requested.
       iii. Refusal to Participate in Job Search or Other Required 
     WORK Program Activity. An individual who refused to 
     participate in job search (e.g., following a WORK assignment) 
     or other required WORK program activity would be subject to 
     the same penalty as persons who quit or were fired from WORK 
     assignments, with each refusal to be considered one 
     occurrence. If such a refusal constituted the first 
     occurrence, the penalty, as above, would be curable upon 
     engaging in the required activity.
       iv. Quitting an Unsubsidized Job without Good Cause. 
     Individuals who without good cause voluntarily quit an 
     unsubsidized job that met the minimum work standard would not 
     be eligible to register for the WORK program for a period of 
     3 months following the quit.
       (k) All penalties (any occurrence, first or subsequent) 
     would be curable upon acceptance of an unsubsidized job 
     meeting the minimum work standard. In other words, a 
     sanctioned individual who took an unsubsidized job meeting 
     the minimum work standard would be treated exactly the same 
     as an unsanctioned individual with respect to calculating any 
     supplemental AFDC grant. If the family's income, net of work 
     expenses, were lower than the AFDC grant for a family of that 
     size, the family would receive a supplemental AFDC benefit 
     sufficient to make up the difference (see Earnings 
     Supplementation above). Such an individual would 
     still not, however, be eligible for a WORK assignment during 
     the penalty period (e.g., six months for refusal to take an 
     unsubsidized job, three months for a second occurrence of 
     another type of misconduct).
       (l) Food stamp and housing law and regulations would be 
     amended as necessary to ensure that neither food stamps nor 
     housing assistance would rise in response to a JOBS or WORK 
     penalty.
       (m) A person ineligible for the WORK program, and the 
     family, provided they were otherwise qualified, would still 
     be eligible for other assistance programs, including food 
     stamps, Medicaid and housing assistance.
       (n) As described under AFDC-UP Families and the Time Limit 
     above, if one of the two parents in AFDC-UP family is 
     sanctioned under the WORK program or under JOBS for failure 
     to accept an unsubsidized job, the sanctions described in 
     this section apply, regardless of the status of the other 
     parent.
       (o) The State would be required, upon imposition of a 
     second WORK sanction, to conduct a thorough evaluation of the 
     participant and the family to ascertain why the individual is 
     not in compliance and to determine the appropriate services, 
     if any, to address the presenting issues. The evaluation 
     would include, when appropriate, a Child Protective Services 
     abuse and neglect investigation. The WORK administering 
     agency could, as a result of the evaluation, decide, for 
     example, that the parent should be deferred from WORK 
     participation or that he or she should receive intensive 
     counseling.

                             37. Job Search

                             Specifications

       (a) WORK program participants would generally be required 
     to engage in job search at the conclusion of a WORK 
     assignment or while otherwise awaiting a WORK assignment or 
     enrollment to a WORK program activity serving as an 
     alternative to a WORK assignment (see Allocation of WORK 
     Assignments/Interim Activities). The number of hours per week 
     (up to a maximum of 35) and the duration of periods of 
     required job search would be set by the State, consistent 
     with regulations to be promulgated by the Secretary.
       (b) The State could also require WORK participants to 
     engage in job search while in a WORK assignment, provided 
     that the combined hours of work and job search did not exceed 
     an average of 40 per week and the requirement was consistent 
     with regulations to be promulgated by the Secretary. The 
     number of hours for job search would be the expected time to 
     fulfill the particular job search requirement, i.e., if a 
     WORK participant were expected to make 5 contacts per week, 
     the number of hours of job search would be the estimated 
     number of hours needed to make the contacts.

           38. Assessing Participation in WORK Beyond 2 Years

                             Specifications

       (a) At the end of the two consecutive WORK assignments, 
     participants who had not found unsubsidized work would be 
     assessed on an individual basis, with three possible results:
       1) Participants determined to be unable to work or to need 
     additional training would be deferred from WORK or re-
     assigned to the JOBS program.
       (2) Those determined to be unable to find work in the 
     private sector either because there were no jobs available to 
     match their skills or because they were incapable of working 
     outside a sheltered environment would be allowed to remain in 
     the WORK program for another assignment. Similar assessments 
     would be conducted following each subsequent assignment.
       (3) At State option, those who were employable and who 
     lived in an area where there were jobs available to match 
     their skills could be required to engage in intensive job 
     search supervised by a job developer, who would be able to 
     require participants to apply for appropriate job openings to 
     determine if they were not making good faith efforts to find 
     jobs. Failure to apply for appropriate job openings, 
     noncooperation with the job developer or employer, or refusal 
     to accept a private sector job opening without good cause 
     would result in ineligibility for either WORK or AFDC 
     benefits for 6 months. After 6 months of ineligibility, the 
     person would immediately be given another individual work 
     assessment and could again be denied eligibility for 
     noncooperation or refusal to accept a job.
       (b) The Departments of HHS and Labor will undertake a 
     comprehensive national study at the end of the second year 
     following implementation of the WORK program to measure the 
     program's success in moving people into unsubsidized jobs and 
     to evaluate the skill levels and barriers to work of the 
     persons who have spent two years in the WORK program.

   39. Secretary's Fund for States That Spend Beyond Their JOBS/WORK 
                               Allotments

                                 Vision

       Establish a fund that the Secretary would use to provide 
     additional funding for States that spend beyond their JOBS/
     WORK allotments and re-allotments. A sum of $300 million 
     would be put into the fund initially. Thereafter, any unspent 
     JOBS/WORK and At-Risk child care monies would contribute to 
     the Fund.

                               Rationale

       The Secretary's Fund gives the Department the ability to 
     allocate overall JOBS/WORK program funds prudently and, at 
     the same time, provide additional support to States that are 
     aggressively implementing their programs and require more 
     than what they receive under their standard allotment and re-
     allotments. Furthermore, under this program, States are given 
     some lead time to they can anticipate the additional funding 
     in their planning processes.

                             Specifications

       (a) A fund of $300 million would be established for FY 96 
     for use by the Secretary to provide funding to States that 
     needed additional dollars for JOBS (and subsequently JOBS or 
     WORK) beyond what they were provided under the JOBS and WORK 
     funding allocation formulas and subsequent reallocation 
     procedures (see JOBS Funding and WORK Funding above).
       (b) Twice each year (March 1 and September 1), States that 
     obligated 95% of their JOBS and WORK allotments for the 
     previous year and were expected to obligate their full JOBS 
     and WORK allotments for the current year would qualify for 
     additional funding from the Secretary's Fund for the next 
     fiscal year.
       (c) Thirty days later, States would be notified about final 
     decisions on funding from the Secretary's Fund.
       [Regulations would specify how the monies would be 
     allocated among qualified States. If the total amount 
     requested from the Fund were greater than what was available 
     in the fund, monies would be allocated based on a procedure 
     to be developed by the Secretary.]
       (d) Monies from the fund would be treated just as the basic 
     JOBS/WORK allotment and subject to the same Federal matching 
     rates each year as were in effect for standard JOBS/WORK 
     funding. The same between-program reallocation rules as those 
     for the base JOBS/WORK funding would also be in effect. That 
     is, States could move up to 10% of the combined JOBS and WORK 
     monies from the Fund from one program to the other.
       (e) The monies available in the Fund in FY 97 would come 
     from two sources:
       i. The original authorization level of $300 million, and
       ii. Unspent State JOBS/WORK and At-Risk Child Care monies 
     that had not been reallocated to the States (see JOBS Funding 
     and WORK Funding above).
       (f) Beginning in fiscal year 1998, the Secretary's Fund 
     would be capped at $400 million (after all requests had been 
     satisfied). Excess monies would revert to the Treasury.
       (g) Beginning in FY 98, States could request monies for 
     both JOBS and WORK. The monies from the Secretary's Fund that 
     States added to their standard WORK program allocation would 
     be included for purposes of determining the minimum number of 
     WORK slots States must create.

   Enhancing Responsibility and Opportunity for Non-custodial Parents

                                 Vision

       We need to make sure that all parents live up to their 
     responsibilities. When people don't pay child support, their 
     children suffer. Just as we expect more of mothers, we cannot 
     let fathers just walk away. A number of programs show 
     considerable promise in helping non-custodial parents to 
     reconnect with their children and fulfill their 
     responsibility to support them. Some programs help non-
     custodial parents do more by seeing that they get the skills 
     they need to hold down a job. Other programs give non-
     custodial parents the opportunity to meet their child support 
     obligations through work.
       As there is not a long track record of research and 
     evaluation on programs for non-custodial parents, it is 
     envisioned that new programs should be modest and flexible, 
     growing only as evaluation findings begin to identify the 
     most effective strategies.

          1. Training and Employment for Non-custodial Parents

                              Current Law

       Section 482 of the Social Security Act (Title IV-F) permits 
     the Secretary to fund demonstrations to provide services to 
     non-custodial parents. The Secretary is limited as to the 
     number of projects that can be funded under this provision. 
     Evaluations are required. This provision, along with section 
     1115 of the Social Security Act, provide the authority for 
     the Parents Fair Share Demonstrations currently underway.

                                 Vision

       States would be provided with the option of developing JOBS 
     and/or work programs for the noncustodial parents of children 
     who were receiving AFDC or have child support arrerages owed 
     to the State from prior periods of AFDC receipt. States would 
     be given the flexibility to develop different models of non-
     custodial parent programs which could best address the needs 
     of children and parents in their state. These non-custodial 
     parent programs would coordinate with other relevant efforts 
     such as the public housing authorities' Resident Initiatives 
     Programs, which make job and services available to non-
     custodial parents of children living in public housing. 
     Evaluations would be required as appropriate for the options 
     developed by the States.

                               Rationale

       There is evidence that one of the primary reasons for non-
     support by some non-custodial parents is unemployment and 
     underemployment. In a recent GAO report evidence was 
     presented that about 29 percent of non-custodial fathers 
     under age 30, many of whom were non-marital fathers, had 
     income below the poverty level for one or no income at all. 
     It will be difficult for these fathers to contribute much to 
     the financial support of their children without additional 
     basic education, work-readiness and job training which would 
     enhance their earning capacity and job security.

                             Specifications

       (a) A State would be able to spend up to 10 percent of its 
     JOBS and WORK funding (allotment from the WORK capped 
     entitlement) for training, work readiness and work 
     opportunities for non-custodial parents. The State would have 
     complete flexibility as to which of these funding streams 
     would be tapped.
       i. Parenting and peer support services offered in 
     conjunction with other employment-related services would be 
     eligible for FFP.
       ii. A State could structure the service delivery in a 
     variety of ways. For example, a State could provide services 
     to non-custodial parents through the JOBS program and a non-
     custodial parent work program, or through a single combined 
     program.
       (b) A non-custodial parent would be eligible to participate 
     (1) if his or her child were receiving AFDC or the custodial 
     parent were in the WORK program at the time of referral or 
     (2) if he or she were unemployed and had outstanding AFDC 
     child support arrears. Paternity, if not already established, 
     would have to be voluntarily acknowledged or otherwise 
     established prior to participation in the program. In 
     instances in which a child support award had not yet been 
     established, the State could require, as a additional 
     condition of eligibility, that the non-custodial parent 
     cooperate in the establishment process. Arrears would not 
     have to have accrued in order for non-custodial parents to be 
     eligible to participate. For those parents with no 
     identifiable income, participation could commence as part of 
     the establishment or enforcement process.
       (c) The state would be required to allow a non-custodial 
     parent to complete the program activity or activities in 
     which he was currently enrolled even if the children became 
     ineligible for AFDC. However, if the non-custodial parent 
     voluntarily left the program, were placed in a job, or were 
     terminated from the program, he would have to be redetermined 
     as eligible under the criteria in (b) above.
       (d) States would not be required to provide all the same 
     JOBS or WORK services to custodial and non-custodial parents, 
     although they could choose to do so. Participation in the 
     JOBS program would not be a prerequisite for participation in 
     a non-custodial parent work program. The non-custodial 
     parent's participation would not be linked to self-
     sufficiency requirements or to JOBS/WORK participation by the 
     custodial parent.
       (e) Payment of stipends for work would be required. Payment 
     of training stipends would be allowed. All stipends would be 
     eligible for FFP.
       i. Stipends would have to be garnished for payment of 
     current support.
       ii. At State option, the (current) child support obligation 
     could be suspended or reduced to the minimum while the non-
     custodial parent was participating in program activities 
     which did not provide a stipend or wages sufficient to pay 
     the amount of the current order.
       iii. Participation in program activities could be credited 
     against AFDC child support arrears owed the State.
       iv. State-wideness requirements would not apply.

 Indian tribes and Alaska Native organizations; JOBS, time limits WORK 
                             and child care

       Provisions in this section apply specifically to Indian 
     tribes and Alaska Native organizations.

                          JOBS and time limits

                   1. New Tribal JOBS Funding Formula

                              Current law

       Under current law, funding for Indian tribes who operate a 
     JOBS program is based on the number of adult Tribal members 
     who receive AFDC who reside within the tribe's designated 
     service area. Funding for Alaska Native organizations is 
     based on the number of adult Alaska Natives who receive AFDC 
     who reside within the boundaries of the region the 
     organization represents. Indians living on the same 
     reservation are currently subject to either the Tribal JOBS 
     program or the State JOBS program depending on Tribal 
     affiliation. Indians living in Alaska who are not Alaska 
     Natives are subject to the State's JOBS program.
       Tribal JOBS grantees currently receive funding based on a 
     count of just under 31,000 adult Tribal members who receive 
     AFDC. It is estimated that the adult AFDC population for all 
     reservations (including those where a Tribal JOBS program 
     does not exist) is 58,000.

                                 Vision

       All Native Americans living within the designated service 
     area of an Indian tribe or Alaska Native organization would 
     be subject to the tribal JOBS program regardless of tribal 
     affiliation, if the tribe elects to run a JOBS program.

                               Rationale

       Programs operated by the Department of Labor and the Bureau 
     of Indian Affairs for Indians do not use Tribal affiliation 
     to establish program funding or eligibility.

                             Specifications

       (a) All Indians, living within the designated service area 
     of an Indian tribe or within the boundaries of the region 
     served by an Alaska Native organization which is a JOBS 
     grantee, would be included in determining the amount of the 
     grantee's JOBS funds.
       (b) An Indian is one who meets the definition of Indian as 
     given in section 4(d) of the Indian Self-Determination and 
     Education Assistance Act.

                     2. New JOBS Application Period

                              Current Law

       Under current law, Indian tribes and Alaska Native 
     organizations had until April 13, 1989 to apply and until 
     October 1, 1990 to begin operating a JOBS program. Indian 
     tribes who did not meet these deadlines are prohibited from 
     submitting applications to operate JOBS programs.

                                 Vision

       Indian tribes who did not meet the application deadline for 
     JOBS would be given additional opportunity to do so.

                               Rationale

       The window in which Indian tribes had to apply for JOBS was 
     very limited. Other Federally funded formula grant programs 
     available to Indian tribes do not have similar restrictions.

                             Specifications

       (a) All federally recognized Indian tribes not operating a 
     JOBS program may submit applications and plans to do so.
       (b) There would be no new application deadline.
       (c) New applications/plans would have to be submitted by 
     July 1 of each year, with the effective date of approved 
     plans to be October 1.
       (d) An Indian tribe or Alaska Native organization who 
     terminated or has its JOBS program terminates would be 
     eligible to reapply for JOBS after a five-year period. Such 
     Indian tribe or Alaska Native organization can reapply by 
     July 1 of the fifth year by submitting an application and 
     plan, with the effective date of an approved plan to be 
     October. 1. (This is to prevent a Tribal grantee from 
     frequently entering and leaving the program.)
       (e) The current restriction that an Indian tribe must have 
     a reservation to be eligible to operate a JOBS program would 
     be retained.

             3. Funding Set-Aside for Tribal JOBS Grantees

                              Current Law

       Currently, funding for Indian tribes who operate a JOBS 
     program is based on the number of adult Tribal members who 
     receive AFDC who reside within the tribe's designated service 
     area. Funding for Alaska Native organizations is based on the 
     number of adult Alaska Natives who receive AFDC who reside 
     within the boundaries of the region the organization 
     represents. Yearly, Tribal grantees (includes Alaska Native 
     organizations) and the State in which they are located must 
     reach an agreement on the number of Tribal members who 
     receive AFDC who reside with the grantee's designated service 
     area. Any amount due a grantee by this agreement is deducted 
     from the JOBS funding allocated to the State.
       Although in some cases it does not cause problems, States 
     and Indian tribes/Alaska Native organizations have found it 
     difficult to come to agreement on the number of adult Tribal 
     members who receive AFDC.

                                 Vision

       A set-aside of 2% out of total JOBS funds would be 
     established to distribute to Indian tribes and Alaska Native 
     organizations to provide JOBS.
       The proposed percentage set-aside for Tribal JOBS grantees 
     was determined based on two assumptions. First, that Indian 
     tribes who do not currently operate a JOBS program would be 
     given the opportunity to do so. Second, that all Indians, not 
     just Tribal members, would determine Tribal funding. Using 
     these assumptions, it is estimated that almost 2% (58,000 
     individuals) of the eligible adult AFDC population are 
     Indians living on or near reservations or in areas served by 
     Alaska Native organizations.

                               Rationale

       Additional funding for the tribal JOBS grantees would make 
     up for the lack of matching funds. States spent approximately 
     $1,395 per JOBS participant from Federal and State matching 
     funds in FY 93. Indian tribes spent approximately $935 per 
     JOBS participant, all from federal funds as tribes are not 
     required to provide matching funds.
       Establishing a set-aside in lieu of the current funding 
     formula would benefit both the Indian tribes, Alaska Native 
     organizations and the States. States would not have any 
     vested interest in the number of adult AFDC recipients who 
     are Indians residing within a Tribal grantee's designated 
     service area as the numbers would not have an impact on the 
     States' JOBS allocations.
       Funding for Indian tribes in the Child Care and Development 
     Block Grant (CCDBG) program is a set-aside of the total 
     allocated CCDBG funds.

                             Specifications

       (a) Allocate a set aside of 2% of the total JOBS allocation 
     to Indian tribes and Alaska Native organizations.
       (b) Each grantee's share of the set aside would be 
     determined by its percentage share of the entire adult Indian 
     AFDC population which is living on or near reservations or 
     within the boundaries of the region represented by an Alaska 
     Native Organization.
       (c) Provide for a periodic review of the percentage set-
     aside to ensure that it is based on an accurate percentage of 
     adult AFDC recipients who are Indians living in the 
     designated service area of a grantee. Provide for an 
     automatic adjustment of the set-aside based on the results of 
     this review.
       (d) The remainder of the funding issued to an Indian tribe 
     or Alaska Native organization who wishes to terminate or who 
     have their programs terminated after the start of a fiscal 
     year would revert to the State in which the Indian tribe or 
     Alaska Native organization is located. This is because the 
     State would then be responsible for serving the AFDC 
     recipients who had been subject to the Tribal program.
       (e) An Indian tribe or Alaska Native organization would be 
     permitted to reallocate up to 10% of its JOBS allotment to 
     its WORK program, and vise versa.

                         4. Carry-over of Funds

                              Current law

       States, Indian tribes and Alaska Native organizations are 
     currently prohibited from carrying over federal funds awarded 
     in one fiscal year to the next fiscal year. All federal funds 
     received in a fiscal year must be obligated by the end of the 
     same fiscal year. Indian tribes and Alaska Native 
     organizations have sometimes had to shut down their JOBS 
     programs because new fiscal year funding is often not 
     received until November. Unlike States which are in a 
     position to use their own resources for operating JOBS 
     pending the issuance of grant awards, Indian tribes and 
     Alaska Native organizations do not have this luxury. States 
     also have the advantage of the Cash Management Improvement 
     Act (CMIA) which does not apply to Indian tribes and Alaska 
     Native organizations. CMIA says that the Federal government 
     must pay interest to States if States are forced to use State 
     funds for something for which Federal funds are normally 
     used. Thus, for example, States were issued a portion of 
     their fiscal year 1994 JOBS funds a month before Indian 
     tribes and Alaska Native organizations were issued any funds.
       Without timely grant awards and without forward funding, 
     Indian tribes and Alaska Native organizations either had to 
     cease the program or use other limited tribal funds in the 
     interim.

                                 Vision

       The JOBS programs operated by Indian tribes and Alaska 
     Native organizations would not have to cease operation at the 
     beginning of a fiscal year due to the non-timely issuance of 
     new grant awards.

                               Rationale

       The Job Training Partnership Act program under the 
     Department of Labor has authority for forward funding. JTPA 
     grantees are permitted to carry over a maximum of 20% of 
     funds from one program year to the next.

                             Specifications

       (a) Indian tribes and Alaska Native organizations who 
     operate JOBS programs would be permitted to carry over no 
     more than 20% of the funds awarded in one fiscal year into 
     the next fiscal year.

                 5. JOBS Funds for Economic Development

                              Current law

       Under current law, JOBS funds cannot be used to build/
     improve infrastructure which is so badly needed by Indian 
     tribes and in areas served by Alaska Native organizations. 
     JOBS funds cannot be combined with economic development funds 
     to write proposals, make capital expenditures, etc. Indian 
     tribes and Alaska Native organizations can apply for grants 
     from ACF's Administration for Native Americans that if 
     received can be used to support these activities. What Indian 
     tribes and Alaska Native organizations can and what some do 
     is to use JOBS funds to train individuals to work in economic 
     development enterprises.

                                 Vision

       Allowing tribal JOBS grantees to denote a portion of their 
     JOBS funds to economic development would give them additional 
     opportunity to help their clients move towards self-
     sufficiency.

                               Rationale

       Without the leveraging of Federal funds for economic 
     development, there would be fewer employment opportunities 
     for Native Americans.

                             Specifications

       (a) Upon approval by the Secretary, Indian tribes and 
     Alaska Native organizations would be permitted to use no more 
     than $5,000 or 10%, whichever is less, of their JOBS funds on 
     economic development related projects.
       (b) All economic development related projects that use JOBS 
     funds must involve the training of JOBS participants for 
     related jobs.

                              6. Deferrals

       All provisions in the discussion on deferrals above apply 
     except for the following.

                             Specifications

       (a) Indian tribes and Alaska Native organizatons who 
     operate a JOBS program would be responsible for the 
     determination as to whether an AFDC recipient is to be 
     deferred.

                             7. Extensions

                                 Vision

       Tribal JOBS grantees would be responsible for granting 
     extensions to time limited AFDC benefits and would not 
     necessarily be held to the same limitation on the granting of 
     extensions as would be the States.

                               Rationale

       Many reservations and areas served by Alaska Native 
     organizations suffer from lower literacy rates and higher 
     unemployment than most areas of the country.

                             Specifications

       (a) Indian tribes and Alaska Native organizations who 
     operate a JOBS program would be responsible for the 
     determination as to whether extensions to time limited AFDC 
     benefits should be granted.

                                  WORK

 1. Indian Tribes and Alaska Native Organizations to Operate Their Own 
                             WORK Programs

                              Current Law

       Refer to this section under the general discussion of the 
     WORK program.

                                 Vision

       Tribal AFDC recipients would be subject to the requirement 
     to participate in JOBS just as they are now. They would also 
     be subject to time limits.
       Indian tribes and Alaska Native organizations would have 
     the option to run JOBS. An Indian tribe or Alaska Native 
     organization that operates JOBS would be required to operate 
     a WORK program also. Indian tribes and Alaska Native 
     organizations are responsible for determinations of JOBS-Prep 
     status and extensions; however, there may be additional 
     extensions because of unique tribal circumstances. Tribal 
     members subject to tribal JOBS/WORK programs are excluded 
     from any State program measures.
       The Tribal WORK program would have to look different from 
     the State WORK program because of the proposed funding 
     formula. The portion of the WORK funding based on a diversion 
     of AFDC grants would be difficult and complicated to 
     accomplish because of the State's continued responsibility of 
     AFDC funds and the need for extremely close coordination 
     between the State and the Indian tribe or Alaska Native 
     organization. Therefore, it is envisioned that the tribal 
     WORK program would more closely resemble a Community Work 
     Experience Program (CWEP) than a work-for-wages model (i.e., 
     a tribal member would continue to receive cash assistance, 
     but would be required to participate in a WORK activity). 
     Indian tribes and Alaska Native organizations would be able 
     to use WORK allocation to create job opportunities.

                               Rationale

       Since the Indian tribes and Alaska Native organizations 
     would have to be involved in the development of WORK 
     assignments on the reservation, it follows that the Indian 
     tribes and Alaska Native organizations be given the 
     administration of the WORK program. Keeping the WORK program 
     at the tribal level would allow for a continuum of activity. 
     It also advances tribal self-determination and provides for a 
     more holistic framework for addressing the needs of Native 
     Americans.

                             Specifications

       (a) Indian tribes and Alaska Native organizations which 
     operate a JOBS program would apply to administer a WORK 
     program. Any application would have to be approved by the 
     Secretary.
       (b) Indian tribes and Alaska Native organizations who do 
     not want to operate a WORK program could not continue to 
     operate a JOBS program.
       (c) Funding for the tribal WORK program would be a 
     percentage set-aside of the total WORK allocation.
       (d) An Indian tribe or Alaska Native organization would be 
     permitted to reallocate up to 10 percent of its JOBS 
     allotment to its WORK program, and vice versa.
       (e) An Indian tribe or Alaska Native organization would not 
     be required to match Federal funds.
       (f) The WORK program set forth in the application of an 
     Indian tribe or Alaska Native organization under this part 
     need not meet any requirement of the State WORK program that 
     the Secretary determines is inappropriate with respect to a 
     tribal WORK program.
       (g) The Secretary shall develop appropriate data collection 
     requirements.
       (h) Appropriate performance measures would be developed.

                               Child Care

1. Allocate JOBS and Transitional Child Care Funds to Tribes and Alaska 
                          Native Organizations

                              Current Law

       Under current law, States are the only entities eligible to 
     administer title IV-A child care funds. Participants in 
     Tribal JOBS programs who need child care have to be referred 
     to the State IV-A agencies in order to receive needed child 
     care.
       Although data is not collected on the extent that title IV-
     A child care is used by Tribal JOBS participants, anecdotal 
     information from Tribal JOBS directors seems to indicate that 
     Tribal JOBS participants do not always get their child care 
     needs taken care of through the State. Potential child care 
     providers on reservations are often intimidated or unable to 
     provide necessary information to the State in order to meet 
     State requirements. Indian tribes and Alaska Native 
     organizations that receive Child Care and Development Block 
     Grant (CCDBG) funds sometimes use these funds to pay the 
     costs of the child care to avoid dealing with the State. By 
     using CCDBG funds to pay for the child care needed by Tribal 
     JOBS participants, the Indian tribe or Alaska Native 
     organization cannot use the funds to serve the child care 
     needs of others who qualify.

                                 Vision

       Indian tribes and Alaska Native organizations would not 
     have to rely the State IV-A agencies to guarantee the child 
     care needed by Tribal JOBS participants and transitional 
     child care. Funding the Tribal JOBS grantees to guarantee 
     child care makes it easier for these entities to ensure that 
     Tribal child care needs are met. Tribes would be provided 
     funding for child care up to an amount equal to their JOBS/
     WORK allotment from title IV-A funds to address JOBS and 
     transitional child care needs.

                               Rationale

       Indian tribes and Alaska Native organizations who currently 
     rely on the use of CCDBG to provide child care that is the 
     responsibility of the State IV-A agency would be able to use 
     CCDBG funds for their intended purpose once JOBS and 
     transitional child care funds are available to them. The 
     amount of child care funding available to the Indian tribes 
     and Alaska Native organizations from title IV-A funds for 
     JOBS and transitional child care and CCDBG should be 
     sufficient to meet the child care needs without the 
     additional funding provided by At-Risk Child Care. Therefore, 
     it is not being recommended to fund the Indian tribes and 
     Alaska Native organizations directly for the At-Risk 
     Child Care program at this time. However, we are adding a 
     provision to give the Secretary authority to determine 
     that there is a need in the future and to allocate funds 
     for At-risk Child Care to tribal programs at that time.

                             Specifications

       (a) Upon an approved application, all Indian tribes and 
     Alaska Native organizations that operate a JOBS/WORK program 
     would be allowed to administer title IV-A JOBS and 
     transitional child care funds.
       (b) Tribes that elect to administer title IV-A JOBS and 
     transitional child care funds would receive reimbursement 
     from title IV-A funds for the actual amount spent on child 
     care up to an amount equal to their combined JOBS and WORK 
     allotment.
       (c) Indian tribes and Alaska Native organizations would not 
     be required to match Federal funds.
       (d) The JOBS and transitional child care program set forth 
     in the application of an Indian tribe or Alaska Native 
     organization under this part need not meet any requirement of 
     the JOBS and transitional child care programs that the 
     Secretary determines is inappropriate with respect to such 
     tribal JOBS and transitional child care program. The CCDBG 
     health and safety standards, however, could not be waived.
       (e) The Secretary shall develop appropriate data collection 
     requirements.
       (f) Appropriate performance measures would be developed.

                             Miscellaneous

        1. Technical Assistance, Demonstrations and Evaluations

                              Current law

       The three year contract awarded in 1990 to provide 
     technical assistance to Tribal JOBS grantees expired last 
     year. Tribal JOBS grantees are not eligible to operate 
     demonstration projects. And evaluations of the Tribal JOBS 
     programs have not been done.

                                 Vision

       To gain more thorough information about what makes a 
     successful Tribal or Alaska Native JOBS program, evaluation 
     is needed just as it is for State programs.

                               Rationale

       Welfare reform will be a major force in Indian country. 
     Whatever form welfare reform takes, Indian tribes and Alaska 
     Native organizations will need ongoing technical assistance 
     to understand and implement necessary changes to their JOBS 
     programs.
       Most Tribal (including areas served by Alaska Native 
     organizations) environments are sufficiently different from 
     State environments to warrant the involvement of a certain 
     number of Indian tribes or Alaska Native organizations in 
     demonstration projects. A demonstration project may further 
     allow an Indian tribe or Alaska Native organization to design 
     and implement a program that tests innovative approaches that 
     suits the unique circumstances of that Indian tribe, Alaska 
     Native organization or of Indian country.

                             Specifications

       (a) Indian tribes and Alaska Native organizations would be 
     eligible to submit applications for demonstration projects 
     related to welfare reform, such as combining JOBS and WORK 
     into a block grant.
       (b) Any contract awarded for the provision of technical 
     assistance following the passage of welfare reform 
     legislation must specify that Indian tribes and Alaska Native 
     organizations receive a fair share of the technical 
     assistance.

                       Provisions for Territories

                                 Vision

       As under current law, Territories would be required to 
     operate a JOBS program. However, Territories would have the 
     option to run a time-limited system or not. Should a 
     Territory choose to implement a time-limited system, 
     operation of a WORK program would be mandatory. The funding 
     for operation of the WORK program would be available in an 
     equivalent manner as for all States. Provisions which would 
     remove At-Risk child care from the section 1108 cap (see 
     Improving Government Assistance section) would enable 
     Territories to meet their expanded child care needs. 
     Additionally, the Secretary would have flexibility to 
     accommodate special circumstances faced by Territories.

                             Specifications

                        1. JOBS and Time Limits

       (a) Funding level for Jobs would be at the enhanced match 
     rate (described in JOBS Funding above). The JOBS allocation 
     methodology would be the same as under current law.
       (b) Time-limits would be an option. Territories can elect 
     to implement a time-limited system but are not required to. 
     If a Territory chooses to operate a time-limited system, it 
     must specify a phase-in strategy in the plan, subject to 
     Secretarial approval. Territories would also be required to 
     specify a time-frame for implementing a time-limited system 
     Territory-wide, subject to Secretarial approval.
       (c) Territories would be subject to all participation rates 
     and other performance standards if applicable. However, the 
     Secretary shall have the authority to modify these and other 
     requirements to accommodate special circumstances.

                          2. WORK Requirements

       (a) If Territory elects to operate a time-limited system, a 
     WORK program is mandatory. Territories would be required to 
     specify an implementation plan, subject to Secretarial 
     approval.
       (b) WORK funding would be the same as JOBS--75 percent 
     match for administrative costs from the national capped 
     entitlement. The WORK allotment would be based on the same 
     methodology as for other States: based on number of JOBS 
     participants subject to time-limits and number of WORK 
     registrants. WORK wages funding would come from Sec. 1108 
     capped monies (i.e., the AFDC benefits these recipients would 
     have gotten anyway under a non-time-limited system).
       (c) The Secretary shall have the authority to allow or 
     require Territories to opt-out of a time-limited and WORK 
     system. Territories can opt-in again after at least 5 years.


                      waiver provisions [title ii]

                              Current law

       Section 1115 of the Social Security Act provides the 
     Secretary authority to waive compliance with specified 
     requirements of the Act that are judged likely to promote the 
     objectives of the AFDC, child support, or Medicaid program. 
     Demonstrations under waiver authority must be cost neutral to 
     the federal government and must be rigorously evaluated.

                                 Vision

       The two-year time limit is part of the overall effort to 
     shift the focus of the welfare system from disbursing funds 
     to promoting self-sufficiency. It is imperative that we send 
     a clear and consistent message about our expectations of the 
     States and of welfare recipients. For that reason, the 
     numbers of waivers granted to States to apply time limits 
     other than 24 months will be limited to 5.
       States will be able to conduct demonstrations regarding the 
     WORK program. However, certain aspects of the WORK program 
     will not be waivable so that recipients are afforded some 
     protections against financial loss and loss of Medicaid and 
     to ensure that the program does not result in displacement of 
     other workers.

                             Specifications

                    1. Authority for demonstrations

       (a) Allow the Secretary to authorize no more than five 
     demonstrations with time limits other than 24 months. These 
     time limits can be longer or shorter than 24 months provided 
     that they are consistent with the overall goals of the JOBS 
     and WORK programs.

                    2. Non-waivable WORK provisions;

       (a) Each State shall have a WORK program.
       (b) No person defined as eligible in for the WORK program 
     shall be excluded from the WORK program.
       (c) Participant families in a demonstration program, other 
     than those subject to sanctions, shall not be made worse-off 
     than a family of the same size, with no income, receiving 
     AFDC benefits.
       (d) Participants employed under any demonstration program 
     shall be compensated for such employment at a rate no less 
     than the highest of: the Federal minimum wage specified in 
     section 6(a)(1) of the Fair Labor Standards Act of 1938; the 
     rate specified by the appropriate State or local minimum wage 
     law; the rate paid to employees or trainees of the same 
     employer working the same length of time and performing the 
     same type of work.
       (e) In assigning participants in the demonstration program 
     to any program activity: each assignment shall take into 
     account the physical capacity, skills, experience, health and 
     safety, family responsibilities, and place of residence of 
     the participant; no participant shall be required, without 
     his or her consent, to travel an unreasonable distance from 
     his or her home or remain away from such home overnight; 
     individuals shall not be discriminated against on the basis 
     of race, sex, national origin, religion, age, or handicapping 
     condition, and all participants will have such rights as are 
     available under any applicable Federal, State, or local law 
     prohibiting discrimination;
       (f) Appropriate workers' compensation and tort claims 
     protection shall be provided to participants on the same 
     basis as they are provided to other individuals in the State 
     in similar employment (as determined under regulations of the 
     Secretary).
       (g) No work assignment under the program shall result in a 
     violation of any non-displacement, grievence, or consulation 
     provisions specified in the JOBS, Time Limit and Work 
     section.
       (h) Funds available to carry out a demonstration program 
     may not be used to assist, promote, or deter union 
     organizing.
       (i) The State shall establish and maintain a grievance 
     procedure for resolving complaints by regular employees or 
     their representatives that the work assignment of an 
     individual under the program violates any of the prohibitions 
     described in subsection (g). A decision of the State under 
     such procedure may be appealed to the Secretary of Labor for 
     investigation and such action as such Secretary may find 
     necessary.
       (j) Participants in the program and their families shall be 
     categorically eligible for Medicaid.


                  make work pay [title III, title VII]

                         Background and vision

       A crucial component of welfare reform that promotes work 
     and independence is making work pay. In 1992, 30 percent of 
     female heads of families with children worked but the family 
     remained poor. Even full-time work can leave a family poor. 
     Almost 11 percent of these female head who worked full-year/
     full-time were poor, 15 percent if they had children under 
     six years of age. Simultaneously, the welfare system sets up 
     a devastating array of barriers for people who receive 
     assistance but want to work. It penalizes those who work by 
     taking away benefits dollar for dollar; it poses arduous 
     reporting requirements for those with earnings but still 
     eligible to receive assistance; and it prevents saving for 
     the future with a meager limit on assets. Moveover, working 
     poor families often lack adequate health protection and face 
     sizeable child care costs. Too often, parents may choose 
     welfare instead of work in order to ensure that their 
     children have health insurance and receive child care. If our 
     goals are to encourage work and independence, to help 
     families who are playing by the rules, and to reduce both 
     poverty and welfare use, then work must pay better than 
     welfare.
       Working family tax credits are a major component of making 
     work pay. The expansion of the Earned Income Tax Credit 
     (EITC) passed in 1993 was a significant step toward making it 
     possible for low-wage workers to support themselves and their 
     families above poverty. When fully implemented, it will have 
     the effect of making a $4.25 per hour job pay nearly $6.00 
     per hour for a parent with two or more children. Those 
     families who are eligible for the maximum credit in 1996 
     obtain, in effect, a raise worth $1.62 per hour (or $3,000 
     per year), assuming full-year/full-time work. Full 
     utilization and periodic distribution will maximize the 
     effect of this pay raise for the work poor.
       A critical step toward making work pay is ensuring that all 
     Americans have health insurance coverage. Many recipients are 
     trapped on welfare by their inability to find or keep jobs 
     with health benefits that provide the security they need. And 
     too often, poor, non-working families on welfare have better 
     coverage than poor, working families. The President's health 
     care reform plan will provide universal health care coverage, 
     ensuring that no one will have to choose welfare instead of 
     work to ensure that their children have health insurance. The 
     EITC expansion, access to child care, and health care reform 
     will support workers as they leave welfare to maintain their 
     independence and self-sufficiency.
       Another essential component for making work pay is 
     affordable, accessible child care. In order for families, 
     especially single-parent families, to be able to work or 
     prepare themselves for work, they need dependable care for 
     their children. In addition to ensuring child care for 
     participants in the transitional assistance program and for 
     those who transition off welfare, child care subsidies will 
     be made available to low-income working families who have 
     never been on welfare.
       All regulatory provisions specified in this section shall 
     be published within 1 year of enactment of this act, unless 
     specified as otherwise.


                             A. CHILD CARE

             Current Law and General Direction of Proposal

       The Federal Government currently subsidizes child care for 
     low-income families through a number of different programs. 
     The programs have different eligibility rules and 
     regulations, creating an extremely complicated system that is 
     hard for both providers and recipients to navigate. The major 
     existing programs include an entitlement to child care for 
     AFDC recipients (title IV-A); transitional child care (TCC) 
     (also entitlement) for up to a year for people who have left 
     welfare for work; a capped entitlement ($300 million) for 
     those the State determines to be at-risk of AFDC receipt (At-
     Risk); and the Child Care and Development Block Grant 
     (CCDBG). There is also a disregard for child care costs 
     available to working AFDC recipients. While these multiple 
     programs provide valuable support for child care, legislative 
     changes are needed to strengthen the welfare reform plan.
       We are at this making changes only in the IV-A programs, 
     which will remain as separate authorities. Any changes in the 
     CCDBG will be made during its reauthorization in 1995.

                                 Vision

       Child care is critical to the success of welfare reform. It 
     is essential to provide child care support for parents 
     receiving assistance who will be required to participate in 
     education, training, and employment. In addition, child care 
     support for the working poor is also essential to ``making 
     work pay'' and to enable parents to remain in the workforce. 
     Our goals are to increase child care funding so that families 
     have the access to the child care that they need, to simplify 
     the administration of Federal child care programs to support 
     the development State child care systems and to reduce the 
     likelihood that parents and children will have to change 
     providers as they move from funding stream to funding stream, 
     and to assure that children are cared for in healthy and safe 
     environments.

                               Rationale

       We are proposing to increase available child care support 
     significantly by extending the child care guarantee to JOBS 
     Prep and WORK program participants and by increasing the 
     funding for child care for working poor families through the 
     At-Risk Child Care Program. To assure access to a variety of 
     forms of child care, we would prohibit States from lowering 
     their State-wide limits and mandate that States supplement 
     the disregard or provide a second, direct payment option to 
     all parents. To improve consistency, we propose to have the 
     IV-A child care programs follow the CCDBG requirements and 
     allow States to place all Federal child care programs in one 
     agency. Finally, to increase supply and improve quality in 
     order to ensure that children are in healthy and safe 
     environments, we propose to create a set-aside in the At-Risk 
     program, to make licensing and monitoring of IV-A child care 
     programs allowable for reimbursement as an administrative 
     cost, to add IV-A requirements that States must assure that 
     children do not have access to toxic substances and weapons 
     and that all children must be immunized to meet the Public 
     Health Service immunization standards.
       We have selected the strategy of using the CCDBG standards 
     and adding two new standards because we believe this truly 
     represents the minimal requirements that can assure that 
     children are protected. Many States obviously agree since 
     they are already using the same standards for IV-A child care 
     and CCDBG child care according to their State plans. In all 
     cases except immunization, States will continue to establish 
     their own standards; in the case of immunization, we do not 
     believe requirements should vary from State to State. Using 
     the CCDBG standards IV-A child care also strengthens the 
     parental rights and opportunities; we will assure the 
     parental choice of providers, provide parents information on 
     options for care and payments of child care, and establish 
     a system for parental complaints.

                             Specifications

                  1. Increased funding for child care

       (a) Change the State match for the At-Risk Child Care 
     Program, Section 402(i) to that consistent with the new, 
     enhanced match for other IV-A services. Increase the amount 
     authorized for the program to $300 million in 1995; $500 
     million in 1996; $580 million in 1997; $755 million in 1998; 
     and $1 billion in 1999. The program will increase by $50 
     million each year thereafter until 2004 when it will increase 
     by $100 million. Restrict eligibility to families not 
     eligible for other IV-A child care programs. Reallocate 
     unused At-Risk funds to States that have exceeded the 
     required State match. If the State unemployment rate 
     increases dramatically, the amount of the required match 
     would be reduced. Similarly, the capped entitlement would be 
     increased in the event of high unemployment nationwide. (See 
     description in Jobs, Time Limits and Work section)
       (b) Change the State match for all other IV-A child care 
     programs to the new, enhanced match for other IV-A services.

              2. Program simplification/consistency issues

       (a) Continued to have the IV-A child care funds flow to the 
     IV-A agency but give the States the explicit option to 
     contract to the lead CCDBG agency.
       (b) Make the IV-A requirements for coordination, public 
     involvement, and consultation in relationship to develop of 
     the IV-A child care plan consistent with the requirements of 
     the CCDBG statute.
       (c) make the IV-A child care requirements consistent with 
     CCDBG requirements with respect to parental rights and health 
     and safety standards.
       Add to the health and safety standards section:
       (i) a requirement that the State must have requirements 
     that children funded under the IV-A child care programs are 
     immunized at levels specified by PHS. States will be given 
     the flexibility to exclude certain children from this 
     requirement.
       (ii) a requirement that the State must have rules to assure 
     that no child has access to toxic and illegal substances or 
     weapons in the child care setting.
       (d) Require that the State establish and periodically 
     revise sliding fee scales that provide cost sharing by the 
     families that receive Federal assistance for child care 
     services. The fee scales will be the same for all programs 
     (those used for CCDBG).
       (e) Establish one requirement for State reporting to cover 
     all programs, with core data elements to be defined by the 
     Secretary.

                         3. Continuity of Care

       (a) Give States the option under the IV-A programs to 
     extend hours and weeks of care when reasonable to assure 
     continuity of care for children.

                       4. Information to Parents

       (a) Require that States must provide child care information 
     to parents (use CCDBG language, adding ``(including options 
     for care and payment).'')

                      5. Supply and Quality Issues

       (a) Create a 10% set aside in the At-Risk program for 
     supply building and quality improvements using language in 
     CCDBG Section 658 (B) as allowable activities and adding as 
     an allowable activity the expansion of the supply of care for 
     infants and toddlers in low-income communities (as defined by 
     the States).
       (b) Establish explicitly that licensing and monitoring of 
     IV-A funded child care providers is an allowable 
     administrative cost, limited by a cap on expenditures of $15 
     million a year with State allocations set by a formula 
     established by the Secretary.

                               6. Payment

       (a) Prohibit States from lowering their statewide limits 
     below those in effect on January 1, 1994.
       (b) Retain the disregard, but mandate that States must 
     offer working AFDC recipients the same level and forms of 
     child care assistance as families in JOBS, TCC, and At-Risk 
     Child Care. To accomplish this, States may either offer 
     families the choice of the disregard or a direct payment for 
     care or they may instead offer them a supplement to the 
     disregard.

                   7. Clarification of the Guarantee

       Guarantee child care for volunteers whose activities are 
     approved as part of their employability plan under JOBS 
     regardless of the availability of JOBS funding for those 
     activities if the volunteer still undertakes the approved 
     activities.

                             8. Territories

       Allow territories to use WORK funds to pay for child care 
     for WORK participants; continue to allow them to use JOBS 
     funds to pay for child care for JOBS participants. Remove At-
     Risk Child Care from the territorial cap (See Improving 
     Government Assistance section).


                   b. improving the eitc [title iii]

   1. Permitting publicly administered advanced EITC payment systems

                              Current law

       The earned income tax credit (EITC) is a refundable tax 
     credit available to a low-income filer who has earned income 
     and whose adjusted gross income is below specific thresholds. 
     Low income workers can claim the EITC while filing their tax 
     returns at the end of the year. In addition, workers with 
     children have the choice of obtaining a portion of the credit 
     in advance through their employers, and claiming the balance 
     of the credit upon filing their income returns. The amount of 
     the advanced payment is calculated on the basis that 
     taxpayers have only one qualifying child. The annual advanced 
     EITC payment cannot exceed 60 percent of the maximum full-
     year EITC for a family with one child. In 1996, the maximum 
     advance payment would be $1,223.
       An employee choosing to receive a portion of the EITC in 
     advance does so by filing a form W-5 with his or her 
     employer. The employer is not required to verify employee's 
     eligibility for the credit. Employers may be penalized for 
     failing to comply with an employee's request for an advanced 
     payment. The employer calculates the advanced EITC payment to 
     which an employee is entitled based on the employee's wages 
     and filing status and adds the appropriate amount to the 
     employee's paycheck. The employer reduces its payment of 
     employment and income taxes to the IRS by the aggregate 
     amount of advanced EITC payments made during the period and 
     reports this amount to the IRS on form 941.
       At the end of the year, the employer notifies both the IRS 
     and the employee of the actual amounts of advanced credits 
     paid to the employee by filling in a box on the form W-2. 
     When filing their income tax return at the end of the year, 
     an employee is required to report advance payments, if any, 
     of the EITC.

                                 Vision

       The proposal would promote use of advance payment option of 
     the Earned Income Tax Credit (AEITC) by allowing selected 
     public agencies to administer an advanced EITC payment for 
     low income workers who voluntarily request it. For example, a 
     States might choose to administer the AEITC through Food 
     Stamp offices. States are not permitted to do this under 
     current statute.

                               Rationale

    
    
       Few programs are as effective in reaching the eligible 
     population as the EITC. Despite the successes of the current 
     program, the delivery of the EITC could be improved, 
     particularly by enhancing the probability that the EITC will 
     be claimed in advance throughout the year rather than as a 
     year-end lump sum payment. In recent years, fewer than 1 
     percent of EITC claimants have received the credit through 
     advance payments in their paychecks. The reasons for the low 
     utilization rate are not fully known, though a recent GAO 
     study found that many low-income taxpayers were unaware they 
     could claim the credit in advance.
       There may be other barriers to participation in the advance 
     payment option. The GAO study also found that once informed, 
     many workers stated that they would prefer to receive the 
     EITC in a lump-sum payment. While some workers may simply 
     prefer the forced savings aspects of receiving the credit in 
     a lump sum, others may fear their employer's reaction if they 
     ask for a government wage supplement to be added to their 
     paycheck. Others may be fearful of owing the government a 
     large sum of money at the end of the year because they 
     received too large an amount in advance.
       It is believed that welfare recipients, in particular, 
     could benefit from receiving the credit at more regular 
     intervals throughout the year. By receiving the credit as 
     they earn wages, workers would observe the direct link 
     between work effort and the EITC. Public agencies that deal 
     directly with welfare recipients are uniquely advantaged to 
     ensure that the AEITC option is used frequently and 
     appropriately. They could explain to recipients who are about 
     to transition from welfare to work how the AEITC will 
     increase their income stream, making work a more rational 
     option.
       Allowing States the option provide advance payments of the 
     EITC through public agencies (e.g., the offices which also 
     provide food stamp benefits) could dramatically increase use 
     of the AETIC among the working AFDC and ex-AFDC populations. 
     A State could choose to target information about the EITC to 
     welfare recipients or other individuals likely to become 
     welfare recipients but who are currently outside the 
     workforce. Individuals could have the choice of receiving the 
     credit from a neutral third-party, without fear of notifying 
     their employers of their eligibility for the EITC. Moreover, 
     they could receive assistance in determining the appropriate 
     amount of the EITC to claim in advance. States would also 
     have the resources to verify eligibility for the credit 
     better than employers, reducing the risk of erroneous 
     payments being made to ineligible persons. This option would 
     also allow for an evaluation of alternative delivery systems:

                             Specifications

       (a) A State would have the option to propose to the 
     Secretary of the Treasury a demonstration project pursuant to 
     which advance payments of the EITC would be made to eligible 
     residents through a State agency. Such agencies may include 
     public assistance offices (AFDC and/or Food Stamps), 
     Employment Service Offices, State finance and revenue 
     agencies, and so forth. A State may choose only one agency to 
     provide the advance credit.
       (b) Approval by the Secretary of the Treasury of a State's 
     proposal would be required in all cases. The Secretary of the 
     Treasury would consult with the Secretary of Health and Human 
     Services, the Secretary of Agriculture, and other 
     Departmental Secretaries as appropriate if the State proposal 
     includes coordination of EITC payments and other Federal 
     benefits.
       (c) Where appropriate, States may include in their 
     proposals coordination of advance payments of the EITC and 
     other Federal benefits (such as food stamps) through 
     electronic benefit technology.
       (d) State plans would be required to specify how payment of 
     the EITC would be administered. States must include a 
     detailed explanation of how eligibility for the credit would 
     be determined and verified. States would also have to agree 
     to provide recipients and the IRS with annual information 
     reports in a timely fashion (typically by January 31 of the 
     following year) showing the amounts of the EITC paid in 
     advance. In addition, States would agree to provide the IRS 
     with a listing by December 1st of the names and social 
     security numbers of all person who participated in the state 
     program at any time during the year (through October). States 
     which failed to meet these reporting requirements would not 
     be allowed to continue participation in the program.
       (e) States would be allowed (but not required) to provide 
     on an advanced basis up to 75 percent of the maximum amount 
     of the credit for which the taxpayer is eligible and 
     voluntarily requests.
       (f) States would reduce payments of withholding taxes (for 
     both income and payroll taxes) from their own employees by 
     the amount of the advance payments made during the prior 
     quarter.
       (g) After the processing of income tax returns and matching 
     of returns with information reports, the Secretary of the 
     Treasury would be required to issue an annual report 
     detailing the extent to which EITC claimants under State 
     plans: (1) participated in the State plan; (2) filed a tax 
     return; (3) reported accurately the amount of the advanced 
     payments payable during the year by the state; and (4) repaid 
     any overpayments of the advanced EITC within the prescribed 
     time. The report would also contain an estimate of the amount 
     of the excessive overpayments made by the state. Excessive 
     overpayments would include advance payments not reported on 
     the tax return and advance payments in excess of the EITC 
     calculated on the basis of information reported to the IRS 
     and causing taxpayers to owe outstanding amounts to the IRS.
       (h) States would be required to repay the Federal 
     government 50 percent of excessive advance payments 
     subsequently not recaptured by the IRS made to State 
     residents participating in the plan over a 4 percent 
     threshold. The Secretary of the Treasury would demonstrate 
     that due and diligent effort had been made to recapture these 
     amounts through normal procedures. The 4 percent threshold 
     applies to all advanced payments made by the State for a 
     given tax year. States would become liable for the excessive 
     amounts two years after the due date for the filing of a tax 
     return.
       (i) The Secretary of Treasury and the Secretary of Health 
     and Human Services would jointly ensure that technical 
     assistance is provided to States undertaking demonstration 
     projects aimed at increasing participation in the EITC and 
     EITC advanced payment programs. Sufficient training and 
     adequate resources would be provided to both agencies 
     pursuant to the provision of technical assistance to the 
     States. The Secretaries of Treasury and HHS will see that 
     such pilots are rigorously evaluated.
       (j) The Secretary of Treasury, in consultation with the 
     Secretary of HHS, shall enter into agreements with up to 4 
     States to pilot and assess the development and implement 
     publicly administered advanced Earned Income Tax Credit 
     initiatives. The Food Stamp population for the selected 
     States can not equal more than 5% of the Food Stamp caseload 
     nationwide.
       (k) These agreements shall provide planning and 
     implementation grants to States selected under this provision 
     provided:
       (i) that the Secretary of the Treasury also reviews and 
     approves of the proposal submitted to the Secretary of DHHS;
       (ii) that the selected States agree to share their findings 
     and lessons with other interested States in a manner to be 
     described by the Secretary.
       (l) The total amount available under this provision for 
     demonstration planning, organizing, and start-up is $1.4 
     million and no individual State can receive a grant in excess 
     of $500,000. These demonstration programs shall not exceed 
     three years in duration.
       (m) AFDC and Food Stamp administrative funds can be used to 
     pay for these provisions.


                    C. INCOME DISREGARDS [TITLE VII]

                              Current Law

       Federal AFDC law requires that all income received by an 
     AFDC recipient or applicant be counted against the AFDC grant 
     except income that is explicitly excluded by definition or 
     deduction. States are required by Federal law to disregard 
     the following income: (1) for the first four months of 
     earnings, working recipients are allowed a $90 work expense 
     disregard, another $30 unspecified disregard, and one-third 
     of remaining earnings are also disregarded; (2) the one-third 
     disregard ends after four months; and (3) the unspecified $30 
     disregard ends after 12 months.
       In addition, a child care expense disregard of $175 per 
     child per month ($200 if the child is under 2) is permitted 
     to be calculated after other disregard provisions have been 
     applied. Currently, $50 in child-support is passed through to 
     families with established awards. States are now required to 
     disregard the EITC in determining eligibility for and 
     benefits under the AFDC program.

                                 Vision

       The provisions proposed under this component are designed 
     to: (1) make the treatment of income simpler for both 
     recipients and welfare officials to understand; (2) make work 
     a more attractive, rational option for those who would 
     continue to receive assistance; (3) remove the time 
     sensitivity of current rules (i.e., eliminate provisions 
     which change the rules governing the treatment of income 
     depending on how long the person has worked); and (4) improve 
     the economic well-being of those who need to combine work and 
     welfare. (See Improving Government Assistance for other 
     earning disregard provisions)

                             Specifications

       (a) Require States to disregard a minimum of $120 in 
     earnings, indexed for inflation in rounded increments of $10.
       (b) States will have the flexibility to establish their own 
     disregard policies on earned income above this amount for 
     both applicants and/or recipients and WORK program 
     participants.
       (c) States shall have flexibility in establishing fill-the-
     gap policies (i.e., States will have the flexibility to 
     determine which types of income should be considered in 
     developing a fill-the-gap policy, such as child support 
     payments, stipends, etc, in addition to earned income).
       (d) The AFDC $50 pass-through of child support payments 
     will also be indexed for inflation in rounded $10 increments. 
     States will have the flexibility to pass-through additional 
     child support payments above this amount.
       (e) The Federally established earnings disregard and the 
     $50 child support pass-through will be indexed for inflation 
     according to changes in the consumer price index (CPI). The 
     disregards will be rounded to the nearest $10 increment.
       The base period for the provisions to index the disregards 
     shall be the calendar quarter ending September 30, 1996. The 
     computation quarter for determining whether an adjustment is 
     warranted shall be the calendar quarter ending September 30 
     for each year following 1996. For computation purposes, 
     adjustments will be determined based on the un-rounded 
     disregard amount. For example, if the unrounded adjusted 
     value of the disregard is $125, then the rounded disregard is 
     $130. To determine the value of the disregard in the 
     subsequent year, the change in the CPI will be compared to 
     $126, not $130. Adjustments to the disregards will become 
     effective the following January 1.
       (f) The effective date of these provisions shall be October 
     1, 1996.

                               Rationale

       The proposal allows for greater State flexibility; States 
     can determine the appropriate income disregard and can 
     determine which sources of income to disregard. The indexing 
     of the minimum amount will ensure that working recipients are 
     afforded an adequate earned disregard in the future.


                PERFORMANCE MEASURES PROPOSAL [Title IV]

                                 Vision

       The provisions described in this section initiate a process 
     that will result in the development and implementation of a 
     comprehensive performance measurement system which reflects 
     and reinforces the emerging ``culture'' of the redesigned 
     welfare system.

                            Current JOBS law

       Under the SSA section 487 [FSA Section 203(b)] not later 
     than October 1st, 1993, the Secretary of Health and Human 
     Services shall:
       (1) in consultation with the Secretary of Labor, 
     representatives of organizations representing Governors, 
     State and local program administrators, educators, State job 
     training coordinating councils, community-based 
     organizations, recipients, and other interested persons, 
     develop performance standards with respect to the programs 
     established pursuant to this part that are based, in part, on 
     the results of the studies conducted under section 203(c) of 
     such Act, and the initial State evaluations (if any) 
     performed under section 486 of this Act; and
       (2) submit his/her recommendations for performance 
     standards developed under paragraph (1) to the appropriate 
     committees of jurisdiction of Congress, which recommendations 
     shall be made with respect to specific measurements of 
     outcomes and be based on the degree of success which may be 
     reasonably expected of States in helping individuals to 
     increase earnings, achieve self-sufficiency, and reduce 
     welfare dependency, and shall not be measured solely by 
     levels of activity or participation. Performance standards 
     developed under this subsection shall be reviewed 
     periodically by the Secretary and modified to the extent 
     necessary.

               Current JOBS program performance measures

       Participation rate for all AFDC recipients required to 
     participate in JOBS (45 CFR 250.74(b) and 250.78)--For Fiscal 
     Year 1994 the required participation rate is 15%. This is to 
     ensure that a minimum proportion of the AFDC adult population 
     is participating at a meaningful (significant) level.
       Participation rate for AFDC-UP recipients (45 CFR 250.74(c) 
     -- For Fiscal Year 1994 the required participation rate is 
     40%. This is to ensure that a minimum proportion of the AFDC-
     UP principal wage earners or their spouses engage in work 
     activities.
       Target group expenditures (45 CFR 250.74(a)(1))--At least 
     55% of a State's JOBS expenditures must be spent on 
     applicants and recipients who are members of the State's 
     target populations as defined at 45 CFR 250.1. This is to 
     ensure that the hard to serve are served by requiring that 
     55% of IV-F expenditures are spent on the target groups 
     defined in the statute or, if different, approved as a part 
     of the State's JOBS plan.

                     Current data reporting system

       The JOBS Case Sample Reporting System (CSRS) was 
     established to meet some of the reporting requirements 
     mandated by section 487 of the Social Security Act. However, 
     the data necessary to establish participation rates is 
     collected through both CSRS and aggregate hard copy. Only 
     data necessary to establish the numerator for overall 
     participation is collected through CSRS. The population from 
     which each State must draw its sample (or in lieu of drawing 
     a sample, the State may submit the entire population each 
     month) is defined as the number of JOBS participants that 
     were engaged in at least one hour of activity in an 
     approved JOBS program component during the sample month. 
     In addition to JOBS program data, a limited amount of 
     demographic data and child care data is also required to 
     be submitted.

                             Current QC law

       Under section 408 of the Social Security Act, States are 
     required to operate a quality control system in order to 
     ensure the accuracy of payments in the AFDC program. States 
     operate the system in accordance with time schedules, 
     sampling methodologies, and review procedures prescribed by 
     the Secretary. The law defines: what constitutes a payment 
     error; how error rates and disallowances are calculated; the 
     method for adjusting State matching payments; and the 
     administrative and judicial reviews available to States 
     subject to disallowances because of error rates in excess of 
     the national standard (i.e., the national error rate for each 
     year).
       The AFDC-QC system functions primarily as a monitoring/
     auditing system. Its primary purpose is to establish the 
     correctness with which payments are made to AFDC cases in 
     each State. The AFDC-QC system also obtains the data 
     necessary to produce the publication entitled 
     ``Characteristics and Financial Circumstances of AFDC 
     Recipients.'' The AFDC-QC system is not used to meet any of 
     the reporting requirements for the AFDC program. Subsequent 
     to the establishment of this system, which is a subsystem of 
     the National Integrated Quality Control System (NIQCS), OMB 
     required additional AFDC data be collected to replace the 
     biennial survey of AFDC families that had been in place 
     through 1979.

                                 Vision

       One objective of welfare reform is to transform the 
     ``culture'' of the welfare system; from an institutional 
     system whose primary mission is to ensure that poor children 
     have a minimal level of economic resources to a system that 
     focuses equal attention on the task of integrating their 
     adult caretakers into the economic and social mainstream of 
     society. We envision an outcome-based performance measurement 
     system that consists of a limited set of broad measures and 
     focuses State efforts on the goals of the transitional 
     support system--helping recipients become self-sufficient, 
     reducing dependency, and moving recipients into work. The 
     system would be developed and implemented over time, as 
     specified in statute. Interested parties will be included in 
     the process for determining outcome-based performance 
     measures and standards.
       Until a system incorporating outcome-based standards can be 
     put in place, State performance will be measured against 
     service delivery measures as specified in statute. These 
     service delivery standards would be used to monitor program 
     implementation and operations, provide incentives for timely 
     implementation, and ensure that States were providing 
     services needed to convert welfare into a transitional 
     support system. The current targeting and participation 
     standards would be eliminated (see draft specifications on 
     JOBS, Time Limits, and WORK). The new service delivery 
     measure for JOBS would ensure that a substantial portion of 
     such cases are being serviced on an ongoing basis. As soon as 
     WORK program requirements begin to take effect (i.e., two 
     years after the effective date of the start of the phase-in), 
     States would be subject to a performance standard under the 
     WORK program. Until automated systems are operational and 
     reliable, State performance vis-a-vis these service delivery 
     measures would be based on information gathered through the 
     modified QC system.
       Within a specified time period after enactment of this 
     bill, the Secretary will develop a broader system of 
     standards which incorporates measures addressing the States' 
     success in moving clients toward self-sufficiency and 
     reducing their average tenure on welfare. All accompanying 
     regulations to this section shall be published within 12 
     months of the enactment of this act, unless an effective date 
     is otherwise specified.

                               Rationale

       The standards against which systems performance are judged 
     must reflect the emerging mission or goal of the reformed 
     system. The existing Quality Control (QC) system may actually 
     create counterproductive incentives for States attempting to 
     cope with this emerging institutional environment. QC focuses 
     on how well the income support function is done to the 
     exclusion of other systems goals. This directly shapes the 
     atmosphere of and feel within welfare agencies; how personnel 
     are selected and trained, how administrative processes are 
     organized, and the basis for allocating organizational 
     rewards.
       It is a simple reality that the management and 
     technological demands which emerge from a system designed to 
     change how people function are more complex than those for an 
     income support system. Strategies that judge performance 
     solely by inputs or effort will no longer be adequate. The 
     new system eventually must be judged by what is accomplished 
     rather than how it is accomplished. At the same time, the 
     challenges of transforming organizational cultures cannot be 
     ignored; we must remain cognizant of the implementation and 
     operational challenges all levels of government will confront 
     in moving to the new system.
       In response to the demands imposed by substantive 
     organizational change, the ``official'' focus of the QC 
     system will be revised to include program outcomes in 
     addition to payment accuracy. The QC system should reflect 
     the new mission of the system without jeopardizing the 
     integrity of the program as it is currently understood. This 
     can be achieved through the development of performance 
     measures and standards that reflect the degree to which the 
     policy is implemented as intended and which eventually focus 
     on results, while ensuring that the residual income support 
     functions are administered competently. The goal is that 
     payment accuracy and other designated performance standards 
     be given equal priority by the welfare agency.
       Provisions 1 through 3 generally deal with requirements and 
     procedures for establishing performance outcomes; provisions 
     4 and 5 deal with developing service delivery measures and 
     standards to assess whether the program is being implemented 
     and operated as intended; and provision 6 provides the 
     necessary authority to modify the QC system to carry out the 
     monitoring functions specified in the Act.

                             Specifications

     1. Establishing an Outcome-Based Performance Standards System

                                 Vision

       Part 1: This provision provides general authority to the 
     Secretary of DHHS to establish an outcome-based performance 
     standards system.
       The vision governing welfare reform is consistent with the 
     theme of ``reinventing government.'' Ultimately, this means 
     less federal prescription, greater local flexibility and 
     responsibility, and the measurement of success by outcomes 
     and not inputs or effort.

                               Rationale

       These provisions establish and reinforce the goal that 
     State performance eventually will be judged by the results 
     they achieve and not the way they achieve those results. This 
     means keeping a focus on the goals of reform; moving clients 
     toward self-sufficiency and independence while ensuring the 
     overall well-being of children and their families.

                             Specifications

       (a) In accordance with the effective dates specified, in 
     order to assess State performance, the Secretary shall enact 
     an outcome-based performance standards systems that will 
     measure the extent to which the program helps participants 
     improve their self-sufficiency, their independence from 
     welfare, their labor market participation, and the economic 
     well-being of families with children. As specified below, the 
     Secretary shall fist develop outcome-based performance 
     measures and then shall take steps to set expected standards 
     of performance with respect to those measures. The system 
     will also include performance standards for measuring the 
     extent to which individuals are served by the transitional 
     support system (i.e., service delivery standards).
       (b) The current quality control system shall be revised to 
     reflect the new performance standards system (see section on 
     Quality Control).
       (c) The Secretary shall publish annually State-level data 
     indicating State performance under such a system.
       (d) Amend Sec. 487 (b) to read: The Secretary may require 
     States to gather such information and perform such monitoring 
     functions as are appropriate to assist in the development of 
     such a performance measurement system and shall include in 
     regulations provisions establishing uniform reporting 
     requirements for such information.
       (e) In adopting performance standards the Secretary shall 
     use appropriate methods for obtaining data as necessary, 
     which may include access to earnings records, State 
     employment security records, State Unemployment Insurance 
     records, and records collected under the Federal Insurance 
     Contributions Act (chapter 21 of the Internal Revenue Code of 
     1986); drawing reliable statistical samples and revising QC 
     reviews of AFDC payment and case information; and using 
     appropriate safeguards to protect the confidentiality of the 
     information obtained.
       (f) The Secretary shall, in consultation with appropriate 
     interested parties, review and modify the performance 
     measures and standards, and other components of the 
     performance measures system periodically as appropriate.

     2. Developing an Outcome-Based Performance Measurement System

                                 Vision

       Part 2: This provision requires the Secretary to propose a 
     specific set of intermediate outcome measures and establishes 
     a process and timetable for doing such.
       Before outcome-based standards are established, a set of 
     outcome-based measures will be put in place. (Note: a measure 
     is merely an aspect of the program on which data is 
     collected; a standard is a specific level of performance that 
     is expected of States of agencies with respect to that 
     measure.)
       These provisions are viewed as the first step toward 
     developing a true outcome-based performance measurement 
     system and recognize complementary work taking place in other 
     agencies.

                               Rationale

       Recognizing the complexity of this task, this legislation 
     incorporates a prudent strategy that moves forcefully, yet 
     with reasonable caution in the direction of developing an 
     outcome-based performance system.

                             Specifications

       (a) By April 1, 1996, for the purposes of enacting a 
     performance measurement system, the Secretary will develop 
     recommendations for specific outcome-based performance 
     measures (with proposed definitions and data collection 
     methodologies) and shall solicit comments from the Congress, 
     Secretaries of Labor, Education, and other Departments, 
     representatives of organizations representing Governors, 
     State and local program administrators, educators, State job 
     training coordinating councils, community-based 
     organizations, recipients, and other interested persons 
     (hereinafter referred to as interested parties).
       (b) The recommendations shall include the percentage of the 
     caseload who reach the 2-year time-limit and may include but 
     shall not be limited to measures which examine:
       (i) factors used in section 106 of the Job Training 
     Partnership Act and any subsequent amendments such as 
     placement and retention in unsubsidized employment and a 
     reduction in welfare dependency; and,
       (ii) other factors as deemed appropriate by the Secretary.
       (c) Based on comments from the interested parties, the 
     Secretary will finalize the measures and will publish them in 
     the Federal Register by October 1, 1996.

    3. Implementing an Outcome-Based Performance Measurement System

                                 Vision

       Part 3: This provision requires the Secretary to set 
     standards of performance for States to meet with respect to 
     the measures developed under prior provisions and sets some 
     procedural guidelines for setting those standards.
       Knowing what we want to accomplish is different from 
     setting concrete expectations for States about what they 
     ought to accomplish. The standards should be set carefully, 
     with adequate time to obtain input from stakeholders and 
     interested parties and to fully access the potential impact 
     of the standards.

                               Rationale

       It is important to provide sufficient time to think through 
     an appropriate set of measures with relevant parties and to 
     carefully consider what kind of realistic standards might be 
     set with respect to those measures. The legislation sets a 
     time period to consider important measurement issues and what 
     consequences should be set for failure to meet established 
     standards.

                             Specifications

       (a) By April 1, 1998, for the purposes of enacting outcome-
     based standards, the Secretary, in consultation with 
     interested parties, shall present recommendations for 
     performance standards based on the performance measure 
     information (as specified above) and other appropriate 
     information.
       (b) Based on comments from the interested parties, the 
     Secretary will finalize the standards and will publish them 
     in the Federal Register by October 1, 1998.
       (c) The Secretary shall amend the regulations for this Act 
     to establish the penalties and incentives for the proposed 
     standards by October 1, 1998. These regulations shall specify 
     that the incentives may be paid from penalty payments 
     collected and available funds in the Secretary's Fund, such 
     that the result of such payments shall be cost-neutral.

                     4. Service Delivery Standards

                                 Vision

       Part 4: This provision requires that certain standards be 
     set to determine how well States are implementing key aspects 
     of the new system and sets rewards and penalties based on 
     those standards.
       To ensure that welfare systems are operating the program as 
     intended, the new performance system will provide for awards 
     and penalties for State performance through adjustments to 
     the State's claims for federal matching funds on AFDC 
     payments and on JOBS service dollars. These measures are 
     designed to provide positive and negative incentives to 
     States to serve recipients under the new transitional system 
     and to monitor program operations. States would be subject to 
     financial incentives for a monthly participation rate in JOBS 
     and a participation rate in WORK. In addition, the caps on 
     JOBS extensions and deferral assignments and State accuracy 
     in keeping of the two-year clock are considered service 
     delivery standards.

                               Rationale

       Because major changes to the welfare system are being 
     proposed, it is critical that the extent to which the intent 
     of the law is being realized be monitored carefully. 
     Measuring critical aspects of the new program will provide 
     necessary feedback upon which to judge progress toward 
     changing the ``culture'' of the welfare system, while the 
     proposed set of incentives and penalties will keep States 
     focused on the required changes.

                             Specifications

       (a) Upon enactment of this act, the Secretary shall 
     implement service delivery measures for purposes of 
     accountability and compliance.
       (b) States shall be subject to service delivery standards 
     upon the effective date of the new JOBS program. States shall 
     begin reporting and validating data for service delivery 
     measures no later than 12 months following the publication of 
     the JOBS/WORK regulations in a manner to be prescribed by the 
     Secretary.
       (c) The service delivery standards apply only to the 
     phased-in mandatory population that is subject to the time 
     limit (including those additional groups a State can opt to 
     include in the phase-in group).
       (d) Monthly Participation Rate in JOBS: Similar to current 
     law, States are expected to meet a monthly participation 
     rate. Using a computation period of each month in a fiscal 
     year (i.e., over a 12 month period), the State's monthly 
     participation rate shall be expressed by a percentage, and 
     calculated as follows:
       (i) The denominator consists of the average monthly number 
     of individuals who are mandatory for JOBS (i.e., excluding 
     those in the deferral status)
       (ii) The numerator consists of the average monthly number 
     of individuals who are mandatory for JOBS (i.e, excluding 
     those in the deferral system) who participate in an activity, 
     are employed and meet the minimum work standard (and remain 
     on aid), or are in the sanctioning process as defined by JOBS 
     program rules). The definition of participation for the 
     purposes of calculating the monthly participation rate will 
     be determined in regulation.
       (e) The performance standard for the JOBS monthly 
     participation rate is set at 50 percent, with a -5/+5 
     tolerance level, with financial penalties if the standard is 
     not met and financial incentives if the standard is exceeded. 
     For the proportion of caseload below the standard (45%), a 25 
     percent reduction in the FFP for their AFDC benefits will be 
     levied for the annual period covered by the rate, using the 
     average AFDC benefit paid in the State to calculate the 
     amount of the penalty. (This penalty is not a 25 percentage 
     point reduction. Rather, the penalty will reduce the FFP from 
     50 percent to 37.5 percent, not from 50 percent to 25 
     percent.) There will be no penalties or additional payments 
     for those States with participation rates between 45 and 55 
     percent. Penalties will not be assessed in the first year of 
     program operation.
       (f) If a State exceeds the JOBS monthly participation rate 
     (55%) in a fiscal year, the State will be entitled to receive 
     an additional payment (without the requirement of any 
     additional nonfederal share) for use in carrying out its JOBS 
     program. The payments will be made from penalties collected 
     from State performance on other service delivery measures and 
     from the Secretary's Fund. The Secretary shall determine the 
     amount of the payments.
       (g) WORK Program Participation Rate: To ensure that 
     individuals who reach the time limit are assigned to work 
     slots, States will be expected to meet a WORK participation 
     standard. Financial penalties are applied if the standard is 
     not met. The WORK performance measure would take effect two 
     years after the effective date of this legislation (sees 
     JOBS, Time Limits, and Work section). To meet this standard, 
     States are required to meet either:
    
    
       (i) Case 1: The number required so that 80 percent of those 
     who are registered for the WORK program are assigned to a 
     WORK slot or are in other defined statutes (as explained 
     below). Using a computation period of each month in a fiscal 
     year (i.e. over a 12 month period), the WORK participation 
     rate is expressed as a percentage and is calculated as 
     follows: (1) The denominator consists of two parts; first, 
     the average monthly number of individuals who are registered 
     for the WORK program (i.e., excluding those in the deferral 
     status); and second, the average monthly number of 
     individuals who left the WORK program within the last three 
     months and are working in an unsubsidized job and are not 
     eligible for an earnings supplement. (2) The numerator 
     consists of the average monthly number of individuals who 
     are assigned to a WORK slot, are in the sanctioning 
     process as defined under the WORK program rules, are 
     participating in a WORK job search activity between WORK 
     assignments (for a period of up to three months), or, who 
     left the WORK program within the last three months and are 
     working in an unsubsidized job and are not eligible for an 
     earnings supplement. The exact definition of the rate will 
     be specified in regulation. Or,
       (ii) Case 2: The number required so that total number of 
     WORK slots the State is required to create, based on their 
     funding allocation, are filled by individuals assigned to a 
     WORK slot. Under this option the number of WORK slots the 
     State is required to create will be determined by dividing 
     the annual capped WORK allocation by a figure representing 
     the cost per work slot, with the latter to be determined by 
     the Secretary.
       (h) For the proportion of caseload below the applicable 
     standard, a 25 percent reduction in the FFP for their AFDC 
     benefits will be levied for the annual period covered by the 
     rate, using the average AFDC benefit level paid in the State 
     to determine the amount of the penalty. Penalties will not be 
     assessed in the first year of program operation. (This 
     penalty is not a 25 percentage point reduction. Rather, the 
     penalty will reduce the FFP from 50 percent to 37.5 percent, 
     not from 50 percent to 25 percent.)
       (i) States will be required to place individuals who have 
     most recently hit the time-limit into WORK slots prior to 
     other WORK participants (e.g., those who have already 
     completed a slot and are awaiting re-assignment).
       (j) Caps on Deferrals and JOBS Extensions: For any cases 
     above the cap for deferrals and/or above the cap for JOBS 
     extensions, a 25 percent reduction in the FFP for their AFDC 
     benefits will be levied, using the average AFDC benefit level 
     paid in the State to determine the amount of the penalty. 
     Penalties will not be assessed in the first year of program 
     operation. The penalties do not apply if the State submitted 
     a proposal to the Secretary to raise the cap and the 
     Secretary granted such a waiver. (This penalty is not a 25 
     percentage point reduction. Rather, the penalty will reduce 
     the FFP from 50 percent to 37.5 percent, not from 50 percent 
     to 25 percent.) (see also JOBS, Time Limits, and WORK 
     section)
       (k) As appropriate, the Secretary may require States to 
     report other data elements related to the provision of JOBS 
     and WORK services, such as the provision on teen case 
     management services. Such additional reporting requirements 
     will be specified in regulation no later than 12 months 
     following the enactment of this act.
       (l) States are not eligible for adding payments for 
     exceeding the JOBS monthly participation rate if the 
     Secretary determines:
       (i) the accuracy of a State's time-clock fails the 
     threshold standards for time-clock accuracy, as defined 
     subsequently in regulations; and/or,
       (ii) other required data on the JOBS and WORK program 
     reported by a State that fails the threshold standards for 
     data quality, as defined subsequently in regulations.

                           5. Client Feedback

                                 Vision

       Part 5: This provision requires that States establish a 
     process for collecting client feedback on their experience in 
     the program as a method for improving program operations.
       There has been little study in the past of client 
     perceptions of the services provided through the welfare 
     department. However, similar to the way customers' reactions 
     are important to the business community, understanding and 
     managing client feedback on the services they receive provide 
     important information on areas where program performance 
     could improved. Additionally, it will be important to 
     establish mechanisms to ensure feedback on the quality of 
     services provided by public, nonprofit, and private agencies.

                               Rationale

       One aspect of reinventing government is to make public 
     systems client- or market-driven. In a time-limited cash 
     assistance program, providing participants with quality 
     services and opportunities through which to enhance their 
     human capital and improve their chances in the labor market 
     seems essential. Obtaining feedback directly from the 
     ``customers'' is one way of helping program managers ensure 
     that they provide participants what is needed.

                             Specifications

       (a) Each State shall establish methods for obtaining, on a 
     regular basis, information from individuals and employers who 
     have received services through the JOBS and/or WORK program 
     regarding the effectiveness and quality of such services. 
     Such methods may include the use of surveys, interviews, and 
     focus groups.
       (b) Each State agency shall analyze the customer service 
     information on a regular basis and provide a summary of such 
     information for use in improving the administration of the 
     programs.

             6. Expanded Mission for Quality Control System

                                 Vision

       Part 6: This provision provides the Secretary with the 
     authority to review and modify the Quality Control system as 
     needed and sets up some procedural guidelines for identifying 
     the needed changes and making those changes.
       The following language allows the Secretary to build on the 
     current payment accuracy Quality Control system to 
     incorporate a broader system focused on the performance 
     standards established in statute or by regulation and to 
     ensure the efficient and effective operation of the JOBS/
     WORK/Time Limited Assistance program. Payment accuracy will 
     be retained but as one element in a broad performance 
     measurement role for the QC system.

                               Rationale

       Operating a performance driven accountability system 
     requires resources. Until the new system is fully developed, 
     it will be difficult to estimate what those resource 
     requirements will be. Some of those resources must come from 
     the existing QC system, necessitating changes in that system. 
     The Secretary must have authority to make those changes in a 
     way that does not sacrifice the ability to ensure the 
     integrity and accuracy of income maintenance payments.

                             Specifications

       (a) The Secretary shall build on the current QC system to 
     establish procedures for determining, with respect to each 
     State, the extent to which any and all performance standards 
     established by statute or regulation are being met. The 
     Secretary shall modify the scope of the current QC system as 
     deemed necessary to accommodate the review of the additional 
     data elements and new performance measures and standards and 
     shall report the modifications to Congress.
       (b) To this end, the Social Security Act will be amended to 
     expand the purpose of the QC system to include: improving the 
     accuracy of benefit and wage payments in the AFDC and WORK 
     program, assessing the quality of State-reported data, 
     ensuring the accuracy of State reporting of JOBS/WORK data 
     required under this act, ensuring that other performance 
     standards are met, and fulfilling other appropriate functions 
     of a performance measurement system.
       (c) The Secretary shall designate additional data elements 
     to be collected in a QC review sample to fulfill the needs of 
     a performance measures system (pursuant to section 487 as 
     amended under this part), shall amend case sampling plans and 
     data collection procedures as deemed necessary to make 
     statistically valid estimates of program performance 
     identified elsewhere in this section, and may redefine what 
     is counted as an erroneous payment in the QC system.
       (d) States shall conduct periodic, internal audits of their 
     JOBS and WORK processes to ensure the accuracy of reported 
     data and annual audits to establish accuracy rates. The 
     Federal government would specify the minimum sample sizes to 
     achieve 90 or 95 percent confidence at the lower limit (the 
     method generally used by OIG). States would also be permitted 
     to use current QC resources to conduct special studies to 
     test and improve the current system.
       (e) The Secretary shall, after consulting with the States 
     and securing input from knowledgeable sources, publish 
     regulations regarding changes in the design and 
     administration of existing QC functions as well as 
     enhancements to that system. These proposed changes will be 
     published no later than 6 months after enactment of this 
     Bill.


           information systems and infrastructure [title iv]

                       Current law and background

       In the late 1970s, the Federal government decided to 
     improve the administration of welfare programs through the 
     use of computerized information systems. The Congress enacted 
     PL 96-265 and subsequent legislation to grant incentive 
     funding to encourage the development of automated systems.
       In 1981, the AFDC program released the Family Assistance 
     Management Information System (FAMIS) specifications and 
     updated them in 1983. In 1988, the Food Stamp Program (FSP) 
     released similar guidelines in regulations and updated them 
     in 1992. Incentive funding is also available for statewide, 
     Child Support Enforcement (CSE) systems.
       A recent GAO report indicated that, in the previous 10 
     years the Federal government had spent nearly $900 million in 
     the development and operation of AFDC and FSP automated 
     systems alone. In the Omnibus Budget Reconciliation Act of 
     1993, the Congress repealed enhanced funding for AFDC and FSP 
     effective April 1, 1994.
       An emerging priority of Federal funding agencies has been 
     to encourage States to implement more cost-effective systems 
     which integrate service delivery at the local level. This has 
     enabled many States to begin using combined application forms 
     for multiple programs (including AFDC, FSP, and Medicaid) and 
     a combined interview to determine eligibility for the various 
     programs. Consequently, with systems support, a single 
     eligibility worker can process an application for several 
     programs at the same time.
       Another priority is the development of electronic transfer 
     of funds and Electronic Benefit Transfer (EBT) technology to 
     delivery benefits. This technology allows recipients to use a 
     debit card, similar to a bank card, at retail food stores and 
     automated teller machines (ATMs) to access their benefit 
     accounts. Plans to expand the use of EBT systems are 
     mentioned in the Vice President's National Performance 
     Review.
       Under current law and regulations, States and the Federal 
     government have developed elaborate computer management 
     information systems for financial management and benefit 
     delivery, program operations, and quality control. Some 
     programs, such as Child Support Enforcement, are in the midst 
     of large-scale (and long-term) computer system change, while 
     others, such as AFDC (with its FAMIS systems), are nearing 
     completion of a development cycle.
       Both FAMIS and Child Support Enforcement Systems (CSES) 
     have been funded under an enhanced funding (90 percent) 
     match. Partly as a result of this incentive funding, many 
     States have integrated, automated, income maintenance systems 
     which assist caseworkers in determining eligibility, 
     maintaining and tracking case status, and reporting 
     management information to the State and Federal governments.
       Other essential welfare programs, namely JOBS and child 
     care, have limited and fragmented automated systems. For the 
     most part, States could fund parts of these systems at the 50 
     percent match rate. States report that administrative funds 
     have not been available to fully automate and interface JOBS 
     and Child Care with other programs within the State.
       Many of these systems have serious limitations: limited 
     flexibility, lack of interactive access, limited ability to 
     exchange data electronically, etc. Even the most 
     sophisticated systems fall short of the goal of allowing 
     State agencies to use technology to:
       Eliminate the need for clients to access different entry 
     points before they receive services;
       Eliminate the need for agency workers (and clients) to 
     encounter and understand a wide variety of complex rules and 
     procedures;
       Share fully computer data with programs within the State 
     and among States; and
       Provide the kind of case tracking and management that will 
     be needed for a time-limited welfare system.

                          Vision and Rationale

       Computer and information technology solutions will support 
     welfare reform by providing new automated screening and 
     intake processes, eligibility decision-making tools, and 
     benefit delivery techniques. Application of modern 
     technologies such as expert systems, relational databases, 
     voice recognition units, and high performance computer 
     networks, will help empower families and individuals seeking 
     assistance. At the same time, these technologies will assist 
     in reducing fraud and abuse so that Federal and State 
     benefits are available to those who are in need.

             State-level Systems and National Clearinghouse

       To achieve this vision, we are proposing an information 
     infrastructure which allows, at the State level, the 
     integration and interfacing of multiple systems, for example, 
     AFDC, food stamps, work programs, child care, Child Support 
     Enforcement (CSE), and others. The Federal Government, in 
     partnership with the States, or groups of States in 
     partnership with the Federal Government, may develop model 
     systems that perform these functions or subsets of these 
     functions.
       To support the broader information needs, the new 
     information infrastructure needs to include, on the one hand, 
     a national data ``clearinghouse'' to coordinate data exchange 
     and for other purposes and, on the other, enhanced State and 
     local information processing systems to improve management 
     and delivery of services.
       Enhanced State Systems. At the State and local level, the 
     systems infrastructure would include automated subsystems for 
     intake, eligibility determination, assessment, and referral; 
     case management and service delivery; and benefit, payment, 
     and reporting. The infrastructure would consist of new 
     systems components integrated with existing systems or with 
     somewhat enhanced existing systems. Variations in existing 
     automated systems would make it unreasonable to try to 
     standardize these systems. Rather, we need linkages that 
     allow for the accurate exchange of data between systems.
       By linking the various programs and systems, States would 
     be able to provide integrated services and/or benefits to 
     families and individuals ``at-risk'' of needing financial 
     assistance, those receiving assistance, and those 
     transitioning from public assistance program to self-
     sufficiency. As part of this automation effort, enhanced 
     funding will be offered as an incentive for States to develop 
     and implement statewide, automated systems for JOBS/WORK 
     management and monitoring, and to enable seamless services 
     for child care. Such an automated system infrastructure would 
     enable States to provide greater support to families who 
     might otherwise dissolve, as well as to parents who may, 
     because of unmet needs, be forced to terminate employment or 
     training opportunities.
       In addition, as Electronic Benefit Transfer (EBT) and 
     Electronic Funds Transfer (EFT) become more widespread, they 
     would be used for other programs, such as child care 
     reporting and payments, and reporting of JOBS participation. 
     As an example, a JOBS participant could be required to self-
     report either through a touch-tone phone that connects to a 
     Voice Recognition Unit (VRU) or through the use of plastic 
     card technology.
       Enhanced Detection of Fraud and Abuse. For detection and 
     analysis of fraud and abuse, computer matching of records and 
     sharing of data among State programs and at a national level 
     would be increased. For example, the child support 
     information needs for establishing an order or in review and 
     modification would be extremely valuable for access by the 
     AFDC agency, after the agency has performed prospective 
     eligibility determinations, but before benefits are granted. 
     In addition, the National Clearinghouse would be extremely 
     helpful in ensuring that an individual does not obtain AFDC 
     beyond the time limit, does not receive benefits in more than 
     one location or for children claimed by another family, or 
     fails to report employment.
       Data and Reporting on Program Operations and Clients. 
     Current methods for data gathering and reporting requirements 
     on program operations and clients could be reduced. Many of 
     the current data and reporting requirements will be 
     superseded by new ones, but in any case, many current items 
     are of low data quality or of little interest. Current 
     requirements will be re-examined.
       National Clearinghouse. The National Clearinghouse will be 
     a collection of abbreviated case and other data that 
     ``points'' to where detailed case data resides and provides 
     the minimum information for implementing key program 
     features. Described in detail under the Child Support 
     Enforcement section, this Clearinghouse will not be a Federal 
     data system that performs individual case activities. While 
     information will be coming to and from the Clearinghouse, it 
     will contain limited data--States will retain overall 
     processing responsibility.
       The Clearinghouse will maintain at least the following data 
     registries:
       The National New Hire Registry will maintain employment 
     data for individuals, including new hire information.
       The National Locate Registry will enhance and subsume the 
     current Federal Parent Locator Service (FPLS) functions.
       The National Child Support Registry will contain data on 
     all non-custodial parents who have support orders.
       The National Welfare Receipt Registry will contain data to 
     operate a time-limited assistance program, such as the 
     beginning and ending dates of welfare receipt, participation 
     in various work programs, and the name of the State providing 
     benefits.


                  a. national welfare receipt registry

       (a) As part of the National Clearinghouse, the Secretary of 
     DHHS will establish and operate a National Welfare Receipt 
     Registry to assist in operating a national time-limited 
     assistance ``clock''.
       (b) The Clearinghouse, described more fully in the section 
     on Information Systems for the Child Support Enforcement 
     Program, will contain four Registries including the National 
     Welfare Receipt Registry. At a minimum, the Welfare Receipt 
     Registry will assist States in calculating the remaining 
     months an individual may be eligible to receive benefits and 
     reduce fraud and abuse.
       (c) The National Welfare Receipt Registry will be 
     maintained by obtaining electronically from each State IV-A 
     agency information on individuals receiving benefits. Upon 
     request, the Clearinghouse will send electronically 
     information to the State agency.
       (d) The information to be exchanged is as follows:
       (i) Information to be sent to the Clearinghouse includes 
     identification information, such as the names and Social 
     Security Numbers of members of the family; the dates an 
     individual went on and off assistance; participation 
     information for AFDC, JOBS and WORK programs; information on 
     extensions of time-limits and sanctions for non-compliance 
     for these and other programs; as well as other information as 
     determined necessary by the secretary.
       (ii) Information to be received from the Clearinghouse 
     includes whether the applicant has been reported to have 
     received assistance and, if so, when and in which State(s); 
     whether the Social Security Numbers supplied are valid; 
     whether the applicant is contained in the New Hire Registry 
     as being recently employed; and other information as 
     determined by the Secretary.
       (e) Information Discrepancies: If an information 
     discrepancy exists between the information the client 
     presents to the State agency and the information in the 
     Clearinghouse, the Secretary will assist in the resolution by 
     verifying that the data contained in the Registry reflects 
     the information contained in the State agency records where 
     the individual has previous assistance, correcting the 
     Clearinghouse information if necessary, and reporting the 
     updated information to the requesting State.
       (f) The States involved must take appropriate actions to 
     resolve the discrepancy in accordance with normal due process 
     requirements and must submit corrected information to the 
     Clearinghouse when the discrepancy is resolved.


      b. state transitional assistance support information system

       (a) The State agency, in order to assist in the 
     administration of time-limited welfare, will establish and 
     operate a statewide, automated, Transitional Assistance 
     Support Information System. This system will serve to 
     significantly improve the effectiveness and efficiency of 
     State systems information infrastructures for the management, 
     monitoring, and reporting on clients as they work towards 
     independence and self sufficiency. The State may 
     receive enhanced funding for these changes under specific 
     approaches approved by DHHS and described below.
       (b) The minimum capabilities of the State system include:
       (i) Exchanging information as described above in A(d) in a 
     standard, electronic format with the National Clearinghouse;
       (ii) Querying electronically the National Welfare Receipt 
     Registry in the National Clearinghouse before granting 
     assistance;
       (iii) Using the information received from the Clearinghouse 
     in the determination of eligibility and time period for which 
     assistance may be granted:
       (iv) Reporting corrected or updated information to the 
     Registry; and
       (v) Meeting current statutory requirements for security and 
     privacy.
       (c) Alternative Interim Method: The Secretary may approve 
     an alternative interim method if the State demonstrates that 
     the alternative will be effective in reporting, receiving, 
     and using transitional assistance information and the State 
     has an approved Advanced Planning Document for the Automated 
     Data Processing System that meets requirements in the 
     proposed statute.
       (d) The State may also augment the minimum system described 
     above in specific ways and receive enhanced match for 
     development costs under certain conditions. (The specific 
     conditions are described in a later section.) Under this 
     augmented system, clients will receive considerably enhanced 
     service responsiveness through responsiveness through 
     prescreening to match available services to individuals and 
     determine the required qualifying and verification 
     information needed for each service.


                       c. state automated systems

       (a) As part of building better automated systems, States 
     will be offered enhanced funding if they take one of two 
     strategies to automation projects. That is, to economically 
     and efficiently develop and implement automated systems in 
     support of AFDC, child care, and JOBS/WORK programs, the 
     Secretary will, as a condition of enhanced funding, require 
     States to develop and use model systems developed in 
     partnership with the Federal Government and other States 
     under one of two approaches.

1. Federally Led and Sponsored Model Systems, in Partnership with State 
                                Agencies

       Under this approach, the Department in partnership with the 
     States will design and develop model automated support and 
     case management information systems that assist the States in 
     managing, controlling, accounting for, and monitoring the 
     factors of the State plans for AFDC, child care, and JOBS/
     WORK programs as well as providing security safeguards. These 
     model systems are described below:
       (a) Transitional Assistance Support Information System: 
     This model system will provide statewide, automated, 
     procedures and processes to meet both the minimum 
     requirements described above plus additional functions. The 
     additional functions include at least: performing intake and 
     referral; monitoring and reporting against some performance 
     measures; exchanging information on-line with the 
     Clearinghouse and exchanging data with other automated case 
     management and information systems.
       (b) Child Care Case Management Information System: This 
     model system will provide statewide, automated, procedures 
     and processes to achieve seamless child care delivery, 
     including all child care programs of the State. This system 
     will assist the State in administration of child care 
     program(s) and to manage the non-service related CCDBG funds. 
     The functions will meet both the minimum requirements 
     described above plus additional functions which will include, 
     at least, the ability to: identify families and children in 
     need of child care, establish eligibility for child care, and 
     determine funding source(s); plan and monitor services, 
     determine payments, and update and maintain the family and 
     child care eligibility status for child care; maintain and 
     monitor necessary provider information; process payments and 
     meet other fiscal needs for the management of child care 
     program(s); produce reports required by Federal and State 
     directives; monitor and report performance against 
     performance standards; and electronically exchange 
     information with other automated case management systems and 
     with the statewide automated transitional assistance support 
     system.
       (c) JOBS/WORK Case Management Information System: This 
     model system will provide statewide, automated, procedures 
     and processes to control, account for, and monitor all 
     factors of the JOBS and WORK programs and support both 
     management and administrative activities of the programs. 
     these functions will meet both the minimum requirements 
     described above plus additional functions including the 
     capability to: assess a participant's service needs; develop 
     an employability plan; arrange, coordinate, and manage the 
     services or resources needed for the plan; track and monitor 
     ongoing program participation and attendance; exchange 
     information electronically with other programs; and provide 
     performance and assessment information to the Secretary.

    2. Multi-State Collaborative Projects, State Lead with Federal 
                              Partnership

       Under this approach, the Department will assist and support 
     State IV-A agencies, or the State's designated contracted 
     agency (for child care or JOBS), in multi-State collaborative 
     projects for purposes of designing and developing automated 
     system models and in developing enhancements to existing 
     systems as follows:
       (a) Transitional Assistance Support System: In addition to 
     meeting the Federally-sponsored model system functional 
     specifications described above, States may, in collaborative 
     efforts, augment their systems to include automation of 
     additional functions as follows: determining eligibility; 
     improving government assistance standards; performing case 
     maintenance and management functions; calculating, managing, 
     and reconciling payments to eligible recipients; providing 
     for processes and procedures to detect and prevent fraud and 
     abuse; and producing reports.
       (b) Child Care and JOBS/WORK Case Management Information 
     Systems: States may, in collaborative efforts, design, 
     develop, and implement automated information systems that 
     meet the model functional specifications of Child Care and 
     JOBS/WORK described in the Federally-sponsored model 
     approach.


 D. FEDERAL FUNDING FOR NATIONAL WELFARE RECEIPT REGISTRY, MODEL STATE 
   SYSTEMS TO SUPPORT STATE ACTIVITIES, AND TECHNICAL ASSISTANCE AND 
                                TRAINING

       (a) $6 million will be needed to establish the National 
     Welfare Receipt Registry in Fiscal Year 1995 and $4 million 
     to operate the Registry for each of fiscal years 1996 through 
     1999; $7.5 million will be needed to develop the model 
     systems for each of fiscal years 1995 and 1996; and $1 
     million will be needed to provide technical assistance and 
     training to States for each of fiscal years 1995 through 
     1999.


                  E. FEDERAL FUNDING OF STATE SYSTEMS

       (a) Under certain conditions, States may claim Federal 
     Financial Participation (FFP) for the costs to establish and 
     operate automated systems described above. Two match rates 
     will be available.
       (b) Enhanced Match. States are eligible for enhanced match 
     (80 percent FFP) for up to 5 years after enactment for costs 
     incurred in developing and implementing automated systems 
     described above, including the costs of computer hardware, on 
     the condition that the approach to system design, 
     development, and implementation meets one of the two 
     approaches:
       1. Federally Sponsored Model: The State adapts and 
     implements a model/prototype system developed by the 
     Secretary in accordance with the functional specification 
     described in that section, or
       Multi-State Collaborative Project: The State, through a 
     collaborative multi-State consortium, jointly designs, 
     develops, and/or implements, a system or subsystems in 
     accordance with the functional conditions and specifications 
     described in that section.
       (c) The Federal portion of the enhanced match will be 
     limited to $800 million and will be available over a five 
     year period State-by-State in accordance with a formula that 
     takes into consideration State program caseload, existing 
     level of automation and performance and progress against an 
     approved advance planning document. The Secretary will 
     develop regulations for the definition and implementation of 
     these funding provisions.
       (d) Exception for Adaptation of Existing System to Meet 
     Minimum Requirements: If a State demonstrates to the 
     Secretary that modifications to an existing system meet the 
     minimum requirements of a Transitional Assistance Support 
     System as described in that section and meet certain 
     additional conditions, the Secretary may grant an exception 
     to the enhanced funding requirements. The additional 
     conditions are that the State requires limited enhancements 
     to an existing system and the State demonstrates that it 
     would be more cost-effective to proceed independently or with 
     custom modifications.
       (e) Regular Match: States will receive 50 percent FFP for 
     operational costs and for costs they incur if they do not 
     follow the enhanced match provisions described above and for 
     systems features beyond those provided above.


                f. additional fraud and abuse provisions

                                 Vision

       Under this proposal, statutory provisions will require that 
     States and specific Federal agencies utilize the information 
     for purposes of reducing waste, fraud, and abuse. In order to 
     ensure that Federal and State agencies implement and utilize 
     the prescribed systems effectively for these purposes the 
     following provisions apply. Federal and State expenditures 
     for specific administrative costs will be reduced if--despite 
     full implementation and use of the systems--actual savings 
     from anti-fraud provisions do not meet anticipated savings. 
     This provision will ensure that Federal and State agencies 
     have a stake in the successful implementation and operation 
     of information systems for anti-fraud and abuse purposes.

                             Specifications

       (a) The Department of HHS will certify that the systems 
     associated with the National New Hire Registry, the National 
     Child Support Registry, and the National Welfare Receipt 
     Registry are operational.
       (b) For the purpose of reducing waste, fraud and abuse, the 
     Office of Management and Budget (OMB) must certify that 
     required Federal agencies have implemented and utilized the 
     information fully to utilize information from these data 
     systems.
       (c) If OMB, in consultation with the Secretary of HHS, 
     certifies that actual saving as a result of increased Federal 
     and State activities of anti-fraud provisions are less than 
     $290 million over five years (including savings as a result 
     of Federal agencies fully utilizing the information) the 
     following expenditure shall be reduced to make up the short-
     fall (This provision shall apply only if all provisions 
     specified in (a) and (b) are fully met):
       (i) The 2% set-aside for technical assistance, research and 
     demonstrations (as specified in the Technical Assistance, 
     Research and Demonstration section) and the 1% set-aside for 
     training, technical assistance, research, and demonstrations 
     (as specified in the Child Support Enforcement section) shall 
     be reduced by an amount equal to the difference or up to the 
     amount of the set-aside.
       (ii) If the shortfall in savings is still greater than in 
     (i), additional funds shall be reduced via the following 
     mechanism: States that fail to implement the improved 
     verification data source will receive 3% less in IV-A 
     administrative matching funds.
       (d) This provision shall be assessed in FY 1998. Penalties, 
     if applicable, will be applied to FY 1999 funding, and every 
     year thereafter.
       (e) This provision shall expire at the close of FY 2004.


 technical assistance, research, demonstrations, and evaluation [Title 
                                  IV]

           a. technical assistance, research, and evaluation

   1. Authority to Tap JOBS/WORK and Child Care Funds For Research, 
      Demonstrations, Evaluation and Technical Assistance Purposes

                              Current law

       There are a variety of ways that funds are set aside for 
     evaluation oversight and technical assistance support to 
     programs. The Family Support Act, for example, authorizes 
     specific amounts for implementation and effectiveness studies 
     of the JOBS Program. Under the Head Start Act, 13 percent of 
     annual appropriations are reserved by the Secretary for a 
     broad range of uses including training, technical assistance 
     and evaluation. The Secretary of HHS, at her discretion, sets 
     aside 1% of Public Health program funding for evaluation of 
     its programs.

                                 Vision

       Welfare reform seeks nothing less than a change in the 
     ``culture'' of the welfare system. This necessitates making 
     major changes in a system that has primarily been focused on 
     issuing checks. Now we will be expecting States to change 
     individual behavior and their own institutions so that 
     welfare recipients will be moved into mainstream society. 
     This will not be done easily. We see a major role for 
     evaluation, technical assistance and information sharing. 
     Initially, States will require considerable assistance as 
     they design and implement the changes required under this 
     legislation. Then, as one State or locality finds strategies 
     that work, those lessons ought to be widely shared with 
     others. One of the elements critical to this reform effort 
     has been the lessons learned from the careful evaluations 
     done of earlier programs. Those lessons and the feedback 
     secured during the implementation of these reforms will be 
     used in a formative sense and will guide continuing 
     innovation into the future. We propose reserving 2% of the 
     total annual capped entitlement funding for JOBS and At-Risk 
     Child Care in FY 1996, FY 1997, and FY 1998 and 1% of the 
     JOBS, At-Risk Child Care and WORK annual capped entitlement 
     in fiscal years thereafter for research, demonstrations, 
     evaluation, and technical assistance, with a significant 
     amount reserved for child care. We seek to evaluate 
     demonstrations in a number of different areas. Please see the 
     sections on Make Work Pay, Child Support Enforcement, and 
     Prevent Pregnancy and Promote Parental Responsibility.

                               Rationale

       Sufficient funds should be available to ensure that the 
     Department(s) can provide adequate levels of technical 
     assistance to States, oversee State implementation of welfare 
     reform, and carry out other supportive research and training 
     activities. Tying funds to a percentage of the overall 
     program dollars ensures that as the program grows, funds for 
     research, evaluation and technical assistance also grow.

                             Specifications

       (a) Reserve for the Secretary from amounts authorized for 
     the capped JOBS, WORK and At-Risk Child Care funding, two 
     percent of JOBS and child care funds in Fiscal Years 1996 
     through 1998, and one percent of JOBS, At-Risk Child Care, 
     and WORK for each fiscal year thereafter for expenditures for 
     research, evaluation, the provision of technical assistance 
     to the States and to carry out research, evaluations, and 
     demonstrations as described below. Technical assistance is 
     defined broadly to include training, ``hands-on'' 
     consultation to States requesting assistance, the 
     transferring of ``best practices'' from one State to 
     another, etc.
       (b) To the extent that these issues can be researched in a 
     methodologically sound way, the Secretary of HHS, in 
     consultation with the Secretary of Labor and the Secretary of 
     Education, shall conduct the following evaluation studies of 
     time-limited JOBS followed by WORK:
       (i) A two-phase implementation study that describes:
       How States and localities initially responded to new 
     policies, implemented the new program, the obstacles and 
     barriers encountered, institutional arrangements entered 
     into, and recommendations;
       How States and localities subsequently performed as their 
     programs matured including program design, services provided, 
     operating procedures, funding levels, participation rates and 
     recommendations. The study will also consider the effects on 
     State and local administration of welfare programs including 
     management systems, staffing structure, and ``culture.''
       (ii) A study of the effectiveness of a time-limited 
     assistance program followed by work in helping participants 
     achieve self-sufficiency and the corresponding effect on 
     unemployment rates, reduction of welfare dependency and teen 
     pregnancy, and the effects on income levels, family 
     structure, and children's well-being.
       (iii) A comprehensive national study of the WORK program 
     after it has been in effect for two years to measure success 
     its success in assisting participants to obtain unsubsidized 
     employment and to evaluate the skill levels and barriers to 
     participants who were unable to obtain unsubsidized jobs.


                           B. DEMONSTRATIONS

  1. Authority to Initiate Major Demonstrations and Pilot Programs to 
Improve the Effectiveness and Efficiency of the Reformed Welfare System

                              Current law

       The Social Security Act authorizes the Secretary to conduct 
     demonstrations. Many States operate demonstration programs 
     with strong evaluation components that have helped shape 
     public policy.

                                 Vision

       We propose key demonstrations in areas where additional 
     feedback is required about the cost, feasibility, and/or 
     effectiveness is necessary before national policy is 
     determined. In each area, we propose both a set of policies 
     for immediate implementation and a set of demonstrations 
     designed to explore ideas for still bolder innovation in the 
     future. In addition, we would encourage States, Indian 
     tribes, and Alaskan Native organizations to develop their own 
     demonstrations. In some cases we would provide additional 
     Federal resources. Lessons from past demonstrations have been 
     central to both the development of the Family Support Act and 
     to this plan.

                             Specifications

       (a) The Secretary of HHS shall have the authority to 
     approve and conduct the following demonstrations, which will 
     be funded out of the funds allocated to technical assistance, 
     research, demonstrations, and evaluation (as discussed in 
     detail below):

 2. Demonstrations to Encourage Placement During Participation in the 
                              JOBS Program

    
    

                              Current law

       There are no provisions in current law similar to what is 
     proposed under this section.

                                 Vision

       One of the explicit goals of welfare reform is to transform 
     the welfare system (and the JOBS program) into one which 
     focuses from the very first day on helping people to get and 
     hold jobs. To achieve this, we will find demonstration 
     programs that focus on enhancing job placements. We envision 
     two strategies, as specified below.

                               Rationale

       A good JOBS program balances the need to communicate to 
     those entering the welfare system that AFDC is a temporary 
     support system by moving recipients quickly into the labor 
     market while remaining sensitive to the fact that all 
     recipients are not competitive in that market. We are 
     changing the culture of welfare to get out of the business of 
     writing checks and into the business of helping people find 
     and keep jobs. We are changing the incentives in the welfare 
     system to emphasize long-term placement in the workforce. We 
     want to experiment with a number of new approaches that will 
     spur caseworkers, clients, and service providers to help 
     people get off welfare for good. We need more information 
     about how to set up rewards that will reflect the new 
     ``mission'' of the welfare system.

                             Specifications

       (a) Placement Bonuses: No more than five demonstration 
     grants would be available for programs that use placement 
     bonuses to reward agencies or caseworkers who are 
     particularly good at placing JOBS participants in private 
     sector jobs. The emphasis will be on securing long-term 
     placements in the labor market and on finding ways to place 
     medium and long-term recipients.
       (b) Placement Firms: No more than five demonstration grants 
     would be available to States to work with private not-for-
     profit and for-profit organizations. Services that the 
     organization will deliver, such as work preparation, 
     placement services, and follow-up services will be specified. 
     Performance standards will specify the basis on which the 
     organizations will be paid. These performance standards would 
     be based on placement and retention measures.
       (c) The Secretary shall evaluate the effectiveness of such 
     programs, preferably using random assignment of individuals 
     to treatment and control groups or, where that is 
     inappropriate for scientific reasons, the most rigorous 
     appropriate method.

 3. Demonstrations to Develop Work-for-Wages Programs Outside the AFDC 
                                 System

                                 Vision

       States are encouraged to experiment with approaches to 
     designing and administering the WORK program outside of the 
     AFDC system. The Secretary may authorize up to 5 
     demonstration projects to assess the feasibility and 
     effectiveness of WORK programs that are administered outside 
     of the AFDC system. These demonstrations will be rigorously 
     evaluated.

                               Rationale

       It is not clear that the welfare system will be the most 
     appropriate agency to run an employment based system like the 
     WORK program in all States. In some cases, state-level Labor 
     Department entities, non-profit, or proprietary agencies may 
     have a comparative advantage. Even if a comparative advantage 
     does lie with an organization independent of the welfare 
     system, questions remain. For example, it is not apparent 
     that the required ongoing communication between the agencies 
     running the WORK program and the agency issuing supplemental 
     income support checks (and retaining responsibility for other 
     residual welfare functions) can be maintained. This, and 
     other management uncertainties, must be resolved through 
     demonstration programs.

                             Specifications

       (a) Up to 5 local demonstration projects to test the 
     development and implementation of WORK programs 
     administratively located outside of the AFDC system will be 
     conducted.
       (b) The Secretary shall conduct a rigorous evaluation, 
     preferably using a random assignment to treatment and control 
     groups or, where that is inappropriate for scientific 
     reasons, the most rigorous appropriate method.
       (c) All individuals who exhaust their transitional 
     assistance must be eligible to apply to the WORK program 
     either after their initial spell on welfare or if they leave 
     JOBS or WORK and subsequently reapply for assistance and have 
     no time left. States may not deny admission into WORK for any 
     reasons other than those discussed under the section on 
     sanction policy.
       (d) States must close AFDC cases when recipients reach the 
     time limit. WORK programs under this subsection may only pay 
     participants for performance of some activity.
       (e) States may develop a system of compensation that mixes 
     wages and WORK stipends. States must develop a system that 
     ensures that WORK participants who comply fully with the 
     program's rules are receiving income at least equal to what 
     they would have received on AFDC plus the work disregard. 
     States shall have flexibility on this criteria in the 
     interest of administrative simplicity but the income from 
     full compliance in WORK must exceed income on AFDC for a 
     similarly situated family.
       (f) States will be allowed to pay participants WORK 
     stipends when they are not in a WORK assignment as 
     compensation for a range of activities to be designated by 
     the state, including job search, job clubs, and interim 
     community service assignments. States will have flexibility 
     in designing the stipend system, but it will have to be a 
     pay-for-activity system.
       (g) States would be allowed to develop a system of wage 
     supplementation. WORK stipends could be provided to part-time 
     workers either in unsubsidized jobs or in the WORK program. 
     States would be encouraged to develop a simple system of 
     supplements.
       (h) Eligibility for the supplement would be contingent on 
     satisfactory participation in WORK.

                 4. WORK Support Agency Demonstrations

                              Current law

       At State option, Federal financial participation is 
     available for JOBS activities and services provided for 
     certain periods to an individual who has been a JOBS 
     participant but who loses eligibility for AFDC. These 
     activities and periods are: (1) case management activities 
     and supportive services for up to 90 days from the date the 
     individual loses eligibility for AFDC; and (2) JOBS component 
     activities for the duration of the activity if funds for the 
     activity are obligated or expended before the individual 
     loses eligibility for AFDC. (45 CFR 250.73) In addition, the 
     State agency may provide, pay for, or reimburse one-time 
     work-related expenses which it determines are necessary for 
     an applicant or recipient to accept or maintain employment. 
     (45 CFR 255.2)

                                 Vision

       In order to learn about the effects of work support 
     strategies, we propose demonstration programs to test 
     different approaches. The goal is to increase employment 
     retention and reduce welfare recidivism by helping those 
     individuals who become employed keep their jobs and those who 
     lose their jobs to regain employment quickly. Case managers 
     will maintain contact with and offer assistance to current or 
     former AFDC recipients who obtain employment and provide 
     direct assistance to aid them in employment retention or to 
     help find a subsequent job. Payments to help meet the costs 
     of certain employment-related needs may also be provided if 
     determined necessary for job acceptance or retention, or 
     reemployment.
       States might establish work support agencies with 
     distinctly different responsibilities than IV-A agencies and 
     possibly housed separately from the local IV-A agencies to 
     provide centralized services specifically to working 
     families. The Work Support agencies could be administered, 
     for example, by the State employment or labor departments; by 
     Community Action Agencies, or a One-Stop Shopping Center.
       The work support offices might provide food stamps, child 
     care, advance EITC payments, and possibly health insurance 
     subsidies to eligible low-income working families, or (at 
     local discretion) families suffering a temporary labor market 
     disruption. Employment-related services such as career 
     counseling, assistance with updating resumes and filling out 
     job applications would also be made available specifically to 
     individuals who had left AFDC for work through the work 
     support office. Services which might also be included are 
     time and money management, family issues, workplace rules, 
     establishing ongoing relationships with employers, providing 
     mediation between employer and employee, assisting with 
     application for the EITC, making referrals to other community 
     services, providing or arranging for supportive services 
     needed for employment retention or re-employment, and 
     providing for job referral or placement assistance if initial 
     jobs are lost. The supportive services which can be provided 
     to aid job retention may include: occupational license, 
     certification, or test fees, tool/equipment expenses, 
     clothing, uniforms, or safety equipment costs, driver's 
     license fees, motor vehicle maintenance, repair, insurance or 
     license costs, other transportation expenses, moving expenses 
     (related to accepting employment), emergency child care 
     expenses, health-related expenses not covered by Medicaid, 
     short-term mental health expenses, and family counseling.

                               Rationale

       A significant proportion of new entrants will move between 
     States of dependency and non-dependency. Some 70 percent of 
     new entrants exit in two years, about one-half of these for 
     work. But within five years, some 70 percent of those will 
     return. A similar picture is found for those in the secondary 
     labor market. Job transitions and disruptions are very 
     common, even within brief time periods. Many of these people 
     do not have sufficient work histories to qualify for benefits 
     under the Unemployment Insurance system. The primary recourse 
     available upon a job loss is the welfare system.
       Our welfare and JOBS systems are geared toward graduations; 
     treating people and moving them on. We now assume that even 
     those with high levels of human capital may have to make 
     seven or eight reinvestments in training and new skill/
     technology acquisitions over the course of a lifetime. We 
     must begin to work on developing a similar perspective and 
     supportive systems for low-wage workers and those who must, 
     on occasion, receive income assistance for their families.
       The participating State would be responsible for the design 
     of the work support agency, including the administrative 
     structure and the menu of services, but would have to receive 
     approval from the appropriate departments (in most cases 
     Agriculture, Health and Human Services and Treasury).

                             Specifications

       (a) A separate authority under Title IV of the Social 
     Security Act would be established whereby a designated number 
     of entities chosen by the Secretary, in consultation with the 
     Secretary of Labor, Agriculture, and Treasury, would be 
     entitled to demonstration grants to operate a Work Support 
     Agency to support individuals who have left AFDC for work.
       (b) Up to five demonstration projects will be funded.
       (c) The activities under the demonstration would be focused 
     on providing coordinated employment-related services. 
     Grantees would be given great flexibility to design programs 
     to help former AFDC recipients retain employment.

    5. Demonstration Grants for Innovative Paternity and Parenting 
                              Initiatives

                                 Vision

       This proposal would focus on helping fathers (primarily 
     poor, young, non-marital fathers) understand and accept their 
     responsibilities to nurture and support their children. 
     Building on programs which seek to enhance the well-being of 
     children, this proposal would facilitate the development of 
     parenting components aimed specifically at fathers whose 
     participation in the lives of their children is often ignored 
     or even unintentionally discouraged.

                               Rationale

       There is considerable evidence that increased poverty is 
     not the only adverse affect on children of fatherless 
     families. Fathers have an important role to play in fostering 
     self-esteem and self-control in children as well as 
     increasing and promoting the career aspirations of both sons 
     and daughters. Some clinical researchers and social 
     commentators believe that much of the increase in violent 
     behavior among teenage boys is at least in part due to lack 
     of positive male role-models and supportive fathering in many 
     communities. But good fathering is especially difficult for 
     the many men who themselves belong to a second and third 
     generation of ``fatherless'' families or whose own role 
     models for parenting where abusive or neglectful.

                             Specifications

       (a) Demonstration grants will be made available to States, 
     Indian tribes, and/or community based organizations to 
     develop and implement non-custodial parent (fathers) 
     components for existing programs for high risk families 
     (e.g., Head Start, Even Start, Healthy Start, Family 
     Preservation, Teen Pregnancy and Prevention) to promote 
     responsible parenting, including the importance of paternity 
     establishment and economic security for children, and the 
     development of parenting skills.
       (b) Grants must last three years, have an evaluation 
     component, preferably using a random assignment of 
     individuals to treatment and control groups or, where that is 
     inappropriate for scientific reasons, the most rigorous 
     appropriate method.

                        6. Section 1115 Waivers

                              Current Law

       Section 1115(c)(3) of the Social Security Act restricts 
     State waivers which can be granted under the child support 
     program to those that would not increase the Federal cost of 
     the AFDC program. In all other cases, States can offset 
     increased costs in one program (such as increased 
     expenditures for JOBS) with savings in other areas (such as 
     AFDC and Medicaid). In child support, however, savings 
     generated from non-IV-A programs cannot be used to cover IV-A 
     costs resulting from IV-D waivers. The within-AFDC cost 
     neutrality provisions for the child support program 
     discourages States from looking at IV-D as part of their 
     total welfare reform strategy and greatly restricts their 
     abilities to design and implement child support 
     demonstrations of interest and significance.

                             Specification

       (a) Increase States' ability to test innovative IV-D and 
     non-custodial parent programs. Give them the same degree of 
     flexibility to offset AFDC costs resulting from 
     demonstrations involving child support that now exists in the 
     other programs. In addition, give States the authority to 
     value the worth of work activities that non-custodial fathers 
     do to reduce their AFDC debts and child support arrearages.


  prevent teen pregnancy and promote parental responsibility [title v]

            a. national teen pregnancy prevention initiative

  1. Teen Pregnancy Prevention Grants and Establishment of a National 
                    Clearinghouse on Teen Pregnancy

                              Current Law

       There are numerous Federal programs that address the issue 
     of teen pregnancy prevention, including repeat pregnancies. 
     Some of these programs focus specifically on teen pregnancy, 
     but given that the multiple problems adolescents face are 
     often interrelated, the specific problems that other programs 
     emphasize (e.g., alcohol and drug abuse, school drop-out) are 
     also related to adolescent pregnancy prevention. Current 
     federal efforts include HHS's family planning grants, 
     maternal and child health programs, adolescent health 
     programs, runaway and homeless youth programs, and alcohol 
     and drug abuse prevention programs. Department of Education 
     efforts include drug-free schools and communities programs, 
     and postsecondary education outreach and student support 
     services programs; and the Department of Labor efforts 
     include New Chance, Youth Fair Chance, JTPA programs, and the 
     Young Unwed Fathers Project. There are also programs in the 
     Departments of Housing and Urban Development, Agriculture, 
     Justice, Interior and Defense.

                                 Vision

       We must address the issue of births among unmarried teens. 
     There will be a national campaign to help reduce the number 
     of unmarried teenagers who become pregnant. This campaign 
     will also take into account the myriad of risky behaviors 
     that can be related to teenage pregnancy. It will strive to 
     develop, enhance and promote youth competence, as well as 
     foster ties to families, communities, and society.
       The rise in births to unmarried teens over the past 
     generation has raised the issue of teen pregnancy to enormous 
     national significance. The number of births to unwed teen 
     mothers increased from 92,000 in 1960 to 368,000 in 1991. 
     Adolescents who bring children into the world face a very 
     difficult time getting themselves out of poverty, while young 
     people who graduate from high school and defer childbearing 
     until they are mature, married and able to support their 
     offspring are far more likely to get ahead. Both parents bear 
     responsibility for providing emotional and material support 
     for their child. The overwhelming majority of teenagers who 
     bring children into the world are not yet equipped to fulfill 
     this fundamental obligation. They are often unable to handle 
     peer pressures and the risk of other activities leading to 
     negative consequences, such as alcohol and drug abuse, 
     delinquency and violence.
       The non-legislative aspects of this campaign are a national 
     mobilization of business, national and community voluntary 
     organizations, religious institutions, schools, and the media 
     behind a shared and urgent challenge directed by the 
     President; the announcement of national goals to define the 
     mission and to guide the work of the national campaign; and 
     the establishment of a privately funded non-profit, non-
     partisan entity committed to the goals and mission of the 
     national campaign. These are the essential building-blocks of 
     a comprehensive campaign for youth balancing opportunity and 
     responsibility across the full range of Administration youth 
     initiatives, including Goals 2000, School-to-Work, National 
     Service, the preventive health provisions under the Health 
     Security Act, the after-school and jobs programs included in 
     the prevention package in the Crime Bill, as well as the 
     prevention strategies proposed below as part of welfare 
     reform.
       There are two legislative aspects of this initiative. The 
     first, addressed below, is a Teen Pregnancy Prevention Grant 
     Program where about 1,000 schools and community-based 
     entitles would be provided flexible grants to implement 
     promising teen pregnancy prevention strategies. Funding would 
     be targeted to schools with the highest concentration of 
     middle and high school age youth at-risk. The goal would be 
     to work with youth as early as age 10 and establish 
     continuous contact and involvement through graduation from 
     high school. To ensure quality and establish a visible and 
     effective presence, these programs will be supervised by 
     professional staff and, where feasible, be supported by a 
     team of national service participants provided by the 
     Corporation for National and Community Service. The second, 
     described in number 2 below, is a comprehensive services 
     demonstration approach to enhance our learning from 
     prevention strategies.

                             Specifications

       (a) A separate authority under the Title XX of the Social 
     Security Act would be established for grants to promote the 
     development, operation, expansion, and improvement of school-
     based and -linked adolescent pregnancy prevention programs in 
     areas where there are high poverty rates or high rates of 
     unmarried adolescent births.
       (b) The approved applicant shall be entitled to payment of 
     at least $50,000 and not more than $400,000 each fiscal yer 
     for five years. The grant amount will be based on an 
     assessment of the scope and quality of the proposed program 
     and the number of children to be served by the program. The 
     grant must be expended in the fiscal year it is awarded or in 
     the succeeding fiscal year. At least a 20 percent non-
     Federal, cash or in-kind match, is required. Priority will be 
     given to those with a higher match or an increasing ratio of 
     non-Federal resources over the length of the grant.
       (c) The grants will be jointly awarded by HHS, Education, 
     and the Corporation for National and Community Service, in 
     consultation with other Federal departments and agencies. The 
     administration of the program could be delegated to another 
     Federal entity, such as the proposed Ounce of Prevention or 
     the Community Empowerment Board.
       (d) Eligible grantees are a partnership that includes a 
     local education agency, acting on behalf of one or more 
     schools, and one or more community-based organziations, 
     institutions of higher education, or public or private for-
     profit or non-profit agencies or organizations. Existing 
     successful programs--including those now operated by national 
     voluntary organizations--would be encouraged to apply for 
     funds to expand and upgrade their services. Grantees would 
     have to be located in a school attendance area where either 
     (1) at least 75 percent of the children are from low-income 
     families as defined under part A of title 1 of the Elementary 
     and Secondary Education Act of 1965, or (2) there are a 
     significant number of children receiving AFDC, or (3) there 
     is a high unmarried adolescent birth rate. Geographic 
     distribution, including urban and rural distribution, would 
     be taken into account in selection of grantees.
       (e) Grantees would, based on local needs, design and 
     implement promising programs to prevent teen pregnancy 
     through a variety of approaches. Grantees would be given a 
     great deal of flexibility in designing their program. 
     However, core components at each site must include:
       Curriculum and counseling designed to reach young people 
     that address the full range of consequences of premature 
     sexual behavior and teen pregnancy. Existing models of best 
     practices suggest that these educational activities should 
     focus on developing the psychology and character required for 
     responsible behavior as well as on expanding cognitive 
     knowledge.
       Activities designed to provide opportunities for youth at-
     risk to develop sustained contact with one or more volunteer 
     or professionally trained adults to provide character 
     development. Group coaching, individual mentoring, and a 
     range of activities after-school, on weekends, and in the 
     summer could be included. Such activities could also include 
     community service by the youth themselves.
       To ensure quality, programs would be coordinated by one or 
     more professional staff. The programs, where feasible, would 
     also utilize national service participants to engage 
     students, parents, families, and the community in organized 
     efforts to reduce risk-taking behaviors that may lead to 
     adolescent pregnancy, including the delivery of services and 
     in the coordination of during- or after-school activities. 
     Grantees will be asked to describe the role that any National 
     Service participants will play in the program, consistent 
     with the National and Community Service Act of 1990.
       Grantees are allowed to expand on these core components, 
     including conducting activities as part of another youth 
     development program.
       (f) Grantees would be asked to submit an application. The 
     primary aspect of the application would be a plan which 
     addresses local needs and describes (a) the measurable goals 
     the applicant wants to achieve and how it intends to measure 
     progress in achieving the goals; (b) curriculum and 
     counseling and sustained adult relationships components of 
     the program, as well as any additional components, and how 
     they intend to implement them; and (c) how national service 
     participants will be an integral part of the program, where 
     feasible.
       They would also be asked to provide other assurances, 
     including--
       How the services provided are based on research of 
     effective approaches to reducing teen pregnancy. Other risk-
     taking behaviors correlated with teen pregnancy should also 
     be included.
       How both male and female teens and, where possible, out-of-
     school teens will be served.
       How each program would work with middle and/or high school 
     age youth (ages 10 through 19) to establish continuous 
     contact and involvement through graduation from high school.
       How school staff, parents, community organizations, and the 
     teens to be served have been and will be included in the 
     development of the application as well as the planning and 
     implementation of the program.
       Evidence of ongoing commitment with other community 
     institutions, such as churches, youth groups, universities, 
     businesses, or other community, civic, and fraternal 
     organizations.
       Coordination of their program with other Federal or 
     federally assisted programs, State and local programs, and 
     private activities, and how the applicants resources and 
     services are linked and coordinated. For example, how they 
     are coordinating State education reform efforts underground 
     by the State education agency.
       How the program plans to continue operation following 
     completion of the grant period.
       How funds will not supplant Federal, State, or local funds.
       (g) A grantee would be given priority if their non-Federal 
     resources are significantly is excess of the 20 percent 
     required or there is an increasing ratio of non-Federal 
     resources over the length of the grant, and if they 
     participate in other Federal and non-Federal programs.
       (h) The Secretary may terminate a grant before the end of 
     the 5-year period if the Secretary determines that the 
     grantee conducting the project has failed substantially to 
     carry out the project as described in the approved 
     application.
       (i) Total funding for the program is $300 million over five 
     years. $20 million in FY 1995, $40 million in FY 1996, $60 
     million in FY 1997, $80 million in FY 1998 and $100 million 
     in FY 1999 and each subsequent fiscal year thereafter. Up to 
     ten percent of the funding will be set-aside for the 
     evaluation, training, and technical assistance as well as for 
     establishment of a National Clearinghouse on Teen Pregnancy 
     (see j. and k. below). Since this program and the 
     Clearinghouse is authorized through Title XX of the Social 
     Security Act, any funds not expended in a fiscal year shall 
     be redirected to the Title XX Social Services Block Grant 
     Program.
       (j) A rigorous Federal evaluation of some sites would be 
     conducted. Grantees would be asked to provide information 
     requested for the evaluation. Training and technical 
     assistance would also be provided to the grantees.
       (k) A National Clearinghouse of Teen Pregnancy Prevention 
     would be established to provide communities and schools with 
     teen pregnancy prevention programs with curricula, models, 
     materials, training and technical assistance. There could be 
     an existing clearinghouse or technical assistance center. It 
     will establish an information exchange and network on 
     promising models and rigorous evaluation.
       The Clearinghouse would be a national center for the 
     collection and dissemination of programmatic information and 
     technical assistance that relates to teen pregnancy 
     prevention programs. It will also look at the State of teen 
     pregnancy prevention program development, including 
     information on the most effective models. It would develop 
     and sponsor training institutes and curricula for teen 
     pregnancy prevention program staff, and develop networks of 
     for sharing and disseminating information. The Clearinghouse 
     could also conduct evaluations of teen pregnancy prevention 
     programs (not limited to the grants provided in this bill).

 2. Learning from Prevention Approaches through Comprehensive Services 
   Demonstrations to Prevent Teen Pregnancy in High Risk Communities

                              Current Law

       There are demonstration authorities that exist to serve 
     youth in particular areas, but most are not as comprehensive 
     as the demonstrations described below in the scope of 
     services for all youth and are not a saturation model.

                                 Vision

       Early unwed child-bearing and other problem behaviors are 
     interrelated and strongly influenced by the general life-
     experiences associated with poverty. Changing the 
     circumstances in which people live and consequently how they 
     view themselves is needed to change the decisions young 
     people make in regard to their lives.
       For any effort which hopes to have results that are large 
     enough to be meaningful, attention must be made to 
     circumstances in which youth grow up. It should address a 
     wide spectrum of areas associated with youth living in a 
     healthy community: economic opportunity, safety, health, and 
     education.
       Particular emphasis must be paid to the delay of sexual 
     activity and prevention of adolescent pregnancy before 
     marriage. Programs that combine these elements have shown the 
     most promise, especially for adolescents who are motivated to 
     avoid pregnancy until they are married. However, for those 
     populations where adolescent pregnancy is a symptom of deeper 
     problems, education and contraceptive services alone will be 
     inadequate; they must be part of a much wider spectrum of 
     services.
       Interventions need to enhance education, prevent drug use, 
     link education to health and other services, and help 
     stabilize communities and families in trouble. This would 
     provide a sense of rationality and order in which you can 
     develop, make decisions, place trust in individuals and 
     institutions serving them, and have a reasonable expectation 
     of a long, safe, and productive life.
       Comprehensive Demonstration Grants for Youth in High-Risk 
     Communities of sufficient size or ``critical mass'' to 
     significantly improve the day to day experiences, decisions 
     and behaviors of youth are proposed. Services would be non-
     categorical, integrated and delivered with a personal 
     dimension. They would follow a ``youth development'' model 
     and would seek to assist communities as well as directly 
     support youth and families. These demonstrations would be 
     coordinated with other Administration activities, such as the 
     prevention components of the Crime bill and empowerment 
     zones, and would be part of an overall community strategy for 
     youth.

                             Specifications

       (a) A separate authority under the Title XX of the Social 
     Security Act would be established whereby a designated number 
     of community sites chosen by the Secretary, in consultation 
     with the Secretaries of Education, HUD, Justice, Labor, and 
     the Director of the Office of National Drug Control Policy, 
     would be entitled to a demonstration grant to educate and 
     support school-age youth (youth ages 10 through 21) in high 
     risk situations and their family members through 
     comprehensive social and health services, with an emphasis on 
     pregnancy prevention.
       (b) Funding and services provided under this demonstration 
     do not have to achieve this goal of comprehensiveness in and 
     of themselves. Rather, this funding can be used to provide 
     ``glue money,'' fill gaps in services, ensure coordination of 
     services, and other similar activities which will help 
     achieve the overall goal of comprehensive integrated services 
     to youth.
       (c) Starting in FY 1995, up to seven community sites would 
     be entitled to $90 million over 5 years (up to $3.6 million 
     per site). Grantees would be required to provide a 10 
     percent, in cash or in-kind, match of the Federal funding. 
     Priority would be given to those with a higher match or an 
     increasing ratio of non-Federal resources over the length of 
     the grant. Since this program is authorized through Title XX 
     of the Social Security Act, any funds not expended in a 
     fiscal year shall be redirected to the Title XX Social 
     Services Block Grant Program.
       (d) The demonstration grantee would develop a community-
     wide strategy to address the causes and factors of risk-
     taking tendencies among youth, to positively affect community 
     norms, to increase community health and safety, and to 
     generally improve the social environment to enhance the life 
     choices of community youth. The strategy would be used to 
     provide a comprehensive set of coordinated services designed 
     to saturate the community and would include, but not be 
     limited to, the following areas:
       (i) Health education and access services designed to 
     promote physical and mental well-being, delay sexual 
     activity, and personal responsibility. These include school 
     health services, family planning services, alcohol and drug 
     use prevention services and referral for treatment, life 
     skills training, and decision-making skills training.
       (ii) Educational and employability development services 
     designed to promote educational advancement that lead to a 
     high school diploma or its equivalent and opportunities for 
     high skill, high wage job attainment and productive 
     employment, to establish a lifelong commitment to learning 
     and achievement, and to increase self-confidence. Activities 
     could include, but are not limited to, academic tutoring, 
     literacy training, drop-out prevention programs, career and 
     college counseling, mentoring programs, job skills training, 
     apprenticeships, and part-time paid work opportunities.
       (iii) Social support services designed to provide youth 
     with a stable environment, continuous contact with adults, 
     and encouragement to participate in safe and productive 
     activities. Services could include, but are not limited to, 
     cultural, recreational and sports activities, leadership 
     development, peer counseling and crisis intervention, 
     mentoring programs, parenting skills training, and family 
     counseling.
       (iv) Community activities designed to improve community 
     stability, and to encourage youth to participate in community 
     service and establish a stake in the community. Activities 
     could include, but are not limited to, community policing, 
     community service programs, community activities in 
     partnership with less distressed communities, local media 
     campaigns, and establishment of community advisory councils 
     with youth representation.
       (v) Employment opportunity development activities designed 
     to be coordinated with educational and employability 
     development services, social support services, and community 
     activities described in (ii) through (iv). Emphasis would be 
     on the development of linkages with employers within and 
     outside the community to help create employment opportunities 
     and foster an understanding by community youth of the 
     relationship between productive employment, healthy 
     development, and sound life choices.
       (e) Sites would have to meet the following characteristics, 
     and any others determined by the Secretary of Health and 
     Human Services, in consultation with the other Federal 
     agencies.
       (i) Geographic--Communities must identify the community or 
     communities they will target. Smaller, more focused 
     boundaries than those required in Empowerment Zones or Youth 
     Fair Chance will be used in order to develop a ``critical 
     mass'' of services to meet the above goals. Each community 
     must have an identifiable boundary and must be considered a 
     community by its residents.
       (ii) Population--Each community or group of communities 
     have populations of approximately 20,000 to 35,000 people.
       (iii) Poverty--The entire area must have a poverty rate of 
     at least 20%.
       (f) Local governments (or units of local governments) and 
     local public and private non-profit organizations could 
     apply. Applicants would be required to supply evidence of 
     comprehensive commitment to the project and collaboration 
     between the community and the city and State (such as local 
     school to work partnerships). The applicant must involve 
     multiple elements (e.g., government, schools, churches, 
     businesses) of the community and the State in the planning 
     and implementation of the demonstration program. Applicants 
     must demonstrate (1) ability to manage this major effort, (2) 
     resources for obtaining data and maintaining accurate 
     records, (3) how they will coordinate with other programs 
     serving the same population, and (4) assurances that the 
     funding provided through this program will not be used to 
     supplant Federal funds for services and activities which 
     promote the purposes of this program.
       (g) Applicants must define the goals intended to be 
     accomplished under the project. They must also describe the 
     methods to be used in measuring progress toward 
     accomplishment of the goals and outcomes to be measured. 
     Outcomes to be measured would include, but are not limited 
     to, unmarried birth rates, high school graduation rates, 
     college attendance rates, rates of alcohol and other drug use 
     and violence reduction.
       (h) The Department will support rigorous evaluations of all 
     demonstrations. The Federal government will also provide 
     technical assistance to applicants throughout the life of the 
     demonstration. These activities will be coordinated with the 
     National Clearinghouse on Teen Pregnancy Prevention. $10 
     million would be provided for these activities.
       (i) The Secretary may terminate a grant before the end of 
     the 5-year period if the Secretary determines that the 
     grantee conducting the project has failed substantially to 
     carry out the project as described in the approved 
     application.


                 B. INCENTIVES FOR RESPONSIBLE BEHAVIOR

                     1. Minor Parents Live at Home

                              Current Law

       Under Section 402(a)(43) of the Social Security Act, States 
     have the option of requiring minor parents (those under the 
     age of 18) to reside in their parents' household, a legal 
     guardian or other adult relative, or reside in a foster home, 
     maternity home or other adult supervised supportive living 
     arrangement (with certain exceptions). Delaware, Maine, 
     Michigan, Virgin Islands, and Puerto Rico have included this 
     in their State plans.

                                 Vision

       By definition, minor parents are children. We believe that 
     children should be subject to adult supervision. This 
     proposal would require minor parents to live in an 
     environment where they can receive the support and guidance 
     they need. At the same time, the circumstances of each 
     individual minor will be taken into account in making 
     decisions about living arrangements.

                             Specifications

       (a) All States would require minor parents to reside in 
     their parents' household or with a legal guardian, with 
     certain exceptions as described below. This is the same as 
     the allowed State option under current law, except that now 
     the provision would be a requirement in all States.
       (b) As in current law, when a minor parent lives with her 
     parent(s), the parent(s)' income is taken into account in 
     determining the benefit. If the minor parent lives with 
     another responsible adult, the responsible adult's income is 
     not taken into account. Child support would be sought in all 
     cases.
       (c) A minor parent is an individual who (i) is under the 
     age of 18, (ii) has never been married and (iii) is either 
     the natural parent of a dependent child living in the same 
     household or eligible for assistance paid under the State 
     plan to a pregnant woman. This is the same definition as 
     current law.
       (d) The following exceptions (now in current law) to living 
     with a parent or legal guardian will be maintained:
       (i) individual has no parent or legal guardian of his or 
     her own who is living and whose whereabouts are known;
       (ii) no living parent or legal guardian of such individual 
     allows the individual to live in the home of such parent or 
     guardian;
       (iii) the State agency determines that the physical or 
     emotional health or safety of the individual or dependent 
     child would be jeopardized if the individual and dependent 
     child lived in the same residence with the individual's own 
     parent or legal guardian;
       (iv) individual lived apart from his or her own parent or 
     legal guardian for a period of at least one year before 
     either the birth of any dependent child or the individual 
     having made application for aid to families with dependent 
     children under the plan; or
       (v) the State agency otherwise determines (in accordance 
     with regulations issued by the Secretary) that there is good 
     cause for waiving the requirement. (In those States that have 
     this policy, the following are examples of what they 
     determine to be good cause exceptions: the home is the scene 
     of illegal activity; returning home would result in 
     overcrowding, violation of the terms of the lease, or 
     violation of local health and safety standards; the minor 
     parent is actively participating in a substance abuse program 
     which would no longer be available if she returned home; no 
     parent or legal guardian lives in the State.)
       (e) Current law and regulation requiring that the 
     determination of a minor parent's residency status must be 
     made within 45 days that all eligibility determinations are 
     made would be maintained.
       (f) If the State determines the minor should not live with 
     a parent or legal guardian (or the current arrangement ceases 
     to be appropriate because circumstances change), the minor 
     must be assisted in obtaining an appropriate supportive 
     alternative to living independently. (The types of living 
     arrangements that States now use or are considering include 
     living with an adult relative, a licensed foster home, in a 
     group home for pregnant teens or teen parents, and in an 
     approved congregate housing facility.) If no appropriate 
     setting is found the State must grant eligibility, but must 
     utilize case managers to provide support for the minor.
       (g) The State would use the case management for teen parent 
     provision (see #2 below) to make the determinations required 
     under this provision. As described in the next proposal, 
     these case managers would be trained appropriately and have 
     reasonable caseloads. Determinations would be made after a 
     full assessment of the situation, including taking into 
     account the needs and concerns expressed by the minor.
       (h) This provision would go into effect in FY 1996.

  2. Limiting AFDC Benefits To Additional Children Conceived While on 
                                  AFDC

                              Current Law

       Currently, families on welfare receive additional support 
     whenever they have an additional child.

                                 Vision

       States should be allowed to seek to reinforce parental 
     responsibility by not increasing AFDC benefits when a child 
     is conceived while the parent is on welfare. The message of 
     responsibility would be further strengthened by providing the 
     family an opportunity to earn what would have been paid in 
     benefits.

                             Specifications

       (a) Allow States the option of limiting the increase, in 
     full or in part, in the AFDC benefit amount when an 
     additional child is conceived while the parent is on welfare. 
     In order to exercise this option, the State must demonstrate 
     that family planning services under 402(a)(15) are available 
     and provided to all recipients who request them.
       (b) Under this option, if a parent has an additional child, 
     the State must disregard an amount of income equal to any 
     increase in aid that would have been paid as a result of the 
     additional child. Types of income to be disregarded include: 
     (i) child support; (ii) earned income; or (iii) any other 
     source that the State develops and is approved by the 
     Secretary.
       (c) The provision would not be applied in the case of rape 
     or in any other cases that the State agency finds would 
     violate the standards of fairness and good conscience (such 
     as where there is clear evidence that contraceptive failure 
     occurred in an unemployed parent AFDC family).
       (d) This provision would go into effect in FY 1996.

           3. Case Management for All Custodial Teen Parents

                               Curent law

       Section 482(b)(3) of the Social Security Act allows States 
     to provide case management to all those participating in the 
     JOBS program.

                                 Vision

       Frequently, it is multiple problems that lead youth to the 
     welfare system. Their complex needs often stand in the way of 
     their meeting educational requirements and other 
     responsibilities. Removing these barriers to self-sufficiency 
     can involve the confusing and difficult process of accessing 
     multiple service systems. This proposal would provide every 
     teen with a case manager who would help them navigate these 
     systems and hold them accountable for their responsibilities 
     and requirements.

                             Specifications

       (a) Require States to provide case management services to 
     all custodial teen parents under age 20 who are receiving 
     AFDC.
       (b) Case management services to teen parents will include, 
     but is not limited to: (i) assisting recipients in gaining 
     access to services, including, at a minimum, family planning, 
     parenting education, and educational or vocational training 
     services; (ii) determining the best living situation for a 
     minor parent, taking into account the needs and concerns 
     expressed by the minor (see #1 above); (iii) monitoring and 
     enforcing program participation requirements (including 
     sanctions and incentives were appropriate); and (iv) 
     providing ongoing general guidance, encouragement and 
     support.
       States must describe in their plans how they will meet 
     these requirements.
       (c) Case managers must receive adequate training in the 
     social service and youth development field, and States should 
     take into account recommendations by appropriate professional 
     organizations to carry this out. Also, the case managers must 
     be assigned a caseload of a size that permits effective case 
     management (adequately serves and protests teen parents and 
     their children).
       (d) This provision would go into effect in FY 1996.

     4. Teen Parent Education and Parenting Activities State Option

                              Current law

       Under section 402(a)(19) of the Social Security Act, teen 
     custodial parents are required to participate in the JOBS 
     program unless they are under 16 years of age, attending 
     school full-time, or are in the last seven months of 
     pregnancy. Participation in the JOBS program involves an 
     assessment of the individual, and an agreement specifying 
     what support services the State will provide and what 
     obligations the recipient has. For those who have not 
     obtained a high school diploma or a GED, attendance at school 
     can serve as their JOBS assignment. Participation in the JOBS 
     program is contingent on the existence of such a program in 
     the geographic vicinity of the recipients' residence.
       In addition, under a Section 1115 waiver, States, can 
     implement programs which utilize incentives or sanctions to 
     encourage or require teen parents on AFDC to continue their 
     education. Two examples of States have done or planning to do 
     this are the Learning, Earning, and Parenting Program (LEAP) 
     in Ohio and Cal Learn in California, which is in the process 
     of being implemented. LEAP and Cal Learn are mandatory for 
     all pregnant and custodial teen parents who are receiving 
     AFDC and who do not have a high school diploma or GED. Under 
     both LEAP and Cal Learn program rules, all eligible teens are 
     required to enroll (or remain enrolled) in and regularly 
     attend a school or education program leading to a high school 
     diploma or GED. These two initiatives apply only to teens who 
     are case heads. Other States have obtained waivers to 
     implement programs using sanctions to influence dependents to 
     continue their education.

                                 Vision

       Teenage mothers face substantial obstacles to achieving 
     self-sufficiency. Eight percent of teen mothers drop out of 
     high school and only 56 percent ever graduate. Their earning 
     abilities are limited by lack of education and job skills. 
     Teen parents are often not well prepared in the area of 
     parenting. This proposal provides States with a mechanism to 
     utilize creative approaches for encouraging and supporting 
     youth in both their educational and parenting endeavors.

                             Specifications

       (a) Provide States the option to use monetary incentives 
     (which must be combined with sanctions) as inducement for 
     pregnant teens and teen custodial parents who are receiving 
     AFDC and who do not have a high school diploma or GED to 
     enroll (or remain enrolled in and regularly attend a school 
     of education program leading to a high school diploma or GED, 
     or a program leading to a recognized degree or skills 
     certificate if the State determines this is most appropriate 
     for a recipient. States may also choose to provide incentives 
     for participation in parenting education activities. This 
     option will operate as part of the new JOBS program, and the 
     rules pertaining to JOBS will apply unless it is specifically 
     stated otherwise.
       (b) Each State plan must clearly define the following--
       Incentives: States must define by how much benefits will be 
     increased and what kinds of achievements will be rewarded.
       Examples of incentives chosen by Ohio and California are as 
     follows:
       In Ohio's LEAP, teens who provide evidence of school 
     enrollment receive a bonus payment of $62. They then receive 
     an additional $62 in their welfare check for each month in 
     which they meet the program's attendance requirements. For 
     teens in a regular high school in Ohio, this means being 
     absent no more than four times in the month, with two or 
     fewer unexcused absences. Different attendance standards 
     apply to part-time programs, such as Adult Basic Education 
     (ABE) programs providing GED preparation assistance, but the 
     same financial incentives apply.
       Participants of Cal Learn will be required to present their 
     report cards four times a year. The grant will be increased 
     by $100 for the month after the Cal Learn participant 
     receives a report card with a ``C'' average or better. For 
     graduating high school (or its equivalent), these teens will 
     have their grants increased on a one time basis by $500.
       Sanctions: Sanctions under the revised JOBS program would 
     apply unless the State proposes alternative sanctions, to be 
     approved by the Secretary, which the State believes better 
     achieves their objectives.
       Examples of sanctions chosen by Ohio and California are as 
     follows:
       In LEAP, teens who do not attend an initial assessment 
     interview (which commences participation in LEAP) or fail to 
     enroll in school have $62 deducted from their grant (i.e., 
     the teens are ``sanctioned'') each month until they comply 
     with program rules. Similarly, enrolled teens are sanctioned 
     by $62 for each month that they exceed the allowed number of 
     unexcused absences. Teens who exceed the allowed number of 
     total absences, but do not exceed the allowed number of 
     unexcused absences receive neither a bonus nor a sanction.
       In the Cal Learn program, teens who do not receive at least 
     a ``D'' average or who do not submit his/her report card will 
     have the assistance unit grant reduced over a two month 
     period by the lesser of $50 or the amount of the grant. This 
     will result in a sanction of not more than $100. Included in 
     the sanctions will be teens that do not present their report 
     cards because they have dropped out of school or were 
     expelled.
       Coordination: A case manager (as described in A.2) will 
     assess each recipient's needs and arrange for appropriate 
     services. States must describe the mechanism case managers 
     and other service providers will use to coordinate with 
     schools.
       Eligibility: Custodial teen parents under 20 years of age 
     and pregnant women under the age of 20 who have not received 
     a high school diploma (or equivalent) are eligible. States 
     may choose to include custodial pregnant teens and teen 
     parents up to their 21st birthday.
       Exemptions: Exemptions from participation will be based on 
     the same new guidelines governing participation in JOBS and 
     WORK, with two exceptions. First, teens will only be able to 
     defer participation for 3 months after giving birth. Also, a 
     disability will not allow a recipient to defer participation 
     in high school, as school districts are required to provide 
     students with disabilities appropriate services. (See JOBS 
     and WORK section of proposal for more specific details.)
       State-wideness: States can limit the geographic scope of 
     this option.
       Information and Evaluation: States would be required to 
     provide information at the Secretary's request and to 
     cooperate in any evaluation.
       (c) Monetary incentives provided under this program would 
     be considered AFDC.
       (d) Monetary incentives provided under this option would 
     not be considered income in determining a family's 
     eligibility for any other Federal or Federally-assisted 
     program, and any other Federal or Federally-assisted program 
     would treat any penalty imposed as if no such penalty had 
     been applied.
       (e) This provision would go into effect in FY 1996.


                   child support enforcement proposal

                               [Title VI]

                   I. Establish awards in every case

       The first step in ensuring that a child receives financial 
     support from the noncustodial parent is the establishment of 
     a child support award. This is normally done through a legal 
     proceeding to establish paternity or at a legal proceeding at 
     the time of a separation or divorce. States currently receive 
     Federal funding for paternity establishment services provided 
     through the IV-D agency. This proposal expands the scope and 
     improves the effectiveness of current State paternity 
     establishment procedures. States are encouraged to establish 
     paternity for as many children born out-of-wedlock as 
     possible, regardless of the welfare or income status of the 
     mother or father and as soon as possible following the 
     child's birth. This proposal further requires more outreach 
     about paternity establishment to stress that having a child 
     is a two-parent responsibility. Building on the President's 
     recent mandate for in-hospital paternity establishment 
     programs enacted as part of the Omnibus Budget and 
     Reconciliation Act (OBRA) of 1993, it further encourages 
     nonadversarial procedures to establish paternity as soon as 
     possible following the child's birth, streamlines procedures 
     surrounding genetic parentage testing, and requires efforts 
     to remove barriers to interstate paternity establishment.

            Paternity Performance and Measurement Standards

       Under current law, State performance is only measured 
     against those cases in the IV-D child support system that 
     need paternity established. Children are often several years 
     old or older by the time they enter the IV-D system (normally 
     when the mother applies for welfare). Research shows that the 
     longer the paternity establishment process is delayed, the 
     less likely it is that paternity will ever be established, so 
     it is important to start early, before a mother goes on 
     welfare.
       Under the proposal, each State's paternity establishment 
     performance will be measured based not only upon cases within 
     the State's current IV-D child support system, but upon all 
     cases where children are born to an unmarried mother. States 
     will then be encouraged to improve their paternity 
     establishment for all out-of-wedlock births through 
     performance-based incentives. (Current paternity 
     establishment performance standards for IV-D cases will also 
     be maintained.)
       (1) Each State will be required, as a condition of receipt 
     of Federal funding for the child support enforcement program, 
     to calculate a State paternity establishment percentage based 
     on yearly data that record: (a) all out-of-wedlock births in 
     the State for a given year, regardless of the parents' 
     welfare or income status; and (b) all paternities established 
     for the out-of-wedlock births in the State during that year.
       The Secretary shall prescribe by regulation the acceptable 
     methods for determining the denominator and the numerator of 
     the new paternity establishment performance measure with a 
     preference for actual number counts rather than estimates.

            Financial Incentives for Paternity Establishment

       In order to encourage States to increase the number of 
     paternities established, the Federal government will provide 
     performance-based incentive payments to States based on 
     improvements in each State's paternity establishment 
     percentage. The incentive structure will reward the early 
     establishment of paternity so that States have both an 
     incentive to get paternities established as quickly as 
     possible and an incentive to work older cases. (See also 
     State Paternity Cooperation Responsibilities and Standards, 
     p. 11). Finally, current regulations establishing time-frames 
     for establishing paternity will be revised since the 
     administrative procedures required under the proposal will 
     allow cases to be processed more quickly.
       (1) Federal Financial Participation rate (FFP) will be 
     provided for all paternity establishment services provided by 
     the IV-D agency regardless of whether the mother or father 
     signs a IV-D application.
       (2) Performance-based incentives will be made to each State 
     in the form of increased FFP of up to 5 percent. The 
     incentive structure determined by the Secretary will build on 
     the performance measure so that States that excel will be 
     eligible for incentive payments.
       (3) At State option, States may experiment with programs 
     that provide financial incentives to parents to establish 
     paternity. The Secretary will additionally authorize up to 
     three demonstration projects whereby Federal Financial 
     Participation is available for financial incentives to 
     parents for establishing paternity.
       (4) The Secretary will issue regulations establishing 
     revised time-frames for establishing paternity.

             Streamling the Paternity Establishment Process

              Encouraging early establishment of paternity

       Very little outreach is currently conducted about the 
     importance and mechanics of establishing paternity in public 
     health related facilities (e.g. prenatal clinics or WIC 
     clinics), even though these facilities have significant 
     contact with unmarried pregnant women. For example, in 1990, 
     less than 1 percent of all counties reported they conducted 
     outreach about paternity establishment in prenatal clinics. 
     Conducting outreach in these public-health related facilities 
     will not only broaden knowledge about the benefits of 
     establishing paternity in general, but will also enhance the 
     effectiveness of hospital-based programs. By the time the 
     parents of an out-of-wedlock child are offered an opportunity 
     to establish paternity in the hospital, the parent(s) will 
     have already had an opportunity to obtain information about 
     and reflect upon why they should establish paternity for 
     their child.
       As part of the effort to encourage the early establishment 
     of paternity, the proposal allows State agencies and mothers 
     to start the paternity establishment process even before the 
     child is born. Since fathers are much more likely to have a 
     continuing relationship with the mother at that time, 
     locating the father and serving him with legal process is 
     much easier. If the father does not acknowledge paternity, a 
     genetic test can then be scheduled immediately after the 
     birth of the child.
       Experience has also shown that while a high proportion of 
     fathers are willing to consent to paternity in the hospital, 
     there are some who are unwilling to voluntarily acknowledge 
     paternity outright but would do so if genetic testing 
     confirmed parentage. The hospital based paternity 
     establishment process can be further streamlined by providing 
     the opportunity for genetic testing right at the hospital. 
     This is an efficient use of resources since hospitals are 
     already fully equipped to obtain samples for these tests 
     and blood tests are already performed on newborns at the 
     hospital for other purposes.
       As part of the State's voluntary consent procedures, each 
     State must:
       (1) require, either directly or under contract with health 
     care providers, other health-related facilities (including 
     pre-natal clinics, ``well-baby'' clinics, in-home public 
     health service visitations, family planning clinics and WIC 
     centers) to inform unwed parents about the benefits of and 
     the opportunities for establishing legal paternity for their 
     children; this effort should be coordinated with the U.S. 
     Public Health Service. WIC program information shall also be 
     available to the IV-D agency in order to provide outreach and 
     services to recipients of that program.
       (2) require full participation by hospitals and other 
     health-related facilities to cooperate and implement in-
     hospital paternity establishment programs as a condition of 
     reimbursement of Medicaid.
       As part of a State's civil procedures for establishment of 
     paternity, each State must: (1) have statutes allowing the 
     commencement of paternity actions prior to the birth of the 
     child and procedures for ordering genetic tests as soon as 
     the child is born, provided that the putative father has not 
     yet acknowledged paternity; (2) make available procedures 
     within hospitals to provide for taking a blood or other 
     sample at the time of the child's birth, if the parents 
     request the test.

                  Simplifying paternity establishment

       Currently, acknowledgements of paternity must create either 
     a rebuttable or conclusive presumption of paternity. A 
     rebuttable presumption means that even though someone has 
     admitted paternity, they can later come in and offer other 
     evidence to ``rebut'' their previous acknowledgement. This 
     leaves many cases dangling for years and years. The parents 
     believe in some cases that paternity is established when, in 
     fact, it is not. Under the proposal, rebuttable presumptions 
     ``ripen'' into conclusive presumptions after one year. A 
     conclusive presumption acts as a judgment so that paternity 
     has, in fact, been officially established. States are allowed 
     some flexibility to tailor due process provisions.
       The vast majority of paternity cases can be resolved 
     without a trial once a genetic test is completed. Such tests 
     are highly accurate and will effectively either exclude the 
     alleged father or result in a paternity probability over 99 
     percent. Virtually all alleged fathers will admit to 
     paternity when faced with genetic test results showing near 
     certainty that he is the father. Currently in most States, 
     however, changes in the legal process have not kept up with 
     the changes in genetic testing technology, resulting in an 
     unnecessary and inefficient reliance on the courts to handle 
     the matters surrounding genetic tests.
       Under the proposal, States will no longer have to start a 
     legal proceeding through the courts and have a court hearing 
     simply to have a genetic test ordered. States are also 
     precluded from requiring a court hearing prior to 
     ratification of paternity acknowledgments. These procedures 
     will speed up what is otherwise unnecessarily a very time 
     consuming and labor intensive process. Another delay in the 
     process occurs if the father fails to show for an ordered 
     blood test. Often the IV-D agency must go back to court to 
     get a default order entered, even though this process 
     could be handled more efficiently on an administrative 
     basis. Under the proposal, the IV-D agency will be given 
     the authority to enter default orders without having to 
     resort to the courts.
       The Federal government currently pays 90 percent of the 
     laboratory costs for paternity cases requiring genetic 
     testing and will continue to do so. However, there is 
     currently a great deal of variation at the State and local 
     level regarding whether and under what circumstances the 
     costs of genetic testing are passed on to fathers facing a 
     paternity allegation. The proposal will eliminate the current 
     variation by requiring all States to advance the costs of 
     genetic tests, and then allowing recoupment from the alleged 
     father in cases where he is determined to be the biological 
     father of the child. By advancing the costs of genetic 
     testing, there is no financial disincentive for alleged 
     fathers to evade genetic testing. At the same time, requiring 
     that an alleged father reimburse the State for the cost of 
     genetic tests should he be determined to be the biological 
     father eliminates any incentives for fathers to request 
     genetic tests as a ``stalling'' technique and promotes 
     voluntary acknowledgment of paternity when appropriate.
       In the event that a party disputes a particular test 
     result, the dispute should normally be resolved through 
     further testing. The party should be given the opportunity to 
     have additional tests but also be required to incur the costs 
     of those additional tests. This will help to ensure that the 
     opportunity to request additional testing is used only in 
     cases where there is a legitimate reason to question the 
     original test results and not used as a delaying tactic to 
     avoid establishing paternity.
       Currently, research on non-custodial fathers suggests that 
     many fathers who might otherwise be open to the idea of 
     establishing paternity are deterred from doing so because 
     they may then be required to pay large amounts of arrears 
     and/or face delivery-associated medical expenses in addition 
     to ongoing support obligations. For low-income fathers with 
     limited incomes, this poses a special problem. Providing the 
     administrative agency/court the authority to forgive all or 
     part of these costs will reduce disincentives to establish 
     paternity in certain cases.
       IV-D agencies currently are not encouraged to bring a 
     paternity action forward on behalf of the putative father, 
     even in cases in which the mother is not cooperating with the 
     State in establishing paternity. In some states, fathers have 
     no standing to bring paternity actions at all. If the primary 
     goal is to establish paternity for as many children born out-
     of-wedlock as possible, IV-D agencies should be able to 
     assist putative fathers as well as mothers in establishing 
     paternity for a non-marital child.
       Under the OBRA of 1993 amendments, States are required to 
     have expedited processes for paternity establishment in 
     contested cases and each State must give full faith and 
     credit to determinations of paternity made by others States. 
     In order to further streamline the treatment of contested 
     cases, the proposal provides that States can set temporary 
     support in appropriate cases. This discourages defendants in 
     paternity actions from contesting cases in order to simply 
     delay the payment of support. The proposal also abolishes 
     jury trials for paternity cases. Jury trials are a remnant 
     from the time when paternity cases were criminal in nature. 
     Almost two-thirds of the States still allow jury trials. 
     While rarely requested, jury trials delay the resolution of 
     cases and take a heavy toll on personnel resources. With the 
     advent of modern scientific genetic testing, they serve very 
     little purpose, as almost all cases will ultimately be 
     resolved based on the results of the tests. The proposal also 
     cases certain evidentiary rules, allowing cases to be heard 
     without the need for establishing a foundation for evidence 
     that is normally uncontroverted.
       As part of a State's civil procedures for establishment of 
     paternity, each State must:
       (1) provide that acknowledgments of paternity create either 
     a rebuttable or conclusive presumption of paternity. If a 
     rebuttable presumption of paternity is created, States must 
     provide that the presumption ripens into a conclusive legal 
     determination with the same effect as a judgment no later 
     than 12 months from the date of signing the acknowledgment. 
     States may, at their option, allow fathers to move to vacate 
     or reopen such judgments at a later date in cases of fraud or 
     if it is in the best interest of the child.
       (2) provide administrative authority to the IV-D agency to 
     order all parties to submit to genetic testing in all cases 
     where either the mother or putative father requests a genetic 
     test; and submits a sworn statement setting forth facts 
     establishing a reasonable possibility of the requisite sexual 
     contact, without the need for a court hearing prior to such 
     an order. (State option remains as to whether to provide this 
     administrative authority in cases where there is a presumed 
     father under State law);
       (3) precluded the use of court hearings to ratify paternity 
     acknowledgments;
       (4) provide administrative authority to the IV-D agency to 
     enter default orders to establish paternity specifically 
     where a party refuses to comply with an order for genetic 
     testing. (State law continues to determine the criteria, if 
     any, for opening default orders);
       (5) advance the costs of genetic tests, subject to 
     recoupment from the putative father (subject to State pauper 
     provisions) if he is determined to be the biological father 
     of the child (Federal funding will continue at 90 percent for 
     laboratory tests for paternity); if the result of the genetic 
     testing is disputed, upon reasonable request of a party, 
     order that additional testing be done by the same laboratory 
     or an independent laboratory at the expense of the party 
     requesting the additional tests;
       (6) provide discretion to the administrative agency or 
     court setting the amount of support to forgive delivery 
     medical expenses or limit arrears owed to the State (but not 
     the mother) in cases where the father cooperates or 
     acknowledges paternity before or after a genetic test is 
     completed;
       (7) allow putative fathers (where not presumed to be the 
     father under State law) standing to initiate their own 
     paternity actions;
       (8) establish and implement laws which mandate, upon motion 
     by a party, a tribunal in contested cases to order temporary 
     support according to the laws of the tribunal's State if: (a) 
     the results of the parentage testing create a rebuttable 
     presumption of paternity; (b) the person from whom support is 
     sought has signed a verified statement of parentage; or (c) 
     there is other clear and convincing evidence that the person 
     from whom support is sought is the particular child's parent;
       (9) enact laws which abolish the availability of trial by 
     jury for paternity cases; and
       (10) have and use laws that provide for the introduction 
     and admission into evidence, without need for third-party 
     foundation testimony, of pre-natal and post-natal birth-
     related and parentage-testing bills; and each bill shall be 
     regarded as prima facie evidence of the amount incurred on 
     behalf of the child for the procedures included in the bill.

                           Paternity Outreach

       Paternity establishment is recognized as an important 
     strategy to combat the high incidence of poverty among 
     children born out of wedlock. Yet to date, there has been no 
     cohesive national strategy to educate the public on this 
     issue. As a result, many parents do not understand the 
     benefits of paternity establishment and child support and are 
     unaware of the availability of services. This proposal calls 
     for a broad, comprehensive outreach campaign at the Federal 
     and State level to promote the importance of paternity 
     establishment as a parental responsibility and a right of the 
     children.
       A combined outreach and education strategy will build on 
     the Administration's paternity establishment initiative 
     included in last year's budget law, OBRA of 1993, by 
     underscoring the importance of paternity establishment for 
     children born outside of marriage and the message that child 
     support is a two-parent responsibility. States will be asked 
     to expand their point of contact with unwed parents in order 
     to provide maximum opportunity for paternity establishment 
     and to promote the norm that paternity establishment is doing 
     the right thing for their children.
       Under the proposal: (1) the Department of Health and Human 
     Services, including the Public Health Service, and in 
     cooperation with the Department of Education, will take the 
     lead in developing a comprehensive media campaign designed to 
     reinforce both the importance of paternity establishment and 
     the message that child support is a ``two parent'' 
     responsibility; (2) States will be required to implement 
     outreach programs promoting voluntary acknowledgment of 
     paternity through a variety of means, such as the 
     distribution of written materials at schools, hospitals, and 
     other agencies. These efforts should be coordinated with the 
     U.S. Department of Education. States are also encouraged to 
     establish pre-natal programs for expectant couples, either 
     married or unmarried, to educate parents on their joint 
     rights and responsibilities in paternity. At State option, 
     such programs could be required of all expectant welfare 
     recipients; (3) States will be required to make reasonable 
     efforts to follow up with individuals who do not establish 
     paternity in the hospital, providing them information on the 
     benefits and procedures for establishing paternity. The 
     materials and the process for which the information is 
     disseminated is left to the discretion of the States, but 
     States must have a plan for this outreach, which includes at 
     least one post-hospital contact with each parent whose 
     whereabouts are known (unless the State has reason to believe 
     that such contact puts the child or mother at risk); (4) all 
     parents who establish paternity, but who are not required to 
     assign their child support rights to the State due to receipt 
     of AFDC, must, at a minimum, be provided subsequently with 
     information on the benefits and procedures for establishing a 
     child support order and an application for child support 
     services; and
       (5) upon approval of the Secretary, Federal funding will be 
     provided at an increased matching rate of 90 percent for 
     paternity outreach programs.

   Improving Cooperation Among AFDC Mothers in the Establishment of 
                               Paternity

            Cooperation standards and good cause exceptions

       Currently, cooperating with the IV-D agency in establishing 
     paternity is a condition of eligibility for AFDC and Medicaid 
     recipients. Cooperation is defined as appearance for 
     appointments (including blood tests), appearance for judicial 
     or administrative proceedings, or provision of complete and 
     accurate information. The last standard is so vague that 
     ``true'' cooperation is often difficult to determine. 
     Research suggests that a greater percentage of mothers know 
     the identity and whereabouts of the father of their child 
     than is reported to the IV-D agency. Better and more 
     aggressive procedures can yield a much higher rate of success 
     in eliciting information about the father from the mother 
     than is currently achieved.
       The proposal contains several provisions aimed at 
     significantly increasing cooperation among AFDC mothers while 
     at the same time not penalizing those who have fully 
     cooperated with the IV-D agency but for whom paternity for 
     their child is not established due to circumstances beyond 
     their control. Increased cooperation will result in higher 
     rates of paternity establishment.
       Under the proposal:
       (1) the new cooperation standards described herein will 
     apply to all applications for AFDC or appropriate Medicaid 
     cases for women with children born on or after 10 months 
     following the date of enactment;
       (2) the initial cooperation requirement is met only when 
     the mother has provided the State the following information: 
     (a) the name of the father; and (b) sufficient information to 
     verify the identity of the person named (such as the present 
     address of the person, the past or present place of 
     employment of the person, the past or present school attended 
     by the person, the name and address of the person's parents, 
     friends or relatives that can provide location information 
     for the person, the telephone number of the person, the date 
     of birth of the person, or other information that, if 
     reasonable efforts were made by the State, could lead to 
     identify a particular person to be served with process); (c) 
     if there is more than one possible father, the mother must 
     provide the names of all possible fathers;
       (3) the continued cooperation requirement is met when the 
     mother provides the State the following information: (a) 
     additional reasonable, relevant information which the mother 
     can reasonably provide, requested by the State at any 
     point; (b) appearance at required interviews, conference 
     hearings or legal proceedings, if notified in advance and 
     an illness or emergency does not prevent attendance; or 
     (c) appearance (along with the child) to submit to genetic 
     tests;
       (4) good cause exceptions will be granted for non-
     cooperation on an individual case basis only if recipients 
     meet the existing good cause exceptions for the AFDC program.
       (5) State IV-D workers must inform each applicant orally 
     and in writing of the good cause exceptions available under 
     current law and help the mother determine if she meets the 
     definition. (Current exemptions for Medicaid eligibility for 
     pregnant women are also maintained.)

                Cooperation prior to receipt of benefits

       Currently, many local IV-D agencies do not conduct intake 
     interviews at all but rather rely on information (e.g., 
     identity and location of the father) obtained by the IV-A 
     agency. Those IV-D agencies that conduct intake interviews do 
     not schedule them until after the mother has already applied 
     for and been determined eligible to receive AFDC benefits. 
     This practice reduces the incentive of AFDC mothers to 
     cooperate with the IV-D agency in providing complete and 
     accurate information about the father of their child because 
     questions regarding cooperation do not arise until after 
     eligibility for AFDC has been approved and the family is 
     receiving benefits.
       The proposal will increase the incidence of paternity 
     establishment by making receipt of benefits conditional upon 
     fulfilling the cooperation requirement; IV-D agencies will 
     have to determine whether the cooperation requirement has 
     been met prior to the receipt of benefits. States will be 
     encouraged, but not required, to facilitate this change in 
     procedure by either co-locating IV-A agencies and IV-D 
     agencies or conducting a single IV-A/IV-D screening or intake 
     interview. AFDC applicants who fail to fulfill the new 
     cooperation requirement will be sanctioned.
       (1) Applicants must cooperate in establishing paternity 
     prior to receipt of benefits: (a) using the new cooperation 
     standards, an initial determination of cooperation must be 
     made by the State IV-D agency within 10 days of application 
     for AFDC and/or Medicaid; (b) if the cooperation 
     determination is not made within the specified time-frame, 
     the applicant could not be denied eligibility for the above 
     benefits based on noncooperation pending the determination; 
     (c) once an initial determination of cooperation is made, the 
     IV-D agency must inform the mother and the relevant programs 
     of its determination; (d) individuals qualifying for 
     emergency assistance or expedited processing could begin 
     receiving benefits before a determination is made.
       (2) Failure to cooperate with the IV-D agency will result 
     in an immediate sanction:
       (a) sanctions will be based on current law. States are 
     required to inform all sanctioned individuals of their right 
     to appeal the determination.
       (b) if a determination is made that the custodial parent 
     has met the initial cooperation requirement and the IV-D 
     agency later has reason to believe that the information is 
     incorrect or insufficient, the agency must: (i) try to obtain 
     additional information; and if that fails (ii) schedule a 
     fair hearing to determine if the parent is fully cooperating 
     before imposing a sanction;
       (c) if a mother fails to cooperate and is determined 
     ineligible for benefits, but subsequently chooses to 
     cooperate and takes appropriate action, Federal and State 
     benefits will be immediately reinstated.
       (d) if the determination results in a finding of 
     noncooperation and the applicant appeals, the applicant could 
     not be denied benefits based on noncooperation pending the 
     outcome of the appeal. States can set up appeal procedures 
     through the existing IV-A appeals process or through a IV-D 
     appeals process.
       (3) States are encouraged to either co-locate IV-A and IV-D 
     offices, provide a single interview for IV-A and IV-D 
     purposes, or conduct a single screening process.

       State Paternity Cooperation Responsibilities and Standards

       States will be held to new standards of responsibility for 
     determining cooperation and ensuring that information 
     regarding paternity is acted upon in a timely fashion. Under 
     the proposal, if the mother meets this stricter cooperation 
     requirement and provides full information, the burden shifts 
     to the State to determine paternity within one year from the 
     date the mother met the initial cooperation date. This is a 
     shorter time period than what was required by regulation 
     under the Family Support Act of 1988 and under the proposed 
     OBRA of 1993 regulations.
       If the State fails to establish paternity within the new 
     specified one-year time-frame, it will lose Federal FFP for 
     those cases. This FFP penalty does not exist under current 
     law, and provides a significant incentive for States to work 
     their incoming paternity cases in a timely fashion. A 
     tolerance level is allowed for cases where paternity cannot 
     be established despite the State's best efforts. Other 
     paternity standards under existing law will be maintained to 
     encourage States to continue to work all new and old IV-D 
     cases.
       For all cases subject to the new cooperation requirements: 
     (1) State IV-D agencies must either establish paternity if at 
     all possible or impose a sanction in every case within one 
     year from the date that the initial cooperation requirement 
     is met; or (2) If the mother has met the cooperation 
     requirements and the State has failed to establish 
     paternity within the one year time limit, the State will 
     not be eligible for FFP of the AFDC grant for those cases. 
     (The Secretary will establish by regulation a method for 
     keeping track of those cases. The FFP penalty will be 
     based on an average monthly grant for cases where 
     paternity is not established rather than by tracking 
     individual cases.) The Secretary shall prescribe by 
     regulation a tolerance level, for which there will be no 
     penalty, for cases where paternity cannot be established 
     despite the best efforts of the State. The tolerance level 
     shall not exceed a percentage of the State's mandatory 
     cases that need paternity established in any given year 
     (25 percent in years 1 and 2, 20 percent in years 3, and 
     4, 15 percent in years 5 and 6, and 10 percent 
     thereafter).

             Accreditation of Genetic Testing Laboratories

       In 1976 a joint committee of the American Bar Association 
     (ABA) and the American Medical Association (AMA) establishing 
     guidelines for paternity testing. In the early 1980's, the 
     Parentage Testing Committee of the American Association of 
     Blood Banks (AABB), under a grant from the Federal Office of 
     Child Support Enforcement, developed standards for parentage 
     testing laboratories. These standards served as a foundation 
     for an inspection and accreditation program for parentage 
     testing laboratories. In addition, the Parentage Testing 
     Committee developed a checklist for inspectors to use in 
     determining if laboratories are in conformance with the 
     standards required for AABB accreditation. These standards 
     are subject to future revision as the state-of-the-art and 
     experience dictate.
       Using accredited laboratories ensures that laboratories do 
     not take shortcuts, employ unqualified personnel, fail to 
     perform duplicate testing or otherwise compromise quality 
     control. Thirty-six of the fifty-four IV-D Child Support 
     Enforcement agencies currently use solely AABB accredited 
     laboratories for paternity testing. Under the proposal, the 
     Secretary will authorize an organization such as the AABB or 
     a U.S. agency to accredit laboratories conducting genetic 
     testing and States will be required to use only accredited 
     laboratories.
       State law often fails to keep pace with scientific advances 
     in genetic testing. For instance, while DNA testing for 
     paternity cases is widely accepted in the scientific 
     community, some State laws remain from a time prior to DNA 
     testing. Such State laws may refer only to ``HLA'' or 
     ``blood'' testing, so State agencies are unable to contract 
     with laboratories using more modern techniques. Under the 
     proposal, States must amend their laws to accept all 
     accredited test results with the type of tests to be 
     determined by the authorized organization or agency based 
     upon what testing is widely accepted in the scientific 
     community.
       (1) The Secretary will authorize an organization or U.S. 
     agency to accredit laboratories conducting genetic testing 
     and the procedures and methods to be used; and
       (2) States are required to use accredited labs for all 
     genetic testing and to accept all accredited test results.

    Administrative Authority to Establish Orders Based on Guidelines

       Establishing paternity alone does not establish an 
     obligation to pay support. An obligation to pay support is 
     only created when the proper authority issues an order that 
     support be paid (i.e., an ``award'' of support). Sometimes 
     this is done when paternity is established and sometimes 
     not--there are many State variations. States also vary in how 
     they establish an award when someone enters the IV-D system 
     in non-paternity cases. A few States provide administrative 
     authority to establish child support orders. Many States 
     require that a separate court action be brought.
       Establishing support awards is critical to ensuring that 
     children receive the support they deserve. Under the 
     proposal, all IV-D agencies will have the authority to issue 
     the child support award. This will vastly simplify and speed-
     up the process of getting an award in place. Adequate 
     protections are provided to ensure that award levels are 
     fair; the IV-D agency must base the award level on State 
     guidelines and States are provided the flexibility to set up 
     procedural due process protections. These administrative 
     procedures apply to paternity and IV-D cases only. Legal 
     separations and divorces may still be handled through the 
     court process.
       States can be exempted from this requirement if they can 
     establish orders as effectively and efficiently through 
     alternative procedures.
       (1) States must have and use simple administrative 
     procedures in IV-D cases to establish support orders so that 
     the IV-D agency can impose an order for support (based upon 
     State guidelines) in cases where: (a) the custodial parent 
     has assigned his or her right of support to the state; (b) 
     the parent has not assigned his or her right of support to 
     the State but has established paternity through an 
     acknowledgment or State administrative procedure; or (c) in 
     cases of separation where a parent has applied for IV-D 
     services and there is not a court proceeding pending for a 
     legal separation or divorce. At State option, States may 
     extend such authority to all cases of separation and divorce, 
     but they are not required to do so.
       (2) In all cases appropriate notice and due process as 
     determined by the State must be followed.
       (3) Existing provisions for exempting States under section 
     466(d) of the Social Security Act are preserved.

                      II. Ensure fair award levels

            National Commission on Child Support Guidelines

       States are currently required to use presumptive guidelines 
     in setting and modifying all support awards but have wide 
     discretion in their development. While the use of state-based 
     guidelines has led to more uniform treatment of similarly-
     situated parties within a state, there is still much debate 
     concerning the adequacy of support awards resulting from 
     guidelines. This is due to inadequate information on the 
     costs of raising a child by two parents in two separate 
     households and because disagreements abound over what costs 
     (medical care, child care, non-minor and/or multiple family 
     support) should be included in guidelines. The issue is 
     further compounded by charges that individual State 
     guidelines result in disparate treatment between States and 
     encourage forum shopping.
       To resolve these issues and ensure that guidelines truly 
     provide and equitable and adequate level of support in all 
     cases, the proposal creates a national commission to study 
     and make recommendations on the desirability of uniform 
     national guidelines or national parameters for setting 
     guidelines.
       (1) A twelve-member National Commission on child Support 
     Guidelines will be established no later than March 1, 1995, 
     for the purpose of studying the desirability of a uniform, 
     national child support guideline or national parameters for 
     State guidelines.
       (2) The Chairman of the Senate Committee on Finance and the 
     Chairman of the House Committee on Ways and Means shall 
     appoint tow members each, the Ranking Minority Members of 
     such Committee shall appoint one member each, and the 
     Secretary of Health and Human Services shall appoint six 
     members. Appointments to the Commission must include a State 
     IV-D Director and members or representatives of both 
     custodial and non-custodial parent groups.
       (3) The Commission shall prepare a report not later than 
     two years after the date of appointment to be submitted to 
     Congress. The Commission terminates six months after 
     submission of the report.
       (4) If the Commission determines that a uniform guideline 
     should be adopted, the Commission shall recommend to Congress 
     a guideline which it considers most equitable, taking into 
     account studies of various guideline models, their 
     deficiencies, and any needed improvements. The Commission 
     shall also consider the need for simplicity and ease of 
     application of guidelines as a critical objective.
       In addition, the Commission should study the following:
       (1) the adequacy of existing State guidelines
       (2) the treatment of multiple families in State guidelines 
     including: (a) whether a remarried parent's spouse's income 
     affects a support obligation; (b) the impact of step and 
     half-siblings on support obligations; and (c) the costs of 
     multiple and subsequent family child raising obligations, 
     other than those children for whom the action was brought;
       (3) the treatment of child care expenses in guidelines 
     including whether guidelines should take into account: (a) 
     current or projected work related or job training related 
     child care expenses of either parent for the care of children 
     of either parent; and (b) health insurance, related uninsured 
     health care expenses, and extraordinary school expenses 
     incurred on behalf of the child for whom the order is sought;
       (4) the duration of support by one or both parents, 
     including the sharing of post-secondary or vocational 
     institution costs; the duration of support of a disabled 
     child including children who are unable to support themselves 
     due to a disability that arose during the child's minority;
       (5) the adoption of uniform terms in all child support 
     orders to facilitate the enforcement of orders by other 
     States;
       (6) the definition of income and whether and under what 
     circumstances income should be imputed;
       (7) the effect of extended visitation, shared custody and 
     joint custody decisions on guideline levels; and
       (8) the tax aspects of child support payments.

                 Modifications of Child Support Orders

       Inadequate child support awards are a major factor 
     contributing to the gap between the amount of child support 
     currently collected versus the amount that could potentially 
     be collected. When child support awards are determined 
     initially, the award is set using current guidelines which 
     take into account the income of the noncustodial parent (and 
     usually the custodial parent as well). Although the 
     circumstances of both parents' (including their income) and 
     the child change over time, awards often remain at their 
     original level. In order to rectify this situation, child 
     support awards need to be updated periodically so that the 
     amount of support provided reflects current circumstances. 
     Recent research indicates that an additional $7.1 billion 
     dollars per year could be collected if all awards were 
     updated (based upon the Wisconsin guidelines).
       The Family Support Act of 1988 responded to the problem of 
     inadequate awards by requiring States to review and modify 
     all AFDC cases once every three years, and every non-AFDC IV-
     D case every three years for which a parent requests a 
     review. Although a good start, there are several shortcomings 
     with current policy.
       First, requiring the non-AFDC custodial parent, usually the 
     mother, to initiate review, places a heavy burden on the 
     mother to raise what is often a controversial and adversarial 
     issue. Research indicates that a significant proportion of 
     mothers would rather not ``rock the boat'' by initiating a 
     review, even though it could result in a higher amount of 
     child support. In order to eliminate this burden on the non-
     AFDC custodial parent and this inequitable treatment of AFDC 
     and non-AFDC cases, child support awards of non-AFDC children 
     should be subject to automatic review and updating just as 
     current law now provides for AFDC children.
       Second, current review and modification procedures are 
     extremely labor intensive, time-consuming, and cumbersome to 
     implement. This problem is particularly pronounced in, 
     although not limited to, States with court-based systems. 
     Improvements in automated systems will help diminish some of 
     the time delays and tracking problems currently associates 
     with review and modification efforts. However, a simplified 
     administrative process for updating awards is also needed for 
     States to handle the volume of cases involved in a more 
     efficient and speedier manner.
       (1) States shall have and use laws that require the review 
     of all child support orders included in the State Central 
     Registry once every three years. The review may consist of an 
     exchange of financial information through the State Central 
     Registry. The State shall provide that a change in the 
     support amount resulting from the application of guidelines 
     since the entry of the last order is sufficient reason for 
     modification of a child support obligation without the 
     necessity of showing any other change in circumstances. 
     (States may, at their option, establish a threshold amount 
     not to exceed 10 percent since entry of the last order.) 
     States shall adjust each order in accordance with the 
     guidelines unless both parents decline the adjustment in a 
     writing filed with the State Central Registry.
       (2) States may set a minimum time-frame that runs from the 
     date of the last adjustment that bars a subsequent review 
     before a certain period of time elapses, absent other changed 
     circumstances. Individuals may request modifications more 
     often than once every three years if either parent's income 
     changes by more than 20 percent.
       (3) States are not precluded from conducting the process at 
     the local or county level. Telephonic hearings and video 
     conferencing are encouraged.
       (4) To ensure that all reviews can be conducted within the 
     specified time-frame, States must have and use laws which: 
     (a) provide the child support agency through the State 
     Central Registry administrative power to modify all child 
     support orders and medical support orders, including those 
     orders entered by a court (unless the State is exempted under 
     section 466(d) of the Social Security Act); (b) provide full 
     faith and credit for all valid orders of support modified 
     through an administrative process; (c) require the child 
     support agency to automate the review and modification 
     process to the extent possible; (d) ensure that interstate 
     modification cases follow UIFSA and any amending Federal 
     jurisdictional legislation for determining which State has 
     jurisdiction to modify an order; (e) ensure that downward 
     modifications as well as upward modifications must be made in 
     all cases if a review indicates a modification is warranted; 
     (f) simplify notice and due process procedures for 
     modifications in order to expedite the processing of 
     modifications (Federal statutory changes also); (g) provide 
     administrative subpoena power for all relevant income 
     information; and (h) provide default standards for non-
     responding parents.
       (5) The Secretary of Health and Human Services and the 
     Secretary of the Treasury shall conduct a study to determine 
     if IRS income data can be use to facilitate the modification 
     process.

                 Distribution of Child Support Payments

                 Priority of child support distribution

       Families are often not given first priority under current 
     child support distribution policies. The proposal will make 
     such policies more responsive to the needs of families by 
     reordering child support distribution priorities, giving 
     States the option to pay current child support directly to 
     families who are recipients and reordering Federal income tax 
     offset priorities.
       When a family applies for AFDC, an assignment of support 
     rights is made to the State by the custodial parent. Child 
     support paid (above the first $50 of current support) is 
     retained by the State to reimburse itself and the Federal 
     government for AFDC benefits expended on behalf of that 
     family. When someone goes off public assistance, payments for 
     support obligations above payment of current support (i.e., 
     arrearages) may be made to satisfy amounts owned the State 
     and the family. States currently have discretion to either 
     pay these child support arrearages first to the former AFDC 
     family or to use such arrearage payments to recover for past 
     unreimbursed AFDC assistance. Only about 19 States have 
     chosen to pay the family arrearages first for missed payments 
     after the family stops receiving AFDC benefits.
       The proposed change will require all States to pay 
     arrearages due to the family before reimbursing any 
     unreimbursed public assistance owed to the State. Such a 
     change will strengthen a families post-AFDC self-sufficiency. 
     Families often remain economically vulnerable for a 
     substantial amount of time after leaving AFDC; about 40 
     percent of those who leave return within a year and another 
     60 percent return within two years. Ensuring that all support 
     due to the family during this critical transition period is 
     paid to the family can mean the difference between self-
     sufficiency or a return to welfare.
       States that have already voluntarily implemented this 
     policy believe that such a policy is more fair to the 
     custodial family who now depends on payment of support to 
     help meet its living expenses. States have also found it 
     difficult to explain to custodial and non-custodial parents 
     why support paid when a family has left welfare should go to 
     reimburse the State arrearages first before arrearages owed 
     the family are paid. If child support is about ensuring the 
     well-being of children, then the children's economic needs 
     should be taken care of before State debt repayment.
       Public policy also ought to promote the establishment of 
     two-parent families. Having two parents living together 
     within marriage provides children with more emotional and 
     financial support than having two parents living apart. Under 
     current law, child support arrears are not dischargeable even 
     if the parents marry or reconcile. In these circumstances, 
     the family must pay back itself, or the State, if the family 
     was on AFDC. For families with no AFDC arrearages, such 
     payments are illogical and inefficient; a check must be 
     written by the family, sent to the IV-D agency, credited 
     against the arrearage amount, and re-issued by the State back 
     to the family. For families with AFDC arrearages, such 
     payments are not re-issued to the family, but are to be used 
     to reduce the State and Federal debt. This can make low 
     income families even poorer. Under the proposal, families who 
     unite or reunite in marriage can have their arrearages 
     suspended or forgiven if the family income is less than twice 
     the Federal poverty guideline. Protections will be 
     included to ensure that marriage (or remarriage) is not 
     undertaken for the sole purpose of eliminating child 
     support arrearages.
       (1) States shall distribute payments of all child support 
     collected in cases in which the obligee is not receiving 
     AFDC, including moneys collected through a tax refund offset, 
     in the following priority: (a) to a current month's child 
     support obligation; (b) to debts owed the family (non-AFDC 
     obligations); if any rights to child support were assigned to 
     the State, then all arrearages that accrued after or before 
     the child received AFDC shall be distributed to the family; 
     (c) subject to (2), to the State making the collection for 
     any AFDC debts incurred under the assignment of rights 
     provision of Title IV-A of the Social Security Act; (d) 
     subject to (2), to other States for AFDC debts (in the order 
     in which they accrued); the collecting State must continue to 
     enforce the order until all such debts are satisfied and to 
     transmit the collections and identifying information to the 
     other State;
       (2) If the noncustodial and custodial parents unite or 
     reunite in a legitimate marriage (not a sham marriage), the 
     State must suspend or forgive collection of arrearages owed 
     to the State if the reunited family's joint income is less 
     than twice the Federal poverty guideline.
       (3) The Secretary shall promulgate regulations that provide 
     for a uniform method of allocation/proration of child support 
     when the obligor owes support to more than one family. All 
     States must use the standard allocation formula.
       (4) Assignment of support provisions shall be consistent 
     with (1) above.

       Treatment of Child Support for AFDC Families--State option

       With the exception of the $50 pass-through, States may not 
     pay current child support directly to families who are AFDC 
     recipients. Instead child support payments are paid to the 
     State and are used to reimburse the State for AFDC benefit 
     payments. Many States have found that both AFDC recipients 
     and noncustodial parents misunderstand and resent child 
     support being used for State debt collection. Under waiver 
     authority, Georgia has undertaken a demonstration to pay 
     child support directly to the AFDC family and a number of 
     other States have expressed interest in this approach. The 
     proposal will allow States the option to pay child support 
     directly to the AFDC family, thereby allowing States to 
     choose the distribution policy that will work best in their 
     State. The AFDC benefit amount is reduced in accordanc e with 
     State policy to account for the additional family income. 
     This policy change makes child support part of a family's 
     primary income and places AFDC income as a secondary source 
     of support.
       (1) At State option, States may provide that all current 
     child support payments made on behalf of any family receiving 
     AFDC must be paid directly to the family (counting the child 
     support payments as income).
       (2) The Secretary shall promulgate regulations to ensure 
     that States choosing this option have available an AFDC 
     budgeting system that minimizes irregular monthly payments to 
     recipients.

                   III. Collect Awards That are Owed

                                Overview

       Currently, enforcement of support cases is too often 
     handled on a complaint-driven basis with the IV-D agency only 
     taking enforcement action when the custodial parent pressures 
     the agency to take action. Many enforcement steps require 
     court intervention, even when the case is a routine one, and 
     even routine enforcement measures often require individual 
     case processing rather than relying upon automation and mass 
     case processing.
       Under the proposal, all States will maintain a central 
     State registry and centralized collection and disbursement 
     capability through a central payment center. State staff will 
     monitor support payments to ensure that the support is being 
     paid and will be able to impose certain administrative 
     enforcement remedies at the State level. Thus, routine 
     enforcement actions that can be handled on a mass or group 
     basis will be imposed through the central State office using 
     computers and automation. States may, at their option, use 
     local offices for cases that require local enforcement 
     actions. State staff thus will supplement, but not 
     necessarily replace, local staff.
       The Federal role will be expanded to ensure efficient 
     location and enforcement, particularly in interstate cases. 
     In order to coordinate activity at the Federal level, a 
     National Child Support Enforcement Clearinghouse (NC) will be 
     established to help track parents across State lines. The 
     National Clearinghouse includes a national child support 
     registry, the expanded FPLS and a national directory of new 
     hires. The National Clearinghouse will serve as the hub for 
     transmitting information between States, employers, and 
     Federal and State data bases. Interstate processing of cases 
     will be made easier through the adoption of uniform laws for 
     handling these types of cases.
       The proposal includes a number of child support enforcement 
     tools--tools that have been proven effective in the best 
     performing States. Finally, changes in the funding and 
     incentive structure of the IV-D program and changes designed 
     to improve program management and accountability are 
     proposed.

                               State Role

                         Central State Registry

       Currently, child support orders and records are often 
     scattered through various branches and levels of government. 
     This fragmentation makes it impossible to enforce orders on 
     an efficient and organized basis. Also, the ability to 
     maintain accurate records that can be centrally accessed is 
     critical. Under the proposal, States will be required to 
     establish a Central State Registry for all child support 
     orders established or registered in that State. The registry 
     will maintain current records of all the support orders and 
     work in coordination with the Central Payment Center for the 
     collection and distribution of child support payments. This 
     will vastly simplify withholding for employers. The creation 
     of central State registries was one of the major 
     recommendations of the U.S. Commission on Interstate Child 
     Support and is a concept supported by virtually all child 
     support professionals and advocacy groups.
       (1) As a condition of receipt of Federal funding for the 
     child support enforcement program, each State must establish 
     an automated central State registry of child support orders.
       (2) The registry must maintain a current record of the 
     following:
       (a) all present IV-D orders established, modified or 
     enforced in the State;
       (b) all new and modified orders of child support (IV-D and 
     non-IV-D) established by or under the jurisdiction of the 
     State, after the effective date of this provision; and
       (c) at either parent's request, existing child support 
     cases not included in the IV-D system on the effective date 
     of the registry.
       (3) The State, in operating the child support registry, 
     must:
       (a) maintain and update the registry at all times;
       (b) meet specified time-frames for submission of local 
     court or administrative orders to the registry, as determined 
     by the Secretary;
       (c) receive out-of-State orders to be registered for 
     enforcement and/or modification;
       (d) record the amount of support ordered and the record of 
     payment for each case that is collected and disbursed through 
     the central payment center;
       (e) conform to a standardized support abstract format, as 
     determined by the Secretary, for the extraction of case 
     information to the National Registry and for matches against 
     other data bases on a regular basis;
       (f) program the statewide automated system to extract 
     updates automatically of all case records included in the 
     registry;
       (g) provide a central point of access to the Federal new-
     hire reporting directory and other Federal data bases, 
     statewide data bases, and interstate case activity;
       (h) routinely match against other State data bases to which 
     the child support agency has access;
       (i) use a uniform identification number, preferably the 
     Social Security Number, for all individuals or cases as 
     determined by the Secretary;
       (j) maintain procedures to ensure that new arrearages do 
     not accrue after the child for whom support is ordered is no 
     longer eligible for support or the order becomes invalid 
     (e.g., triggering notices to parents if order does not 
     terminate by its own terms or by operation of law);
       (k) use technology and automated procedures in operating 
     the registry wherever feasible and cost-effective;
       (l) ensure that the interest or late payment fees charged 
     can be automatically calculated;
       (m) ensure that the registry has access to vital statistics 
     or other information necessary to determine the new paternity 
     performance measure. (If automated elsewhere, access to these 
     other data bases should be automated as well); and
       (n) ensure that the system is capable of producing a 
     payment history as determined by the Secretary.

                  Option for integrated state registry

       (4) States may, at their option, maintain a unified, 
     integrated registry by connecting local registries through 
     computer linkage. (Local registries must be able to be 
     integrated at a cost which does not exceed the cost of a new 
     single central registry.) Under this option, however, the 
     State and State staff must still perform all of the 
     activities described herein for central registries and must 
     maintain a State Central payment Center for collection and 
     disbursement of payments.

 Automated mass case processing and administrative enforcement remedies

       In most States, routine enforcement actions, which are 
     necessary in thousands or tens of thousands of cases, are 
     still handled on an individual case basis. Often these 
     actions require court involvement in each individual case or, 
     at the very least, initiation of the routine action at the 
     local level. Such a process by its nature is slow and 
     cumbersome, causing many cases to simply never receive the 
     attention they deserve. A few States, such as Massachusetts, 
     are handling routine enforcement actions by using mass case 
     processing techniques and imposing administrative enforcement 
     remedies through centralized case handling. Computer systems 
     routinely match child support files of delinquent obligors 
     against other data bases, such as wage reporting data and 
     bank account data, and when a match is found can take 
     enforcement action automatically without human intervention. 
     The system automatically notifies the obligors of the actions 
     being taken and offers an appeal process. The vast majority 
     of obligors do not appeal, so the case proceeds routinely and 
     the support is obtained and sent to the families due support.
       The use of such mass case processing techniques and 
     administrative remedies have significantly reduced the number 
     of cases where the IV-D agency has to resort to contempt or 
     other judicial measures. This also frees up staff to work 
     paternity cases or other more labor intensive enforcement 
     measures. The Proposal requires all States to develop the 
     capacity to handle cases using mass case processing and the 
     administrative enforcement remedies.
       (1) As a condition of State plan approval, the State must 
     have sufficient State staff, State authority and automated 
     procedures to monitor cases and impose those enforcement 
     measures that can be handled on a mass or group basis using 
     computer automation technology. ``State staff'' are staff 
     that are employed by and directly accountable to the State 
     IV-D agency (private contractors are allowed). (Where States 
     have local staff, this supplements, but does not necessarily 
     replace, local staff. Therefore, local staff are still 
     provided where necessary.)
       Specifically the State shall:
       (2) monitor all cases within the registry on a regular 
     basis, determining on at least a monthly basis whether the 
     child support payment has been made;
       (3) maintain automation capability whereby a disruption in 
     payments triggers automatic enforcement mechanisms;
       (4) administratively impose the following enforcement 
     measures without need for a separate court order:
       (a) order wages to be withheld automatically for the 
     purposes of satisfying child support obligations, and direct 
     wage withholding orders to employers immediately upon 
     notification by the national directory of new hires;
       (b) attach financial institution accounts (post-judgment 
     seizures) without the need for a separate court order for the 
     attachment; (States can, at their option, freeze accounts and 
     if no challenge to the freeze of funds is made, turn over the 
     part of the account subject to the freeze up to the amount of 
     the child support debt to the person or State seeking the 
     execution);
       (c) intercept certain lump-sum monies such as lottery 
     winnings and settlements to be turned over to the State to 
     satisfy pending arrearages;
       (d) attach public and private retirement funds in 
     appropriate cases, as determined by the Secretary;
       (e) attach unemployment compensation, workman's 
     compensation and other State benefits;
       (f) increase payments to cover arrearages;
       (g) intercept State tax refunds; and
       (h) submit cases for Federal tax offset.
       (5) In all cases, appropriate notice and due process as 
     determined by the State must be followed but State laws and 
     procedures must recognize that child support arrears are 
     currently treated as judgments by operation of law and 
     reducing amounts to money judgments is not a prerequisite to 
     any enforcement.

Centralized Collection and Disbursement Through a State Central Payment 
                                 Center

       Under current law, payments of support by noncustodial 
     parents or by employers on behalf of noncustodial parents are 
     made to a wide variety of different agencies, institutions 
     and individuals. As wage withholding becomes a requirement 
     for a larger and larger segment of the noncustodial 
     population, the need for one, central location to collect and 
     disburse payments in a timely manner has grown. States vary 
     regarding how the child support payments are routed. In some 
     States, locally distributed child support payments stay at 
     the local level, with the remainder going to the State for 
     distribution. In other States, all the money is transmitted 
     to the State and is then distributed to either the family or 
     to the governmental entity receiving AFDC reimbursement. A 
     few States are beginning to collect and distribute child 
     support payments at the State level.
       Collection and distribution practices vary in non-IV-D 
     cases as well. Some States route the money through local 
     clerks or courts. In other States the non-IV-D child support 
     payments flow entirely outside of government, from the 
     obligor or his or her employer directly to the custodial 
     parent.
       Under the proposal, payments made in all cases entered in 
     the central registry are processed through a Central Payment 
     Center, run by the State government as part of the Central 
     Registry or contracted to a private vendor. (Parents may opt 
     out of payment through the State Central Payment Center under 
     certain conditions; see p. 29 for further detail.) This eases 
     the burden on employers by allowing them to send withholdings 
     to one location within the State instead of to several county 
     clerks or agencies. In addition, distribution and 
     disbursement is accomplished based on economies of scale, 
     allowing for the purchase of more sophisticated processing 
     equipment than many counties could individually purchase, 
     ensuring speedy disbursement and central accountability in 
     intercounty cases. State governments will be able to 
     credit their AFDIC reimbursement accounts quickly and 
     parents who opt for direct deposit could have their share 
     of the support almost immediately deposited.
       (1) Through a fully automated process, the State Central 
     Payment Center must:
       (a) serve as the State payment center for all employers 
     remitting child support withheld from wages; and
       (b) serve as the State payment center for all non-wage 
     withholding payments through the use of payment coupons or 
     stubs or electronic means, unless the parties meet specified 
     opt-out requirements. States, at their option, may allow cash 
     payments at local offices or financial institutions only if 
     the payments are remitted to the State Central Payment Center 
     for payment processing by electronic funds transfer within 24 
     hours of receipt.
       (2) In fulfilling these obligations, the State Central 
     Payment Center must:
       (a) accept all payments through any means of transfer 
     determined acceptable by the State including the use of 
     credit card payments and Electronic Funds Transfer (EFT) 
     systems;
       (b) generate bills which provide for accurate payment 
     identification, such as return stubs or coupons, for cases 
     not covered under wage withholding;
       (c) identify all payments made to the State Central Payment 
     Center and match the payment to the correct child support 
     case record;
       (d) disburse all collections in accordance with priorities 
     as set forth under the proposal;
       (e) disburse the child support payments to the custodial 
     parents through a transmission process acceptable to the 
     State, including direct deposit if the custodial parent 
     requests;
       (f) provide that each child support payment made by the 
     noncustodial parent is processed and sent to the custodial 
     parent promptly at the time it is received (exceptions by 
     regulation for unidentified payments);
       (g) maintain records of transactions and the status of all 
     accounts including arrears, and monitor all payments of 
     support;
       (h) develop automatic monitoring procedures for all cases 
     where a disruption in payments triggers automatic enforcement 
     mechanisms;
       (i) accept and transmit interstate collections to other 
     States using electronic funds transfer (EFT) technology; and
       (3) In order to facilitate the quick processing and 
     disbursement of payments to custodial parents, States are 
     encouraged to use Electronic Funds Transfer (EFT) systems 
     wherever possible.
       (4) States must also be able to provide parents up-to-date 
     information on current payment records, arrearages, and 
     general information on child support services available. Use 
     of automated Voice Response Units (VRU) to respond to client 
     needs and questions, the use of high-speed check-processing 
     equipment, the use of high-performance, fully-automated mail 
     and postal procedures and fully automated billing and 
     statement processing are encouraged; the Federal Office of 
     Child Support Enforcement (OCSE) will facilitate private 
     businesses in providing such technical assistance to the 
     States.
       (5) States may form regional cooperative agreements to 
     provide the collection and disbursement function for two or 
     more States through one ``drop box'' location with computer 
     linkage to the individual State registries.
       (6) States must enact procedures providing that in child 
     support cases, a change in payee may not require a court 
     hearing or order to take effect and may be done 
     administratively, with notice to both parties.

               Eligibility for IV-D Enforcement Services

       Under the existing system, child support services are 
     provided automatically to recipients of AFDC, Medicaid and, 
     in some cases, Foster Care Assistance. Other single parent 
     families, however, must seek services on their own by making 
     a written application to the IV-D agency. Further, they must 
     pay an application fee unless the State elects to pay the fee 
     for them. Women may be intimidated from initiating a request 
     for services and many States view the written application 
     requirement as an unnecessary bureaucratic step.
       To foster an environment where routine payment of child 
     support is inescapable without placing the burden on the 
     custodial parent to take action, all cases included in the 
     central registry (that is, all families with new and modified 
     orders for support, all families currently receiving IV-D 
     services and any other family desiring inclusion in the 
     registry) will receive child support enforcement services 
     automatically, without the need for application. However, in 
     situations where compliance with the order is not an issue, 
     parents can opt to be excluded from payment through the 
     central payment center. This essentially carries forward the 
     flexibility provided under existing immediate wage 
     withholding requirements.
       (1) All cases included in the State's central registry 
     shall receive child support services without regard to 
     whether the parent signs an application for services. Current 
     child support cases not covered through the IV-D system at 
     the time of enactment could also request services through the 
     State child support agency.
       (2) Under no circumstances may a State deny any person 
     access to State child support services based solely on the 
     person's nonresidency in that State or require the payment of 
     any fees by a parent for inclusion in the central registry.
       (3) No fees or costs may be imposed on any custodial or 
     noncustodial parent or other individual for application for 
     IV-D child support services; no fees or costs may be imposed 
     on any custodial parent for any child support enforcement 
     services, including collections, provided by the IV-D child 
     support agency. (Non-custodial parents may be charged fees or 
     costs except where prohibited herein.)

                         Opportunity to opt-out

       (4) Parents with child support orders included in the 
     central registry can choose to opt-out of payment through the 
     central payment center if they are not otherwise subject to a 
     wage withholding order (current provisions for exceptions to 
     wage withholding are preserved).
       (5) Parents who opt-out must file a separate written form 
     with the agency signed by both parties, indicating that both 
     individuals agree with the arrangement.
       (6) If the parents choose to opt-out of wage withholding 
     and payment through the central payment center, the 
     noncustodial parent fails to pay support, and the custodial 
     parent notifies the agency for enforcement action, compliance 
     with be monitored by the State thereafter.

                              Federal Role

                      National clearinghouse (NC)

       The National Clearinghouse will consist of four components, 
     three of which have direct bearing on improving child support 
     enforcement: the National Child Support Registry, the 
     expanded FPLs, and the National Directory of New Hires. (The 
     National Transitional Assistance Registry is not discussed in 
     this section.) The National Clearinghouse shall operate under 
     the direction of the Secretary of Health and Human Services.

                    National child support registry

       The Family Support Act of 1988 mandated the implementation 
     and operation of a comprehensive, statewide, automated child 
     support enforcement system in every State by October 1, 1995. 
     Statewide automation will help correct some of the 
     deficiencies associated with organizational fragmentation as 
     well as alleviate another problem--ineffective case 
     management. For interstate case processing, the Child Support 
     Enforcement Network (CSENet), currently being implemented, is 
     designed to link together statewide, automated systems for 
     the purpose of exchanging interstate case data among States. 
     While all States will eventually be linked through CSENet, no 
     national directory or registry of all child support cases 
     currently exists. A national registry in combination with 
     statewide automated systems has the potential to greatly 
     improve enforcement nationally, through improved located and 
     wage withholding, and to also improve interstate case 
     processing.
       Under the proposal, a National Child Support Registry will 
     be operated by the Federal government to maintain an up-to-
     date record of all child support cases and to match these 
     cases against other databases for location and enforcement 
     purposes. The primary function of the Registry is to expedite 
     matches with other major databases.
       (1) The Federal government will establish a National Child 
     Support Registry that maintains a current record of all child 
     support cases based on an extract of information from each 
     State's Central Registry. The National Registry will:
       (a) contain minimal information on every child support case 
     from each State: the name and Social Security Number of the 
     noncustodial parent (or putative father) and the case 
     identification number;
       (b) interface with State Central Registries for the 
     automatic transmission of case updates;
       (c) match the data against other Federal data bases;
       (d) point all matches back to the relevant State in a 
     timely manner; and
       (e) interface and match with National Directory of New 
     Hires.
       (2) The Secretary shall determine the networking system, 
     after considering the feasibility and cost, which may be any 
     of the following:
       (a) building upon the existing CSENet interstate network 
     system;
       (b) replacing the existing CSENet;
       (c) integrating with the current SSA system; or
       (d) integrating with the proposed Health Security 
     Administration's network and data base.
       (3) An amount equal to two (2) percent of the Federal share 
     of child support collections made on behalf of AFDC families 
     in the previous year shall be authorized in each fiscal year 
     to fund the National Clearinghouse.

                    National directory of new hires

       A National Directory of New Hires, operated by the Federal 
     government, will be created to maintain an up-to-date data 
     base of all new employees for purposes of determining child 
     support responsibility. Information will come from 
     transmission of the W-4 form, which is already routinely 
     completed or through some other mechanism as the employer 
     chooses. Information from the data base will be matched 
     regularly against the National Registry to identify obligors 
     for automatic income withholding and the appropriate State 
     will be notified of the match. This national directory will 
     provide a standardized process for all employers and 
     interstate cases will be processed as quickly as intraState 
     cases.
       Currently, information about employees and their income is 
     reported to State Employment Security Agencies on a quarterly 
     basis. This data is an excellent source of information for 
     implementing wage withholding as well as for locating the 
     noncustodial parent to establish an order. A major drawback, 
     however, is that this data is approximately three- to six-
     months old before the child support agency has access to it. 
     A significant number of obligors delinquent in their child 
     support change jobs frequently or work in seasonal or 
     cyclical industries. Therefore, it is difficult to enforce 
     child support through wage withholding for these individuals. 
     At least ten States have passed legislation and implemented a 
     process requiring employers to report information on new 
     employees soon after hiring. Several others have 
     introduced legislation for employer reporting.
       The problem with continuing on the current path is that 
     each State is taking a slightly different approach concerning 
     who must report, what must be reported, and the frequency of 
     reporting, etc. Also, while improving intraState wage 
     withholding, this approach does little to improve interstate 
     enforcement. The time has come for more standardization as 
     well as expansion through a national system for reporting new 
     hire information. Many employers and the associations which 
     represent them, such as the American Society for Payroll 
     Management, are calling for a centralized, standardized 
     single reporting system for new hire reporting to minimize 
     the burden on the employer community. A National Directory of 
     New Hires will significantly reduce the burden on employers, 
     especially multi-State employers, as well as increase the 
     effectiveness for interstate wage withholding.
       (1) The Secretary of Health and Human Services shall 
     operate a new National Directory of New Hires which maintains 
     a current data base of all new employees in the United States 
     as they are hired.
       (2) All employers are required to report information based 
     on every new employee's W-4 form (which is already routinely 
     completed) within 10 days of hire to the National Directory:
       (a) employers may mail or fax a copy of the W-4 or use a 
     variety of other filing methods to accommodate their needs 
     and limitations, including the use of POS devices, touch tone 
     telephones, electronic transmissions via personal computer, 
     tape transfers, or mainframe to mainframe transmissions;
       (b) information submitted must include: the employee's 
     name, Social Security Number, date of birth, and the 
     employer's identification number (EIN);
       (3) employers will face fines or civil penalities if they 
     intentionally fail to: comply with the reporting 
     requirements; withhold child support as required; or disburse 
     it to the payee of record within five calendar days of the 
     date of the payroll.
       (4) The National Directory of New Hires shall:
       (a) match the data base against several national data bases 
     on a periodic basis including:
       (i) the Social Security Administration's Employer 
     Verification System (EVS) to verify that the social security 
     number given by the employee is correct and to correct any 
     transpositions;
       (ii) the National Child Support Registry (matching to occur 
     at least every 48 hours); and
       (iii) the Federal Parent Locate Service (FPLS);
       (all cases submitted to the National Child Support Registry 
     and other locate requests submitted by the States shall be 
     periodically cross-matched against the National Directory of 
     New Hires);
       (b) notify the State Registry of any new matches within 48 
     hours including the individual's place of employment so that 
     States can initiate wage withholding for cases where wages 
     are not being withheld currently or take appropriate 
     enforcement action; and
       (c) retain data for a designated time period, to be 
     determined by the Secretary.
       (5) The State Employment Security Agencies (SESAs) shall 
     submit extracts of their quarterly wage reporting data to the 
     National Directory of New Hires. The SESAs shall utilize a 
     variety of automated means to transmit the data 
     electronically to the National Directory of New Hires. The 
     National Directory shall take appropriate measures to 
     safeguard the privacy and unauthorized disclosure of the wage 
     reporting data submitted by SESAs.
       (6) States shall match the hits against their central 
     registry records at least every 48 hours and must send notice 
     to employers (if a withholding order/notice is not already in 
     place) within 48 hours of receipt from the National Directory 
     of New Hires.
       (7) A feasibility study shall be undertaken to determine if 
     the New Hire Directory should ultimately be part of the 
     Simplified Tax and Wage Reporting System, or the Social 
     Security Administration's or the Health Security Act-created 
     data bases.

                             Expanded FPLS

       States currently operate State Parent Locator Services 
     (SPLS) to locate noncustodial parents, their income, assets 
     and employers. The SPLS conducts matches against other State 
     databases and in some instance has on-line access to other 
     State databases. In addition, the SPLS may seek information 
     from credit bureaus, the postal service, unions, and other 
     sources. Location sources may vary from State to State 
     depending on the individual State's law. One location source 
     used by the SPLS is the Federal Parent Locator Service 
     (FPLS). The FPLS is a computerized national location network 
     operated by OCSE which obtains information from six Federal 
     agencies and the State Employment Security agencies (SESAs).
       In order to improve efforts to locate noncustodial parents, 
     under the proposal, OCSE will significantly expand the 
     Federal Parent Locate Services and make improvements in 
     parent locator services offered at the Federal and State 
     levels. The FPLS shall operate under the National 
     Clearinghouse.
       (1) The OCSE shall expand the scope of State and Federal 
     locate efforts by:
       (a) allowing States (through access to the FPLS and the 
     National Child Support Registry) to locate persons who owe a 
     child support obligation, persons for whom an obligation is 
     being established, or persons who are owed child support 
     obligations by accessing:
       (i) the records of other State IV-D agencies and locate 
     sources;
       (ii) Federal sources of locate information in the same 
     fashion; and
       (iii) other appropriate data bases.
       (b) requiring the child support agency to provide both ad-
     hoc and batch processing of locate requests, with ad-hoc 
     access restricted to cases in which the information is needed 
     immediately (such as with court appearances) and batch 
     processing used to troll data bases to locate persons or 
     update information periodically;
       (c) for information retained in a State IV-D system, 
     providing for a maximum 48 hours turnaround from the time the 
     request is received by the State to the time information/
     response is returned; for information not maintained by the 
     State IV-D system, the system must generate a request to 
     other State locate data bases within 24 hours of receipt, and 
     respond to the requesting State within 24 hours after receipt 
     of that information from the State locate sources;
       (d) broadening the definition of parent location to include 
     the parents' income and assets;
       (e) developing with the States an automated interface 
     between their Statewide automated child support enforcement 
     systems and the Child Support Enforcement Network (CSENet), 
     permitting locate and status requests from one State to be 
     integrated with intraState requests, thereby automatically 
     accessing all locate sources of data available to the State 
     IV-D agency; and
       (2) States shall have and use laws that require unions and 
     their hiring halls to cooperate with IV-D agencies by 
     providing information on the residential address, employer, 
     employer's address, wages, and medical insurance benefits of 
     members;
       (3) The Secretary shall authorize:
       (a) a study to address the issue of whether access to the 
     National Locate Registry should be extended to noncustodial 
     parents seeking the location of their children and whether, 
     if it were, custodial parents fearful of domestic violence 
     could be adequately protected and shall make recommendations 
     to Congress; and
       (b) a study to address the feasibility and costs of 
     contracting with the largest credit reporting agencies to 
     have an electronic data interchange with FPLS, accessible by 
     States, for credit information useful for the enforcement of 
     orders, and if the Fair Credit Reporting Act is amended, for 
     establishment and adjustment of orders.
       (c) demonstration grants to States to improve the interface 
     with State data bases that show potential as automated locate 
     sources for child support enforcement.

               Expanded role of Internal Revenue Service

       The Internal Revenue Service (IRS) is currently involved in 
     the child support enforcement program both as a source of 
     valuable information to assist in locating noncustodial 
     parents, their assets and their place of employment, and as a 
     collection authority to enforce payment of delinquent support 
     obligations. In FY 1992, well over one-half of a billion 
     dollars was collected by the IRS on behalf of over 800,000 
     child support cases. This proposal focuses on strengthening 
     the IRS role in child support enforcement in three areas: 
     enhancing data exchange; expanding the tax refund offset 
     program; and, improving the full collection process.

  Enhancing data exchange between IV-D child support and the IRS data

       The internal Revenue Code currently provides access to 
     certain tax information used by child support enforcement 
     agencies, including 1099 data. Access to this information 
     greatly enhances State enforcement efforts and the utility of 
     the locate network. Under the proposal, the Secretary of the 
     Treasury will explore the feasibility of simplifying access 
     to this IRS data.
       (1) The Secretary of the Treasury shall explore the 
     feasibility of and, as appropriate, institute procedures 
     whereby States can more easily obtain access to IRS data 
     (including 1099 data), if allowed by law, for the purposes of 
     identifying obligors' income and assets. Safeguards must be 
     in place to protect the confidentiality of the information.

                         IRS tax refund offset

       Current statutory requirements for Federal tax refund 
     interception set different criteria for AFDC and non-AFDC 
     cases. One especially inequitable difference is that the tax 
     refund offset is not available to collect past-due child 
     support for non-AFDC children who have reached the age of 
     majority, even if the arrearage accrued during the child's 
     minority. The proposal will eliminate all disparities between 
     AFDC and non-AFDC income tax refund offsets for child support 
     collection purposes.
       (1) The disparities between AFDC and non-AFDC cases 
     regarding the availability of the Federal income tax refund 
     offset shall be eliminated, the arrearage requirement shall 
     be reduced to an amount determined by the Secretary, and 
     offsets shall be provided regardless of the age of the child 
     for whom an offset is sought. Time-frames, notice and hearing 
     requirement shall be reviewed for simplification.

                          IRS full collections

       Currently, the IRS full collection process (which may 
     include seizure by the IRS of property, freezing of accounts, 
     and other procedures) is available to States as an 
     enforcement tool in collecting delinquent child support 
     payments. While use of the IRS full collection process could 
     be an effective enforcement remedy, especially in interstate 
     cases, it is currently used only rarely, in part, because the 
     current process is cumbersome and prohibitively expensive 
     from the States' perspective. The IRS and HHS have recently 
     undertaken a study of explore how to improve the IRS full 
     collection process and to make recommendations regarding its 
     expansion. As part of this study, 700 cases were certified to 
     IRS for collection in September, 1993. These cases are being 
     closely monitored and the data obtained will be used to make 
     recommendations for improvement to the IRS Full Collection 
     project, including the establishment of a new fee structure. 
     The proposal will require the Secretary of Treasury to 
     improve the full collection process by establishing a 
     simplified and streamlined process, including the use of an 
     automated collection process for child support debts.
       (1) To improve the IRS Full Collection process, the 
     Secretary of the Treasury shall:
       (a) simplify the IRS full collection process;
       (c) establish procedures to ensure that the process is 
     expeditious and implemented effectively;
       (c) explore the feasibility of the IRS using its automated 
     tax collection techniques in child support full collection 
     cases; and
       (d) the IRS will not charge an extra submission fee if a 
     State updates the arrears on an open case.

                         Interstate Enforcement

       Currently, many child support efforts are hampered by 
     States' inability to locate noncustodial parents and secure 
     orders of support across State lines. New provisions will be 
     enacted to improve State efforts to work interstate child 
     support cases and make interstate procedures more uniform 
     throughout the country.
       Under current law, most States handle their interstate 
     cases through the use of versions of the Uniform Reciprocal 
     Enforcement of Support Act (URESA), promulgated in 1950 and 
     changed in 1952, 1958 and 1968. Using URESA may result in the 
     creation of several child support orders in different States 
     (or even counties within the same state) for different 
     amounts, all of which are valid and enforceable. Interstate 
     income withholding, an administrative alternative to URESA, 
     is not widely used and limits the enforcement remedy of 
     withholding.
       Under the proposal, States will be required to adopt 
     verbatim URESA's replacement, the Uniform Interstate Family 
     Support Act (UIFSA). UIFSA ensures that only one State 
     controls the terms of the order at any one time. UIFSA, 
     unlike URESA, includes a comprehensive long-arm jurisdiction 
     section to ensure that as many cases stay in one State as is 
     possible. Direct withholding will allow a State to use income 
     withholding in interstate cases by serving the employer 
     directly without having to go through the second State's IV-D 
     agency. Additionally, States could quickly obtain wage 
     information from out-of-State employers. Interstate locate 
     through the National Clearinghouse should improve locate 
     capability dramatically, by linking State agencies, Federal 
     locate sources and the new hire data base.
       We will also ask Congress to express its sense that it is 
     constitutional to use ``child-state'' jurisdiction, which if 
     upheld by the Supreme Court, will allow agencies to bring the 
     child support case where the child resides instead of where 
     the noncustodial parent lives if he or she has no ties to the 
     child's state. This extends long arm jurisdiction's reach to 
     all cases instead of just most cases. It would also eliminate 
     arguments and court proceedings regarding jurisdiction.
       While all States have implemented immediate wage 
     withholding programs for child support payment, there are 
     significant variances in individual State laws, procedures 
     and forms. Those differences are significant enough to bog 
     down the interstate withholding system. Even within States, 
     forms and procedures may vary, resulting in slow or 
     inaccurate case processing. The proposal will require the 
     Secretary to promulgate regulations defining income and other 
     terms so that income withholding terms, procedures and 
     definitions are uniform. This will improve interstate wage 
     withholding effectiveness and fairness and facilitate a more 
     employer-friendly withholding environment. The net effect of 
     UIFSA, direct and uniform withholding, national subpoenas, 
     interstate lien recognition, interstate communication, and 
     child-State jurisdiction is to almost eradicate any barriers 
     that exist to case processing simply because the parents do 
     not reside in the same state.
       To facilitate interstate enforcement efforts, each State 
     must have and use laws, rules and procedures that:
       (1) provide for long-arm jurisdiction over a nonresident 
     individual in a child support or parentage case under certain 
     conditions;
       (2) require Social Security Numbers of all persons apply 
     for a marriage license or divorce to be listed on the 
     supporting license or decree;
       (3) require Social Security Numbers of both parents to be 
     listed on all child support orders and birth certificates;
       (4) adopt verbatim the Uniform Reciprocal Enforcement of 
     Support Act (URESA) drafting committee's final version of the 
     Uniform InterState Family Support Act (UIFSA), to become 
     effective in all States no later than October 1, 1995 or 
     within 12 months of passage, but in no event later than 
     January 1, 1996;
       (5) give full faith and credit to all terms of any child 
     support order (whether for past-due, currently owned, or 
     prospectively owned support) issued by a court or through an 
     administrative process which has jurisdiction under the terms 
     of UIFSA;
       (6) provide that out-of-State service of process in 
     parentage and child support actions must be accepted in the 
     same manner as are in-State service of process methods and 
     proof of service so if service of process is valid in either 
     State it is valid in the hearing State;
       (7) require the filing of the noncustodial parent's and the 
     custodial parent's residential address, mailing address, home 
     telephone number, driver's license number, Social Security 
     Number, name of employer, address of place of employment and 
     work telephone number with the appropriate court or 
     administrative agency on or before the date the final order 
     is issued, in addition:
       (a) pursue for the purpose of providing sufficient notice 
     in any support related action, other than the initial notice 
     in an action to adjudicate parentage or establish or modify a 
     support order that the last residential address of the party 
     given to the appropriate agency or court is the current 
     address of the party, in the absence of the obligor or 
     obligee providing a new address;
       (b) prohibit the release of information concerning the 
     whereabouts of a parent or child to the other parent if there 
     is a court order for the physical protection of one parent or 
     child entered against the other parent;
       (8) provide intraState transfers of cases to the city, 
     county, or district where the child resides for purposes of 
     enforcement and modification, without the need for refiling 
     by the plaintiff or re-serving the defendant; require the 
     State child support agency or State courts that hear child 
     support claims to exert statewide jurisdiction over the 
     parties and allow the child support orders and lines to have 
     statewide effort effect for enforcement purposes;
       (9) make clear that visitation denial is not a defense to 
     child support enforcement and that nonsupport is not 
     available as a defense when visitation is at issue;
       (10) require States to require employers, as a condition of 
     doing business in the State, to respond to requests by out-
     of-State IV-D agencies for individual income information 
     pertaining to all private, State and local government 
     employees for purposes of establishing and collecting child 
     support.
       In addition, the Federal government shall:
       (1) make a Congressional finding that child-State 
     jurisdiction is consistent with the Due Process clauses of 
     the Fifth and Fourteenth Amendments, Section 5, the Commerce 
     Clause, the General Welfare Clause, and the Full Faith and 
     Credit Clause of the United States Constitution, so that due 
     process is satisfied when the State where a child is 
     domiciled asserts jurisdiction over a nonresident party, 
     provided that party is the parent or presumed parent of the 
     child in a parentage or child support action;
       (a) test the constitutionality of this assertion of child-
     State jurisdiction by providing for an expedited appeal to 
     the U.S. Supreme Court directly from a Federal court;
       (2) provide that a State that has asserted jurisdiction 
     properly retains continuing, exclusive jurisdiction over the 
     parties as long as the child or either party resides in that 
     State or if all the parties consent to the State retaining 
     jurisdiction;
       (a) when no State has continuing exclusive jurisdiction 
     when actions are pending in different States, the last State 
     where the child has resided for a consecutive six month 
     period (the home State) can claim to be the State of 
     continuing and exclusive jurisdiction, if the action in the 
     home State was filed before the time expired in the other 
     State for filing a responsive pleading and a responsive 
     pleading contesting jurisdiction is filed in that other 
     State;
       (3) provide that a State loses its continuing, exclusive 
     jurisdiction to modify its order regarding child support if 
     all the parties no longer reside in that State or if all the 
     parties consent to another State asserting jurisdiction;
       (a) if a State loses its continuing, exclusive jurisdiction 
     to modify, that State retains jurisdiction to enforce the 
     terms of its original order and to enforce the new order upon 
     request under the direction of the State that has 
     subsequently acquired continuing, exclusive jurisdiction;
       (b) if a State no longer has continuing jurisdiction, then 
     any other State that can claim jurisdiction may assert it;
       (c) when actions to modify are pending in different States, 
     and the State that last had continuing, exclusive 
     jurisdiction no longer has jurisdiction, the last State where 
     the child has resided for a consecutive six month period (the 
     home State) can claim to be the State of continuing, 
     exclusive jurisdiction, if:
       (i) a responsive pleading contesting jurisdictional control 
     is filed in a timely basis in the non-home State, and
       (ii) an action in the home State is filed before the time 
     has expired in the non-home State for filing a responsive 
     pleading;
       (4) provide that the law of the forum State applies in 
     child support cases, unless the forum State must interpret an 
     order rendered in another State, so that the rendering 
     State's law governs interpretation of the order; in cases in 
     which a statute of limitations may preclude collection of any 
     outstanding child support arrearages, the longer of the forum 
     or rendering State's statute of limitations shall apply; and
       (5) provide that all employers can be served directly with 
     a withholding order by any State, regardless of the State 
     issuing the order; The Secretary shall develop a universal 
     withholding form that must be used by all States.
       In addition: (1) Section 466 of the Social Security Act 
     will be amended to require regulations so that income 
     withholding terms, procedures, forms and definitions of 
     income for withholding purposes are uniform to ensure 
     interstate withholding efficiency and fairness, based on 
     regulations promulgated by the Secretary;

                       Other Enforcement Measures

       Currently, State and Federal enforcement efforts are often 
     hampered by cumbersome enforcement procedures that make even 
     routine actions difficult and time consuming. In order to 
     enable States to take more efficient and effective action 
     when child support is not paid, the proposal requires States 
     to adopt several additional proven enforcement tools and 
     streamline enforcement procedures.

           Routinized Lien-Placing Process on Motor Vehicles

       Liens have two faces. They are either passive encumbrances 
     on property that entitle the lienholder to money when the 
     property changes owners, or they are proactive collection 
     tools that force the obligor to relinquish the property to 
     satisfy the child support debt. Under current law, States 
     must have and use procedures to impose liens on personal and 
     real property. However, the time consuming and cumbersome 
     nature associated with the case-by-case judicial activity now 
     required to impose liens is a major reason for their limited 
     use in practice. Under the proposal, the process by which 
     liens on motor vehicles are imposed will be made more 
     routinized and efficient, resulting in an increase in child 
     support collected. States will be required to set up a 
     routine lien-placing process on motor vehicle titles, without 
     the necessity of first acquiring writs from courts, on non-
     custodial parents who are delinquent in paying child support.

                       Universal wage withholding

       Withholding child support directly from wages has proven to 
     be one of the most effective means of ensuring that child 
     support payments are made. Currently, all IV-D orders should 
     generally be in withholding status if the parties have not 
     opted out or a decision maker has not found good cause. IV-D 
     orders entered prior to 1991 in which no one has requested 
     withholding or the obligor has not fallen behind by one 
     month's worth of support are the only orders that do not have 
     to be in withholding status. Arrearage-triggered IV-D 
     withholding requires prior notice in all but a handful of 
     States. Non-IV-D orders entered after January 1, 1994 are 
     subject to immediate withholding if the two opt-outs are not 
     invoked. Other non-IV-D orders may be in withholding status, 
     depending on if there are arrearages and whether the parties 
     took the appropriate action to impose if the withholding 
     State does not impose it automatically in non-IV-D cases.
       While the patchwork of orders subject to withholding is 
     gradually being filled in, one way to speed up the 
     universality of withholding is to require withholding in all 
     cases unless the parties opt out or a court finds good cause. 
     As under current law, if an arrearage of one month of support 
     accrues whether or not there is an opt out, withholding must 
     be implemented; however, it should be implemented 
     automatically without need of further court action in non-IV-
     D cases as well, and without need for notice prior to 
     withholding in the arrearage-triggered cases. Universalizing 
     withholding (except for opt outs) makes the system equal for 
     the non-IV-D and the IV-D parent. It allows for the immediate 
     implementation of withholding when an obligor begins a new 
     job. Imposing withholding without prior notice gives the 
     States the jump on collection, instead of waiting up to 45 
     days for resolution. In the very few cases in which 
     withholding might be incorrectly imposed, a hearing will be 
     immediately available to the aggrieved obligor to satisfy due 
     process concerns and to ensure accurate withholding (if a 
     phone call to the agency does not quickly resolve the 
     dispute).

                           Access to records

       Access to current income and asset information is critical 
     to tracking down delinquent noncustodial parents who are 
     trying to escape their responsibilities. The need to petition 
     the courts for information on the address, employer, and 
     income of parents on a case-by-case basis impedes the ability 
     of States to effectively carry out child support enforcement 
     actions. Recognizing the value of timely and systematic 
     access to information, the proposal will require States to 
     make the records of various agencies available to the child 
     support agency on a routine basis, through automated and 
     nonautomated means. In addition, the proposal will require 
     that child support agencies be granted access to specific 
     case-related financial institution records for location or 
     enforcement action.

                 Reducing fraudulent transfer of assets

       A major problem in some child support cases occurs when an 
     obligor transfers his or her assets to someone else to avoid 
     paying support. To protect the rights of creditors, States 
     have enacted laws under the Uniform Fraudulent Conveyance Act 
     and the Uniform Fraudulent Transfer Act to allow creditors to 
     undo fraudulent transfers. Applying such laws to child 
     support will provide equal protection to the support rights 
     of custodial parents as applied to any other creditor and may 
     deter obligors who are considering fraudulent transfer. The 
     proposal will make it easier to take legal steps against 
     parents who intentionally transfer property to avoid child 
     support payment.

                          License revocations

       An effective enforcement tool recently implemented by a 
     number of States is withholding or suspending professional/
     occupational licenses and, in some States, also standard 
     driver's licenses of noncustodial parents owing past-due 
     child support. States that have added this procedure to their 
     arsenal of enforcement remedies have favorable perceptions 
     about its effectiveness, noting that it has both increased 
     the amount of arrearages collected and served as an incentive 
     for noncustodial fathers to keep current in their monthly 
     child support obligation. Often the mere threat of suspending 
     a license is enough to get many recalcitrant obligors to pay. 
     The proposal requires all States to adopt such laws while 
     allowing State flexibility to tailor due process protections.

          Statute of limitations for child support arrearages

       Under current law, each State may decide when it no longer 
     has the power to collect old debts. Usually invoking a State 
     statute of limitations is done by the debtor, and is not 
     automatic. Some State statute of limitations for child 
     support debts are as short as seven years. Under the 
     proposal, a uniform and extended statute of limitations for 
     collecting child support debts of 30 years after the child's 
     birth will be required. This ensures that a non-payor is less 
     likely to forever escape payment simply because they have 
     avoided payment in the short-term.

                         Interest on arrearages

       Child support debts are currently at a competitive 
     disadvantage compared to commercial debts. While many States 
     have the authority to apply interest to delinquent support, 
     few routinely do so and thus there is no financial incentive 
     for a noncustodial parent to pay support before paying an 
     interest accruing debt. To raise the priority of child 
     support debts to at least that afforded to other creditors, 
     the proposal will require States to calculate and collect 
     interest or late penalties on arrearages.

                    Expanded use of credit reporting

       Credit Bureaus can be an effective mechanism for collecting 
     information needed to locate parents and establish awards at 
     the appropriate level and for ensuring that child support 
     payments are kept current. Under current law, credit report 
     information may be used for locate and enforcement purposes. 
     Agencies may not use credit reports for establishment or 
     modification purposes, however. States are also not required 
     to report arrearages upon a request from a credit bureau 
     unless the arrearages are in excess of $1,000. (States may 
     report, at State option, when a lesser amount is owed.) This 
     proposal will give IV-D agencies access to all credit bureau 
     information for consideration in establishing, modifying, and 
     enforcing child support orders. Since credit reports are 
     likely to fully disclose income generating activities, such 
     reports can be extremely important in identifying assets and 
     income needed to establish awards. Additionally, requirements 
     for States to report child support arrears of more than one 
     month would encourage non-custodial parents to stay current 
     in their payment of support, because non-payment could 
     jeopardize their credit rating. Many States have improved 
     their credit reporting activities regarding child support 
     arrearages. This proposal will ensure uniformity among the 
     States and prevent any one State from becoming a safe-haven 
     for non-paying parents.

                               Bankruptcy

       Although a noncustodial parent obligated to pay support may 
     not escape the obligation by filing bankruptcy, the ability 
     to collect amounts due is hampered by current bankruptcy 
     practices. One of the difficulties faced is that the filing 
     of a bankruptcy action automatically ``stays'' or forbids 
     various actions to collect past-due support. In order to 
     continue child support collections, permission from the 
     Bankruptcy Court must be granted to lift the automatic stay. 
     Another obstacle is a requirement that the attorney handling 
     the child support creditor's claim must either be a member of 
     the Federal bar in the jurisdiction where the bankruptcy 
     action is filed, appear by permission, or find alternative 
     representation. In addition, child support obligations are 
     often treated less favorably than other financial obligations 
     such as consumer debts and, under a Chapter 13 bankruptcy 
     proceeding, an individual debtor is allowed to pay off debts 
     over an extended period of time--usually three to five years. 
     Even though the current child support continues and 
     arrearages cannot be forgiven through bankruptcy, the ability 
     to collect these arrearages quickly can be thwarted when, as 
     under current practice, a bankruptcy payment plan could 
     require a different payment arrangement on support arrearages 
     than that imposed by a court or administrative support 
     process.
       The proposal will eliminate these types of bankruptcy 
     related obstacles to collecting child support. It will remove 
     the effects of an automatic stay with respect to child 
     support establishment, modification, and enforcement 
     proceedings, require the establishment of a simple procedure 
     under which a support creditor can file their claim with the 
     bankruptcy court, treat unsecured support obligations as a 
     second priority claim status, and require that the bankruptcy 
     trustee recognize and honor an arrearage payment schedule 
     established by a court or administrative decision maker. 
     These changes will facilitate the uninterrupted flow of 
     support to children in the event the obligor files for or 
     enters into bankruptcy.

                          Federal garnishment

       Garnishment of Federal employees salaries and wages for 
     child support was authorized prior to the requirement that 
     all States have and use wage withholding procedures which do 
     not require specific court or administrative authorization. 
     The Federal garnishment statute was not changed to make its 
     procedures consistent with the requirements for all other 
     child support wage withholding. The proposal will simplify 
     the implementation of child support wage withholding by 
     requiring that the same procedures be used for Federal and 
     non-Federal employees. The proposal also allows garnishment 
     of military pay more consistent with other types of 
     garnishable money.

                               Passports

       Collecting child support from persons who have left the 
     country is extremely difficult, even if the United States has 
     a reciprocal agreement with the country in which the 
     noncustodial parent currently resides. If there is no 
     reciprocal agreement with that country, it is often virtually 
     impossible to collect child support from the noncustodial 
     parent. Under the proposal, passports and visas will not be 
     issued for foreign travel for the most egregious cases in 
     which support is owed--those owing over $5,000 in past due 
     support.
       In order to enforce orders of support more effectively, 
     States must have and use laws that: (1) systematically impose 
     liens on vehicle titles for child support arrearages using a 
     method for updating the value of the lien on a regular basis 
     or allowing for an expedited inquiry to and response for 
     proof of the amount of arrears; provide an expedited method 
     for the titleholder or the individual owing the arrearage to 
     contest the arrearage or request a release upon fulfilling 
     the support obligation; the liens shall cover all current and 
     future support arrearages and shall have priority over all 
     other creditors' liens imposed on a vehicle title other than 
     a purchase money security interest; in appropriate cases the 
     agency shall have the power to execute on, seize, sell and 
     distribute encumbered or attached property in accordance with 
     State law;
       (2) require the State agency to initiate immediate wage 
     withholding action for all cases for which a noncustodial 
     parent has been located and wage withholding is not currently 
     in effect, without the need for advance notice to the obligor 
     prior to the implementation of the withholding order;
       (3) empower child support agencies to issue administrative 
     subpoenas requiring defendants in paternity and child support 
     actions to produce and deliver documents to or to appear at a 
     court or administrative agency on a certain date; sanction 
     individuals who fail to obey a subpoena's command;
       (4) provide, at a minimum, that the following records are 
     available to the State child support agency through automated 
     or nonautomated means:
       (a) recreational licenses of residents, or of nonresidents 
     who apply for such licenses, if the State maintains records 
     in a readily accessible form;
       (b) real and personal property including transfers of 
     property;
       (c) State and local tax departments including information 
     on the residence address, employer, income and assets of 
     residents;
       (d) publicly regulated utility companies and cable 
     television operators; and
       (e) marriages, births, and divorces of residents;
       (5) provide, at a minimum, the following records of State 
     agencies are available to the State child support agency: the 
     tax/revenue department, motor vehicle department, employment 
     security department, bureau of corrections, occupational/
     professional licensing department, secretary of state's 
     office, bureau of vital statistics, and agencies 
     administering public assistance. If any of these State data 
     bases are automated, the child support agency must be granted 
     either on-line or batch access to the data.
       (6) provide for access to financial institution records 
     based on a specific case's location or enforcement need 
     through tape match or other automated or nonautomated means, 
     with appropriate safeguards to ensure that the information is 
     used for its intended purpose only and is kept confidential; 
     a bank or other financial institution will not be liable for 
     any consequences arising from providing the access, unless 
     the harm arising from institution's conduct was intentional;
       (7) provide indicia or badges of fraud that create a prima 
     facie case that an obligor transferred income or property to 
     avoid a child support creditor; once a prima facia case is 
     made, the State must take steps to avoid the fraudulent 
     transfer unless settlement is reached;
       (8) require the withholding or suspension of professional 
     or occupational licenses from noncustodial parents who owe 
     past-due child support or are the subject of outstanding 
     failure to appear warrants, capiases, and bench warrants 
     related to a parentage or child support proceeding;
       (a) the State shall determine the procedures to be used in 
     a particular State and determine the due process rights to be 
     accorded to obligors.
       (b) the State shall determine the procedures to be used in 
     a particular State and determine the due process rights to be 
     accorded to obligors.
       (b) the State shall determine the threshold amount of child 
     support due before withholding or suspension procedures are 
     initiated.
       (9) suspend the driver's licenses, including any commercial 
     licenses, of noncustodial parents who owe past-due child 
     support:
       (a) the suspension shall be determined by the IV-D agency, 
     which shall administratively suspend licenses. The State 
     shall determine the due process rights to be accorded the 
     obligor, including, but not limited to, the right to a 
     hearing, stay of the order under appropriate circumstances, 
     and the circumstances under the suspension may be lifted;
       (b) the State shall determine the threshold amount of child 
     support due before withholding or suspension procedures are 
     initiated.
       (10) extend the statute of limitations for collection of 
     child support arrearages until the child for whom the support 
     is ordered is at least 30 years of age.
       (11) calculate and collect interest or late penalties on 
     arrearages (accrued after the date of enactment) for non-
     payment. (Late penalties may be imposed on a monthly, 
     quarterly, or annual basis.) All such charges must be 
     distributed to the benefit of the child (unless child support 
     rights have been assigned to the State). The Secretary shall 
     establish by regulation a rule to resolve choice of low 
     conflicts.
       In addition, Congress shall: (12) amend the Fair Credit 
     Reporting Act to allow State agency access to and use of 
     credit reports for the location of noncustodial parents and 
     their assets and for establishing and modifying orders to the 
     same extent that the State agency may currently use credit 
     reports for enforcing orders;
       (13) require reports to credit bureaus of all child support 
     obligations when the arrearages reach an amount equal to one 
     month's payment of child support;
       (14) amend the Bankruptcy Code to:
       (a) allow parentage and child support establishment, 
     modification and enforcement proceedings to continue without 
     interruption after the filing of a bankruptcy petition; 
     preclude the bankruptcy stay from barring or affecting any 
     part of any action pertaining to support as defined in 
     section 523 of Title 11;
       (b) allow child support creditors to file a claim without 
     charge or having to meet special local court rule 
     requirements for attorney appearances in a bankruptcy case or 
     district court anywhere in the United States by filing a 
     simplified form that includes information detailing the child 
     support creditor's representation, and the child support 
     debt, its status, and other characteristics;
       (c) require the establishment of a simple procedure under 
     which support creditors can file claims with the bankruptcy 
     court;
       (d) give child support creditors priority over certain 
     other unsecured creditors; and
       (e) require that the bankruptcy trustee make payments to a 
     child support creditor from the bankruptcy State in 
     accordance with a payment schedule established in a family 
     court or other administrative or judicial proceeding.
       (15) amend and streamline Sections 459, 461, 462 and 465 of 
     the Social Security Act and companion laws to make the 
     garnishment of Federal employees and retirees (including 
     military) salaries, wages and other benefits and income 
     consistent with the terms and procedures of the IV-D 
     withholding statute (466(b) of the Social Security Act).
       (16) amend laws and procedures to ensure that passports, 
     and visas for persons attempting to leave the country, are 
     not issued if they owe more than $5,000 in child support 
     arrearages. The State Department may match its list of 
     applicant against tax offset files of noncustodial parents 
     with orders who owe more than $5,000;
       The Social Security Administration shall be authorized to: 
     (17) provide the State IV-D or Department of Motor Vehicle 
     agency access to electronic verification of Social Security 
     Numbers.

                           Privacy protection

       Historically, child support enforcement agencies have had 
     access to information unavailable to other Federal and/or 
     State agencies because of the special nature of their 
     mission--ensuring that children receive appropriate financial 
     support from their parents. Parents cannot be located and 
     orders cannot be established and enforced unless the State 
     has access to a wide array of information sources which 
     identify places of employment and other information about 
     assets and income. Under current Federal and State 
     regulations and rules, information obtained for child support 
     purposes is protected from unwarranted disclosure. The 
     proposal ensures that privacy safeguards continue to cover 
     all sensitive and personal information by extending such 
     protections to any new sources of information. States are 
     required to ensure that safeguards are in place to prevent 
     breaches of privacy protection for individuals not liable or 
     potentially liable for support and to prevent the misuse of 
     information by those employees and agencies with legitimate 
     access for child support purposes only.
       (1) States shall:
       (a) extend their data safeguarding State plan requirements 
     to all newly accessible information under the proposal. 
     States shall also institute routine training for State and 
     local employees (and contractors shall be required to do the 
     same for their staff) who handle sensitive and confidential 
     data.
       (b) regularly self-audit for unauthorized access or data 
     misuse, and investigate individual complaints as necessary.
       (c) have penalties for persons who obtain unauthorized 
     access to safeguarded information or who misuse information 
     that they are authorized to obtain. Supervisors who knew or 
     should have known of unauthorized access or misuse shall also 
     be subject to penalties.
       (2) Procedures for protection of tax records should include 
     such protections as:
       (a) data matching performed by staff having access only to 
     related data fields necessary to perform child support 
     functions;
       (b) controlling access to individual child support computer 
     records by the use of individual passwords; and
       (c) monitoring access on a regular basis by use of 
     computerized audit trail reports and feedback procedures.
       In addition: (3) All child support enforcement staff shall 
     be kept informed of Federal and State laws and regulations 
     pertaining to disclosure of confidential tax and child 
     support information.
       (4) Access to State vital statistics shall be restricted to 
     authorized IV-D personnel.
       (5) The Federal government shall ensure that New Hire 
     information is limited to IV-D agency use by authorized 
     persons (as defined under current law).
       (6) The Secretary shall issue regulations setting minimum 
     privacy safeguards that States must follow to ensure that 
     only authorized users of personal information have access to 
     it solely for official purposes.

                                Funding

             Federal financial participation and incentives

       The current funding structure of the Child Support 
     Enforcement program is comprised of three major components: 
     direct Federal matching, incentive payments to States, and 
     the States' share of child support collections made on behalf 
     of AFDC recipients.
       Direct Federal matching, known as Federal financial 
     participation or FFP, provides for 66 percent of most State/
     local IV-D program costs. A higher rate, 90 percent, is paid 
     for genetic testing to establish paternity and, until October 
     1, 1995, for comprehensive State wide automated data 
     processing (ADP) systems. The Federal government also pays 
     States an annual incentive based on collections and cost 
     effectiveness equalling 6-10 percent of collections from the 
     Federal share of AFDC-related collections. States must pass 
     on part of the incentive to any local jurisdiction that 
     collected the child support if the State required the 
     jurisdiction to participate in the program's costs.
       Currently, States may profit from the IV-D program's 
     funding structure irrespective of their performance. The 
     proposed child support financing reforms are primarily 
     directed at the Federal financial participation and the 
     payment of incentives. Basic FFP will be increased from 66 
     percent to 75 percent to ensure that all States had a 
     sufficient resource base to operate an efficient and 
     effective program. Incentives will be based on State 
     performance in the areas of paternity establishment, order 
     establishment, collections and cost-effectiveness. Such 
     incentives will ensure that States focus on the results that 
     are expected from the program activities. States and the 
     Federal Government will still share in the reduction in costs 
     resulting from support collections made on behalf of AFDC 
     recipients.
       (1) The Federal government will pay 75 percent of State 
     administrative costs. All cases included in the State's 
     Central Registry will be eligible for federal funding.
       (2) States are eligible for incentive payments in the 
     following areas:
       (a) paternity establishment--earning an increase of up to 5 
     percentage points in FFP for high paternity establishment 
     rates, as determined by the Secretary; and
       (b) overall performance--earning an increase of up to 10 
     percentage points in FFP for strong overall performance which 
     factors in:
       (i) the percentage of cases with support orders established 
     (number of orders compared to the number of paternities 
     established and other cases which need a child support 
     order):
       (ii) the percentage of overall cases with orders in paying 
     status;
       (iii) the percentage of overall collections compared to 
     amount due;
       (iv) cost-effectiveness.
       (3) All incentives will be based on a formula to be 
     determined by the Secretary.
       (4) All incentive payments made to the States must be 
     reinvested back into the State child support program.

            Registry and clearinghouse start-up enhanced FFP

       Enhanced funding for the automated central registries and 
     centralized collection distribution systems is critical to 
     enable States to implement these new requirements.
       (I) States will receive enhanced FFP at a 80%/20% Federal/
     State match rate, or at the base 75% FFP plus incentives, 
     whichever is higher, for the planning, design, procurement, 
     conversion, testing and start-up of their full-service, 
     technology-enabled State registries and centralized payment 
     centers. This includes necessary enhancements to the 
     automated child support system to accommodate the proposal.)
       (2) For the next 5 years, total Federal payments to States 
     for ADP are capped at $260,000,000, to be distributed among 
     States by a formula set in regulations which takes into 
     account the relative size of State caseloads and the level of 
     automation needed to meet applicable ADP requirements.

                  State/Federal maintenance of effort

       (1) Using a maintenance of effort plan, the Federal 
     government will require States to maintain at least their 
     current level of contribution to the program, representing 
     the State FFP match and any other State funds or receipts 
     allocated to the child support program.

                          Revolving loan fund

       In order to encourage ongoing innovation in the IV-D 
     program, it is proposed that a revolving loan fund be 
     created. The revolving loan fund will allow the Federal 
     government more flexibility in helping States develop and 
     implement innovative practices which have significant effects 
     on increasing collections and ongoing innovation.
       (1) The Federal government through OCSE shall provide an 
     authorization of funds of up to $100 million to be made 
     available to States and their subdivisions to be used solely 
     for short-term, high-payoff operational improvements to the 
     State child support program. Projects demonstrating a 
     potential for increases in child support collections will be 
     submitted to the Secretary on a competitive basis. Crieria 
     for determining which projects to fund shall be specified by 
     the Secretary based on whether adequate alternative funding 
     already exists, and whether collections can be increased as a 
     result. Within these guidelines, States shall have maximum 
     flexibility in deciding which projects to fund.
       (2) Funding will be limited to no more than $5 million per 
     State or $1 million per project, except for limited 
     circumstances under which a large State undertakes a 
     statewide project, in which case the maximum for that State 
     shall be $5 million for the project. States may supplement 
     Federal funds to increase the amount of funds available for 
     the project and may require local jurisdictions to put up a 
     local match.
       (3) Fundng will be available for a maximum of three years 
     based on a plan established with the Secretary. OCSE must 
     expeditiously review and, as appropriate, fund the approved 
     plan. At the end of the project period, recipients must pay 
     funds back to the Revolving Fund out of increased performance 
     incentives.
       (4) Beginning with the next Federal fiscal year after the 
     project ends, the Federal government shall offset half of the 
     increase in the State's performance incentives every year 
     until the funds are fully repaid. If the State fails to raise 
     collections that result in a performance incentive increase 
     at the projected attributable level, the funds will be 
     recouped by offsetting the FFP due to a State by a sum equal 
     to one-twelfth of the project's Federal funding, plus 
     interest, over the first twelve quarters beginning with the 
     next fiscal year following the project's completion.

                           Program management

       Dramatically improving child support enforcement requires 
     improved program management at both the State and Federal 
     levels. The proposal includes several provisions designed to 
     lead to better program performance and better services.

                                Training

       From 1979 through the late 1980s OCSE contracted with 
     outside organizations to provide on-site training to States 
     across a broad range of topics. In early 1991, OCSE 
     established the National Training Center within the Division 
     of Program Operations to take over many training functions 
     formerly performed by contractors. The purpose of the Center 
     is to bolster States' training initiatives through curriculum 
     design/development, dissemination of information and 
     materials and, to the extent resources permit, the provision 
     of direct training. While a few States have developed 
     training standards for staff, there is currently no mandate 
     that States have minimum standards for persons involved in 
     the child support program.
       Under the proposal, the Federal share of funding for 
     training, technical assistance and research will 
     significantly increase and will be earmarked each year for 
     such things as training, technical assistance, research, 
     demonstrations and staffing studies. Furthermore, States will 
     be required to have minimum standards for training in their 
     State plans. Under the proposal, OCSE will also develop a 
     training program for State IV-D Directors. The IV-D program's 
     complexity and importance to children and family self-
     sufficiency require that States have experienced and well-
     trained managers. Experts often point to the leadership 
     experience of IV-D managers as a major factor in a state's 
     performance.
       (1) An amount equal to one (1) percent of the Federal share 
     of child support collections made on behalf of AFDC families 
     in the previous year shall be authorized in each fiscal year 
     to fund technical assistance, training, research, 
     demonstrations and staffing studies.
       (2) OCSE shall provide a Federal developed core curriculum 
     to all States to be used in the development of State-specific 
     training guides. OCSE shall also develop a national training 
     program for all State IV-D directors.
       (3) States must also have minimum standards in their State 
     plans for training, based on the newly develop state-specific 
     training guide, that include initial and ongoing training for 
     all persons involved in the IV-D child support program. The 
     program shall include annual training for all line workers 
     and special training for all staff when laws, policies or 
     procedures change.
       (4) In addition, funds under Title IV-D of the Social 
     Security Act shall be made available to States for the 
     development and conduct of training of IV-A and IV-E 
     caseworkers, private attorneys, judges and clerks who need a 
     knowledge of child support to perform their duties but for 
     whom a cooperative agreement does not exist for ongoing child 
     support activities.

                          Technical assistance

       Currently, States complain that they receive very little 
     technical assistance from the Federal government. Indeed, the 
     level of technical assistance provided to State child support 
     enforcement agencies has declined significantly over the past 
     several years because of staff and resource limitations. 
     Aside from the provision of training and publication 
     dissemination, most of the assistance provided is in the 
     nature of problem identification through program reviews.
       Under the proposal, OCSE will provide comprehensive direct 
     technical assistance in a variety of forms to States. In 
     particular, OCSE will take an active role in developing model 
     laws and identifying best practices that States may adopt, 
     reviewing State laws, procedures, policies, and 
     organizational structure, and providing enhanced technical 
     assistance to meet the program's goals. Such provision of 
     technical assistance will be designed to prevent program 
     deficiencies before they occur.
       The OCSE shall provide technical assistance to States by: 
     (1) developing model laws and identifying model legislation 
     and ``best'' State practices that States may follow when 
     changing State laws to meet new Federal requirements;
       (2) reviewing State laws, policies, procedures, and 
     organizational structure, including cooperative agreements, 
     as part of the State plan approval process;
       (3) providing a State with a written assessment of its 
     program and, when appropriate, identifying areas in which the 
     State is deficient;
       (4) providing enhanced technical assistance to States to 
     meet the program's goals; and

                          Audit and reporting

       The Federal statute mandates periodic comprehensive Federal 
     audits of State programs to ensure substantial compliance 
     with all federal requirements. If deficiencies identified in 
     an audit are not corrected, States face a mandatory fiscal 
     penalty of between 1 and 5 percent of the Federal share of 
     the State's AFDC program funding. Once an audit determines 
     compliance with identified deficiencies, the penalty is 
     lifted.
       The detail-oriented audit is time-consuming and labor 
     intensive for both Federal auditors and the States. One 
     result is that audit findings do not measure current State 
     performance or current program requirements. States contend 
     that the audit system focuses too much on administrative 
     procedures and processes rather than performance outcomes and 
     results. However, it is widely agreed that efforts to pass 
     the audit have been a significant driving force behind 
     States' improved performance. While two-thirds of the States 
     fail the initial audit, three-fourths of these same States 
     come into compliance after a corrective-action period and 
     avoid the financial penalty.
       The proposal will simplify the Federal audit requirements 
     to focus primarily on performance outcomes and require States 
     to conduct self-reviews to assess whether or not all required 
     services are being provided. Federal auditors will assess 
     States' data used to determine performance outcomes to 
     determine if it is valid and reliable and conduct periodic 
     financial and other audits as the Secretary deems necessary. 
     If State self-reviews or the level of grievances/complaints 
     indicates that services are not being provided, OCSE will 
     evaluate the State's program and ascertain the causes for the 
     problems to help States correct the problems. Audit penalties 
     assessed on the basis of deficiencies found with respect to a 
     fiscal year will be waived if the State passes the audit at 
     the end of the next fiscal year.
       (1) Audit procedures by the Secretary shall include:
       (a) simplifying the Federal audit requirements to focus 
     primarily on performance outcomes;
       (b) requiring States to develop their own control systems 
     to ensure that performance outcomes are achieved, while 
     making the results subject to verification and audit;
       (2) States shall:
       (a) develop internal automated management control reporting 
     systems that provide information to enable States to assess 
     their own performance and employees' workload analysis, on a 
     routine, ongoing basis so that exceptions can be called to 
     the program management's attention;
       (b) develop computer systems controls that provide 
     reasonable assurances that computer-based data are complete, 
     valid, and reliable;
       (c) in accordance with Federal regulations, annually 
     conduct a self-review to assess whether or not the State 
     meets the program's specified goals, performance 
     objectives and any recently completed staffing studies, as 
     well as ensure that all required services are being 
     provided.
       (3) Federal auditors shall:
       (a) at a minimum, based up the U.S. Comptroller General's 
     Government Auditing Standards, every 3 years assess the 
     reliability of the computer-processed data (or results 
     provided as a result of the self-review). These audits will: 
     (a) examine the computer system's general and application 
     controls; (b) test whether those controls are being complied 
     with; and (c) test data produced by the system on computer 
     magnetic tape or other appropriate auditing medium to ensure 
     that it is valid and reliable;
       (b) if a State has failed a previous audit, continue to 
     evaluate on an annual basis whether the State has corrected 
     the deficiencies identified under (1) above;
       (c) if the State self-reviews determine that the Federal 
     requirements are not being met, ascertain the causes for the 
     deficiency/weakness so that States will be able to take 
     better corrective actions; and
       (d) if the State's report on the status of grievances/
     complaints indicates substantial and material noncompliance 
     with the program requirements, then evaluate the State's 
     program.
       (e) each State will also be subject to periodic financial 
     audits to ensure that their funds are being allocated and 
     expended appropriately and adequate internal controls are in 
     place which will help ensure that all monies are being 
     safeguarded. The Secretary may conduct such other audits as 
     deemed necessary to ensure compliance.
       (4) The Secretary shall promulgate regulations to revise 
     the penalty process for failures to meet the program's 
     performance goals and objectives and/or failure to generate 
     reliable and valid data. Penalties will be imposed 
     immediately after a one year corrective action period.

            Director of office of child support enforcement

       (1) The individual with responsibility for the day to day 
     operation of the Federal Office of Child Support Enforcement 
     shall have the title of Director instead of Deputy Director.

                             Staffing study

       Insufficient staff levels have been cited as the greatest 
     barrier to effectively processing child support cases. 
     Despite significant State savings from the program, staffing 
     levels have not kept pace with caseloads ever increasing in 
     size and complexity. Comprehensive data on staffing is almost 
     nonexistent. To address this information vacuum, staffing 
     studies will be conducted for each State child support 
     enforcement program, including an assessment of the effects 
     of automation on human resource needs. States can use this 
     information for informed personnel and budgetary 
     decisionmaking.
       (1) The Secretary of Health and Human Services or a 
     disinterested contractor shall conduct staffing studies of 
     each State's child support enforcement program. Such studies 
     shall include a review of the automated case processing 
     system and central registry/central payment center 
     requirements and include adjustments to future staffing if 
     these changes reduce staffing needs. Such staffing studies 
     may be periodically repeated at the Secretary's discretion. 
     The Secretary shall report the results of such staffing 
     studies to the Congress and the States.

                           Expanded Outreach

       No manner of child support reform will be truly successful 
     unless parents are aware of and have reasonable access to 
     services. Despite the fact that State child support agencies 
     are currently required to advertise the availability of 
     services, many families remain unaware of the program and 
     still others find that services are not easily accessible.
       In addition to the paternity establishment outreach 
     provisions described earlier, the proposal will require each 
     State to develop an outreach plan to inform families of the 
     availability of IV-D services and to provide broader access 
     to services, including initiatives which target the needs of 
     working families and non-English speaking families. The 
     Federal government will aid this effort by developing 
     outreach prototypes and a multi-media campaign which focuses 
     on the positive effects a noncustodial parent's involvement 
     can have on a child's life as well as the detrimental effects 
     of a parent's failure to participate.
       (l) In order to broaden access to child support services, 
     each State plan must:
       (a) respond to the need for office hours or other 
     flexibility that provide parents opportunity to attend 
     appointments without taking time off of work; and
       (b) develop and appropriately disseminate materials in 
     languages other than English where the State has a 
     significant non-English-speaking population; staff or 
     contractors who can translate should be reasonably accessible 
     for the non-English-speaking person provided services.
       (2) To aid State outreach efforts, OCSE must:
       (a) develop prototype brochures that explain the services 
     available to parents with specific information on the types 
     of services available, the mandated time frames for action to 
     be taken, and all relevant information about the procedures 
     used to apply for services;
       (b) develop model public service announcements for use by 
     States in publicizing on local television and radio the 
     availability of child support services;
       (c) develop model news releases that States could use to 
     announce major developments in the program that provide 
     ongoing information of the availability of services and 
     details of new programs; and
       (d) focus more resources on reaching putative fathers and 
     noncustodial parents through a multimedia campaign that 
     acknowledges positively those who comply and spotlights the 
     detrimental effects on a child of a parent's failure to 
     financially and emotionally participate in the child's life.

                        Customer accountability

       Under current law, OCSE has few requirements regarding how 
     IV-D offices are to interact with the ``customer'' i.e., the 
     affected family members, and how State agencies should 
     respond to child support customers' complaints. Under the 
     proposal, States will be required to notify custodial parents 
     on a timely basis before all scheduled establishment and 
     modification hearings or conferences. The State agency has 14 
     days to provide a copy of any subsequent order to the 
     custodial parent. If someone receiving IV-D services feels 
     the services provided were inadequate, he or she may request 
     a fair hearing or a formal review process. Complaint and 
     disposition reports shall be forwarded to the Department of 
     Health and Human Services. These reforms give the 
     ``customers,'' the children's parents acting on behalf of the 
     children, the redress that seems lacking in many States when 
     the system fails to perform adequately. A mandatory grievance 
     system should take care of most complaints, with a back-up 
     right to sue in case the State grievance system inadequately 
     resolves serious deficiencies of the program.
       (1) State agencies shall notify custodial parents in a 
     timely manner of all hearings or conferences in which child 
     support obligations might be established or modified;
       (2) State agencies shall provide custodial parents with a 
     copy of any order that establishes or modifies a child 
     support obligation within 14 days of the issuance of such 
     order;
       (3) An individual receiving IV-D services shall have timely 
     access to a State fair hearing or a formal, internal 
     complaint-review process, according to regulations 
     established by the Secretary, provided that there is no stay 
     of enforcement as a result of the pending request (reports of 
     complaints and dispositions shall also be reported to the 
     Secretary);
       (4) It is the intent of Congress that the express purpose 
     of Title IV-D is to assist children and their families in 
     collecting child support owned to them. Individuals who are 
     injured by a State's failure to comply with the requirements 
     of Federal law, including State plan requirements of various 
     titles of the Social Security Act, should be able to seek 
     redress in Federal court. (No specific private cause of 
     action to enforce child support provisions of the law are 
     contained herein because there is already a private cause of 
     action under 42 U.S.C. 1983 to redress State and local 
     officials' violations if Federal child support statutes.)

                             Effective date

       Unless otherwise stated in the Appendix, the amendments 
     made by this Act shall take effect on October 1, 1994.


IV. GUARANTEEING SOME LEVEL OF CHILD SUPPORT-CHILD SUPPORT ENFORCEMENT 
                      AND ASSURANCE DEMONSTRATIONS

       Improving child support enforcement is absolutely essential 
     if we are going to make it possible for people to move from 
     welfare to work. Single parents cannot be expected to bear 
     the entire financial burden of supporting their children 
     alone. We have to do everything possible to ensure that the 
     non-custodial parent also contributes to the support of his 
     or her child. Still, there will be cases where the support 
     from the non-custodial parent will not be available; for 
     instance, in cases where the non-custodial parent has been 
     laid off from a job or presently has very low income.
       Child Support Enforcement and Assurance (CSEA) is a program 
     that will provide a minimum insured child support payment to 
     the custodial parent even when the noncustodial parent was 
     unable to pay. With such a program, a combination of work and 
     child support could support a family out of welfare and 
     provide some real financial security. Unlike traditional 
     welfare, Child Support Enforcement and Assurance will 
     encourage work because it allows single parents to combine 
     earnings with the child support payment without penalty. 
     Also, according to some experts, Child Support Enforcement 
     and Assurance will change the incentives for a mother to get 
     an award in place and it will focus attention on the 
     noncustodial parent as a source of support.
       No State currently has a Child Support Enforcement and 
     Assurance program, although the Child Assistance Program 
     (CAP) in the New York State has some similar features. Many 
     States have expressed an interest in trying a Child Support 
     Enforcement and Assurance program, provided that some federal 
     assistance and direction could be provided. Major questions 
     surround such programs--costs, implementation strategies, 
     anti-poverty effectiveness, the effect on AFDC participation, 
     etc. And unless the State really does a good job in 
     enforcement, there is a question about whether such a program 
     lets the noncustodial parent off the hook for payment
       State demonstrations will be used to try out Child Support 
     Enforcement and Assurance with States being allowed some 
     State flexibility to try different approaches. Evaluations of 
     the demonstrations will be conducted and used to make 
     recommendations for future policy directions.
       (1) Congress will authorize and appropriate funds for three 
     CSEA demonstration programs:
       (a) Each demonstration will last seven to ten years. An 
     interim report will be due four years after approval of the 
     demonstration grant.
       (b) The Secretary shall determine from the interim reports 
     whether the programs should be extended beyond seven to ten 
     years and whether additional State programs should be 
     recommended, based on various factors that include the 
     economic impact of CSEA on both the noncustodial and 
     custodial parents, the rate of noncustodial parents' child 
     support compliance in cases where CSEA has been received by 
     the custodial parent, the impact of CSEA on work-force 
     participation and AFDC participation, the anti-poverty 
     effectiveness of CSEA, the effect on paternity establishment 
     rates, and any other factors the Secretary may cite.
       (c) As part of the demonstrations, some States will have 
     the option of creating work programs so that noncustodial 
     parents could work off the support if they have no income.
       (d) The demonstration projects are based on a 90%/10% 
     Federal/State match rate (the higher federal match applies 
     only to administrative costs attributable to the program and 
     that portion of the benefits that does not represent the 
     reduction in AFDC due to receipt of the CSEA benefit.)
       (e) The Secretary may terminate the demonstrations if the 
     Secretary determines that the State conducting the 
     demonstrations is not in substantial compliance with the 
     terms of the approved application.
       (f) The Secretary may approve both state-wide 
     demonstrations and demonstrations that are less than state-
     wide.
       (g) The Secretary shall develop standards for evaluation 
     including appropriate random assignment requirements.
       (2) The child support assurance criteria for the State 
     demonstration programs will require that:
       (a) the CSEA program be administered by the State IV-D 
     agency, or at State option, its department of revenue; in 
     order to be eligible to participate in the CSEA program, 
     States must ensure that their automated systems that include 
     child support cases are fully able to meet the CSEA program's 
     processing demands, timely distribute the CSEA benefit, and 
     interface with an in-house (or have on-line access to a) 
     central statewide registry of CSEA cases.
       (b) States are provided flexibility in designing the 
     benefit scales within the following parameters: benefit 
     levels between $1,500 per year for one child and $3,000 per 
     year for four or more children and benefit levels between 
     $3,000 per year for one child and $4,500 per year for four or 
     more children.
       (c) CSEA basic benefit amounts are indexed to the adjusted 
     Consumer Price Index.
       (d) CSEA benefits are counted as private child support for 
     the purpose of eligibility for other government programs;
       (e) CSEA benefits are deducted dollar for dollar from an 
     AFDC grant, except that in low benefit States, the Secretary 
     shall have discretion to approve applications for programs 
     with less than a dollar for dollar deduction. (Also, where 
     CSEA removes someone from the AFDC grant, States may, at 
     their option, continue eligibility for other related benefits 
     that would have been provided under the AFDC grant.) If a 
     State chooses it may supplement the CSEA basic benefit amount 
     by paying the FMAP contribution of any supplement up to $25, 
     and all of any supplement over $25.
       (f) CSEA eligibility is limited to children who have 
     paternity and support established. Waivers from this 
     requirement may be granted only in cases of rape, incest, and 
     danger of physical abuse.
       (g) CSEA benefits are treated as income to the custodial 
     parent for State and Federal tax purposes. At the end of the 
     calendar year, the State will send each CSEA recipient a 
     statement of the amount of CSEA provided and private child 
     support paid during the calendar year. If the CSEA benefits 
     exceed the support collected, the difference is taxable as 
     ordinary income.
       (h) money collected from the noncustodial parent be 
     distributed first to pay current support, then CSEA 
     arrearages, then family support arrearages (see distribution 
     section of enforcement), then AFDC debts.
       (i) in cases of joint and/or split custody, a person is 
     eligible for CSEA if there is a support award that exceeds 
     the minimum insured benefit or the court or agency setting 
     the award certifies that the child support award will be 
     below the minimum CSEA benefit if the guidelines for sole 
     custody were applied to either parent.


 v. enhancing responsibility and opportunity for non-custodial parents

                 Access and Visitation Grants to States

       Children need emotional and social support of both parents, 
     as well as financial support. While it is necessary to 
     clearly distinguish between obligations for financial support 
     and other parent-child interactions, positive parent-child 
     interactions may have an effect on support payment compliance 
     as well as other aspects of child well-being. There is also 
     evidence that many parents need help in understanding how to 
     implement cooperative parenting after a divorce or separation 
     occurs and that children are harmed by the continuation of 
     hostile relationships between their parents. The Family 
     Support Act of 1988 authorized Access demonstration to 
     determine if such projects reduced the amount of time 
     required to resolve access disputes, reduced litigation 
     relating to access disputes, and improved compliance in the 
     payment of support. These demonstrations are coming to a 
     close and there is no provision for the on-going funding of 
     additional projects.
       This proposal will supplement State efforts to provide 
     increased support for access and visitation projects which 
     reinforce the need for children to have continued access to 
     and visitation by both parents.
       (1) Grants will be made to States for access and visitation 
     related programs; including mediation (both voluntary and 
     mandatory), counseling, education, development of parenting 
     plans, visitation enforcement including monitoring, 
     supervision and neutral drop off and pick up and development 
     of guidelines for visitation and alternative custody 
     arrangements.
       (a) The Administration for Children and Families, 
     Department of Health and Human Services will administer the 
     program.
       (b) States will be required to monitor and evaluate their 
     programs; evaluation and reporting requirements will be 
     determined by the Secretary;
       (c) States may sub-grant or contract with courts, local 
     public agencies or to private nonprofit agencies to carry out 
     the approved grant work;
       (d) Program(s) operating under the grant will not have to 
     be state-wide;
       (e) Funding will be authorized as a capped entitlement 
     under section IV-D of the Social Security Act. State grantees 
     will receive funding at the regular FFP program rate. 
     Projects will be required to supplement rather than supplant 
     State funds.

            Training and Employment for Noncustodial Parents

       [See JOBS/time-Limits and WORK Specifications]

       Demonstration Grants for Paternity and Parenting Programs

       [See Technical Assistance, Evaluation and Demonstrations 
     Specifications]


                effective dates for implementing reforms

       The following schedule assumes passage of Federal 
     legislation before October 1, 1994. Legislation amending 
     existing Federal statutes outside of Title IV-D of the Social 
     Security Act is effective upon enactment unless stated 
     otherwise. Legislation amending Federal responsibilities 
     under Title IV-D is effective October 1, 1994.
       Any State requirement that requires legislation to be 
     effective within two years of the date of enactment of the 
     Federal legislation should have an additional caveat: ``. . . 
     or, if the State legislature meets biennially, within three 
     months after the close of its first regular session that 
     begins after enactment of this bill.''

------------------------------------------------------------------------
        Proposed requirement                    Effective date          
------------------------------------------------------------------------
Paternity:                                                              
    New paternity measurement......  Oct. 1, 1995.                      
    FFP--paternity (see FFP phase    Oct. 1, 1997.                      
     in below).                                                         
    Performance-based incentives...  Oct. 1, 1996.                      
    Federally approved State         Oct. 1, 1996.                      
     incentives/demos.                                                  
    State/health care provider       Oct. 1, 1996.                      
     information.                                                       
Simplified paternity procedures....  Oct. 1, 1995.                      
    State outreach requirements....  Oct. 1, 1996.                      
    Enhanced FFP (90 percent) for    Oct. 1, 1995.                      
     paternity outreach.                                                
    Cooperation and good cause       10 months after enactment.         
     requirements.                                                      
    Accredition of genetic testing                                      
     labs:                                                              
        Fed regulations............  Oct. 1, 1995.                      
        Effective for 1st new State  Oct. 1, 1995.                      
         contract.                                                      
Administrative authority for         Oct. 1, 1997.                      
 establishment.                                                         
    National commission on child                                        
     support guidelines:                                                
        Authorized.................  Oct. 1, 1994.                      
        Named by...................  March 1, 1995.                     
        Report due.................  July 1, 1997.                      
    Review and adjustment for cases  Oct. 1, 2000.                      
    Distribution changes:                                               
        New priority/multiple        Oct. 1, 1997.                      
         orders.                                                        
        Treatment of child support   Oct. 1, 1995.                      
         in AFDC cases.                                                 
        Tax offset-returns filed...  After Jan. 1, 1996.                
    Central State registry:                                             
        Automated requirements tied  Oct. 1, 1995.                      
         to current FSA/OCSE                                            
         requirements.                                                  
        Other requirements.........  Oct. 1, 1997.                      
    Central payment center:                                             
        Centralized collection/      Oct. 1, 1997.                      
         distribution start up.                                         
        Statewide distribution.....  Oct. 1, 1998.                      
    Administrative action to change  Oct. 1, 1995.                      
     payee.                                                             
    National child support                                              
     registry:                                                          
        Funding....................  Oct. 1, 1994.                      
        On-line/fully operational..  Oct. 1, 1997.                      
    National directory of new                                           
     hires:                                                             
        Funding....................  Oct. 1, 1995.                      
        On-line for all States.....  Jan. 1, 1997.                      
        Universal ER reporting       Jan. 1, 1997.                      
         requirements.                                                  
    Feasibility study (STAWRS, SSA,                                     
     AHSA):                                                             
        Funded.....................  Oct. 1, 1994.                      
        Let........................  Dec. 1, 1994.                      
        Due........................  June 1, 1995.                      
        HHS/IRS decision...........  Aug. 1, 1995.                      
    Expanded FPLS:                                                      
        Funding....................  Oct. 1, 1994.                      
        On-line/fully operational..  Oct. 1, 1997.                      
    Union Hall cooperation--State    Oct. 1, 1995.                      
     laws.                                                              
    Studies--Locate and credit                                          
     reporting agencies:                                                
        Funded.....................  Oct. 1, 1995.                      
        Let........................  Dec. 1, 1995.                      
        Due........................  Dec. 1, 1996.                      
IRS data (IRS and State changes)...  Oct. 1, 1995.                      
    IRS tax offset--Effective for    After Jan. 1, 1996.                
     returns.                                                           
    IRS full collection:                                                
        Nonautomated changes.......  Oct. 1, 1995.                      
        Automated funding..........  Oct. 1, 1994.                      
        Automated IRS                Oct. 1, 1995.                      
         implementation.                                                
    Interstate enforcement:                                             
        UIFSA (legis. flexible       Oct. 1, 1995.                      
         until 1/1/96).                                                 
        Federal request for          Oct. 1, 1995.                      
         information.                                                   
        OCSE distributes form        Oct. 1, 1995.                      
         nationwide force effective.                                    
        Other State laws...........  Oct. 1, 1995.                      
    Other enforcement measures:                                         
        State enforcement law        Oct. 1, 1995.                      
         changes.                                                       
        Exception: liens and         Oct. 1, 1997.                      
         immediate wage withholding                                     
         in all non-IV-D cases.                                         
Privacy protections:                                                    
    Federal regulations............  Oct. 1, 1995.                      
    State implementation...........  Oct. 1, 1996.                      
    Federal financial                                                   
     participation:                                                     
        66 to 69 percent...........  Oct. 1, 1995.                      
        70 to 72 percent...........  Oct. 1, 1996.                      
        73 to 75 percent...........  Oct. 1, 1997.                      
    Incentives: Federal reg          Oct. 1, 1995.                      
     promulgation.                                                      
        Paternity standard.........  Oct. 1, 1997.                      
    Overall performance............  Oct. 1, 1997.                      
Enhanced (80 percent) ADP system                                        
 enhancement:                                                           
    Start up.......................  Oct. 1, 1994.                      
    Sunsets........................  Oct. 1, 1999.                      
State/Federal maintenance of effort  Oct. 1, 1997.                      
    Revolving loan fund............  Oct. 1, 1995.                      
    Training/technical assistance:                                      
    OCSE begins its efforts........  Oct. 1, 1994.                      
      Audit and technical                                               
       assistance:                                                      
        Technical assistance         Oct. 1, 1994.                      
         funding.                                                       
        Federal audit regulations..  Oct. 1, 1995.                      
        State-based audit            Oct. 1, 1996.                      
         requirements.                                                  
    Staffing studies funded........  Oct. 1, 1994.                      
        Studies completed..........  Oct. 1, 1996.                      
    Outreach:                                                           
        States begin to meet goals.  Oct. 1, 1995.                      
        OCSE requirements/funding..  Oct. 1, 1995.                      
Customer Accountability:                                                
    Fair hearings:                                                      
        Federal regulations........  Oct. 1, 1995.                      
        State implementation.......  Oct. 1, 1996.                      
Child support enforcement and                                           
 assurance (CSEA) demonstrations:                                       
    Fed/State funding for CSEA.....  Oct. 1, 1995.                      
    State interim reports..........  Jan. 1, 1999.                      
    State final reports............  Oct. 1, 2002-5.                    
    Federal reports to Congress....  Apr. 1, 2005.                      
    Federal administrative funding.  Oct. 1, 1994.                      
    Federal regulations............  Oct. 1, 1995.                      
------------------------------------------------------------------------

         improving government assistance [title vii, title vii]

    a. rationalization and simplification across assistance programs

       The rationalization and simplification of assistance 
     programs is something of the holy grail of welfare reform--
     always sought, never realized. The reasons are many: 
     different goals of different programs, varied constituencies, 
     Department differences, divergent Congressional committee 
     jurisdictions, and the inevitable creation of winners and 
     losers from changing the status quo. Yet everyone agrees that 
     recipients, administrators, and taxpayers are all losers from 
     the current complexity. Below are several proposals for 
     reform. The proposals do not make substantial changes in 
     program structures. Rather, the proposals achieve 
     simplification by streamlining administrative processes and 
     by conforming program rules between the AFDC and Food Stamp 
     programs. The proposals modify existing rules that create 
     unnecessary complexity and confusion for program 
     administrators and recipients. The proposal also supports the 
     expansion of Electronic Benefits Transfer (EBT) programs for 
     delivering Federal and State government benefits. Nationwide 
     expansion was recommended by the Vice President's National 
     Performance Review as a means of reducing fraud, streamlining 
     benefit delivery, and saving taxpayers money. No legislative 
     or regulatory provisions are included in the welfare reform 
     proposal specific to the EBT expansion, although the two 
     initiatives are complementary in their commitment to improve 
     government assistance.

                              1. Resources

                              (A) General

                              Current law

       The Social Security Act and implementing regulations set a 
     $1,000 limit (or a lower limit at State option) on the equity 
     value of resources that a family may have and be eligible for 
     AFDC. Excluded from consideration as countable resources are 
     the home owned and occupied by the family; an automobile with 
     a maximum equity value of $1,500 (or a lower limit at State 
     option); bona fide funeral agreements with a maximum equity 
     value of $1,500 for each family member (or lower limit set by 
     the State); one burial plot for each family member; and real 
     property for a period of 6 consecutive months (or 9 
     consecutive months at State option) which the family is 
     making a good faith effort to sell. Under certain conditions, 
     States may establish rules regarding transfer of resources in 
     order to obtain or retain eligibility.
       The Food Stamp Act and implementing regulations set a 
     $2,000 limit (or $3,000 for a household with a member age 60 
     or over) on the value of resources a household may have and 
     participate in the program. The Act does not specify how the 
     value of resources is to be determined, but provides for 
     uniform national eligibility standards for income and 
     resources. State agencies are prohibited from imposing any 
     other standards of eligibility. Households in which each 
     member receives AFDC, SSI, or general assistance from certain 
     programs do not have to pass the food stamp resource 
     eligibility test. Regulations exclude from resources the 
     value of one burial plot per family member and the cash value 
     of life insurance policies. Also excluded is real property 
     which the household is making a good faith effort to sell at 
     a reasonable price and which has not been sold. There is no 
     specific exclusion for burial plans (funeral agreements). Any 
     amount that can be withdrawn from a funeral contract without 
     an obligation to repay is counted as a resource.
       Food Stamp law prohibits the transfer of resources within 
     the 3-month period prior to application. A household that 
     knowingly transfers resources for the purposes of qualifying 
     or attempting to qualify for food stamps shall be ineligible 
     to participate in the program for a period of up to one 
     year from the date of discovery of the transfer.

                                 Vision

       Both the AFDC and Food Stamps programs serve similar needy 
     populations. Yet, because the rules for treatment of both the 
     amounts and categories of resources are different in each 
     program, resources that meet one program's requirement can 
     result in ineligibility under the other. Both programs have 
     substantially different rules for evaluating the resources of 
     that needy group, forcing welfare administrators to apply 
     different program rules to the same resources in the same 
     family. The following legislative proposal would reduce the 
     current administrative complexity and confusion for welfare 
     administrators and recipients by providing uniform treatment 
     of assets where appropriate.

                             Specifications

       Require the Secretaries in both Departments to develop 
     uniform resource exclusion policies in the following areas, 
     by October 1, 1996:
       (a) Resource Limits: Increase the AFDC resource limit to 
     $2,000 (or $3,000 for a household with a member age 60 or 
     over) to conform to the Food Stamp resource limit.
       (b) The Secretary of HHS shall specify in regulations the 
     valuation of an automobile.
       (c) Resource Exclusions:
       (i) Real Property: Propose legislation to amend the Social 
     Security Act to exclude real property which the AFDC family 
     is making a good faith effort to sell at a reasonable price 
     and which has not been sold, to conform to the Food Stamp 
     policy.
       (ii) Cash Surrender Value of Life Insurance Policies: 
     Propose legislation to amend the Social Security Act to 
     totally exclude the cash surrender value of life insurance 
     policies under the AFDC program to conform to the Food Stamp 
     policy.
       (iii) Transfer of Resources: Propose legislation to provide 
     that a household that knowingly transfers resources for the 
     purposes of qualifying or attempting to qualify for AFDC 
     shall be ineligible for benefits for a period of up to one 
     year from the date of discovery of the transfer. This 
     proposal conforms to the Food Stamp policy.

                               Rationale

       The administrative complexity that exists in applying 
     certain resource requirements in the AFDC and Food Stamp 
     programs will be greatly reduced under the proposed changes. 
     Welfare administrators will be able to apply the same rules 
     to the same resources for the same family. These conforming 
     changes achieve simplification by streamlining the 
     administrative processes in both programs.

        (B) Asset Accumulation--Individual Development Accounts

                              Current Law

       The Social Security Act and implementing regulations set a 
     $1,000 limit (or a lower limit at State option) on the equity 
     value of resources that a family may have and be eligible for 
     AFDC, with only limited exclusions.
       The Food Stamp Act and implementing regulations set a 
     $2,000 limit (or $3,000 for a household a member age 60 or 
     over) on the value of resources a household may have and 
     participate in the Program. Section 13925 of Pub. L. 103-66 
     of the Omnibus Budget Reconciliation Act provides that the 
     Secretary of Agriculture shall conduct, for a period not to 
     exceed 4 years, projects to test allowing not more than 
     11,000 households nationwide to accumulate up to $10,000 each 
     in excluded resources. These assets are for later 
     expenditures for a purpose directly related to improving the 
     education, training or employability (including self-
     employment) of household members, for the purchase of a home 
     for the household, for a change in the household's residence, 
     or for making major repairs to the household's home.

                                 Vision

       Welfare reform should include strategies to test the notion 
     that one way out of welfare for some people is through 
     empowering them to start their own businesses and encouraging 
     them to save their earnings to build for the future. During 
     the campaign, the President endorsed the idea of helping 
     welfare recipients help themselves by proposing to increase 
     the number of microenterprises and establish Individual 
     Development Accounts (IDAs). These legislative proposals 
     would promote self-sufficiency by encouraging recipients to 
     accumulate savings, assets and start their own businesses.
       An IDA is an optional earnings-bearing, tax-benefitted 
     trust account in the name of one person. An IDA would be held 
     in a licensed, federally-insured financial institution. 
     Withdrawals can be made from the account only for qualified 
     purposes, which include: first home purchase, post-secondary 
     education (college/long-term training), or business 
     development (microenterprises). There would be penalties for 
     non-designated use of the account. Participant eligibility 
     would be determined by the State agency using Federal 
     guidelines. Monies placed into an IDA account by an AFDC and 
     Food Stamp recipient would be disregarded for purposes of 
     determining resource limits, up to $10,000. All income placed 
     into an IDA would be tax deferred. An individual would retain 
     the IDA after leaving welfare, but would still be required to 
     use the resources for specified purposes or would face 
     penalties.
       The tax laws will be amended to allow for the establishment 
     of IDAs; DHHS and USDA regulations will set the limit at 
     $10,000; subsidized IDAs will be established on a 
     demonstration basis; unsubsidized IDAs will also be permitted 
     for qualified individuals not involved in a demonstration. 
     Current recipients (and applicants with established IDAs) for 
     both the AFDC and Food Stamp programs can establish IDAs and 
     have their savings and interest excluded. States, at their 
     option, could pursue this approach to promoting self-
     sufficiency.

                             Specifications

                  1. National Unsubsidized IDA Program

       (a) At State option, allow IDAs to be established by 
     Federally insured financial institutions to be used 
     exclusively to pay for post-secondary education or training 
     expenses, first-home purchases, or business capitalization 
     where there is a qualified plan. Effective October 1, 
     1996.
       (b) Recipients of Food Stamps and AFDC are eligible for 
     participation in the IDA program. Individuals otherwise 
     eligible for the Earned Income Tax Credit shall be permitted 
     to establish IDAs, but some restrictions apply (specifically 
     see provision (iv) below).
       (i) Annual contributions shall not exceed the lesser of 
     $1,000 or 100% of all income, excluding public assistance, 
     with a total account limit of $10,000 per family.
       (ii) The total amount in an IDA shall not exceed $10,000.
       (iii) If the accounts are established while a family is on 
     AFDC or Food Stamps, the IDA account balance will not count 
     against a family's resource limits, Families who leave the 
     rolls after opening an account can continue the account. If 
     the family re-applies for AFDC or Food Stamps at a later 
     date, their IDA savings and interest, up to $10,000, are 
     excluded.
       (iv) If an IDA-eligible individual establishes an IDA while 
     not receiving AFDC or Food Stamps (for example, upon 
     receiving an EITC payment under the subsidized IDA 
     demonstration) and subsequently applies for assistance to 
     either program, the amount in the IDA shall be applied 
     against the resource limits for purposes of determining 
     eligibility.
       (c) The penalty for a withdrawal from an unsubsidized IDA 
     for purposes other than those specified will be 10 percent of 
     the amount withdrawn that is includable in income.

    2. Subsidized Individual Development Account (IDA) Demonstration

       (a) Amend the tax laws to allow States, localities, and 
     community development financial institutions to apply to 
     receive grants to operate 6-year IDA demonstration projects. 
     Project grants will be awarded by the Community Development 
     Bank and Financial Institutions Fund on a competitive basis 
     and must be renewed annually. Authorized levels are $10 
     million in fiscal year 1997 and 2002 and $20 million for 
     fiscal years 1998-2001. Effective October 1, 1996.
       (i) $500 in initial financial assistance will be placed 
     into accounts established for project participants who 
     establish IDAs so banks are willing to set up the accounts. 
     In addition, participant contributions may be subsidized in 
     amounts ranging from $.50 to $4 for each $1 deposited, not to 
     exceed $2,500. Total individual IDA amounts may not exceed 
     $10,000.
       (ii) Eligible participants are households with: at least 
     one member eligible for EITC, an adjusted gross income not in 
     excess of $18,000, and a net worth not in excess of $20,000.
       (iii) Grantees will maintain a reserve fund to be spent on 
     assisting participants in achieving self-sufficiency, 
     administering the project, and to collect evaluation 
     information.
       (iv) Grantees must submit annual reports on the progress of 
     their project.
       (v) The Fund will contract for an independent evaluation of 
     individual demonstration projects describing project 
     features, assessing levels of self-sufficiency and benefit 
     reduction achieved, levels of assets accumulated, and their 
     effects.
       (vi) The penalty for a non-designated withdrawal from a 
     subsidized IDA will be the total amount of the subsidy and 10 
     percent of the individual's contribution of the amount 
     withdrawn.

            3. Self-Employment/Microenterprise Demonstration

       (a) Through a memorandum of understanding, HHS and SBA will 
     jointly develop and administer a minimum 5-year, self-
     employment/microenterprise demonstration program. 
     Consultation with Agriculture, HUD and Labor is also 
     required. Participants must be persons with incomes below 130 
     percent of poverty or persons participating in JOBS, WORK or 
     AFDC-only, with the percentage of welfare recipients to be 
     established by the agencies. Local intermediaries 
     (organizations or consortium of organizations) will apply to 
     enter into agreements to demonstrate the program. Authorized 
     amounts shall be $4 million for fiscal years 97 and 02 and $8 
     million for fiscal years 1998-2001. Effective October 1, 
     1996.
       (i) HHS and SBA, in consultation with public and private 
     organizations, will identify promising program models 
     currently used to provide self-employment and related 
     services to low-income individuals and design a demonstration 
     to evaluate, using a randomized experimental design, at least 
     two types of models with contrasting levels of technical 
     assistance. The agencies may fund up to five other projects 
     with designs that do not lend themselves to a randomized 
     experiment.
       (ii) HHS and SBA may provide technical assistance, grants, 
     loan guarantees and loans to intermediaries.
       (iii) In selecting intermediaries, SBA and HHS will take 
     into consideration the applicant's record of success, program 
     design, capacity and other criteria.
       (iv) Intermediaries must have contracts with the local JOBS 
     agency such that JOBS and WORK program funds will be used to 
     provide supportive services including training and technical 
     assistance for participants who are welfare recipients.
       (v) Preliminary and final effectiveness evaluation reports 
     together with recommendations must be submitted to the 
     President and Congress. A report on barriers is also 
     required. The evaluation study shall take into consideration 
     increase in self-sufficiency, reduced costs of public 
     support, number of businesses and jobs created, cost-
     effectiveness, and program effectiveness. Early and regular 
     feedback to the participating intermediaries is also 
     specified.

                      4. Other Legislative Changes

       (a) The Social Security Act and the Food Stamp Act will be 
     amended, as appropriate, to comport with the changes in the 
     tax laws. In addition, will be drafted to include the 
     following provisions:
       (i) Lump sum income: Non-recurring lump sum income will not 
     be counted for resource purposes in the month of receipt or 
     the following month if put in an IDA.
       (ii) The total exclusion for an AFDC assistance unit or 
     Food Stamp household is $10,000.

                               Rationale

       IDA's and other set-asides provide welfare recipients the 
     opportunity to be entrepreneurs in the private sector and 
     accumulate savings for specific purposes. This approach 
     promotes self-sufficiency by empowering them to start their 
     own businesses and encouraging them to save money they earn 
     to build for their future. Additionally, the money saved in 
     IDAs might be used by participants for educational and 
     training purposes, thus saving local program resources.

                 (C) Microenterprise (Self-Employment)

                              Current law

                          Resource Exclusions

       Under Federal AFDC policy, except for real property, States 
     may disregard for AFDC purposes income-producing property (as 
     defined by the State) of self-employed individuals. States 
     may also disregard income-producing property owned by a 
     recipient who is not currently employed, but who the State 
     reasonably expects to return to work. Federal regulations as 
     45 CFR 233.30(a)(3)(xxi) require that States disregard, for 
     AFDC purposes, bona fide loans from any source for any 
     purpose that meet the criteria set out in the State Plan.
       Section 5(g)(2) of the Food Stamp Act and implementing 
     regulations at 7 CFR 273.8(e)(4), (5), (6), (9), (15) and 
     (16) exclude ``property which annually produces income 
     consistent with its fair market value; property which is 
     essential to the self-employment of a household member; 
     installment contracts for the sale of lands and buildings, if 
     the contract . . . is producing income consistent with fair 
     market value; resources . . of . . self-employed persons, 
     which has been prorated as income;'' non-liquid assets with 
     liens resulting from business loans; and real or personal 
     property that is needed for maintenance of certain vehicles.

                             Specifications

       (a) Amend the Social Security and Food Stamp Acts to give 
     the respective Secretaries the authority to specify in 
     regulations exclusions necessary for self-employment. Require 
     that these regulations be prepared jointly and demonstrate 
     consistency between the two programs.
       (b) Amend the Food Stamp Act to exclude business loans from 
     resources.

                               Rationale

       Current AFDC policy does not permit funds necessary for the 
     operation of a microenterprise to be excluded separately from 
     the general $1,000 resource limit. This restriction 
     discourages recipients from establishing small businesses. By 
     expanding the microenterprise resource exclusions, 
     microenterprise owners will be able to set aside sufficient 
     liquid resources to operate the business.

                            2. Income issues

                                 Vision

       Federal laws or rules frequently disregard a part or the 
     total income of applicants and recipients in determining 
     eligibility and benefits for assistance programs. Often, the 
     same income is treated differently in the AFDC and Food Stamp 
     programs. Such differences are incomprehensible to recipients 
     and difficult to administer.
       Our goal is to adopt uniform equitable income disregard 
     policies for the AFDC and Food Stamp programs which are easy 
     to understand, simple to administer and promote work and 
     education.

                    1. Treatment of Lump Sum Income

                              Current law

       Under Section 402(a)(17) of the Social Security Act, non-
     recurring lump sum income is considered to be available to 
     meet an AFDC family's current and future needs. If the 
     assistance unit's countable income, because of receipt of 
     lump sum income, exceeds the applicable State need standard, 
     the unit is ineligible for a period determined by dividing 
     the total countable income (including the lump sum) by the 
     need standard.
       The Food Stamp Act, at 5(d)(8), excludes from income non-
     recurring lump sum payments. Such amounts, if not spent in 
     the month received, are treated as resources.

                             Specifications

       For applicants and recipients:
       (a) Amend section 402(a)(17) of the Social Security Act 
     (SSA) to exclude non-recurring lump sum payments from income.
       (b) Amend both the SSA and FSA to disregard as resources, 
     for one year from the date of receipt, non-recurring lump sum 
     payments that are reimbursements or advanced payments.
       (c) Amend both the SSA and the Food Stamp Act (FSA) to 
     disregard the amount of any Federal or State EITC lump sum 
     payments as resources for one year from receipt.

                               Rationale

       Lump sum payments are treated completely differently in the 
     two programs. Considerable simplification for both the 
     clients and workers can be achieved if the policies are 
     consistent. Also, current AFDC policy can result in hardship 
     for families since they are supposed to conserve the payments 
     to meet future living expenses rather than to cover debts and 
     other costs.

                 2. Treatment of Educational Assistance

                              Current law

       Several laws address the treatment of educational 
     assistance for AFDC. Any educational assistance provided 
     under programs in title IV of the Higher Education Act or the 
     Bureau of Indian Affairs must be disregarded (P.L. 102-325, 
     sec. 479B). A State must disregard payments made for 
     attendance costs under the Carl D. Perkins Vocational and 
     Applied Technology Education Act (P.L. 101-392, sec. 
     507(a). Under AFDC rules, the State must disregard 
     educational loans and grants that are obtained and used 
     for direct educational expenses, such as tuition and books 
     (233.20(a)(3)(iv)(B). (Any of the educational assistance 
     covering items in the State's need standard is counted as 
     income.) Also, States may disregard all educational 
     assistance as complementary assistance that is for a 
     different purpose than AFDC (233.20(a)(3)(vii)(a)).
       Portions of income received under the Job Training 
     Partnership Act and the Higher Education Act are disregarded 
     in the Food Stamp program. By regulation, such educational 
     assistance provided on behalf of the household for living 
     expenses, food, or clothing to the extent that the funds 
     exceed the costs of tuition and mandatory fees are counted as 
     income. (7 CFR 273.9(c)(1)(v); 273(c)(3); 273(c)(4); 
     273.9(c)(5)(i)(D); and 373.9((c)(10)(xi).

                             Specifications

       (a) Amend the Social Security Act and Food Stamp Act to 
     totally disregard all educational assistance received by 
     applicants and recipients.

                        3. Earnings of Students

                              Current law

       For a dependent child receiving AFDC, the earned income of 
     a full-time or part-time student (not employed full-time) 
     attending a school, college, or university, or a course of 
     vocational or technical training designed to fit him for 
     gainful employment is disregarded (402(a)(8)(A) of the Social 
     Security Act). At State option, the earned income of a 
     dependent child applying for AFDC may also generally be 
     disregarded. The earnings of minor parents attending school 
     are not excluded.
       Effective September, 1994, the Food Stamp program will 
     exclude the earnings of elementary or high school students 
     age 21 and under (FSA 5(d)(5); 7 CFR 273.9(c)(7).

                             Specifications

       (a) Amend the Social Security and Food Stamp Acts to 
     conform Food Stamps to AFDC policy and limit the disregards 
     to elementary and secondary students up to age 19.

                          4. Irregular Income

                              Current law

       No statutory provisions address irregular income for AFDC. 
     Rules permit States to disregard small, nonrecurring gifts 
     not to exceed $30 per individual per quarter 
     (233.20(a)(3)(iv)(F).
       The Food Stamp Act (Sec. 5(d)(2)) requires the exclusion of 
     income of $30 or less in a quarter per household received too 
     infrequently or irregularly to be anticipated. The exclusion 
     does not apply under retrospective budgeting.

                             Specifications

       (a) Amend the Food Stamp Act to conform to AFDC rules to 
     exclude inconsequential income not in excess $30 per 
     individual per quarter.

                      5. Treatment of JTPA Income

                              Current Law

       For AFDC, the income of a dependent child which is derived 
     from participation in a JTPA program may be disregarded. 
     Earned income may be disregard for a period up to six months 
     per calendar year. Unearned income may be disregarded 
     indefinitely (section 402(a)(8)(A)(v) of the SSA).
       Under Food Stamps, training allowances from vocational and 
     rehabilitation programs and JTPA earnings are excluded, 
     except income from on-the-job training programs under section 
     204(5) of title II. All OJT income of individuals under age 
     19 and under parental control is excluded. (7 CFR 
     273.9(b)(1)(iii) and (v); 273.9(c)(10)(v)

                             Specifications

       (a) Amend the Social Security and the Food Stamp Acts to 
     disregard as income all training stipends and allowances 
     received by a child or adult from any program, including 
     JTPA.
       (b) Eliminate targeted earned income disregards so that the 
     earned income from any on-the-job training programs or from a 
     job will be counted after the general earned income 
     disregards are deducted.

                        6. Supplemental Payments

                              Current Law

       Section 402(a)(28) of the Social Security Act requires 
     those States that deduct income from the need rather than the 
     payment standard (fill-the-gap) now and in July of 1975 to 
     provide a supplemental payment to families who have less 
     disposable income because child support is paid to the child 
     support agency instead of directly to the family.
       Food Staps--No such provision exists in the Food Stamp 
     program.

                             Specifications

       (a) Amend the Social Security Act to remove this provision.

                     7. Treatment of In-kind Income

                              Current Law

       AFDC rules require earned in-kind income to be counted. As 
     a matter of policy, States may disregard any unearned in-kind 
     income. If the State elects to count unearned in-kind income, 
     the amount counted is limited to the value of the item in the 
     State's need standard.
       Under Food Stamps, in-kind benefits such as food, clothing, 
     housing, produce are excluded. (FSA 5(d)(1); 7 CFR 
     273.9(c)(1)).

                             Specifications

       (a) Amend the Social Security Act to require States to 
     disregard both earned and unearned in-kind income.

      8. Treatment of National and Community Service Act Benefits

                              Current Law

       No statutory provision excludes, for purposes of the AFDC 
     program, allowances, stipends and educational awards received 
     by participants in a National Service program established 
     under the National and Community Service Act of 1990, as 
     amended by the National and Community Service Trust Act of 
     1993.
       The Food Stamp program will exclude from income National 
     Service program benefits. The National and Community Service 
     Act, as amended, specifies that the exclusion in section 
     142(b) of the Job Training Partnership Act (JTPA) applies to 
     National Service program benefits. Section 142(b) of the JTPA 
     provides that payments will not be considered as income for 
     purposes of income transfer and in-kind aid furnished under 
     any Federal or federally assisted program based on need, 
     other than Social Security Act programs.

                             Specifications

       (a) Amend section 402(a)(8)(A) of the Social Security Act 
     to disregard from the income of a family allowances, stipends 
     and educational awards received by volunteers participating 
     in a National Service Program under the National and 
     Community Service Act of 1990, as amended by the National and 
     Community Service Trust Act of 1993.

                             3. Filing unit

       Under current law, the AFDC filing unit must consist of a 
     needy deprived child, its natural or adoptive parent(s), and 
     all natural and adoptive brothers and sisters (including half 
     brothers and sisters) who are living together. The unit's 
     income and resources are used to determine eligibility and 
     the amount of payment. A stepparent is treated the same as a 
     natural or adoptive parent for filing unit purposes in seven 
     States (Nebraska, New Hampshire, Oregon, South Dakota, Utah, 
     Vermont, and Washington). These States have laws of general 
     applicability which hold the stepparent responsible for the 
     children to the same extent as a natural or adoptive parent. 
     In all other States, the stepparent's needs are not included 
     in the unit and his/her income, after certain disregards, are 
     considered available to the unit members.
       If there is no parent in the home, then another non-legally 
     responsible relative with whom the child is living may, at 
     his/her option, join the unit and be assisted. Additionally, 
     States may exercise the option of including other 
     individual(s) living in the home as an essential person(s). 
     The essential person's income and resources are used to 
     determine eligibility and amount of payment.
       Certain parents and siblings are excluded from the unit: 
     illegal and sponsored aliens, recipients of SSI, foster 
     children, and individuals ineligible due to lump sum income.

                            1. UP Provisions

                              Current Law

       The Social Security Act at section 407(a) and 407(b) limits 
     AFDC eligibility for two-parent families to those where the 
     principal wage earner is unemployed, and has worked six of 
     the last 13 quarters. ``Unemployed'' is defined in 
     regulations as working less than 100 hours in a month.

                             Specifications

       (a) Allow States, at their option, to modify, reduce, or 
     eliminate any of the special eligibility requirements for 
     two-parent families (e.g., the 100-hour rule, 30 day 
     unemployment requirements, the work history test, etc.) for 
     both applicants and/or recipients. For States that elect to 
     maintain a 100 hour rule (or a modified hour rule), WORK 
     program participation would not count towards this rule.
       (b) Remove the sunset provision that allows for the 
     termination of AFDC-UP in 1998 and make it a permanent 
     program.
       (c) The effective date for the above provisions shall be 
     October 1, 1996.

                               Rationale

       Some of the arguments for removing the additional 
     eligibility requirements are that eliminating them would:
       Remove the AFDC marriage penalty in which single-parent 
     families have easier access to benefits than married couples;
       Improve horizontal equity by treating disadvantaged 
     children the same irrespective of whether they live with one 
     or two parents;
       Encourage work, as the current rule limiting labor market 
     attachment would be incongruous in a new transitional welfare 
     program that emphasizes work; and,
       Also enhance the simplicity of the system.
       Finally, a number of States have sought waivers in this 
     area.

                     2. Essential Person Provision

                              Current Law

       The Social Security Act at section 402(a)(7) and the 
     implementing regulation at 45 CFR 233.20(a)(2)(vi) permit 
     States, at their option, to include in the AFDC grant 
     benefits for essential persons. Such individuals are not 
     eligible for AFDC in their own right, but their needs are 
     taken into account in determining the benefits payable to the 
     AFDC family because they are considered essential to the 
     well-being of an AFDC recipient in the family. Twenty-two 
     States currently include the option as part of their 
     respective State plans.
       (a) Limit the kinds of individuals that a State may 
     identify as essential to individuals providing at least one 
     of the following benefits or services to the AFDC family:
       (1) child care which enables a caretaker relative to work 
     full or part-time outside the home;
       (2) care for an incapacitated AFDC family member in the 
     home;
       (3) child care that enables a caretaker relative to attend 
     high school or GED classes on a full or part-time basis;
       (4) child care that enables a caretaker relative to 
     participate in JOBS; and
       (5) child care that enables a caretaker relative to receive 
     training on a full or part-time basis.

                               Rationale

       The Social Security Amendments of 1967 provided a specific 
     statutory base for an essential person policy. This policy 
     has two aspects. First, States are permitted to specify those 
     individuals who can be considered essential; second, States 
     must permit the AFDC family to have the final decision as to 
     whether such individuals are in fact essential. Under this 
     policy, States are not required to identify the benefits or 
     services that these essential persons must provide.
       In 1989, this policy became contentious. Based in part on 
     an OIG review of certain State practices the Family Support 
     Administration published final regulations which limited 
     State authority to determine categories of individuals who 
     could be considered as essential to the family. These 
     regulations precluded States from covering individuals who 
     did not provide an essential benefit or service to the 
     family. (The permissible categories are the five shown in 
     option 2 above.) However, in 1990 the district court for the 
     Eastern District of Pennsylvania in Vance v. Sullivan and the 
     district court for the District of Maine in McKenney v. 
     Sullivan held that these regulatory limitations conflict with 
     section 402(a)(7)(A) of the Social Security Act. The courts 
     interpreted this section as providing States with the 
     authority to identify in their State plans the categories of 
     individuals who may be recognized as essential persons. These 
     judicial decisions were not appealed. Consequently, the 
     Department revoked the 1989 regulations and reinstated the 
     prior policy. In order to rationalize the use of the 
     essential person policy, a statutory amendment to section 
     402(a)(7)(A) is necessary.

                         3. Stepparent Deeming

                              Current Law

       Section 402(a)(31) of the Social Security Act requires that 
     the income of an AFDC dependent child's stepparent who lives 
     in the same home as the child is counted in the monthly 
     determination of eligibility and the amount of assistance. 
     The statute also requires that the following disregards will 
     be applied in determining the amount of the stepparent's 
     countable income:
       The first $90 of the stepparent's gross earned income;
       An additional amount for the support of the stepparent and 
     other individuals who live in the home, who are not in the 
     assistance unit, and who the stepparent claims as dependents 
     for Federal income tax purposes. This disregard must equal 
     the State's need standard amount for a family group of the 
     same composition as the stepparent and the other individuals 
     not in the assistance unit;
       Alimony and child support payments to individuals not 
     living in the household, and
       Amounts actually paid by the stepparent to individuals not 
     living in the home but who he or she claims as dependents for 
     Federal income tax purposes.

                             Specification

       (a) Amend the Social Security Act to give States the 
     flexibility to increase the amount of the stepparent 
     disregards. This provision shall be effective October 1, 
     1995.

                               Rationale

       Allowing the disregards to be increased provides incentives 
     for AFDC recipients to marry to improve the stability of the 
     family, and provides an incentive for stepparents to increase 
     their earnings.

                  4. Optional retrospective budgeting

                              Current Law

       For the AFDC program, the Social Security Act permits 
     States to use retrospective budgeting only for the categories 
     of families required to monthly report. The Food Stamp Act 
     permits States to retrospectively budget cases that are not 
     required to monthly report.

                             Specifications

       (a) Amend the Social Security Act at section 402(a)(13) to 
     delete the clause ``but only with respect to any one or more 
     categories of families required to report monthly to the 
     State agency pursuant to paragraph (14),''. This technical 
     amendment will make retrospective budgeting optional for 
     States without regard to whether families are required to 
     monthly report.

                               Rationale

       Allowing States to use retrospective budgeting without 
     requiring cases to monthly report will foster consistency 
     between the AFDC and Food Stamp programs, and will give 
     States greater flexibility to administer their programs.

               5. Miscellaneous administrative provisions

                            1. Underpayments

                         Current Law and Policy

       Section 402(a)(22) of the Social Security Act requires 
     State agencies to promptly take all necessary steps to 
     correct any underpayment. Regulations at 45 CFR 233.20(a)(13) 
     limit the issuance of underpayments (both agency and client 
     caused) to current recipients and former recipients who would 
     be currently eligible if the error causing the underpayment 
     had not occurred. As a result of litigation, program policy 
     also permits States to issue underpayments to former 
     recipients who would no longer be currently eligible. The 
     amount of the underpayment is not limited by the number of 
     eligible months covered.
       Section 11(e)(11) of the Food Stamp Act provides that 
     benefits are to be restored to a household requesting them if 
     the benefits have been ``wrongfully denied or terminated.'' 
     The period for which benefits are restored is limited to one 
     year prior to the date the State agency either receives a 
     request for restoration from the household or otherwise 
     learns that a loss to the household occurred. The Food 
     Stamp rule (7 CFR 273.17) also prohibits the State agency 
     from restoring benefits for a period longer than 12 
     months. The rule requires that benefits be restored even 
     if the household is currently ineligible.

                                 Vision

       To provide clients with a rational and consistent policy in 
     the processing of underpayments.

                             Specifications

       (a) Amend section 402(a)(22) of the Social Security Act to 
     conform to Food Stamp law by requiring the issuance of agency 
     caused underpayments to current and former recipients for a 
     period not in excess of 12 months from the date that the 
     agency learns about the underpayment.

                               Rationale

       Since clients are responsible for reporting changes in 
     circumstances that affect eligibility and benefits, a 12-
     month limit on restoring lost benefits due to agency error 
     reinforces positive behavior. The change also achieves 
     consistency between the AFDC and Food Stamp underpayment 
     policies.

       2. Recovery of Overpayments Through Federal Tax Intercept

                              Current Law

       Section 402(a)(22) of the Social Security Act requires, as 
     a condition for aid and services to needy families with 
     children, a State plan which must provide that a State agency 
     will promptly take all necessary steps to correct any 
     overpayment to any individual who is no longer receiving aid 
     under the plan. Recovery shall be made by appropriate action 
     under State law against the income or resources of the 
     individual or the family.

                                 Vision

       To allow State agencies to recover AFDC program 
     overpayments through the use of a tax intercept program in 
     coordination with the IRS. A 50% match rate to cover 
     administrative costs will be provided.

                             Specifications

       (a) Amend section 402(a)(22)(b) of the Social Security Act 
     to permit State agencies to coordinate with the IRS to 
     intercept Federal Income Tax Returns for the collection of 
     outstanding AFDC overpayments, provided they pursue other 
     means of collection under State law prior to using the 
     Federal Tax intercept program. The tax intercept recovery 
     method would only be used to recover overpayments made to 
     individuals who are no longer receiving aid under the plan.
       (b) The administrative costs would have a 50% Federal match 
     rate for State expenses.

                               Rationale

       Currently States have the authority to intercept State tax 
     refunds but are unable to do so if the overpaid individual 
     moves to another State. A Federal system would allow States 
     to collect from individuals, regardless of their State of 
     residence. FNS has been running an IRS tax intercept program 
     as a demonstration project since 1992. The program has proved 
     to be very effective in collecting outstanding overpayments, 
     so much so that FNS has expanded the demonstration every year 
     to include more States. A 50% match for administrative costs 
     supports the Administration's philosophy that the 
     administration of the AFDC program should be an equal 
     Federal/State partnership.

     3. Administrative cost structuring for certain social services

                              Current Law

       Section 402(a)(15) of the Social Security Act provides for 
     certain services to be offered and provided promptly 
     (directly or under arrangements with others) to all 
     individuals voluntarily requesting such services. Services 
     will be voluntary and shall not prerequisite to eligibility. 
     This is to be provided to each appropriate relative and 
     dependent child receiving aid and for each appropriate 
     individual (living in the same home as a relative and child 
     receiving aid) whose needs are taken into account in making 
     the eligibility determination.

                                 Vision

       Section 403(a)(3) indicates that administrative costs of 
     such services are not matched at 50 percent if the State 
     includes family planning under their Title XX Social Services 
     Block Grant Program. This policy would be amended to allow 
     for administrative matching for counseling and referral 
     activities only.

                             Specifications

       (a) Change Section 403(a)(3), to allow a 50 percent match 
     for counseling and referral activities if they are provided 
     under Title XX.

               4. Declaration of citizenship and alienage

                              Current Law

       Section 1137(d) of the Act requires, as a condition of 
     eligibility for assistance, a declaration in writing by the 
     individual (or, in the case of an individual who is a child, 
     by another on his/her behalf) under penalty of perjury, 
     stating whether or not the individual is a citizen or 
     national of the United States, and, if such individual is not 
     a citizen or national of the United States, whether he/she is 
     in a satisfactory immigration status.

                                 Vision

       To bring the AFDC program into alignment with Food Stamps 
     by allowing one adult member of an applicant assistance unit 
     to sign the declaration of citizenship or alien status for 
     all members of the unit.

                             Specifications

       (a) Amend the Social Security Act by revising section 
     1137(d)(1)(A) as follows:
       (1)(A) The State shall require, as a condition of an 
     individual's eligibility for benefits under any program 
     listed in subsection (b), a declaration in writing by the 
     individual (or, in the case of an individual who is a child 
     or a second parent in a two-parent unit, by another on the 
     individual's behalf), under penalty of perjury, stating 
     whether or not the individual is a citizen or national of the 
     United States, and, if that individual is not a citizen or 
     national of the United States, that the individual is in 
     satisfactory immigration status.

                               Rationale

       The current requirement is administratively burdensome as 
     it requires each adult in the AFDC unit to sign a separate 
     declaration. This proposal will allow the adult payee or 
     principal earner in an assistance unit to declare on behalf 
     of his/her second parent and children, thereby simplifying 
     the application and redetermination process. This proposal 
     would also provide consistency with Food Stamps.

                             6. Territories

                              Current Law

       Section 1108 of the Social Security Act permits the 
     territories (i.e., Guam, Puerto Rico, and the Virgin Islands) 
     to operate the AABD and AFDC programs; American Samoa is only 
     authorized to operate an AFDC program. Funding for Child Care 
     and Transitional Child Care is provided for under the JOBS 
     limit of entitlement. If the territory elects to operate 
     these programs, it must also have an title IV-E or Foster 
     Care program. The territory must adhere to the same 
     eligibility and payment requirements as the States. The 
     Federal government matches 75 percent of costs; however, 
     funding for the territories is capped. The caps are $82 
     million for Puerto Rico, $3.8 million for Guam, and $2.8 
     million for the Virgin Islands. Between 1979 and the present, 
     the caps were increased once, by roughly 13 percent.

                                 Vision

       To create realistic funding levels for the territories that 
     are reflective of the current economy and caseload. A 
     mechanism that will provide occasional adjustments in funding 
     levels will be developed to replace the current burdensome 
     method of petitioning Congress for adjustments. Additionally, 
     Territories will have the option to operate a time-limited 
     system and a WORK program (see specifications under JOBS, 
     Time Limits, and WORK section) but will not be required to do 
     so.

                             Specifications

       (a) Continue to require the territories to operate the 
     AABD, AFDC (including JOBS supportive services) and Foster 
     Care programs. Amend section 1108 of the Social Security Act 
     to increase the caps by an additional 25 percent and create a 
     mechanism for indexing. The effective date shall be October 
     1, 1996.
       (b) At-Risk child care will not be applied against the cap.
       (c) The territories would not be required to operate AFDC-
     UP programs (effective upon enactment of this act).
       (d) The cap shall be adjusted regularly, according to 
     changes in the CPI.

                               Rationale

       The number of public assistance programs funded under the 
     current caps, coupled with only one adjustment to these caps 
     in 15 years, has seriously limited the territories' abilities 
     to provide, let alone increase benefits. Benefit payments 
     above the cap are financed 100 percent by the territories, 
     resulting in situations such as Guam's where the Federal 
     share is roughly 40 percent. Puerto Rico reports that, since 
     1987, AFDC caseloads have nearly doubled from 98,000 units to 
     183,000 units. Further, beginning October, 1994, Puerto Rico 
     will be required to extend eligibility to two-parent 
     families. Puerto Rico estimates that an additional 40,000 
     families will be eligible for AFDC due to this provision. If 
     match rates were determined by formula, as they are in the 
     States, the territories would be eligible for higher match 
     rates. Increasing the cans and providing a mechanism for 
     efficient adjustments to those caps will not only continue to 
     give territories the authority to operate public assistance 
     programs but adequate means to do so as well.


                        B. REGULATORY REVISIONS

                      1. Automobile resource limit

                          Current requirements

       The Social Security Act provides for the exclusion of so 
     much of a family member's ownership interest in one 
     automobile as prescribed by the Secretary. That exclusion is 
     set by regulation at $1500 equity value (or a lower limit set 
     by the State) in one vehicle with any excess equity value 
     counted toward the $1,000 AFDC resource limit.
       The Food Stamp Act provides for the total exclusion of 
     vehicles that are used over 50 percent of the time for 
     income-producing purposes; annually producing income 
     consistent with their FMV; necessary for long distance travel 
     for work (other than daily commute); used as the household's 
     home; or needed to transport a physically disabled household 
     member. For the following vehicles, the amount of the FMV 
     OVER $4,500 is counted as a resource: one per household 
     (regardless of use); and vehicles used for work, training or 
     education to prepare for work in accordance with food stamp 
     employment and training requirements. For all other vehicles, 
     the FMV over $4,500 or the equity value, whichever is more, 
     is counted as a resource.

                                 Vision

       Reliable transportation will be essential to achieving 
     self-sufficiency for many recipients in a time-limited 
     program. Because a dependable vehicle is important to 
     individuals in finding and keeping a job, particularly for 
     those in areas without adequate public transportation, both 
     the AFDC and the Food Stamp programs need as conforming 
     automobile resource policy that supports acquiring reliable 
     vehicles. This proposal would simplify the automobile 
     resource policy by conforming the program rules and reducing 
     the unnecessary complexity and confusion for program 
     administrators in both programs.

                       Regulatory specifications

       (a) Exercise Secretarial authority and amend the 
     regulations to increase the AFDC automobile limit to $3,500 
     equity value, and subsequently index for inflation.

                               Rationale

       This proposal is a first step toward bringing a level of 
     conformity between the two programs that would eliminate some 
     of the administrative complexity involved with valuing 
     vehicles under varying criteria and would result in greater 
     effectiveness and efficiency in the administration of both 
     programs.

                            2. Verification

                          Current Requirements

       Food Stamp law and regulations include specific 
     requirements for verification and documentation of 
     information needed for eligibility and benefit 
     determinations. Food Stamp regulations mandate verification 
     of utility and medical expenses (when actual is claimed), 
     identity, residency (address), disability and household 
     composition. In the AFDC program, the Act and regulations do 
     not address how verification is to occur but State procedures 
     have generally conformed to the verification policy outlined 
     in the Federal quality control manual.
       Under the Food Stamp Act (FSA) (sections 11(e)(3),(9)) and 
     Social Security Act (Act) (sections 402(a)(25) and 1137), 
     income must be verified through the Income and Eligibility 
     Verification System (IEVS). The State must request wage and 
     benefit information for from the State Wage Information 
     Collection Agency, the Social Security Administration, and 
     the agency administering Unemployment Insurance Benefits. 
     Unearned income information must be requested from the 
     Internal Revenue Service. Both programs are also required by 
     law to verify alien status through the Immigration and 
     Naturalization Service's Systemic Alien Verification for 
     Entitlement system.
       Both programs review the accuracy of eligibility decisions 
     and benefit amounts through quality control systems, with the 
     intended result that much information is verified at 
     application and at recertification to avoid errors. States 
     may, in both programs, adopt other verification requirements.

                                 Vision

       Federal computer matching and verification requirements are 
     often burdensome for both clients and eligibility staff. Even 
     where States have flexibility, the emphasis on payment 
     accuracy and the potential for fiscal quality control 
     penalties have often resulted in unnecessary documentation, 
     delays in benefits and improper denials and terminations. 
     Yet, to assure the public that their taxes are being spent to 
     serve only those in need, verification will continue to be a 
     critical component of the new system for delivering 
     assistance to families. States must be afforded the 
     flexibility to simplify matching procedures, while assuring 
     program integrity through minimum standards.

                       Regulatory Specifications

       (a) Exercise current Secretarial waiver authority for IEVS 
     and SAVE to give States greater flexibility relative to the 
     selection of alternate sources for matching activities, the 
     elimination of certain matches, the targeting of client 
     groups for matching and follow-up verification, and the 
     modification of time frames for follow-up action on match 
     ``hits.'' Amend the Federal regulations on IEVS and change 
     the ACF review perspective on SAVE (given the absence of 
     regulations in this area) to provide greater latitude on what 
     can be waived and the applicable State justification.
       (b) Verification systems and time-frames for action will be 
     included in the State Plan.

                               Rationale

       States will welcome the increased flexibility provided by 
     this proposal and be able to streamline their verification 
     activities, saving time and paperwork. At the same time, the 
     State plan approval process will ensure adequate protection 
     of client rights and program integrity without restricting 
     State flexibility.


                        non-citizens provisions

                    a. eligibility for non-citizens

 1. Apply a uniform standard for determining alien eligibility for non-
     citizens under AFDC Supplemental Security income, and Medicaid

                              Current law

       Assuming they meet all other eligibility requirements, 
     foreign nationals residing in the United States must be 
     lawfully admitted for permanent residence or ``permanently 
     residing in the United States under color of law'' (PRUCOL) 
     to qualify for benefits of the AFDC, Supplemental Security 
     Income (SSI), or Medicaid programs.
       The term PRUCOL applies to certain individuals who are 
     neither U.S. citizens nor aliens lawfully admitted for 
     permanent residence. Aliens who are PRUCOL entered the United 
     States either lawfully in a status other than lawful 
     permanent residence or unlawfully. PRUCOL status is not a 
     specific immigration status but rather includes many other 
     immigration statuses. Under the SSI statute, PRUCOL aliens 
     include those who hold parole status. The AFDC statute 
     defines aliens who have been granted parole, refugee, or 
     asylum status as PRUCOL, as well as aliens who had 
     conditional entry status prior to April 1, 1980. The Medicaid 
     statute uses the term PRUCOL but provides no guidance as to 
     the meaning parole of the term.
       In addition to the revisions in the regulations reflecting 
     the interpretation of section 1614(a)(1)(B) of the Social 
     Security Act resulting from the court in the Berger and 
     Sudomir decisions discussed below, PRUCOL status also is 
     defined in AFDC, SSI and Medicaid regulations as including 
     aliens: who have been placed under an order of supervision or 
     granted asylum status: who entered before January 1, 1972, 
     and continuously resided in the United States since then; who 
     have been granted ``voluntary departure'' or ``indefinite 
     voluntary departure'' status; and who have been granted 
     indefinite stays of deportation.
       In the case of Berger v. Secretary, HHS, the U.S. Court of 
     Appeals for the 2d Circuit in interpreted PRUCOL for the SSI 
     program to include 15 specific categories of aliens and also 
     those aliens whom the Immigration and Naturalization Service 
     (INS) knows are in the country and ``does not contemplate 
     enforcing'' their departure. SSA follows the Berger court's 
     interpretation of the phrase ``does not contemplate 
     enforcing'' to include aliens for whom the policy or practice 
     of the INS is not to enforce their departure as well as 
     aliens whom it appears the INS is otherwise permitting to 
     reside in the United States indefinitely. The Medicaid 
     regulations include the same Prucol categories as the SSI 
     regulations.
       The Sudomir v. Secretary, HHS decision, which focused on 
     AFDC eligibility for asylum applicants, was less expansive. 
     The U.S. Court of Appeals for the 9th Circuit determined that 
     AFDC eligibility would extend only to those aliens allowed to 
     remain in the United States with a ``sense of permanence.'' 
     Applicants for asylum are thus specifically excluded from 
     receiving AFDC benefits by this decision even though they 
     would not necessarily be disqualified for SSI due to the 
     Berger decision.

                             Specifications

       (a) Eliminate any reference to PRUCOL as an eligibility 
     category in titles IV, XVI, and XIX of the Social Security 
     Act (the Act). Standardize the treatment of aliens under 
     these titles by identifying in the statute the specific 
     immigration statuses in which non-citizens must be classified 
     by INS in order to qualify to be considered for AFDC, SSI, or 
     Medicaid eligibility. Specifically, provide that only aliens 
     in the following immigration statuses could qualify--lawfully 
     admitted for permanent residence within the meaning of 
     section 101(a)(20) of the Immigration and Nationality Act 
     (INA); residing in the United States with lawful temporary 
     status under sections 245A and 210 of the INA (relating to 
     certain undocumented aliens legalized under the Immigration 
     Reform and Control Act of 1986); residing in the United 
     States as the spouse or unmarried child under 21 years of age 
     of a citizen of the United States, or the parent of such 
     citizen if the citizen is over 21 years of age, and with 
     respect to whom an application for adjustment to lawful 
     permanent resident is pending; or residing in the United 
     States as a result of the application of the provisions 
     listed below: sections 207 of the INA (relating to refugees) 
     or 203(a)(7) of the INA (relating to conditional entry status 
     as in effect prior to April 1, 1980); section 208 of the INA 
     (relating to asylum); section 243(h) of the INA (relating to 
     a decision of the Attorney General to withhold deportation); 
     section 244 of the INA (relating to a decision of the 
     Attorney General to suspend deportation); and any other 
     provision of the INA, provided that: (i) the Attorney General 
     determines that the continued presence of an alien within a 
     class of aliens serves a humanitarian or other compelling 
     public interest, and (ii) the Secretary of HHS determines 
     that such interest would be further served by permitting such 
     alien of such class to be potentially eligible for benefits 
     under titles IV, XVI, and IX (e.g., certain aliens granted 
     parole status).
       (b) The proposal would continue the eligibility of those 
     aliens eligible for AFDC, SSI, or Medicaid on the effective 
     date of the amendment who began their periods of eligibility 
     before enactment for as long as they remain continuously 
     eligible.
       (c) The proposal would also allow State and local programs 
     of assistance to utilize the same criteria for eligibility.

                               Rationale

       Some aliens currently considered PRUCOL did not enter the 
     United States as immigrants under prescribed immigration 
     procedures and quotas, but entered illegally. Others entered 
     legally under temporary visa but did not depart. The courts 
     have determined some of these aliens to be eligible 
     for benefits under the definition of PRUCOL, even though 
     such individuals have not received from INS a deliberate 
     immigration decision and status for permanent presence in 
     the United States. In essence, many of these aliens are 
     similar to illegal aliens except that they have been 
     caught, which under current law can ironically improve an 
     alien's situation in terms of benefit eligibility. That 
     is, if they are caught, INS will likely grant them one of 
     the ``PRUCOL statuses''--such as voluntary departure or 
     deferred action--which currently allows them to be 
     eligible for SSI, AFDC, and/or Medicaid. If they are not 
     caught, they are simply undocumented and are not eligible 
     for any benefits other than emergency medical services. 
     Therefore, it is reasonable to restrict AFDC, SSI, and 
     Medicaid eligibility to specific categories of aliens who 
     have entered the United States lawfully or who are 
     permitted to remain in the U.S. indefinitely and are 
     eligible to obtain permanent resident status.
       Determining which aliens must be considered for eligibility 
     for Social Security Act programs has become excessively 
     confusing due to judicial actions, and it is subject to 
     ongoing challenge in the courts. This confusion--
     characterized by the different treatment by different 
     programs of similar individuals--would be remedied by 
     establishing in statute a uniform definition of alien 
     eligibility. The proposal would provide such a uniform 
     definition by listing the immigrant statutes and specifically 
     citing the provisions of the INA under which they are 
     granted, thereby eliminating the ongoing uncertainty about 
     the precise scope of the eligibility conditions and potential 
     inconsistencies regarding alien eligibility in the three 
     programs. Due to the complexities of immigration statuses 
     there are some groups of aliens which can not be defined 
     unequivocally in statute. For example, some aliens are 
     paroled into the U.S. for humanitarian purposes and are 
     effectively permitted to remain indefinitely. Others are 
     paroled into the U.S. for a very limited period of time--
     typically a matter of weeks--for specific purposes (e.g., to 
     testify at a trial). The proposal would permit the Attorney 
     General to identify those classes of aliens within certain 
     immigration categories that are allowed to remain in the U.S. 
     due to humanitarian or other compelling public interest 
     reasons. In turn, the Secretary of HHS would be granted 
     authority to determine whether those classes of aliens 
     identified by the Attorney General would be potentially 
     eligible for benefits.
       The Food Stamp program has avoided similar problems because 
     the categories of aliens eligible for assistance under the 
     program have been specifically listed in law. This proposal 
     seeks to do the same for AFDC, SSI, and Medicaid. The 
     proposal would save administrative resources and costs. The 
     case development required to determine if an alien is 
     considered PRUCOL generally is time-consuming because SSA and 
     State AFDC and Medicaid agencies must verify the alien's 
     status with INS. In many cases, an alien's status as PROCOL 
     must be re-verified annually.


                      b. sponsor-to-alien deeming

       Current Law: Under immigration law and policies, most 
     aliens lawfully admitted for permanent residence and certain 
     aliens paroled into the United States are required to have 
     sponsors.
       As a condition of entry as a lawful permanent resident, 
     almost all immigrants must satisfy the admitting officer that 
     they are not likely to become a public charge in the United 
     States. For many immigrants, this requirement is met by 
     having a relative who is a U.S. citizen or legal permanent 
     resident agree to ``sponsor'' the immigrant. Sponsors sign 
     affidavits of support or similar agreements provided by the 
     Department of State or the Immigration and Naturalization 
     Service affirming that they will be responsible for 
     supporting the immigrants and ensuring that he immigrants 
     will not become public charges. However, these pledges are 
     not enforceable and, by themselves, have no effect on whether 
     the immigrants can qualify for public assistance. Therefore, 
     the Supplemental Security Income (SSI), Aid to Families with 
     Dependent Children (AFDC), and the Food Stamp program apply 
     rules that limit sponsors' shifting their responsibilities to 
     the programs by deeming a portion of a sponsor's income and 
     resources as being available to the immigrant for a 
     particular period of time. The affidavit of support 
     informs the sponsor and the immigrant of the deeming rules 
     that will be applied to the immigrant by the SSI, AFDC, 
     and Food Stamp programs.
       Specifically, sections 1614(f)(3), 1621(a), and 415 of the 
     Social Security Act provide that in determining SSI and AFDC 
     eligibility and benefit amount for an alien, his sponsor's 
     (and sponsor's spouse's) income and resources are deemed to 
     the alien for 3 years after the alien's entry into the United 
     States. Public Law 103-152 extends the period of sponsor-to-
     alien deeming in the SSI program from 3 to 5 years for those 
     applying for benefits beginning January 1, 1994 and ending 
     October 1, 1996. For the SSI program, these deeming 
     provisions do not apply to an alien who becomes blind or 
     disabled after entry into the U.S. The Food Stamp program 
     currently provides for a three-year sponsor-to-alien deeming 
     period. Refugees are exempt from the deeming rules under all 
     three programs. Immigration law provides generally that an 
     alien who has resided continuously in the United States for 
     at least 5 years after being lawfully admitted for permanent 
     residence may file an application for U.S. citizenship.

                             Specifications

       (a) Make permanent the five year sponsor-to-alien deeming 
     under the SSI program. Extend from three to five years 
     sponsor-to-alien deeming under the AFDC and Food Stamp 
     programs.
       (b) For the period beginning with six years after being 
     lawfully admitted for permanent residence in the U.S. and 
     until a sponsored immigrant attains citizenship status, no 
     sponsored immigrant shall be eligible for benefits under the 
     AFDC, SSI, and Food Stamp programs, unless the annual income 
     of the immigrant's sponsor is below the most recent measure 
     of U.S. median family income.
       ``Annual income'' of the sponsor shall include the most 
     recent measure of annual adjusted gross income (AGI) of the 
     immigrant's sponsor, and the AGI of the sponsor's spouse and 
     dependent children, if any.
       ``Median family income'' shall be based on the most recent 
     Bureau of the Census measure for U.S. median family income 
     for all families, updated by the most recent measure of 
     change in the Consumer Price Index (CPI-U).
       (c) Each year the Secretary of HHS shall publish in the 
     Federal Register the median family income amount that will be 
     used to determine the eligibility of sponsored immigrants for 
     the AFDC, SSI, and Food Stamp programs. This measure will be 
     based on the most recent income data from the Current 
     Population Survey (CPS), published by the Bureau of the 
     Census.
       (d) Allow State and local programs of assistance to 
     disqualify from participation in general assistance any alien 
     who is disqualified from participation in the SSI, AFDC, and 
     Food Stamp programs due to sponsor-to-alien deeming.
       (e) Effective with respect to applications filed and 
     reinstatements of eligibility following a month or months of 
     ineligibility on or after October 1st 1994.
       (f) Exempt from sponsor-to-alien deeming under the Food 
     Stamp program any sponsored alien who becomes blind or 
     disabled after entry into the U.S. and becomes eligible for 
     SSI.
       (g) Raise the Food Stamp resource limit under sponsor-to-
     alien deeming to conform with the general resource limit 
     under Food Stamps.
       (h) Exempt from sponsor-to-alien deeming under SSI, AFDC, 
     and Food Stamps any sponsored immigrant whose sponsor is 
     receiving AFDC or SSI benefits.
       (i) Allow the Secretaries of HHS and Agriculture--after 
     consultation and coordination with each other--to alter or 
     suspend the sponsor-to-alien deeming provisions on an 
     individual case basis where it is determined that application 
     of the standard sponsor-to-alien deeming provisions would be 
     inequitable under the circumstances (e.g., if the sponsor has 
     physically abused the sponsored immigrant).

                               Rationale

       The number of immigrants entering the U.S. has been 
     increasing recently and there has been a rapid rise in the 
     number of immigrants receiving benefits--particularly SSI 
     benefits. For example, the number of immigrants who received 
     SSI benefits in December 1992 was more than double the number 
     who received benefits in December 1987. Over a third of all 
     aged legal permanent residents on the SSI rolls in December 
     1993 came onto the rolls within 12 months after their 3-year 
     sponsor-to-alien deeming period ended, indicating that the 
     deeming provision is instrumental in delaying alien 
     eligibility for SSI. Maintaining (under SSI) and extending 
     (under AFDC and Food Stamps) the deeming period to 5 years 
     for lawfully admitted permanent residents for whom an 
     affidavit of support has been signed serves to enforce the 
     pledge made by a sponsor that the immigrant will not become a 
     public charge and avoids increases in benefit program costs 
     which would otherwise occur as a result of increasing 
     immigrant use of welfare benefits. Requiring a sponsor that 
     is in the top half of the income distribution in the U.S. to 
     continue to be financially responsible for a sponsored 
     immigrant beyond the 5 year deeming period maintains the 
     integrity of these welfare programs which are intended to 
     help the poorest of the poor.
       For example, under the SSI program, many elderly immigrants 
     are sponsored by their children who have signed affidavits of 
     support. It seems equitable to require the children to 
     continue to support their relatives for the 5 year deeming 
     period, rather than allow the parents to obtain welfare 
     entitlement benefits solely on the basis of age, particularly 
     if the sponsors are financially able to continue supporting 
     the immigrants they have sponsored. Sponsors generally have 
     significant income and resources to support their alien 
     relatives. Once the 5 year period has ended, it is equitable 
     to continue requiring the sponsor in the top half of the 
     income distribution to be financially responsible for the 
     well-being of the sponsored immigrant. Nothing in this 
     proposal would prohibit a sponsored immigrant from becoming 
     eligible for benefits if the sponsor's income and resources 
     were depleted sufficiently to meet eligibility criteria, as 
     is the case with current law. Also, refugees would continue 
     to be exempt from sponsor-to-alien deeming, and sponsored 
     immigrants who become blind or disabled after entry into the 
     U.S. would continue to be eligible for benefits. This 
     proposal merely requires sponsors to continue for a longer 
     period of time to accept financial responsibility for those 
     immigrants they choose to sponsor. Once sponsored immigrants 
     become citizens, it is appropriate to discontinue these 
     eligibility rules.


                          financing provisions

                                 Vision

       The financing for welfare reform comes from three areas: 
     (1) reductions in entitlement programs; (2) extensions of 
     various savings provisions set to expire in the future; and 
     (3) better EITC targeting and compliance measures. Estimated 
     federal savings for all proposals are roughly $9.3 billion 
     over five years.


                         a. entitlement reforms

                1. Cap the emergency assistance program

                                 Vision

       The AFDC-Emergency Assistance (EA) Program is an uncapped 
     entitlement program. In fiscal year 1990, expenditures 
     totalled $189 million; by fiscal year 1999 they are projected 
     to reach almost $1 billion. While the intent of the EA 
     program is to meet short-term emergency needs and help keep 
     people off welfare, States currently have wide latitude to 
     determine the scope of their EA programs. Recently, States 
     have realized that the definition of the program is so broad 
     that it can fund almost any critical services to low-income 
     persons. Some States have begun shifting costs from programs 
     which the States fund primarily on their own such as foster 
     care, family preservation, and homeless services into the 
     matched EA program. States appear to be funding services that 
     address long-term problems as well as true emergency issues.

                             Specifications

       (a) Modify the current Emergency Assistance program by 
     establishing a Federal cap for each State's EA expenditures. 
     The cap will be set in fiscal year 1995 and increased by the 
     Consumer Price Index in each subsequent year.
       (b) The basic allocation formula is a combination of two 
     components:
       (i) Allocation among States proportional to their requested 
     expenditures in 1994; and
       (ii) Allocation among States proportional to their total 
     AFDC spending in the previous year.
       (c) There will be a ten-year transition period, and the 
     weighting of the components will shift over time, with 
     increasingly more weight being given to the second component. 
     Beginning in 1995, the weighting will be 90 percent by 
     component 1 and 10 percent by component 2. The weighting will 
     be altered by 10 percentage points each year such that by 
     2004, the weighting will be 100 percent by component 2.

                               Rationale

       The proposal ensures that all States will receive continued 
     funding equal to their actual 1991 levels. The Federal match 
     will continue at 50 percent up to the cap. This proposal 
     raises about $1.60 billion over five years. The basic 
     allocation formula balances the need to protect States that 
     have been spending heavily on EA in and before 1994 with the 
     potential claims of new States which have not previously had 
     claims for services under EA.

     2. Tighten sponsorship and eligibility rules for non-citizens

                                 Vision

       In recent years, the number of non-citizens lawfully 
     residing in the U.S. who collect SSI has risen dramatically. 
     Immigrants rose from 5 percent of the SSI aged caseload in 
     1982 to over 25 percent of the caseload in 1992. Since 1982, 
     applications for SSI from immigrants have tripled, while 
     immigration rose by only about 50 percent over the period.
       Most of the legal permanent residents applicants enter the 
     country sponsored by their relatives, who agree as a 
     condition of sponsorship that their relatives will not become 
     public charges. To enforce this commitment, until this year, 
     current law required that for 3 years, a portion of the 
     sponsor's income in excess of 110 percent of poverty by 
     ``deemed'' as available to help support the legal permanent 
     resident (LPR) immigrant should they need public assistance. 
     Currently, about one-third of the LPR immigrants on SSI 
     subject to the deeming rules apply in their 4th year of 
     residency. Last fall, to pay for extended unemployment 
     benefits, Congress extended the time of deeming under SSI 
     from three years to five years until 1996 when it reverts to 
     three years again.
       The Administration proposal related to non-citizens 
     contains two parts-extending the deeming period for sponsor 
     income and coordinating eligible criteria under four Federal 
     assistance programs.

                             Specifications

       (a) Deeming Make the current five-year period of sponsor 
     responsibility permanent law under the SSI program and 
     extends from three years sponsor responsibility under the 
     AFDC and Food Stamp programs. The sponsor's income would be 
     deemed as available to support the immigrant should they 
     apply for public assistance. For the period beginning with 
     six years after being lawfully admitted for permanent 
     residence in the U.S. and until a sponsored immigrant attains 
     citizenship status, if the sponsor has become above the U.S. 
     median family income ($39,500), the sponsor will continue to 
     be responsible for ensuring the support of the immigrant.

                                Rational

       This will have the effect of denying benefits to immigrants 
     with sponsors with income above the median. Once immigrants 
     attain citizenship, they will be eligible to apply for 
     benefits on their own. Any immigrants whose sponsor is 
     receiving SSI or AFDC benefits would be exempt from sponsor-
     to-alien deeming under SSI, AFDC and food stamps. The 
     proposal affects applications for the date of enactment 
     (i.e., it would grandfather current recipients as long as 
     they remained continuously eligible for benefits). These 
     changes in deeming rules would have no effect on, Medicaid 
     eligibility for immigrants. This part of the proposal saves 
     about $2.8 billion over five years.
       (b) Set consistent deeming rules for sponsored immigrants 
     across three Federal programs (SSI, AFDC, and Food Stamps). 
     Sponsor responsibility is based on longstanding immigration 
     policy that immigrants should not become public charges.

                               Rationale

       Sponsored immigrants most often apply for SSI benefits on 
     the basis of being aged, and are different from most citizens 
     in that the latter typically spend their life working and 
     paying taxes in the U.S. At the same time, this proposal 
     ensures that truly needy sponsored immigrants will not be 
     denied welfare benefits if they can establish that their 
     sponsors are no longer able to support them, if their 
     sponsors die, or if the immigrant becomes blind or 
     disabled after entry into the U.S. The policy would not 
     affect refugees or asylees.

                                 Vision

       Currently, due to different eligibility criteria in 
     statute, and litigation over how to interpret statutory 
     language, the four Federal programs (SSI, AFDC, Medicaid, and 
     Food Stamps) do not cover the same categories of non-LPR 
     immigrants. For example, aliens whose departure the INS does 
     not contemplate enforcing are eligible for SSI, but not for 
     Food Stamps. The Food Stamp program has the most restrictive 
     definition of which categories of non-LPR immigrants are 
     eligible for benefits (i.e., the eligibility criteria 
     encompass a fewer number of INS statuses). SSI and Medicaid 
     have the most expansive definition of which categories of 
     non-LPR immigrants are eligible for benefits, and the AFDC 
     program falls between these extremes. This element 
     establishes in statute a consistent definition of which non-
     LPR immigrants are eligible for welfare benefits.
       (c) Eligibility criteria. Establish similar eligibility 
     criteria under four Federal programs (SSI, AFDC, Medicaid, 
     and Food Stamps) for all categories of immigrants who are not 
     legal permanent residents.

                               Rationale

       This proposal makes eligibility criteria in the SSI, 
     Medicaid, and AFDC programs similar to the criteria that 
     currently exist in the Food Stamp program. The new list of 
     INS statuses required for potential eligibility to the SSI, 
     Medicaid, and AFDC programs is also virtually identical to 
     those listed in the Health Security Act providing eligibility 
     for the Health Security Card. Like the extended deeming 
     provisions, this part of the proposal affects applications 
     after date of enactment (i.e., it would grandfather current 
     recipients as long as they remained continuously eligible for 
     benefits). This part of the proposal saves about $900 million 
     over five years.

   3. New rules regarding SSI benefits for drug and alcohol addicted 
                               recipients

                              Current Law

       Current law requires that all SSI disability recipients for 
     whom substance abuse is material to the finding of disability 
     must be in available treatment and must have their payments 
     made through a representative payee (a third party who 
     receives and manages the funds). Payments to these SSI drug 
     addict and alcoholic (DA&A) beneficiaries are suspended if 
     the individual fails to participate in appropriate alcohol or 
     drug treatment, if such treatment is available. No similar 
     requirements are made of Social Security (Title II) 
     disability beneficiaries who receive benefits on the basis of 
     addictions. The representative payee and treatment 
     requirements have been part of the SSI program since its 
     inception over 20 years ago. However, the provisions have not 
     been implemented effectively.

                             Specification

       (a) Strengthen sanctions and apply new time limits to 
     benefits paid to individuals receiving Supplemental Security 
     Income (SSI) and Social Security Disability Insurance (SSDI) 
     benefits who have substance abuse problems that are material 
     to their disability finding.

                               Rationale

       The Congress is reaching decisions on these proposals 
     currently in conference on H.R. 4277, a bill which the 
     Administration supports. We anticipate savings of $800 
     million over five years. Should the final bill yield savings 
     of less than $800 million, we are committed to working with 
     Congress to fully finance the package.

      4. Income test meal reimbursements to family day care homes

                              Current Law

       The Child Care Food Program provides food subsidies for 
     children in two types of settings: child care centers and 
     family day care homes. They are administered quite 
     differently. The subsidies in centers are well targeted 
     because they are means-tested; USDA believes that over 90 
     percent of Federal dollars support meals served to low-income 
     (below 185 percent of poverty) children. The family day care 
     part of the program is not well targeted because it has no 
     means test (due to the burden it would place on the 
     providers). A USDA-commissioned study estimates that 71 
     percent of Federal food program dollars to family day care 
     homes support meals for children above 185 percent of the 
     poverty line. While the child care center funding levels have 
     been growing at a modest rate, the family day care funding 
     levels are growing rapidly--16.5 percent between 1991 and 
     1992.

                             Specifications

       (a) Amend section 17(c) of the National School Lunch Act 
     (42 U.S.C. 1766(c)) to establish a two-tiered reimbursement 
     structure (in the Child and Adult Care Food Program) with a 
     higher level of reimbursement for meals served by family day 
     care homes located in low-income areas. Low-income areas 
     would be defined as those in which half of the households 
     have incomes below 185 percent of poverty. Family day care 
     homes not located in low-income areas would have the option 
     of receiving lower rates of meal reimbursement or 
     administering a means test to enrolled children.
       (b) Under the means tested option, meals served to children 
     whose family income is below 185 percent of poverty would be 
     reimbursed at the higher rate, while those served to children 
     from higher income families would be reimbursed at the lower 
     rate. Meals served to children enrolled in programs operated 
     by low income providers would also be reimbursed at the 
     higher rate. Finally, meals served to the day care providers' 
     own children would continue to be means-tested.
       (c) Provide family day home sponsoring organizations with 
     an additional $10 per home per month for each home it 
     sponsors in low-income areas. Authorize $2 million to States 
     agencies for technical assistance to sponsors to help 
     implement the new reimbursement system in FY 1995. Technical 
     assistance funding would increase to $5 million in FY 1996. 
     Authorize for FY 1997 through FY 2000 $5 million for the 
     licensing of family day care homes in low-income areas.

                               Rationale

       This approach better targets the family day care food 
     program funding to low-income children and creates minimal 
     administrative requirements for providers. This provision 
     yields savings of about $500 million over five years.

 5. Limit deficiency payments to those making $100,000+ from off-farm 
                            income per year

                                 Vision

       USDA farm programs are criticized for unfairly supporting 
     large farms and wealthy producers rather than smaller farms 
     and lower-income farmers. The Congressional Office of 
     Technology Assessment concluded that most big farms ``do not 
     need direct government payments and/or subsidies to compete 
     and survive.''

                             Specification

       (a) Make producers receiving $100,000 or more in off-farm 
     adjusted gross income ineligible for Commodity Credit 
     Corporation (CCC) crop subsidies (price support loans and 
     income support payments).

                               Rationale

       The proposed targeting of subsidies would direct farm 
     payments to smaller, family farms, which deserve Federal 
     financial help more than large agricultural enterprises and 
     individuals with sufficient off-farm income. It would cause 
     an estimated 1-2 percent of program participants to drop out 
     of USDA farm programs. Most of these wealthiest participants 
     include corporations and individuals for whom farming is not 
     a primary occupation or source of income. This proposal would 
     save about $500 million over five years.


                     B. EXTEND EXPIRING PROVISIONS

1. Hold constant the portion of food stamp overpayment recoveries that 
                           States may retain

                          Vision and rationale

       States are permitted to keep some portion of the 100-
     percent Federal Food Stamp recoveries as an incentive payment 
     for pursuing violations. This proposal raises about $100 
     million over five years.

                             Specification

       (a) Extend the 1990 Farm Bill provision which reduced the 
     percentage of recovered Food Stamp over-issuances retainable 
     by State agencies for fiscal years 1991-95. Under this 
     provision, which would be extended to fiscal years of 1996-
     2004, States could retain 25 percent of recoveries from 
     intentional program violations (previously 50 percent) and 10 
     percent of other recoveries (previously 25 percent).

   2. Extend fees for passenger processing and other custom services

                          Vision and rationale

       A flat-rate merchandise processing fee (MPF-- is charged by 
     U.S. customs for processing of commercial and non-commercial 
     merchandise that enters or leaves U.S. warehouses. The fee, 
     adopted by OBRA 1986, generally is set at 0.19, percent of 
     the value of the good. Other variable customs fees are 
     charged for: passenger processing; commercial truck arrivals; 
     railroad car arrivals; private vessel or private aircraft 
     entries; dutiable mail; broker permits; and barge/bulk 
     carriers. NAFTA extended the MPF and other fees through 
     September, 2003. This proposal would save about $1 billion 
     in that year.

                             Specification

       (a) Extend the fees through September, 2004.

                   3. Extend railroad safety use fees

                          Vision and rationale

       Railroad safety inspection fees were enacted in the Omnibus 
     Budget Reconciliation Act of 1990 to pay for the costs of the 
     Federal rail safety inspection program. The railroads are 
     assessed fees according to a formula based on three criteria: 
     road miles, as a measure of system size; train miles as a 
     measure of volume; and employee hours as a measure of 
     employee activity. The formula is applied across the board to 
     all railroads to cover the full costs of the Federal railroad 
     safety inspection program. The fees are set to expire in 
     1996. The 1995 President's Budget proposed to extend the fees 
     through 1999 and expand them, effective in 1995, to cover 
     other railroad safety costs. The proposal raises about $200 
     million over five years.

                             Specification

       (a) Extend the Railroad safety inspection fees permanently.

  4. Extend expiring corporate environmental income (CEI) tax used to 
                           finance superfund

                          Vision and rationale

       A broad-based environmental tax, based on corporate 
     alternative minimum taxable income (0.12 percent) in excess 
     of $2 million, was first enacted in 1986 and is set to expire 
     at the end of 1995.
       Superfund reauthorization legislation would provide a 
     further CEI tax extension through the year 2000, which would 
     provide sufficient additional credit needed for budget 
     scoring of the Superfund legislation's ``orphan share'' 
     proposal. All revenue from the CEI tax extension, whether 
     enacted in welfare reform or Superfund legislation, will 
     continue to be dedicated to the Hazardous Substance Superfund 
     to be used only for Superfund cleanups.

                             Specification

       (a) Extend the CEI tax into 1998.


               C. EITC TARGETING AND COMPLIANCE MEASURES

                  1. Deny EITC to non-resident aliens

                          Vision and rationale

       Under current law, non-resident aliens may receive the 
     Earned Income Tax Credit (EITC). Because non-resident 
     taxpayers are not required to report their worldwide income, 
     it is currently impossible for the IRS to determine whether 
     ineligible individuals (such as high-income nonresident 
     aliens) are claiming the EITC. We estimate that about 
     50,000 taxpayers will be affected by our proposal, mainly 
     visiting foreign students and professors. The proposal 
     raises about $100 million over five years.

                             Specification

       (a) Deny the EITC to non-resident aliens completely.

2. Require Income Reporting for EITC Purposes for Department of Defense 
                            (DoD) Personnel

                          Vision and rationale

       Under current law, families living overseas are ineligible 
     for the EITC. The first part of this proposal would extend 
     the EITC to active military families living overseas. To pay 
     for this proposal, and to raise net revenues, the DoD would 
     be required to report the nontaxable earned income paid to 
     military personnel (both overseas and States-side) on Form W-
     2. Such nontaxable earned income includes basic allowances 
     for subsistence and quarters. Because current law provides 
     that in determining earned income for EITC purposes such 
     nontaxable earned income must be taken into account, the 
     additional information reporting would enhance compliance 
     with the EITC rules. The combination of these two proposals 
     raises about $200 million over five years.

                             Specifications

       (a) Extend the EITC to active military families living 
     overseas.
       (b) Require DoD to report the nontaxable earned income paid 
     to military personnel (both overseas and States-side) on Form 
     W-2.
                                 ______

      By Mr. HATFIELD:
  S. 2226. A bill to designate a site for the relocation of the public 
facility of the National Museum of Health and Medicine, and for other 
purposes; to the Committee on Armed Services.


         relocating the national museum of health and medicine

 Mr. HATFIELD. Mr. President, on May 5, 1994, I introduced 
legislation, S. 2080, to designate the site for the relocation of the 
National Museum of Health and Medicine. The legislation identifies a 
site adjacent to the Hubert Humphrey Building, located just off of the 
National Mall, as the new location for the museum, which is currently 
at the Walter Reed Medical Center in Bethesda, MD. My legislation, 
cosponsored by Senators Nunn, Kennedy, Harkin, and Boxer, was referred 
to the Senate Committee on Energy and Natural Resources.
  Today I am introducing a revised version of the legislation which 
adds to the original purpose of relocating the museum by also providing 
for the continued display and interpretation of the collections of the 
Armed Services Institute of Pathology. These collections, which contain 
precious artifacts representing our country's history in such areas as 
Civil War medicine and the assassinations of Presidents Lincoln and 
Garfield, are world renown. This bill will be referred to the Senate 
Committee on Armed Services, which has had primary jurisdiction over 
this facility since its inception when it was known as the Army Medical 
Museum.
  The Army Medical Museum was born amidst the tumult of the United 
States Civil War. Over the years, in addition to handling the autopsies 
on two of our former Presidents, the museum identified the Aedes 
Aegypti mosquito as the carrier of yellow fever--work which made it 
possible to control the disease and removed a critical barrier to 
construction of the Panama Canal. Prior to World War I, Maj. Frederick 
Russell, curator of the museum, was a central figure in the discovery 
of a successful antityphoid vaccine which was both developed and tested 
at the museum. ``Fit to Fight,'' a series of educational films warning 
American soldiers about the dangers of venereal disease, was produced 
by the museum in response to this recurring problem of the great war.
  In 1965, the museum was designated a national historic landmark. In 
1989, it became the National Museum of Health and Medicine of the Armed 
Forces Institute of Pathology. Today, more than 125 years after its 
founding, the museum continues to respond to changing medical and 
educational needs of the Nation and the international audience it 
serves.
  I am convinced that this facility, if strategically located and 
infused with a strong public education mandate, can play a pivotal role 
in the teaching of self-responsibility for our health. To me, as we 
continue to reform the Nation's health care delivery system, there is 
no greater mission than raising public awareness and 
responsibility.
                                 ______

      By Mr. LAUTENBERG (for himself and Mr. Mitchell):
  S. 2227. A bill to amend the Solid Waste Disposal Act to provide 
congressional authorization of State control over transportation of 
municipal solid waste, and for other purposes; to the Committee on 
Environment and Public Works.


                        flow control act of 1994

 Mr. LAUTENBERG. Mr. President, today I am introducing the Flow 
Control Act of 1994 which will overturn a recent Supreme Court decision 
and give State and local governments the authority to control the flow 
of solid waste. This decision, if allowed to stand, could result in 
chaos in communities in the 43 States where flow control authority is 
currently in place and constitutes a critical component of strategies 
to manage waste. I'm pleased that the majority leader, Senator 
Mitchell, is a cosponsor of this legislation.
  A few weeks ago, in a 6-to-3 decision, the Supreme Court ruled in the 
case of Carbone versus Clarkstown that a New York municipality could 
not require that garbage generated in the locality be sent to a 
designated waste management facility. The Court held that a Clarkstown, 
NY flow control ordinance interfered with interstate commerce and 
deprived out-of-State firms access to the local trash market. The 
Constitution provides that only the Federal Government may regulate 
commerce among the States unless it specifically delegates this 
authority to them. The Court's ruling held that this power had not been 
granted by Congress to the States.
  This decision will have a significant effect on the ability of State 
and local governments to manage garbage. Historically, State and local 
governments have had the responsibility for municipal solid waste 
management. This is recognized in the Nation's solid waste management 
law, the Resource Conservation and Recovery Act or RCRA. In RCRA, the 
Congress found that collection and disposal of garbage is primarily a 
function for State and local governments. To foster this function, RCRA 
requires EPA to provide assistance in the development and 
implementation of State solid waste management plans. States are 
encouraged to develop statewide solid waste management plans. Before 
EPA approves a plan, it must find that the plan identifies the 
responsibilities of State, regional and local governments and has 
provided for the establishment of such State regulatory powers as is 
necessary to implement the plan. It's clear from RCRA that Congress 
intended that state and local governments have the authority necessary 
to manage solid waste.

  Forty-three States including New Jersey either utilize flow control 
authority or have authorized local governments to use flow control for 
waste management. Flow control laws have been in place in New Jersey 
since 1979 and control all of the nonhazardous solid waste in our 567 
municipalities and 21 counties. Flow control has been a significant 
part of New Jersey's ability to build an infrastructure to handle the 
14 millions tons of solid waste requiring disposal annually. 
Collectively, this infrastructure represents a capital investment of 
over $2 billion. New Jersey's recycling programs also are dependent on 
revenues received for use of New Jersey waste management facilities.
  The Supreme Court Decision threatens this authority, undercuts the 
roles of State and local governments in solid waste management, and 
negates the planning process contemplated by the Congress in RCRA.
  The decision makes it impossible for cities to guarantee a steady 
stream of waste to waste disposal and processing facilities. Without 
this guaranteed steady stream of garbage, communities will be unable to 
secure financing to build solid waste management facilities. This 
threatens New Jersey's program to become solid waste self-sufficient by 
the end of the decade. It also threatens New Jersey's existing program 
to restrict exports of garbage without approval by the State.
  In addition, localities would lose the revenue generated by garbage 
disposal at municipal facilities as garbage flowed to other facilities. 
This would eliminate the source of funding for related nonprofitable 
waste management activities such as recycling and household hazardous 
waste programs. We need to increase recycling efforts. But the loss of 
flow control authority threatens existing efforts let alone making an 
expansion of recycling programs less likely.
  Finally, existing bonds used to finance waste management facilities 
are at risk if localities cannot send an adequate level of garbage to 
the facility to generate revenues to pay off the bonds. If localities 
cannot send an adequate level of garbage to a facility to generate the 
revenue needed to pay off the bonds, they face default and the affected 
communities face higher taxes.
  My bill takes a balanced approach to addressing the concerns raised 
by the Supreme Court decision. It is intended to put State and local 
governments in the same position they were in concerning flow control 
authority on the day before the Carbone decision and other court 
decisions striking down flow control laws except as specifically 
provided for in the bill. It protects all existing flow control laws 
and arrangements like those in New Jersey where flow control had been 
used to designate solid waste management facilities prior to May 15, 
1994. It grants authority to State and local governments to institute 
additional flow control authority for:

  Municipal solid waste from household sources;
  Recyclables which have been voluntarily surrendered to the 
government; and
  Municipal solid waste generated from commercial, industrial and 
institutional sources, as well as incinerator ash and construction and 
demolition debris if such waste had been flow controlled under a State 
or local law or ordinance prior to May 15, 1994.
  It provides that flow control authority can only be used if the 
community has a program to remove recyclables from the solid waste 
stream in accordance with the State law or a local solid waste 
management plan.
  My bill requires that the local government undertake a competitive 
designation process when it decides to implement its flow control 
authority which considers the facilities and services which the private 
sector can provide. This process is designed to foster competition and 
help save the taxpayers money by keeping tipping fees down.
  This competitive designation process requires the government to 
establish specific criteria to be used to select facilities and also 
compare alternatives when designating a facility for flow control. The 
process also provides the public participation during the selection 
process. At the same time, it allows State and local governments to 
retain final decision making authority over most waste disposal 
decisions.
  I want to make clear what the bill does not do. It does not tell 
State and local governments how to manage waste. Decisions on how to 
manage garbage and where to site management facilities are not Federal 
responsibilities. These decisions have been and continue to be issues 
for local governments to decide subject to state permits. It leaves 
State and local governments with the same authority they've had other 
than dealing with flow control to address solid waste.
  Mr. President, we cannot expect State and local governments to manage 
solid waste as contemplated by RCRA if we fail to provide those 
governments with the tools to ensure that properly sized facilities to 
manage the waste are constructed. By bill merely overturns the Supreme 
Court decision and provides state and local governments with the tools 
they need to manage solid waste.
  Mr. President, the Congress should deal with the ambiguities that 
flow from the Supreme Court decision soon. State and local governments 
need to discharge their responsibilities for solid waste disposal.
  In dealing with this issue, we must be mindful of the impact that it 
might have on the consumer. My bill is pro-consumer. Municipal solid 
waste is a State and local government responsibility but doesn't have 
to be carried out by these governments. There are numerous examples of 
successful efforts to privatize government operations. This bill will 
bring the pressure of the free market to bear on solid waste decisions 
and hopefully lead to the most efficient operation providing relief to 
local taxpayers.
  I ask unanimous consent that a copy of the bill, a summary of the 
bill, editorials from the Camden Courier-News, the Newark Star-Ledger, 
and the Atlantic City Press and letters of support of the bill appear 
in the Congressional Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                S. 2226

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Flow Control Act of 1994''.

     SEC. 2. CONGRESSIONAL AUTHORIZATION OF STATE CONTROL OVER 
                   TRANSPORTATION OF MUNICIPAL SOLID WASTE.

       (a) In General.--Subtitle D of the Solid Waste Disposal Act 
     (42 U.S.C. 6941 et seq.) is amended by adding at the end the 
     following new section:

     ``SEC. 4011. CONGRESSIONAL AUTHORIZATION OF STATE CONTROL 
                   OVER TRANSPORTATION OF MUNICIPAL SOLID WASTE.

       ``(a) Authority.--
       ``(1) In general.--Each State and each qualified political 
     subdivision may, in accordance with this section--
       ``(A) direct, limit, regulate, or prohibit the 
     transportation of municipal solid waste generated from 
     household sources (as described in subsection (g)(2)(A)(i)) 
     within the boundaries of the State or subdivision and 
     designate each waste management facility to which any such 
     municipal solid waste shall be transported;
       ``(B) direct, limit, regulate, or prohibit the 
     transportation of municipal solid waste that is generated, or 
     is commingled with municipal solid waste that is generated, 
     from commercial, institutional, or industrial sources within 
     the boundaries of the State or subdivision, or that is 
     incinerator ash from a solid waste incineration unit, or 
     construction debris or demolition debris, generated within 
     the boundaries of the State or subdivision (referred to in 
     this subparagraph as `covered waste') and designate each 
     waste management facility to which any such covered waste 
     shall be transported, if, before May 15, 1994--
       ``(i) the State or subdivision adopted a law, ordinance, 
     regulation, or legislative or administrative provision that 
     pertains to the transportation of municipal solid waste 
     generated within the boundaries; and
       ``(ii) directed, limited, regulated, or prohibited the 
     transportation of covered waste under the law, ordinance, 
     regulation, or provision to a facility designated before such 
     date; and
       ``(C) direct, limit, regulate, or prohibit the 
     transportation of recyclable materials generated within the 
     boundaries of the State or subdivision and designate each 
     facility to which any such materials shall be transported.
       ``(2) Application.--A State or qualified political 
     subdivision may exercise the authority described in paragraph 
     (1)(C) with respect to recyclable materials only if--
       ``(A) the generator or owner of the materials voluntarily 
     made the materials available to the State or qualified 
     political subdivision and relinquished any rights to, or 
     ownership of, such materials; and
       ``(B) the State or qualified political subdivision, or the 
     designee of the State or qualified political subdivision, 
     assumes such rights to, or ownership of, such materials.
       ``(b) Limitations.--A State or qualified political 
     subdivision may exercise the authority provided by subsection 
     (a) only if the State or qualified political subdivision--
       ``(1) before exercising the authority described in 
     subsection (a)(1)(A) with respect to municipal solid waste 
     described in subsection (a)(1), establishes a program to 
     separate, or divert at the point of generation, the materials 
     described in subsection (g)(4) from the municipal solid 
     waste, for purposes of recycling, reclamation, or reuse, in 
     accordance with any State law or municipal solid waste 
     planning requirements in effect;
       ``(2) develops and implements a process described in 
     subsection (c) for the designation of facilities described in 
     subsection (a); and
       ``(3) after conducting 1 or more public hearings--
       ``(A) finds, on the basis of the record developed at the 
     hearing or hearings that it is necessary to exercise the 
     authority provided by subsection (a) to meet the current 
     solid waste management needs (as of the date of the record) 
     and anticipated solid waste management needs of the State or 
     qualified political subdivision for management of municipal 
     solid waste or recyclable materials; and
       ``(B) provides a written explanation of the reasons for the 
     finding described in subparagraph (A).
       ``(c) Competitive Designation Process.--In developing and 
     implementing the designation process described in subsection 
     (b)(2) or (e)(4) with respect to waste management facilities 
     and facilities for recyclable materials, the State or 
     qualified political subdivision shall--
       ``(1) ensure that the designation process is based on, or 
     is part of, a municipal solid waste management plan that is 
     adopted by the State or qualified political subdivision and 
     that is designed to ensure long-term management capacity for 
     municipal solid waste or recyclable materials generated 
     within the boundaries of the State or subdivision;
       ``(2) set forth the goals of the designation process, 
     including at a minimum--
       ``(A) capacity assurance;
       ``(B) the establishment of provisions to ensure that 
     protection of human health and the environment will be 
     achieved; and
       ``(C) any other goals determined to be relevant by the 
     State or qualified political subdivision;
       ``(3) identify and compare the alternatives and options for 
     designation of the facilities;
       ``(4) provide for public participation and comment;
       ``(5) ensure that the designation of the facilities is 
     accomplished through an open competitive process during which 
     the State or qualified political subdivision--
       ``(A) identifies in writing the specific criteria to be 
     utilized for selection of the facilities;
       ``(B) provides an opportunity for interested public persons 
     and private persons to offer their existing (as of the date 
     of the process) or proposed facilities for designation; and
       ``(C) evaluates and selects the facilities for designation 
     based on the merits of the facilities in meeting the specific 
     criteria identified; and
       ``(6) base the designation of each such facility on reasons 
     that shall be stated in a public record.
       ``(6) Ownership of Recyclable Materials.--
       ``(1) Prohibition on required transfers.--Except as 
     provided in paragraph (3), nothing in this section shall 
     authorize any State or qualified political subdivision to 
     require any generator or owner of recyclable materials to 
     transfer any recyclable materials (other than abandoned or 
     discarded materials) to such State or qualified political 
     subdivision.
       ``(2) Prohibition on prohibited transactions.--Except as 
     provided in paragraph (3), nothing in this section shall 
     prohibit any generator or owner of recyclable materials from 
     selling, purchasing, accepting, conveying, or transporting 
     any recyclable materials for purposes of transformation or 
     remanufacture into usable or marketable materials, unless the 
     generator or owner voluntarily made the materials available 
     to the State or qualified political subdivision and 
     relinquished any rights to, or ownership of, such materials.
       ``(3) Law and contracts.--A contract, law, ordinance, 
     regulation, or provision described in subsection (e)(1) may 
     contain an authorization described in paragraph (1) or a 
     prohibition described in paragraph (2).
       ``(e) Existing Laws and Contracts.--
       ``(1) In general.--This section shall not supersede, 
     abrogate, or otherwise modify any of the following:
       ``(A) Any contract or other agreement (including any 
     contract containing an obligation to repay the outstanding 
     indebtedness on any facility) entered into before May 15, 
     1994, by a State or qualified political subdivision in which 
     such State or qualified political subdivision has designated 
     a waste management facility, or management facility for 
     recyclable materials, for the management of municipal solid 
     waste or recyclable materials pursuant to an ordinance or law 
     adopted by such State or qualified political subdivision 
     before May 15, 1994.
       ``(B) Any other contract or agreement entered into before 
     May 15, 1994, for the management of municipal solid waste.
       ``(C)(i) Any law, ordinance, regulation, or legislative or 
     administrative provision--
       ``(I) that is adopted before May 15, 1994; and
       ``(II) that pertains to the transportation of municipal 
     solid waste generated within the boundaries of a State or 
     qualified political subdivision;

     to the extent that the law, ordinance, regulation, or 
     provision is applied to the transportation of municipal solid 
     waste, generated from household sources (as described in 
     subsection (g)(2)(A)(i)) within the boundaries, to a facility 
     designated before such date under such law, ordinance, 
     regulation, or provision.
       ``(ii) Any law, ordinance, regulation, or legislative or 
     administrative provision--
       ``(I) that is adopted before May 15, 1994;
       ``(II) that pertains to the transportation of municipal 
     solid waste generated within the boundaries of a State or 
     qualified political subdivision; and
       ``(III) under which a State or qualified political 
     subdivision, prior to May 15, 1994, directed, limited, 
     regulated, or prohibited the transportation of municipal 
     solid waste that is generated, or is commingled with 
     municipal solid waste that is generated, from commercial, 
     institutional, or industrial sources within the boundaries, 
     or that is incinerator ash from a solid waste incineration 
     unit, or construction debris or demolition debris, generated 
     within the boundaries;

     to the extent that the law, ordinance, regulation, or 
     provision is applied to the transportation of municipal solid 
     waste described in subclause (III), to a facility designated 
     before such date under such law, ordinance, regulation, or 
     provision.
       ``(iii) Any law, ordinance, regulation, or legislative or 
     administrative provision--
       ``(I) that is adopted before May 15, 1994; and
       ``(II) that pertains to the transportation of recyclable 
     materials generated within the boundaries of a State or 
     qualified political subdivision;

     to the extent that the law, ordinance, regulation, or 
     provision is applied to the transportation of recyclable 
     materials, that are generated within the boundaries and with 
     respect to which the generator or owner of the materials, and 
     the State or qualified political subdivision, have met the 
     appropriate conditions described in subsection (a)(2), to a 
     facility designated before such date under such law, 
     ordinance, regulation, or provision.
       ``(iv) Any law, ordinance, regulation, or legislative or 
     administrative provision--
       ``(I) that is adopted before May 15, 1994;
       ``(II) that pertains to the transportation of recyclable 
     materials generated within the boundaries of a State or 
     qualified political subdivision; and
       ``(III) under which a State or qualified political 
     subdivision, prior to May 15, 1994, directed, limited, 
     regulated, or prohibited the transportation of recyclable 
     materials that are not materials with respect to which the 
     generator or owner of the materials, and the State or 
     qualified political subdivision, have met the appropriate 
     conditions described in subsection (a)(2) and that--
       ``(aa) are generated from household sources (as described 
     in subsection (g)(2)(A)(i)) within the boundaries; or
       ``(bb) are generated from commercial, institutional, or 
     industrial sources within the boundaries;

     to the extent that the law, ordinance, regulation, or 
     provision is applied to the transportation of recyclable 
     materials, described in subclause (III), to a facility 
     designated before such date under such law, ordinance, 
     regulation, or provision, and is applied to the same class of 
     materials described in item (aa) or (bb) of subclause (III) 
     to which the law, ordinance, regulation, or provision applied 
     before such date.
       ``(2) Contract information.--A party to a contract or other 
     agreement that is described in subparagraph (A) or (B) of 
     paragraph (1) shall provide a copy of the contract or 
     agreement to the State or qualified political subdivision on 
     request. Any proprietary information contained in the 
     contract of agreement may be omitted in the copy, but the 
     information that appears in the copy shall include at least 
     the date that the contract or agreement was signed, the 
     volume of municipal solid waste or recyclable materials 
     covered by the contract or agreement with respect to which 
     the State or qualified political subdivision could otherwise 
     exercise authority under subsection (a), the source of the 
     waste or materials, the destination of the waste or 
     materials, the duration of the contract or agreement, and the 
     parties to the contract or agreement.
       ``(3) Effect on interstate commerce.--Effective from the 
     date of its adoption, no contract or agreement described in 
     subparagraph (A) or (B) of paragraph (1), and no law, 
     ordinance, regulation, or provision described in paragraph 
     (1)(C), shall be considered to impose an undue burden on or 
     otherwise impair, restrain, or discriminate against 
     interstate commerce.
       ``(4) Limitation.--A State or qualified political 
     subdivision may exercise the authority of any law, ordinance, 
     regulation, or provision described in paragraph (1)(C), to 
     the extent provided in such paragraph, only if the State or 
     qualified political subdivision develops and implements a 
     process described in subsection (c) for the designation of 
     any waste management facility or facility for recyclable 
     materials that the State or qualified political subdivision 
     designates, after the date of enactment of this section, as a 
     facility to which any waste or materials described in 
     paragraph (1) shall be transported. Nothing in this paragraph 
     shall affect any designation made before the date of 
     enactment of this section
       ``(5) Effect on state procurement laws.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     nothing in this section shall supersede or modify--
       ``(i) any State law or State regulation concerning the 
     procurement of municipal solid waste services or facilities 
     by qualified political subdivisions; or
       ``(ii) any State law or regulation concerning competitive 
     bidding for such services or facilities.
       ``(B) Designation.--Notwithstanding subparagraph (A), any 
     such facilities shall be subject to the designation process 
     described in subsection (c).
       ``(6) Designation before a date.--For purposes of this 
     section, a facility shall be considered to be designated 
     before a date if--
       ``(A) the facility was designated before the date in a 
     written document; and
       ``(B) the terms and requirements of the document, and of 
     any laws and regulations of the State or qualified political 
     subdivision involved, that were in effect and applicable to 
     the designation continue to apply
       ``(f) Savings Clause.--Nothing in this section is intended 
     to supersede, amend, or otherwise modify Federal or State 
     environmental standards that apply to the disposal or 
     management of solid waste at waste management facilities and 
     facilities for recyclable materials.
       ``(g) Definitions.--As used in this section:
       ``(1) Industrial solid waste.--The term `industrial solid 
     waste' means solid waste generated by manufacturing or 
     industrial processes, including waste generated during scrap 
     processing and recycling, that is not hazardous waste 
     regulated under subtitle C.
       ``(2) Municipal solid waste.--
       ``(A) In general.--The term `municipal solid waste'--
       ``(i) means any waste generated by a household, including a 
     single or multifamily residence,
       ``(ii) includes waste generated by a commercial, 
     institutional, or industrial source to the extent that such 
     waste--
       ``(I) is essentially the same as waste normally generated 
     by households; or
       ``(II) would be considered conditionally exempt small 
     quantity generator waste under section 3001(d) and is 
     collected and disposed of with other municipal solid waste as 
     part of normal municipal solid waste collection services; and
       ``(iii) includes residue remaining after recyclable 
     materials have been separated, or diverted at the point of 
     generation, from municipal solid waste described in clause 
     (i) or (ii).
       ``(B) Exclusions.--The term `municipal solid waste' shall 
     not include any of the following:
       ``(i) Hazardous waste required to be managed in accordance 
     with subtitle C (other than waste described in subparagraph 
     (A)(ii)(II)), solid waste containing a polychorinated 
     biphenyl regulated under the Toxic Substances Control Act (15 
     U.S.C. 2601 et seq.), or medical waste.
       ``(ii)(I) A recyclable material.
       ``(II) A material or a product returned from a dispenser or 
     distributor to the manufacturer or the agent of the 
     manufacturer for credit, evaluation, or reuse.
       ``(III) A material or product that is an out-of-date or 
     unmarketable material or product, or is a material or product 
     that does not confirm to specifications, and that is returned 
     to the manufacturer or the agent of the manufacturer for 
     credit, evaluation, or reuse.
       ``(iii) Any solid waste (including contaminated soil and 
     debris) resulting from a response action taken under section 
     104 or 106 of the Comprehensive Environmental Response, 
     Compensation, and Liability Act of 1980 (42 U.S.C. 9604 or 
     9606) or a corrective action taken under this Act.
       ``(iv)(I) Industrial solid waste.
       ``(II) Any solid waste that is generated by an industrial 
     facility and transported for the purpose of containment, 
     storage, or disposal to a facility that is owned or operated 
     by the generator of the waste, or a facility that is located 
     on property owned by the generator or a company with which 
     the generator is affiliated.
       ``(3) Qualified political subdivision.--The term `qualified 
     political subdivision' means a governmental entity of a 
     political subdivision of a State if a majority of members of 
     the entity are elected officials and the entity has been 
     granted authority by the State to plan for, or determine the 
     methods to be utilized for, the collection, disposal, or 
     other management of municipal solid waste generated within 
     the boundaries of the political subdivision.
       ``(4) Recyclable materials.--The term `recyclable material' 
     means any material (including any metal, glass, plastic, 
     textile, wood, paper, rubber, or other material) that has 
     been separated, or diverted at the point of generation, from 
     solid waste for the purpose of recycling, reclamation, or 
     reuse.
       ``(5) Waste management facility.--The term `waste 
     management facility' means any facility in which solid waste 
     is collected, separated, stored, transferred, treated, 
     processed, or disposed of.''.
       (b) Table of Contents.--The table of contents for such 
     subtitle D is amended by adding after the item relating to 
     section 4010 the following new item:

``Sec. 4011. Congressional authorization of State control over 
              transportation of municipal solid waste.''.
                                  ____


                          Flow Control Summary


                       (a) flow control authority

       (a)(1) Provides general authority for flow control of waste 
     generated within the boundaries of the State or political 
     subdivision for:
       (A) Municipal solid waste generated from household sources;
       (B) Municipal solid waste generated from commercial 
     institutional, or industrial sources, if, before May 15, 
     1994, the State or political subdivision had a low 
     authorizing the flow control of such waste and the State or 
     political subdivision had directed such waste to a solid 
     waste management facility designated before such date, and;
       (C) Recyclable materials.
       (a)(2) Limits authority to flow control recyclables to 
     situations where the generator or owner of the material 
     voluntarily relinquishes ownership of the material and the 
     state or local government assumes ownership of the materials.


                      (b) limitations on authority

       To use flow control authority, states or local governments 
     must:
       (1) establish a program to separate or divert recyclables 
     from municipal solid waste in accordance with any State law 
     or municipal solid waste planning requirements;
       (2) implement a process for the designation of facilities; 
     and
       (3) conduct a public hearing and make a written finding it 
     is necessary to exercise flow control authority to meet needs 
     for the management of municipal solid waste or recyclables.


                        (c) designation process

       Establishes and designation process that state and local 
     governments must use to exercise flow control. The process 
     must: be based on or part of a municipal solid waste 
     management plan; set forth goals of the process including 
     addressing capacity assurance and protecting human health and 
     the environment; identify and compare alternatives for 
     designation; provide for public participation; designate 
     facilities based on an open competitive process in which the 
     community identifies the criteria to be used in selecting 
     facilities, provides an opportunity for any member of the 
     public to offer their facility for the designation, and 
     selects the facility based on the merits of the facility 
     meeting the specified decision criteria; and base the 
     designation of each facility on reasons stated in the public 
     record.


                        (d) Recyclable Materials

       Except for laws which were implemented by the designation 
     of a facility to receive recyclables prior to May 15, 1994, 
     makes clear that: (a) a state or local government cannot 
     require a generator or owner of recyclable materials to 
     transfer the material to the State or local government; and 
     (b) the flow control provisions have no effect on the ability 
     of owners of recyclables from engaging in transactions 
     regarding the material unless the owner voluntarily 
     relinquishes any rights to the material.


             (e) grandfather of existing contracts and laws

       (1) Protests contracts entered into by a state or local 
     government which designates a waste management facility which 
     were entered into before May 15, 1994. Protects any other 
     contract (including those involving private parties) entered 
     into before May 15, 1994. Protects laws, ordinances, 
     regulations or legislative or administrative provision 
     adopted before May 15, 1994 regarding flow control of 
     municipal solid waste generated from; (1) residential 
     sources, (2) commercial, institutional, or industrial 
     sources, or incinerator ash and construction and demolition 
     debris, (3) recyclable materials where ownership is 
     voluntarily relinquished by the generator or owner, and (4) 
     recyclable materials where ownership is not voluntarily 
     relinquished by the generator or owner, if the state or local 
     government had exercised flow control authority by the 
     designation of a facility to receive such waste prior to May 
     15, 1994. Future flow control over recyclable materials where 
     ownership is not voluntarily relinquished by the generator or 
     owner may only be applied to the same category of 
     recyclables.
       (2) Allows the state or local government to obtain access 
     to the contract or agreement grandfathered under paragraph 
     (1) after the deletion of proprietary information. 
     Establishes the minimum level of information which must be 
     made available.
       (3) Provides that the contracts, agreements, laws, and 
     administrative provisions grandfather under paragraph (1) 
     shall not be considered to impose an undue burden on or 
     discriminate against interstate commerce.
       (4) Provides that for designations taking place after the 
     date of enactment under the authority of those laws, 
     ordinances or provisions grandfathered under paragraph 1(C), 
     the state or local government must implement the designation 
     process.
       (5) Provides that nothing in the section shall supersede or 
     modify any state law regarding procurement or competitive 
     bidding.
       (6) Provides that when a facility is designated before a 
     date, the laws and regulations of the state or political 
     subdivision which accompany the designation continue to 
     remain in effect.


                           (f) savings clause

       Provides that nothing in the bill shall supersede, amend, 
     or modify Federal or State environmental standards which 
     apply to solid waste management or disposal.


                            (g) definitions

       (1) Industrial waste definition refers to waste from 
     manufacturing or industrial processes that is not hazardous 
     waste as regulated under Subtitle C, including waste 
     generated during scrap processing and recycling.
       (2) Municipal solid waste means waste generated by a 
     household, including a single or multifamily residence, and 
     includes waste generated by a commercial, institutional, or 
     industrial source if it is essentially the same as waste 
     normally generated by households, or would be considered 
     conditionally exempt small quantity generator waste under 
     section 3001(d) of RCRA. It includes residue remaining after 
     recyclable materials have been separated or diverted. Certain 
     materials are specifically excluded.
       (3) Qualified political subdivisions means a government 
     entity of a political subdivision of a state if a majority of 
     members of the entity are elected officials that has been 
     granted authority by the State to plan for or determine the 
     method to be used for the collection, disposal, or other 
     management of municipal solid waste generated within the 
     boundaries of the political subdivision.
       (4) Recyclable material means any material that has been 
     separated or diverted at the point of generation from solid 
     waste for the purpose of recycling, reclamation or reuse.
       (5) Waste management facility means any facility in which 
     solid waste is collected, separated, stored, transferred, 
     treated, processed, or disposed of and any combustion 
     facility.
                                  ____


                 [From the Star-Ledger, June 18, 1994]

                              In the Dumps

       The garbage disposal business has become so complicated 
     these days that even the U.S. Supreme Court has become 
     involved--a development that virtually ensures it will become 
     even more complicated. In a ruling that could have far-
     reaching implications, the court invalidated government 
     control over where private haulers may dump municipal 
     garbage.
       The court, in a 6-3 decision, held that a local ordinance 
     in a New York State community requiring its garbage to be 
     sent to a designated facility was unlawful because it 
     interfered with interstate commerce and was unconstitutional.
       The ruling could have an adverse impact on New Jersey waste 
     management policies which regulate the statewide disposal of 
     garbage. However, Robert Shinn, commissioner of the state 
     Department of Environmental Protection and Energy (DEPE), 
     said there are ``enough distinctions'' between the New York 
     ordinance and the state's regulations to protect New Jersey's 
     law from a court challenge.
       A dissenting view came from Bruce Parker, general counsel 
     for the National Solid Wastes Management Association, which 
     represents private waste haulers nationwide. The Supreme 
     Court ruling, he said, gives haulers the option of ignoring 
     New Jersey directives to dump their waste at particular 
     incinerators, landfills or transfer stations if they find 
     that an out-of-state alternative is more economically 
     favorable.
       New Jersey has a big stake here. Hundreds of millions of 
     dollars have been invested in waste disposal facilities that 
     depend on an assured flow of garbage to sustain their 
     economic viability. If these regulatory controls are invalid, 
     they could have a serious financial impact because of the 
     diversion of waste to landfills in other states. They also 
     would affect 43 other states that also use the so-called 
     ``flow-control'' authority to manage garbage disposal.
       There's an element of irony in that several states want to 
     stop New Jersey and other states from continuing to export 
     their garbage. That is precisely the objective of this 
     state's solid waste policies, which are directed at reducing 
     its dependency in exporting 20 percent of its garbage.
       New Jersey and other states would have no recourse but to 
     explore other options in the event that the Supreme Court 
     ruling has a disruptive impact on its waste management 
     policies by significantly increasing the volume of out-of-
     state garbage dumping. It is a national problem that should 
     be addressed by federal legislation. Several states already 
     have petitioned Congress to stop the export of garbage to 
     their landfills.
       A more direct approach is being taken by Sen. Frank 
     Lautenberg (D-N.J.), who will introduce legislation to 
     overturn the Supreme Court decision. This is a response that 
     should help resolve reservations over a state's proper 
     function to regulate an industry that provides an essential 
     public service, addressing the specific waste disposal needs 
     of individual states.
                                  ____


                 [From the Courier-News, May 15, 1994]

   ``Flow Control'' Invalid--Ruling Threatens To Hike Disposal Costs

       For years New Jersey has been running out of landfills, 
     fighting congressional bans on exporting of our garbage and 
     trying to keep mobsters from controlling the state's hauling 
     industry.
       To attain self-sufficiency in waste disposal, and to hold 
     down rising costs, the state proclaimed a determination to 
     become self-sufficient in handling its waste--by target dates 
     that were repeatedly extended.
       The Legislature also required counties to develop what are 
     now known nationwide as ``flow-control plans.'' Haulers are 
     required to take all waste to recycling, separation and 
     transfer stations certified by the state before it is burned 
     at an incinerator or dumped in a landfill.
       The requirement to use only certified facilities assured a 
     steady flow of garbage--and income to pay off the bond issues 
     used to finance new incinerators. It also made it difficult 
     for haulers stripped of state licenses because of their mob 
     connections to re-enter the business.
       New Jersey's flow-control system is the most comprehensive 
     of the 27 adopted by other states. But Robert Shinn, the 
     state environmental protection commissioner, was almost blase 
     in assessing the impact of Monday's U.S. Supreme Court ruling 
     that one town's flow-control rules violated the 
     Constitution's interstate commerce clause.
       Shinn said that, unlike the Clarkstown, N.Y. rules 
     invalidated by the court, New Jersey's were immune to 
     challenge. (The suit against Clarkstown, was filed by a 
     hauler barred from doing business in New Jersey because of 
     mob ties.)
       Sen. Frank Lautenberg accepted the invitation extended in 
     Justice Sandra Day O'Connor's concurring opinion for Congress 
     to authorize flow-control rules. He pledged to introduce 
     legislation to overturn the Clarkstown decision.
       A spokesman for the hauling industry says the decision 
     means that any hauler who can save money by dumping garbage 
     out of state ``cannot be stopped by New Jersey.'' Haulers who 
     bypass certified transfer, recycling and separation centers 
     and incinerators, of course, reduce income for those 
     facilities.
       When tonnage falls below amounts guaranteed in ``put or 
     pay'' contracts, counties--or rather their taxpayers--are 
     required to pay penalties.
       There was a remedy proposed in the majority opinion by 
     Justice Anthony Kennedy: Municipalities (or counties) should 
     subsidize fees of their waste-disposal facilities so that 
     they will always be lower than those charged by the private 
     sector--and will thus attract business without any flow-
     control laws.
       The Supreme Court ruling in a theoretical vacuum, 
     ultimately may have increased costs for a service the state 
     was trying to assure would be delivered more efficiently, 
     safely and less corruptly. Taxpayers can only hope Shinn's 
     confidence in the legal invulnerability of New Jersey's 
     system is well-placed.
                                  ____


                     [From the Press, May 29, 1994]

                          Congress Should Act

       It's tempting, isn't it?
       It's tempting to say: Open up the marketplace in trash. Let 
     government compete with private industry. Take away 
     government's monopoly on trash disposal--which has made New 
     Jersey one of the costliest states in the nation to get rid 
     of trash.
       That's a tempting conclusion, in the wake of a Supreme 
     Court case that would eliminate the ability of governments to 
     tell private haulers where to dispose of trash.
       But it would be wrong. Here's why:
       Remember, for a second, why government started taking 
     control of trash in the first place. Remember leaking, 
     substandard landfills and illegal dumpsites that polluted 
     groundwater--many of which became Superfund sites that are 
     now costing billions to clean up. Remember concerns about mob 
     influence over the waste-disposal industry. Remember the 
     environment--and goals that trash generation and disposal be 
     done in a manner least likely to pollute our environment and 
     deplete natural resources.
       For all of those excellent reasons, government took control 
     of trash. Whether that was the best route to go or not, it's 
     too late to reverse it now for existing facilities.
       Most of the tough decisions have been made about where to 
     build trash-disposal facilities. The programs are in place. 
     Already, billions of dollars have been spent by local 
     governments. And the financial under-pinnings of those 
     programs and facilities were flow-control laws, which the 
     Supreme Court decision undermines.
       Kicking out those financial underpinnings after so many 
     trash facilities have been built and so much money expended 
     is unfair. It jeopardizes public bonds and could leave 
     taxpayers paying the bill.
       Moreover, undermining flow-control laws is likely to hurt 
     recycling efforts. And recycling (at least of most materials) 
     saves natural resources and landfill space. It's the right 
     thing to do, whether it saves money or not.
       Congress should act quickly on a bill that would 
     grandfather the trash control systems that exist in about 
     half the states, including New Jersey. Such a bill is now 
     being prepared in the House and Senate.
       Such a bill would be most attractive if it not only 
     protects the financial footing of existing government-run 
     trash programs, but requires government to consider whether 
     future operations would be less costly and more effectively 
     run by private industry.
       Legislation requiring a comparison of public and private 
     ownership of new trash facilities is pending on the state 
     level. That provision has also been included in at least one 
     early draft of the federal bill protecting existing trash 
     systems from the Supreme Court decision.
       Such a mandatory cost comparison is wise. It's at least at 
     attempt to rein in the spiraling cost of garbage disposal in 
     New Jersey and help ensure the bills for future trash 
     operations aren't inflated by government bloat.
                                  ____

                                                The Association of


                                    Environmental Authorities,

                                    Mercerville, NJ, June 8, 1994.
     Hon. Frank Lautenberg,
     Hart Senate Office Building, Washington, DC.
       Dear Senator: It was a pleasure to meet with you in Newark 
     last Friday. The AEA members who manage solid waste are 
     grateful to you for supporting our position in the draft 
     amendment which you have distributed to us. We wish you 
     success in getting it added on to the Interstate Bill. Please 
     feel free to call on us to help advance the bill in any way 
     in which we can.
       AEA has planned a program with the League of Municipalities 
     to present this issue. I was hopeful that someone from your 
     staff might attend and present your views on why the wording 
     of this bill is advisable over other similar bills. 
     Obviously, the New Jersey League position will be helpful in 
     moving the National League of Cities position. I do not yet 
     have a date for the seminar, but will keep your staff 
     advised.
       Thank you also for permitting us to participate in the 
     press conference which was held after our meeting. The debt 
     impact was presented in the ensuing article printed in the 
     Star Ledger and was a welcomed opportunity.
       Your attention to this matter is greatly appreciated.
           Very Truly Yours,
                                                  Ellen Gulbinsky,
                                               Executive Director.
                                  ____

                                                  Atlantic County,


                                             Executive Office,

                                  Atlantic City, NJ, June 3, 1994.
     Senator Frank Lautenberg,
     Hart Building, Washington DC.
       Dear Senator Lautenberg: As you are aware, the recent U.S. 
     Supreme Court decision in Carbone vs. Clarkstown has stymied 
     many of the solid waste collection and disposal systems 
     financed and supervised by New Jersey's county governments.
       I join with fellow county executives Robert Janizewski of 
     Hudson County and Robert Prunetti of Mercer County in support 
     of your efforts to pass legislation which establishes the 
     circumstances under which county governments vested with 
     principal responsibility for the collection and disposal of 
     solid waste can regulate waste flows.
       This legislation is vital to the orderly collection and 
     disposal of solid waste in New Jersey, where this 
     responsibility has been delegated to county governments with 
     state oversight. As a result many counties have invested 
     extensively in solid waste facilities such as incinerators, 
     transfers stations, and long term disposal contracts. These 
     investments are seriously jeopardized if a county cannot rely 
     on a guaranteed waste stream which will provide the necessary 
     revenues to pay the project's indebtedness.
       Every homeowner in New Jersey is at risk of significantly 
     higher taxes if corrective legislation is not approved. Your 
     efforts in this regard are greatly appreciated.
           Sincerely yours,
                                               Richard E. Squires,
                                                 County Executive.
                                  ____



                                       WMX Technologies, Inc.,

                                    Washington, DC, June 16, 1994.
     Hon. Frank Lautenberg,
     U.S. Senate, Washington, DC.
       Dear Senator Lautenberg: As you know, the WMX family 
     companies provides municipal solid waste (MSW) management 
     services in 48 States. These services include 134 solid waste 
     landfills and 15,000 waste collection vehicles serving 
     approximately 800,000 commercial and industrial customers as 
     well as 12 million residential customers and contracts with 
     nearly 1,800 municipalities. In addition, our 14 trash-to-
     energy facilities produce energy from MSW for the 400 
     communities they serve. Finally, our recycling programs 
     provide curbside recycling to 5.2 million households in more 
     than 600 communities and 75,000 commercial customers 
     throughout the United States.
       Because all of these services could be severely and 
     adversely impacted by inappropriate flow control legislation, 
     we have a strong interest in supporting your efforts to 
     identify a fair and effective resolution of the issues 
     associated with flow control.
       We believe that your proposed legislation strikes an 
     appropriate balance between the need to protect existing 
     investments and arrangements upon which there has been actual 
     reliance, and the need to foster and maintain vigorous and 
     free competition in the provision of waste management 
     services. Your bill would do so by grandfathering flow 
     control measures that have been implemented by designation of 
     particular facilities before May 15, 1994, and authorizing 
     prospective flow control after that date of only household 
     MSW and certain recyclables under specified conditions and 
     procedures, including a competitive process and a finding 
     that flow control is needed. We consider these elements to be 
     critically important, and we are pleased that you included 
     them.
       We look forward to working with you in support of your flow 
     control legislation and in seeking to strike a similar 
     balance in interstate waste legislation that honors and 
     protects good faith investments and arrangements made in 
     reliance upon the Commerce Clause.
           Sincerely,
                                                  Robert Eisenbud,
                                  Director of Legislative Affairs.
                                  ____

                                      Institute of Scrap Recycling


                                             Industries, Inc.,

                                    Washington, DC, June 16, 1994.
     Senator Frank Lautenberg,
     Hart Senate Office Building,
     Washington, DC.
       Dear Senator Lautenberg: Thank you very much for your 
     concerted efforts to bring together a consensus of all 
     interested parties around legislation to address the issue of 
     flow control. Well before the U.S. Supreme Court created the 
     current furor over flow control by handing down the Carbonne 
     v. Clarkstown case, you and your staff were laying the 
     necessary ground work for achieving compromise on this 
     delicate issue.
       The Institute of Scrap Recycling Industries (ISRI) 
     appreciates your work and supports the draft legislation you 
     have put forward, as it applies to recyclables, because it 
     resolves a number of very important flow control issues in a 
     manner that will benefit recycling. First, the bill clearly 
     acknowledges the distinction between municipal solid waste 
     and recyclable material. While some local governments might 
     feel the need for a type of flow control in order to plan for 
     future waste contingencies, the bill recognizes that where 
     this need has been asserted, it has been related to a 
     ``disposal'' problem and that recycling is the opposite of 
     disposal rather than a subset of it. Your legislation 
     prohibits, in all prospectively enacted flow control 
     ordinances, the seizure by a governmental entity of 
     recyclable materials which the owner does not voluntarily 
     relinquish.
       Second, for existing flow control requirements, the bill 
     limits the effects of flow control on recyclable material 
     which the owner does not relinquish willingly, to situations 
     where: 1) a governmental entity has enacted a law which 
     instituted flow control over recyclables prior to May 15, 
     1994, 2) that entity has designated a facility, prior to May 
     15, 1994, to which such recyclables must be taken, 3) that 
     entity has actually applied the flow control requirement to 
     recyclables before May 15, 1994, and the recyclables to which 
     the government entity seeks to flow control are of the same 
     commodity type as those over which it asserted authority 
     prior to May 15, 1994. We believe that this grandfathering 
     requirement is sufficiently and appropriately narrow to 
     assure that the nationwide market for recycled content 
     materials will not be Balkanized.
       Finally, the definition section of the bill clearly states 
     that the wastes generated during the recycling process are 
     industrial solid wastes and therefore exempt from flow 
     control.
       Again, ISRI appreciates your foresight and interest in 
     recycling.
           Sincerely yours,
                                                  Herschel Cutler,
     Executive Director.

                          ____________________