[House Report 104-651]
[From the U.S. Government Publishing Office]



104th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES

 2d Session                                                     104-651
_______________________________________________________________________


 
                WELFARE AND MEDICAID REFORM ACT OF 1996

                               ----------                              

                              R E P O R T

                                 of the

                        COMMITTEE ON THE BUDGET
                        HOUSE OF REPRESENTATIVES

                              to accompany

                               H.R. 3734

 A BILL TO PROVIDE FOR RECONCILIATION PURSUANT TO SECTION 201(a)(1) OF 
      THE CONCURRENT RESOLUTION ON THE BUDGET FOR FISCAL YEAR 1997

                             together with

               MINORITY, ADDITIONAL, AND DISSENTING VIEWS

                                     



 June 27, 1996.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed



                 WELFARE AND MEDICAID REFORM ACT OF 1996



104th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES

 2d Session                                                     104-651
_______________________________________________________________________


                WELFARE AND MEDICAID REFORM ACT OF 1996

                               __________

                              R E P O R T

                                 of the

                        COMMITTEE ON THE BUDGET
                        HOUSE OF REPRESENTATIVES

                              to accompany

                               H.R. 3734

 A BILL TO PROVIDE FOR RECONCILIATION PURSUANT TO SECTION 201(a)(1) OF 
      THE CONCURRENT RESOLUTION ON THE BUDGET FOR FISCAL YEAR 1997

                             together with

               MINORITY, ADDITIONAL, AND DISSENTING VIEWS




 June 27, 1996.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed


                        COMMITTEE ON THE BUDGET

  JOHN R. KASICH, Ohio, Chairman
MARTIN OLAV SABO, Minnesota,         DAVID L. HOBSON, Ohio,
  Ranking Minority Member              Speaker's Designee
CHARLES W. STENHOLM, Texas           ROBERT S. WALKER, Pennsylvania,
LOUISE McINTOSH SLAUGHTER,             Vice Chairman
  New York                           JIM KOLBE, Arizona
WILLIAM J. COYNE, Pennsylvania       CHRISTOPHER SHAYS, Connecticut
ALAN B. MOLLOHAN, West Virginia      WALLY HERGER, California
JERRY F. COSTELLO, Illinois          JIM BUNNING, Kentucky
PATSY T. MINK, Hawaii                LAMAR S. SMITH, Texas
BILL ORTON, Utah                     WAYNE ALLARD, Colorado
EARL POMEROY, North Dakota           DAN MILLER, Florida
GLEN BROWDER, Alabama                RICK LAZIO, New York
LYNN C. WOOLSEY, California          BOB FRANKS, New Jersey
JOHN W. OLVER, Massachusetts         NICK SMITH, Michigan
LUCILLE ROYBAL-ALLARD, California    BOB INGLIS, South Carolina
CARRIE P. MEEK, Florida              MARTIN R. HOKE, Ohio
LYNN N. RIVERS, Michigan             SUSAN MOLINARI, New York
LLOYD DOGGETT, Texas                 JIM NUSSLE, Iowa
SANDER M. LEVIN, Michigan            STEVE LARGENT, Oklahoma
BENNIE G. THOMPSON, Mississippi      SUE MYRICK, North Carolina
                                     SAM BROWNBACK, Kansas
                                     JOHN SHADEGG, Arizona
                                     GEORGE P. RADANOVICH, California
                                     CHARLES F. BASS, New Hampshire
                                     MARK W. NEUMANN, Wisconsin

                           Professional Staff

  Richard E. May, Staff Director
 Eileen M. Baumgartner, Minority 
          Staff Director


                            C O N T E N T S

                              ----------                              
Introduction.....................................................     3
Title I--Committee on Agriculture:
    Legislative Language.........................................    13
    Report Language..............................................    59
Title II--Committee on Commerce:
    Legislative Language.........................................   189
    Report Language..............................................   323
Title III--Committee on Economic and Educational Opportunities:
    Legislative Language.........................................   751
    Report Language..............................................   815
Title IV--Committee on Ways and Means:
    Legislative Language.........................................  1085
    Report Language..............................................  1321
Miscellaneous House Report Requirements..........................  1939
    Cost Estimate of the Congressional Budget Office.............  1940
Minority, Additional, and Dissenting Views:
    Committee on Agriculture.....................................  2015
    Committee on Commerce........................................  2018
    Committee on Economic and Educational Opportunities..........  2025
    Committee on Ways and Means..................................  2035
    Committee on the Budget......................................  2049


                                                                       
104th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES

 2d Session                                                     104-651
_______________________________________________________________________



   PROVIDING FOR RECONCILIATION PURSUANT TO SECTION 201(A)(1) OF THE 
        CONCURRENT RESOLUTION ON THE BUDGET FOR FISCAL YEAR 1997

_______________________________________________________________________


 June 27, 1996.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

             Mr. Kasich, from the Committee on the Budget,

                        submitted the following

                              R E P O R T

                             together with

               MINORITY, ADDITIONAL, AND DISSENTING VIEWS

                        [To accompany H.R. 3734]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on the Budget, to whom reconciliation 
recommendations were submitted pursuant to section 201(a)(1) of 
House Concurrent Resolution 178, the concurrent resolution on 
the budget for fiscal year 1997, having considered the same, 
report the bill without recommendation.

                                  (1)
                     A HELPING HAND, NOT A HANDOUT

      INTRODUCTION TO THE WELFARE AND MEDICAID REFORM ACT OF 1996
                                ------                                

    This legislation incorporates two of the most important 
reforms being undertaken by the 104th Congress: reforming the 
Nation's failed welfare system and restructuring the Federal/
State Medicaid program. The committees of jurisdiction have 
submitted extensive report language explaining their respective 
portions of the legislation. This introduction, by the 
Committee on the Budget, describes the broad policy goals of 
the reforms.

                           Reforming Welfare

    There is little doubt that the current welfare system is a 
failure. It traps recipients in a cycle of dependency. It 
undermines the values of work and family that form the 
foundation of America's communities. Most devastating of all, 
it fails the Nation's children.
    These are the pathologies that the welfare reform 
incorporated in this reconciliation measure is intended to 
cure.
    The reform proposal saves families by promoting work, 
discouraging illegitimacy, and strengthening child support 
enforcement. It converts welfare into a helping hand, rather 
than a handout, by limiting lifetime welfare benefits. It halts 
payments to people who should not be on welfare. It grants 
maximum State flexibility to show true compassion by helping 
those in need achieve the freedom of self-reliance.
    Opponents of such genuine reforms have tried to argue that 
the current system allows for State flexibility by providing 
waivers from Federal requirements. We reject this alternative--
it only maintains a system in which States must beg Washington 
for permission to innovate for the benefit of their 
populations. This is not real reform. Only fundamental reform 
of welfare can correct the damage to families and children that 
the current system has caused.

                THE CURRENT WELFARE SYSTEM IS A FAILURE

    Consider the following facts about today's welfare system:

  - Since 1960, all levels of government have spent $5.4 
        trillion (in constant 1992 dollars) on programs to end 
        poverty. Yet the poverty rate has held stubbornly at 
        between 12 percent and 15 percent of the population.

  - Total spending on antipoverty programs has risen from $24.4 
        billion in 1960 to an estimated $397.1 billion in 1995.

  - While poverty has failed to decline, enrollment in Aid to 
        Families With Dependent Children [AFDC], the principal 
        welfare program, has increased fivefold. At the same 
        time, illegitimacy has increased 400 percent, the 
        number of single-parent families has increased 238 
        percent, and violent crime has risen 560 percent. All 
        these pathologies are linked to the current structure 
        of welfare itself.

    The welfare system contradicts fundamental American values 
that ought to be encouraged and rewarded: work, family, 
personal responsibility, and self-sufficiency. Instead, the 
system subsidizes dysfunctional behavior.
    According to a recent Cato Institute study, the total 
package of public benefits for low-income persons is, in many 
cases, substantially more generous than working. Cato notes 
that welfare pays more than the starting salary for a teacher 
in 9 States; more than the average salary for a secretary in 29 
States; more than an $8 per hour job in 40 States; and more 
than the entry level salary for a computer programmer in the 
most generous States. Furthermore, only 20 percent of those 
receiving welfare benefits today are covered by any kind of 
work requirement, and still fewer work.
    As welfare discourages work, it encourages long-term 
dependency. According to research done for the Urban Institute, 
90 percent of those currently receiving welfare will eventually 
spend more than 2 years on the rolls, and 76 percent will 
receive welfare for more than 5 years. Thus welfare punishes 
its intended beneficiaries, isolating them from the economic 
and social mainstream.
    The failures of welfare also represent a major factor in 
America's crime wave. High rates of welfare dependency 
correlate with high crime rates among young men. Indeed, a lack 
of married parents--a condition promoted by the current welfare 
system--contributes more to the crime rate than do race or 
poverty: A major 1988 study of 11,000 individuals found that 
``the percentage of single-parent households with children 
between the ages of 12 to 20 is significantly associated with 
rates of violent crime and burglary.''
    In addition, the welfare system empowers bureaucrats rather 
than the poor. Washington spends roughly $150 billion a year on 
about 75 means-tested programs that the public thinks of as 
``welfare.'' But much of this spending has been absorbed by an 
expanding bureaucracy for delivering social services that eats 
up a disproportionate amount of the funds available for 
fighting poverty.

                   THE CURRENT SYSTEM FAILS CHILDREN

    The greatest tragedy of the welfare system is how it harms 
the Nation's children. By promoting illegitimacy, the system 
breeds a variety of other pathologies scarring children in ways 
that can affect their entire lives.
    First, welfare-encouraged illegitimacy leads to increased 
risks of behavioral and emotional problems during childhood. 
The National Health Interview Survey of Child Health has 
confirmed that children born out of wedlock have more emotional 
and behavioral problems than children in intact families. These 
problems include antisocial behavior, hyperactivity, 
disobedience, greater peer conflict, and dependency.
    Second, welfare-encouraged out-of-wedlock childbearing 
increases the probability of teen sexual activity and future 
welfare dependency. According to the National Longitudinal 
Survey of Youth, teenagers whose mothers have never married are 
two-and-a-half times more likely to be sexually active. 
Research done for the Department of Health and Human Services 
shows that children born out of wedlock are three times more 
likely to become dependent on welfare than are other children. 
An analysis by June E. O'Neill, Director of the Congressional 
Budget Office [CBO], concluded that a 50-percent increase in 
the monthly value of AFDC and food stamp benefits led to a 43-
percent increase in the number of out-of-wedlock births.
    Third, the receipt of welfare income has negative effects 
on young boys with respect to their long-term employment and 
earnings capacity. According to a University of Michigan study, 
the more welfare income received by the boy's family while he 
was growing up, the lower are his earnings as an adult.

                  BENEFITS OF THE WELFARE REFORM PLAN

    The welfare reform incorporated in this reconciliation bill 
saves families and promotes work. CBO estimates that under this 
proposal, 1.3 million families on welfare will be working in 
fiscal year 2002. That is 30 percent more welfare recipients 
gaining the benefits of work experience than CBO estimates 
would be working under the administration's proposal.
    Under the congressional plan, welfare is, for the first 
time, converted to a work program. The proposal requires one 
member of every family on welfare to be working within 2 years. 
Lifetime welfare benefits are limited to 5 years (though 
exemptions for special hardship may be applied to as many as 20 
percent of families if necessary). The plan also fulfills the 
request of the Nation's Governors for $4 billion in additional 
child care funding, resulting in $3 billion more than current 
law to assist welfare recipients in obtaining the child care 
they need to leave welfare and move into the work force. In 
addition, a $1-billion performance bonus fund makes additional 
moneys available to States that are successful in moving 
welfare recipients off welfare rolls and into productive work.
    The proposal also discourages out-of-wedlock childbearing. 
It allows States to cap benefits for those on welfare, ending 
bonuses for families on welfare who have additional children 
they cannot support. States that reduce out-of-wedlock births 
without increasing abortions are rewarded with further cash 
grants. Any teenager who gives birth out of wedlock is required 
to live with an adult and remain in school to continue 
receiving welfare benefits.
    At the same time, child support enforcement is 
significantly strengthened to ensure that absent noncustodial 
parents provide financial support for their children. Uniform 
State tracking procedures are established to catch deadbeat 
parents. Stronger measures are taken to establish paternity in 
cases of out-of-wedlock births.
    The proposal cuts through the bureaucratic maze that the 
Washington-centered welfare regime has created. The plan gives 
States the freedom to innovate in developing income support 
programs for welfare families that encourage personal 
responsibility and move welfare recipients into the work force. 
[By contrast, the President's welfare plan would continue 
requiring States to seek Federal approval for such 
innovations.] Furthermore, States are permitted to harmonize 
cash welfare assistance and food stamps, so that one set of 
rules can be used for families applying for both programs. This 
eliminates bureaucratic duplication while providing one-stop 
service to program participants.
    The plan also combats substance abuse by allowing States to 
sanction welfare recipients who test positive for illicit drug 
use.
    The congressional welfare reform strategy ends the role of 
welfare as an immigration magnet and goes significantly farther 
than the President's proposals in discouraging welfare-based 
immigration. Under the congressional plan, families that 
sponsor immigrant relatives will be legally required to provide 
for the economic well-being of the members they bring to the 
United States. The reform also would exclude aliens who are not 
veterans of the U.S. military from receiving food stamps or 
Supplemental Security Income [SSI] benefits until they have 
obtained U.S. citizenship, or until they have worked and paid 
Social Security taxes for at least 40 quarters. This approach 
is significantly more forceful than the President's proposal, 
which still allows aliens who have never worked in the United 
States to obtain these welfare benefits if their U.S. citizen 
sponsors are low-income as well.

                      THE SHORTCOMINGS OF WAIVERS

    Those who advocate the Federal waiver process as an 
alternative to fundamental welfare reform overlook the basic 
flaw in this approach: The process leaves unchallenged the 
notion that Federal bureaucrats in Washington should have the 
last say in any decision involving the design of programs 
intended to attack poverty. Waivers, which can be revoked, keep 
the power in Washington; they cannot substitute for 
fundamental, systemic changes that empower States and local 
communities to make their own decisions about how to address 
the needs of their populations. In virtually every case in 
which waivers have been granted, States have been required to 
modify their original programs to obtain Federal approval for 
the waiver. Thus, welfare recipients are denied the full 
benefit of the innovations that States are seeking to initiate. 
In addition, few waivers have been granted statewide, and most 
of them have involved relatively noncontroversial items such as 
requiring teenage mothers to attend school or remain in their 
parents' homes as a condition of receiving benefits.
    The administration's treatment of Wisconsin's waiver 
requests is illuminating. For all of the administration's 
claims that it is reforming welfare through waivers, it remains 
to be seen if the administration will actually accept a 
statewide time limit on welfare benefits such as those the 
State of Wisconsin has requested. Some White House policymakers 
already are backtracking on the President's promise to grant 
Wisconsin the waiver to implement a statewide time limit, and 
so far the administration has resisted giving this kind of 
sweeping statewide waiver in a major substantive policy area.
    Waivers themselves are treated not as welfare reform 
measures, but as social science ``experiments.'' The waiver 
process requires States to maintain ``control'' groups--
recipients who are kept in the existing system so they can be 
compared with those experiencing the reform. This approach only 
serves the social engineers while denying some portion of a 
State's welfare population an escape from a system that is 
already known to have failed.
    Also, because waivers are considered experimental, they 
have time limits; they expire after a period of several years, 
putting the State at risk that a future administration will 
choose not to renew the waiver, forcing the State to abandon 
their policy changes and revert to the old system.

               OHIO'S EXPERIENCE WITH THE WAIVER PROCESS

    On March 14, 1996, the administration announced its 
approval of the State of Ohio's request for waivers from 
Federal law needed to implement Ohio's welfare reform 
legislation passed last year. It took the administration 7 
months to process the waiver. Nevertheless, Ohio's Governor 
Voinovich was pleased to finally receive a decision from 
Washington, and, on the whole, he and other State officials 
were pleased that most of their plan survived intact. But the 
administration rejected four parts of the Ohio plan, or 
requested substantive changes that essentially gutted certain 
provisions. The administration:

  - Watered down Ohio's 36-month time limit on AFDC eligibility 
        for participants in the AFDC JOBS program, essentially 
        removing application of the limit to persons unable to 
        find work after making good faith efforts to do so.

  - Denied the State's request to block increases in food stamp 
        benefits for persons whose AFDC benefits were reduced 
        as a sanction for failure to comply with conditions of 
        the new Ohio program.

  - Denied the State's request that persons found guilty of 
        welfare fraud could have their Medicaid benefits 
        revoked. The provision applied only to adults in the 
        household; children's benefits would have continued.

  - Limited the State's ability to expand its subsidized jobs 
        program, even though it contained safeguards against 
        eliminating currently existing jobs.

    In addition to these changes, the Department of Health and 
Human Services [HHS] prohibited the State from implementing the 
reforms in five counties, which would serve as a ``control'' 
group.

                         Restructuring Medicaid

             SHIFTING POWER AND INFLUENCE OUT OF WASHINGTON

    Like the welfare reform strategy embraced in this 
legislation, the restructuring of Medicaid focuses on shifting 
greater control and responsibility to the States. It proceeds 
from the premise that allowing States to design their own 
programs will make each State better able to address the unique 
needs of its population. The congressional plan eliminates the 
current Federal Medicaid law and then adds back any guarantees 
and guidelines needed to assure appropriate coverage. This 
represents a key difference with the administration's approach. 
The President would retain the current Federal Medicaid law 
(Title XIX of the Social Security Act) and almost all of its 
regulations. Thus the President would keep the power and 
influence in Washington.
    The congressional plan also recognizes that current 
Medicaid costs--driven by the structure of the Federal-State 
program itself--are unsustainable. Medicaid spending has 
exploded: It has grown an average of 19.1 percent annually 
between 1990 and 1994, and is currently projected to increase 
by roughly 10 percent a year through 2002 if left unreformed.
    The growth of Medicaid spending also has put extraordinary 
pressure on State budgets. In 1987, Medicaid represented about 
10.2 percent of all State expenditures; by 1994, it had 
increased to about 19.4 percent of all State expenditures. 
Thus, over a 7-year interval, State Medicaid spending had 
nearly doubled as a percent of total State spending. This 
growth has drained State funds from other critical needs, 
causing a decline in the proportion of State funds for 
elementary and secondary education, higher education, welfare, 
and transportation.
    Medicaid cost pressure results from Federal 
micromanagement, complex bureaucratic requirements, outdated 
delivery systems, federally mandated expansions in eligibility, 
and waste, fraud, and abuse in the program. Additional cost 
pressure also comes from practices in the States, because 
Medicaid requires the Federal Government to pay its 
preestablished share of whatever the States spend. This 
encourages States to spend more so they can get more. The House 
Medicaid reform strategy encourages States instead to establish 
efficient and effective programs.

                       PROVIDING ADEQUATE FUNDING

    Under the congressional Medicaid reform, funding would 
increase each year, from $95.7 billion in fiscal year 1996 to 
$136.5 billion in fiscal year 2002--a 43-percent increase. 
Outlays over the next 6 years will equal $731 billion, a 58-
percent increase from the $463 billion over the previous 6 
years. Medicaid spending per recipient would grow from $2,600 
in fiscal year 1996 to $3,170 in fiscal year 2002. The plan 
allows States to provide health care for an individual whose 
income does not exceed 275 percent of the Federal poverty 
level. [The poverty level for a family of four is $15,600 for 
1996. The 275-percent level would be $42,900.] States will 
continue to match the Federal Medicaid dollars to receive 
Federal funds.

                    ENSURING GUARANTEES OF COVERAGE

    To assure that the most vulnerable populations will receive 
coverage, the plan contains coverage guarantees for the 
following populations:

  - Pregnant women and children under age 6 whose families' 
        incomes are below 133 percent of poverty.

  - Children age 6 to 12 whose families' incomes are below 100 
        percent of poverty and phase in children up to age 18.

  - Disabled individuals who meet specified income and resource 
        standards.

  - Elderly individuals who meet SSI income and resource 
        standards.

    The legislation also contains other, less restrictive, 
measures such as a requirement that each State continue to 
spend at least 90 percent of what it had been spending on 
mandatory services for three broad groups of eligibles: low-
income families, low-income elderly, and low-income disabled.

  PROTECTING NURSING HOME RESIDENTS, THEIR SPOUSES, AND THEIR FAMILIES

    The plan maintains the Federal nursing home protections 
enacted in 1987. It also contains measures to ensure that the 
spouse of a nursing home resident will not have to impoverish 
himself or herself to ensure Medicaid nursing home benefits for 
an institutionalized spouse. Finally, the plan prohibits States 
from requiring an adult child of an institutionalized parent to 
contribute to the cost of the nursing facility and other long-
term care services covered under the State plan. Contributions 
by the adult children must be voluntary.

                PROVIDING A FAIRER DISTRIBUTION OF FUNDS

    The current formula distributes Medicaid funds using State 
per-capita income only. Per-capita income is used as a measure 
of both the State's need and its fiscal capacity. It is a good 
measure of neither.
    The congressional Medicaid restructuring plan employs a new 
formula, developed by the General Accounting Office [GAO]. The 
formula derives from three factors:

  - A 3-year rolling average of the number of residents in 
        poverty in each State.

  - A ``case mix index'' reflecting the severity of a State's 
        Medicaid caseload--such as what percentage of Medicaid 
        recipients are elderly as opposed to mothers and 
        children, who are less expensive to care for.

  - A health care input cost index, which measures wages paid 
        by hospitals in the State.

    The formula also uses the U.S. average spending per person 
in poverty (the same value for all States) and the current 
Federal/State matching rate (which varies by State from 50 
percent to 80 percent).

                          SPENDING COMPARISONS

    Comparisons with historical data, and with the President's 
proposal, show that the congressional restructuring plan 
successfully reforms Medicaid and protects vulnerable 
populations at lower costs than those projected under current 
law or in the administration's plan [see tables 1 and 2].
    For example, the congressional plan slows the growth of 
Medicaid to an average of 6.1 percent a year over the next 6 
years, compared with the 9.7-percent-a-year projected by the 
Congressional Budget Office [CBO] if no reforms are undertaken. 
Overall, the plan would spend $731 billion for Medicaid over 
the next 6 years, saving $72 billion from the $803 billion that 
CBO projects will be spent in an unreformed program. 
Nevertheless, the congressional plan allows for 58 percent more 
funds over the next 6 years than the $463 billion spent in the 
past 6 years.
    In contrast, the administration plan calls for a spending 
growth rate averaging 7.2 percent a year over the next 6 years. 
The President's plan would spend $749 billion over 6 years, an 
increase of 62 percent from the past 6 years. The 
administration's savings total $54 billion through 2002.

                                      TABLE 1.--PROJECTED MEDICAID SPENDING                                     
                                            [In billions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                           1996    1997    1998    1999    2000    2001    2002 
----------------------------------------------------------------------------------------------------------------
CBO.....................................................    95.7   105.1   115.4   126.4   138.2   151.5   166.4
                                                                                                                
(6)(7-Year Increase 1996-2002: 74 Percent)                                                                      
----------------------------------------------------------------------------------------------------------------
Administration..........................................    95.7   106.6   113.6   120.7   128.4   135.4   144.9
                                                                                                                
(6)(7-Year Increase 1996-2002: 51 Percent)                                                                      
----------------------------------------------------------------------------------------------------------------
Congressional Medicaid Reform...........................    95.7   105.6   113.9   119.0   124.7   130.9   137.3
                                                                                                                
(6)(7-Year Increase 1996-2002: 43 Percent)                                                                      
----------------------------------------------------------------------------------------------------------------
Source: Congressional Budget Office.                                                                            


                                    TABLE 2.--PROJECTED MEDICAID GROWTH RATES                                   
                                        [Percentage growth, year by year]                                       
----------------------------------------------------------------------------------------------------------------
                                                                   1997    1998    1999    2000    2001    2002 
----------------------------------------------------------------------------------------------------------------
CBO.............................................................     9.8     9.8     9.5     9.3     9.7     9.9
                                                                                                                
(5)(Average Growth Over 6 Years: 9.7 Percent a Year)                                                            
----------------------------------------------------------------------------------------------------------------
Administration..................................................    11.4     6.6     6.2     6.4     5.4     7.0
                                                                                                                
(5)(Average Growth Over 6 Years: 7.2 Percent a Year)                                                            
----------------------------------------------------------------------------------------------------------------
Congressional Medicaid Reform...................................    10.3     7.9     4.5     4.8     5.0     4.9
                                                                                                                
(5)(Average Growth Over 6 Years: 6.1 Percent a Year)                                                            
----------------------------------------------------------------------------------------------------------------
Source: Congressional Budget Office.                                                                            

                        A Word About the Process

    The Welfare and Medicaid Reform Act of 1996 represents the 
first installment of a three-part reconciliation process 
envisioned in the conference report on House Concurrent 
Resolution 178, the budget resolution for fiscal year 1997.
    The budget resolution envisions an ambitious agenda of 
reforms to reduce the size and scope of the Federal Government 
and to provide tax relief for working American families. Under 
the most common practice, a major portion of these reforms 
would be pursued through a single, omnibus reconciliation bill. 
But such legislation can become so unwieldy and complex that 
Members may have difficulty grasping its entire content. The 
House-Senate conferees on an omnibus reconciliation bill can 
number in the hundreds. Finally, a President may be inclined to 
veto such legislation, even if he supports parts of it, because 
he opposes other portions. Thus, the all-or-nothing character 
of an omnibus bill can force the rejection of even those 
measures favored by both Congress and the President. More 
important, the Nation's citizens may sacrifice the benefits of 
legislative reforms that would have been enacted in a different 
combination.
    The three-part reconciliation process called for by 
H.Con.Res. 178 seeks to overcome these hurdles by breaking down 
reconciliation into a more orderly process comprising more 
manageable pieces. The Welfare and Medicaid Reform Act of 1996 
is the first of these. The process permits Congress to follow 
this bill later in the summer with a Medicare preservation plan 
and a package of tax relief and miscellaneous direct spending 
reforms.
    As designed in the budget resolution conference report, the 
multi-reconciliation process provides maximum flexibility to 
achieve the changes in spending and the tax relief assumed in 
the budget. For example, any of the spending or revenue changes 
assumed in the first reconciliation bill could--if the first 
bill were not enacted--be achieved in the third bill. Moreover, 
the reconciled committees are permitted to exceed the savings 
assumed in each of the reconciliation bills.
    Nevertheless, the process still requires reconciled 
committees ultimately to meet their targets, whether 
incrementally, through the separate reconciliation bills, or 
solely through the third bill.
                   TITLE I--COMMITTEE ON AGRICULTURE

SEC. 1001. SHORT TITLE.

    This title may be cited as the ``Food Stamp Reform and 
Commodity Distribution Act of 1996''.

SEC. 1002. TABLE OF CONTENTS.

    The table of contents of this title is as follows:

             TITLE I--FOOD STAMPS AND COMMODITY DISTRIBUTION

Sec. 1001. Short title.
Sec. 1002. Table of contents.

                     Subtitle A--Food Stamp Program

Sec. 1011. Definition of certification period.
Sec. 1012. Definition of coupon.
Sec. 1013. Treatment of children living at home.
Sec. 1014. Optional additional criteria for separate household 
          determinations.
Sec. 1015. Adjustment of thrifty food plan.
Sec. 1016. Definition of homeless individual.
Sec. 1017. State option for eligibility standards.
Sec. 1018. Earnings of students.
Sec. 1019. Energy assistance.
Sec. 1020. Deductions from income.
Sec. 1021. Vehicle allowance.
Sec. 1022. Vendor payments for transitional housing counted as income.
Sec. 1023. Doubled penalties for violating food stamp program 
          requirements.
Sec. 1024. Disqualification of convicted individuals.
Sec. 1025. Disqualification.
Sec. 1026. Caretaker exemption.
Sec. 1027. Employment and training.
Sec. 1028. Comparable treatment for disqualification.
Sec. 1029. Disqualification for receipt of multiple food stamp benefits.
Sec. 1030. Disqualification of fleeing felons.
Sec. 1031. Cooperation with child support agencies.
Sec. 1032. Disqualification relating to child support arrears.
Sec. 1033. Work requirement.
Sec. 1034. Encourage electronic benefit transfer systems.
Sec. 1035. Value of minimum allotment.
Sec. 1036. Benefits on recertification.
Sec. 1037. Optional combined allotment for expedited households.
Sec. 1038. Failure to comply with other means-tested public assistance 
          programs.
Sec. 1039. Allotments for households residing in centers.
Sec. 1040. Condition precedent for approval of retail food stores and 
          wholesale food concerns.
Sec. 1041. Authority to establish authorization periods.
Sec. 1042. Information for verifying eligibility for authorization.
Sec. 1043. Waiting period for stores that fail to meet authorization 
          criteria.
Sec. 1044. Operation of food stamp offices.
Sec. 1045. State employee and training standards.
Sec. 1046. Exchange of law enforcement information.
Sec. 1047. Expedited coupon service.
Sec. 1048. Withdrawing fair hearing requests.
Sec. 1049. Income, eligibility, and immigration status verification 
          systems.
Sec. 1050. Disqualification of retailers who intentionally submit 
          falsified applications.
Sec. 1051. Disqualification of retailers who are disqualified under the 
          WIC program.
Sec. 1052. Collection of overissuances.
Sec. 1053. Authority to suspend stores violating program requirements 
          pending administrative and judicial review.
Sec. 1054. Expanded criminal forfeiture for violations.
Sec. 1055. Limitation of Federal match.
Sec. 1056. Standards for administration.
Sec. 1057. Work supplementation or support program.
Sec. 1058. Waiver authority.
Sec. 1059. Response to waivers.
Sec. 1060. Employment initiatives program.
Sec. 1061. Reauthorization.
Sec. 1062. Simplified food stamp program.
Sec. 1063. State food assistance block grant.
Sec. 1064. A study of the use of food stamps to purchase vitamins and 
          minerals.
Sec. 1065. Investigations.
Sec. 1066. Food stamp eligibility.
Sec. 1067. Report by the Secretary.
Sec. 1068. Deficit reduction.

               Subtitle B--Commodity Distribution Programs

Sec. 1071. Emergency food assistance program.
Sec. 1072. Food bank demonstration project.
Sec. 1073. Hunger prevention programs.
Sec. 1074. Report on entitlement commodity processing.

             Subtitle C--Electronic Benefit Transfer Systems

Sec. 1091. Provisions to encourage electronic benefit transfer systems.

    

                     Subtitle A--Food Stamp Program

SEC. 1011. DEFINITION OF CERTIFICATION PERIOD.

    Section 3(c) of the Food Stamp Act of 1977 (7 U.S.C. 
2012(c)) is amended by striking ``Except as provided'' and all 
that follows and inserting the following: ``The certification 
period shall not exceed 12 months, except that the 
certification period may be up to 24 months if all adult 
household members are elderly or disabled. A State agency shall 
have at least 1 contact with each certified household every 12 
months.''.

SEC. 1012. DEFINITION OF COUPON.

    Section 3(d) of the Food Stamp Act of 1977 (7 U.S.C. 
2012(d)) is amended by striking ``or type of certificate'' and 
inserting ``type of certificate, authorization card, cash or 
check issued in lieu of a coupon, or an access device, 
including an electronic benefit transfer card or personal 
identification number,''.

SEC. 1013. TREATMENT OF CHILDREN LIVING AT HOME.

    The second sentence of section 3(i) of the Food Stamp Act 
of 1977 (7 U.S.C. 2012(i)) is amended by striking ``(who are 
not themselves parents living with their children or married 
and living with their spouses)''.

SEC. 1014. OPTIONAL ADDITIONAL CRITERIA FOR SEPARATE HOUSEHOLD 
                    DETERMINATIONS.

    Section 3(i) of the Food Stamp Act of 1977 (7 U.S.C. 
2012(i)) is amended by inserting after the third sentence the 
following: ``Notwithstanding the preceding sentences, a State 
may establish criteria that prescribe when individuals who live 
together, and who would be allowed to participate as separate 
households under the preceding sentences, shall be considered a 
single household, without regard to the common purchase of food 
and preparation of meals.''.

SEC. 1015. ADJUSTMENT OF THRIFTY FOOD PLAN.

    The second sentence of section 3(o) of the Food Stamp Act 
of 1977 (7 U.S.C. 2012(o)) is amended--
            (1) by striking ``shall (1) make'' and inserting 
        the following: ``shall--
            ``(1) make'';
            (2) by striking ``scale, (2) make'' and inserting 
        ``scale;
            ``(2) make'';
            (3) by striking ``Alaska, (3) make'' and inserting 
        the following: ``Alaska;
            ``(3) make''; and
            (4) by striking ``Columbia, (4) through'' and all 
        that follows through the end of the subsection and 
        inserting the following: ``Columbia; and
            ``(4) on October 1, 1996, and each October 1 
        thereafter, adjust the cost of the diet to reflect the 
        cost of the diet, in the preceding June, and round the 
        result to the nearest lower dollar increment for each 
        household size, except that on October 1, 1996, the 
        Secretary may not reduce the cost of the diet in effect 
        on September 30, 1996.''.

SEC. 1016. DEFINITION OF HOMELESS INDIVIDUAL.

    Section 3(s)(2)(C) of the Food Stamp Act of 1977 (7 U.S.C. 
2012(s)(2)(C)) is amended by inserting ``for not more than 90 
days'' after ``temporary accommodation''.

SEC. 1017. STATE OPTION FOR ELIGIBILITY STANDARDS.

    Section 5(b) of the Food Stamp Act of 1977 (7 U.S.C. 
2014(d)) is amended by striking ``(b) The Secretary'' and 
inserting the following:
    ``(b) Eligibility Standards.--Except as otherwise provided 
in this Act, the Secretary''.

SEC. 1018. EARNINGS OF STUDENTS.

    Section 5(d)(7) of the Food Stamp Act of 1977 (7 U.S.C. 
2014(d)(7)) is amended by striking ``21'' and inserting ``19''.

SEC. 1019. ENERGY ASSISTANCE.

    (a) In General.--Section 5(d) of the Food Stamp Act of 1977 
(7 U.S.C. 2014(d)) is amended by striking paragraph (11) and 
inserting the following: ``(11) a 1-time payment or allowance 
made under a Federal or State law for the costs of 
weatherization or emergency repair or replacement of an unsafe 
or inoperative furnace or other heating or cooling device,''.
    (b) Conforming Amendments.--
            (1) Section 5(k) of the Act (7 U.S.C. 2014(k)) is 
        amended--
                    (A) in paragraph (1)--
                            (i) in subparagraph (A), by 
                        striking ``plan for aid to families 
                        with dependent children approved'' and 
                        inserting ``program funded''; and
                            (ii) in subparagraph (B), by 
                        striking ``, not including energy or 
                        utility-cost assistance,'';
                    (B) in paragraph (2), by striking 
                subparagraph (C) and inserting the following:
            ``(C) a payment or allowance described in 
        subsection (d)(11);''; and
                    (C) by adding at the end the following:
            ``(4) Third party energy assistance payments.--
                    ``(A) Energy assistance payments.--For 
                purposes of subsection (d)(1), a payment made 
                under a Federal or State law to provide energy 
                assistance to a household shall be considered 
                money payable directly to the household.
                    ``(B) Energy assistance expenses.--For 
                purposes of subsection (e)(7), an expense paid 
                on behalf of a household under a Federal or 
                State law to provide energy assistance shall be 
                considered an out-of-pocket expense incurred 
                and paid by the household.''.
            (2) Section 2605(f) of the Low-Income Home Energy 
        Assistance Act of 1981 (42 U.S.C. 8624(f)) is amended--
                    (A) by striking ``(f)(1) Notwithstanding'' 
                and inserting ``(f) Notwithstanding'';
                    (B) in paragraph (1), by striking ``food 
                stamps,''; and
                    (C) by striking paragraph (2).

SEC. 1020. DEDUCTIONS FROM INCOME.

    (a) In General.--Section 5 of the Food Stamp Act of 1977 (7 
U.S.C. 2014) is amended by striking subsection (e) and 
inserting the following:
    ``(e) Deductions From Income.--
            ``(1) Standard deduction.--The Secretary shall 
        allow a standard deduction for each household in the 48 
        contiguous States and the District of Columbia, Alaska, 
        Hawaii, Guam, and the Virgin Islands of the United 
        States of $134, $229, $189, $269, and $118, 
        respectively.
            ``(2) Earned income deduction.--
                    ``(A) Definition of earned income.--In this 
                paragraph, the term `earned income' does not 
                include income excluded by subsection (d) or 
                any portion of income earned under a work 
                supplementation or support program, as defined 
                under section 16(b), that is attributable to 
                public assistance.
                    ``(B) Deduction.--Except as provided in 
                subparagraph (C), a household with earned 
                income shall be allowed a deduction of 20 
                percent of all earned income to compensate for 
                taxes, other mandatory deductions from salary, 
                and work expenses.
                    ``(C) Exception.--The deduction described 
                in subparagraph (B) shall not be allowed with 
                respect to determining an overissuance due to 
                the failure of a household to report earned 
                income in a timely manner.
            ``(3) Dependent care deduction.--
                    ``(A) In general.--A household shall be 
                entitled, with respect to expenses (other than 
                excluded expenses described in subparagraph 
                (B)) for dependent care, to a dependent care 
                deduction, the maximum allowable level of which 
                shall be $200 per month for each dependent 
                child under 2 years of age and $175 per month 
                for each other dependent, for the actual cost 
                of payments necessary for the care of a 
                dependent if the care enables a household 
                member to accept or continue employment, or 
                training or education that is preparatory for 
                employment.
                    ``(B) Excluded expenses.--The excluded 
                expenses referred to in subparagraph (A) are--
                            ``(i) expenses paid on behalf of 
                        the household by a third party;
                            ``(ii) amounts made available and 
                        excluded for the expenses referred to 
                        in subparagraph (A) under subsection 
                        (d)(3); and
                            ``(iii) expenses that are paid 
                        under section 6(d)(4).
            ``(4) Deduction for child support payments.--
                    ``(A) In general.--A household shall be 
                entitled to a deduction for child support 
                payments made by a household member to or for 
                an individual who is not a member of the 
                household if the household member is legally 
                obligated to make the payments.
                    ``(B) Methods for determining amount.--The 
                Secretary may prescribe by regulation the 
                methods, including calculation on a 
                retrospective basis, that a State agency shall 
                use to determine the amount of the deduction 
                for child support payments.
            ``(5) Homeless shelter allowance.--A State agency 
        may develop a standard homeless shelter allowance, 
        which shall not exceed $143 per month, for such 
        expenses as may reasonably be expected to be incurred 
        by households in which all members are homeless 
        individuals but are not receiving free shelter 
        throughout the month. A State agency that develops the 
        allowance may use the allowance in determining 
        eligibility and allotments for the households, except 
        that the State agency may prohibit the use of the 
        allowance for households with extremely low shelter 
        costs.
            ``(6) Excess medical expense deduction.--
                    ``(A) In general.--A household containing 
                an elderly or disabled member shall be 
                entitled, with respect to expenses other than 
                expenses paid on behalf of the household by a 
                third party, to an excess medical expense 
                deduction for the portion of the actual costs 
                of allowable medical expenses, incurred by the 
                elderly or disabled member, exclusive of 
                special diets, that exceeds $35 per month.
                    ``(B) Method of claiming deduction.--
                            ``(i) In general.--A State agency 
                        shall offer an eligible household under 
                        subparagraph (A) a method of claiming a 
                        deduction for recurring medical 
                        expenses that are initially verified 
                        under the excess medical expense 
                        deduction in lieu of submitting 
                        information or verification on actual 
                        expenses on a monthly basis.
                            ``(ii) Method.--The method 
                        described in clause (i) shall--
                                    ``(I) be designed to 
                                minimize the burden for the 
                                eligible elderly or disabled 
                                household member choosing to 
                                deduct the recurrent medical 
                                expenses of the member pursuant 
                                to the method;
                                    ``(II) rely on reasonable 
                                estimates of the expected 
                                medical expenses of the member 
                                for the certification period 
                                (including changes that can be 
                                reasonably anticipated based on 
                                available information about the 
                                medical condition of the 
                                member, public or private 
                                medical insurance coverage, and 
                                the current verified medical 
                                expenses incurred by the 
                                member); and
                                    ``(III) not require further 
                                reporting or verification of a 
                                change in medical expenses if 
                                such a change has been 
                                anticipated for the 
                                certification period.
            ``(7) Excess shelter expense deduction.--
                    ``(A) In general.--A household shall be 
                entitled, with respect to expenses other than 
                expenses paid on behalf of the household by a 
                third party, to an excess shelter expense 
                deduction to the extent that the monthly amount 
                expended by a household for shelter exceeds an 
                amount equal to 50 percent of monthly household 
                income after all other applicable deductions 
                have been allowed.
                    ``(B) Maximum amount of deduction.--In the 
                case of a household that does not contain an 
                elderly or disabled individual, the excess 
                shelter expense deduction shall not exceed--
                            ``(i) in the 48 contiguous States 
                        and the District of Columbia, $247 per 
                        month; and
                            ``(ii) in Alaska, Hawaii, Guam, and 
                        the Virgin Islands of the United 
                        States, $429, $353, $300, and $182 per 
                        month, respectively.
                    ``(C) Standard utility allowance.--
                            ``(i) In general.--In computing the 
                        excess shelter expense deduction, a 
                        State agency may use a standard utility 
                        allowance in accordance with 
                        regulations promulgated by the 
                        Secretary, except that a State agency 
                        may use an allowance that does not 
                        fluctuate within a year to reflect 
                        seasonal variations.
                            ``(ii) Restrictions on heating and 
                        cooling expenses.--An allowance for a 
                        heating or cooling expense may not be 
                        used in the case of a household that--
                                    ``(I) does not incur a 
                                heating or cooling expense, as 
                                the case may be;
                                    ``(II) does incur a heating 
                                or cooling expense but is 
                                located in a public housing 
                                unit that has central utility 
                                meters and charges households, 
                                with regard to the expense, 
                                only for excess utility costs; 
                                or
                                    ``(III) shares the expense 
                                with, and lives with, another 
                                individual not participating in 
                                the food stamp program, another 
                                household participating in the 
                                food stamp program, or both, 
                                unless the allowance is 
                                prorated between the household 
                                and the other individual, 
                                household, or both.
                            ``(iii) Mandatory allowance.--
                                    ``(I) In general.--A State 
                                agency may make the use of a 
                                standard utility allowance 
                                mandatory for all households 
                                with qualifying utility costs 
                                if--
                                            ``(aa) the State 
                                        agency has developed 1 
                                        or more standards that 
                                        include the cost of 
                                        heating and cooling and 
                                        1 or more standards 
                                        that do not include the 
                                        cost of heating and 
                                        cooling; and
                                            ``(bb) the 
                                        Secretary finds that 
                                        the standards will not 
                                        result in an increased 
                                        cost to the Secretary.
                                    ``(II) Household 
                                election.--A State agency that 
                                has not made the use of a 
                                standard utility allowance 
                                mandatory under subclause (I) 
                                shall allow a household to 
                                switch, at the end of a 
                                certification period, between 
                                the standard utility allowance 
                                and a deduction based on the 
                                actual utility costs of the 
                                household.
                            ``(iv) Availability of allowance to 
                        recipients of energy assistance.--
                                    ``(I) In general.--Subject 
                                to subclause (II), if a State 
                                agency elects to use a standard 
                                utility allowance that reflects 
                                heating or cooling costs, the 
                                standard utility allowance 
                                shall be made available to 
                                households receiving a payment, 
                                or on behalf of which a payment 
                                is made, under the Low-Income 
                                Home Energy Assistance Act of 
                                1981 (42 U.S.C. 8621 et seq.) 
                                or other similar energy 
                                assistance program, if the 
                                household still incurs out-of-
                                pocket heating or cooling 
                                expenses in excess of any 
                                assistance paid on behalf of 
                                the household to an energy 
                                provider.
                                    ``(II) Separate 
                                allowance.--A State agency may 
                                use a separate standard utility 
                                allowance for households on 
                                behalf of which a payment 
                                described in subclause (I) is 
                                made, but may not be required 
                                to do so.
                                    ``(III) States not electing 
                                to use separate allowance.--A 
                                State agency that does not 
                                elect to use a separate 
                                allowance but makes a single 
                                standard utility allowance 
                                available to households 
                                incurring heating or cooling 
                                expenses (other than a 
                                household described in 
                                subclause (I) or (II) of 
                                subparagraph (C)(ii)) may not 
                                be required to reduce the 
                                allowance due to the provision 
                                (directly or indirectly) of 
                                assistance under the Low-Income 
                                Home Energy Assistance Act of 
                                1981 (42 U.S.C. 8621 et seq.).
                                    ``(IV) Proration of 
                                assistance.--For the purpose of 
                                the food stamp program, 
                                assistance provided under the 
                                Low-Income Home Energy 
                                Assistance Act of 1981 (42 
                                U.S.C. 8621 et seq.) shall be 
                                considered to be prorated over 
                                the entire heating or cooling 
                                season for which the assistance 
                                was provided.''.
    (b) Conforming Amendment.--Section 11(e)(3) of the Act (7 
U.S.C. 2020(e)(3)) is amended by striking ``Under rules 
prescribed'' and all that follows through ``verifies higher 
expenses;''.

SEC. 1021. VEHICLE ALLOWANCE.

    Section 5(g) of the Food Stamp Act of 1977 (7 U.S.C. 
2014(g)) is amended by striking paragraph (2) and inserting the 
following:
            ``(2) Included assets.--
                    ``(A) In general.--Subject to the other 
                provisions of this paragraph, the Secretary 
                shall, in prescribing inclusions in, and 
                exclusions from, financial resources, follow 
                the regulations in force as of June 1, 1982 
                (other than those relating to licensed vehicles 
                and inaccessible resources).
                    ``(B) Additional included assets.--The 
                Secretary shall include in financial 
                resources--
                            ``(i) any boat, snowmobile, or 
                        airplane used for recreational 
                        purposes;
                            ``(ii) any vacation home;
                            ``(iii) any mobile home used 
                        primarily for vacation purposes;
                            ``(iv) subject to subparagraph (C), 
                        any licensed vehicle that is used for 
                        household transportation or to obtain 
                        or continue employment to the extent 
                        that the fair market value of the 
                        vehicle exceeds $4,600; and
                            ``(v) any savings or retirement 
                        account (including an individual 
                        account), regardless of whether there 
                        is a penalty for early withdrawal.
                    ``(C) Excluded vehicles.--A vehicle (and 
                any other property, real or personal, to the 
                extent the property is directly related to the 
                maintenance or use of the vehicle) shall not be 
                included in financial resources under this 
                paragraph if the vehicle is--
                            ``(i) used to produce earned 
                        income;
                            ``(ii) necessary for the 
                        transportation of a physically disabled 
                        household member; or
                            ``(iii) depended on by a household 
                        to carry fuel for heating or water for 
                        home use and provides the primary 
                        source of fuel or water, respectively, 
                        for the household.''.

SEC. 1022. VENDOR PAYMENTS FOR TRANSITIONAL HOUSING COUNTED AS INCOME.

    Section 5(k)(2) of the Food Stamp Act of 1977 (7 U.S.C. 
2014(k)(2)) is amended--
            (1) by striking subparagraph (F); and
            (2) by redesignating subparagraphs (G) and (H) as 
        subparagraphs (F) and (G), respectively.

SEC. 1023. DOUBLED PENALTIES FOR VIOLATING FOOD STAMP PROGRAM 
                    REQUIREMENTS.

    Section 6(b)(1) of the Food Stamp Act of 1977 (7 U.S.C. 
2015(b)(1)) is amended--
            (1) in clause (i), by striking ``six months'' and 
        inserting ``1 year''; and
            (2) in clause (ii), by striking ``1 year'' and 
        inserting ``2 years''.

SEC. 1024. DISQUALIFICATION OF CONVICTED INDIVIDUALS.

    Section 6(b)(1)(iii) of the Food Stamp Act of 1977 (7 
U.S.C. 2015(b)(1)(iii)) is amended--
            (1) in subclause (II), by striking ``or'' at the 
        end;
            (2) in subclause (III), by striking the period at 
        the end and inserting ``; or''; and
            (3) by inserting after subclause (III) the 
        following:
                    ``(IV) a conviction of an offense under 
                subsection (b) or (c) of section 15 involving 
                an item covered by subsection (b) or (c) of 
                section 15 having a value of $500 or more.''.

SEC. 1025. DISQUALIFICATION.

    (a) In General.--Section 6(d) of the Food Stamp Act of 1977 
(7 U.S.C. 2015(d)) is amended by striking ``(d)(1) Unless 
otherwise exempted by the provisions'' and all that follows 
through the end of paragraph (1) and inserting the following:
    ``(d) Conditions of Participation.--
            ``(1) Work requirements.--
                    ``(A) In general.--No physically and 
                mentally fit individual over the age of 15 and 
                under the age of 60 shall be eligible to 
                participate in the food stamp program if the 
                individual--
                            ``(i) refuses, at the time of 
                        application and every 12 months 
                        thereafter, to register for employment 
                        in a manner prescribed by the 
                        Secretary;
                            ``(ii) refuses without good cause 
                        to participate in an employment and 
                        training program under paragraph (4), 
                        to the extent required by the State 
                        agency;
                            ``(iii) refuses without good cause 
                        to accept an offer of employment, at a 
                        site or plant not subject to a strike 
                        or lockout at the time of the refusal, 
                        at a wage not less than the higher of--
                                    ``(I) the applicable 
                                Federal or State minimum wage; 
                                or
                                    ``(II) 80 percent of the 
                                wage that would have governed 
                                had the minimum hourly rate 
                                under section 6(a)(1) of the 
                                Fair Labor Standards Act of 
                                1938 (29 U.S.C. 206(a)(1)) been 
                                applicable to the offer of 
                                employment;
                            ``(iv) refuses without good cause 
                        to provide a State agency with 
                        sufficient information to allow the 
                        State agency to determine the 
                        employment status or the job 
                        availability of the individual;
                            ``(v) voluntarily and without good 
                        cause--
                                    ``(I) quits a job; or
                                    ``(II) reduces work effort 
                                and, after the reduction, the 
                                individual is working less than 
                                30 hours per week; or
                            ``(vi) fails to comply with section 
                        20.
                    ``(B) Household ineligibility.--If an 
                individual who is the head of a household 
                becomes ineligible to participate in the food 
                stamp program under subparagraph (A), the 
                household shall, at the option of the State 
                agency, become ineligible to participate in the 
                food stamp program for a period, determined by 
                the State agency, that does not exceed the 
                lesser of--
                            ``(i) the duration of the 
                        ineligibility of the individual 
                        determined under subparagraph (C); or
                            ``(ii) 180 days.
                    ``(C) Duration of ineligibility.--
                            ``(i) First violation.--The first 
                        time that an individual becomes 
                        ineligible to participate in the food 
                        stamp program under subparagraph (A), 
                        the individual shall remain ineligible 
                        until the later of--
                                    ``(I) the date the 
                                individual becomes eligible 
                                under subparagraph (A);
                                    ``(II) the date that is 1 
                                month after the date the 
                                individual became ineligible; 
                                or
                                    ``(III) a date determined 
                                by the State agency that is not 
                                later than 3 months after the 
                                date the individual became 
                                ineligible.
                            ``(ii) Second violation.--The 
                        second time that an individual becomes 
                        ineligible to participate in the food 
                        stamp program under subparagraph (A), 
                        the individual shall remain ineligible 
                        until the later of--
                                    ``(I) the date the 
                                individual becomes eligible 
                                under subparagraph (A);
                                    ``(II) the date that is 3 
                                months after the date the 
                                individual became ineligible; 
                                or
                                    ``(III) a date determined 
                                by the State agency that is not 
                                later than 6 months after the 
                                date the individual became 
                                ineligible.
                            ``(iii) Third or subsequent 
                        violation.--The third or subsequent 
                        time that an individual becomes 
                        ineligible to participate in the food 
                        stamp program under subparagraph (A), 
                        the individual shall remain ineligible 
                        until the later of--
                                    ``(I) the date the 
                                individual becomes eligible 
                                under subparagraph (A);
                                    ``(II) the date that is 6 
                                months after the date the 
                                individual became ineligible;
                                    ``(III) a date determined 
                                by the State agency; or
                                    ``(IV) at the option of the 
                                State agency, permanently.
                    ``(D) Administration.--
                            ``(i) Good cause.--The Secretary 
                        shall determine the meaning of good 
                        cause for the purpose of this 
                        paragraph.
                            ``(ii) Voluntary quit.--The 
                        Secretary shall determine the meaning 
                        of voluntarily quitting and reducing 
                        work effort for the purpose of this 
                        paragraph.
                            ``(iii) Determination by state 
                        agency.--
                                    ``(I) In general.--Subject 
                                to subclause (II) and clauses 
                                (i) and (ii), a State agency 
                                shall determine--
                                            ``(aa) the meaning 
                                        of any term in 
                                        subparagraph (A);
                                            ``(bb) the 
                                        procedures for 
                                        determining whether an 
                                        individual is in 
                                        compliance with a 
                                        requirement under 
                                        subparagraph (A); and
                                            ``(cc) whether an 
                                        individual is in 
                                        compliance with a 
                                        requirement under 
                                        subparagraph (A).
                                    ``(II) Not less 
                                restrictive.--A State agency 
                                may not determine a meaning, 
                                procedure, or determination 
                                under subclause (I) to be less 
                                restrictive than a comparable 
                                meaning, procedure, or 
                                determination under a State 
                                program funded under part A of 
                                title IV of the Social Security 
                                Act (42 U.S.C. 601 et seq.).
                            ``(iv) Strike against the 
                        government.--For the purpose of 
                        subparagraph (A)(v), an employee of the 
                        Federal Government, a State, or a 
                        political subdivision of a State, who 
                        is dismissed for participating in a 
                        strike against the Federal Government, 
                        the State, or the political subdivision 
                        of the State shall be considered to 
                        have voluntarily quit without good 
                        cause.
                            ``(v) Selecting a head of 
                        household.--
                                    ``(I) In general.--For the 
                                purpose of this paragraph, the 
                                State agency shall allow the 
                                household to select any adult 
                                parent of a child in the 
                                household as the head of the 
                                household if all adult 
                                household members making 
                                application under the food 
                                stamp program agree to the 
                                selection.
                                    ``(II) Time for making 
                                designation.--A household may 
                                designate the head of the 
                                household under subclause (I) 
                                each time the household is 
                                certified for participation in 
                                the food stamp program, but may 
                                not change the designation 
                                during a certification period 
                                unless there is a change in the 
                                composition of the household.
                            ``(vi) Change in head of 
                        household.--If the head of a household 
                        leaves the household during a period in 
                        which the household is ineligible to 
                        participate in the food stamp program 
                        under subparagraph (B)--
                                    ``(I) the household shall, 
                                if otherwise eligible, become 
                                eligible to participate in the 
                                food stamp program; and
                                    ``(II) if the head of the 
                                household becomes the head of 
                                another household, the 
                                household that becomes headed 
                                by the individual shall become 
                                ineligible to participate in 
                                the food stamp program for the 
                                remaining period of 
                                ineligibility.''.
    (b) Conforming Amendment.--
            (1) The second sentence of section 17(b)(2) of the 
        Act (7 U.S.C. 2026(b)(2)) is amended by striking 
        ``6(d)(1)(i)'' and inserting ``6(d)(1)(A)(i)''.
            (2) Section 20 of the Act (7 U.S.C. 2029) is 
        amended by striking subsection (f) and inserting the 
        following:
    ``(f) Disqualification.--An individual or a household may 
become ineligible under section 6(d)(1) to participate in the 
food stamp program for failing to comply with this section.''.

SEC. 1026. CARETAKER EXEMPTION.

    Section 6(d)(2) of the Food Stamp Act of 1977 (7 U.S.C. 
2015(d)(2)) is amended by striking subparagraph (B) and 
inserting the following: ``(B) a parent or other member of a 
household with responsibility for the care of (i) a dependent 
child under the age of 6 or any lower age designated by the 
State agency that is not under the age of 1, or (ii) an 
incapacitated person;''.

SEC. 1027. EMPLOYMENT AND TRAINING.

    (a) In General.--Section 6(d)(4) of the Food Stamp Act of 
1977 (7 U.S.C. 2015(d)(4)) is amended--
            (1) in subparagraph (A)--
                    (A) by striking ``Not later than April 1, 
                1987, each'' and inserting ``Each'';
                    (B) by inserting ``work,'' after ``skills, 
                training,''; and
                    (C) by adding at the end the following: 
                ``Each component of an employment and training 
                program carried out under this paragraph shall 
                be delivered through a statewide workforce 
                development system, unless the component is not 
                available locally through the statewide 
                workforce development system.'';
            (2) in subparagraph (B)--
                    (A) in the matter preceding clause (i), by 
                striking the colon at the end and inserting the 
                following: ``, except that the State agency 
                shall retain the option to apply employment 
                requirements prescribed under this subparagraph 
                to a program applicant at the time of 
                application:'';
                    (B) in clause (i), by striking ``with terms 
                and conditions'' and all that follows through 
                ``time of application''; and
                    (C) in clause (iv)--
                            (i) by striking subclauses (I) and 
                        (II); and
                            (ii) by redesignating subclauses 
                        (III) and (IV) as subclauses (I) and 
                        (II), respectively;
            (3) in subparagraph (D)--
                    (A) in clause (i), by striking ``to which 
                the application'' and all that follows through 
                ``30 days or less'';
                    (B) in clause (ii), by striking ``but with 
                respect'' and all that follows through ``child 
                care''; and
                    (C) in clause (iii), by striking ``, on the 
                basis of'' and all that follows through 
                ``clause (ii)'' and inserting ``the exemption 
                continues to be valid'';
            (4) in subparagraph (E), by striking the third 
        sentence;
            (5) in subparagraph (G)--
                    (A) by striking ``(G)(i) The State'' and 
                inserting ``(G) The State''; and
                    (B) by striking clause (ii);
            (6) in subparagraph (H), by striking ``(H)(i) The 
        Secretary'' and all that follows through ``(ii) Federal 
        funds'' and inserting ``(H) Federal funds'';
            (7) in subparagraph (I)(i)(II), by striking ``, or 
        was in operation,'' and all that follows through 
        ``Social Security Act'' and inserting the following: 
        ``), except that no such payment or reimbursement shall 
        exceed the applicable local market rate'';
            (8)(A) by striking subparagraphs (K) and (L) and 
        inserting the following:
                    ``(K) Limitation on funding.--
                Notwithstanding any other provision of this 
                paragraph, the amount of funds a State agency 
                uses to carry out this paragraph (including 
                under subparagraph (I)) for participants who 
                are receiving benefits under a State program 
                funded under part A of title IV of the Social 
                Security Act (42 U.S.C. 601 et seq.) shall not 
                exceed the amount of funds the State agency 
                used in fiscal year 1995 to carry out this 
                paragraph for participants who were receiving 
                benefits in fiscal year 1995 under a State 
                program funded under part A of title IV of the 
                Act (42 U.S.C. 601 et seq.).''; and
            (B) by redesignating subparagraphs (M) and (N) as 
        subparagraphs (L) and (M), respectively; and
            (9) in subparagraph (L), as redesignated by 
        paragraph (8)(B)--
                    (A) by striking ``(L)(i) The Secretary'' 
                and inserting ``(L) The Secretary''; and
                    (B) by striking clause (ii).
    (b) Funding.--Section 16(h) of the Act (7 U.S.C. 2025(h)) 
is amended by striking ``(h)(1)(A) The Secretary'' and all that 
follows through the end of paragraph (1) and inserting the 
following:
    ``(h) Funding of Employment and Training Programs.--
            ``(1) In general.--
                    ``(A) Amounts.--To carry out employment and 
                training programs, the Secretary shall reserve 
                for allocation to State agencies from funds 
                made available for each fiscal year under 
                section 18(a)(1) the amount of--
                            ``(i) for fiscal year 1996, 
                        $75,000,000;
                            ``(ii) for fiscal year 1997, 
                        $79,000,000;
                            ``(iii) for fiscal year 1998, 
                        $81,000,000;
                            ``(iv) for fiscal year 1999, 
                        $84,000,000;
                            ``(v) for fiscal year 2000, 
                        $86,000,000;
                            ``(vi) for fiscal year 2001, 
                        $88,000,000; and
                            ``(vii) for fiscal year 2002, 
                        $90,000,000.
                    ``(B) Allocation.--The Secretary shall 
                allocate the amounts reserved under 
                subparagraph (A) among the State agencies using 
                a reasonable formula (as determined by the 
                Secretary) that gives consideration to the 
                population in each State affected by section 
                6(o).
                    ``(C) Reallocation.--
                            ``(i) Notification.--A State agency 
                        shall promptly notify the Secretary if 
                        the State agency determines that the 
                        State agency will not expend all of the 
                        funds allocated to the State agency 
                        under subparagraph (B).
                            ``(ii) Reallocation.--On 
                        notification under clause (i), the 
                        Secretary shall reallocate the funds 
                        that the State agency will not expend 
                        as the Secretary considers appropriate 
                        and equitable.
                    ``(D) Minimum allocation.--Notwithstanding 
                subparagraphs (A) through (C), the Secretary 
                shall ensure that each State agency operating 
                an employment and training program shall 
                receive not less than $50,000 in each fiscal 
                year.''.
    (c) Additional Matching Funds.--Section 16(h)(2) of the Act 
(7 U.S.C. 2025(h)(2)) is amended by inserting before the period 
at the end the following: ``, including the costs for case 
management and casework to facilitate the transition from 
economic dependency to self-sufficiency through work''.
    (d) Reports.--Section 16(h) of the Act (7 U.S.C. 2025(h)) 
is amended--
            (1) in paragraph (5)--
                    (A) by striking ``(5)(A) The Secretary'' 
                and inserting ``(5) The Secretary''; and
                    (B) by striking subparagraph (B); and
            (2) by striking paragraph (6).

SEC. 1028. COMPARABLE TREATMENT FOR DISQUALIFICATION.

    (a) In General.--Section 6 of the Food Stamp Act of 1977 (7 
U.S.C. 2015) is amended by adding at the end the following:
    ``(i) Comparable Treatment for Disqualification.--
            ``(1) In general.--If a disqualification is imposed 
        on a member of a household for a failure of the member 
        to perform an action required under a Federal, State, 
        or local law relating to a means-tested public 
        assistance program, the State agency may impose the 
        same disqualification on the member of the household 
        under the food stamp program.
            ``(2) Rules and procedures.--If a disqualification 
        is imposed under paragraph (1) for a failure of an 
        individual to perform an action required under part A 
        of title IV of the Social Security Act (42 U.S.C. 601 
        et seq.), the State agency may use the rules and 
        procedures that apply under part A of title IV of the 
        Act to impose the same disqualification under the food 
        stamp program.
            ``(3) Application after disqualification period.--A 
        member of a household disqualified under paragraph (1) 
        may, after the disqualification period has expired, 
        apply for benefits under this Act and shall be treated 
        as a new applicant, except that a prior 
        disqualification under subsection (d) shall be 
        considered in determining eligibility.''.
    (b) State Plan Provisions.--Section 11(e) of the Act (7 
U.S.C. 2020(e)) is amended--
            (1) in paragraph (24), by striking ``and'' at the 
        end;
            (2) in paragraph (25), by striking the period at 
        the end and inserting a semicolon; and
            (3) by adding at the end the following:
            ``(26) the guidelines the State agency uses in 
        carrying out section 6(i); and''.
    (c) Conforming Amendment.--Section 6(d)(2)(A) of the Act (7 
U.S.C. 2015(d)(2)(A)) is amended by striking ``that is 
comparable to a requirement of paragraph (1)''.

SEC. 1029. DISQUALIFICATION FOR RECEIPT OF MULTIPLE FOOD STAMP 
                    BENEFITS.

    Section 6 of the Food Stamp Act of 1977 (7 U.S.C. 2015), as 
amended by section 1028, is amended by adding at the end the 
following:
    ``(j) Disqualification for Receipt of Multiple Food Stamp 
Benefits.--An individual shall be ineligible to participate in 
the food stamp program as a member of any household for a 10-
year period if the individual is found by a State agency to 
have made, or is convicted in a Federal or State court of 
having made, a fraudulent statement or representation with 
respect to the identity or place of residence of the individual 
in order to receive multiple benefits simultaneously under the 
food stamp program.''.

SEC. 1030. DISQUALIFICATION OF FLEEING FELONS.

    Section 6 of the Food Stamp Act of 1977 (7 U.S.C. 2015), as 
amended by sections 1028 and 1029, is amended by adding at the 
end the following:
    ``(k) Disqualification of Fleeing Felons.--No member of a 
household who is otherwise eligible to participate in the food 
stamp program shall be eligible to participate in the program 
as a member of that or any other household during any period 
during which the individual is--
            ``(1) fleeing to avoid prosecution, or custody or 
        confinement after conviction, under the law of the 
        place from which the individual is fleeing, for a 
        crime, or attempt to commit a crime, that is a felony 
        under the law of the place from which the individual is 
        fleeing or that, in the case of New Jersey, is a high 
        misdemeanor under the law of New Jersey; or
            ``(2) violating a condition of probation or parole 
        imposed under a Federal or State law.''.

SEC. 1031. COOPERATION WITH CHILD SUPPORT AGENCIES.

    Section 6 of the Food Stamp Act of 1977 (7 U.S.C. 2015), as 
amended by sections 1028 through 1030, is amended by adding at 
the end the following:
    ``(l) Custodial Parent's Cooperation With Child Support 
Agencies.--
            ``(1) In general.--At the option of a State agency, 
        subject to paragraphs (2) and (3), no natural or 
        adoptive parent or other individual (collectively 
        referred to in this subsection as `the individual') who 
        is living with and exercising parental control over a 
        child under the age of 18 who has an absent parent 
        shall be eligible to participate in the food stamp 
        program unless the individual cooperates with the State 
        agency administering the program established under part 
        D of title IV of the Social Security Act (42 U.S.C. 651 
        et seq.)--
                    ``(A) in establishing the paternity of the 
                child (if the child is born out of wedlock); 
                and
                    ``(B) in obtaining support for--
                            ``(i) the child; or
                            ``(ii) the individual and the 
                        child.
            ``(2) Good cause for noncooperation.--Paragraph (1) 
        shall not apply to the individual if good cause is 
        found for refusing to cooperate, as determined by the 
        State agency in accordance with standards prescribed by 
        the Secretary in consultation with the Secretary of 
        Health and Human Services. The standards shall take 
        into consideration circumstances under which 
        cooperation may be against the best interests of the 
        child.
            ``(3) Fees.--Paragraph (1) shall not require the 
        payment of a fee or other cost for services provided 
        under part D of title IV of the Social Security Act (42 
        U.S.C. 651 et seq.).
    ``(m) Noncustodial Parent's Cooperation With Child Support 
Agencies.--
            ``(1) In general.--At the option of a State agency, 
        subject to paragraphs (2) and (3), a putative or 
        identified noncustodial parent of a child under the age 
        of 18 (referred to in this subsection as `the 
        individual') shall not be eligible to participate in 
        the food stamp program if the individual refuses to 
        cooperate with the State agency administering the 
        program established under part D of title IV of the 
        Social Security Act (42 U.S.C. 651 et seq.)--
                    ``(A) in establishing the paternity of the 
                child (if the child is born out of wedlock); 
                and
                    ``(B) in providing support for the child.
            ``(2) Refusal to cooperate.--
                    ``(A) Guidelines.--The Secretary, in 
                consultation with the Secretary of Health and 
                Human Services, shall develop guidelines on 
                what constitutes a refusal to cooperate under 
                paragraph (1).
                    ``(B) Procedures.--The State agency shall 
                develop procedures, using guidelines developed 
                under subparagraph (A), for determining whether 
                an individual is refusing to cooperate under 
                paragraph (1).
            ``(3) Fees.--Paragraph (1) shall not require the 
        payment of a fee or other cost for services provided 
        under part D of title IV of the Social Security Act (42 
        U.S.C. 651 et seq.).
            ``(4) Privacy.--The State agency shall provide 
        safeguards to restrict the use of information collected 
        by a State agency administering the program established 
        under part D of title IV of the Social Security Act (42 
        U.S.C. 651 et seq.) to purposes for which the 
        information is collected.''.

SEC. 1032. DISQUALIFICATION RELATING TO CHILD SUPPORT ARREARS.

    Section 6 of the Food Stamp Act of 1977 (7 U.S.C. 2015), as 
amended by sections 1028 through 1031, is amended by adding at 
the end the following:
    ``(n) Disqualification for Child Support Arrears.--
            ``(1) In general.--At the option of the State 
        agency, no individual shall be eligible to participate 
        in the food stamp program as a member of any household 
        during any month that the individual is delinquent in 
        any payment due under a court order for the support of 
        a child of the individual.
            ``(2) Exceptions.--Paragraph (1) shall not apply 
        if--
                    ``(A) a court is allowing the individual to 
                delay payment; or
                    ``(B) the individual is complying with a 
                payment plan approved by a court or the State 
                agency designated under part D of title IV of 
                the Social Security Act (42 U.S.C. 651 et seq.) 
                to provide support for the child of the 
                individual.''.

SEC. 1033. WORK REQUIREMENT.

    (a) In General.--Section 6 of the Food Stamp Act of 1977 (7 
U.S.C. 2015), as amended by sections 1028 through 1032, is 
amended by adding at the end the following:
    ``(o) Work Requirement.--
            ``(1) Definition of work program.--In this 
        subsection, the term `work program' means--
                    ``(A) a program under the Job Training 
                Partnership Act (29 U.S.C. 1501 et seq.);
                    ``(B) a program under section 236 of the 
                Trade Act of 1974 (19 U.S.C. 2296); or
                    ``(C) a program of employment and training 
                operated or supervised by a State or political 
                subdivision of a State that meets standards 
                approved by the Governor of the State, 
                including a program under section 6(d)(4), 
                other than a job search program or a job search 
                training program.
            ``(2) Work requirement.--Subject to the other 
        provisions of this subsection, no individual shall be 
        eligible to participate in the food stamp program as a 
        member of any household if, during the preceding 12-
        month period, the individual received food stamp 
        benefits for not less than 4 months during which the 
        individual did not--
                    ``(A) work 20 hours or more per week, 
                averaged monthly; or
                    ``(B) participate in and comply with the 
                requirements of a work program for 20 hours or 
                more per week, as determined by the State 
                agency; or
                    ``(C) participate in a program under 
                section 20 or a comparable program established 
                by a State or political subdivision of a State.
            ``(3) Exception.--Paragraph (2) shall not apply to 
        an individual if the individual is--
                    ``(A) under 18 or over 50 years of age;
                    ``(B) medically certified as physically or 
                mentally unfit for employment;
                    ``(C) a parent or other member of a 
                household with responsibility for a dependent 
                child;
                    ``(D) otherwise exempt under section 
                6(d)(2); or
                    ``(E) a pregnant woman.
            ``(4) Waiver.--
                    ``(A) In general.--On the request of a 
                State agency, the Secretary may waive the 
                applicability of paragraph (2) to any group of 
                individuals in the State if the Secretary makes 
                a determination that the area in which the 
                individuals reside--
                            ``(i) has an unemployment rate of 
                        over 10 percent; or
                            ``(ii) does not have a sufficient 
                        number of jobs to provide employment 
                        for the individuals.
                    ``(B) Report.--The Secretary shall report 
                the basis for a waiver under subparagraph (A) 
                to the Committee on Agriculture of the House of 
                Representatives and the Committee on 
                Agriculture, Nutrition, and Forestry of the 
                Senate.
            ``(5) Subsequent eligibility.--
                    ``(A) In general.--Paragraph (2) shall 
                cease to apply to an individual if, during a 
                30-day period, the individual--
                            ``(i) works 80 or more hours;
                            ``(ii) participates in and complies 
                        with the requirements of a work program 
                        for 80 or more hours, as determined by 
                        a State agency; or
                            ``(iii) participates in a program 
                        under section 20 or a comparable 
                        program established by a State or 
                        political subdivision of a State.
                    ``(B) Limitation.--During the subsequent 
                12-month period, the individual shall be 
                eligible to participate in the food stamp 
                program for not more than 4 months during which 
                the individual does not--
                            ``(i) work 20 hours or more per 
                        week, averaged monthly;
                            ``(ii) participate in and comply 
                        with the requirements of a work program 
                        for 20 hours or more per week, as 
                        determined by the State agency; or
                            ``(iii) participate in a program 
                        under section 20 or a comparable 
                        program established by a State or 
                        political subdivision of a State.''.
    (b) Transition Provision.--Prior to 1 year after the date 
of enactment of this Act, the term ``preceding 12-month 
period'' in section 6(o) of the Food Stamp Act of 1977, as 
amended by subsection (a), means the preceding period that 
begins on the date of enactment of this Act.

SEC. 1034. ENCOURAGE ELECTRONIC BENEFIT TRANSFER SYSTEMS.

    (a) In General.--Section 7(i) of the Food Stamp Act of 1977 
(7 U.S.C. 2016(i)) is amended--
            (1) by striking paragraph (1) and inserting the 
        following:
            ``(1) Electronic benefit transfers.--
                    ``(A) Implementation.--Each State agency 
                shall implement an electronic benefit transfer 
                system in which household benefits determined 
                under section 8(a) or 26 are issued from and 
                stored in a central databank before October 1, 
                2002, unless the Secretary provides a waiver 
                for a State agency that faces unusual barriers 
                to implementing an electronic benefit transfer 
                system.
                    ``(B) Timely implementation.--State 
                agencies are encouraged to implement an 
                electronic benefit transfer system under 
                subparagraph (A) as soon as practicable.
                    ``(C) State flexibility.--Subject to 
                paragraph (2), a State agency may procure and 
                implement an electronic benefit transfer system 
                under the terms, conditions, and design that 
                the State agency considers appropriate.
                    ``(D) Operation.--An electronic benefit 
                transfer system should take into account 
                generally accepted standard operating rules 
                based on--
                            ``(i) commercial electronic funds 
                        transfer technology;
                            ``(ii) the need to permit 
                        interstate operation and law 
                        enforcement monitoring; and
                            ``(iii) the need to permit 
                        monitoring and investigations by 
                        authorized law enforcement agencies.'';
            (2) in paragraph (2)--
                    (A) by striking ``effective no later than 
                April 1, 1992,'';
                    (B) in subparagraph (A)--
                            (i) by striking ``, in any 1 
                        year,''; and
                            (ii) by striking ``on-line'';
                    (C) by striking subparagraph (D) and 
                inserting the following:
            ``(D)(i) measures to maximize the security of a 
        system using the most recent technology available that 
        the State agency considers appropriate and cost 
        effective and which may include personal identification 
        numbers, photographic identification on electronic 
        benefit transfer cards, and other measures to protect 
        against fraud and abuse; and
            ``(ii) effective not later than 2 years after the 
        effective date of this clause, to the extent 
        practicable, measures that permit a system to 
        differentiate items of food that may be acquired with 
        an allotment from items of food that may not be 
        acquired with an allotment.'';
                    (D) in subparagraph (G), by striking 
                ``and'' at the end;
                    (E) in subparagraph (H), by striking the 
                period at the end and inserting ``; and''; and
                    (F) by adding at the end the following:
            ``(I) procurement standards.''; and
            (3) by adding at the end the following:
            ``(7) Replacement of benefits.--Regulations issued 
        by the Secretary regarding the replacement of benefits 
        and liability for replacement of benefits under an 
        electronic benefit transfer system shall be similar to 
        the regulations in effect for a paper food stamp 
        issuance system.
            ``(8) Replacement card fee.--A State agency may 
        collect a charge for replacement of an electronic 
        benefit transfer card by reducing the monthly allotment 
        of the household receiving the replacement card.
            ``(9) Optional photographic identification.--
                    ``(A) In general.--A State agency may 
                require that an electronic benefit card contain 
                a photograph of 1 or more members of a 
                household.
                    ``(B) Other authorized users.--If a State 
                agency requires a photograph on an electronic 
                benefit card under subparagraph (A), the State 
                agency shall establish procedures to ensure 
                that any other appropriate member of the 
                household or any authorized representative of 
                the household may utilize the card.
            ``(10) Application of anti-tying restrictions to 
        electronic benefit transfer systems.--
                    ``(A) In general.--A company shall not sell 
                or provide electronic benefit transfer 
                services, or fix or vary the consideration for 
                such services, on the condition or requirement 
                that the customer--
                            ``(i) obtain some additional point-
                        of-sale service from the company or any 
                        affiliate of the company; or
                            ``(ii) not obtain some additional 
                        point-of-sale service from a competitor 
                        of the company or competitor of any 
                        affiliate of the company.
                    ``(B) Definitions.--In this paragraph--
                            ``(i) Affiliate.--The term 
                        `affiliate' shall have the same meaning 
                        as in section 2(k) of the Bank Holding 
                        Company Act.
                            ``(ii) Company.--The term `company' 
                        shall have the same meaning as in 
                        section 106(a) of the Bank Holding 
                        Company Act Amendments of 1970, but 
                        shall not include a bank, bank holding 
                        company, or any subsidiary of a bank 
                        holding company.
                            ``(iii) Electronic benefit transfer 
                        service.--The term `electronic benefit 
                        transfer service' means the processing 
                        of electronic transfers of household 
                        benefits determined under section 8(a) 
                        or 26 where the benefits are--
                                    ``(I) issued from and 
                                stored in a central databank;
                                    ``(II) electronically 
                                accessed by household members 
                                at the point of sale; and
                                    ``(III) provided by a 
                                Federal or state government.
                            ``(iv) Point-of-sale service.--The 
                        term `point-of-sale service' means any 
                        product or service related to the 
                        electronic authorization and processing 
                        of payments for merchandise at a retail 
                        food store, including but not limited 
                        to credit or debit card services, 
                        automated teller machines, point-of-
                        sale terminals, or access to on-line 
                        systems.
                    ``(C) Consultation with the federal reserve 
                board.--Before promulgating regulations or 
                interpretations of regulations to carry out 
                this paragraph, the Secretary shall consult 
                with the Board of Governors of the Federal 
                Reserve System.''.
    (b) Sense of Congress.--It is the sense of Congress that a 
State that operates an electronic benefit transfer system under 
the Food Stamp Act of 1977 (7 U.S.C. 2011 et seq.) should 
operate the system in a manner that is compatible with 
electronic benefit transfer systems operated by other States.

SEC. 1035. VALUE OF MINIMUM ALLOTMENT.

    The proviso in section 8(a) of the Food Stamp Act of 1977 
(7 U.S.C. 2017(a)) is amended by striking ``, and shall be 
adjusted'' and all that follows through ``$5''.

SEC. 1036. BENEFITS ON RECERTIFICATION.

    Section 8(c)(2)(B) of the Food Stamp Act of 1977 (7 U.S.C. 
2017(c)(2)(B)) is amended by striking ``of more than one 
month''.

SEC. 1037. OPTIONAL COMBINED ALLOTMENT FOR EXPEDITED HOUSEHOLDS.

    Section 8(c) of the Food Stamp Act of 1977 (7 U.S.C. 
2017(c)) is amended by striking paragraph (3) and inserting the 
following:
            ``(3) Optional combined allotment for expedited 
        households.--A State agency may provide to an eligible 
        household applying after the 15th day of a month, in 
        lieu of the initial allotment of the household and the 
        regular allotment of the household for the following 
        month, an allotment that is equal to the total amount 
        of the initial allotment and the first regular 
        allotment. The allotment shall be provided in 
        accordance with section 11(e)(3) in the case of a 
        household that is not entitled to expedited service and 
        in accordance with paragraphs (3) and (9) of section 
        11(e) in the case of a household that is entitled to 
        expedited service.''.

SEC. 1038. FAILURE TO COMPLY WITH OTHER MEANS-TESTED PUBLIC ASSISTANCE 
                    PROGRAMS.

    Section 8 of the Food Stamp Act of 1977 (7 U.S.C. 2017) is 
amended by striking subsection (d) and inserting the following:
    ``(d) Reduction of Public Assistance Benefits.--
            ``(1) In general.--If the benefits of a household 
        are reduced under a Federal, State, or local law 
        relating to a means-tested public assistance program 
        for the failure of a member of the household to perform 
        an action required under the law or program, for the 
        duration of the reduction--
                    ``(A) the household may not receive an 
                increased allotment as the result of a decrease 
                in the income of the household to the extent 
                that the decrease is the result of the 
                reduction; and
                    ``(B) the State agency may reduce the 
                allotment of the household by not more than 25 
                percent.
            ``(2) Rules and procedures.--If the allotment of a 
        household is reduced under this subsection for a 
        failure to perform an action required under part A of 
        title IV of the Social Security Act (42 U.S.C. 601 et 
        seq.), the State agency may use the rules and 
        procedures that apply under part A of title IV of the 
        Act to reduce the allotment under the food stamp 
        program.''.

SEC. 1039. ALLOTMENTS FOR HOUSEHOLDS RESIDING IN CENTERS.

    Section 8 of the Food Stamp Act of 1977 (7 U.S.C. 2017) is 
amended by adding at the end the following:
    ``(f) Allotments for Households Residing in Centers.--
            ``(1) In general.--In the case of an individual who 
        resides in a center for the purpose of a drug or 
        alcoholic treatment program described in the last 
        sentence of section 3(i), a State agency may provide an 
        allotment for the individual to--
                    ``(A) the center as an authorized 
                representative of the individual for a period 
                that is less than 1 month; and
                    ``(B) the individual, if the individual 
                leaves the center.
            ``(2) Direct payment.--A State agency may require 
        an individual referred to in paragraph (1) to designate 
        the center in which the individual resides as the 
        authorized representative of the individual for the 
        purpose of receiving an allotment.''.

SEC. 1040. CONDITION PRECEDENT FOR APPROVAL OF RETAIL FOOD STORES AND 
                    WHOLESALE FOOD CONCERNS.

    Section 9(a)(1) of the Food Stamp Act of 1977 (7 U.S.C. 
2018(a)(1)) is amended by adding at the end the following: ``No 
retail food store or wholesale food concern of a type 
determined by the Secretary, based on factors that include 
size, location, and type of items sold, shall be approved to be 
authorized or reauthorized for participation in the food stamp 
program unless an authorized employee of the Department of 
Agriculture, a designee of the Secretary, or, if practicable, 
an official of the State or local government designated by the 
Secretary has visited the store or concern for the purpose of 
determining whether the store or concern should be approved or 
reauthorized, as appropriate.''.

SEC. 1041. AUTHORITY TO ESTABLISH AUTHORIZATION PERIODS.

    Section 9(a) of the Food Stamp Act of 1977 (7 U.S.C. 
2018(a)) is amended by adding at the end the following:
            ``(3) Authorization periods.--The Secretary shall 
        establish specific time periods during which 
        authorization to accept and redeem coupons, or to 
        redeem benefits through an electronic benefit transfer 
        system, shall be valid under the food stamp program.''.

SEC. 1042. INFORMATION FOR VERIFYING ELIGIBILITY FOR AUTHORIZATION.

    Section 9(c) of the Food Stamp Act of 1977 (7 U.S.C. 
2018(c)) is amended--
            (1) in the first sentence, by inserting ``, which 
        may include relevant income and sales tax filing 
        documents,'' after ``submit information''; and
            (2) by inserting after the first sentence the 
        following: ``The regulations may require retail food 
        stores and wholesale food concerns to provide written 
        authorization for the Secretary to verify all relevant 
        tax filings with appropriate agencies and to obtain 
        corroborating documentation from other sources so that 
        the accuracy of information provided by the stores and 
        concerns may be verified.''.

SEC. 1043. WAITING PERIOD FOR STORES THAT FAIL TO MEET AUTHORIZATION 
                    CRITERIA.

    Section 9(d) of the Food Stamp Act of 1977 (7 U.S.C. 
2018(d)) is amended by adding at the end the following: ``A 
retail food store or wholesale food concern that is denied 
approval to accept and redeem coupons because the store or 
concern does not meet criteria for approval established by the 
Secretary may not, for at least 6 months, submit a new 
application to participate in the program. The Secretary may 
establish a longer time period under the preceding sentence, 
including permanent disqualification, that reflects the 
severity of the basis of the denial.''.

SEC. 1044. OPERATION OF FOOD STAMP OFFICES.

    Section 11 of the Food Stamp Act of 1977 (7 U.S.C. 2020), 
as amended by sections 1020(b) and 1028(b), is amended--
            (1) in subsection (e)--
                    (A) by striking paragraph (2) and inserting 
                the following:
            ``(2)(A) that the State agency shall establish 
        procedures governing the operation of food stamp 
        offices that the State agency determines best serve 
        households in the State, including households with 
        special needs, such as households with elderly or 
        disabled members, households in rural areas with low-
        income members, homeless individuals, households 
        residing on reservations, and households in areas in 
        which a substantial number of members of low-income 
        households speak a language other than English;
            ``(B) that in carrying out subparagraph (A), a 
        State agency--
                    ``(i) shall provide timely, accurate, and 
                fair service to applicants for, and 
                participants in, the food stamp program;
                    ``(ii) shall develop an application 
                containing the information necessary to comply 
                with this Act;
                    ``(iii) shall permit an applicant household 
                to apply to participate in the program on the 
                same day that the household first contacts a 
                food stamp office in person during office 
                hours;
                    ``(iv) shall consider an application that 
                contains the name, address, and signature of 
                the applicant to be filed on the date the 
                applicant submits the application;
                    ``(v) shall require that an adult 
                representative of each applicant household 
                certify in writing, under penalty of perjury, 
                that--
                            ``(I) the information contained in 
                        the application is true; and
                            ``(II) all members of the household 
                        are citizens or are aliens eligible to 
                        receive food stamps under section 6(f);
                    ``(vi) shall provide a method of certifying 
                and issuing coupons to eligible homeless 
                individuals, to ensure that participation in 
                the food stamp program is limited to eligible 
                households; and
                    ``(vii) may establish operating procedures 
                that vary for local food stamp offices to 
                reflect regional and local differences within 
                the State;
            ``(C) that nothing in this Act shall prohibit the 
        use of signatures provided and maintained 
        electronically, storage of records using automated 
        retrieval systems only, or any other feature of a State 
        agency's application system that does not rely 
        exclusively on the collection and retention of paper 
        applications or other records;
            ``(D) that the signature of any adult under this 
        paragraph shall be considered sufficient to comply with 
        any provision of Federal law requiring a household 
        member to sign an application or statement;'';
                    (B) in paragraph (3), as amended by section 
                1020(b)--
                            (i) by striking ``shall--'' and all 
                        that follows through ``provide each'' 
                        and inserting ``shall provide each''; 
                        and
                            (ii) by striking ``(B) assist'' and 
                        all that follows through 
                        ``representative of the State 
                        agency;'';
                    (C) by striking paragraphs (14) and (25);
                    (D)(i) by redesignating paragraphs (15) 
                through (24) as paragraphs (14) through (23), 
                respectively; and
                    (ii) by redesignating paragraph (26), as 
                added by section 1028(b), as paragraph (24); 
                and
            (2) in subsection (i)--
                    (A) by striking ``(i) Notwithstanding'' and 
                all that follows through ``(2)'' and inserting 
                the following:
    ``(i) Application and Denial Procedures.--
            ``(1) Application procedures.--Notwithstanding any 
        other provision of law,''; and
                    (B) by striking ``; (3) households'' and 
                all that follows through ``title IV of the 
                Social Security Act. No'' and inserting a 
                period and the following:
            ``(2) Denial and termination.--Other than in a case 
        of disqualification as a penalty for failure to comply 
        with a public assistance program rule or regulation, 
        no''.

SEC. 1045. STATE EMPLOYEE AND TRAINING STANDARDS.

    Section 11(e)(6) of the Food Stamp Act of 1977 (7 U.S.C. 
2020(e)(6)) is amended--
            (1) by striking ``that (A) the'' and inserting 
        ``that--
                    ``(A) the'';
            (2) by striking ``Act; (B) the'' and inserting 
        ``Act; and
                    ``(B) the'';
            (3) in subparagraph (B), by striking ``United 
        States Civil Service Commission'' and inserting 
        ``Office of Personnel Management''; and
            (4) by striking subparagraphs (C) through (E).

SEC. 1046. EXCHANGE OF LAW ENFORCEMENT INFORMATION.

    Section 11(e)(8) of the Food Stamp Act of 1977 (7 U.S.C. 
2020(e)(8)) is amended--
            (1) by striking ``that (A) such'' and inserting the 
        following: ``that--
                    ``(A) the'';
            (2) by striking ``law, (B) notwithstanding'' and 
        inserting the following: ``law;
                    ``(B) notwithstanding'';
            (3) by striking ``Act, and (C) such'' and inserting 
        the following: ``Act;
                    ``(C) the''; and
            (4) by adding at the end the following:
                    ``(D) notwithstanding any other provision 
                of law, the address, social security number, 
                and, if available, photograph of any member of 
                a household shall be made available, on 
                request, to any Federal, State, or local law 
                enforcement officer if the officer furnishes 
                the State agency with the name of the member 
                and notifies the agency that--
                            ``(i) the member--
                                    ``(I) is fleeing to avoid 
                                prosecution, or custody or 
                                confinement after conviction, 
                                for a crime (or attempt to 
                                commit a crime) that, under the 
                                law of the place the member is 
                                fleeing, is a felony (or, in 
                                the case of New Jersey, a high 
                                misdemeanor), or is violating a 
                                condition of probation or 
                                parole imposed under Federal or 
                                State law; or
                                    ``(II) has information that 
                                is necessary for the officer to 
                                conduct an official duty 
                                related to subclause (I);
                            ``(ii) locating or apprehending the 
                        member is an official duty; and
                            ``(iii) the request is being made 
                        in the proper exercise of an official 
                        duty; and
                    ``(E) the safeguards shall not prevent 
                compliance with paragraph (16);''.

SEC. 1047. EXPEDITED COUPON SERVICE.

    Section 11(e)(9) of the Food Stamp Act of 1977 (7 U.S.C. 
2020(e)(9)) is amended--
            (1) in subparagraph (A)--
                    (A) by striking ``five days'' and inserting 
                ``7 days''; and
                    (B) by inserting ``and'' at the end;
            (2) by striking subparagraphs (B) and (C);
            (3) by redesignating subparagraph (D) as 
        subparagraph (B); and
            (4) in subparagraph (B), as redesignated by 
        paragraph (3), by striking ``, (B), or (C)''.

SEC. 1048. WITHDRAWING FAIR HEARING REQUESTS.

    Section 11(e)(10) of the Food Stamp Act of 1977 (7 U.S.C. 
2020(e)(10)) is amended by inserting before the semicolon at 
the end a period and the following: ``At the option of a State, 
at any time prior to a fair hearing determination under this 
paragraph, a household may withdraw, orally or in writing, a 
request by the household for the fair hearing. If the 
withdrawal request is an oral request, the State agency shall 
provide a written notice to the household confirming the 
withdrawal request and providing the household with an 
opportunity to request a hearing''.

SEC. 1049. INCOME, ELIGIBILITY, AND IMMIGRATION STATUS VERIFICATION 
                    SYSTEMS.

    Section 11 of the Food Stamp Act of 1977 (7 U.S.C. 2020) is 
amended--
            (1) in subsection (e)(18), as redesignated by 
        section 1044(1)(D)--
                    (A) by striking ``that information is'' and 
                inserting ``at the option of the State agency, 
                that information may be''; and
                    (B) by striking ``shall be requested'' and 
                inserting ``may be requested''; and
            (2) by adding at the end the following:
    ``(p) State Verification Option.--Notwithstanding any other 
provision of law, in carrying out the food stamp program, a 
State agency shall not be required to use an income and 
eligibility or an immigration status verification system 
established under section 1137 of the Social Security Act (42 
U.S.C. 1320b-7).''.

SEC. 1050. DISQUALIFICATION OF RETAILERS WHO INTENTIONALLY SUBMIT 
                    FALSIFIED APPLICATIONS.

    Section 12(b) of the Food Stamp Act of 1977 (7 U.S.C. 
2021(b)) is amended--
            (1) in paragraph (2), by striking ``and'' at the 
        end;
            (2) in paragraph (3), by striking the period at the 
        end and inserting ``; and''; and
            (3) by adding at the end the following:
            ``(4) for a reasonable period of time to be 
        determined by the Secretary, including permanent 
        disqualification, on the knowing submission of an 
        application for the approval or reauthorization to 
        accept and redeem coupons that contains false 
        information about a substantive matter that was a part 
        of the application.''.

SEC. 1051. DISQUALIFICATION OF RETAILERS WHO ARE DISQUALIFIED UNDER THE 
                    WIC PROGRAM.

    Section 12 of the Food Stamp Act of 1977 (7 U.S.C. 2021) is 
amended by adding at the end the following:
    ``(g) Disqualification of Retailers Who Are Disqualified 
Under the WIC Program.--
            ``(1) In general.--The Secretary shall issue 
        regulations providing criteria for the disqualification 
        under this Act of an approved retail food store and a 
        wholesale food concern that is disqualified from 
        accepting benefits under the special supplemental 
        nutrition program for women, infants, and children 
        established under section 17 of the Child Nutrition Act 
        of 1966 (7 U.S.C. 1786).
            ``(2) Terms.--A disqualification under paragraph 
        (1)--
                    ``(A) shall be for the same length of time 
                as the disqualification from the program 
                referred to in paragraph (1);
                    ``(B) may begin at a later date than the 
                disqualification from the program referred to 
                in paragraph (1); and
                    ``(C) notwithstanding section 14, shall not 
                be subject to judicial or administrative 
                review.''.

SEC. 1052. COLLECTION OF OVERISSUANCES.

    (a) Collection of Overissuances.--Section 13 of the Food 
Stamp Act of 1977 (7 U.S.C. 2022) is amended--
            (1) by striking subsection (b) and inserting the 
        following:
    ``(b) Collection of Overissuances.--
            ``(1) In general.--Except as otherwise provided in 
        this subsection, a State agency shall collect any 
        overissuance of coupons issued to a household by--
                    ``(A) reducing the allotment of the 
                household;
                    ``(B) withholding amounts from unemployment 
                compensation from a member of the household 
                under subsection (c);
                    ``(C) recovering from Federal pay or a 
                Federal income tax refund under subsection (d); 
                or
                    ``(D) any other means.
            ``(2) Cost effectiveness.--Paragraph (1) shall not 
        apply if the State agency demonstrates to the 
        satisfaction of the Secretary that all of the means 
        referred to in paragraph (1) are not cost effective.
            ``(3) Maximum reduction absent fraud.--If a 
        household received an overissuance of coupons without 
        any member of the household being found ineligible to 
        participate in the program under section 6(b)(1) and a 
        State agency elects to reduce the allotment of the 
        household under paragraph (1)(A), the State agency 
        shall not reduce the monthly allotment of the household 
        under paragraph (1)(A) by an amount in excess of the 
        greater of--
                    ``(A) 10 percent of the monthly allotment 
                of the household; or
                    ``(B) $10.
            ``(4) Procedures.--A State agency shall collect an 
        overissuance of coupons issued to a household under 
        paragraph (1) in accordance with the requirements 
        established by the State agency for providing notice, 
        electing a means of payment, and establishing a time 
        schedule for payment.''; and
            (2) in subsection (d)--
                    (A) by striking ``as determined under 
                subsection (b) and except for claims arising 
                from an error of the State agency,'' and 
                inserting ``, as determined under subsection 
                (b)(1),''; and
                    (B) by inserting before the period at the 
                end the following: ``or a Federal income tax 
                refund as authorized by section 3720A of title 
                31, United States Code''.
    (b) Conforming Amendments.--Section 11(e)(8) of the Act (7 
U.S.C. 2020(e)(8)) is amended--
            (1) by striking ``and excluding claims'' and all 
        that follows through ``such section''; and
            (2) by inserting before the semicolon at the end 
        the following: ``or a Federal income tax refund as 
        authorized by section 3720A of title 31, United States 
        Code''.
    (c) Retention Rate.--Section 16(a) of the Act (7 U.S.C. 
2025(a)) is amended by striking ``25 percent during the period 
beginning October 1, 1990'' and all that follows through 
``error of a State agency'' and inserting the following: ``25 
percent of the overissuances collected by the State agency 
under section 13, except those overissuances arising from an 
error of the State agency''.

SEC. 1053. AUTHORITY TO SUSPEND STORES VIOLATING PROGRAM REQUIREMENTS 
                    PENDING ADMINISTRATIVE AND JUDICIAL REVIEW.

    Section 14(a) of the Food Stamp Act of 1977 (7 U.S.C. 
2023(a)) is amended--
            (1) by redesignating the first through seventeenth 
        sentences as paragraphs (1) through (17), respectively; 
        and
            (2) by adding at the end the following:
            ``(18) Suspension of stores pending review.--
        Notwithstanding any other provision of this subsection, 
        any permanent disqualification of a retail food store 
        or wholesale food concern under paragraph (3) or (4) of 
        section 12(b) shall be effective from the date of 
        receipt of the notice of disqualification. If the 
        disqualification is reversed through administrative or 
        judicial review, the Secretary shall not be liable for 
        the value of any sales lost during the disqualification 
        period.''.

SEC. 1054. EXPANDED CRIMINAL FORFEITURE FOR VIOLATIONS.

    (a) Forfeiture of Items Exchanged in Food Stamp 
Trafficking.--The first sentence of section 15(g) of the Food 
Stamp Act of 1977 (7 U.S.C. 2024(g)) is amended by striking 
``or intended to be furnished''.
    (b) Criminal Forfeiture.--Section 15 of the Act (7 U.S.C. 
2024) is amended by adding at the end the following:
    ``(h) Criminal Forfeiture.--
            ``(1) In general.--In imposing a sentence on a 
        person convicted of an offense in violation of 
        subsection (b) or (c), a court shall order, in addition 
        to any other sentence imposed under this subsection, 
        that the person forfeit to the United States all 
        property described in paragraph (2).
            ``(2) Property subject to forfeiture.--All 
        property, real and personal, used in a transaction or 
        attempted transaction, to commit, or to facilitate the 
        commission of, a violation (other than a misdemeanor) 
        of subsection (b) or (c), or proceeds traceable to a 
        violation of subsection (b) or (c), shall be subject to 
        forfeiture to the United States under paragraph (1).
            ``(3) Interest of owner.--No interest in property 
        shall be forfeited under this subsection as the result 
        of any act or omission established by the owner of the 
        interest to have been committed or omitted without the 
        knowledge or consent of the owner.
            ``(4) Proceeds.--The proceeds from any sale of 
        forfeited property and any monies forfeited under this 
        subsection shall be used--
                    ``(A) first, to reimburse the Department of 
                Justice for the costs incurred by the 
                Department to initiate and complete the 
                forfeiture proceeding;
                    ``(B) second, to reimburse the Department 
                of Agriculture Office of Inspector General for 
                any costs the Office incurred in the law 
                enforcement effort resulting in the forfeiture;
                    ``(C) third, to reimburse any Federal or 
                State law enforcement agency for any costs 
                incurred in the law enforcement effort 
                resulting in the forfeiture; and
                    ``(D) fourth, by the Secretary to carry out 
                the approval, reauthorization, and compliance 
                investigations of retail stores and wholesale 
                food concerns under section 9.''.

SEC. 1055. LIMITATION OF FEDERAL MATCH.

    Section 16(a)(4) of the Food Stamp Act of 1977 (7 U.S.C. 
2025(a)(4)) is amended by inserting after the comma at the end 
the following: ``but not including recruitment activities,''.

SEC. 1056. STANDARDS FOR ADMINISTRATION.

    (a) In General.--Section 16 of the Food Stamp Act of 1977 
(7 U.S.C. 2025) is amended by striking subsection (b).
    (b) Conforming Amendments.--
            (1) The first sentence of section 11(g) of the Act 
        (7 U.S.C. 2020(g)) is amended by striking ``the 
        Secretary's standards for the efficient and effective 
        administration of the program established under section 
        16(b)(1) or''.
            (2) Section 16(c)(1)(B) of the Act (7 U.S.C. 
        2025(c)(1)(B)) is amended by striking ``pursuant to 
        subsection (b)''.

SEC. 1057. WORK SUPPLEMENTATION OR SUPPORT PROGRAM.

    Section 16 of the Food Stamp Act of 1977 (7 U.S.C. 2025), 
as amended by section 1056(a), is amended by inserting after 
subsection (a) the following:
    ``(b) Work Supplementation or Support Program.--
            ``(1) Definition of work supplementation or support 
        program.--In this subsection, the term `work 
        supplementation or support program' means a program 
        under which, as determined by the Secretary, public 
        assistance (including any benefits provided under a 
        program established by the State and the food stamp 
        program) is provided to an employer to be used for 
        hiring and employing a public assistance recipient who 
        was not employed by the employer at the time the public 
        assistance recipient entered the program.
            ``(2) Program.--A State agency may elect to use an 
        amount equal to the allotment that would otherwise be 
        issued to a household under the food stamp program, but 
        for the operation of this subsection, for the purpose 
        of subsidizing or supporting a job under a work 
        supplementation or support program established by the 
        State.
            ``(3) Procedure.--If a State agency makes an 
        election under paragraph (2) and identifies each 
        household that participates in the food stamp program 
        that contains an individual who is participating in the 
        work supplementation or support program--
                    ``(A) the Secretary shall pay to the State 
                agency an amount equal to the value of the 
                allotment that the household would be eligible 
                to receive but for the operation of this 
                subsection;
                    ``(B) the State agency shall expend the 
                amount received under subparagraph (A) in 
                accordance with the work supplementation or 
                support program in lieu of providing the 
                allotment that the household would receive but 
                for the operation of this subsection;
                    ``(C) for purposes of--
                            ``(i) sections 5 and 8(a), the 
                        amount received under this subsection 
                        shall be excluded from household income 
                        and resources; and
                            ``(ii) section 8(b), the amount 
                        received under this subsection shall be 
                        considered to be the value of an 
                        allotment provided to the household; 
                        and
                    ``(D) the household shall not receive an 
                allotment from the State agency for the period 
                during which the member continues to 
                participate in the work supplementation or 
                support program.
            ``(4) Other work requirements.--No individual shall 
        be excused, by reason of the fact that a State has a 
        work supplementation or support program, from any work 
        requirement under section 6(d), except during the 
        periods in which the individual is employed under the 
        work supplementation or support program.
            ``(5) Length of participation.--A State agency 
        shall provide a description of how the public 
        assistance recipients in the program shall, within a 
        specific period of time, be moved from supplemented or 
        supported employment to employment that is not 
        supplemented or supported.
            ``(6) Displacement.--A work supplementation or 
        support program shall not displace the employment of 
        individuals who are not supplemented or supported.''.

SEC. 1058. WAIVER AUTHORITY.

    Section 17(b)(1) of the Food Stamp Act of 1977 (7 U.S.C. 
2026(b)(1)) is amended--
            (1) by redesignating subparagraph (B) as 
        subparagraph (C); and
            (2) in subparagraph (A)--
                    (A) by striking the second sentence; and
                    (B) by striking ``benefits to eligible 
                households, including'' and inserting the 
                following: ``benefits to eligible households, 
                and may waive any requirement of this Act to 
                the extent necessary for the project to be 
                conducted.
                    ``(B) Project requirements.--
                            ``(i) Program goal.--The Secretary 
                        may not conduct a project under 
                        subparagraph (A) unless the project is 
                        consistent with the goal of the food 
                        stamp program of providing food 
                        assistance to raise levels of nutrition 
                        among low-income individuals.
                            ``(ii) Permissible projects.--The 
                        Secretary may conduct a project under 
                        subparagraph (A) to--
                                    ``(I) improve program 
                                administration;
                                    ``(II) increase the self-
                                sufficiency of food stamp 
                                recipients;
                                    ``(III) test innovative 
                                welfare reform strategies; and
                                    ``(IV) allow greater 
                                conformity with the rules of 
                                other programs than would be 
                                allowed but for this paragraph.
                            ``(iii) Impermissible projects.--
                        The Secretary may not conduct a project 
                        under subparagraph (A) that--
                                    ``(I) involves the payment 
                                of the value of an allotment in 
                                the form of cash, unless the 
                                project was approved prior to 
                                the date of enactment of this 
                                subparagraph;
                                    ``(II) substantially 
                                transfers funds made available 
                                under this Act to services or 
                                benefits provided primarily 
                                through another public 
                                assistance program; or
                                    ``(III) is not limited to a 
                                specific time period.
                            ``(iv) Additional included 
                        projects.--Pilot or experimental 
                        projects may include''.

SEC. 1059. RESPONSE TO WAIVERS.

    Section 17(b)(1) of the Food Stamp Act of 1977 (7 U.S.C. 
2026(b)(1)), as amended by section 1058, is amended by adding 
at the end the following:
                    ``(D) Response to waivers.--
                            ``(i) Response.--Not later than 60 
                        days after the date of receiving a 
                        request for a waiver under subparagraph 
                        (A), the Secretary shall provide a 
                        response that--
                                    ``(I) approves the waiver 
                                request;
                                    ``(II) denies the waiver 
                                request and explains any 
                                modification needed for 
                                approval of the waiver request;
                                    ``(III) denies the waiver 
                                request and explains the 
                                grounds for the denial; or
                                    ``(IV) requests 
                                clarification of the waiver 
                                request.
                            ``(ii) Failure to respond.--If the 
                        Secretary does not provide a response 
                        in accordance with clause (i), the 
                        waiver shall be considered approved, 
                        unless the approval is specifically 
                        prohibited by this Act.
                            ``(iii) Notice of denial.--On 
                        denial of a waiver request under clause 
                        (i)(III), the Secretary shall provide a 
                        copy of the waiver request and a 
                        description of the reasons for the 
                        denial to the Committee on Agriculture 
                        of the House of Representatives and the 
                        Committee on Agriculture, Nutrition, 
                        and Forestry of the Senate.''.

SEC. 1060. EMPLOYMENT INITIATIVES PROGRAM.

    Section 17 of the Food Stamp Act of 1977 (7 U.S.C. 2026) is 
amended by striking subsection (d) and inserting the following:
    ``(d) Employment Initiatives Program.--
            ``(1) Election to participate.--
                    ``(A) In general.--Subject to the other 
                provisions of this subsection, a State may 
                elect to carry out an employment initiatives 
                program under this subsection.
                    ``(B) Requirement.--A State shall be 
                eligible to carry out an employment initiatives 
                program under this subsection only if not less 
                than 50 percent of the households that received 
                food stamp benefits during the summer of 1993 
                also received benefits under a State program 
                funded under part A of title IV of the Social 
                Security Act (42 U.S.C. 601 et seq.) during the 
                summer of 1993.
            ``(2) Procedure.--
                    ``(A) In general.--A State that has elected 
                to carry out an employment initiatives program 
                under paragraph (1) may use amounts equal to 
                the food stamp allotments that would otherwise 
                be issued to a household under the food stamp 
                program, but for the operation of this 
                subsection, to provide cash benefits in lieu of 
                the food stamp allotments to the household if 
                the household is eligible under paragraph (3).
                    ``(B) Payment.--The Secretary shall pay to 
                each State that has elected to carry out an 
                employment initiatives program under paragraph 
                (1) an amount equal to the value of the 
                allotment that each household would be eligible 
                to receive under this Act but for the operation 
                of this subsection.
                    ``(C) Other provisions.--For purposes of 
                the food stamp program (other than this 
                subsection)--
                            ``(i) cash assistance under this 
                        subsection shall be considered to be an 
                        allotment; and
                            ``(ii) each household receiving 
                        cash benefits under this subsection 
                        shall not receive any other food stamp 
                        benefit for the period for which the 
                        cash assistance is provided.
                    ``(D) Additional payments.--Each State that 
                has elected to carry out an employment 
                initiatives program under paragraph (1) shall--
                            ``(i) increase the cash benefits 
                        provided to each household under this 
                        subsection to compensate for any State 
                        or local sales tax that may be 
                        collected on purchases of food by any 
                        household receiving cash benefits under 
                        this subsection, unless the Secretary 
                        determines on the basis of information 
                        provided by the State that the increase 
                        is unnecessary on the basis of the 
                        limited nature of the items subject to 
                        the State or local sales tax; and
                            ``(ii) pay the cost of any increase 
                        in cash benefits required by clause 
                        (i).
            ``(3) Eligibility.--A household shall be eligible 
        to receive cash benefits under paragraph (2) if an 
        adult member of the household--
                    ``(A) has worked in unsubsidized employment 
                for not less than the preceding 90 days;
                    ``(B) has earned not less than $350 per 
                month from the employment referred to in 
                subparagraph (A) for not less than the 
                preceding 90 days;
                    ``(C)(i) is receiving benefits under a 
                State program funded under part A of title IV 
                of the Social Security Act (42 U.S.C. 601 et 
                seq.); or
                    ``(ii) was receiving benefits under a State 
                program funded under part A of title IV of the 
                Social Security Act (42 U.S.C. 601 et seq.) at 
                the time the member first received cash 
                benefits under this subsection and is no longer 
                eligible for the State program because of 
                earned income;
                    ``(D) is continuing to earn not less than 
                $350 per month from the employment referred to 
                in subparagraph (A); and
                    ``(E) elects to receive cash benefits in 
                lieu of food stamp benefits under this 
                subsection.
            ``(4) Evaluation.--A State that operates a program 
        under this subsection for 2 years shall provide to the 
        Secretary a written evaluation of the impact of cash 
        assistance under this subsection. The State agency, 
        with the concurrence of the Secretary, shall determine 
        the content of the evaluation.''.

SEC. 1061. REAUTHORIZATION.

    The first sentence of section 18(a)(1) of the Food Stamp 
Act of 1977 (7 U.S.C. 2027(a)(1)) is amended by striking ``1991 
through 1997'' and inserting ``1996 through 2002''.

SEC. 1062. SIMPLIFIED FOOD STAMP PROGRAM.

    (a) In General.--The Food Stamp Act of 1977 (7 U.S.C. 2011 
et seq.) is amended by adding at the end the following:

``SEC. 26. SIMPLIFIED FOOD STAMP PROGRAM.

    ``(a) Definition of Federal Costs.--In this section, the 
term `Federal costs' does not include any Federal costs 
incurred under section 17.
    ``(b) Election.--Subject to subsection (d), a State may 
elect to carry out a Simplified Food Stamp Program (referred to 
in this section as a `Program'), statewide or in a political 
subdivision of the State, in accordance with this section.
    ``(c) Operation of Program.--If a State elects to carry out 
a Program, within the State or a political subdivision of the 
State--
            ``(1) a household in which all members receive 
        assistance under a State program funded under part A of 
        title IV of the Social Security Act (42 U.S.C. 601 et 
        seq.) shall automatically be eligible to participate in 
        the Program; and
            ``(2) subject to subsection (f), benefits under the 
        Program shall be determined under rules and procedures 
        established by the State under--
                    ``(A) a State program funded under part A 
                of title IV of the Social Security Act (42 
                U.S.C. 601 et seq.);
                    ``(B) the food stamp program (other than 
                section 27); or
                    ``(C) a combination of a State program 
                funded under part A of title IV of the Social 
                Security Act (42 U.S.C. 601 et seq.) and the 
                food stamp program (other than section 27).
    ``(d) Approval of Program.--
            ``(1) State plan.--A State agency may not operate a 
        Program unless the Secretary approves a State plan for 
        the operation of the Program under paragraph (2).
            ``(2) Approval of plan.--The Secretary shall 
        approve any State plan to carry out a Program if the 
        Secretary determines that the plan--
                    ``(A) complies with this section; and
                    ``(B) contains sufficient documentation 
                that the plan will not increase Federal costs 
                for any fiscal year.
    ``(e) Increased Federal Costs.--
            ``(1) Determination.--During each fiscal year and 
        not later than 90 days after the end of each fiscal 
        year, the Secretary shall determine whether a Program 
        being carried out by a State agency is increasing 
        Federal costs under this Act above the Federal costs 
        incurred under the food stamp program in operation in 
        the State or political subdivision of the State for the 
        fiscal year prior to the implementation of the Program, 
        adjusted for any changes in--
                    ``(A) participation;
                    ``(B) the income of participants in the 
                food stamp program that is not attributable to 
                public assistance; and
                    ``(C) the thrifty food plan under section 
                3(o).
            ``(2) Notification.--If the Secretary determines 
        that the Program has increased Federal costs under this 
        Act for any fiscal year or any portion of any fiscal 
        year, the Secretary shall notify the State not later 
        than 30 days after the Secretary makes the 
        determination under paragraph (1).
            ``(3) Enforcement.--
                    ``(A) Corrective action.--Not later than 90 
                days after the date of a notification under 
                paragraph (2), the State shall submit a plan 
                for approval by the Secretary for prompt 
                corrective action that is designed to prevent 
                the Program from increasing Federal costs under 
                this Act.
                    ``(B) Termination.--If the State does not 
                submit a plan under subparagraph (A) or carry 
                out a plan approved by the Secretary, the 
                Secretary shall terminate the approval of the 
                State agency operating the Program and the 
                State agency shall be ineligible to operate a 
                future Program.
    ``(f) Rules and Procedures.--
            ``(1) In general.--In operating a Program, a State 
        or political subdivision of a State may follow the 
        rules and procedures established by the State or 
        political subdivision under a State program funded 
        under part A of title IV of the Social Security Act (42 
        U.S.C. 601 et seq.) or under the food stamp program.
            ``(2) Standardized deductions.--In operating a 
        Program, a State or political subdivision of a State 
        may standardize the deductions provided under section 
        5(e). In developing the standardized deduction, the 
        State shall consider the work expenses, dependent care 
        costs, and shelter costs of participating households.
            ``(3) Requirements.--In operating a Program, a 
        State or political subdivision shall comply with the 
        requirements of--
                    ``(A) subsections (a) through (g) of 
                section 7;
                    ``(B) section 8(a) (except that the income 
                of a household may be determined under a State 
                program funded under part A of title IV of the 
                Social Security Act (42 U.S.C. 601 et seq.));
                    ``(C) subsection (b) and (d) of section 8;
                    ``(D) subsections (a), (c), (d), and (n) of 
                section 11;
                    ``(E) paragraphs (8), (12), (16), (18), 
                (20), (24), and (25) of section 11(e);
                    ``(F) section 11(e)(10) (or a comparable 
                requirement established by the State under a 
                State program funded under part A of title IV 
                of the Social Security Act (42 U.S.C. 601 et 
                seq.)); and
                    ``(G) section 16.
            ``(4) Limitation on eligibility.--Notwithstanding 
        any other provision of this section, a household may 
        not receive benefits under this section as a result of 
        the eligibility of the household under a State program 
        funded under part A of title IV of the Social Security 
        Act (42 U.S.C. 601 et seq.), unless the Secretary 
        determines that any household with income above 130 
        percent of the poverty guidelines is not eligible for 
        the program.''.
    (b) State Plan Provisions.--Section 11(e) of the Act (7 
U.S.C. 2020(e)), as amended by sections 1020(b), 1028(b), and 
1044, is amended by adding at the end the following:
            ``(25) if a State elects to carry out a Simplified 
        Food Stamp Program under section 26, the plans of the 
        State agency for operating the program, including--
                    ``(A) the rules and procedures to be 
                followed by the State agency to determine food 
                stamp benefits;
                    ``(B) how the State agency will address the 
                needs of households that experience high 
                shelter costs in relation to the incomes of the 
                households; and
                    ``(C) a description of the method by which 
                the State agency will carry out a quality 
                control system under section 16(c).''.
    (c) Conforming Amendments.--
            (1) Section 8 of the Act (7 U.S.C. 2017), as 
        amended by section 1039, is amended--
                    (A) by striking subsection (e); and
                    (B) by redesignating subsection (f) as 
                subsection (e).
            (2) Section 17 of the Act (7 U.S.C. 2026) is 
        amended--
                    (A) by striking subsection (i); and
                    (B) by redesignating subsections (j) 
                through (l) as subsections (i) through (k), 
                respectively.

SEC. 1063. STATE FOOD ASSISTANCE BLOCK GRANT.

    (a) In General.--The Food Stamp Act of 1977 (7 U.S.C. 2011 
et seq.), as amended by section 1062, is amended by adding at 
the end the following:

``SEC. 27. STATE FOOD ASSISTANCE BLOCK GRANT.

    ``(a) Definitions.--In this section:
            ``(1) Food assistance.--The term `food assistance' 
        means assistance that may be used only to obtain food, 
        as defined in section 3(g).
            ``(2) State.--The term `State' means each of the 50 
        States, the District of Columbia, Guam, and the Virgin 
        Islands of the United States.
    ``(b) Establishment.--The Secretary shall establish a 
program to make grants to States in accordance with this 
section to provide--
            ``(1) food assistance to needy individuals and 
        families residing in the State; and
            ``(2) funds for administrative costs incurred in 
        providing the assistance.
    ``(c) Election.--
            ``(1) In general.--A State may annually elect to 
        participate in the program established under subsection 
        (b) if the State--
                    ``(A) has fully implemented an electronic 
                benefit transfer system that operates in the 
                entire State;
                    ``(B) has a payment error rate under 
                section 16(c) that is not more than 6 percent 
                as announced most recently by the Secretary; or
                    ``(C) has a payment error rate in excess of 
                6 percent and agrees to contribute non-Federal 
                funds for the fiscal year of the grant, for 
                benefits and administration of the State's food 
                assistance program, the amount determined under 
                paragraph (2).
            ``(2) State mandatory contributions.--
                    ``(A) In general.--In the case of a State 
                that elects to participate in the program under 
                paragraph (1)(C), the State shall agree to 
                contribute, for a fiscal year, an amount equal 
                to--
                            ``(i) the benefits issued in the 
                        State; multiplied by
                            ``(ii) the payment error rate of 
                        the State; minus
                    ``(B)(i) the benefits issued in the State; 
                multiplied by
                    ``(ii) 6 percent.
                    ``(B) Determination.--Notwithstanding 
                sections 13 and 14, the calculation of the 
                contribution shall be based solely on the 
                determination of the Secretary of the payment 
                error rate.
                    ``(C) Data.--For purposes of implementing 
                subparagraph (A) for a fiscal year, the 
                Secretary shall use the data for the most 
                recent fiscal year available.
            ``(3) Election limitation.--
                    ``(A) Re-entering food stamp program.--A 
                State that elects to participate in the program 
                under paragraph (1) may in a subsequent year 
                decline to elect to participate in the program 
                and instead participate in the food stamp 
                program in accordance with the other sections 
                of this Act.
                    ``(B) Limitation.--Subsequent to re-
                entering the food stamp program under 
                subparagraph (A), the State shall only be 
                eligible to participate in the food stamp 
                program in accordance with the other sections 
                of this Act and shall not be eligible to elect 
                to participate in the program established under 
                subsection (b).
            ``(4) Program exclusive.--
                    ``(A) In general.--A State that is 
                participating in the program established under 
                subsection (b) shall not be subject to, or 
                receive any benefit under, this Act except as 
                provided in this section.
                    ``(B) Contract with federal government.--
                Nothing in this section shall prohibit a State 
                from contracting with the Federal Government 
                for the provision of services or materials 
                necessary to carry out a program under this 
                section.
    ``(d) Lead Agency.--A State desiring to receive a grant 
under this section shall designate, in an application submitted 
to the Secretary under subsection (e)(1), an appropriate State 
agency responsible for the administration of the program under 
this section as the lead agency.
    ``(e) Application and Plan.--
            ``(1) Application.--To be eligible to receive 
        assistance under this section, a State shall prepare 
        and submit to the Secretary an application at such 
        time, in such manner, and containing such information 
        as the Secretary shall by regulation require, 
        including--
                    ``(A) an assurance that the State will 
                comply with the requirements of this section;
                    ``(B) a State plan that meets the 
                requirements of paragraph (3); and
                    ``(C) an assurance that the State will 
                comply with the requirements of the State plan 
                under paragraph (3).
            ``(2) Annual plan.--The State plan contained in the 
        application under paragraph (1) shall be submitted for 
        approval annually.
            ``(3) Requirements of plan.--
                    ``(A) Lead agency.--The State plan shall 
                identify the lead agency.
                    ``(B) Use of block grant funds.--The State 
                plan shall provide that the State shall use the 
                amounts provided to the State for each fiscal 
                year under this section--
                            ``(i) to provide food assistance to 
                        needy individuals and families residing 
                        in the State, other than residents of 
                        institutions who are ineligible for 
                        food stamps under section 3(i); and
                            ``(ii) to pay administrative costs 
                        incurred in providing the assistance.
                    ``(C) Groups served.--The State plan shall 
                describe how and to what extent the program 
                will serve specific groups of individuals and 
                families and how the treatment will differ from 
                treatment under the food stamp program under 
                the other sections of this Act of the 
                individuals and families, including--
                            ``(i) elderly individuals and 
                        families;
                            ``(ii) migrants or seasonal 
                        farmworkers;
                            ``(iii) homeless individuals and 
                        families;
                            ``(iv) individuals and families who 
                        live in institutions eligible under 
                        section 3(i);
                            ``(v) individuals and families with 
                        earnings; and
                            ``(vi) members of Indian tribes or 
                        tribal organizations.
                    ``(D) Assistance for entire state.--The 
                State plan shall provide that benefits under 
                this section shall be available throughout the 
                entire State.
                    ``(E) Notice and hearings.--The State plan 
                shall provide that an individual or family who 
                applies for, or receives, assistance under this 
                section shall be provided with notice of, and 
                an opportunity for a hearing on, any action 
                under this section that adversely affects the 
                individual or family.
                    ``(F) Assessment of Needs.--The State plan 
                shall assess the food and nutrition needs of 
                needy persons residing in the State.
                    ``(G) Eligibility standards.--The State 
                plan shall describe the income, resource, and 
                other eligibility standards that are 
                established for the receipt of assistance under 
                this section.
                    ``(H) Disqualification of fleeing felons.--
                The State plan shall provide for the 
                disqualification of any individual who would be 
                disqualified from participating in the food 
                stamp program under section 6(k).
                    ``(I) Receiving benefits in more than 1 
                jurisdiction.--The State plan shall establish a 
                system for the exchange of information with 
                other States to verify the identity and receipt 
                of benefits by recipients.
                    ``(J) Privacy.--The State plan shall 
                provide for safeguarding and restricting the 
                use and disclosure of information about any 
                individual or family receiving assistance under 
                this section.
                    ``(K) Other information.--The State plan 
                shall contain such other information as may be 
                required by the Secretary.
            ``(4) Approval of application and plan.--The 
        Secretary shall approve an application and State plan 
        that satisfies the requirements of this section.
    ``(f) No Individual or Family Entitlement to Assistance.--
Nothing in this section--
            ``(1) entitles any individual or family to 
        assistance under this section; or
            ``(2) limits the right of a State to impose 
        additional limitations or conditions on assistance 
        under this section.
    ``(g) Benefits for Aliens.--
            ``(1) Eligibility.--No individual who is an alien 
        shall be eligible to receive benefits under a State 
        plan approved under subsection (e)(4) if the individual 
        is not eligible to participate in the food stamp 
        program due to the alien status of the individual.
            ``(2) Income.--The State plan shall provide that 
        the income of an alien shall be determined in 
        accordance with section 5(i).
    ``(h) Employment and Training.--
            ``(1) Work requirements.--No individual or 
        household shall be eligible to receive benefits under a 
        State plan funded under this section if the individual 
        or household is not eligible to participate in the food 
        stamp program under subsection (d) or (o) of section 6.
            ``(2) Work programs.--Each State shall implement an 
        employment and training program in accordance with the 
        terms and conditions of section 6(d)(4) for individuals 
        under the program and shall be eligible to receive 
        funding under section 16(h).
    ``(i) Enforcement.--
            ``(1) Review of compliance with state plan.--The 
        Secretary shall review and monitor State compliance 
        with this section and the State plan approved under 
        subsection (e)(4).
            ``(2) Noncompliance.--
                    ``(A) In general.--If the Secretary, after 
                reasonable notice to a State and opportunity 
                for a hearing, finds that--
                            ``(i) there has been a failure by 
                        the State to comply substantially with 
                        any provision or requirement set forth 
                        in the State plan approved under 
                        subsection (e)(4); or
                            ``(ii) in the operation of any 
                        program or activity for which 
                        assistance is provided under this 
                        section, there is a failure by the 
                        State to comply substantially with any 
                        provision of this section;
                the Secretary shall notify the State of the 
                finding and that no further grants will be made 
                to the State under this section (or, in the 
                case of noncompliance in the operation of a 
                program or activity, that no further grants to 
                the State will be made with respect to the 
                program or activity) until the Secretary is 
                satisfied that there is no longer any failure 
                to comply or that the noncompliance will be 
                promptly corrected.
                    ``(B) Other penalties.--In the case of a 
                finding of noncompliance made pursuant to 
                subparagraph (A), the Secretary may, in 
                addition to, or in lieu of, imposing the 
                penalties described in subparagraph (A), impose 
                other appropriate penalties, including 
                recoupment of money improperly expended for 
                purposes prohibited or not authorized by this 
                section and disqualification from the receipt 
                of financial assistance under this section.
                    ``(C) Notice.--The notice required under 
                subparagraph (A) shall include a specific 
                identification of any additional penalty being 
                imposed under subparagraph (B).
            ``(3) Issuance of regulations.--The Secretary shall 
        establish by regulation procedures for--
                    ``(A) receiving, processing, and 
                determining the validity of complaints made to 
                the Secretary concerning any failure of a State 
                to comply with the State plan or any 
                requirement of this section; and
                    ``(B) imposing penalties under this 
                section.
    ``(j) Grant.--
            ``(1) In general.--For each fiscal year, the 
        Secretary shall pay to a State that has an application 
        approved by the Secretary under subsection (e)(4) an 
        amount that is equal to the grant of the State under 
        subsection (m) for the fiscal year.
            ``(2) Method of Grant.--The Secretary shall make a 
        grant to a State for a fiscal year under this section 
        by issuing 1 or more letters of credit for the fiscal 
        year, with necessary adjustments on account of 
        overpayments or underpayments, as determined by the 
        Secretary.
            ``(3) Spending of grants by state.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), a grant to a State determined 
                under subsection (m)(1) for a fiscal year may 
                be expended by the State only in the fiscal 
                year.
                    ``(B) Carryover.--The State may reserve up 
                to 10 percent of a grant determined under 
                subsection (m)(1) for a fiscal year to provide 
                assistance under this section in subsequent 
                fiscal years, except that the reserved funds 
                may not exceed 30 percent of the total grant 
                received under this section for a fiscal year.
            ``(4) Food assistance and administrative 
        expenditures.--In each fiscal year, not more than 6 
        percent of the Federal and State funds required to be 
        expended by a State under this section shall be used 
        for administrative expenses.
            ``(5) Provision of food assistance.--A State may 
        provide food assistance under this section in any 
        manner determined appropriate by the State, such as 
        electronic benefit transfer limited to food purchases, 
        coupons limited to food purchases, or direct provision 
        of commodities.
    ``(k) Quality Control.--Each State participating in the 
program established under this section shall maintain a system 
in accordance with, and shall be subject to section 16(c), 
including sanctions and eligibility for incentive payment under 
section 16(c), adjusted for State specific characteristics 
under regulations issued by the Secretary.
    ``(l) Nondiscrimination.--
            ``(1) In general.--The Secretary shall not provide 
        financial assistance for any program, project, or 
        activity under this section if any person with 
        responsibilities for the operation of the program, 
        project, or activity discriminates with respect to the 
        program, project, or activity because of race, 
        religion, color, national origin, sex, or disability.
            ``(2) Enforcement.--The powers, remedies, and 
        procedures set forth in title VI of the Civil Rights 
        Act of 1964 (42 U.S.C. 2000d et seq.) may be used by 
        the Secretary to enforce paragraph (1).
    ``(m) Grant Calculation.--
            ``(1) State grant.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), from the amounts made 
                available under section 18 for each fiscal 
                year, the Secretary shall provide a grant to 
                each State participating in the program 
                established under this section an amount that 
                is equal to the sum of--
                            ``(i) the greater of, as determined 
                        by the Secretary--
                                    ``(I) the total dollar 
                                value of all benefits issued 
                                under the food stamp program 
                                established under this Act by 
                                the State during fiscal year 
                                1994; or
                                    ``(II) the average per 
                                fiscal year of the total dollar 
                                value of all benefits issued 
                                under the food stamp program by 
                                the State during each of fiscal 
                                years 1992 through 1994; and
                            ``(ii) the greater of, as 
                        determined by the Secretary--
                                    ``(I) the total amount 
                                received by the State for 
                                administrative costs under 
                                section 16(a) (not including 
                                any adjustment under section 
                                16(c)) for fiscal year 1994; or
                                    ``(II) the average per 
                                fiscal year of the total amount 
                                received by the State for 
                                administrative costs under 
                                section 16(a) (not including 
                                any adjustment under section 
                                16(c)) for each of fiscal years 
                                1992 through 1994.
                    ``(B) Insufficient funds.--If the Secretary 
                finds that the total amount of grants to which 
                States would otherwise be entitled for a fiscal 
                year under subparagraph (A) will exceed the 
                amount of funds that will be made available to 
                provide the grants for the fiscal year, the 
                Secretary shall reduce the grants made to 
                States under this subsection, on a pro rata 
                basis, to the extent necessary.
            ``(2) Reduction.--The Secretary shall reduce the 
        grant of a State by the amount a State has agreed to 
        contribute under subsection (c)(1)(C).''.
    (b) Employment and Training Funding.--Section 16(h) of the 
Act (7 U.S.C. 2025(a)), as amended by section 1027(d)(2), is 
amended by adding at the end the following:
            ``(6) Block grant states.--Each State electing to 
        operate a program under section 27 shall--
                    ``(A) receive the greater of--
                            ``(i) the total dollar value of the 
                        funds received under paragraph (1) by 
                        the State during fiscal year 1994; or
                            ``(ii) the average per fiscal year 
                        of the total dollar value of all funds 
                        received under paragraph (1) by the 
                        State during each of fiscal years 1992 
                        through 1994; and
                    ``(B) be eligible to receive funds under 
                paragraph (2), within the limitations in 
                section 6(d)(4)(K).''.
    (c) Research On Optional State Food Assistance Block 
Grant.--Section 17 of the Act (7 U.S.C. 2026), as amended by 
section 1062(c)(2), is amended by adding at the end the 
following:
    ``(l) Research On Optional State Food Assistance Block 
Grant.--The Secretary may conduct research on the effects and 
costs of a State program carried out under section 27.''.

SEC. 1064. A STUDY OF THE USE OF FOOD STAMPS TO PURCHASE VITAMINS AND 
                    MINERALS.

    The Secretary of Agriculture shall, in consultation with 
the National Academy of Sciences and the Center for Disease 
Control and Prevention, conduct a study of the use of food 
stamps to purchase vitamins and minerals. The study shall 
include an analysis of scientific findings on the efficacy of 
and need for vitamins and minerals, including the adequacy of 
vitamin and mineral intake in low income populations, as shown 
by existing research and surveys, and the potential value of 
nutritional supplements in filling nutrient gaps that may exist 
in the population as a whole or in vulnerable subgroups in the 
U.S. population; the impact of nutritional improvements 
(including vitamin or mineral supplementation) on health status 
and health care costs for women of childbearing age, pregnant 
or lactating women, and the elderly; the cost of vitamin and 
mineral supplements commercially available; the purchasing 
habits of low income populations with regard to vitamins and 
minerals; the impact on the food purchases of low income 
households; and the economic impact on agricultural 
commodities. The Secretary shall report the results of the 
study to the Committee on Agriculture of the U.S. House of 
Representatives not later than December 15, 1996.''.

SEC. 1065. INVESTIGATIONS.

    Section 12(a) of the Food Stamp Act of 1977 (7 U.S.C. 
2021(a)) is amended by adding at the end the following:
``Regulations issued pursuant to this Act shall provide 
criteria for the finding of violations and the suspension or 
disqualification of a retail food store or wholesale food 
concern on the basis of evidence which may include, but is not 
limited to, facts established through on-site investigations, 
inconsistent redemption data or evidence obtained through 
transaction reports under electronic benefit transfer 
systems.''.

SEC. 1066. FOOD STAMP ELIGIBILITY.

    Section 6(f) of the Food Stamp Act of 1977 (7 U.S.C. 
2015(f)) is amended by striking the third sentence and 
inserting the following:
``The State agency shall, at its option, consider either all 
income and financial resources of the individual rendered 
ineligible to participate in the food stamp program under this 
subsection, or such income, less a pro rata share, and the 
financial resources of the ineligible individual, to determine 
the eligibility and the value of the allotment of the household 
of which such individual is a member.''.

SEC. 1067. REPORT BY THE SECRETARY.

    The Secretary of Agriculture may report to the Committee on 
Agriculture of the House of Representatives, not later than 
January 1, 2000, on the effect of the food stamp reforms in the 
Welfare and Medicaid Reform Act of 1996 and the ability of 
State and local governments to deal with people in poverty. The 
report must answer the question: ``Did people become more 
personally responsible and were work opportunities provided 
such that poverty in America is better managed?''.

SEC. 1068. DEFICIT REDUCTION.

    It is the sense of the Committee on Agriculture of the 
House of Representatives that reductions in outlays resulting 
from this title shall not be taken into account for purposes of 
section 552 of the Balanced Budget and Emergency Deficit 
Control Act of 1985.

              Subtitle B--Commodity Distribution Programs

SEC. 1071. EMERGENCY FOOD ASSISTANCE PROGRAM.

    (a) Definitions.--Section 201A of the Emergency Food 
Assistance Act of 1983 (Public Law 98-8; 7 U.S.C. 612c note) is 
amended to read as follows:

``SEC. 201A. DEFINITIONS.

    ``In this Act:
            ``(1) Additional commodities.--The term `additional 
        commodities' means commodities made available under 
        section 214 in addition to the commodities made 
        available under sections 202 and 203D.
            ``(2) Average monthly number of unemployed 
        persons.--The term `average monthly number of 
        unemployed persons' means the average monthly number of 
        unemployed persons in each State in the most recent 
        fiscal year for which information concerning the number 
        of unemployed persons is available, as determined by 
        the Bureau of Labor Statistics of the Department of 
        Labor.
            ``(3) Eligible recipient agency.--The term 
        `eligible recipient agency' means a public or nonprofit 
        organization--
                    ``(A) that administers--
                            ``(i) an emergency feeding 
                        organization;
                            ``(ii) a charitable institution 
                        (including a hospital and a retirement 
                        home, but excluding a penal 
                        institution) to the extent that the 
                        institution serves needy persons;
                            ``(iii) a summer camp for children, 
                        or a child nutrition program providing 
                        food service;
                            ``(iv) a nutrition project 
                        operating under the Older Americans Act 
                        of 1965 (42 U.S.C. 3001 et seq.), 
                        including a project that operates a 
                        congregate nutrition site and a project 
                        that provides home-delivered meals; or
                            ``(v) a disaster relief program;
                    ``(B) that has been designated by the 
                appropriate State agency, or by the Secretary; 
                and
                    ``(C) that has been approved by the 
                Secretary for participation in the program 
                established under this Act.
            ``(4) Emergency feeding organization.--The term 
        `emergency feeding organization' means a public or 
        nonprofit organization that administers activities and 
        projects (including the activities and projects of a 
        charitable institution, a food bank, a food pantry, a 
        hunger relief center, a soup kitchen, or a similar 
        public or private nonprofit eligible recipient agency) 
        providing nutrition assistance to relieve situations of 
        emergency and distress through the provision of food to 
        needy persons, including low-income and unemployed 
        persons.
            ``(5) Food bank.--The term `food bank' means a 
        public or charitable institution that maintains an 
        established operation involving the provision of food 
        or edible commodities, or the products of food or 
        edible commodities, to food pantries, soup kitchens, 
        hunger relief centers, or other food or feeding centers 
        that, as an integral part of their normal activities, 
        provide meals or food to feed needy persons on a 
        regular basis.
            ``(6) Food pantry.--The term `food pantry' means a 
        public or private nonprofit organization that 
        distributes food to low-income and unemployed 
        households, including food from sources other than the 
        Department of Agriculture, to relieve situations of 
        emergency and distress.
            ``(7) Poverty line.--The term `poverty line' has 
        the same meaning given the term in section 673(2) of 
        the Community Services Block Grant Act (42 U.S.C. 
        9902(2)).
            ``(8) Soup kitchen.--The term `soup kitchen' means 
        a public or charitable institution that, as an integral 
        part of the normal activities of the institution, 
        maintains an established feeding operation to provide 
        food to needy homeless persons on a regular basis.
            ``(9) Total value of additional commodities.--The 
        term `total value of additional commodities' means the 
        actual cost of all additional commodities made 
        available under section 214 that are paid by the 
        Secretary (including the distribution and processing 
        costs incurred by the Secretary).
            ``(10) Value of additional commodities allocated to 
        each state.--The term `value of additional commodities 
        allocated to each State' means the actual cost of 
        additional commodities made available under section 214 
        and allocated to each State that are paid by the 
        Secretary (including the distribution and processing 
        costs incurred by the Secretary).''.
    (b) State Plan.--Section 202A of the Act (7 U.S.C. 612c 
note) is amended to read as follows:

``SEC. 202A. STATE PLAN.

    ``(a) In General.--To receive commodities under this Act, a 
State shall submit a plan of operation and administration every 
4 years to the Secretary for approval. The plan may be amended 
at any time, with the approval of the Secretary.
    ``(b) Requirements.--Each plan shall--
            ``(1) designate the State agency responsible for 
        distributing the commodities received under this Act;
            ``(2) set forth a plan of operation and 
        administration to expeditiously distribute commodities 
        under this Act;
            ``(3) set forth the standards of eligibility for 
        recipient agencies; and
            ``(4) set forth the standards of eligibility for 
        individual or household recipients of commodities, 
        which shall require--
                    ``(A) individuals or households to be 
                comprised of needy persons; and
                    ``(B) individual or household members to be 
                residing in the geographic location served by 
                the distributing agency at the time of applying 
                for assistance.
    ``(c) State Advisory Board.--The Secretary shall encourage 
each State receiving commodities under this Act to establish a 
State advisory board consisting of representatives of all 
interested entities, both public and private, in the 
distribution of commodities received under this Act in the 
State.''.
    (c) Authorization of Appropriations for Administrative 
Funds.--Section 204(a)(1) of the Act (7 U.S.C. 612c note) is 
amended--
            (1) in the first sentence by striking ``for State 
        and local'' and all that follows through ``under this 
        title'' and inserting ``to pay for the direct and 
        indirect administrative costs of the State related to 
        the processing, transporting, and distributing to 
        eligible recipient agencies of commodities provided by 
        the Secretary under this Act and commodities secured 
        from other sources''; and
            (2) by striking the fourth sentence.
    (d) Delivery of Commodities.--Section 214 of the Act (7 
U.S.C. 612c note) is amended--
            (1) by striking subsections (a) through (e) and 
        (j);
            (2) by redesignating subsections (f) through (i) as 
        subsections (a) through (d), respectively;
            (3) in subsection (b), as redesignated by paragraph 
        (2)--
                    (A) in the first sentence, by striking 
                ``subsection (f) or subsection (j) if 
                applicable,'' and inserting ``subsection (a)''; 
                and
                    (B) in the second sentence, by striking 
                ``subsection (f)'' and inserting ``subsection 
                (a)'';
            (4) by striking subsection (c), as redesignated by 
        paragraph (2), and inserting the following:
    ``(c) Administration.--
            ``(1) In general.--Commodities made available for 
        each fiscal year under this section shall be delivered 
        at reasonable intervals to States based on the grants 
        calculated under subsection (a), or reallocated under 
        subsection (b), before December 31 of the following 
        fiscal year.
            ``(2) Entitlement.--Each State shall be entitled to 
        receive the value of additional commodities determined 
        under subsection (a).''; and
            (5) in subsection (d), as redesignated by paragraph 
        (2), by striking ``or reduce'' and all that follows 
        through ``each fiscal year''.
    (e) Technical Amendments.--The Act (7 U.S.C. 612c note) is 
amended--
            (1) in the first sentence of section 203B(a), by 
        striking ``203 and 203A of this Act'' and inserting 
        ``203A'';
            (2) in section 204(a), by striking ``title'' each 
        place it appears and inserting ``Act'';
            (3) in the first sentence of section 210(e), by 
        striking ``(except as otherwise provided for in section 
        214(j))''; and
            (4) by striking section 212.
    (f) Report on EFAP.--Section 1571 of the Food Security Act 
of 1985 (Public Law 99-198; 7 U.S.C. 612c note) is repealed.
    (g) Availability of Commodities Under the Food Stamp 
Program.--The Food Stamp Act of 1977 (7 U.S.C. 2011 et seq.), 
as amended by sections 1062 and 1063, is amended by adding at 
the end the following:

``SEC. 28. AVAILABILITY OF COMMODITIES FOR THE EMERGENCY FOOD 
                    ASSISTANCE PROGRAM.

    ``(a) Purchase of Commodities.--From amounts appropriated 
under this Act, for each of fiscal years 1997 through 2002, the 
Secretary shall purchase $300,000,000 of a variety of 
nutritious and useful commodities of the types that the 
Secretary has the authority to acquire through the Commodity 
Credit Corporation or under section 32 of the Act entitled `An 
Act to amend the Agricultural Adjustment Act, and for other 
purposes', approved August 24, 1935 (7 U.S.C. 612c), and 
distribute the commodities to States for distribution in 
accordance with section 214 of the Emergency Food Assistance 
Act of 1983 (Public Law 98-8; 7 U.S.C. 612c note).
    ``(b) Basis for Commodity Purchases.--In purchasing 
commodities under subsection (a), the Secretary shall, to the 
extent practicable and appropriate, make purchases based on--
            ``(1) agricultural market conditions;
            ``(2) preferences and needs of States and 
        distributing agencies; and
            ``(3) preferences of recipients.''.
    (h) Effective Date.--The amendments made by subsection (d) 
shall become effective on October 1, 1996.

SEC. 1072. FOOD BANK DEMONSTRATION PROJECT.

    Section 3 of the Charitable Assistance and Food Bank Act of 
1987 (Public Law 100-232; 7 U.S.C. 612c note) is repealed.

SEC. 1073. HUNGER PREVENTION PROGRAMS.

    The Hunger Prevention Act of 1988 (Public Law 100-435; 7 
U.S.C. 612c note) is amended--
            (1) by striking section 110;
            (2) by striking subtitle C of title II; and
            (3) by striking section 502.

SEC. 1074. REPORT ON ENTITLEMENT COMMODITY PROCESSING.

    Section 1773 of the Food, Agriculture, Conservation, and 
Trade Act of 1990 (Public Law 101-624; 7 U.S.C. 612c note) is 
amended by striking subsection (f).

            Subtitle C--Electronic Benefit Transfer Systems

SEC. 1091. PROVISIONS TO ENCOURAGE ELECTRONIC BENEFIT TRANSFER SYSTEMS.

    Section 904 of the Electronic Fund Transfer Act (15 U.S.C. 
1693b) is amended--
            (1) by striking ``(d) In the event'' and inserting 
        ``(d) Applicability to Service Providers Other Than 
        Certain Financial Institutions.--
            ``(1) In general.--In the event''; and
            (2) by adding at the end the following new 
        paragraph:
            ``(2) State and local government electronic benefit 
        transfer programs.--
                    ``(A) Exemption generally.--The 
                disclosures, protections, responsibilities, and 
                remedies established under this title, and any 
                regulation prescribed or order issued by the 
                Board in accordance with this title, shall not 
                apply to any electronic benefit transfer 
                program established under State or local law or 
                administered by a State or local government.
                    ``(B) Exception for direct deposit into 
                recipient's account.--Subparagraph (A) shall 
                not apply with respect to any electronic funds 
                transfer under an electronic benefit transfer 
                program for deposits directly into a consumer 
                account held by the recipient of the benefit.
                    ``(C) Rule of construction.--No provision 
                of this paragraph may be construed as--
                            ``(i) affecting or altering the 
                        protections otherwise applicable with 
                        respect to benefits established by 
                        Federal, State, or local law; or
                            ``(ii) otherwise superseding the 
                        application of any State or local law.
                    ``(D) Electronic benefit transfer program 
                defined.--For purposes of this paragraph, the 
                term `electronic benefit transfer program'--
                            ``(i) means a program under which a 
                        government agency distributes needs-
                        tested benefits by establishing 
                        accounts to be accessed by recipients 
                        electronically, such as through 
                        automated teller machines, or point-of-
                        sale terminals; and
                            ``(ii) does not include employment-
                        related payments, including salaries 
                        and pension, retirement, or 
                        unemployment benefits established by 
                        Federal, State, or local 
                        governments.''.
                   TITLE I--COMMITTEE ON AGRICULTURE

                     U.S. House of Representatives,
                                  Committee on Agriculture,
                                     Washington, DC, June 13, 1996.
Hon. John Kasich,
Chairman, Committee on the Budget, Cannon House Office Building, 
        Washington, DC.
    Dear Chairman Kasich: I am transmitting herewith the 
results of the Committee on Agriculture's consideration of 
recommendations with respect to the reconciliation bill for 
fiscal year 1997, provided for under H.Con.Res. 178, the 
Concurrent Resolution on the Budget--Fiscal Year 1997.
    The instructions to this committee contained in H.Con.Res. 
178, section 201(b)(1) from the Budget Committee (H. Rept. 104-
612) related to ``changes in laws within its [the Committee on 
Agriculture's] jurisdiction that provide direct spending,'' 
especially the Food Stamp Act of 1977 and commodity 
distribution programs and the enclosed recommendations comply 
with those instructions.
    A considerable number of hearings were held in 1995 and 
1996 with respect to welfare reform, and more particularly with 
respect to food stamp and commodity distribution program 
reforms within the jurisdiction of this committee. There were 
also innumerable discussions, briefings, et cetera among the 
members of the committee, representatives the U.S. Department 
of Agriculture, groups representing food stamp recipients, 
representatives of the National Governors Conference, retailers 
of food, religious and other charitable institutions, and other 
groups with an interest in the food stamp and commodity 
distribution programs.
    After H.R. 4, the ``Personal Responsibility Act of 1995'' 
was vetoed by the President January 9, 1996, work commenced on 
what was to become H.R. 3507, the ``Personal Responsibility and 
Work Opportunity Act.'' Title X and related food stamp and 
commodity distribution program provisions of H.R. 3507 are 
essentially the same as they were in H.R. 4 approved by the 
House of Representatives on December 21, 1995, by a vote of 245 
to 178--with one significant exception. The food stamp funding 
cap is eliminated in these recommendations as a concession to, 
and at the request of, the National Governor's Conference, the 
Clinton administration and the Secretary of Agriculture.
    The committee's recommendations contain reforms that meet 
its instructions set forth in H.Con.Res. 178 and in addition 
represent sound food stamp policy. The recommendations with 
respect to the reform of the Food Stamp Program retain the 
program as a Federal safety net; permit States to harmonize 
their assistance to families with dependent children (AFDC) and 
Food Stamp Programs; end all automatic spending increases, 
except for annual increase in food benefits; require able-
bodied persons without dependents to work, and in addition 
there are increased penalties for trafficking and fraud.
    The Staff of the Committee on Agriculture has reviewed the 
text of H.R. 3507 and has worked in cooperation with the other 
committee of jurisdiction in drafting language contained in 
H.R. 3507 as it relates to provisions within this committee's 
jurisdiction. The following provisions of H.R. 3507 have been 
identified as within the Committee on Agriculture's 
jurisdiction:

   TITLE I--BLOCK GRANTS FOR TEMPORARY ASSISTANCE FOR NEEDY FAMILIES

    Food stamp recipients who receive cash benefits under a 
program established by the State under the Temporary Assistance 
for Needy Families Block Grant (TANF) established in section 
103 may be issued food stamp benefits in accordance with the 
rules and procedures established by the State under TANF.
    Food stamp recipients who participate in the program 
established by the State under TANF will be required to meet 
the work requirements of the program established by the State 
under TANF.

                TITLE II--SUPPLEMENTARY SECURITY INCOME

    To the extent that the changes in this title affect 
eligibility of individuals for Supplemental Security Income, it 
affects the categorical eligibility of such individuals for the 
Food Stamp Program.

                        TITLE III--CHILD SUPPORT

    To the extent that provisions relating to the establishment 
of paternity affect the eligibility of persons receiving 
benefits under the program established by the State under TANF, 
food stamp recipients TANF could be affected.

      TITLE IV--RESTRICTING WELFARE AND PUBLIC BENEFITS FOR ALIENS

    Section 401 prohibits illegal aliens from receiving any 
Federal means-tested benefits, including food stamps.
    Section 403 prohibits legal aliens, with certain 
exceptions, from receiving food stamps;

                   TITLE IX--CHILD NUTRITION PROGRAMS

    To the extent that provisions relating to providing 
commodities under the Child Nutrition Programs could be 
affected.

                   TITLE XI--MISCELLANEOUS PROVISIONS

    Section 1105 allows States to consider the income and 
resources of an alien ineligible for food stamps when 
determining the eligibility of a household for food stamps.
    Section 1110 exempts State and local governments from 
liability under the Electronic Fund Transfer Act as it relates 
to the operation of electronic benefits transfer systems 
established by a State to issue benefits under the Food Stamp 
Program or any other programs.
    The Committee on Agriculture preserves its jurisdictional 
prerogatives as to such other provisions as further examination 
may disclose to be within its jurisdiction.
    During the markup of these recommendations, the ranking 
minority member, Congressman E (Kika) de la Garza, offered a 
substitute amendment that was for the most part the 
administration's food stamp proposal (not introduced in the 
House as a bill and S. 1841 in the Senate). A comparison of Mr. 
de la Garza's substitute with title X, et cetera, of H.R. 3507 
reflects that approximately 55 percent of the number of food 
stamp reforms in H.R. 3507 are identical to those in the 
substitute and 72 percent of the food stamp reforms in H.R. 
3507 are identical or similar to those in the substitute. The 
CBO preliminary cost estimate for reductions in food stamp and 
related spending for the substitute is $18.4 bill in whereas it 
is $23 billion for those in H.R. 3507.
    Several other amendments were offered during markup, some 
of which were adopted, others withdrawn, and several failed 
adoption.
    The committee's markup of H.R. 3507 commenced June 11 and 
was completed at 1:30 p.m., June 13, 1996.
    I am enclosing a hard copy of the committee's 
recommendations on title X and related provisions of H.R. 3507 
that achieve the budget reductions as contained in the 
instructions contained in H.Con.Res. 178 and as requested in 
your letter of June 12, 1996. There is also enclosed a hard 
copy of the Section-by-Section Analysis of the recommendations, 
as well as a Word Perfect 6.0 disk thereof. Final Congressional 
Budget Office cost estimates are not yet available and will be 
forwarded upon receipt but no later than June 17th. Minority 
views, if any; a hard copy of the Ramseyer; and the remainder 
of the contents of the report filed pursuant to Rule XI of the 
Rules of the House, including the Brief Explanation, Committee 
Consideration, the Purpose and Need, et cetera for the 
committee's recommendations will also be forwarded when 
available, but not later than Monday, June 17th.
            Sincerely,
                                             Pat Roberts, Chairman.

                                CONTENTS

                                                                   Page
Brief Explanation................................................    61
Purpose and Need.................................................    63
Section-by-Section Analysis of the Legislation...................    72
Committee Consideration..........................................    87
Rollcall Votes...................................................    99
Budget Act Compliance............................................   100
Inflationary Impact Statement....................................   101
Oversight Statement..............................................   101
Congressional Budget Office Estimate.............................   101
Changes in Existing Law..........................................   101

                           Brief Explanation

    The Food Stamp Reform and Commodity Distribution Act of 
1996, as amended by the House Committee on Agriculture, is 
designed to reform and simplify the Food Stamp Program and to 
improve the Commodity Distribution Programs of the Department 
of Agriculture, and for other purposes.

                     Subtitle A--Food Stamp Program

          (1) reauthorizes and reforms the Food Stamp Program;
          (2) allows States to harmonize Food Stamp Program 
        rules with those of the State Aid to Families with 
        Dependent Children program for those receiving benefits 
        from both programs;
          (3) provides for an annual increase in food stamp 
        benefits, based on 100 percent of the thrifty food 
        plan;
          (4) keeps certain income deductions at fiscal year 
        1996 levels;
          (5) keeps the threshold ($4,600) above which the fair 
        market value of vehicles is counted as an asset in 
        determining food stamp eligibility at the fiscal year 
        1996 level;
          (6) requires able-bodied individuals between the ages 
        of 18 and 50, with no dependents, to work at least 20 
        hours a week or participate in a State program for 4 
        months out of every 12 month period in order to 
        continue to receive food stamps;
          (7) allows States to use food stamps in work 
        supplementation or support programs where participants 
        have the opportunity to achieve practical work 
        experience;
          (8) increases penalties for trafficking and fraud;
          (9) provides that the same penalty for individuals 
        failing to comply with the rules of a State welfare 
        program would apply to food stamps;
          (10) encourages States to implement electronic 
        benefit transfer (EBT) systems;
          (11) provides States with the option to operate the 
        Food Stamp Program under a block grant if EBT operates 
        statewide, or if the rate of error is reduced to 
        acceptable levels, or if a State pays that part of the 
        food stamp errors over acceptable levels.

              Subtitle B--Commodity Distribution Programs

          (1) consolidates USDA commodity distribution programs 
        into one consolidated program, the emergency food 
        assistance program (TEFAP);
          (2) provides $300 million annually, beginning in 
        fiscal year 1997, to purchase, process, store, and 
        distribute commodities;
          (3) establishes guidelines for allocation of 
        commodities among States, supplementation of 
        commodities, and eligibility standards.
          (4) requires the Secretary of Agriculture to take 
        precautions to ensure that commodities made available 
        do not displace commercial sales.

            Subtitle C--Electronic Benefit Transfer Systems

          (1) Exempts EBT systems that provide for distribution 
        of means-tested benefits in States from the Regulation 
        E requirements.

                            Purpose and Need

                  A. REFORM OF THE FOOD STAMP PROGRAM

Food Stamp Program

    The Food Stamp Program began as pilot projects in 1961, by 
Presidential Executive Order under the authority to spend funds 
in order to support agriculture. In 1964, the administration 
proposed and Congress passed the Food Stamp Act. Eligibility 
standards were set by States, cities, and counties and they 
could choose to operate a Food Stamp Program or a food 
distribution program. As is the case now, the benefits were 
paid by the Federal Government. In 1971, uniform, national 
eligibility standards were set by Congress and the food stamp 
benefit was adjusted to reflect increases due to inflation. By 
1975, amendments to the Food Stamp Act were adopted requiring 
that if the Food Stamp Program was in operation in any place in 
a State, it must be offered statewide. By this time the food 
distribution program was all but phased out.
    In 1979, the Food Stamp Act of 1977 took effect, replacing 
the 1964 Act. The purchase requirement, through which 
participants had to pay a portion of their income, representing 
the expected contribution to their food costs, in order to 
receive a larger amount of food stamps, was eliminated. Because 
this action was determined to increase participation in the 
Food Stamp Program, Congress coupled this with restrictions on 
eligibility and benefits. The amount that could be spent on the 
Food Stamp Program was specifically limited through 
authorization ceilings. Nevertheless, the costs of the Food 
Stamp Program grew considerably. Congress acted to limit the 
growth through annual, rather than semi-annual inflation 
adjustments and established fiscal penalties for States with 
high rates of error. In 1981, the Food Stamp Program again was 
changed. Inflation adjustments were limited and the income 
eligibility standard was set at 130 percent of the poverty 
level. The growth of the program was slowed.
    In 1984 and 1985, previous limitations were restored and 
benefits were increased. Further, in 1988, a 3 percent addition 
to the maximum food stamp benefit was enacted and benefits were 
further increased. Since that time the costs of the Food Stamp 
Program have continued to grow, due both to changes in the law, 
specifically the Omnibus Budget Reconciliation Act of 1993, and 
as a result of the automatic adjustments in several of the food 
stamp deductions and in the thrifty food plan.

Food Stamp Program costs

------------------------------------------------------------------------
                                                        Average monthly 
               Year                    Spending (in      participation  
                                        billions)        (in millions)  
------------------------------------------------------------------------
1984..............................              $12.4               22.4
1985..............................               12.5               21.4
1986..............................               12.5               20.9
1987..............................               12.5               20.6
1988..............................               13.2               20.0
1989..............................               13.8               20.2
1990..............................               16.4               21.5
1991..............................               19.7               24.1
1992..............................               23.5               26.9
1993..............................               24.7               28.4
1994..............................               25.6               28.9
1995..............................               25.6               28.0
1996 \1\..........................               26.4               27.5
------------------------------------------------------------------------
\1\ Estimate.                                                           
                                                                        
Source: U.S. Department of Agriculture (includes benefits, State        
  administrative costs, and other program costs for the Food Stamp      
  Program and nutrition assistance to Puerto Rico and the Northern      
  Marianas).                                                            

Limiting automatic increases

    The committee believes it is time to limit the automatic 
increases built into the Food Stamp Program. Therefore, the 
committee has stopped the automatic indexing of the standard 
deduction, the excess shelter deduction, and the homeless 
shelter allowance. The committee has provided for an annual 
increase in the thrifty food plan, the basis of food stamp 
benefits, based on 100 percent of the thrifty food plan, rather 
than the 103 percent of the thrifty food plan now in place.
    Basic food stamp benefits are currently indexed each year 
to reflect the changes in the cost of the thrifty food plan. 
The annual increase in the thrifty food plan will continue to 
be automatically indexed, and will be set at 100 percent of the 
thrifty food plan.
    The food stamp standard deduction ($134 per month) will 
continue at the fiscal year 1996 level. The food stamp excess 
shelter deduction ($247 per month) will continue at the fiscal 
year 1996 level. The food stamp homeless shelter deduction, now 
set by regulation at $143 per month, will continue at the 
fiscal year 1996 level.
    The standard deduction was introduced in the 1977 Food 
Stamp Act and it was to be adjusted based on increases in the 
Consumer Price Index for nonfood items. It was established to 
take the place of itemized deductions. The current excess 
shelter deduction was also introduced in the 1977 Food Stamp 
Act (the earlier program included a shelter deduction that was 
more generous than that included in the 1977 Act). The 
deduction provides flexibility for families subject to varying 
weather conditions and for increased rents. Shelter expenses, 
including utilities, to the extent they exceed 50 percent of a 
family's net income, after all other deductions, can be 
deducted as a shelter cost, up to a maximum. The 1993 Budget 
Reconciliation Act increased this deduction and eliminated the 
ceiling after fiscal year 1996.
    Other deductions that are available to food stamp families 
include a deduction of 20 percent of earnings in recognition of 
taxes and work related expenses; dependent care expenses 
related to work or training up to $200 for children under the 
age of 2 years and $175 per month for all other dependents; 
medical expense deduction for elderly or disabled food stamp 
participants, to the extent medical expenses exceed $35 per 
month, per person; and for the elderly and disabled an 
unlimited excess shelter expenses deduction is allowed. These 
deductions are not changed in the committee bill.

Vehicle allowance

    The fair market value of vehicles is counted as an asset in 
determining food stamp eligibility, to the extent the value 
exceeds $4,600 (total assets cannot exceed $2,000 or $3,000 for 
elderly persons). The $4,600 threshold is scheduled to rise to 
$5,000 in October 1996, and then be indexed for inflation. 
Also, the value of vehicles used to transport a food stamp 
household's fuel or water, if that is the primary source of 
fuel or water, is not counted in determining the total assets 
of a household. The October 1996, increase, and the indexing of 
the threshold are repealed.
    The Omnibus Budget Reconciliation Act of 1993 expanded and 
indexed the fair market value of vehicles that can be owned by 
food stamp participants. The committee believes this is another 
example of indexing in the Food Stamp Program that can result 
in uncontrolled cost escalation.
    Current food stamp law provides that certain vehicles are 
not counted at all in calculating eligibility for food stamp 
benefits. These vehicles include those used to produce income; 
necessary for long distance travel for migrant and seasonal 
workers; used for subsistence hunting or fishing; or needed for 
a physically disabled person. The fair market value of other 
vehicles is calculated and to the extent that value exceeds 
$4,600, the amount over $4,600 is attributed toward the 
resource limit of $2,000. Therefore a family could have a 
vehicle with a fair market value of $6,600, if there are no 
other liquid assets, and still retain eligibility for food 
stamps. Additionally, if a family has more than one vehicle, 
each valued under $4,600, eligibility for food stamps will not 
be affected.

Simplified Food Stamp Program

    The committee has determined that the Food Stamp Program 
will remain at the Federal level. Reform of the Aid to Families 
with Dependent Children (AFDC) program and other welfare 
programs will constitute significant changes in the provision 
of welfare. Until States have completed the transition to the 
reformed programs, food stamps should remain a Federal program, 
reformed, but still available to persons in need of food.
    The committee believes it is essential to provide States 
with the ability to harmonize their new welfare program with 
the Food Stamp Program and has therefore provided States with 
considerable latitude to accomplish this task. Over the past 
several years many efforts have been made to allow States this 
option. Demonstration projects have been authorized, with some 
more successful than others. The 1981 Food Stamp and Commodity 
Distribution Amendments and the 1990 farm bill authorized 
demonstration projects to test various forms of a simplified 
process to determine eligibility and benefits for AFDC and food 
stamps.
    The 1981 Simplified Application Demonstration Projects 
tested how different levels of standardization and 
simplification affect benefits, administrative costs, and 
errors in the Food Stamp Program. The demonstration projects 
centered on food stamp participants who also receive AFDC, 
Supplemental Security Income (SSI), and/or Medicaid. These 
simplified programs operated in Illinois, California, and 
Oklahoma. In Illinois, program simplification entailed 
assigning food stamp benefits to AFDC households based on 
standard benefit tables under which all households within 
certain categories receive the same food stamp allotment. Three 
other demonstration sites adopted more limited forms of 
simplification. San Diego and Fresno Counties in California 
used AFDC income definitions for the Food Stamp Program. 
Oklahoma standardized the gross income level used to calculate 
food stamp benefits for households at the maximum AFDC payment 
for the households plus the household's ``$30 plus \1/3\'' AFDC 
earned income disregard. The demonstration projects authorized 
by the 1990 farm bill were not implemented. Three other States 
have implemented projects with similar characteristics, 
Alabama, Minnesota, and Washington.
    The 1990 farm bill also established a Welfare 
Simplification and Coordination Advisory Committee. The members 
of that advisory committee were experts in the fields of public 
assistance programs, including food stamps, AFDC, medical 
assistance and housing programs and had demonstrated expertise 
in evaluating the operation of these programs and the 
interaction of these programs with one another. Representatives 
of State and local administrators and recipients were included 
as well. In June 1993, the advisory committee issued its report 
and recommended the replacement of the ``numerous programs that 
currently serve the needy with one, family-focused, client-
oriented, comprehensive program.''
    The committee believes it is time to provide States with 
the option of harmonizing their new AFDC program with the Food 
Stamp Program for those participants receiving assistance from 
both programs. The Food Stamp Program is reformed to make it 
possible for States to harmonize the eligibility and benefit 
determination standards for the new program and food stamps. 
States will have the option to establish one set of benefit 
rules for families applying for the new program and for food 
stamps. Penalties applied by the State program rules for work 
and program compliance will not result in an increase in food 
stamp benefits. States will be able to choose to apply the same 
penalties to food stamp benefits as are applied to other State 
welfare programs work and compliance requirements.
    States will be able to define and count income and expenses 
for food stamp benefit purposes in the same way they do in 
their State program. They will be able to simplify rules, 
provide standard benefits varied by household size, area of 
residence, or other factors. The same procedural rules can be 
used for the State program and for food stamps (reporting of 
income, changes in household circumstances, verification 
standards) as long as a State provides notice of changes in 
benefits and a fair hearing process.
    The committee intends that USDA can refuse to approve a 
State food stamp simplification plan only if it is judged to 
increase Federal food stamp costs or fails to include adequate 
notice and fair hearing rights and certain other provisions of 
current food stamp law.
    The Federal Government operates a multitude of assistance 
programs which are under the jurisdiction of different Federal 
agencies and in some cases different State and local agencies. 
For major income and food assistance programs, this lack of 
coordination and resolution of the differences among programs 
is troublesome. The committee considers the simplified Food 
Stamp Program a first step in the process of coordination. 
Further steps will be considered as the States continue the 
process of implementing reform of the overall welfare system.

Work requirements and program options in the Food Stamp Program

    The committee believes that able-bodied participants with 
no dependents, between the ages of 18 and 50 years, must be 
required work or be in a training program. These persons will 
be ineligible for food stamps after 4 months, out of a 12 month 
period, unless they are employed at least 20 hours per week in 
a job; are in a training program for at least 20 hours per 
week, or participate in workfare.
    The committee intends that, for 20 hours per week, able-
bodied persons between the ages of 18 and 50, with no 
dependents, should be working; be in a program under the Job 
Training Partnership Act; be in a program under the Trade 
Adjustment Act; or be in a program of employment and training 
that meets the standards set by the Governor. These persons may 
also meet the work requirement by participating in workfare 
programs.
    The committee understands that there may be instances in 
which high unemployment rates in all or part of a State or 
other specified circumstances may limit the jobs available for 
able-bodied food stamp participants between 18 and 50 years 
with no dependents. Therefore the Secretary, upon request from 
a State, is provided with the authority to waive job 
requirements in these circumstances or if unemployment rates 
are above 10 percent. The committee intends that the Secretary, 
in exercising this authority, will provide the Agriculture 
Committees of the House of Representatives and the Senate with 
the rationale for such a decision.
    The committee has provided States with new money (food 
stamp benefits) to give employers who would, in turn, pay it, 
in lieu of food coupons, to food stamp recipients to 
participate in work supplementation or support programs. Such 
programs include those in which public assistance benefits, 
including food stamps, are provided to employers who hire 
public assistance recipients. The benefits pay part of the 
wages. These programs must meet standards set by the Secretary. 
Several States, including Oregon and Mississippi, have 
indicated interest in these types of work programs. The 
committee expects that the Secretary will keep the committee 
informed at regular intervals as to the progress of these work 
supplementation or support programs.

Food Stamp Program integrity

    The incidence of fraud and the resulting losses to the Food 
Stamp Program are steadily increasing as the number of Food 
Stamp Program participants and the total value of benefits 
received increase. In fiscal year 1996, it is estimated that 
the Food Stamp Program will cost over $26 billion and food 
stamp benefits will be issued to a monthly average of more than 
27 million recipients.
    Fraud occurs in the Food Stamp Program in three different 
ways. The first method of fraud is in the certification and 
issuance of benefits. USDA estimates that $1.8 billion in food 
stamp benefits were overissued to recipients in fiscal year 
1994. Of this total, about $414 million was issued to 
recipients as a result of fraud. The rest was the result of 
unintentional recipient error and caseworker error.
    Recipient fraud varies from the intentional under-reporting 
of income or inflation of household expenses to elaborate 
schemes involving the creation of false documents and 
fictitious identities. The committee heard testimony describing 
a recent incident in the State of Washington in which two State 
welfare caseworkers and a refugee counselor were engaged in a 
scheme to fraudulently obtain social security and food stamp 
benefits for at least 300 refugees. The false food stamp 
applications were prompted by the refugee counselor and the 
caseworkers, who took kickbacks from the refugees in return for 
their being certified to receive benefits.
    The second method of fraud is street trafficking in food 
stamp coupons. Street trafficking involves a person who sells, 
purchases, or barters food stamps for cash or other nonfood 
items. In many communities, food stamps have become a second 
currency. The committee heard reports and witnessed undercover 
video footage of food stamps being traded for cash, drugs, 
guns, and a stolen car.
    The committee also heard reports that it was not uncommon 
for food stamp traffickers to be a part of other criminal 
enterprises, such as theft and fencing rings or drug 
trafficking operations. In Smithfield, North Carolina, OIG 
agents and other law enforcement officers successfully 
penetrated an organized drug trafficking ring that was 
transporting large quantities of ``crack'' cocaine from Florida 
to Smithfield. During the investigation, OIG documented members 
of the gang exchanging cocaine on numerous occasions for over 
$23,000 in food stamps. In Los Angeles, an undercover OIG agent 
contacted a street trafficker who agreed to buy $30,000 in food 
stamps from the agent. A subsequent search of the trafficker's 
residence and automobile uncovered an additional $82,000 in 
food stamps that had been improperly acquired from recipients.
    The third method of fraud is retail food store and 
wholesale food concern trafficking. USDA is responsible for 
authorizing retail food stores and wholesale food concerns to 
redeem food stamps. Currently, over 207,000 retail food stores 
and wholesale food concerns are authorized to redeem food 
stamps. Each year, about 30,000 new entities apply for 
authorization. Also, each year about 30,000 entities are 
disqualified or become ineligible to redeem food stamps. 
Approximately 77 percent of all food stamps are redeemed by 
supermarkets which comprise only about 15 percent of all 
authorized entities. USDA has found that most retail 
trafficking occurs in smaller food stores and in other retail 
entities whose business is not primarily food sales. During 
fiscal year 1994, USDA compliance investigators reviewed 4,300 
entities authorized to redeem food stamps. Of these entities, 
1,300 were found to have committed violations serious enough to 
warrant sanctions, including 902 entities which were 
trafficking in food stamps.
    While neither USDA, OIG, nor GAO can provide an estimate 
with any certainty as to the amount of food stamp trafficking 
that occurs each year, trafficking in food stamps is believed 
by OIG to exceed $1 billion each year. Clearly, the number of 
trafficking investigations involving multi-million dollar food 
stamp trafficking operations and the organization with which 
such operations are operating is on the rise. The committee 
heard testimony of a case in Brooklyn, New York, in which 
investigators found an individual who had obtained 
authorization to redeem food stamps from USDA for a fictitious 
retail store. In a 22-month period, this fictitious store 
illegally accepted more than $40 million in food stamps from 
over 600 restaurants, retail stores, and other businesses. In 1 
month alone, this fictitious store illegally redeemed over $4.7 
million in food stamps, nearly 5 percent of all food stamps 
redeemed that month in New York City.
    Electronic benefit transfer systems (EBT) systems have the 
potential to reduce but not eliminate trafficking and fraud in 
the Food Stamp Program. EBT has the potential to severely 
curtail street trafficking because such systems can only be 
used in conjunction with an authorized point-of-sale terminal 
at an authorized retail food store or wholesale food concern. 
EBT, however, is still susceptible to trafficking and fraud by 
retail food stores and wholesale food concerns. The committee 
heard testimony from OIG detailing a trafficking operation 
using EBT in Baltimore, Maryland, in which two small retailers 
at an indoor market trafficked over $1.2 million in food stamp 
benefits. EBT data, however, assists investigators in detecting 
traffickers and provides evidence assisting in their 
prosecution. Additionally, EBT provides investigators with 
detailed records identifying recipients who traffic in food 
stamps and assists in prosecuting or disqualifying these 
individuals.
    To combat recipient fraud, the committee believes that the 
disqualification periods for recipients for intentional program 
violations should be increased from 6 months to 1 year for the 
first offense and increased from 1 year to 2 years for the 
second offense. To combat recipient trafficking, the committee 
believes that recipients who are convicted of trafficking food 
stamps with a value of over $500 should be permanently 
disqualified from the program. Additionally, the committee 
believes that States should be required to participate in the 
Federal Tax Refund Offset Program to collect outstanding food 
stamp claims. Also, existing authority for States to collect 
overissued food stamp benefits is greatly expanded.
    To combat trafficking by retail food stores and wholesale 
food concerns, the committee believes that USDA, or an agent of 
USDA, should visit each retail food store or wholesale food 
concern, or may elicit the assistance of State or local agency 
before granting authorization to redeem food stamps. The 
committee believes that initial authorization should be for a 
limited period and that retail food stores and wholesale food 
concerns should be prohibited from submitting a new application 
for 6 months after a denial of an application for authorization 
to redeem food stamps. The committee believes that where an 
authorized retail food store or wholesale food concern is 
permanently disqualified, such disqualification should be 
effective from the date of receipt of the notice of 
disqualification pending any administrative or judicial review. 
The committee also believes that a retail food store or 
wholesale food concern disqualified from the Special 
Supplemental Food Program for Women, Infants, and Children also 
should be disqualified from the Food Stamp Program during such 
disqualifications. Finally, the committee believes that all 
property used to traffic in food stamps and proceeds traceable 
to any property used to traffic in food stamps should be 
subject to criminal forfeiture.

                   B. COMMODITY DISTRIBUTION PROGRAMS

    Two commodity distribution programs are consolidated to 
provide for greater program efficiency and the amount of money 
provided for the new consolidated program is increased so that 
food will continue to be provided to needy families. Commodity 
distribution programs provide help directly to families at the 
local level through churches, soup kitchens and food banks. 
Other community organizations that provide help through the 
donation of food include battered women's shelters, homeless 
shelters and food pantries. The food provided through commodity 
distribution programs is often matched and exceeded by 
contributions from private sector sources, such as grocery 
stores, food processors and manufacturers, and farmers.
    USDA currently operates several commodity distribution 
programs, two of which are consolidated into one program, 
thereby establishing one administrative structure. The 
essential nature of the programs is maintained. Persons and 
organizations operating food banks, soup kitchens, and other 
similar operations will continue to receive Federal commodities 
and administrative funds. The purpose of the consolidated 
program is to provide wholesome food for needy people and to 
assist farmers through the donation of federally purchased and 
donated commodities. This program will provide wholesome, 
nutritious food to needy families in temporary need due to 
emergencies or natural disasters or as a supplement to other 
programs.
    The following programs are consolidated to provide food for 
distribution to needy individuals and families:
     The Emergency Food Assistance Program (TEFAP)--State and 
local emergency feeding organizations receive federally donated 
commodities (some purchased and some surplus commodities) and 
administrative funding. Assistance varies with the availability 
of commodities but all States operate TEFAP. TEFAP began in 
December 1981. Congress authorized the program in 1983 and it 
is currently authorized through 2002.
    The Soup Kitchen and Food Bank Program.--This program 
provides for the purchase and distribution of commodities to 
soup kitchens and food banks, with priority given to those 
organizations providing meals for homeless people. It was 
initiated in the 1988 Hunger Prevention Act. The 1990 Farm Bill 
reauthorized this program at an authorized level of $32 million 
for 1991 and $40 million for the following years.
    Other programs proving commodity assistance to needy 
persons and families include:
    Assistance for summer camps and charitable institutions.--
The Secretary of Agriculture has the discretion to provide 
commodities to charitable institutions and summer camps. 
Surplus commodities are provided when no other outlet is 
available. The types of organizations receiving commodities are 
churches, orphanages, correctional institutions, homes for 
elderly and hospitals. Only nonprofit, tax-exempt organizations 
and correctional facilities that offer rehabilitation services 
are eligible.
    Commodity Supplemental Food Program (CSFP).--CSFP began in 
1968 as a program for supplemental food for women, infants, and 
children. In 1981 it was expanded to include elderly persons. 
Foods are purchased directly by USDA are distributed through 
State and local agencies. Approximately 400,000 people are 
provided benefits, half elderly and half women, infants and 
children. This program operates in 20 States with a total of 60 
CSFP sites.
    Commodity distribution programs serve several purposes. 
They provide food assistance directly to children, the elderly, 
the needy, the homeless and women and children at nutrition 
risk. They help farmers by providing the bounty of nutritious 
food to others in need. They also enable the Federal Government 
to dispose of commodity holdings that might otherwise be 
wasted.
    The committee believes that commodity distribution programs 
are essential and are the first line of defense so that 
communities can help families in immediate need without the 
bureaucratic red tape required by other food assistance 
programs. Therefore the committee requires that the Secretary 
annually purchase $300 million of commodities to distribute 
through the consolidated commodity distribution program (TEFAP) 
beginning in fiscal year 1997.

           C. ELECTRONIC BENEFIT TRANSFER (EBT) ENCOURAGEMENT

    The committee believes that EBT systems, in which food 
stamp benefits are provided through a debit card system instead 
of coupons, is the preferred choice of delivering food 
benefits. The Inspector General of USDA, in his testimony of 
February 1, 1995, before the committee, made it clear that EBT 
systems, while not eliminating trafficking in food stamps, were 
superior to coupons and a tool that can be used in tracking 
down persons abusing the Food Stamp Program.
    For more than 10 years USDA, at the direction of Congress, 
has been investigating the feasibility, cost-effectiveness, and 
general impact of using an electronic benefit transfer (EBT) 
system to issue food stamp benefits. Paper coupons are replaced 
and recipients use a debit-like card at the grocery store 
check-out. Counties in several States, including Pennsylvania, 
Minnesota, New Mexico, and New Jersey have implemented EBT and 
Maryland, Texas, Utah, and South Carolina have EBT systems 
statewide.
    USDA has found that EBT administrative costs are lower than 
coupon issuance costs; that food stamp benefit loss and 
trafficking are reduced; grocery store costs are reduced; food 
stamp participants prefer EBT; and financial institutions also 
prefer EBT and their costs are reduced.
    Law enforcement officials have spoken in favor of EBT 
because it provides an electronic trail of abuses in the 
program. Trafficking is not eliminated under an EBT system; 
however, incidental street trafficking is reduced considerably.
    The committee bill encourages States to go forward with EBT 
and allows them to design their own program, under the 
standards of USDA.
    The committee is concerned that because of the standards 
adopted by the Federal Reserve Board in 1994 governing its 
Regulation E, and which become effective in March of 1997, 
States are receiving conflicting messages on implementation of 
EBT systems for the Food Stamp Program. The committee stresses 
its encouragement of the advancement of EBT systems and is 
concerned that the increased liability and higher 
administrative costs under the Federal Reserve Board's 1994 
decision may retard progress. Therefore Regulation E will not 
apply to means-tested programs, including the Food Stamp 
Program.
    To further encourage adoption of EBT systems, once a State 
has implemented EBT on a statewide basis, that State will have 
the option of operating a Food Stamp Program under a block 
grant. Food stamp EBT benefits will be redeemable only for 
food.

                           Section-by-Section

                     Subtitle A--Food Stamp Program

Section 1001. Short title

    This title is cited as the Food Stamp Reform and Commodity 
Distribution Act of 1996.

Section 1011. Definition of a certification period

    Food stamp certification periods cannot exceed 12 months. 
States are allowed to establish certification periods of up to 
24 months for households with members that are elderly or 
disabled. States must have at least one contact with the 
household every 12 months.

Section 1012. Definition of coupon

    The definition of a ``coupon'' is revised to include 
authorization cards, cash, or checks issued in lieu of coupons 
and ``access devices'' for electronic benefit transfer systems. 
This expands the types of items to which trafficking penalties 
apply.

Section 1013. Treatment of children living at home

    Parents and their children 21 years of age or younger 
living together (current law), including children who are 
parents living with their children and children who are married 
and living with their spouses, must apply for food stamps as a 
single household.

Section 1014. Optional additional criteria for separate household 
        determinations

    States are allowed to set criteria that prescribe when 
individuals living together, and otherwise would be allowed to 
apply for food stamps as a separate household, must apply as a 
single household.

Section 1015. Adjustment of thrifty food plan

    The maximum monthly food stamp benefits are set at 100 
percent of the cost of the thrifty food plan, effective October 
1, 1996, and adjusted annually, as under existing law. The 
October 1, 1996, adjustment will not reduce maximum benefit 
levels.

Section 1016. Definition of homeless individual

    Persons whose primary residence is a temporary 
accommodation in the home of another may only be considered 
homeless if the accommodation is for no more than 90 days.

Section 1017. State option for eligibility standards

    States are allowed, as provided in other sections of this 
Act, to set nonuniform standards of food stamp eligibility.

Section 1018. Earnings of students

    The earnings of an elementary/secondary student must be 
counted as income for food stamp purposes once the student is 
20 years or older.

Section 1019. Energy assistance

    State and local energy assistance payments will be 
considered as income in the Food Stamp Program. A one-time 
payment under a Federal or State law for the costs of 
weatherization or emergency repair of heating or cooling 
devices will not be considered as income. Benefits paid under 
the low income home energy assistance program (LIHEAP) and HUD 
utility allowances will be considered as income. Payments made 
by LIHEAP or any other energy assistance program counted as 
income, whether paid directly or indirectly, are considered an 
out-of-pocket expense and the household may receive a shelter 
expense deduction for utility costs.

Section 1020. Deductions from income

    The standard deduction will continue at the fiscal year 
1996 level ($134/month for the 48 States and the District of 
Columbia, $229 for Alaska, $189 for Hawaii, $269 for Guam, and 
$118 for the Virgin Islands).
    An earned income deduction will not be allowed for any 
income not reported in a timely manner (the deduction is not 
allowed in determining the amount of any overissued food stamp 
benefits) and will be denied for the public assistance portion 
of income earned under a work supplementation/support program.
    The homeless shelter allowance is set at the October 1995 
level of $143/month. This allowance must be used in 
establishing homeless households' excess shelter expense 
deduction when they do not receive free shelter throughout the 
month. States may prohibit use of the allowance for households 
with extremely low shelter costs.
    The excess shelter deduction is set at the October 1995 
level ($247/month for the 48 States and the District of 
Columbia, $429 for Alaska, $353 for Hawaii, $300 for Guam, and 
$182 for the Virgin Islands).

Section 1021. Vehicle allowance

    The threshold above which the fair market value of a 
vehicle is counted as an asset for determining eligibility for 
the Food Stamp Program is set at $4,600.

Section 1022. Vendor payments for transitional housing counted as 
        income

    Payments from regular welfare benefits made on behalf of 
households in transitional housing are no longer disregarded as 
income.

Section 1023. Doubled penalties for violating Food Stamp Program 
        requirements

    The disqualification penalty for the first intentional 
violation of program requirements in increased to 1 year. The 
disqualification penalty for the second intentional violation 
(and the first violation involving trading of a controlled 
substance) is increased to 2 years.

Section 1024. Disqualification of convicted individuals

    Persons convicted of trafficking in food stamp benefits, 
where the benefits trafficked have a value of $500 or more, are 
permanently disqualified from the Food Stamp Program.

Section 1025. Disqualification

    This section adds to the current rules governing 
disqualification for violation of work and employment/training 
requirements. Existing provisions for disqualification (job 
refusal and failure to participate in an employment/training 
program) are expanded to make ineligible (1) individuals 
refusing without good cause to provide sufficient information 
to allow a determination of employment status or job 
availability; (2) all individuals who voluntarily and without 
good cause quit a job; and (3) individuals who voluntarily and 
without good cause reduce their work effort and, after the 
reduction, are working less than 30 hours per week.
    If any individual who is the head of the household is 
disqualified under a work rule, the entire household, at the 
option of a State, will be ineligible for the lesser of the 
duration of the individual's ineligibility or 180 days.
    New mandatory minimum work disqualification periods are 
set. For the first violation, individuals will be ineligible 
until the later of the date the work rules are fulfilled, for 1 
month, or a period to be determined by the State but not to 
exceed 3 months. For the second violation, individuals will be 
ineligible until the later of the date they fulfill the work 
rules, for 3 months, or a period to be determined by the State 
but not to exceed 6 months. For the third or subsequent 
violation, individuals will be ineligible until the later of 
the date they fulfill work rules, for 6 months, or a date 
determined by the State, or permanently at the option of the 
State. The same disqualification periods apply to those failing 
to meet any workfare requirements.
    The Secretary is responsible for determining the definition 
of good cause, voluntary quit, and reduction of work effort. 
States will determine the definition of other terms and the 
procedures for making compliance decisions; however, they 
cannot be less restrictive than a comparable definition or 
procedure under the State's AFDC program. States must include a 
description of the standards and procedures in their State 
plans.

Section 1026. Caretaker exemption

    Parents or other household members with responsibility for 
the care of a dependent child under the age of 1 are exempt 
from food stamp work rules, at State option.

Section 1027. Employment and training

    The requirements for State-operated employment/training 
programs are revised as follows:
          (1) work experience is added to the purpose of 
        employment/training programs;
          (2) each component of an employment/training program 
        must be delivered through a ``statewide work-force 
        development system,'' unless it is not available 
        locally;
          (3) States may apply all work rules to food stamp 
        applicants, not only job search rules;
          (4) specific rules governing job search components 
        are removed;
          (5) eliminates provisions for components related to 
        work experience requiring that they be in public 
        service work and use food stamp recipients' prior 
        training and experience;
          (6) eliminates specific Federal rules regarding 
        States' authority to exempt categories and individuals 
        from employment/training rules;
          (7) eliminates the requirement to serve volunteers in 
        employment/training programs;
          (8) eliminates the rule for ``conciliation 
        procedures'' for resolution of disputes involving 
        participation in the employment/training program;
          (9) limits funding provided by the Food Stamp Program 
        for services to AFDC recipients to the amount used by a 
        State in fiscal year 1995; and
          (10) eliminates Federal performance standards.
    The Secretary is required to reserve, from Food Stamp 
Program funding, the following amounts for employment/training 
programs:

                        [In millions of dollars]

Fiscal year:
    1997..........................................................    79
    1998..........................................................    81
    1999..........................................................    84
    2000..........................................................    86
    2001..........................................................    88
    2002..........................................................    90

     Allocations are to be based on a reasonable formula, 
determined by the Secretary, giving consideration to the 
States' share of the populations affected by the work 
requirements. Minimum State allocations are set at $50,000.

Section 1028. Comparable treatment for disqualification

    Individuals disqualified for failure to perform an action 
required under a federal, State, or local means-tested public 
assistance program are also disqualified from food stamps, at 
the State's option. States may use AFDC rules and procedures to 
impose the same disqualification for food stamps. Individuals 
disqualified from food stamps due to failure to perform a 
required action under another means-tested public assistance 
program may apply for food stamps after the disqualification 
period has expired; however, a prior disqualification period 
under food stamp work rules must be considered in determining 
eligibility. States must include the guidelines used to carry 
out these food stamp disqualification provisions in their State 
plans.

Section 1029. Disqualification for receipt of multiple food stamp 
        benefits

    Individuals found to have fraudulently misrepresented their 
place of residence or identity in order to receive multiple 
food stamp benefits are disqualified from the Food Stamp 
Program for 10 years.

Section 1030. Disqualification of fleeing felons

    Individuals, while they are (1) fleeing to avoid 
prosecution or custody after a conviction for a felony (or an 
attempt) or (2) violating a condition of parole under Federal 
or State law, are disqualified from participation in the Food 
Stamp Program.

Section 1031. Cooperation with child support agencies

    States are allowed to disqualify custodial parents of 
children under the age of 18 years who have an absent parent, 
unless the custodial parent cooperates with the State in 
establishing the child's paternity and obtaining support for 
the child. Cooperation is not required if the State finds there 
is good cause for failure to cooperate. Fees and other costs 
for services can not be changed.
    States are allowed to disqualify putative or noncustodial 
parents of children under the age of 18 years if they refuse to 
cooperate with the State in establishing the child's paternity 
and providing support for the child. The Secretary of 
Agriculture and the Secretary of HHS will develop guidelines 
for what constitutes a refusal to cooperate and States will 
develop procedures to determine whether there is a refusal to 
cooperate. Fees and other costs for services can not be 
charged. States are required to provide safeguards to restrict 
the use of information collected by the State to the purposes 
for which it was collected.

Section 1032. Disqualification relating to child support arrears

    States may disqualify individuals under a court child 
support order during any period in which the individual has an 
unpaid liability, unless the court is allowing delayed 
payments.

Section 1033. Work requirement

    Able-bodied persons between 18 years and 50 years who have 
no children or are not responsible for the care of others are 
ineligible if, during the prior 12-month period, they received 
food stamps for 4 months or more while not working 20 hours per 
week or more; or participating in a work program (such as the 
Jobs Training Partnership Act, the Trade Adjustment Assistance 
Act, or employment and training programs operated or supervised 
by a State meeting standards approved by the Governor, but not 
including job search or job search training programs) for at 
least 20 hours per week, or participating in a workfare 
program.
    The disqualification ceases to apply if, during any 30-day 
period, an individual works 80 hours or more; participates in 
and complies with a work program for at least 80 hours; or 
participates in a workfare program. In the subsequent 12-month 
period, an individual is eligible for food stamps for up to 4 
months while not working for at least 20 hours per week; 
participating in a work program for at least 20 hours per week; 
or participating in a workfare program.
    Upon a State request, the Secretary is allowed to waive 
application of this work requirement for some or all 
individuals in part or all of a State if the Secretary 
determines that the area unemployment rate is over 10 percent 
or if there are insufficient jobs to provide employment for 
those subject to this requirement. The Secretary is required to 
report to the Agriculture Committees on all waivers granted.

Section 1034. Encourage electronic benefit transfer systems

    States are encouraged to implement an electronic benefit 
transfer (EBT) system as soon as practicable. States are 
required to implement EBT before October 1, 2002, unless the 
Secretary waives the requirement because a State faces unusual 
barriers to implementation. Subject to Federal standards, 
States are allowed to procure and implement an EBT system under 
terms, conditions, and designs that they consider appropriate. 
A requirement for Federal procurement standards is added. EBT 
standards must follow generally accepted standard operating 
rules based on commercial technology; permit interstate 
operation; and permit monitoring and investigations by 
authorized law enforcement officials.
    Regulations regarding replacement of benefits under an EBT 
system must be similar to those in effect for a paper-based 
food stamp issuance system.
    EBT systems must be cost neutral; include measures to 
maximize the security of the EBT system; and include provisions 
allowing EBT systems to differentiate among food items, to the 
extent practicable.
    States may charge food stamp participants for the cost of 
replacing a lost or stolen EBT card and may collect the charge 
by reducing the participant's food stamp benefit. States may 
require that EBT cards contain a photograph of one or more 
household members. If States require such a photograph, the 
States must establish procedures to ensure that other 
appropriate members of the food stamp household and authorized 
representatives may use the EBT card.
    The anti-tying restrictions of the Bank Holding Company Act 
Amendments of 1970 will apply to electronic benefit transfer 
(EBT) services offered by nonbanks. Banks providing EBT 
services are subject to the anti-tying restrictions of section 
106 of the Bank Holding Company Act Amendments of 1970. Bank 
holding companies and their subsidiaries that are not banks 
also are subject to the restrictions contained in section 106 
pursuant to regulations promulgated by the Federal Reserve 
Board. This provision extends these restrictions to nonbanks 
that provide EBT services.

Section 1035. Value of minimum allotment

    The minimum monthly allotment for 1- and 2-person 
households continues to be set at $10.

Section 1036. Benefits on recertification

    Food stamp participants who do not complete all the 
requirements for eligibility recertification in the last month 
of their certification periods, but were then determined 
eligible after their certification periods had expired, will 
receive reduced benefits in the first month of their new 
certification periods (i.e., their benefits will be prorated to 
the date they met the requirements and were again judged 
eligible). The 1-month ``grace period'' to fulfill eligibility 
recertification requirements during which benefits would not be 
subject to a prorata reduction is eliminated.

Section 1037. Optional combined allotment for expedited households

    States may provide food stamp households, applying after 
the 15th of the month, an allotment that is an aggregate of the 
initial (pro-rated) benefit and the first regular monthly 
allotment. This provision applies to both regular and expedited 
service applications.

Section 1038. Failure to comply with other means-tested public 
        assistance Programs

    Food stamp benefits may not be increased when benefits 
received through federal, State, or local means-tested public 
assistance programs are reduced due to a failure to perform a 
required action. States may also reduce the food stamp 
household benefit by an amount up to 25 percent. If the food 
stamp benefit is reduced due to a failure to perform an action 
required under the State's AFDC program, the State may use the 
rules of that program to reduce the food stamp benefit.

Section 1039. Allotments for households residing in centers

    States are allowed to divide monthly food stamp benefits 
between the participant who was a resident of a drug or alcohol 
treatment center and then leaves the center and the drug or 
alcohol treatment center. States may require residents of these 
centers to designate the centers as authorized representatives.

Section 1040. Condition precedent for approval of retail food stores 
        and wholesale food concerns

    Retail food stores and wholesale food concerns can not be 
approved for participation in the Food Stamp Program unless a 
visit is made to the store by an appropriate person. The types 
of stores included in this requirement will be determined by 
the Secretary based on factors that include size, location, and 
type of items sold.

Section 1041. Authority to establish authorization periods

    The Secretary is required to establish specific time 
periods during which retail food stores or a wholesale food 
concerns' authorization to accept and redeem food stamp 
benefits (or EBT) will be valid.

Section 1042. Information for verifying eligibility for authorization

    The Secretary is allowed to require that food retailers and 
wholesalers seeking approval must submit relevant income and 
sales tax filing documents. Also, the Secretary is allowed to 
issue regulations requiring food retailers and wholesalers to 
provide written authorization to the Secretary to verify tax 
filings and to obtain corroborating documentation from other 
sources in order to verify the accuracy of the information 
provided by food retailers and wholesalers.

Section 1043. Waiting period for stores that fail to meet authorization 
        criteria

    Retail food stores and wholesale food concerns that fail to 
be approved for participation in the Food Stamp Program will 
not be allowed to submit a new application for 6 months. The 
Secretary may establish longer waiting periods, including 
permanent disqualification, that reflect the severity of the 
basis for denial.

Section 1044. Operation of food stamp offices

    The requirements for States' plans for operation of the 
Food Stamp Program are replaced as follows: A State must (1) 
establish procedures governing operation of the food stamp 
offices that it determines best serves households in the State, 
including those with special needs; (2) provide timely, 
accurate, and fair service to applicants and participants; (3) 
allow applicants to apply and participate on the same day they 
first contact the food stamp office during office hours; (4) 
consider an application filed on the day the applicant submits 
an application that contains the applicant's name, address, and 
signature; (5) require applicants to certify in writing as to 
the truth of information on the application; (6) stipulate that 
the signature of a single adult is sufficient; (7) have methods 
for certifying homeless households; and (8) ensure that 
electronic storage of information is allowed.
    States may establish operating procedures that vary for 
local food stamp offices to reflect regional and local 
differences.
    States may disqualify food stamp participants based on 
another public assistance program's rules for disqualification 
for failure to comply with those rules.

Section 1045. State employee and training standards

    Existing provisions for merit system standards are 
retained. A technical change to reflect the current Federal 
agency is made.

Section 1046. Exchange of law enforcement information

    States must make available to law enforcement officials the 
address, social security number, and (when available) the 
photograph of a food stamp recipient if the law enforcement 
official furnishes the recipient's name and notifies the agency 
that the individuals if fleeing to avoid prosecution or custody 
for a felony crime (or attempt); that the location or 
apprehension of the individual in within the official's duties; 
and the request is within the proper exercise of official 
duties. The requested information must be related to the 
apprehension of a felon or parolee.

Section 1047. Expedited coupon service

    The period in which expedited food stamp benefits must be 
provided is increased to 7 (from 5) calendar days.

Section 1048. Withdrawing fair hearing requests

    States may allow food stamp households to withdraw fair 
hearing requests either orally or in writing.

Section 1049. Income, eligibility, and immigration status verification 
        systems

    The use of income and eligibility and immigration status 
verification systems established under the Social Security Act 
is made optional with the States.

Section 1050. Disqualification of retailers who intentionally submit 
        falsified applications

    The Secretary may disqualify retail food stores or 
wholesale food concerns, including permanent disqualification, 
when the store or concern knowingly submits false information 
on the application.

Section 1051. Disqualification of retailers who are disqualified under 
        the WIC Program

    The Secretary is required to issue regulations providing 
criteria for disqualifying retail food stores and wholesale 
food concerns from participation in the Food Stamp Program once 
they are disqualified from the WIC program. This food stamp 
disqualification is not subject to food stamp rules regarding 
judicial or administrative review.

Section 1052. Collection of overissuances

    Existing overissuance collection rules are replaced. States 
must collect any overissuance of food stamp benefits by 
reducing future benefits, withholding unemployment 
compensation, recovering from Federal pay or income tax 
refunds, or any other means, unless the Secretary demonstrates 
that all of the means are not cost effective. Benefit 
reductions are limited to 10 percent of the monthly benefit or 
$10 per month.
    States may retain 25 percent of overissuances collected 
(other than those caused by a State agency error).

Section 1053. Authority to suspend stores violating program 
        requirements pending administrative and judicial review

    Permanent disqualification of a store or wholesale food 
concern will be effective from the date the notice of 
disqualification is received. If the disqualification is 
reversed through administrative or judicial review, the 
Secretary is not liable for the value of lost sales during the 
disqualification period.

Section 1054. Expanded criminal forfeiture for violations

    This section establishes criminal forfeiture rules. Courts 
are required, in imposing sentences on those convicted of 
trafficking in food stamps to order that the person forfeit 
property to the United States. Property subject to forfeiture 
includes all property used in the transaction to commit a 
trafficking violation. Proceeds traceable to the violation are 
subject to forfeiture. An owner's property interest is not 
subject to forfeiture if the owner establishes that the 
violation was committed without the owner's knowledge or 
consent.
    The proceeds from any sale of forfeited property and any 
money forfeited will be used to reimburse the Justice 
Department, to reimburse the Agriculture Department's Office of 
Inspector General, to reimburse Federal or State law 
enforcement agencies and to be provided to the Secretary to 
carry out approval of stores, reauthorizations of stores and 
compliance activities.

Section 1055. Limitation of Federal match

    Federal reimbursement to States for informational 
(outreach) activities is not available for ``recruitment 
activities.''

Section 1056. Standards for administration

    The requirement that the Secretary establish standards for 
efficient and effective administration of the Food Stamp 
Program is eliminated.

Section 1057. Work supplementation or support program

    States are allowed to operate a work supplementation or 
support program, under which public assistance benefits, 
including food stamps, are provided to employers who hire 
recipients and then are used to pay part of their wages. Work 
supplementation or support programs must meet standards set by 
the Secretary. The food stamp portion cannot be considered 
income for other purposes and the household of the work 
supplementation participants cannot receive regular food stamps 
while the household member is in such a work program. States 
must describe how food stamp participants will be moved into 
jobs that are not supplemented or supported within a specific 
time frame and the program is available for new employees only.
    States must describe work supplementation or support 
programs in their State plans of operation.

Section 1058. Waiver authority

    Existing waiver authority is revised and authority is 
provided to the Secretary to conduct pilot or experimental 
projects and waive the Food Stamp Act as long as projects are 
consistent with the goals of the program and provides food for 
needy families. The Secretary is permitted to conduct projects 
that will improve administration of the program; increase self-
sufficiency of food stamp participants; test innovative welfare 
reform strategies; or allow greater conformity among public 
assistance programs.
    The Secretary may not conduct additional projects that 
involve issuing food stamp benefits in the form of cash; 
substantially transfer program benefits to other public 
assistance programs; or conduct projects not limited to 
specific time periods.

Section 1059. Response to waivers

    Not later that 60 days after receipt of a request for a 
waiver so that a State may conduct a demonstration project, the 
Secretary must either approve the request; deny the request and 
explain any modifications needed for approval; deny the request 
and explain the grounds for denial; or ask for clarification of 
the request. If the Secretary does not respond within 60 days, 
the waiver is considered approved. Denials of waiver requests 
and the basis for the denial must be provided by the Secretary 
to the House and Senate Agriculture Committees.

Section 1060. Employment Initiatives Program

    States may operate private sector employment initiatives 
under which food stamp benefits may be paid in cash to certain 
households. States are eligible to operate this initiative if 
not less than 50 percent of the households in the State that 
received food stamps in the summer of 1993 also received AFDC 
benefits and if the State agrees to increase benefits, at the 
States' expense, to compensate for State or local sales taxes 
on food. Households are eligible to receive cash in lieu of 
food stamps if an adult member selects this option and (1) has 
worked in a nonsubsidized job for not less than the 90 
preceding days; (2) has earned not less than $350 a month from 
that employment; (3) is eligible to receive AFDC (or was 
eligible when the cash payments were first received but is no 
longer eligible because of earned income); and (4) is 
continuing to earn not less than $350 a month from the 
employment.
    States operating a private sector employment initiative 
program for 2 years must provide a written evaluation of the 
impact of cash assistance to the Secretary.

Section 1061. Reauthorization

    The Food Stamp Program is reauthorized through fiscal year 
2002.

Section 1062. Simplified Food Stamp Program

    States may elect to carry out a simplified Food Stamp 
Program in all or part of a State for households in which all 
members receive AFDC. States may operate the simplified Food 
Stamp Program using the rules of the States' AFDC program, the 
Food Stamp Program, or a combination of both programs. States 
must, at a minimum, comply with the following Food Stamp 
Program rules:
      (1) requirements governing issuance procedures;
      (2) the requirement that benefits be calculated by 
subtracting 30 percent of a household's income (as determined 
by State established, not federal, rules under the simplified 
program option) from the maximum food stamp benefit;
      (3) the bar against counting food stamp benefits as 
income or resources in other programs;
      (4) the requirements that State agencies assume 
responsibility for eligibility certification and issuance of 
benefits and keep records for inspection and audit;
      (5) the bar against discrimination by reason or race, 
sex, religious creed, national origin, or politics;
      (6) requirements related to submission and approval of 
plans of operation and administration of the Food Stamp Program 
on Indian reservations;
      (7) limits on the use and disclosure of information about 
food stamp households;
      (8) requirements for notice to and fair hearings for 
aggrieved households (or comparable requirements established by 
the State under its AFDC program);
      (9) requirements for submission of reports and other 
information required by the Secretary;
      (10) the requirement to report illegal aliens to the 
Immigration and Naturalization Service;
      (11) requirements for use of certain Federal and State 
data sources in verifying food stamp participants' eligibility;
      (12) requirements to take measures to ensure that 
households are not receiving duplicate benefits: and
      (13) requirements for the provision of social security 
numbers as a condition of eligibility and for their use by 
State agencies.
    States are allowed to standardize food stamp deductions and 
must not increase food stamp benefits when other public 
assistance benefits are decreased.
    States electing to operate a simplified Food Stamp Program 
must include in their State plans the rules and procedures to 
be followed in determining benefits under the option; how they 
will address the needs of households with high shelter costs; 
and a description of the method by which States will carry out 
its quality control obligations.

Section 1063. State Food Assistance Block Grant

    States that meet one of three conditions may elect to 
receive an annual block grant to operate a food assistance 
program for needy persons in lieu of the Food Stamp Program. 
Eligible States may opt for a block grant at any time, but, if 
the State chooses to withdraw from the block grant or is 
disqualified, it may not again opt for a block grant. Eligible 
States include:
          (1) those that have fully implemented a statewide 
        electronic benefit transfer (EBT) system;
          (2) those for which the dollar value of erroneous 
        benefit and eligibility determinations (overpayments, 
        payments to ineligibles, and underpayments) in the Food 
        Stamp Program or their food assistance block grant 
        program is 6 percent of benefits issued or less (a 
        ``payment error rate'' of 6 percent or less); and
          (3) those with a payment error rate higher than 6 
        percent that agree to contribute, from nonfederal 
        sources, a dollar amount equal to the difference 
        between their payment error rate and a 6 percent rate 
        to pay for benefits and administration of their food 
        assistance block grant program. A State's payment error 
        rate for block grant purposes is the most recent rate 
        available, as determined by the Secretary.
    States electing a block grant are provided an annual grant 
equal to:
          (1) the greater of the fiscal year 1994 amount 
        received as food stamp benefits or the 1992-1994 
        average received as food stamp benefits, and
          (2) the greater of the fiscal year 1994 Federal share 
        of administrative costs or the 1992-1994 average 
        received as the Federal share of administrative costs.
    However, grants to States with payment error rates above 6 
percent would be reduced by the amount they are required to 
contribute (the dollar amount equal to the difference between 
their payment error rate and a 6 percent rate). In general, 
block grant payments must be expended in the fiscal year for 
which they were distributed; but, States may reserve up to 10 
percent per year, up to a total of 30 percent of the block 
grant. If total allotments for a fiscal year exceed the amount 
of funds available to provide them, the Secretary is required 
to reduce allotments on a pro-rata basis as necessary. Grant 
payments will be made by issuing letters of credit.
    Block grant funding may only be used for food assistance 
and administrative costs related to its provision and, in each 
fiscal year, not more than 6 percent of total funds expended 
(including State funds required to be spent) may be used for 
administrative costs.
    Each participating block grant State is required to 
maintain a food stamp quality control program to measure 
erroneous benefit and eligibility determinations, and block 
grant States will continue to be subject to the Food Stamp 
Program's quality control system (including eligibility for 
incentive payments and imposition of fiscal sanctions for high 
payment error rates). Each participating State is required to 
implement an employment and training program under Food Stamp 
Act terms and conditions and is eligible to receive Federal 
funding for employment and training activities (in addition to 
the food stamp block grant amount).
    In order to receive a block grant, a State must annually 
submit a State plan for approval by the Secretary. The State 
plan must:
          (1) identify a lead administering agency;
          (2) describe how and to what extent the State's 
        program serves specific groups (e.g., the elderly, 
        migrant and seasonal farm workers, the homeless, those 
        with earnings, and Indians) and how the treatment 
        differs from their treatment under the Food Stamp 
        Program;
          (3) provide that benefits are available statewide;
          (4) provide for notice and an opportunity for a 
        hearing to those adversely affected;
          (5) assess the food and nutrition needs of needy 
        person in the State;
          (6) describe the State's eligibility standards for 
        assistance under the block grant;
          (7) establish a system for exchanging information 
        with other States to verify participants' identity and 
        the possible receipt of benefits in another State;
          (8) providing for safeguarding and restricting the 
        use and disclosure of information about participants; 
        and
          (9) other information required by the Secretary.
          Eligibility for assistance under the block grant is 
        determined by the State, and there is not individual 
        entitlement to assistance. However, certain Federal 
        rules apply:
          (1) aliens who are not eligible under the Food Stamp 
        Program are not eligible for block grant aid;
          (2) persons and households who are ineligible under 
        the Food Stamp Program's work rules are not eligible 
        for block grant aid;
          (3) disqualification of fleeing felons; and
          (4) disqualification for child support arrears.
    If the Secretary finds that there has been a failure to 
comply with provisions of the block grant or the State's 
approved plan or finds that, in the operation of any program or 
activity for which assistance is provided, there is a failure 
by the State to comply substantially with block grant 
provisions, the Secretary must withhold funding, as 
appropriate, until satisfied there is no longer a failure to 
comply or that the noncompliance will be promptly corrected. In 
additional the Secretary may impose other appropriate 
penalties, including recoupment of improperly spent money and 
disqualification from the block grant. States must be provided 
notice and an opportunity for a hearing in this process.
    The Secretary is authorized to conduct research on the 
effects and costs of a State food assistance block grant.

Section 1064. A study of the use of food stamps to purchase vitamins 
        and minerals

    The Secretary is required, in consultation with the 
National Academy of Sciences and the Center for Disease Control 
and Prevention, to conduct a study of the use of food stamps to 
purchase vitamins and minerals.
    The Secretary is encouraged to conduct a study on whether 
some food items now eligible for purchase with food stamps 
should be eliminated from that eligibility.

Section 1065. Investigations

    Regulations issued by the Secretary concerning civil money 
penalties and disqualification of retail food stores and 
wholesale food concerns must include criteria to support 
findings of food stamp violations on the basis of evidence that 
may include on-site investigations, redemption data, and 
transaction reports from electronic benefit transfer (EBT) 
systems.

Section 1066. Food stamp eligibility

    States are permitted to include either all of an ineligible 
alien's income and resources in the income and resources of the 
household of which the alien is a member or the income, less a 
pro rata share, and the resources of the ineligible alien, to 
determine the value of the allotment of the household of which 
the individual is a member.

Section 1067. Report by the Secretary

    The Secretary may prepare a report on the effect of the 
Food Stamp Program reforms of the Personal Responsibility and 
Work Opportunity Act of 1996. If prepared, the report will be 
submitted to the Committee on Agriculture of the House of 
Representatives not later than January 1, 2000.

Section 1068. Deficit reduction

    This section expresses the sense of the Committee on 
Agriculture that reductions in outlays resulting from this 
title will not be taken into account for purposes of Section 
552 of the Balanced Budget and Emergency Deficit Control Act of 
1985.

              SUBTITLE B--COMMODITY DISTRIBUTION PROGRAMS

Section 1071. Emergency Food Assistance Program

    The emergency food assistance program (TEFAP) and the soup 
kitchen/food bank program (Section 110 of the Hunger Prevention 
Act of 1988) are combined into TEFAP. Definitions applicable to 
the soup kitchen/food bank program are incorporated into TEFAP.
    States are required to submit a State plan of operation 
every 4 years. State plans must include:
          (1) designation of the State agency responsible for 
        distribution of TEFAP commodities;
          (2) a plan of operation and administration to 
        distribute TEFAP commodities;
          (3) a description of the standards of eligibility for 
        recipient agencies; and
          (4) a description of the standards of eligibility for 
        individual or household recipients of commodities. 
        Individuals and household recipients must be comprised 
        of needy persons and must live in the geographic area 
        served by the recipient agencies.
    States are encouraged to set up an advisory board on which 
persons, from public and private entities, interested in 
commodity distribution programs, are invited to participate.
    Beginning October 1, 1996, funds ($300 million per year), 
from amounts appropriated under the Food Stamp Act, to purchase 
a variety of nutritious and useful commodities for distribution 
to States in accordance with TEFAP rules, are authorized 
through fiscal year 2002.

Section 1072. Food bank demonstration project

    This section repeals the expired authority to carry out 
food bank demonstration projects.

Section 1073. Hunger prevention programs

    This section repeals the authority for a separate soup 
kitchen/food bank program and other expired authority for 
evaluation and demonstration projects.

Section 1074. Report on entitlement commodity processing

    This section deletes the expired authority requiring a 
report on commodity processing.

            SUBTITLE C--ELECTRONIC BENEFIT TRANSFER SYSTEMS

Section 1091. Provisions to encourage electronic benefit transfer 
        systems

    Electronic benefit transfer (EBT) programs (distributing 
needs-tested benefits) established under State or local law or 
administered by a State or local government are exempt from 
Regulation E requirements.

                        Committee Consideration

                              I--Hearings

    The Committee on Agriculture met on February 1, 1995. 
Agriculture Committee Chairman Pat Roberts stated that the 
purpose of the hearing was to review enforcement efforts in the 
Food Stamp Program and that this must be accomplished prior to 
considering welfare reform.

February 1, 1995

    The first witness was Roger Viadero, the Inspector General 
of the U.S. Department of Agriculture (USDA). Inspector General 
Viadero testified on the efforts of his office to investigate 
food stamp and electronic benefit transfer (EBT) trafficking 
and laundering operations in nonauthorized grocery stores, 
restaurants, and liquor stores. Video tapes of investigations 
in which officials of the Office of the Inspector General 
participated were shown to the committee.
    The Inspector General also made recommendations for 
legislative and regulatory changes which he believed would 
enhance the integrity of the current Food Stamp Program. These 
recommendations included changing retailer eligibility 
criteria; submission of various tax or license forms to assure 
the retail food store is actually in operation; adding a 1-year 
waiting period for retailers prior to authorization; requiring 
a store visit by USDA's Food and Consumer Services (FCS) staff 
prior to authorization; charging stores a licensing fee; 
authorizing the forfeiture of proceeds in felony food stamp 
fraud; and suspension and permanent program disqualification 
for retailers who traffic in food stamps.
    Congressman Ron Wyden, from Oregon, provided his 
recommendations for correcting existing abuses and systemic 
weaknesses in the Food Stamp Program. Mr. Wyden advocated 
reform of the current system and cautioned against efforts to 
send this program to the States in the form of a block grant. 
He suggested that the committee take a look at newly developed 
and emerging electronic technologies including biometric 
identification cards. He also expressed his support for program 
consolidation efforts.
    Mr. Robert Rasor, representing the U.S. Secret Service, 
summarized the investigations and research performed by the 
Financial Crimes Division of the Secret Service relating to 
fraud and abuse in the Food Stamp Program. He reported that the 
Secret Service found very little evidence of counterfeiting in 
the program in the course of its investigations, but in its 
undercover investigations found the system to be quite 
vulnerable to other forms of abuse and fraud, such as 
embezzlement, recipient fraud, fraud by authorized retailers 
and trafficking in discounted food stamps by external parties. 
Mr. Rasor stressed the importance of incorporating new 
technologies in the form of EBT to minimize existing and future 
abuses to the Food Stamp Program.
    The Subcommittee on Department Operations, Nutrition, and 
Foreign Agriculture met on February 7, 8, 9, and 14, 1995 to 
receive testimony on reforming the present welfare system. 
Subcommittee Chairman Bill Emerson expressed his desire to hear 
ideas on reforming the present welfare maintenance system from 
a wide variety of people.

February 7, 1995

    Ms. Jane L. Ross, Director, Income Securities Issues, 
Health, Education, and Human Services, General Accounting 
Office (GAO) testified regarding the status of Federal means 
tested welfare programs. She reported that nearly 80 means-
tested programs that compose the welfare system accounted for 
about 15 percent of Federal spending in fiscal year 1992. 
Federal welfare spending has risen from $39 billion in 1975 to 
nearly $208 billion in 1992. According to GAO's figures, growth 
in five major entitlement programs has driven this expansion. 
Aid to Families with Dependent Children (AFDC), food stamps, 
Medicaid, Supplemental Security Income (SSI) and two major 
housing programs resulting in a 106 percent increase in 
inflation adjusted dollars over this time period.
    The GAO's work has shown that these means tested programs 
can be costly and difficult to administer. They sometimes 
overlap one another or are so narrowly focused that they create 
gaps in services. The task of applying for benefits is arduous 
and complex. Furthermore, they have found that technology to 
run the programs is not being effectively developed and used, 
and that many of these programs are inherently vulnerable to 
fraud, waste, and abuse. Finally, despite many years of 
experience with these programs, very little is known about how 
well they are working and whether the programs are meeting the 
purposes stated in the various acts.

February 8, 1995

    Congressman Michael N. Castle, from Delaware, urged the 
subcommittee to consider the Delaware Model of ``one stop 
shopping'' as it reforms the Nation's welfare delivery system. 
He described Delaware's model as an innovative and 
comprehensive delivery system. The system consists of 
approximately 160 different welfare programs and serves, 
through its service centers, over 600,000 individuals annually. 
This agency has the mission of promoting access to health and 
human services, addressing and communicating the communities 
service needs, and providing access to support services. 
Congressman Castle cited the overlap in programs that result in 
a patchwork welfare system that restricts the effectiveness and 
efficiency with which the programs can be carried out.
    Mr. Thomas P. Eichler, Secretary of the Delaware Department 
of Services for Children, Youth, and Their Families, spoke on 
the Welfare Simplification and Coordination Advisory Committee 
authorized by Congress in the 1990 farm bill. Charged with 
examining policies and procedures of the food stamp, AFDC, 
medical assistance and housing assistance programs, the 
advisory committee made a series of recommendations for reform. 
The advisory committee recommended eliminating current programs 
and moving to one comprehensive program with the goal of moving 
participants toward self-sufficiency. Primary elements of the 
new program they recommended included (1) a single point of 
client entry, (2) common rules and definitions for 
participation, (3) a single means test for eligibility, and (4) 
a public and private partnership to provide coordinated 
services.
    The Honorable Ellen Haas, USDA Under Secretary for Food, 
Nutrition, and Consumer Services, spoke on the state of 16 food 
and nutrition programs for which she is responsible. She 
reiterated the administration's position that nutrition 
programs for the needy are in the national interest and reform 
of these programs should ensure access to a healthy, nutritious 
diet and promote health. She insisted further that block 
granting these programs would eliminate the ``automatic 
adjuster'' currently in place and possibly force States to 
provide less assistance in times of economic downturn.
    Ms. Haas' recommendations for change included (1) nutrition 
security, (2) program integrity, (3) modernizing benefits 
delivery systems, (4) expanding State flexibility, (5) 
preserving economic responsiveness, and (6) promoting personal 
responsibility.
    The Honorable Mary Jo Bane, Health and Human Services (HHS) 
Assistant Secretary for Children and Families, testified in 
support of the administration's 1994 welfare reform proposal. 
Her presentation covered three major issues; (1) the proper 
balance between national objectives and State flexibility; (2) 
the conversion of AFDC and the Food Stamp Program to block 
grants or capped discretionary programs; and (3) national 
requirements or accountability standards governing a reformed 
welfare system. Ms. Bane recommended that in order to ensure 
greater State flexibility final reform should (1) achieve the 
objectives of work, responsibility and accountability; (2) 
ensure stability in funding over time; (3) cushion State and 
individuals against economic cycles; and (4) preserve the basic 
family protections for needy Americans, particularly children.
    Sister Augusta Hamel, the Executive Assistant to the 
President of Second Harvest National Network of Food Banks, the 
largest domestic hunger relief organization in the United 
States, reviewed the role of such organizations and the 
importance of the Federal contribution to this network. Sister 
Hamel spoke of the need for private sector participation in 
dealing with the hunger problem in this country, but also 
stressed that Federal participation has been critical to the 
success of these efforts and must continue. While reform is 
necessary, she stated that private resources are already pushed 
to the limit and some reform proposals may be asking more of 
the charitable sector than they can possibly deliver.
    On behalf of other organizations similar to Second Harvest, 
Sister Hamel suggested that rather than block granting the 
programs to the States, as proposed, commodity distribution 
programs should be consolidated and integrated. The programs 
include the emergency food assistance program (TEFAP), 
commodity supplemental food program (CSFP), soup kitchens and 
food banks program (SKFB), and the charitable institutions and 
summer camps program (CIP) into a single program: the American 
Commodity Hunger Relief Program (ACHR).
    Reverend Monseigneur Roger P. Morin, Executive Director, 
Department of Community Services, Archdiocese of New Orleans 
spoke in his capacity as Executive Director of the Department 
of Community Services in the Archdiocese of New Orleans. He 
advocated the retention of CSFP. He expressed the view that the 
tremendous purchasing power of the USDA combined with the cost 
effectiveness and efficiency of the volunteer distribution 
system give the taxpayer the highest return. Reverend William 
T. Cunningham, Director, of Focus Hope, another CSFP program 
operating in Detroit, Michigan, expressed support for 
preserving the CSFP because the program targets the Nation's 
most vulnerable populations, the very young and the very old. 
CSFP in Detroit was described as a program that provides a 
monthly selection of foods specifically tailored to the 
nutritional needs of the populations served; purchases foods at 
one-half to one-sixth the cost of equivalent goods in retail 
stores; involves the entire community in the problems of hunger 
and poverty; and links job training, child care and other 
critical services for low-income families.
    Ms. Zoe Slagle, the Food Distribution Coordinator with the 
Michigan Department of Education testified on behalf of her 
Department and the American Commodity Distribution Association 
(ACDA). She advocated the preservation of the commodity 
distribution programs and reiterated the claims made by others, 
that while food and nutrition programs should be further 
streamlined for efficiency and effectiveness, Federal programs 
still represent the highest return to the taxpayer because of 
the tremendous buying power of the Federal Government.

February 9, 1995

    The Honorable John Engler, Governor of Michigan, advocated 
placing food and nutrition programs into a single block grant 
to the States. He further maintained that because States know 
the needs of their people, they should be given the authority 
to plan and administer welfare programs that encourage and 
assist people into productive jobs and off of government 
assistance. In his experience, Federal programs have had the 
opposite effect of encouraging recipients not to work. When the 
State of Michigan has sanctioned individuals who do not work by 
reducing their AFDC benefits, their food stamp allowances have 
gone up.
    Ms. Carol Anderson, Director of the Economic Support 
Services Section in the Georgia Division of Family and Children 
Services, discussed recent innovations and policy changes 
relating to the delivery of assistance benefits. Through the 
use of waivers from HHS and USDA, Ms. Anderson and others in 
her division have streamlined program access and have created 
``one-stop shopping'' for six State and Federal programs. She 
addressed the new ``Work First'' strategy in which eligibility 
staff are trained to assess participants strengths and 
weaknesses in obtaining employment; contracts for self-
sufficiency that map our steps to economic independence; 
expedited child support services that are used to direct 
applicants from welfare to independence; and specialized job 
developers that are hired to work directly with employers.
    Ms. Anderson said that while a block grant is attractive, 
reduced funding levels in current proposals gave her cause for 
concern. However, if States knew what block granting would 
bring in terms of funding and if they knew that block granting 
would also bring increased flexibility, there could be more 
opportunities to create better programs.
    Mr. John Petraborg, Deputy Commissioner of the Minnesota 
Department of Human Services testified before the subcommittee 
regarding welfare reform efforts underway in Minnesota. Its 
simplification and streamlining efforts feature the concepts of 
``Work Pays'' which allows families to keep part of their AFDC 
payments; an enforced social contract-requiring AFDC 
participants to develop a plan of employment and self-support; 
and a program that combines and simplifies the AFDC and Food 
Stamp Programs.
    Ms. Sammie Lynn Puett, Vice President for Public Services 
at the Continuing Education, and University Relations of the 
University of Tennessee, testified of the work of the Welfare 
Simplification and Coordination Advisory Commission created by 
Congress in 1990. She reviewed the objectives of the advisory 
committee and the problems that remain for welfare reformers. 
The advisory committee concluded that the numerous and 
overlapping programs at both the State and Federal level should 
be replaced by a single, one family-focused, client-oriented, 
comprehensive program.
    Ms. Joyce Walsh, of the Larue County Health Center in 
Hodgenville, Kentucky discussed her observations and 
experiences as a local Special Supplemental Program for Women, 
Infants, and Children (WIC) program coordinator. She stated 
that WIC has achieved its original objectives of reducing 
infant mortality and morbidity. She advocated the retention of 
WIC and also suggested combining the administration of WIC and 
the Food Stamp Program. Ms. Walsh suggested that food 
prescriptions for the Food Stamp Program, similar to those 
found in WIC, be developed. She stated that this would improve 
the nutritional status of needy families and could be done at a 
reduced cost.

February 14, 1995

    Congressman Tony Hall, from Ohio, testified in opposition 
to block grants to the States for AFDC, the Food Stamp Program, 
WIC, and other nutrition programs. He said that under block 
grants food assistance would not be automatically increased in 
time of recession and that allocations to the States may be 
miscalculated. He stated State flexibility could be increased, 
fraud reduced, and the costs of the various programs reduced 
without block granting these programs.
    Congressman Ron Wyden, from Oregon discussed his 
recommendations for reducing fraud, waste and abuse in the Food 
Stamp Program. He made three specific recommendations: (1) 
implementation of asset forfeiture laws similar to forfeiture 
provisions under anti-drug trafficking statutes, (2) submission 
of verifiable business license by authorized food stamp 
retailers, and (3) possible imposition of a certification fee 
on retailers to pay for the enforcement of anti-fraud efforts 
of this certification process.
    Mr. Robert Rector, Senior Policy Analyst for Welfare and 
Family Issues at The Heritage Foundation summarized the 
historical objectives, growth, and social and actual costs of 
the welfare system from 1930 to the present. He stated that 
welfare spending is now nine times greater than when President 
Lyndon Johnson launched the War on Poverty. In 1964, welfare 
spending absorbed 1.23 percent of Gross Domestic Product (GDP) 
and by 1993, spending had risen to 5.1 percent of GDP. Mr. 
Rector described three objectives for welfare spending: (1) 
sustain living standards through cash and noncash transfers, 
(2) promote self-sufficiency, and (3) aid economically 
distressed communities. He maintained the U.S. society can no 
longer tolerate or afford open-ended growth in welfare 
spending. His recommendations included phasing out welfare 
entitlements and sending the programs to the States in the form 
of a block grant.
    Ms. Anna Kondratas, Senior Fellow at the Hudson Institute, 
testified on the issue of welfare reform that would discourage 
illegitimacy, promote productivity, and preserve the family 
unit. She expressed the view that the current welfare system is 
seriously flawed and called for scrapping it entirely and 
replacing it with a system that gives more flexibility to the 
States to operate and even change AFDC. This reform should, in 
her view, be done gradually, preserving and combining programs 
that have proven successful. She also expressed support for 
devolution in the federalism debate, but cautioned that State 
and local bureaucracies are still bureaucracies, and many of 
them are no more efficient than Federal ones.
    Mr. Mark Greenberg, of the Center for Law and Social Policy 
testified on the issue of welfare reform as it relates to Food 
Stamp Program reform. He made four principal points: (1) the 
Food Stamp Program has a different purpose, structure, and 
serves a much broader population than the AFDC program; (2) 
block-granting food stamps would seriously undercut the 
program's basic purpose; (3) block-granting the AFDC-related 
portion of food stamps raises additional difficulties; and (4) 
in light of imminent changes in AFDC, the Food Stamp Program's 
role as safety net becomes even more crucial.
    Mr. Robert Greenstein, the Executive Director of the Center 
on Budget and Policy Priorities expressed the view that while 
welfare reform must take place, block grants are ill conceived 
and will jeopardize existing programs and harm those they are 
intended to help. Mr. Greenstein made recommendations for 
increasing flexibility and controlling costs without resorting 
to block grants. States, he said, should be allowed (1) to 
align food stamp employment and training programs with work 
activities for AFDC recipients; (2) to modify rules determining 
income and resources; (3) additional flexibility to simplify or 
standardize procedures for determining food stamp benefit 
levels of AFDC families; (4) to convert food stamp benefits to 
wage subsidies for employees; (5) to have impediments to EBT 
systems removed; and (6) to remove dozens of unnecessary and 
prescriptive State requirements.
    Mr. Robert J. Fersh, President of the Food Research and 
Action Center, discussed the treatment of current participants 
in the food assistance programs and sought assurances that the 
new nutrition programs will meet the objectives of the current 
system. He also addressed the issue of national consensus on 
hunger and malnutrition prevention, minimum nutrition 
requirements for all 50 States, the Food Stamp Programs' 
responsiveness in times of economic change; and advantages of 
maintaining a national Food Stamp Program.
    Mr. Timothy M. Hammonds, President and CEO of the Food 
Marketing Institute recommended changes that would lead to, 
reduction of fraud and abuse, enhancement of the dignity of the 
programs, and reduction of both public and private 
administrative costs. He recommended that current food 
assistance coupons not be issued in cash, but that EBT systems 
be implemented as quickly as possible, that national uniformity 
in the food assistance program should be a goal, and licensing 
requirements for participating retailers should not be 
restrictive. The Honorable John R. Block, National-American 
Wholesale Grocers' Association (NAWGA) and former Secretary of 
Agriculture, expressed support for efforts aimed at block 
granting welfare programs to the States. He opposed proposals 
which cash out the Food Stamp Program to the States and instead 
expressed support for maintaining the food stamp coupon/EBT 
delivery system.
    Mr. William C. Ferriera, President of the Apricot Producers 
of California and representing the Commodity Distribution 
Coalition, encouraged reform of programs but not discontinuance 
of Federal food assistance programs. He endorsed the 
consolidation plan as proposed by Second Harvest; recommended a 
complete review of program administration and technology 
utilization; encouraged making the commodity support component 
of Federal food assistance programs available to other 
programs; advocated preserving nutrition standards for school 
meal programs; and recommended that U.S. agriculture 
commodities be purchased for domestic food assistance programs.
    Reverend Robert A. Sirico of the Acton Institute for the 
Study of Religion and Liberty discussed his belief that the 
Federal Government has almost entirely usurped the traditional 
role of religious institutions and charity. He advocated 
reforming the current welfare system by taking the function of 
charity from the government and returning it to the family and 
churches who understand the most basic needs of people. 
Reverend Frederick Kammer, the President of the Catholic 
Charities USA, cautioned against cashing out or block granting 
food stamps. He stated that the Food Stamp Program is the place 
of last resort for the poorest and most desperate. Churches and 
charities, he said, are incapable of handling the present 
hunger problems.
    Ms. Virginia White, of the Kansas Food Bank Warehouse, 
Inc., advocated keeping the Food Stamp Program and other food 
programs in their current form and suggested that Members seek 
the support of Governors for a plan that would provide a food 
insurance safety net. Ms. Jasmine Gunthorpe of Baltimore, 
Maryland described her personal difficulties living and 
functioning within the current AFDC system. She works in a 
nine-month, part-time-minimum wage, contractual position. If 
her work exceeds AFDC income levels, she loses AFDC benefits 
for that period, requiring her to reapply for AFDC benefits for 
the 3 months she is not working. She expressed frustration at 
having different social workers who estimate benefits, 
calculate wages, assess food stamp needs, and who help with 
child care. She recommended reforms that provide for basic 
needs for children; reduction in poverty not just a reduction 
of individuals from the welfare roles; and efforts to bring 
people into the mainstream of life. Mr. D. Michael Hancock of 
the Farmworker Justice Fund stated that in the event that food 
and nutrition programs are block granted to the States, States 
should be directed to ensure inclusion of farm workers in these 
programs. He also called for educating farm workers on food and 
nutrition programs and for bilingual program counselors.

May 10, 1995

    The Subcommittee on Department Operations, Nutrition, and 
Foreign Agriculture held a hearing on the Food Stamp Program 
and electronic benefit transfer (EBT) systems. The chairman of 
the subcommittee, Bill Emerson, stated that during the 1995 
debate on welfare reform questions arose concerning EBT and the 
actions of the Department of the Treasury that may limit the 
flexibility of States to establish EBT systems. Therefore the 
subcommittee scheduled a hearing to receive testimony from 
administration officials and others interested in the use of 
EBT systems in the Food Stamp Program.
    The witnesses included representatives from the Department 
of the Treasury and the EBT Task Force who described the 
administrations's goals in implementing EBT. Representatives 
from the Missouri Department of Social Services and the 
Maryland Department of Human Resources testified about their 
States' experience with EBT systems. Persons representing 
organizations that assist States in the design of EBT systems 
and other groups also testified. These witnesses represented 
the Unysis Corporation, Applied Systems Institute and the Hull 
House of Chicago, Illinois.
    Representatives from retail food stores and organizations 
interested in EBT services in food stores testified about the 
operation of EBT and the effect on persons using food benefits 
and the types of food purchased.

June 8, 1995

    The Subcommittee on Department Operations, Nutrition, and 
Foreign Agriculture held a hearing on the Food Stamp Program 
and the administration's proposal included in the ``Guidance of 
the Administration'' for the Farm Bill. The chairman of the 
subcommittee, Bill Emerson, stated that while the committee had 
acted on reform of the Food Stamp Program earlier in the year, 
he intended to work with the administration and take their 
proposals into consideration.
    The witnesses at the hearing included the Honorable Eni F. 
H. Faleomavaega, from American Samoa. Mr. Faleomavaega 
testified in support of the modified Food Stamp Program in 
American Samoa. The Honorable Ellen Haas, Under Secretary for 
Food, Nutrition, and Consumer Services, described the 
administration's proposal for the Food Stamp Program to provide 
State flexibility, reduce food stamp regulations, improve the 
integrity of the program, and enhance child support enforcement 
programs.
    Other witnesses included representatives of organizations 
providing self-help services in communities, such as America 
the Beautiful, Sustainable Food Center, and the Society of St. 
Andrew.

July 25, 1995

    The Subcommittee on Department Operations, Nutrition, and 
Foreign Agriculture held a hearing on the Food Stamp Program 
and a bill (H.R. 236) introduced by the chairman of the 
subcommittee, Bill Emerson concerning the use of food stamps to 
purchase vitamins and minerals. Chairman Emerson stated that he 
introduced H.R. 236 because he believes that persons receiving 
food stamps should have the option to use their benefits to 
purchase vitamins and minerals. The Honorable William J. 
Martini and the Honorable Donald Payne testified in support of 
H.R. 236.
    The Deputy Administrator of the Food Stamp Program and the 
Director of USDA's Center for Nutrition Policy and Promotion 
expressed reservations about H.R. 236.
    Other witnesses offering testimony on the subject of the 
use of food stamps to purchase vitamins and minerals included 
representatives from the Council for Responsible Nutrition, the 
Department of Food Science of Rutgers University, University of 
Texas Medical Branch, Food Research and Action Center, and 
United Fresh Fruit and Vegetable Association.

                           II--Full Committee

    The Committee on Agriculture met, pursuant to notice, on 
June 11, 1996, a quorum being present, to consider Title X and 
other related provisions of H.R. 3507 for its Recommendations 
to the Budget Committee as provided in the Budget Resolution 
Instructions contained in H.Con.Res. 178 with respect to the 
Reconciliation Bill for Fiscal Year 1997 to be introduced by 
the Budget Committee.
    The chairman called the meeting to order at 1:40 p.m. and 
made a statement noting that H.R. 3507 was essentially the same 
bill that was approved by the House on December 21, 1996, by a 
vote of 245 yeas to 178 with one significant exception. The 
food stamp funding cap had been eliminated as a concession to 
and at the request of the National Governor's Association, the 
Clinton administration, and the Secretary of Agriculture.
    Ranking Minority Member de la Garza was recognized for a 
statement, as were Mr. Emerson and Mr. LaHood.
    The chairman laid before the committee his recommendations 
proposed for Title X and related provisions of H.R. 3507 and 
then asked Counsel to give a brief summary.
    Thereafter, the chairman offered a technical, correcting 
and conforming amendment to Title X of H.R. 3507. The amendment 
was adopted by a voice vote.
    Mr. Emerson was then recognized to offer and explain an 
amendment which would expand the definition of food eligible 
for purchase with food stamp coupons to include vitamins and 
minerals for home consumption. Discussion occurred on the 
amendment.
     Mr. Condit was recognized to offer an amendment to the 
Emerson amendment which would require USDA to conduct a study 
on the anticipated impact of the purchase of vitamins and 
minerals with food stamps by recipients in the Food Stamp 
Program and report to the committee by December 15, 1996. 
Discussion occurred and Mr. Emerson noted that he was 
constrained to accept Mr. Condit's amendment. Mr. Volkmer noted 
that in the report accompanying H.R. 3603, the Agriculture, 
Rural Development, Food and Drug Administration, and Related 
Agencies Appropriations Bill, 1997, there was language which he 
believed prohibited USDA from conducting any studies within the 
food stamp, child nutrition, and WIC programs during fiscal 
year 1997. The amendment was adopted by a voice vote.
    Mr. Smith was then recognized to offer and explain an 
amendment concerning the definition of food under the Food 
Stamp Act of 1977 and those certain foods that would be 
ineligible for purchase with food stamps under his amendment. 
Discussion occurred, and Mr. Emerson requested that Mr. Smith 
withdraw his amendment so that hearings could be held on the 
issue. Mr. Smith then requested by unanimous consent that 
report language be included which would encourage USDA to 
conduct a study on whether or not some items now considered 
eligible as food for purchase under the Food Stamp Act of 1977 
should be eliminated from that eligibility. Acting Chairman 
Gunderson pointed out that report language could encourage USDA 
to take certain actions, but that it could not mandate USDA to 
do so. Without objection, the report language to that effect 
was adopted and the amendment was withdrawn.
    Mr. LaHood was recognized to offer and explain an amendment 
concerning the application of anti-tying restrictions to 
nonbank electronic benefit transfer (EBT) systems service 
providers that is similar to a law that applies to banks. Mr. 
LaHood explained that the amendment is intended to maintain 
competition among EBT service providers of electronic benefit 
transfer systems and financial services. Discussion occurred, 
and by a voice vote, the amendment was adopted.
    Ms. Clayton was then recognized to offer and explain an 
amendment which would require that the number of hours required 
for work and training for able-bodied 18 to 50 year old persons 
with no dependents must be determined by dividing the amount of 
food stamp benefits by the minimum wage. Lengthy discussion 
occurred.
    During the proceedings, the committee recessed at 
approximately 4:10 p.m. so Members could respond to votes on 
the House Floor. The chairman returned at 4:45 p.m. and 
announced that the House was now considering H.R. 3603, the 
Agriculture, Rural Development, Food and Drug Administration, 
and Related Agencies Appropriations Bill, 1997, and that the 
committee would recess, to reconvene subject to the call of the 
Chair and that the Clayton amendment would be the pending 
matter of business at that time.
    On June 13, 1996 at 10:00 a.m. the committee reconvened to 
finish the consideration of Title X of H.R. 3507. The pending 
business from the business meeting of June 11, 1996 was the 
Clayton amendment as noted above. Chairman Roberts said that it 
was his understanding that an agreement had been reached on a 
modified amendment, and without objection, the pending Clayton 
amendment was withdrawn.
    Ms. Clayton was recognized to offer and then explain a 
similar but modified amendment that would clarify in the 
definition of ``work program'' the term ``program of employment 
or training.'' Ms. Clayton noted that questions had been raised 
as to the use of the conjunction ``or'' in the term ``a program 
of employment or training'' and the requirement of a subsequent 
paragraph to participate in 20 hours per week in a work 
program. The question was whether such 20 hours applied to a 
work activity as well as training program.
    Mr. Gunderson said that he had not had an opportunity to 
review the revised amendment and that he was concerned about 
how the amendment would be consistent with the actions taken by 
the House Committee on Economic and Educational Opportunities 
on June 12, 1996. The amendment was then passed over to give 
Mr. Gunderson and other members an opportunity to review it 
carefully.
    Ms. Clayton was then recognized to offer and explain an 
amendment which would change the language in the text of the 
chairman's recommendation from 4 months to 6 months the amount 
of time that an able-bodied 18 to 50 year old person, with no 
dependents, could receive food stamp benefits before being 
required to comply with certain work requirements. Discussion 
occurred with Chairman Roberts noting that the CBO had 
estimated that the amendment would reduce the savings in the 
chairman's recommendations by $885 million and he asked Ms. 
Clayton if she would like to withdraw her amendment. Ms. 
Clayton requested a vote, and by a voice vote the amendment was 
not adopted.
    Mr. Gunderson was then recognized to discuss the Clayton 
modified amendment noted above which would clarify the 
definition of ``work program'' as a program of employment and 
training. Mr. Gunderson expressed concern that some States may 
be proceeding on two tracks as they consider work and training 
programs, one for food stamp recipients and one for AFDC 
recipients, and he suggested that consolidation of these 
programs is a worthy goal. Discussion occurred and by a voice 
vote the Clayton amendment to clarify the definition ``work 
program'' was adopted that substituted the words ``a program of 
employment and training.''
    Mr. de la Garza was recognized to offer and explain a 
substitute amendment to Title X of H.R. 3507. Discussion 
occurred with Chairman Roberts noting that 55 percent of the 
food stamp reforms in H.R. 3507 are identical to those in the 
administration's bill offered by the Ranking Minority member in 
his amendment and that 72 percent of the food stamp reforms in 
H.R. 3507 are either identical or similar to those in the 
administration's bill so that there is bipartisan support for 
many reforms.
    The chairman described provisions that are significantly 
different between H.R. 3507 and the de la Garza substitute 
amendment. He also noted provisions that are included in H.R. 
3507 but not in the substitute amendment.
    The chairman noted for the record that in H.R. 3507, but 
not in the substitute, existing waiver authority is revised and 
authority is provided to the Secretary to conduct pilot or 
experimental projects and waive certain requirements of the 
Food Stamp Act as long as such waivers for alternatives are 
consistent with the goals of the program and provides food for 
needy families. Chairman Roberts also stated that the de la 
Garza Substitute saved $18.4 billion, while the savings for 
H.R. 3507 are $23 billion which would meet the committee's 
obligation under the Budget Resolution instructions.
    Lengthy discussion occurred with Mr. Baldacci asking the 
administration representatives and staff what would happen to 
States that had already been granted waivers and what would 
happen in the future if the Food Stamp Act were amended as 
recommended in the text under consideration.
    Mrs. Thurman indicated that she wanted to work with the 
committee on two issues: the ``able-bodied'' work requirement 
program relating to 18-50 year old persons and the vehicle 
allowance provisions. Chairman Roberts suggested that the de la 
Garza Substitute would be considered first and then the 
committee would consider other amendments on these issues.
    After considerable discussion, the de la Garza Substitute, 
by a voice vote, was not adopted.
    Mr. Pomeroy was then recognized to offer and explain an 
amendment which would retain a provision in current law that 
provides that there would be no cap on the excess shelter 
deduction beginning on January 1, 1997. H.R. 3507 would 
maintain current cap on shelter deduction after December 31, 
1996. He raised the problems that arise in colder climates such 
as North Dakota. Discussion occurred and the chairman noted 
that the Congressional Budget Office estimated that the 
amendment would cost $4 billion and that Mr. Pomeroy offered no 
off-setting costs and that he (the chairman) reluctantly must 
oppose the amendment. By a voice vote, the amendment was not 
adopted. Mr. Pomeroy requested a rollcall vote. By a recorded 
vote of 22 nays and 18 yeas, the Pomeroy amendment was not 
adopted. See Rollcall Vote No. 1.
    Mrs. Thurman was then recognized to offer and explain an 
amendment on behalf of herself and Mrs. Clayton which would 
require annual indexing of the vehicle allowance from a base of 
$4,600 for households with a working member or a member 
actively looking for work beginning October 1, 1996. Discussion 
occurred, and it was noted that the cost of the amendment had 
been roughly estimated by CBO to be $350 million. Mr. Smith 
offered a verbal amendment to the Thurman amendment which would 
make the annual indexing of the vehicle allowance discretionary 
and dependent upon enactment of State law.
    Mr. Volkmer raised the question of a point of order that no 
one had seen the Smith amendment to the Thurman amendment and 
that it was not in writing, and the amendment was laid aside to 
give staff and others a chance to discuss and review the Smith 
amendment.
    Mr. Condit was then recognized to offer and explain an 
amendment which would clarify that evidence adduced by USDA 
could be used to support a finding of food stamp violations by 
stores. Such evidence could come from on-site investigations, 
redemption data and transaction reports from electronic benefit 
transfer systems. Mr. Condit also noted that the amendment was 
proposed by USDA and was not contained in H.R. 3507. Chairman 
Roberts stated that although he thought the amendment was 
duplicative of permanent law that he had no opposition to the 
amendment. By a voice vote, the Condit amendment was adopted.
    Mr. Stenholm was then recognized to offer and explain an 
amendment to H.R. 3507 that would dedicate all savings from the 
bill to deficit reduction. Chairman Roberts requested that Mr. 
Stenholm withdraw his amendment as it was susceptible to a 
point of order as a nongermane amendment outside the 
jurisdiction of the Committee on Agriculture. Without 
objection, Mr. Stenholm withdrew his amendment.
    Mr. Stenholm was also recognized to offer and explain an 
amendment which was a sense of the committee to the effect that 
reductions in outlays resulting from the committee's 
recommendations to this title to be used for deficit reduction. 
By a voice vote, the Stenholm amendment was adopted.
     Discussion occurred about the conference process in 1995 
regarding the Deficit Reduction Act of 1995.
    Mr. Smith was then recognized to withdraw his verbal 
amendment to the Thurman-Clayton amendment concerning the 
indexing of the vehicle allowance. Further discussion occurred 
on the amendment and Mrs. Thurman requested a rollcall vote. By 
a recorded vote of 21 nays and 20 yeas, the amendment was not 
adopted. See Rollcall Vote #2.
    Mr. Farr was then recognized to offer and explain an 
amendment which would mandate the Secretary of Agriculture and 
the Secretary of Health and Human Services to report on the 
effect of the Personal Responsibility and Work Opportunity Act 
and the ability of State and local government to deal with 
people in poverty. Chairman Roberts pointed out language in the 
report to accompany H.R. 3603, the Agriculture, Rural 
Development, Food and Drug Administration and Related Agencies 
Appropriations Bill of 1997 which prohibits USDA from 
conducting any studies within the food stamp, child nutrition, 
and WIC programs during fiscal year 1997. The chairman also 
stated that the Secretary of Health and Human Services was not 
under the jurisdiction of the Committee on Agriculture. 
Chairman Roberts offered a verbal amendment to make the 
amendment discretionary and apply it only to the Secretary of 
Agriculture and the recommendations in H.R. 3507, Title X and 
related provisions. Without objection, the Roberts amendment to 
the Farr amendment was accepted and by a voice vote the Farr 
amendment was adopted.
    Mr. Gunderson then moved that Title X and its related 
provisions to food stamps contained in H.R. 3507, as amended, 
be submitted to the Budget Committee for its inclusion in the 
Reconciliation package to be reported to the House by the 
Budget Committee in response to the instructions to this 
committee contained in H.Con.Res. 178. By a voice vote the 
motion was accepted.
    Chairman Roberts indicated that a letter had been sent to 
Mr. de la Garza enclosing a copy of a letter from Budget 
Committee Chairman Kasich advising that Minority Views could be 
submitted to the Budget Committee as late as Monday, June 17.
    Without objection, staff was given permission to make any 
necessary technical, syntactical, clarifying, or conforming 
changes as are appropriate without changing the substance of 
the legislation.
    The meeting adjourned, subject to the call of the Chair.

                             Rollcall Votes

    In compliance with clause 2(l)(2)(B) of rule XI of the 
House of Representatives, the committee sets forth the record 
of the following rollcall votes taken with respect to 
consideration of the recommendations regarding the 
Reconciliation Bill for Fiscal Year 1997:

                             Rollcall No. 1

    Summary: To retain a provision in current law which 
provides that there would no longer be a cap on the excess 
shelter deduction after December 31, 1996,
    Offered by: Mr. Pomeroy.
    Results: Failed by a rollcall vote: 18 yeas/22 nays.
    Yeas: Cong. de la Garza, Cong. Brown, Cong. Stenholm, Cong. 
Volkmer, Cong. Johnson, Cong. Dooley, Cong. Clayton, Cong. 
Minge, Cong. Hilliard, Cong. Pomeroy, Cong. Holden, Cong. 
Baesler, Cong. Thurman, Cong. Bishop, Cong. Thompson, Cong. 
Farr, Cong. Pastor, and Cong. Baldacci.
    Nays: Cong. Gunderson, Cong. Allard, Cong. Barrett, Cong. 
Ewing, Cong. Doolittle, Cong. Goodlatte, Cong. Pombo, Cong. 
Canady, Cong. Smith, Cong. Everett, Cong. Lucas, Cong. Lewis, 
Cong. Baker, Cong. Crapo, Cong. Calvert, Cong. Chenoweth, Cong. 
Hostettler, Cong. Bryant, Cong. Latham, Cong. Cooley, Cong. 
LaHood, and Cong. Roberts, Chairman.
    Not Voting: Cong. Emerson, Cong. Combest, Cong. Boehner, 
Cong. Foley, Cong. Chambliss, Cong. Rose, Cong. Condit, and 
Cong. Peterson.

                             Rollcall No. 2

    Summary: To require annual indexing of the vehicle 
allowance for households with a working member or a member 
actively looking for work.
    Offered By: Mrs. Thurman and Mrs. Clayton.
    Results: Failed by a rollcall vote: 20 yeas/21 nays.
    Yeas: Cong. Cooley, Cong. de la Garza, Cong. Brown, Cong. 
Stenholm, Cong. Volkmer, Cong. Johnson, Cong. Condit, Cong. 
Peterson, Cong. Dooley, Cong. Minge, Cong. Hilliard, Cong. 
Pomeroy, Cong. Holden, Cong. Baesler, Cong. Thurman, Cong. 
Bishop, Cong. Thompson, Cong. Farr, Cong. Pastor, and Cong. 
Baldacci.
    Nays: Cong. Gunderson, Cong. Allard, Cong. Barrett, Cong. 
Ewing, Cong. Goodlatte, Cong. Pombo, Cong. Canady, Cong. Smith, 
Cong. Everett, Cong. Lucas, Cong. Lewis Cong. Baker, Cong. 
Crapo, Cong. Calvert, Cong. Chenoweth, Cong. Hostettler, Cong. 
Bryant, Cong. Latham, Cong. Chambliss, Cong. LaHood, and Cong. 
Roberts, Chairman.
    Not voting: Cong. Emerson, Cong. Combest, Cong. Boehner, 
Cong. Doolittle, Cong. Foley, Cong. Rose, and Cong. Clayton.

          Budget Act Compliance (Section 308 and Section 403)

    The provisions of clause 2(l)(3)(B) of Rule XI of the Rules 
of the House of Representatives and section 308(a) of the 
Congressional Budget Act of 1974 (relating to estimates of new 
budget authority, new spending authority, or new credit 
authority, or increased or decreased revenues or tax 
expenditures) are not considered applicable. The estimate and 
comparison required to be prepared by the Director of the 
Congressional Budget Office under clause 2(l)(C)(3) of Rule XI 
of the Rules of the House of Representatives and section 403 of 
the Congressional Budget Act of 1974 is as follows: [See 
consolidated Congressional Budget Office Cost Estimate on page 
1931.]

                     Inflationary Impact Statement

    Pursuant to clause 2(l)(4) of Rule XI of the Rules of the 
House of Representatives, the committee estimates that 
enactment of the chairman's recommendations of the Committee on 
Agriculture with respect to the reconciliation bill for fiscal 
year 1997 will have no inflationary impact on the national 
economy.

                          Oversight Statement

    No summary of oversight findings and recommendations made 
by the Committee on Government Reform and Oversight under 
clause 2(l)(3)(D) of Rule XI of the Rules of the House of 
Representatives was available to the committee with reference 
to the subject matter specifically addressed by the chairman's 
recommendations of the Committee on Agriculture with respect to 
the reconciliation bill for fiscal year 1997.
    No specific oversight activities other than the hearings 
detailed in this report were conducted by the committee within 
the definition of clause 2(b)(1) of Rule X of the Rules of the 
House of Representatives.

                  Congressional Budget Office Estimate

    Pursuant to clause 2(l)(3)(C) of rule XI of the Rules of 
the House of Representatives, the following is the cost 
estimate provided by the Congressional Budget Office pursuant 
to section 403 of the Congressional Budget Act of 1974. [See 
consolidated Congressional Budget Office Cost Estimate on page 
1940.]

    Changes in Existing Law Made by Title I of the Bill, as Reported

    In compliance with clause 3 of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italics, existing law in which no change 
is proposed is shown in roman):

                         FOOD STAMP ACT OF 1977

          * * * * * * *

                              DEFINITIONS

    Sec. 3. As used in this Act, the term:
    (a)  * * *
          * * * * * * *
    (c) ``Certification period'' means the period for which 
households shall be eligible to receive authorization cards. 
[Except as provided in section 6(c)(1)(C), for those households 
that are required to submit periodic reports under section 
6(c)(1) of this Act, the certification period shall be at least 
six months but no longer than twelve months except that the 
foregoing limits on the certification period may, with the 
approval of the Secretary, be waived by a State agency for 
certain categories of households where such waiver will improve 
the administration of the program. For households that are not 
required to submit periodic reports, the certification period 
shall be determined as follows:
            [(1) In the case of a household all of whose 
        members are included in a federally aided public 
        assistance or general assistance grant, the period 
        shall coincide with the period of such grant.
            [(2) In the case of all other households, the 
        period shall be not less than three months: Provided, 
        That such period may be up to twelve months for any 
        household consisting entirely of unemployable or 
        elderly or primarily self-employed persons, or as short 
        as circumstances require for those households as to 
        which there is a substantial likelihood of frequent 
        changes in income or household status, and for any 
        household on initial certification, as determined by 
        the Secretary. The maximum limit of twelve months for 
        such period under the foregoing proviso may be waived 
        by the Secretary where such waiver will improve the 
        administration of the program.] The certification 
        period shall not exceed 12 months, except that the 
        certification period may be up to 24 months if all 
        adult household members are elderly or disabled. A 
        State agency shall have at least 1 contact with each 
        certified household every 12 months.
    (d) ``Coupon'' means any coupon, stamp, [or type of 
certificate] type of certificate, authorization card, cash or 
check issued in lieu of a coupon, or an access device, 
including an electronic benefit transfer card or personal 
identification number, issued pursuant to the provisions of 
this Act.
          * * * * * * *
    (i) ``Household'' means (1) an individual who lives alone 
or who, while living with others, customarily purchases food 
and prepares meals for home consumption separate and apart from 
the others, or (2) a group of individuals who live together and 
customarily purchase food and prepare meals together for home 
consumption. Spouses who live together, parents and their 
children 21 years of age or younger [(who are not themselves 
parents living with their children or married and living with 
their spouses)] who live together, and children (excluding 
foster children) under 18 years of age who live with and are 
under the parental control of a person other than their parent 
together with the person exercising parental control shall be 
treated as a group of individuals who customarily purchase and 
prepare meals together for home consumption even if they do not 
do so. Notwithstanding the preceding sentences, an individual 
who lives with others, who is sixty years of age or older, and 
who is unable to purchase food and prepare meals because such 
individual suffers, as certified by a licensed physician, from 
a disability which would be considered a permanent disability 
under section 221(i) of the Social Security Act (42 U.S.C. 
421(i)) or from a severe, permanent, and disabling physical or 
mental infirmity which is not symptomatic of a disease shall be 
considered, together with any of the others who is the spouse 
of such individual, an individual household, without regard to 
the purchase of food and preparation of meals, if the income 
(as determined under section 5(d)) of the others, excluding the 
spouse, does not exceed the poverty line, as described in 
section 5(c)(1), by more than 65 per centum. Notwithstanding 
the preceding sentences, a State may establish criteria that 
prescribe when individuals who live together, and who would be 
allowed to participate as separate households under the 
preceding sentences, shall be considered a single household, 
without regard to the common purchase of food and preparation 
of meals. In no event shall any individual or group of 
individuals constitute a household if they reside in an 
institution or boarding house, or else live with others and pay 
compensation to the others for meals. For the purposes of this 
subsection, residents of federally subsidized housing for the 
elderly, disabled or blind recipients of benefits under title 
I, II, X, XIV, or XVI of the Social Security Act, or are 
individuals described in paragraphs (2) through (7) of 
subsection (r), who are residents in a public or private 
nonprofit group living arrangement that serves no more than 
sixteen residents and is certified by the appropriate State 
agency or agencies under regulations issued under section 
1616(e) of the Social Security Act or under standards 
determined by the Secretary to be comparable to standards 
implemented by appropriate State agencies under such section, 
temporary residents of public or private nonprofit shelters for 
battered women and children, residents of public or private 
nonprofit shelters for individuals who do not reside in 
permanent dwellings or have no fixed mailing addresses, who are 
otherwise eligible for coupons, and narcotics addicts or 
alcoholics, together with their children, who live under the 
supervision of a private nonprofit institution, or a publicly 
operated community mental health center, for the purpose of 
regular participation in a drug or alcoholic treatment program 
shall not be considered residents of institutions and shall be 
considered individual households.
          * * * * * * *
    (o) ``Thrifty food plan'' means the diet required to feed a 
family of four persons consisting of a man and a woman twenty 
through fifty, a child six through eight, and a child nine 
through eleven years of age, determined in accordance with the 
Secretary's calculations. The cost of such diet shall be the 
basis for uniform allotments for all households regardless of 
their actual composition, except that the Secretary [shall (1) 
make] shall--
            (1) make household-size adjustments (based on the 
        unrounded cost of such diet) taking into account 
        economies of [scale, (2) make] scale;
            (2) make cost adjustments in the thrifty food plan 
        for Hawaii and the urban and rural parts of Alaska to 
        reflect the cost of food in Hawaii and urban and rural 
        [Alaska, (3) make] Alaska;
            (3) make cost adjustments in the separate thrifty 
        food plans for Guam, and the Virgin Islands of the 
        United States to reflect the cost of food in those 
        States, but not to exceed the cost of food in the fifty 
        States and the District of [Columbia, (4) through 
        January 1, 1980, adjust the cost of such diet every 
        January 1 and July 1 to the nearest dollar increment to 
        reflect changes in the cost of the thrifty food plan 
        for the six months ending the preceding September 30 
        and March 31, respectively, (5) on January 1, 1981, 
        adjust the cost of such diet to the nearest dollar 
        increment to reflect changes in the cost of the thrifty 
        food plan for the twelve months ending the preceding 
        September 30, (6) on October 1, 1982, adjust the cost 
        of such diet to reflect changes in the cost of the 
        thrifty food plan for the twenty-one months ending June 
        30, 1982, reduce the cost of such diet by 1 percent, 
        and round the result to the nearest lower dollar 
        increment for each household size, (7) on October 1, 
        1983, and October 1, 1984, adjust the cost of such diet 
        to reflect changes in the cost of the thrifty food plan 
        for the twelve months ending the preceding June 30, 
        reduce the cost of such diet by 1 per centum, and round 
        the result to the nearest lower dollar increment for 
        each household size, (8) on October 1, 1985, and each 
        October 1 thereafter through October 1, 1987, adjust 
        the cost of such diet to reflect changes in the cost of 
        the thrifty food plan for the twelve months ending the 
        preceding June 30 and round the result to the nearest 
        lower dollar increment for each household size, (9) on 
        October 1, 1988, adjust the cost of such diet to 
        reflect 100.65 percent of the cost of the thrifty food 
        plan in the preceding June, and round the result to the 
        nearest lower dollar increment for each household size, 
        (10) on October 1, 1989, adjust the cost of such diet 
        to reflect 102.05 percent of the cost, in the preceding 
        June (without regard to the adjustment made under 
        clause (9)), of the then most recent thrifty food plan 
        as determined by the Secretary or the cost of the 
        thrifty food plan in effect on the date of enactment of 
        the Hunger Prevention Act of 1988, whichever is 
        greater, and round the result to the nearest lower 
        dollar increment for each household size, and (11) on 
        October 1, 1990, and each October 1 thereafter, adjust 
        the cost of such diet to reflect 103 percent of the 
        cost, in the preceding June (without regard to any 
        previous adjustment made under clause (9), (10), or 
        this clause), of the then most recent thrifty food plan 
        as determined by the Secretary or the cost of the 
        thrifty food plan in effect on the date of enactment of 
        the Hunger Prevention Act of 1988, whichever is 
        greater, and round the result to the nearest lower 
        dollar increment for each household size, except that 
        on October 1, 1992, and (in the case of households 
        residing in Alaska) on October 1, 1994, the Secretary 
        may not reduce the cost of such diet.] Columbia; and
            (4) on October 1, 1996, and each October 1 
        thereafter, adjust the cost of the diet to reflect the 
        cost of the diet, in the preceding June, and round the 
        result to the nearest lower dollar increment for each 
        household size, except that on October 1, 1996, the 
        Secretary may not reduce the cost of the diet in effect 
        on September 30, 1996.
          * * * * * * *
    (s) ``Homeless individual'' means--
            (1) an individual who lacks a fixed and regular 
        nighttime residence; or
            (2) an individual who has a primary nighttime 
        residence that is--
                    (A) a supervised publicly or privately 
                operated shelter (including a welfare hotel or 
                congregate shelter) designed to provide 
                temporary living accommodations;
                    (B) an institution that provides a 
                temporary residence for individuals intended to 
                be institutionalized;
                    (C) a temporary accommodation for not more 
                than 90 days in the residence of another 
                individual; or
                    (D) a public or private place not designed 
                for, or ordinarily used as, a regular sleeping 
                accommodation for human beings.
          * * * * * * *

                          ELIGIBLE HOUSEHOLDS

    Sec. 5. (a)  * * *
    [(b) The Secretary]
    (b) Eligibility Standards.--Except as otherwise provided in 
this Act, the Secretary shall establish uniform national 
standards of eligibility (other than the income standards for 
Alaska, Hawaii, Guam, and the Virgin Islands of the United 
States established in accordance with subsections (c) and (e) 
of this section) for participation by households in the food 
stamp program in accordance with the provisions of this 
section. No plan of operation submitted by a State agency shall 
be approved unless the standards of eligibility meet those 
established by the Secretary, and no State agency shall impose 
any other standards of eligibility as a condition for 
participating in the program.
          * * * * * * *
    (d) Household income for purposes of the food stamp program 
shall include all income from whatever source excluding only 
(1) any gain or benefit which is not in the form of money 
payable directly to a household (notwithstanding its conversion 
in whole or in part to direct payments to households pursuant 
to any demonstration project carried out or authorized under 
Federal law including demonstration projects created by the 
waiver of provisions of Federal law), except as provided in 
subsection (k), (2) any income in the certification period 
which is received too infrequently or irregularly to be 
reasonably anticipated, but not in excess of $30 in a quarter, 
subject to modification by the Secretary in light of subsection 
(f), (3) all educational loans on which payment is deferred, 
grants, scholarships, fellowships, veterans' educational 
benefits, and the like (A) awarded to a household member 
enrolled at a recognized institution of post-secondary 
education, at a school for the handicapped, in a vocational 
education program, or in a program that provides for completion 
of a secondary school diploma or obtaining the equivalent 
thereof, (B) to the extent that they do not exceed the amount 
used for or made available as an allowance determined by such 
school, institution, program, or other grantor, for tuition and 
mandatory fees (including the rental or purchase of any 
equipment, materials, and supplies related to the pursuit of 
the course of study involved), books, supplies, transportation, 
and other miscellaneous personal expenses (other than living 
expenses), of the student incidental to attending such school, 
institution, or program, and (C) to the extent loans include 
any origination fees and insurance premiums, (4) all loans 
other than educational loans on which repayment is deferred, 
(5) reimbursements which do not exceed expenses actually 
incurred and which do not represent a gain or benefit to the 
household and any allowance a State agency provides no more 
frequently than annually to families with children on the 
occasion of those children's entering or returning to school or 
child care for the purpose of obtaining school clothes (except 
that no such allowance shall be excluded if the State agency 
reduces monthly assistance to families with dependent children 
under part A of title IV of the Social Security Act (42 U.S.C. 
601 et seq.) in the month for which the allowance is provided): 
Provided, That no portion of benefits provided under title IV-A 
of the Social Security Act, to the extent it is attributable to 
an adjustment for work-related or child care expenses (except 
for payments or reimbursements for such expenses made under an 
employment, education, or training program initiated under such 
title after the date of enactment of the Hunger Prevention Act 
of 1988, and no portion of any educational loan on which 
payment is deferred, grant, scholarship, fellowship, veterans' 
benefits, and the like that are provided for living expenses, 
shall be considered such reimbursement, (6) moneys received and 
used for the care and maintenance of a third-party beneficiary 
who is not a household member, (7) income earned by a child who 
is a member of the household, who is an elementary or secondary 
school student, and who is [21] 19 years of age or younger, (8) 
moneys received in the form of nonrecurring lump-sum payments, 
including, but not limited to, income tax refunds, rebates, or 
credits, cash donations based on need that are received from 
one or more private nonprofit charitable organizations, but not 
in excess of $300 in the aggregate in a quarter, retroactive 
lump-sum social security or railroad retirement pension 
payments and retroactive lump-sum insurance settlements: 
Provided, That such payments shall be counted as resources, 
unless specifically excluded by other laws, (9) the cost of 
producing self-employed income, but household income that 
otherwise is included under this subsection shall be reduced by 
the extent that the cost of producing self-employment income 
exceeds the income derived from self-employment as a farmer, 
(10) any income that any other Federal law specifically 
excludes from consideration as income for purposes of 
determining eligibility for the food stamp program except as 
otherwise provided in subsection (k) of this section, [(11) any 
payments or allowances made for the purpose of providing energy 
assistance (A) under any Federal law, or (B) under any State or 
local laws, designated by the State or local legislative body 
authorizing such payments or allowances as energy assistance, 
and determined by the Secretary to be calculated as if provided 
by the State or local government involved on a seasonal basis 
for an aggregate period not to exceed six months in any year 
even if such payments or allowances (including tax credits) are 
not provided on a seasonal basis because it would be 
administratively infeasible or impracticable to do so,] (11) a 
1-time payment or allowance made under a Federal or State law 
for the costs of weatherization or emergency repair or 
replacement of an unsafe or inoperative furnace or other 
heating or cooling device, (12) through September 30 of any 
fiscal year, any increase in income attributable to a cost-of-
living adjustment made on or after July 1 of such fiscal year 
under title II or XVI of the Social Security Act (42 U.S.C. 401 
et seq.), section 3(a)(1) of the Railroad Retirement Act of 
1974 (45 U.S.C. 231b(a)(1)), or section 3112 of title 38, 
United States Code, if the household was certified as eligible 
to participate in the food stamp program or received an 
allotment in the month immediately preceding the first month in 
which the adjustment was effective, (13) at the option of a 
State agency and subject to subsection (m), child support 
payments that are excluded under section 402(a)(8)(A)(vi) of 
the Social Security Act (42 U.S.C. 602(a)(8)(A)(vi)), (14) any 
payment made to the household under section 3507 of the 
Internal Revenue Code of 1986 (relating to advance payment of 
earned income credit), (15) any payment made to the household 
under section 6(d)(4)(I) for work related expenses or for 
dependent care, and (16) any amounts necessary for the 
fulfillment of a plan for achieving self-support of a household 
member as provided under subparagraph (A)(iii) or (B)(iv) of 
section 1612(b)(4) of the Social Security Act (42 U.S.C. 
1382a(b)(4)).
    [(e) In computing household income for purposes of 
determining eligibility and benefit levels for households 
containing an elderly or disabled member and determining 
benefit levels only for all other households, the Secretary 
shall allow a standard deduction of $85 a month for each 
household, except that households in Alaska, Hawaii, Guam, and 
the Virgin Islands of the United States shall be allowed a 
standard deduction of $145, $120, $170, and $75, respectively. 
Such standard deductions shall be adjusted (1) on October 1, 
1983, to the nearest lower dollar increment to reflect changes 
in the Consumer Price Index for all urban consumers published 
by the Bureau of Labor Statistics, for items other than food 
and the homeowners' costs and maintenance and repair component 
of shelter costs, as appropriately adjusted by the Bureau of 
Labor Statistics after consultation with the Secretary, for the 
fifteen months ending the preceding March 31, (2) on October 1, 
1984, to the nearest lower dollar increment to reflect such 
changes for the fifteen months ending the preceding June 30, 
(3) on October 1, 1985, and October 1, 1986, to the nearest 
lower dollar increment to reflect such changes for the twelve 
months ending the preceding June 30, and (4) on October 1, 
1987, and each October 1 thereafter, to the nearest lower 
dollar increment to reflect changes in the Consumer Price Index 
for all urban consumers published by the Bureau of Labor 
Statistics, for items other than food, for the twelve months 
ending the preceding June 30. All households with earned income 
shall be allowed an additional deduction of 20 per centum of 
all earned income (other than that excluded by subsection (d) 
of this section), to compensate for taxes, other mandatory 
deductions from salary, and work expenses, except that such 
additional deduction shall not be allowed with respect to 
earned income that a household willfully or fraudulently fails 
(as proven in a proceeding provided for in section 6(b)) to 
report in a timely manner. Households, other than those 
households containing an elderly or disabled member, shall also 
be entitled, with respect to expenses other than expenses paid 
on behalf of the household by a third party, amounts made 
available and excluded for the expenses under subsection 
(d)(3), and expenses that are paid under section 6(d)(4)(I) for 
dependent care, to (1) a dependent care deduction, the maximum 
allowable level of which shall be $200 a month for each 
dependent child under 2 years of age and $175 a month for each 
other dependent, for the actual cost of payments necessary for 
the care of a dependent when such care enables a household 
member to accept or continue employment, or training or 
education which is preparatory for employment and (2) an excess 
shelter expense deduction to the extent that the monthly amount 
expended by a household for shelter exceeds an amount equal to 
50 per centum of monthly household income after all other 
applicable deductions have been allowed. In the 15-month period 
ending September 30, 1995, such excess shelter expense 
deduction shall not exceed $231 a month in the 48 contiguous 
States and the District of Columbia, and shall not exceed, in 
Alaska, Hawaii, Guam, and the Virgin Islands of the United 
States, $402, $330, $280, and $171 a month, respectively. In 
the 15-month period ending December 31, 1996, such excess 
shelter expense deduction shall not exceed $247 a month in the 
48 contiguous States and the District of Columbia, and shall 
not exceed, in Alaska, Hawaii, Guam, and the Virgin Islands of 
the United States, $429, $353, $300, and $182 a month, 
respectively. In computing the excess shelter expense 
deduction, a State agency may use a standard utility allowance 
in accordance with regulations promulgated by the Secretary, 
except that a State agency may use an allowance which does not 
fluctuate within a year to reflect seasonal variations. An 
allowance for a heating or cooling expense may not be used for 
a household that does not incur a heating or cooling expense, 
as the case may be, or does incur a heating or cooling expense 
but is located in a public housing unit which has central 
utility meters and charges households, with regard to such 
expense, only for excess utility costs. No such allowance may 
be used for a household that shares such expense with, and 
lives with, another individual not participating in the food 
stamp program, another household participating in the food 
stamp program, or both, unless the allowance is prorated 
between the household and the other individual, household, or 
both. If a State agency elects to use a standard utility 
allowance that reflects heating or cooling costs, it shall be 
made available to households receiving a payment, or on behalf 
of which a payment is made, under the Low-Income Home Energy 
Assistance Act of 1981 (42 U.S.C. 8621 et seq.) or other 
similar energy assistance program, provided that the household 
still incurs out-of-pocket heating or cooling expenses. A State 
agency may use a separate standard utility allowance for 
households on behalf of which such payment is made, but may not 
be required to do so. A State agency not electing to use a 
separate allowance, and making a single standard utility 
allowance available to households incurring heating or cooling 
expenses (other than households described in the sixth sentence 
of this subsection) may not be required to reduce such 
allowance due to the provision (direct or indirect) of 
assistance under the Low-Income Home Energy Assistance Act of 
1981. For purposes of the food stamp program, assistance 
provided under the Low-Income Home Energy Assistance Act of 
1981 shall be considered to be prorated over the entire heating 
or cooling season for which it was provided. A State agency 
shall allow a household to switch between any standard utility 
allowance and a deduction based on its actual utility costs at 
the end of any certification period and up to one additional 
time during each twelve-month period. Households containing an 
elderly or disabled member shall also be entitled, with respect 
to expenses other than expenses paid on behalf of the household 
by a third party, to--
            [(A) an excess medical expense deduction for that 
        portion of the actual cost of allowable medical 
        expenses, incurred by elderly or disabled members, 
        exclusive of special diets, that exceed $35 a month;
            [(B) a dependent care deduction, the maximum 
        allowable level of which shall be the same as that 
        contained in clause (1) of the fourth sentence of this 
        subsection, for the actual cost of payments necessary 
        for the care of a dependent, regardless of the 
        dependent's age, when such care enables a household 
        member to accept or continue employment, or training or 
        education that is preparatory for employment; and
            [(C) an excess shelter expense deduction to the 
        extent that the monthly amount expended by a household 
        for shelter exceeds an amount equal to 50 per centum of 
        monthly household income after all other applicable 
        deductions have been allowed.
State agencies shall offer eligible households a method of 
claiming a deduction for recurring medical expenses that are 
initially verified under the excess medical expense deduction 
provided for in subparagraph (A), in lieu of submitting 
information or verification on actual expenses on a monthly 
basis. The method described in the preceding sentence shall be 
designed to minimize the administrative burden for eligible 
elderly and disabled household members choosing to deduct their 
recurrent medical expenses pursuant to such method, shall rely 
on reasonable estimates of the member's expected medical 
expenses for the certification period (including changes that 
can be reasonably anticipated based on available information 
about the member's medical condition, public or private medical 
insurance coverage, and the current verified medical expenses 
incurred by the member), and shall not require further 
reporting or verification of a change in medical expenses if 
such a change has been anticipated for the certification 
period. Before determining the excess shelter expense 
deduction, all households shall be entitled to a deduction for 
child support payments made by a household member to or for an 
individual who is not a member of the household if such 
household member was legally obligated to make such payments, 
except that the Secretary is authorized to prescribe by 
regulation the methods, including calculation on a 
retrospective basis, that State agencies shall use to determine 
the amount of the deduction for child support payments.]
    (e) Deductions From Income.--
            (1) Standard deduction.--The Secretary shall allow 
        a standard deduction for each household in the 48 
        contiguous States and the District of Columbia, Alaska, 
        Hawaii, Guam, and the Virgin Islands of the United 
        States of $134, $229, $189, $269, and $118, 
        respectively.
            (2) Earned income deduction.--
                    (A) Definition of earned income.--In this 
                paragraph, the term ``earned income'' does not 
                include income excluded by subsection (d) or 
                any portion of income earned under a work 
                supplementation or support program, as defined 
                under section 16(b), that is attributable to 
                public assistance.
                    (B) Deduction.--Except as provided in 
                subparagraph (C), a household with earned 
                income shall be allowed a deduction of 20 
                percent of all earned income to compensate for 
                taxes, other mandatory deductions from salary, 
                and work expenses.
                    (C) Exception.--The deduction described in 
                subparagraph (B) shall not be allowed with 
                respect to determining an overissuance due to 
                the failure of a household to report earned 
                income in a timely manner.
            (3) Dependent care deduction.--
                    (A) In general.--A household shall be 
                entitled, with respect to expenses (other than 
                excluded expenses described in subparagraph 
                (B)) for dependent care, to a dependent care 
                deduction, the maximum allowable level of which 
                shall be $200 per month for each dependent 
                child under 2 years of age and $175 per month 
                for each other dependent, for the actual cost 
                of payments necessary for the care of a 
                dependent if the care enables a household 
                member to accept or continue employment, or 
                training or education that is preparatory for 
                employment.
                    (B) Excluded expenses.--The excluded 
                expenses referred to in subparagraph (A) are--
                            (i) expenses paid on behalf of the 
                        household by a third party;
                            (ii) amounts made available and 
                        excluded for the expenses referred to 
                        in subparagraph (A) under subsection 
                        (d)(3); and
                            (iii) expenses that are paid under 
                        section 6(d)(4).
            (4) Deduction for child support payments.--
                    (A) In general.--A household shall be 
                entitled to a deduction for child support 
                payments made by a household member to or for 
                an individual who is not a member of the 
                household if the household member is legally 
                obligated to make the payments.
                    (B) Methods for determining amount.--The 
                Secretary may prescribe by regulation the 
                methods, including calculation on a 
                retrospective basis, that a State agency shall 
                use to determine the amount of the deduction 
                for child support payments.
            (5) Homeless shelter allowance.--A State agency may 
        develop a standard homeless shelter allowance, which 
        shall not exceed $143 per month, for such expenses as 
        may reasonably be expected to be incurred by households 
        in which all members are homeless individuals but are 
        not receiving free shelter throughout the month. A 
        State agency that develops the allowance may use the 
        allowance in determining eligibility and allotments for 
        the households, except that the State agency may 
        prohibit the use of the allowance for households with 
        extremely low shelter costs.
            (6) Excess medical expense deduction.--
                    (A) In general.--A household containing an 
                elderly or disabled member shall be entitled, 
                with respect to expenses other than expenses 
                paid on behalf of the household by a third 
                party, to an excess medical expense deduction 
                for the portion of the actual costs of 
                allowable medical expenses, incurred by the 
                elderly or disabled member, exclusive of 
                special diets, that exceeds $35 per month.
                    (B) Method of claiming deduction.--
                            (i) In general.--A State agency 
                        shall offer an eligible household under 
                        subparagraph (A) a method of claiming a 
                        deduction for recurring medical 
                        expenses that are initially verified 
                        under the excess medical expense 
                        deduction in lieu of submitting 
                        information or verification on actual 
                        expenses on a monthly basis.
                            (ii) Method.--The method described 
                        in clause (i) shall--
                                    (I) be designed to minimize 
                                the burden for the eligible 
                                elderly or disabled household 
                                member choosing to deduct the 
                                recurrent medical expenses of 
                                the member pursuant to the 
                                method;
                                    (II) rely on reasonable 
                                estimates of the expected 
                                medical expenses of the member 
                                for the certification period 
                                (including changes that can be 
                                reasonably anticipated based on 
                                available information about the 
                                medical condition of the 
                                member, public or private 
                                medical insurance coverage, and 
                                the current verified medical 
                                expenses incurred by the 
                                member); and
                                    (III) not require further 
                                reporting or verification of a 
                                change in medical expenses if 
                                such a change has been 
                                anticipated for the 
                                certification period.
            (7) Excess shelter expense deduction.--
                    (A) In general.--A household shall be 
                entitled, with respect to expenses other than 
                expenses paid on behalf of the household by a 
                third party, to an excess shelter expense 
                deduction to the extent that the monthly amount 
                expended by a household for shelter exceeds an 
                amount equal to 50 percent of monthly household 
                income after all other applicable deductions 
                have been allowed.
                    (B) Maximum amount of deduction.--In the 
                case of a household that does not contain an 
                elderly or disabled individual, the excess 
                shelter expense deduction shall not exceed--
                            (i) in the 48 contiguous States and 
                        the District of Columbia, $247 per 
                        month; and
                            (ii) in Alaska, Hawaii, Guam, and 
                        the Virgin Islands of the United 
                        States, $429, $353, $300, and $182 per 
                        month, respectively.
                    (C) Standard utility allowance.--
                            (i) In general.--In computing the 
                        excess shelter expense deduction, a 
                        State agency may use a standard utility 
                        allowance in accordance with 
                        regulations promulgated by the 
                        Secretary, except that a State agency 
                        may use an allowance that does not 
                        fluctuate within a year to reflect 
                        seasonal variations.
                            (ii) Restrictions on heating and 
                        cooling expenses.--An allowance for a 
                        heating or cooling expense may not be 
                        used in the case of a household that--
                                    (I) does not incur a 
                                heating or cooling expense, as 
                                the case may be;
                                    (II) does incur a heating 
                                or cooling expense but is 
                                located in a public housing 
                                unit that has central utility 
                                meters and charges households, 
                                with regard to the expense, 
                                only for excess utility costs; 
                                or
                                    (III) shares the expense 
                                with, and lives with, another 
                                individual not participating in 
                                the food stamp program, another 
                                household participating in the 
                                food stamp program, or both, 
                                unless the allowance is 
                                prorated between the household 
                                and the other individual, 
                                household, or both.
                            (iii) Mandatory allowance.--
                                    (I) In general.--A State 
                                agency may make the use of a 
                                standard utility allowance 
                                mandatory for all households 
                                with qualifying utility costs 
                                if--
                                            (aa) the State 
                                        agency has developed 1 
                                        or more standards that 
                                        include the cost of 
                                        heating and cooling and 
                                        1 or more standards 
                                        that do not include the 
                                        cost of heating and 
                                        cooling; and
                                            (bb) the Secretary 
                                        finds that the 
                                        standards will not 
                                        result in an increased 
                                        cost to the Secretary.
                                    (II) Household election.--A 
                                State agency that has not made 
                                the use of a standard utility 
                                allowance mandatory under 
                                subclause (I) shall allow a 
                                household to switch, at the end 
                                of a certification period, 
                                between the standard utility 
                                allowance and a deduction based 
                                on the actual utility costs of 
                                the household.
                            (iv) Availability of allowance to 
                        recipients of energy assistance.--
                                    (I) In general.--Subject to 
                                subclause (II), if a State 
                                agency elects to use a standard 
                                utility allowance that reflects 
                                heating or cooling costs, the 
                                standard utility allowance 
                                shall be made available to 
                                households receiving a payment, 
                                or on behalf of which a payment 
                                is made, under the Low-Income 
                                Home Energy Assistance Act of 
                                1981 (42 U.S.C. 8621 et seq.) 
                                or other similar energy 
                                assistance program, if the 
                                household still incurs out-of-
                                pocket heating or cooling 
                                expenses in excess of any 
                                assistance paid on behalf of 
                                the household to an energy 
                                provider.
                                    (II) Separate allowance.--A 
                                State agency may use a separate 
                                standard utility allowance for 
                                households on behalf of which a 
                                payment described in subclause 
                                (I) is made, but may not be 
                                required to do so.
                                    (III) States not electing 
                                to use separate allowance.--A 
                                State agency that does not 
                                elect to use a separate 
                                allowance but makes a single 
                                standard utility allowance 
                                available to households 
                                incurring heating or cooling 
                                expenses (other than a 
                                household described in 
                                subclause (I) or (II) of 
                                subparagraph (C)(ii)) may not 
                                be required to reduce the 
                                allowance due to the provision 
                                (directly or indirectly) of 
                                assistance under the Low-Income 
                                Home Energy Assistance Act of 
                                1981 (42 U.S.C. 8621 et seq.).
                                    (IV) Proration of 
                                assistance.--For the purpose of 
                                the food stamp program, 
                                assistance provided under the 
                                Low-Income Home Energy 
                                Assistance Act of 1981 (42 
                                U.S.C. 8621 et seq.) shall be 
                                considered to be prorated over 
                                the entire heating or cooling 
                                season for which the assistance 
                                was provided.
          * * * * * * *
    (g)(1)  * * *
    [(2) The Secretary shall, in prescribing inclusions in, and 
exclusions from, financial resources, follow the regulations in 
force as of June 1, 1982 (other than those relating to licensed 
vehicles and inaccessible resources), and shall, in addition, 
include in financial resources any boats, snowmobiles, and 
airplanes used for recreational purposes, any vacation homes, 
any mobile homes used primarily for vacation purposes, any 
licensed vehicle (other than one used to produce earned income 
or that is necessary for transportation of a physically 
disabled household member and any other property, real or 
personal, to the extent that it is directly related to the 
maintenance or use of such vehicle) used for household 
transportation or used to obtain or continue employment to the 
extent that the fair market value of any such vehicle exceeds a 
level set by the Secretary, which shall be $4,500 through 
August 31, 1994, $4,550 beginning September 1, 1994, through 
September 30, 1995, $4,600 beginning October 1, 1995, through 
September 30, 1996, and $5,000 beginning October 1, 1996, as 
adjusted on such date and on each October 1 thereafter to 
reflect changes in the new car component of the Consumer Price 
Index for All Urban Consumers published by the Bureau of Labor 
Statistics for the 12-month period ending on June 30 preceding 
the date of such adjustment and rounded to the nearest $50, 
and, regardless of whether there is a penalty for early 
withdrawal, any savings or retirement accounts (including 
individual accounts). The Secretary shall exclude from 
financial resources the value of a vehicle that a household 
depends upon to carry fuel for heating or water for home use 
when such transported fuel or water is the primary source of 
fuel or water for the household.]
            (2) Included assets.--
                    (A) In general.--Subject to the other 
                provisions of this paragraph, the Secretary 
                shall, in prescribing inclusions in, and 
                exclusions from, financial resources, follow 
                the regulations in force as of June 1, 1982 
                (other than those relating to licensed vehicles 
                and inaccessible resources).
                    (B) Additional included assets.--The 
                Secretary shall include in financial 
                resources--
                            (i) any boat, snowmobile, or 
                        airplane used for recreational 
                        purposes;
                            (ii) any vacation home;
                            (iii) any mobile home used 
                        primarily for vacation purposes;
                            (iv) subject to subparagraph (C), 
                        any licensed vehicle that is used for 
                        household transportation or to obtain 
                        or continue employment to the extent 
                        that the fair market value of the 
                        vehicle exceeds $4,600; and
                            (v) any savings or retirement 
                        account (including an individual 
                        account), regardless of whether there 
                        is a penalty for early withdrawal.
                    (C) Excluded vehicles.--A vehicle (and any 
                other property, real or personal, to the extent 
                the property is directly related to the 
                maintenance or use of the vehicle) shall not be 
                included in financial resources under this 
                paragraph if the vehicle is--
                            (i) used to produce earned income;
                            (ii) necessary for the 
                        transportation of a physically disabled 
                        household member; or
                            (iii) depended on by a household to 
                        carry fuel for heating or water for 
                        home use and provides the primary 
                        source of fuel or water, respectively, 
                        for the household.
          * * * * * * *
    (k)(1) For purposes of subsection (d)(1), except as 
provided in paragraph (2), assistance provided to a third party 
on behalf of a household by a State or local government shall 
be considered money payable directly to the household if the 
assistance is provided in lieu of--
            (A) a regular benefit payable to the household for 
        living expenses under a State [plan for aid to families 
        with dependent children approved] program funded under 
        part A of title IV of the Social Security Act (42 
        U.S.C. 601 et seq.); or
            (B) a benefit payable to the household for housing 
        expenses[, not including energy or utility-cost 
        assistance,] under--
                    (i) a State or local general assistance 
                program; or
                    (ii) another basic assistance program 
                comparable to general assistance (as determined 
                by the Secretary).
    (2) Paragraph (1) shall not apply to--
            (A) medical assistance;
            (B) child care assistance;
            [(C) energy assistance;]
            (C) a payment or allowance described in subsection 
        (d)(11);
            (D) assistance provided by a State or local housing 
        authority;
            (E) emergency assistance for migrant or seasonal 
        farmworker households during the period such households 
        are in the job stream;
            [(F) housing assistance payments made to a third 
        party on behalf of the household residing in 
        transitional housing for the homeless;
            [(G)] (F) emergency and special assistance, to the 
        extent excluded in regulations prescribed by the 
        Secretary; or
            [(H)] (G) assistance provided to a third party on 
        behalf of a household under a State or local general 
        assistance program, or another local basic assistance 
        program comparable to general assistance (as determined 
        by the Secretary), if, under State law, no assistance 
        under the program may be provided directly to the 
        household in the form of a cash payment.
          * * * * * * *
            (4) Third party energy assistance payments.--
                    (A) Energy assistance payments.--For 
                purposes of subsection (d)(1), a payment made 
                under a Federal or State law to provide energy 
                assistance to a household shall be considered 
                money payable directly to the household.
                    (B) Energy assistance expenses.--For 
                purposes of subsection (e)(7), an expense paid 
                on behalf of a household under a Federal or 
                State law to provide energy assistance shall be 
                considered an out-of-pocket expense incurred 
                and paid by the household.

                     ELIGIBILITY DISQUALIFICATIONS

    Sec. 6. (a)  * * *
    (b)(1) Any person who has been found by any State or 
Federal court or administrative agency to have intentionally 
(A) made a false or misleading statement, or misrepresented, 
concealed or withheld facts, or (B) committed any act that 
constitutes a violation of this Act, the regulations issued 
thereunder, or any State statute, for the purpose of using, 
presenting, transferring, acquiring, receiving, or possessing 
coupons or authorization cards shall, immediately upon the 
rendering of such determination, become ineligible for further 
participation in the program--
            (i) for a period of [six months] 1 year upon the 
        first occasion of any such determination;
            (ii) for a period of [1 year] 2 years upon--
                    (I) the second occasion of any such 
                determination; or
                    (II) the first occasion of a finding by a 
                Federal, State, or local court of the trading 
                of a controlled substance (as defined in 
                section 102 of the Controlled Substances Act 
                (21 U.S.C. 802)) for coupons; and
            (iii) permanently upon--
                    (I) the third occasion of any such 
                determination;
                    (II) the second occasion of a finding by a 
                Federal, State, or local court of the trading 
                of a controlled substance (as defined in 
                section 102 of the Controlled Substances Act 
                (21 U.S.C. 802)) for coupons; [or]
                    (III) the first occasion of a finding by a 
                Federal, State, or local court of the trading 
                of firearms, ammunition, or explosives for 
                coupons[.]; or
                    (IV) a conviction of an offense under 
                subsection (b) or (c) of section 15 involving 
                an item covered by subsection (b) or (c) of 
                section 15 having a value of $500 or more.
During the period of such ineligibility, no household shall 
receive increased benefits under this Act as the result of a 
member of such household having been disqualified under this 
subsection.
          * * * * * * *
    [(d)(1) Unless otherwise exempted by the provisions of 
paragraph (d)(2) of this subsection, (A) no person shall be 
eligible to participate in the food stamp program who is a 
physically and mentally fit person between the ages of sixteen 
and sixty who (i) refuses at the time of application and once 
every twelve months thereafter to register for employment in a 
manner determined by the Secretary; (ii) refuses without good 
cause to participate in an employment and training program 
under paragraph (4), to the extent required under paragraph 
(4), including any reasonable employment requirements as are 
prescribed by the State agency in accordance with paragraph 
(4), and the period of ineligibility shall be two months; or 
(iii) refuses without good cause (including the lack of 
adequate child care for children above the age of five and 
under the age of twelve) to accept an offer of employment at a 
wage not less than the higher of either the applicable State or 
Federal minimum wage, or 80 per centum of the wage that would 
have governed had the minimum hourly rate under the Fair Labor 
Standards Act of 1938, as amended (29 U.S.C. 206(a)(1)), been 
applicable to the offer of employment, and at a site or plant 
not then subject to a strike or lockout; and (B) no household 
shall be eligible to participate in the food stamp program (i) 
if the head of the household is a physically and mentally fit 
person between the ages of sixteen and sixty and such 
individual refuses to do any of those acts described in clause 
(A) of this sentence, or (ii) if the head of the household 
voluntarily quits any job without good cause, but, in such 
case, the period of ineligibility shall be ninety days. The 
State agency shall allow the household to select an adult 
parent of children in the household as its head where all adult 
household members making application agree to the selection. 
The household may designate its head of household under this 
paragraph each time the household is certified for 
participation in the food stamp program, but may not change the 
designation during a certification period unless there is a 
change in the composition of the household. An employee of the 
Federal Government, or of a State or political subdivision of a 
State, who engaged in a strike against the Federal Government, 
a State or political subdivision of a State and is dismissed 
from his job because of his participation in the strike shall 
be considered to have voluntarily quit such job without good 
cause. Any period of ineligibility for violations under this 
paragraph shall end when the household member who committed the 
violation complies with the requirement that has been violated. 
If the household member who committed the violation leaves the 
household during the period of ineligibility, such household 
shall no longer be subject to sanction for such violation and, 
if it is otherwise eligible, may resume participation in the 
food stamp program, but any other household of which such 
person thereafter becomes the head of the household shall be 
ineligible for the balance of the period of ineligibility.]
    (d) Conditions of Participation.--
            (1) Work requirements.--
                    (A) In general.--No physically and mentally 
                fit individual over the age of 15 and under the 
                age of 60 shall be eligible to participate in 
                the food stamp program if the individual--
                            (i) refuses, at the time of 
                        application and every 12 months 
                        thereafter, to register for employment 
                        in a manner prescribed by the 
                        Secretary;
                            (ii) refuses without good cause to 
                        participate in an employment and 
                        training program under paragraph (4), 
                        to the extent required by the State 
                        agency;
                            (iii) refuses without good cause to 
                        accept an offer of employment, at a 
                        site or plant not subject to a strike 
                        or lockout at the time of the refusal, 
                        at a wage not less than the higher of--
                                    (I) the applicable Federal 
                                or State minimum wage; or
                                    (II) 80 percent of the wage 
                                that would have governed had 
                                the minimum hourly rate under 
                                section 6(a)(1) of the Fair 
                                Labor Standards Act of 1938 (29 
                                U.S.C. 206(a)(1)) been 
                                applicable to the offer of 
                                employment;
                            (iv) refuses without good cause to 
                        provide a State agency with sufficient 
                        information to allow the State agency 
                        to determine the employment status or 
                        the job availability of the individual;
                            (v) voluntarily and without good 
                        cause--
                                    (I) quits a job; or
                                    (II) reduces work effort 
                                and, after the reduction, the 
                                individual is working less than 
                                30 hours per week; or
                            (vi) fails to comply with section 
                        20.
                    (B) Household ineligibility.--If an 
                individual who is the head of a household 
                becomes ineligible to participate in the food 
                stamp program under subparagraph (A), the 
                household shall, at the option of the State 
                agency, become ineligible to participate in the 
                food stamp program for a period, determined by 
                the State agency, that does not exceed the 
                lesser of--
                            (i) the duration of the 
                        ineligibility of the individual 
                        determined under subparagraph (C); or
                            (ii) 180 days.
                    (C) Duration of ineligibility.--
                            (i) First violation.--The first 
                        time that an individual becomes 
                        ineligible to participate in the food 
                        stamp program under subparagraph (A), 
                        the individual shall remain ineligible 
                        until the later of--
                                    (I) the date the individual 
                                becomes eligible under 
                                subparagraph (A);
                                    (II) the date that is 1 
                                month after the date the 
                                individual became ineligible; 
                                or
                                    (III) a date determined by 
                                the State agency that is not 
                                later than 3 months after the 
                                date the individual became 
                                ineligible.
                            (ii) Second violation.--The second 
                        time that an individual becomes 
                        ineligible to participate in the food 
                        stamp program under subparagraph (A), 
                        the individual shall remain ineligible 
                        until the later of--
                                    (I) the date the individual 
                                becomes eligible under 
                                subparagraph (A);
                                    (II) the date that is 3 
                                months after the date the 
                                individual became ineligible; 
                                or
                                    (III) a date determined by 
                                the State agency that is not 
                                later than 6 months after the 
                                date the individual became 
                                ineligible.
                            (iii) Third or subsequent 
                        violation.--The third or subsequent 
                        time that an individual becomes 
                        ineligible to participate in the food 
                        stamp program under subparagraph (A), 
                        the individual shall remain ineligible 
                        until the later of--
                                    (I) the date the individual 
                                becomes eligible under 
                                subparagraph (A);
                                    (II) the date that is 6 
                                months after the date the 
                                individual became ineligible;
                                    (III) a date determined by 
                                the State agency; or
                                    (IV) at the option of the 
                                State agency, permanently.
                    (D) Administration.--
                            (i) Good cause.--The Secretary 
                        shall determine the meaning of good 
                        cause for the purpose of this 
                        paragraph.
                            (ii) Voluntary quit.--The Secretary 
                        shall determine the meaning of 
                        voluntarily quitting and reducing work 
                        effort for the purpose of this 
                        paragraph.
                            (iii) Determination by state 
                        agency.--
                                    (I) In general.--Subject to 
                                subclause (II) and clauses (i) 
                                and (ii), a State agency shall 
                                determine--
                                            (aa) the meaning of 
                                        any term in 
                                        subparagraph (A);
                                            (bb) the procedures 
                                        for determining whether 
                                        an individual is in 
                                        compliance with a 
                                        requirement under 
                                        subparagraph (A); and
                                            (cc) whether an 
                                        individual is in 
                                        compliance with a 
                                        requirement under 
                                        subparagraph (A).
                                    (II) Not less 
                                restrictive.--A State agency 
                                may not determine a meaning, 
                                procedure, or determination 
                                under subclause (I) to be less 
                                restrictive than a comparable 
                                meaning, procedure, or 
                                determination under a State 
                                program funded under part A of 
                                title IV of the Social Security 
                                Act (42 U.S.C. 601 et seq.).
                            (iv) Strike against the 
                        government.--For the purpose of 
                        subparagraph (A)(v), an employee of the 
                        Federal Government, a State, or a 
                        political subdivision of a State, who 
                        is dismissed for participating in a 
                        strike against the Federal Government, 
                        the State, or the political subdivision 
                        of the State shall be considered to 
                        have voluntarily quit without good 
                        cause.
                            (v) Selecting a head of 
                        household.--
                                    (I) In general.--For the 
                                purpose of this paragraph, the 
                                State agency shall allow the 
                                household to select any adult 
                                parent of a child in the 
                                household as the head of the 
                                household if all adult 
                                household members making 
                                application under the food 
                                stamp program agree to the 
                                selection.
                                    (II) Time for making 
                                designation.--A household may 
                                designate the head of the 
                                household under subclause (I) 
                                each time the household is 
                                certified for participation in 
                                the food stamp program, but may 
                                not change the designation 
                                during a certification period 
                                unless there is a change in the 
                                composition of the household.
                            (vi) Change in head of household.--
                        If the head of a household leaves the 
                        household during a period in which the 
                        household is ineligible to participate 
                        in the food stamp program under 
                        subparagraph (B)--
                                    (I) the household shall, if 
                                otherwise eligible, become 
                                eligible to participate in the 
                                food stamp program; and
                                    (II) if the head of the 
                                household becomes the head of 
                                another household, the 
                                household that becomes headed 
                                by the individual shall become 
                                ineligible to participate in 
                                the food stamp program for the 
                                remaining period of 
                                ineligibility.
    (2) A person who otherwise would be required to comply with 
the requirements of paragraph (1) of this subsection shall be 
exempt from such requirements if he or she is (A) currently 
subject to and complying with a work registration requirement 
under title IV of the Social Security Act, as amended (42 
U.S.C. 602), or the Federal-State unemployment compensation 
system, in which case, failure by such person to comply with 
any work requirement to which such person is subject [that is 
comparable to a requirement of paragraph (1)] shall be the same 
as failure to comply with that requirement of paragraph (1); 
[(B) a parent or other member of a household with 
responsibility for the care of a dependent child under age six 
or of an incapacitated person;] (B) a parent or other member of 
a household with responsibility for the care of (i) a dependent 
child under the age of 6 or any lower age designated by the 
State agency that is not under the age of 1, or (ii) an 
incapacitated person; (C) a bona fide student enrolled at least 
half time in any recognized school, training program, or 
institution of higher education (except that any such person 
enrolled in an institution of higher education shall be 
ineligible to participate in the food stamp program unless he 
or she meets the requirements of subsection (e) of this 
section); (D) a regular participant in a drug addiction or 
alcoholic treatment and rehabilitation program; (E) employed a 
minimum of thirty hours per week or receiving weekly earnings 
which equal the minimum hourly rate under the Fair Labor 
Standards Act of 1938, as amended (29 U.S.C. 206(a)(1)), 
multiplied by thirty hours; or (F) a person between the ages of 
sixteen and eighteen who is not a head of a household or who is 
attending school, or enrolled in an employment training 
program, on at least a half-time basis.
          * * * * * * *
    (4)(A) [Not later than April 1, 1987, each] Each State 
agency shall implement an employment and training program 
designed by the State agency and approved by the Secretary for 
the purpose of assisting members of households participating in 
the food stamp program in gaining skills, training, work, or 
experience that will increase their ability to obtain regular 
employment. Each component of an employment and training 
program carried out under this paragraph shall be delivered 
through a statewide workforce development system, unless the 
component is not available locally through the statewide 
workforce development system.
    (B) For purposes of this Act, an ``employment and training 
program'' means a program that contains one or more of the 
following components[:], except that the State agency shall 
retain the option to apply employment requirements prescribed 
under this subparagraph to a program applicant at the time of 
application:
            (i) Job search programs [with terms and conditions 
        comparable to those prescribed in subparagraphs (A) and 
        (B) of section 402(a)(35) of part A of title IV of the 
        Social Security Act, except that the State agency shall 
        retain the option to apply employment requirements 
        prescribed under this clause to program applicants at 
        the time of application].
            (ii) Job search training programs that include, to 
        the extent determined appropriate by the State agency, 
        reasonable job search training and support activities 
        that may consist of jobs skills assessments, job 
        finding clubs, training in techniques for 
        employability, job placement services, or other direct 
        training or support activities, including educational 
        programs, determined by the State agency to expand the 
        job search abilities or employability of those subject 
        to the program.
            (iii) Workfare programs operated under section 20.
            (iv) Programs designed to improve the employability 
        of household members through actual work experience or 
        training, or both, and to enable individuals employed 
        or trained under such programs to move promptly into 
        regular public or private employment. An employment or 
        training experience program established under this 
        clause shall--
                    [(I) limit employment experience 
                assignments to projects that serve a useful 
                public purpose in fields such as health, social 
                services, environmental protection, urban and 
                rural development and redevelopment, welfare, 
                recreation, public facilities, public safety, 
                and day care;
                    [(II) to the extent possible, use the prior 
                training, experience, and skills of the 
                participating member in making appropriate 
                employment or training experience assignments;]
                    [(III)] (I) not provide any work that has 
                the effect of replacing the employment of an 
                individual not participating in the employment 
                or training experience program; and
                    [(IV)] (II) provide the same benefits and 
                working conditions that are provided at the job 
                site to employees performing comparable work 
                for comparable hours.
          * * * * * * *
    (D)(i) Each State agency may exempt from any requirement 
for participation in any program under this paragraph 
categories of household members [to which the application of 
such participation requirement is impracticable as applied to 
such categories due to factors such as the availability of work 
opportunities and the cost-effectiveness of the employment 
requirements. In making such a determination, the State agency 
may designate a category consisting of all such household 
members residing in a specific area of the State. Each State 
may exempt, with the approval of the Secretary, members of 
households that have participated in the food stamp program 30 
days or less].
    (ii) Each State agency may exempt from any requirement for 
participation individual household members not included in any 
category designated as exempt under clause (i) [but with 
respect to whom such participation is impracticable because of 
personal circumstances such as lack of job readiness and 
employability, the remote location of work opportunities, and 
unavailability of child care].
    (iii) Any exemption of a category or individual under this 
subparagraph shall be periodically evaluated to determine 
whether[, on the basis of the factors used to make a 
determination under clause (i) or (ii), the exemption continues 
to be valid. Such evaluations shall occur no less often than at 
each certification or recertification in the case of exemptions 
under clause (ii)] the exemption continues to be valid.
    (E) Each State agency shall establish requirements for 
participation by individuals not exempt under subparagraph (D) 
in one or more employment and training programs under this 
paragraph, including the extent to which any individual is 
required to participate. Such requirements may vary among 
participants. [Through September 30, 1995, two States may, on 
application to and after approval by the Secretary, give 
priority in the provision of services to voluntary participants 
(including both exempt and non-exempt participants), except 
that this sentence shall not excuse a State from compliance 
with the performance standards issued under subparagraphs (K) 
and (L), and the Secretary may, at the Secretary's discretion, 
approve additional States' requests to give such priority if 
the Secretary reports to Congress on the number and 
characteristics of voluntary participants given priority under 
this sentence and such other information as the Secretary 
determines to be appropriate.]
          * * * * * * *
    [(G)(i) The State] (G) The State agency may operate any 
program component under this paragraph in which individuals 
elect to participate.
    [(ii) The State agency shall permit, to the extent it 
determines practicable, individuals not subject to requirements 
imposed under subparagraph (E) or who have complied, or are in 
the process of complying, with such requirements to participate 
in any program under this paragraph.]
    [(H)(i) The Secretary shall issue regulations under which 
each State agency shall establish a conciliation procedure for 
the resolution of disputes involving the participation of an 
individual in the program.
    [(ii) Federal funds] (H) Federal funds made available to a 
State agency for purposes of the component authorized under 
subparagraph (B)(v) shall not be used to supplant non-Federal 
funds used for existing services and activities that promote 
the purposes of this component.
    (I)(i) The State agency shall provide payments or 
reimbursements to participants in programs carried out under 
this paragraph, including individuals participating under 
subparagraph (G), for--
            (I) the actual costs of transportation and other 
        actual costs (other than dependent care costs), that 
        are reasonably necessary and directly related to 
        participation in the program, except that the State 
        agency may limit such reimbursement to each participant 
        to $25 per month; and
            (II) the actual costs of such dependent care 
        expenses that are determined by the State agency to be 
        necessary for the participation of an individual in the 
        program (other than an individual who is the caretaker 
        relative of a dependent in a family receiving benefits 
        under part A of title IV of the Social Security Act (42 
        U.S.C. 601 et seq.) in a local area where an 
        employment, training, or education program under title 
        IV of such Act is in operation[, or was in operation, 
        on the date of enactment of the Hunger Prevention Act 
        of 1988) up to any limit set by the State agency (which 
        limit shall not be less than the limit for the 
        dependent care deduction under section 5(e)), but in no 
        event shall such payment or reimbursements exceed the 
        applicable local market rate as determined by 
        procedures consistent with any such determination under 
        the Social Security Act]), except that no such payment 
        or reimbursement shall exceed the applicable local 
        market rate. Individuals subject to the program under 
        this paragraph may not be required to participate if 
        dependent costs exceed the limit established by the 
        State agency under this subclause or other actual costs 
        exceed any limit established under subclause (I).
          * * * * * * *
    [(K)(i) For any fiscal year, the Secretary shall establish 
performance standards for each State that, in the case of 
persons who are subject to employment requirements under this 
section and who are not exempt under subparagraph (D), 
designate the minimum percentages (not to exceed 10 percent in 
fiscal years 1992 and 1993, and 15 percent in fiscal years 1994 
and 1995) of such persons that State agencies shall place in 
programs under this paragraph. Such standards need not be 
uniform for all the States, but may vary among the several 
States. The Secretary shall consider the cost to the States in 
setting performance standards and the degree of participation 
in programs under this paragraph by exempt persons. The 
Secretary shall not require the plan of a State agency to 
provide for the participation of a number of recipients greater 
than 10 percent in fiscal years 1992 and 1993, and 15 percent 
in fiscal years 1994 and 1995, of the persons who are subject 
to employment requirements under this section and who are not 
exempt under subparagraph (D).
    [(ii) In making any determination as to whether a State 
agency has met a performance standard under clause (i), the 
Secretary shall--
            [(I) consider the extent to which persons have 
        elected to participate in programs under this 
        paragraph;
            [(II) consider such factors as placement in 
        unsubsidized employment, increases in earnings, and 
        reduction in the number of persons participating in the 
        food stamp program; and
            [(III) consider other factors determined by the 
        Secretary to be related to employment and training.
    [(iii) The Secretary shall vary the performance standards 
established under clause (i) according to differences in the 
characteristics of persons required to participate and the type 
of program to which the standard is applied.
    [(iv) The Secretary may delay establishing performance 
standards for up to 18 months after national implementation of 
the provisions of this paragraph, in order to base performance 
standards on State agency experience in implementing this 
paragraph.
    [(L)(i) The Secretary shall establish performance standards 
and measures applicable to employment and training programs 
carried out under this paragraph that are based on employment 
outcomes, including increases in earnings.
    [(ii) Final performance standards and measures referred to 
in clause (i) shall be published not later than 12 months after 
the date that the final outcome-based performance standards are 
published for job opportunities and basic skills training 
programs under part F of title IV of the Social Security Act 
(42 U.S.C. 681 et seq.).
    [(iii) The standards shall encourage States to serve those 
individuals who have greater barriers to employment and shall 
take into account the extent to which persons have elected to 
participate in employment and training programs under this 
paragraph. The standards shall require participants to make 
levels of efforts comparable to those required under the 
regulations set forth in section 273.7(f)(1) of title 7, Code 
of Federal Regulations in effect on January 1, 1991.
    [(iv) The performance standards in effect under 
subparagraph (K) shall remain in effect during the period 
beginning on October 1, 1988, and ending on the date the 
Secretary implements the outcome-based performance standards 
described in this subparagraph.
    [(v) A State agency shall be considered in compliance with 
applicable performance standards under subparagraph (K) if the 
State agency operates an employment and training program in a 
manner consistent with its approved plan and if the program 
requires participants to make levels of effort comparable to 
those required under the regulations set forth in section 
273.7(f)(1) of title 7, Code of Federal Regulations in effect 
on January 1, 1991.]
                    (K) Limitation on funding.--Notwithstanding 
                any other provision of this paragraph, the 
                amount of funds a State agency uses to carry 
                out this paragraph (including under 
                subparagraph (I)) for participants who are 
                receiving benefits under a State program funded 
                under part A of title IV of the Social Security 
                Act (42 U.S.C. 601 et seq.) shall not exceed 
                the amount of funds the State agency used in 
                fiscal year 1995 to carry out this paragraph 
                for participants who were receiving benefits in 
                fiscal year 1995 under a State program funded 
                under part A of title IV of the Act (42 U.S.C. 
                601 et seq.).
    [(M) (i)] (L) The Secretary shall ensure that State 
agencies comply with the requirements of this paragraph and 
section 11(e)(22).
    [(ii) If the Secretary determines that a State agency has 
failed, without good cause, to comply with such a requirement, 
including any failure to meet a performance standard under 
subparagraph (J), the Secretary may withhold from such State, 
in accordance with section 16 (a), (c), and (h), such funds as 
the Secretary determines to be appropriate, subject to 
administrative and judicial review under section 14.
    [(N)] (M) The facilities of the State public employment 
offices and agencies operating programs under the Job Training 
Partnership Act may be used to find employment and training 
opportunities for household members under the programs under 
this paragraph.
          * * * * * * *
    (f) No individual 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 the food stamp 
program as a member of that or any other household unless he or 
she is (1) a resident of the United States and (2) either (A) a 
citizen or (B) an alien lawfully admitted for permanent 
residence as an immigrant as defined by sections 101(a)(15) and 
101(a)(20) of the Immigration and Nationality Act (8 U.S.C. 
1101(a)(15) and 8 U.S.C. 1101(a)(20)), excluding, among others, 
alien visitors, tourists, diplomats, and students who enter the 
United States temporarily with no intention of abandoning their 
residence in a foreign country; or (C) an alien who entered the 
United States prior to June 30, 1948, or such subsequent date 
as is enacted by law, has continuously maintained his or her 
residence in the United States since then, and is not 
ineligible for citizenship, but who is deemed to be lawfully 
admitted for permanent residence as a result of an exercise of 
discretion by the Attorney General pursuant to section 249 of 
the Immigration and Nationality Act (8 U.S.C. 1259); or (D) an 
alien who has qualified for conditional entry pursuant to 
sections 207 and 208 of the Immigration and Nationality Act (8 
U.S.C. 1157 and 1158); or (E) an alien who is lawfully present 
in the United States as a result of an exercise of discretion 
by the Attorney General for emergent reasons or reasons deemed 
strictly in the public interest pursuant to section 212(d)(5) 
of the Immigration and Nationality Act (8 U.S.C. 1182(d)(5)); 
or (F) an alien within the United States as to whom the 
Attorney General has withheld deportation pursuant to section 
243 of the Immigration and Nationality Act (8 U.S.C. 1253(h)). 
No aliens other than the ones specifically described in clauses 
(B) through (F) of this subsection shall be eligible to 
participate in the food stamp program as a member of any 
household. [The income (less a pro rata share) and financial 
resources of the individual rendered ineligible to participate 
in the food stamp program under this subsection shall be 
considered in determining the eligibility and the value of the 
allotment of the household of which such individual is a 
member.] The State agency shall, at its option, consider either 
all income and financial resources of the individual rendered 
ineligible to participate in the food stamp program under this 
subsection, or such income, less a pro rata share, and the 
financial resources of the ineligible individual, to determine 
the eligibility and the value of the allotment of the household 
of which such individual is a member.
          * * * * * * *
    (i) Comparable Treatment for Disqualification.--
            (1) In general.--If a disqualification is imposed 
        on a member of a household for a failure of the member 
        to perform an action required under a Federal, State, 
        or local law relating to a means-tested public 
        assistance program, the State agency may impose the 
        same disqualification on the member of the household 
        under the food stamp program.
            (2) Rules and procedures.--If a disqualification is 
        imposed under paragraph (1) for a failure of an 
        individual to perform an action required under part A 
        of title IV of the Social Security Act (42 U.S.C. 601 
        et seq.), the State agency may use the rules and 
        procedures that apply under part A of title IV of the 
        Act to impose the same disqualification under the food 
        stamp program.
            (3) Application after disqualification period.--A 
        member of a household disqualified under paragraph (1) 
        may, after the disqualification period has expired, 
        apply for benefits under this Act and shall be treated 
        as a new applicant, except that a prior 
        disqualification under subsection (d) shall be 
        considered in determining eligibility.
    (j) Disqualification for Receipt of Multiple Food Stamp 
Benefits.--An individual shall be ineligible to participate in 
the food stamp program as a member of any household for a 10-
year period if the individual is found by a State agency to 
have made, or is convicted in a Federal or State court of 
having made, a fraudulent statement or representation with 
respect to the identity or place of residence of the individual 
in order to receive multiple benefits simultaneously under the 
food stamp program.
    (k) Disqualification of Fleeing Felons.--No member of a 
household who is otherwise eligible to participate in the food 
stamp program shall be eligible to participate in the program 
as a member of that or any other household during any period 
during which the individual is--
            (1) fleeing to avoid prosecution, or custody or 
        confinement after conviction, under the law of the 
        place from which the individual is fleeing, for a 
        crime, or attempt to commit a crime, that is a felony 
        under the law of the place from which the individual is 
        fleeing or that, in the case of New Jersey, is a high 
        misdemeanor under the law of New Jersey; or
            (2) violating a condition of probation or parole 
        imposed under a Federal or State law.
    (l) Custodial Parent's Cooperation With Child Support 
Agencies.--
            (1) In general.--At the option of a State agency, 
        subject to paragraphs (2) and (3), no natural or 
        adoptive parent or other individual (collectively 
        referred to in this subsection as ``the individual'') 
        who is living with and exercising parental control over 
        a child under the age of 18 who has an absent parent 
        shall be eligible to participate in the food stamp 
        program unless the individual cooperates with the State 
        agency administering the program established under part 
        D of title IV of the Social Security Act (42 U.S.C. 651 
        et seq.)--
                    (A) in establishing the paternity of the 
                child (if the child is born out of wedlock); 
                and
                    (B) in obtaining support for--
                            (i) the child; or
                            (ii) the individual and the child.
            (2) Good cause for noncooperation.--Paragraph (1) 
        shall not apply to the individual if good cause is 
        found for refusing to cooperate, as determined by the 
        State agency in accordance with standards prescribed by 
        the Secretary in consultation with the Secretary of 
        Health and Human Services. The standards shall take 
        into consideration circumstances under which 
        cooperation may be against the best interests of the 
        child.
            (3) Fees.--Paragraph (1) shall not require the 
        payment of a fee or other cost for services provided 
        under part D of title IV of the Social Security Act (42 
        U.S.C. 651 et seq.).
    (m) Noncustodial Parent's Cooperation With Child Support 
Agencies.--
            (1) In general.--At the option of a State agency, 
        subject to paragraphs (2) and (3), a putative or 
        identified noncustodial parent of a child under the age 
        of 18 (referred to in this subsection as ``the 
        individual'') shall not be eligible to participate in 
        the food stamp program if the individual refuses to 
        cooperate with the State agency administering the 
        program established under part D of title IV of the 
        Social Security Act (42 U.S.C. 651 et seq.)--
                    (A) in establishing the paternity of the 
                child (if the child is born out of wedlock); 
                and
                    (B) in providing support for the child.
            (2) Refusal to cooperate.--
                    (A) Guidelines.--The Secretary, in 
                consultation with the Secretary of Health and 
                Human Services, shall develop guidelines on 
                what constitutes a refusal to cooperate under 
                paragraph (1).
                    (B) Procedures.--The State agency shall 
                develop procedures, using guidelines developed 
                under subparagraph (A), for determining whether 
                an individual is refusing to cooperate under 
                paragraph (1).
            (3) Fees.--Paragraph (1) shall not require the 
        payment of a fee or other cost for services provided 
        under part D of title IV of the Social Security Act (42 
        U.S.C. 651 et seq.).
            (4) Privacy.--The State agency shall provide 
        safeguards to restrict the use of information collected 
        by a State agency administering the program established 
        under part D of title IV of the Social Security Act (42 
        U.S.C. 651 et seq.) to purposes for which the 
        information is collected.
    (n) Disqualification for Child Support Arrears.--
            (1) In general.--At the option of the State agency, 
        no individual shall be eligible to participate in the 
        food stamp program as a member of any household during 
        any month that the individual is delinquent in any 
        payment due under a court order for the support of a 
        child of the individual.
            (2) Exceptions.--Paragraph (1) shall not apply if--
                    (A) a court is allowing the individual to 
                delay payment; or
                    (B) the individual is complying with a 
                payment plan approved by a court or the State 
                agency designated under part D of title IV of 
                the Social Security Act (42 U.S.C. 651 et seq.) 
                to provide support for the child of the 
                individual.
    (o) Work Requirement.--
            (1) Definition of work program.--In this 
        subsection, the term ``work program'' means--
                    (A) a program under the Job Training 
                Partnership Act (29 U.S.C. 1501 et seq.);
                    (B) a program under section 236 of the 
                Trade Act of 1974 (19 U.S.C. 2296); or
                    (C) a program of employment and training 
                operated or supervised by a State or political 
                subdivision of a State that meets standards 
                approved by the Governor of the State, 
                including a program under section 6(d)(4), 
                other than a job search program or a job search 
                training program.
            (2) Work requirement.--Subject to the other 
        provisions of this subsection, no individual shall be 
        eligible to participate in the food stamp program as a 
        member of any household if, during the preceding 12-
        month period, the individual received food stamp 
        benefits for not less than 4 months during which the 
        individual did not--
                    (A) work 20 hours or more per week, 
                averaged monthly; or
                    (B) participate in and comply with the 
                requirements of a work program for 20 hours or 
                more per week, as determined by the State 
                agency; or
                    (C) participate in a program under section 
                20 or a comparable program established by a 
                State or political subdivision of a State.
            (3) Exception.--Paragraph (2) shall not apply to an 
        individual if the individual is--
                    (A) under 18 or over 50 years of age;
                    (B) medically certified as physically or 
                mentally unfit for employment;
                    (C) a parent or other member of a household 
                with responsibility for a dependent child;
                    (D) otherwise exempt under section 6(d)(2); 
                or
                    (E) a pregnant woman.
            (4) Waiver.--
                    (A) In general.--On the request of a State 
                agency, the Secretary may waive the 
                applicability of paragraph (2) to any group of 
                individuals in the State if the Secretary makes 
                a determination that the area in which the 
                individuals reside--
                            (i) has an unemployment rate of 
                        over 10 percent; or
                            (ii) does not have a sufficient 
                        number of jobs to provide employment 
                        for the individuals.
                    (B) Report.--The Secretary shall report the 
                basis for a waiver under subparagraph (A) to 
                the Committee on Agriculture of the House of 
                Representatives and the Committee on 
                Agriculture, Nutrition, and Forestry of the 
                Senate.
            (5) Subsequent eligibility.--
                    (A) In general.--Paragraph (2) shall cease 
                to apply to an individual if, during a 30-day 
                period, the individual--
                            (i) works 80 or more hours;
                            (ii) participates in and complies 
                        with the requirements of a work program 
                        for 80 or more hours, as determined by 
                        a State agency; or
                            (iii) participates in a program 
                        under section 20 or a comparable 
                        program established by a State or 
                        political subdivision of a State.
                    (B) Limitation.--During the subsequent 12-
                month period, the individual shall be eligible 
                to participate in the food stamp program for 
                not more than 4 months during which the 
                individual does not--
                            (i) work 20 hours or more per week, 
                        averaged monthly;
                            (ii) participate in and comply with 
                        the requirements of a work program for 
                        20 hours or more per week, as 
                        determined by the State agency; or
                            (iii) participate in a program 
                        under section 20 or a comparable 
                        program established by a State or 
                        political subdivision of a State.

                      ISSUANCE AND USE OF COUPONS

    Sec. 7. (a)  * * *
          * * * * * * *
    (i)[(1)(A) Any State agency may, with the approval of the 
Secretary, implement an on-line electronic benefit transfer 
system in which household benefits determined under section 
8(a) are issued from and stored in a central data bank and 
electronically accessed by household members at the point-of-
sale.
    [(B) No State agency may implement or expand an electronic 
benefit transfer system without prior approval from the 
Secretary.]
            (1) Electronic benefit transfers.--
                    (A) Implementation.--Each State agency 
                shall implement an electronic benefit transfer 
                system in which household benefits determined 
                under section 8(a) or 26 are issued from and 
                stored in a central databank before October 1, 
                2002, unless the Secretary provides a waiver 
                for a State agency that faces unusual barriers 
                to implementing an electronic benefit transfer 
                system.
                    (B) Timely implementation.--State agencies 
                are encouraged to implement an electronic 
                benefit transfer system under subparagraph (A) 
                as soon as practicable.
                    (C) State flexibility.--Subject to 
                paragraph (2), a State agency may procure and 
                implement an electronic benefit transfer system 
                under the terms, conditions, and design that 
                the State agency considers appropriate.
                    (D) Operation.--An electronic benefit 
                transfer system should take into account 
                generally accepted standard operating rules 
                based on--
                            (i) commercial electronic funds 
                        transfer technology;
                            (ii) the need to permit interstate 
                        operation and law enforcement 
                        monitoring; and
                            (iii) the need to permit monitoring 
                        and investigations by authorized law 
                        enforcement agencies.
    (2) The Secretary shall issue final regulations [effective 
no later than April 1, 1992,] that establish standards for the 
approval of such a system. The standards shall include--
            (A) determining the cost-effectiveness of the 
        system to ensure that its operational cost, including 
        the pro rata cost of capital expenditures and other 
        reasonable startup costs, does not exceed[, in any 1 
        year,] the operational cost of issuance systems in use 
        prior to the implementation of the [on-line] electronic 
        benefit transfer system;
            (B) defining the required level of recipient 
        protection regarding privacy, ease of use, and access 
        to and service in retail food stores;
            (C) the terms and conditions of participation by 
        retail food stores, financial institutions, and other 
        appropriate parties;
            [(D) system security;]
            (D)(i) measures to maximize the security of a 
        system using the most recent technology available that 
        the State agency considers appropriate and cost 
        effective and which may include personal identification 
        numbers, photographic identification on electronic 
        benefit transfer cards, and other measures to protect 
        against fraud and abuse; and
            (ii) effective not later than 2 years after the 
        effective date of this clause, to the extent 
        practicable, measures that permit a system to 
        differentiate items of food that may be acquired with 
        an allotment from items of food that may not be 
        acquired with an allotment.
            (E) system transaction interchange, reliability, 
        and processing speeds;
            (F) financial accountability;
            (G) the required testing of system operations prior 
        to implementation; [and]
            (H) the analysis of the results of system 
        implementation in a limited project area prior to 
        expansion[.]; and
            (I) procurement standards.
          * * * * * * *
            (7) Replacement of benefits.--Regulations issued by 
        the Secretary regarding the replacement of benefits and 
        liability for replacement of benefits under an 
        electronic benefit transfer system shall be similar to 
        the regulations in effect for a paper food stamp 
        issuance system.
            (8) Replacement card fee.--A State agency may 
        collect a charge for replacement of an electronic 
        benefit transfer card by reducing the monthly allotment 
        of the household receiving the replacement card.
            (9) Optional photographic identification.--
                    (A) In general.--A State agency may require 
                that an electronic benefit card contain a 
                photograph of 1 or more members of a household.
                    (B) Other authorized users.--If a State 
                agency requires a photograph on an electronic 
                benefit card under subparagraph (A), the State 
                agency shall establish procedures to ensure 
                that any other appropriate member of the 
                household or any authorized representative of 
                the household may utilize the card.
            (10) Application of anti-tying restrictions to 
        electronic benefit transfer systems.--
                    (A) In general.--A company shall not sell 
                or provide electronic benefit transfer 
                services, or fix or vary the consideration for 
                such services, on the condition or requirement 
                that the customer--
                            (i) obtain some additional point-
                        of-sale service from the company or any 
                        affiliate of the company; or
                            (ii) not obtain some additional 
                        point-of-sale service from a competitor 
                        of the company or competitor of any 
                        affiliate of the company.
                    (B) Definitions.--In this paragraph--
                            (i) Affiliate.--The term 
                        ``affiliate'' shall have the same 
                        meaning as in section 2(k) of the Bank 
                        Holding Company Act.
                            (ii) Company.--The term ``company'' 
                        shall have the same meaning as in 
                        section 106(a) of the Bank Holding 
                        Company Act Amendments of 1970, but 
                        shall not include a bank, bank holding 
                        company, or any subsidiary of a bank 
                        holding company.
                            (iii) Electronic benefit transfer 
                        service.--The term ``electronic benefit 
                        transfer service'' means the processing 
                        of electronic transfers of household 
                        benefits determined under section 8(a) 
                        or 26 where the benefits are--
                                    (I) issued from and stored 
                                in a central databank;
                                    (II) electronically 
                                accessed by household members 
                                at the point of sale; and
                                    (III) provided by a Federal 
                                or state government.
                            (iv) Point-of-sale service.--The 
                        term ``point-of-sale service'' means 
                        any product or service related to the 
                        electronic authorization and processing 
                        of payments for merchandise at a retail 
                        food store, including but not limited 
                        to credit or debit card services, 
                        automated teller machines, point-of-
                        sale terminals, or access to on-line 
                        systems.
                    (C) Consultation with the federal reserve 
                board.--Before promulgating regulations or 
                interpretations of regulations to carry out 
                this paragraph, the Secretary shall consult 
                with the Board of Governors of the Federal 
                Reserve System.

                           VALUE OF ALLOTMENT

    Sec. 8. (a) The value of the allotment which State agencies 
shall be authorized to issue to any households certified as 
eligible to participate in the food stamp program shall be 
equal to the cost to such households of the thrifty food plan 
reduced by an amount equal to 30 per centum of the household's 
income, as determined in accordance with section 5 (d) and (e) 
of this Act, rounded to the nearest lower whole dollar: 
Provided, That for households of one and two persons the 
minimum allotment shall be $10 per month[, and shall be 
adjusted on each October 1 to reflect the percentage change in 
the cost of the thrifty food plan without regard to the special 
adjustments under section 3(o) for the 12-month period ending 
the preceding June, with the result rounded to the nearest $5].
          * * * * * * *
    (c)(1)  * * *
    (2) As used in this subsection, the term ``initial month'' 
means (A) the first month for which an allotment is issued to a 
household, (B) the first month for which an allotment is issued 
to a household following any period [of more than one month] in 
which such household was not participating in the food stamp 
program under this Act after the expiration of a certification 
period or after the termination of the certification of a 
household, during a certification period, when the household 
ceased to be eligible after notice and an opportunity for a 
hearing under section 11(e)(10), and (C) in the case of a 
migrant or seasonal farmworker household, the first month for 
which allotment is issued to a household that applies following 
any period of more than 30 days in which such household was not 
participating in the food stamp program after previous 
participation in such program.
    [(3) A State agency--
            [(A) in the case of a household that is not 
        entitled in the month in which it applies to expedited 
        service under section 11(e)(9), may provide that an 
        eligible household applying after the 15th day of the 
        month shall receive, in lieu of its initial allotment 
        and its regular allotment for the following month, an 
        allotment that is the aggregate of the initial 
        allotment and the first regular allotment, which shall 
        be provided in accordance with paragraph (3) of section 
        11(e); and
            [(B) in the case of a household that is entitled in 
        the month in which it applies to expedited service 
        under section 11(e)(9), shall provide that an eligible 
        household applying after the 15th day of the month 
        shall receive, in lieu of its initial allotment and its 
        regular allotment for the following month, an allotment 
        that is the aggregate of the initial allotment and the 
        first regular allotment, which shall be provided in 
        accordance with paragraphs (3) and (9) of section 
        11(e).]
            (3) Optional combined allotment for expedited 
        households.--A State agency may provide to an eligible 
        household applying after the 15th day of a month, in 
        lieu of the initial allotment of the household and the 
        regular allotment of the household for the following 
        month, an allotment that is equal to the total amount 
        of the initial allotment and the first regular 
        allotment. The allotment shall be provided in 
        accordance with section 11(e)(3) in the case of a 
        household that is not entitled to expedited service and 
        in accordance with paragraphs (3) and (9) of section 
        11(e) in the case of a household that is entitled to 
        expedited service.
    [(d) A household against which a penalty has been imposed 
for an intentional failure to comply with a Federal, State, or 
local law relating to welfare or a public assistance program 
may not, for the duration of the penalty, receive an increased 
allotment as the result of a decrease in the household's income 
(as determined under sections 5(d) and 5(e)) to the extent that 
the decrease is the result of such penalty.
    [(e)(1) The Secretary may permit not more than five 
statewide projects (upon the request of a State) and not more 
than five projects in political subdivisions of States (upon 
the request of a State or political subdivision) to operate a 
program under which a household shall be considered to have 
satisfied the application requirements prescribed under section 
5(a) and the income and resource requirements prescribed under 
subsections (d) through (g) of section 5 if such household--
            [(A) includes one or more members who are 
        recipients of--
                    [(i) aid to families with dependent 
                children under part A of title IV of the Social 
                Security Act (42 U.S.C. 601 et seq.);
                    [(ii) supplemental security income under 
                title XVI of such Act (42 U.S.C. 1381 et seq.); 
                or
                    [(iii) medical assistance under title XIX 
                of such Act (42 U.S.C. 1396 et seq.); and
            [(B) has an income that does not exceed the 
        applicable income standard of eligibility described in 
        section 5(c).
    [(2) Except as provided in paragraph (3), a State or 
political subdivision that elects to operate a program under 
this subsection shall base the value of an allotment provided 
to a household under subsection (a) on--
            [(A)(i) the size of the household; and
            [(ii)(I) benefits paid to such household under a 
        State plan for aid to families with dependent children 
        approved under part A of title IV of the Social 
        Security Act; or
            [(II) the income standard of eligibility for 
        medical assistance under title XIX of such Act; or
            [(B) at the option of the State or political 
        subdivision, the standard of need for such size 
        household under the programs referred to in clause 
        (A)(ii).
    [(3) The Secretary shall adjust the value of allotments 
received by households under a program operated under this 
subsection to ensure that the average allotment by household 
size for households participating in such program and receiving 
such aid to families with dependent children, such supplemental 
security income, or such medical assistance, as the case may 
be, is not less than the average allotment that would have been 
provided under this Act but for the operation of this 
subsection, for each category of households, respectively, in a 
State or political subdivision, for any period during which 
such program is in operation.
    [(4) The Secretary shall evaluate the impact of programs 
operated under this subsection on recipient households, 
administrative costs, and error rates.
    [(5) The administrative costs of such programs shall be 
shared in accordance with section 16.
    [(6) In implementing this section, the Secretary shall 
consult with the Commissioner of Social Security and the 
Secretary of Health and Human Services to ensure that to the 
extent practicable, in the case of households participating in 
such programs, the processing of applications for, and 
determinations of eligibility to receive, food stamp benefits 
are simplified and are unified with the processing of 
applications for, and determinations of eligibility to receive, 
benefits under such titles of the Social Security Act (42 
U.S.C. 601 et seq.).]
    (d) Reduction of Public Assistance Benefits.--
            (1) In general.--If the benefits of a household are 
        reduced under a Federal, State, or local law relating 
        to a means-tested public assistance program for the 
        failure of a member of the household to perform an 
        action required under the law or program, for the 
        duration of the reduction--
                    (A) the household may not receive an 
                increased allotment as the result of a decrease 
                in the income of the household to the extent 
                that the decrease is the result of the 
                reduction; and
                    (B) the State agency may reduce the 
                allotment of the household by not more than 25 
                percent.
            (2) Rules and procedures.--If the allotment of a 
        household is reduced under this subsection for a 
        failure to perform an action required under part A of 
        title IV of the Social Security Act (42 U.S.C. 601 et 
        seq.), the State agency may use the rules and 
        procedures that apply under part A of title IV of the 
        Act to reduce the allotment under the food stamp 
        program.
    (e) Allotments for Households Residing in Centers.--
            (1) In general.--In the case of an individual who 
        resides in a center for the purpose of a drug or 
        alcoholic treatment program described in the last 
        sentence of section 3(i), a State agency may provide an 
        allotment for the individual to--
                    (A) the center as an authorized 
                representative of the individual for a period 
                that is less than 1 month; and
                    (B) the individual, if the individual 
                leaves the center.
            (2) Direct payment.--A State agency may require an 
        individual referred to in paragraph (1) to designate 
        the center in which the individual resides as the 
        authorized representative of the individual for the 
        purpose of receiving an allotment.

       APPROVAL OF RETAIL FOOD STORES AND WHOLESALE FOOD CONCERNS

    Sec. 9. (a)(1) Regulations issued pursuant to this Act 
shall provide for the submission of applications for approval 
by retail food stores and wholesale food concerns which desire 
to be authorized to accept and redeem coupons under the food 
stamp program and for the approval of those applicants whose 
participation will effectuate the purposes of the food stamp 
program. In determining the qualifications of applicants, there 
shall be considered among such other factors as may be 
appropriate, the following: (A) the nature and extent of the 
food business conducted by the applicant; (B) the volume of 
coupon business which may reasonably be expected to be 
conducted by the applicant food store or wholesale food 
concern; and (C) the business integrity and reputation of the 
applicant. Approval of an applicant shall be evidenced by the 
issuance to such applicant of a nontransferable certificate of 
approval. No retail food store or wholesale food concern of a 
type determined by the Secretary, based on factors that include 
size, location, and type of items sold, shall be approved to be 
authorized or reauthorized for participation in the food stamp 
program unless an authorized employee of the Department of 
Agriculture, a designee of the Secretary, or, if practicable, 
an official of the State or local government designated by the 
Secretary has visited the store or concern for the purpose of 
determining whether the store or concern should be approved or 
reauthorized, as appropriate.
          * * * * * * *
            (3) Authorization periods.--The Secretary shall 
        establish specific time periods during which 
        authorization to accept and redeem coupons, or to 
        redeem benefits through an electronic benefit transfer 
        system, shall be valid under the food stamp program.
          * * * * * * *
    (c) Regulations issued pursuant to this Act shall require 
an applicant retail food store or wholesale food concern to 
submit information, which may include relevant income and sales 
tax filing documents, which will permit a determination to be 
made as to whether such applicant qualifies, or continues to 
qualify, for approval under the provisions of this Act or the 
regulations issued pursuant to this Act. The regulations may 
require retail food stores and wholesale food concerns to 
provide written authorization for the Secretary to verify all 
relevant tax filings with appropriate agencies and to obtain 
corroborating documentation from other sources so that the 
accuracy of information provided by the stores and concerns may 
be verified. Regulations issued pursuant to this Act shall 
provide for safeguards which limit the use or disclosure of 
information obtained under the authority granted by this 
subsection to purposes directly connected with administration 
and enforcement of the provisions of this Act or the 
regulations issued pursuant to this Act, except that such 
information may be disclosed to any used by Federal law 
enforcement and investigative agencies and law enforcement and 
investigative agencies of a State government for the purposes 
of administering or enforcing this Act or any other Federal or 
State law and the regulations issued under this Act or such 
law, and State agencies that administer the special 
supplemental nutrition program for women, infants and children, 
authorized under section 17 of the Child Nutrition Act of 1966, 
for purposes of administering the provisions of that Act and 
the regulations issued under that Act. Any person who 
publishes, divulges, discloses, or makes known in any manner or 
to any extent not authorized by Federal law (including a 
regulation) any information obtained under this subsection 
shall be fined not more than $1,000 or imprisoned not more than 
1 year, or both. The regulations shall establish the criteria 
to be used by the Secretary to determine whether the 
information is needed. The regulations shall not prohibit the 
audit and examination of such information by the Comptroller 
General of the United States authorized by any other provision 
of law.
    (d) Any retail food store or wholesale food concern which 
has failed upon application to receive approval to participate 
in the food stamp program may obtain a hearing on such refusal 
as provided in section 14 of this Act. A retail food store or 
wholesale food concern that is denied approval to accept and 
redeem coupons because the store or concern does not meet 
criteria for approval established by the Secretary may not, for 
at least 6 months, submit a new application to participate in 
the program. The Secretary may establish a longer time period 
under the preceding sentence, including permanent 
disqualification, that reflects the severity of the basis of 
the denial.
          * * * * * * *

                             ADMINISTRATION

    Sec. 11. (a)  * * *
          * * * * * * *
    (e) The State plan of operation required under subsection 
(d) of this section shall provide, among such other provisions 
as may be required by regulation--
            (1)  * * *
            [(2) that each household which contacts a food 
        stamp office in person during office hours to make what 
        may reasonably be interpreted as an oral or written 
        request for food stamp assistance shall receive and 
        shall be permitted to file, on the same day that such 
        contact is first made, a simplified, uniform national 
        application form for participation in the food stamp 
        program designed by the Secretary, unless the Secretary 
        approves a deviation from that form by a particular 
        State agency because of the use by that agency of a 
        dual public assistance food stamp application form 
        pursuant to subsection (i) of this section, the 
        requirements of an agency's computer system, or other 
        exigencies as determined by the Secretary, and in 
        approving such deviation, the Secretary takes into 
        account whether such State forms are easy to use, brief 
        and readable. In consultation with the Secretary of 
        Health and Human Services, the Secretary shall develop 
        a program to provide assistance to States that request 
        assistance in the development of brief, simply-written 
        and readable application forms including application 
        forms that cover the food stamp program, the aid to 
        families with dependent children program under part A 
        of title IV of the Social Security Act (42 U.S.C. 601 
        et seq.), and medical assistance programs administered 
        by the Secretary of Health and Human Services under 
        title XIX of the Social Security Act (42 U.S.C. 1396 et 
        seq.). Each food stamp application form shall contain, 
        in plain and prominent language on its front cover, a 
        place where applicants can write their names, 
        addresses, and signatures, and (on or near its front 
        cover) explanations in understandable terms informing 
        households of their right to file the application 
        without immediately completing additional sections, 
        describing the expedited processing requirements of 
        section 11(e)(9) and informing households that benefits 
        are provided only from the date of application. Each 
        application form shall contain a description in 
        understandable terms in prominent and boldface 
        lettering of the appropriate civil and criminal 
        provisions dealing with violations of this Act, 
        including the penalties therefor, by members of an 
        eligible household. Each application shall also contain 
        in understandable terms and in prominent and boldface 
        lettering a statement that the information provided by 
        the applicant in connection with the application for a 
        coupon allotment will be subject to verification by 
        Federal, State, and local officials to determine if 
        such information is factual and that if any material 
        part of such information is incorrect, food stamps may 
        be denied to the applicant, and that the applicant may 
        be subjected to criminal prosecution for knowingly 
        providing incorrect information. The State agency shall 
        waive in-office interviews, on a household's request, 
        if a household is unable to appoint an authorized 
        representative pursuant to paragraph (7) and has no 
        adult household members able to come to the appropriate 
        State agency office because such members are elderly, 
        are mentally or physically handicapped, live in a 
        location not served by a certification office, or have 
        transportation difficulties or similar hardships as 
        determined by the State agency (including hardships due 
        to residing in a rural area, illness, care of a 
        household member, prolonged severe weather, or work or 
        training hours). If an in-office interview is waived, 
        the State agency may conduct a telephone interview or a 
        home visit. The State agency shall provide for 
        telephone contact by, mail delivery of forms to, and 
        mail return of forms by, households that have 
        transportation difficulties or similar hardships. The 
        State agency shall require that an adult representative 
        of each household that is applying for food stamp 
        benefits shall certify in writing, under penalty of 
        perjury, that the information contained in the 
        application is true and that all members of the 
        household are either citizens or are aliens eligible to 
        receive food stamps under section 6(f). The signature 
        of the adult under this section shall be deemed 
        sufficient to comply with any provision of Federal law 
        requiring household members to sign the application or 
        statements in connection with the application process. 
        The State agency shall provide a method of certifying 
        and issuing coupons to eligible households that do not 
        reside in permanent dwellings or who do not have fixed 
        mailing addresses. In carrying out the preceding 
        sentence, the State agency shall take such steps as are 
        necessary to ensure that participation in the food 
        stamp program is limited to eligible households;]
            (2)(A) that the State agency shall establish 
        procedures governing the operation of food stamp 
        offices that the State agency determines best serve 
        households in the State, including households with 
        special needs, such as households with elderly or 
        disabled members, households in rural areas with low-
        income members, homeless individuals, households 
        residing on reservations, and households in areas in 
        which a substantial number of members of low-income 
        households speak a language other than English;
            (B) that in carrying out subparagraph (A), a State 
        agency--
                    (i) shall provide timely, accurate, and 
                fair service to applicants for, and 
                participants in, the food stamp program;
                    (ii) shall develop an application 
                containing the information necessary to comply 
                with this Act;
                    (iii) shall permit an applicant household 
                to apply to participate in the program on the 
                same day that the household first contacts a 
                food stamp office in person during office 
                hours;
                    (iv) shall consider an application that 
                contains the name, address, and signature of 
                the applicant to be filed on the date the 
                applicant submits the application;
                    (v) shall require that an adult 
                representative of each applicant household 
                certify in writing, under penalty of perjury, 
                that--
                            (I) the information contained in 
                        the application is true; and
                            (II) all members of the household 
                        are citizens or are aliens eligible to 
                        receive food stamps under section 6(f);
                    (vi) shall provide a method of certifying 
                and issuing coupons to eligible homeless 
                individuals, to ensure that participation in 
                the food stamp program is limited to eligible 
                households; and
                    (vii) may establish operating procedures 
                that vary for local food stamp offices to 
                reflect regional and local differences within 
                the State;
            (C) that nothing in this Act shall prohibit the use 
        of signatures provided and maintained electronically, 
        storage of records using automated retrieval systems 
        only, or any other feature of a State agency's 
        application system that does not rely exclusively on 
        the collection and retention of paper applications or 
        other records;
            (D) that the signature of any adult under this 
        paragraph shall be considered sufficient to comply with 
        any provision of Federal law requiring a household 
        member to sign an application or statement;
            (3) that the State agency shall thereafter promptly 
        determine the eligibility of each applicant household 
        by way of verification of income other than that 
        determined to be excluded by section 5(d) of this Act 
        (in part through the use of the information, if any, 
        obtained under section 16(e) of this Act), household 
        size (in any case such size is questionable), and such 
        other eligibility factors as the Secretary determines 
        to be necessary to implement sections 5 and 6 of this 
        Act, although the State agency may verify prior to 
        certification, whether questionable or not, the size of 
        any applicant household and such other eligibility 
        factors as the State agency determines are necessary, 
        so as to complete certification of and provide an 
        allotment retroactive to the period of application to 
        any eligible household not later than thirty days 
        following its filing of an application, and that the 
        State agency [shall--
                    [(A) provide each] shall provide each 
                applicant household, at the time of 
                application, a clear written statement 
                explaining what acts the household must perform 
                to cooperate in obtaining verification and 
                otherwise completing the application process;
                    [(B) assist each applicant household in 
                obtaining appropriate verification and 
                completing the application process;
                    [(C) not require any household to submit 
                additional proof of a matter on which the State 
                agency already has current verification as 
                determined under regulations issued by the 
                Secretary, unless the State agency has reason 
                to believe that the information possessed by 
                the agency is inaccurate, incomplete, or 
                inconsistent;
                    [(D) subject to subparagraph (E), not deny 
                any application for participation under this 
                program solely because of the failure of a 
                person outside the household to cooperate 
                (other than an individual failing to cooperate 
                who would otherwise be a household member but 
                for the operation of any of the individual 
                disqualification provisions of subsections (b), 
                (d), (e), (f), and (g) of section 6); and
                    [(E) process applications if a household 
                complies with the requirements of the first 
                sentence of section 6(c), by taking appropriate 
                steps to verify information otherwise required 
                to be verified under this Act,
        [and that the State agency shall provide the household, 
        at the time of each certification and recertification, 
        with a statement describing the reporting 
        responsibilities of the household under this Act, and 
        provide a toll-free or local telephone number, or a 
        telephone number at which collect calls will be 
        accepted by the State agency, at which the household 
        may reach an appropriate representative of the State 
        agency. Under rules prescribed by the Secretary, a 
        State agency shall develop standard estimates of the 
        shelter expenses that may reasonably be expected to be 
        incurred by households in which all members are 
        homeless but that are not receiving free shelter 
        throughout the month. The Secretary may issue 
        regulations to preclude the use of the estimates for 
        households with extremely low shelter costs for whom 
        the following sentence shall not apply. A State agency 
        shall use the estimates in determining the allotments 
        of the households, unless a household verifies higher 
        expenses;]
          * * * * * * *
            (6) [that (A) the] that--
                    (A) the State agency shall undertake the 
                certification of applicant households in 
                accordance with the general procedures 
                prescribed by the Secretary in the regulations 
                issued pursuant to this [Act; (B) the] Act; and
                    (B) the State agency personnel utilized in 
                undertaking such certification shall be 
                employed in accordance with the current 
                standards for a Merit System of Personnel 
                Administration or any standards later 
                prescribed by the [United States Civil Service 
                Commission] Office of Personnel Management 
                pursuant to section 208 of the 
                Intergovernmental Personnel Act of 1970 
                modifying or superseding such standards 
                relating to the establishment and maintenance 
                of personnel standards on a merit basis; [(C) 
                the State agency shall provide a continuing, 
                comprehensive program of training for all 
                personnel undertaking such certification so 
                that eligible households are promptly and 
                accurately certified to receive the allotments 
                for which they are eligible under this Act; (D) 
                the State agency, at its option, may undertake 
                intensive training to ensure that State agency 
                personnel who undertake the certification of 
                households that include a member who engages in 
                farming are qualified to perform such 
                certification; and (E) at its option, the State 
                agency may provide, or contract for the 
                provision of, training and assistance to 
                persons working with volunteer or nonprofit 
                organizations that provide program information 
                activities or eligibility screening to persons 
                potentially eligible for food stamps;]
          * * * * * * *
            (8) safeguards which limit the use or disclosure of 
        information obtained from applicant households to 
        persons directly connected with the administration or 
        enforcement of the provisions of this Act, regulations 
        issued pursuant to this Act, Federal assistance 
        programs, or federally assisted State programs, except 
        [that (A) such] that--
                    (A) the safeguards shall not prevent the 
                use or disclosure of such information to the 
                Comptroller General of the United States for 
                audit and examination authorized by any other 
                provision of [law, (B) notwithstanding] law;
                    (B) notwithstanding any other provision of 
                law, all information obtained under this Act 
                from an applicant household shall be made 
                available, upon request, to local, State or 
                Federal law enforcement officials for the 
                purpose of investigating an alleged violation 
                of this Act or any regulation issued under this 
                [Act, and (C) such] Act;
                    (C) the safeguards shall not prevent the 
                use by, or disclosure of such information, to 
                agencies of the Federal Government (including 
                the United States Postal Service) for purposes 
                of collecting the amount of an overissuance of 
                coupons, as determined under section 13(b) of 
                this Act [and excluding claims arising from an 
                error of the State agency, that has not been 
                recovered pursuant to such section], from 
                Federal pay (including salaries and pensions) 
                as authorized pursuant to section 5514 of title 
                5 of the United States Code or a Federal income 
                tax refund as authorized by section 3720A of 
                title 31, United States Code;
                    (D) notwithstanding any other provision of 
                law, the address, social security number, and, 
                if available, photograph of any member of a 
                household shall be made available, on request, 
                to any Federal, State, or local law enforcement 
                officer if the officer furnishes the State 
                agency with the name of the member and notifies 
                the agency that--
                            (i) the member--
                                    (I) is fleeing to avoid 
                                prosecution, or custody or 
                                confinement after conviction, 
                                for a crime (or attempt to 
                                commit a crime) that, under the 
                                law of the place the member is 
                                fleeing, is a felony (or, in 
                                the case of New Jersey, a high 
                                misdemeanor), or is violating a 
                                condition of probation or 
                                parole imposed under Federal or 
                                State law; or
                                    (II) has information that 
                                is necessary for the officer to 
                                conduct an official duty 
                                related to subclause (I);
                            (ii) locating or apprehending the 
                        member is an official duty; and
                            (iii) the request is being made in 
                        the proper exercise of an official 
                        duty; and
                    (E) the safeguards shall not prevent 
                compliance with paragraph (16);
            (9) that the State agency shall--
                    (A) provide coupons no later than [five 
                days] 7 days after the date of application to 
                any household which--
                            (i)(I) has gross income that is 
                        less than $150 per month; or
                            (II) is a destitute migrant or a 
                        seasonal farmworker household in 
                        accordance with the regulations 
                        governing such households in effect 
                        July 1, 1982; and
                            (ii) has liquid resources that do 
                        not exceed $100; and
                    [(B) provide coupons no later than five 
                days after the date of application to any 
                household in which all members are homeless 
                individuals and that meets the income and 
                resource criteria for coupons under this Act;
                    [(C) provide coupons no later than five 
                days after the date of application to any 
                household that has a combined gross income and 
                liquid resources that is less than the monthly 
                rent, or mortgage, and utilities of the 
                household; and
                    [(D)] (B) to the extent practicable, verify 
                the income and liquid resources of a household 
                referred to in subparagraph (A)[, (B), or (C)] 
                prior to issuance of coupons to the household;
            (10) for the granting of a fair hearing and a 
        prompt determination thereafter to any household 
        aggrieved by the action of the State agency under any 
        provision of its plan of operation as it affects the 
        participation of such household in the food stamp 
        program or by a claim against the household for an 
        overissuance: Provided, That any household which timely 
        requests such a fair hearing after receiving individual 
        notice of agency action reducing or terminating its 
        benefits within the household's certification period 
        shall continue to participate and receive benefits on 
        the basis authorized immediately prior to the notice of 
        adverse action until such time as the fair hearing is 
        completed and an adverse decision rendered or until 
        such time as the household's certification period 
        terminates, whichever occurs earlier, except that in 
        any case in which the State agency receives from the 
        household a written statement containing information 
        that clearly requires a reduction or termination of the 
        household's benefits, the State agency may act 
        immediately to reduce or terminate the household's 
        benefits and may provide notice of its action to the 
        household as late as the date on which the action 
        becomes effective. At the option of a State, at any 
        time prior to a fair hearing determination under this 
        paragraph, a household may withdraw, orally or in 
        writing, a request by the household for the fair 
        hearing. If the withdrawal request is an oral request, 
        the State agency shall provide a written notice to the 
        household confirming the withdrawal request and 
        providing the household with an opportunity to request 
        a hearing;
          * * * * * * *
            [(14) that the State agency shall prominently 
        display in all food stamp and public assistance offices 
        posters prepared or obtained by the Secretary 
        describing the information contained in subparagraphs 
        (A) through (D) of this paragraph and shall make 
        available in such offices for home use pamphlets 
        prepared or obtained by the Secretary listing (A) foods 
        that contain substantial amounts of recommended daily 
        allowances of vitamins, minerals, and protein for 
        children and adults; (B) menus that combine such foods 
        into meals; (C) details on eligibility for other 
        programs administered by the Secretary that provide 
        nutrition benefits; and (D) general information on the 
        relationship between health and diet;
            [(15)] (14) that the State agency shall specify a 
        plan of operation for providing food stamps for 
        households that are victims of a disaster; that such 
        plan shall include, but not be limited to, procedures 
        for informing the public about the disaster program and 
        how to apply for its benefits, coordination with 
        Federal and private disaster relief agencies and local 
        government officials, application procedures to reduce 
        hardship and inconvenience and deter fraud, and 
        instruction of caseworkers in procedures for 
        implementing and operating the disaster program;
            [(16)] (15) that the State agency shall require 
        each household certified as eligible to participate by 
        methods other than the out-of-office methods specified 
        in the fourth sentence of paragraph (2) of this 
        subsection in those project areas or parts of project 
        areas in which the Secretary, in consultation with the 
        Department's Inspector General, finds that it would be 
        useful to protect the program's integrity and would be 
        cost effective, to present a photographic 
        identification card when using its authorization card 
        in order to receive its coupons. The State agency may 
        permit a member of a household to comply with this 
        paragraph by presenting a photographic identification 
        card used to receive assistance under a welfare or 
        public assistance program;
            [(17)] (16) notwithstanding paragraph (8) of this 
        subsection, for the immediate reporting to the 
        Immigration and Naturalization Service by the State 
        agency of a determination by personnel responsible for 
        the certification or recertification of households that 
        any member of a household is ineligible to receive food 
        stamps because that member is present in the United 
        States in violation of the Immigration and Nationality 
        Act;
            [(18)] (17) at the option of the State agency, for 
        the establishment and operation of an automatic data 
        processing and information retrieval system that meets 
        such conditions as the Secretary may prescribe and that 
        is designed to provide efficient and effective 
        administration of the food stamp program;
            [(19) that information is] (18) at the option of 
        the State agency, that information may be requested and 
        exchanged for purposes of income and eligibility 
        verification in accordance with a State system which 
        meets the requirements of section 1137 of the Social 
        Security Act and that any additional information 
        available from agencies administering State 
        unemployment compensation laws under the provisions of 
        section 303(d) of the Social Security Act [shall be 
        requested] may be requested and utilized by the State 
        agency (described in section 3(n)(1) of this Act) to 
        the extent permitted under the provisions of section 
        303(d) of the Social Security Act;
            [(20)] (19) that, in project areas or parts thereof 
        where authorization cards are used, and eligible 
        households are required to present photographic 
        identification cards in order to receive their coupons, 
        the State agency shall include, in any agreement or 
        contract with a coupon issuer, a provision that (A) the 
        issuer shall (i) require the presenter to furnish a 
        photographic identification card at the time the 
        authorization card is presented, and (ii) record on the 
        authorization card the identification number shown on 
        the photographic identification card; and (B) if the 
        State agency determines that the authorization card has 
        been stolen or otherwise was not received by a 
        household certified as eligible, the issuer shall be 
        liable to the State agency for the face value of any 
        coupons issued in the transaction in which such card is 
        used and the issuer fails to comply with the 
        requirements of clause (A) of this paragraph;
            [(21)] (20) that the State agency shall establish a 
        system and take action on a periodic basis to verify 
        and otherwise assure that an individual does not 
        receive coupons in more than one jurisdiction within 
        the State;
            [(22)] (21) the plans of the State agency for 
        carrying out employment and training programs under 
        section 6(d)(4), including the nature and extent of 
        such programs, the geographic areas and households to 
        be covered under such program, and the basis, including 
        any cost information, for exemptions of categories and 
        individuals and for the choice of employment and 
        training program components reflected in the plans;
            [(23)] (22) in a project area in which 5,000 or 
        more households participate in the food stamp program, 
        for the establishment and operation of a unit for the 
        detection of fraud in the food stamp program, including 
        the investigation, and assistance in the prosecution, 
        of such fraud;
            [(24)] (23) at the option of the State, for 
        procedures necessary to obtain payment of uncollected 
        overissuance of coupons from unemployment compensation 
        pursuant to section 13(c); [and]
            [(25) a procedure for designating project areas or 
        parts of project areas that are rural and in which low-
        income persons face substantial difficulties in 
        obtaining transportation. The State agency shall 
        designate the areas according to procedures approved by 
        the Secretary. In each area so designated, the State 
        agency shall provide for the issuance of coupons by 
        mail to all eligible households in the area, except 
        that any household with mail losses exceeding levels 
        established by the Secretary shall not be entitled to 
        such a mailing and the State agency shall not be 
        required to issue coupons by mail in those localities 
        within such area where the mail loss rates exceed 
        standards set by the Secretary.]
            (24) the guidelines the State agency uses in 
        carrying out section 6(i); and
            (25) if a State elects to carry out a Simplified 
        Food Stamp Program under section 26, the plans of the 
        State agency for operating the program, including--
                    (A) the rules and procedures to be followed 
                by the State agency to determine food stamp 
                benefits;
                    (B) how the State agency will address the 
                needs of households that experience high 
                shelter costs in relation to the incomes of the 
                households; and
                    (C) a description of the method by which 
                the State agency will carry out a quality 
                control system under section 16(c).
          * * * * * * *
    (g) If the Secretary determines, upon information received 
by the Secretary, investigation initiated by the Secretary, or 
investigation that the Secretary shall initiate upon receiving 
sufficient information evidencing a pattern of lack of 
compliance by a State agency of a type specified in this 
subsection, that in the administration of the food stamp 
program there is a failure by a State agency without good cause 
to comply with any of the provisions of this Act, the 
regulations issued pursuant to this Act, the State plan of 
operation submitted pursuant to subsection (d) of this section, 
the State plan for automated data processing submitted pursuant 
to subsection (o)(2) of this section, or [the Secretary's 
standards for the efficient and effective administration of the 
program established under section 16(b)(1) or] the requirements 
established pursuant to section 23 of this Act, the Secretary 
shall immediately inform such State agency of such failure and 
shall allow the State agency a specified period of time for the 
correction of such failure. If the State agency does not 
correct such failure within that specified period, the 
Secretary may refer the matter to the Attorney General with a 
request that injunctive relief be sought to require compliance 
forthwith by the State agency and, upon suit by the Attorney 
General in an appropriate district court of the United States 
having jurisdiction of the geographic area in which the State 
agency is located and a showing that noncompliance has 
occurred, appropriate injunctive relief shall issue, and, 
whether or not the Secretary refers such matter to the Attorney 
General, the Secretary shall proceed to withhold from the State 
such funds authorized under sections 16(a), 16(c), and 16(g) of 
this Act as the Secretary determines to be appropriate, subject 
to administrative and judicial review under section 14 of this 
Act.
          * * * * * * *
    [(i) Notwithstanding any other provision of law, the 
Secretary, the Commissioner of Social Security and the 
Secretary of Health and Human Services shall develop a system 
by which (1) a single interview shall be conducted to determine 
eligibility for the food stamp program and the aid to families 
with dependent children program under part A of title IV of the 
Social Security Act; (2)]
    (i) Application and Denial Procedures.--
            (1) Application procedures.--Notwithstanding any 
        other provision of law, households in which all members 
        are applicants for or recipients of supplemental 
        security income shall be informed of the availability 
        of benefits under the food stamp program and be 
        assisted in making a simple application to participate 
        in such program at the social security office and be 
        certified for eligibility utilizing information 
        contained in files of the Social Security 
        Administration[; (3) households in which all members 
        are included in a federally aided public assistance or 
        State or local general assistance grant in a State that 
        has a single State-wide general assistance application 
        form shall have their application for participation in 
        the food stamp program contained in the public 
        assistance or general assistance application form, and 
        households applying for a local general assistance 
        grant in a local jurisdiction in which the agency 
        administering the general assistance program also 
        administers the food stamp program shall be provided an 
        application for participation in the food stamp program 
        at the time of their application for general 
        assistance, along with information concerning how to 
        apply for the food stamp program; and (4) new 
        applicants, as well as households which have recently 
        lost or been denied eligibility for public assistance 
        or general assistance, shall be certified for 
        participation in the food stamp program based on 
        information in the public assistance or general 
        assistance case file to the extent that reasonably 
        verified information is available in such case file. In 
        addition to implementing paragraphs (1) through (4), 
        the State agency shall inform applicants for benefits 
        under part A of title IV of the Social Security Act (42 
        U.S.C. 601 et seq.) that such applicants may file, 
        along with their application for such benefits, an 
        application for benefits under this Act, and that if 
        such applicants file, they shall have a single 
        interview for food stamps and for benefits under part A 
        of title IV of the Social Security Act. No].
            (2) Denial and termination.--Other than in a case 
        of disqualification as a penalty for failure to comply 
        with a public assistance program rule or regulation, no 
        household shall have its application to participate in 
        the food stamp program denied nor its benefits under 
        the food stamp program terminated solely on the basis 
        that its application to participate has been denied or 
        its benefits have been terminated under any of the 
        programs carried out under the statutes specified in 
        the second sentence of section 5(a) and without a 
        separate determination by the State agency that the 
        household fails to satisfy the eligibility requirements 
        for participation in the food stamp program.
          * * * * * * *
    (p) State Verification Option.--Notwithstanding any other 
provision of law, in carrying out the food stamp program, a 
State agency shall not be required to use an income and 
eligibility or an immigration status verification system 
established under section 1137 of the Social Security Act (42 
U.S.C. 1320b-7).

 CIVIL MONEY PENALTIES AND DISQUALIFICATION OF RETAIL FOOD STORES AND 
                        WHOLESALE FOOD CONCERNS

    Sec. 12. (a) Any approved retail food store or wholesale 
food concern may be disqualified for a specified period of time 
from further participation in the food stamp program, or 
subjected to a civil money penalty of up to $10,000 for each 
violation if the Secretary determines that its disqualification 
would cause hardship to food stamp households, on a finding, 
made as specified in the regulations, that such store or 
concern has violated any of the provisions of this Act or the 
regulations issued pursuant to this Act. Regulations issued 
pursuant to this Act shall provide criteria for the finding of 
violations and the suspension or disqualification of a retail 
food store or wholesale food concern on the basis of evidence 
which may include, but is not limited to, facts established 
through on-site investigations, inconsistent redemption data or 
evidence obtained through transaction reports under electronic 
benefit transfer systems.
    (b) Disqualification under subsection (a) shall be--
            (1) for a reasonable period of time, of no less 
        than six months nor more than five years, upon the 
        first occasion of disqualification;
            (2) for a reasonable period of time, of no less 
        than twelve months nor more than ten years, upon the 
        second occasion of disqualification; [and]
            (3) permanent upon--
                    (A)  * * *
          * * * * * * *
                    (C) a finding of the sale of firearms, 
                ammunition, explosives, or controlled substance 
                (as defined in section 802 of title 21, United 
                States Code) for coupons, except that the 
                Secretary shall have the discretion to impose a 
                civil money penalty of up to $20,000 for each 
                violation (except that the amount of civil 
                money penalties imposed for violations 
                occurring during a single investigation may not 
                exceed $40,000) in lieu of disqualification 
                under this subparagraph if the Secretary 
                determines that there is substantial evidence 
                (including evidence that neither the ownership 
                nor management of the store or food concern was 
                aware of, approved, benefited from, or was 
                involved in the conduct or approval of the 
                violation) that the store or food concern had 
                an effective policy and program in effect to 
                prevent violations of this Act[.]; and
            (4) for a reasonable period of time to be 
        determined by the Secretary, including permanent 
        disqualification, on the knowing submission of an 
        application for the approval or reauthorization to 
        accept and redeem coupons that contains false 
        information about a substantive matter that was a part 
        of the application.
          * * * * * * *
    (g) Disqualification of Retailers Who Are Disqualified 
Under the WIC Program.--
            (1) In general.--The Secretary shall issue 
        regulations providing criteria for the disqualification 
        under this Act of an approved retail food store and a 
        wholesale food concern that is disqualified from 
        accepting benefits under the special supplemental 
        nutrition program for women, infants, and children 
        established under section 17 of the Child Nutrition Act 
        of 1966 (7 U.S.C. 1786).
            (2) Terms.--A disqualification under paragraph 
        (1)--
                    (A) shall be for the same length of time as 
                the disqualification from the program referred 
                to in paragraph (1);
                    (B) may begin at a later date than the 
                disqualification from the program referred to 
                in paragraph (1); and
                    (C) notwithstanding section 14, shall not 
                be subject to judicial or administrative 
                review.

                  COLLECTION AND DISPOSITION OF CLAIMS

    Sec. 13. (a)  * * *
    [(b)(1)(A) In the case of any ineligibility determination 
under section 6(b) of this Act, the household of which such 
ineligible individual is a member is required to agree to a 
reduction in the allotment of the household of which such 
individual is a member, or payment in cash, in accordance with 
a schedule determined by the Secretary, that will be sufficient 
to reimburse the Federal Government for the value of any 
overissuance of coupons resulting from the activity that was 
the basis of the ineligibility determination. If a household 
refuses to make an election on the date of receipt (or, if the 
date of receipt is not a business day, on the next business 
day) of a demand for an election, or elects to make a payment 
in cash under the provisions of the preceding sentence and 
fails to do so, the household shall be subject to an allotment 
reduction.
    [(B) State agencies shall collect any claim against a 
household arising from the overissuance of coupons based on an 
ineligibility determination under section 6(b), other than 
claims collected pursuant to subparagraph (A), by using other 
means of collection, unless the State agency demonstrates to 
the satisfaction of the Secretary that such other means are not 
cost effective.
    [(2)(A) State agencies shall collect any claim against a 
household arising from the overissuance of coupons, other than 
claims the collection of which is provided for in paragraph (1) 
of this subsection and claims arising from an error of the 
State agency, by reducing the monthly allotments of the 
household, except that the household shall be given notice 
permitting it to elect another means of repayment and given 10 
days to make such an election before the State agency commences 
action to reduce the household's monthly allotment. These 
collections shall be limited to 10 per centum of the monthly 
allotment (or $10 per month, whenever that would result in a 
faster collection rate).
    [(B) State agencies may collect any claim against a 
household arising from the overissuance of coupons, other than 
claims collected pursuant to paragraph (1) or subparagraph (A), 
by using other means of collection.]
    (b) Collection of Overissuances.--
            (1) In general.--Except as otherwise provided in 
        this subsection, a State agency shall collect any 
        overissuance of coupons issued to a household by--
                    (A) reducing the allotment of the 
                household;
                    (B) withholding amounts from unemployment 
                compensation from a member of the household 
                under subsection (c);
                    (C) recovering from Federal pay or a 
                Federal income tax refund under subsection (d); 
                or
                    (D) any other means.
            (2) Cost effectiveness.--Paragraph (1) shall not 
        apply if the State agency demonstrates to the 
        satisfaction of the Secretary that all of the means 
        referred to in paragraph (1) are not cost effective.
            (3) Maximum reduction absent fraud.--If a household 
        received an overissuance of coupons without any member 
        of the household being found ineligible to participate 
        in the program under section 6(b)(1) and a State agency 
        elects to reduce the allotment of the household under 
        paragraph (1)(A), the State agency shall not reduce the 
        monthly allotment of the household under paragraph 
        (1)(A) by an amount in excess of the greater of--
                    (A) 10 percent of the monthly allotment of 
                the household; or
                    (B) $10.
            (4) Procedures.--A State agency shall collect an 
        overissuance of coupons issued to a household under 
        paragraph (1) in accordance with the requirements 
        established by the State agency for providing notice, 
        electing a means of payment, and establishing a time 
        schedule for payment.
          * * * * * * *
    (d) The amount of an overissuance of coupons [as determined 
under subsection (b) and except for claims arising from an 
error of the State agency,], as determined under subsection 
(b)(1), that has not been recovered pursuant to such subsection 
may be recovered from Federal pay (including salaries and 
pensions) as authorized by section 5514 of title 5 of the 
United States Code or a Federal income tax refund as authorized 
by section 3720A of title 31, United States Code.

                   ADMINISTRATIVE AND JUDICIAL REVIEW

    Sec. 14. (a)(1) Whenever an application of a retail food 
store or wholesale food concern to participate in the food 
stamp program is denied pursuant to section 9 of this Act, or a 
retail food store or wholesale food concern is disqualified or 
subjected to a civil money penalty under the provisions of 
section 12 of this Act, or a retail food store or wholesale 
food concern forfeits a bond under section 12(d) of this Act, 
or all or part of any claim of a retail food store or wholesale 
food concern is denied under the provisions of section 13 of 
this Act, or a claim against a State agency is stated pursuant 
to the provisions of section 13 of this Act, notice of such 
administrative action shall be issued to the retail food store, 
wholesale food concern, or State agency involved.
    (2) Such notice shall be delivered by certified mail or 
personal service.
    (3) If such store, concern, or State agency is aggrieved by 
such action, it may, in accordance with regulations promulgated 
under this Act, within ten days of the date of delivery of such 
notice, file a written request for an opportunity to submit 
information in support of its position to such person or 
persons as the regulations may designate.
    (4) If such a request is not made or if such store, 
concern, or State agency fails to submit information in support 
of its position after filing a request, the administrative 
determination shall be final.
    (5) If such request is made by such store, concern, or 
State agency, such information as may be submitted by the 
store, concern, or State agency, as well as such other 
information as may be available, shall be reviewed by the 
person or persons designated by the Secretary, who shall, 
subject to the right of judicial review hereinafter provided, 
make a determination which shall be final and which shall take 
effect thirty days after the date of the delivery or service of 
such final notice of determination.
    (6) Determinations regarding claims made pursuant to 
section 16(c) (including determinations as to whether there is 
good cause for not imposing all or a portion of the penalty) 
shall be made on the record after opportunity for an agency 
hearing in accordance with section 556 and 557 of title 5, 
United States Code, in which one or more administrative law 
judges appointed pursuant to section 3105 of such title shall 
preside over the taking of evidence.
    (7) Such judges shall have authority to issue and enforce 
subpoenas in the manner prescribed in sections 13 (c) and (d) 
of the Perishable Agricultural Commodities Act of 1930 (7 
U.S.C. 499m (c) and (d)) and to appoint expert witnesses under 
the provisions of Rule 706 of the Federal Rules of Evidence.
    (8) The Secretary may not limit the authority of such 
judges presiding over determinations regarding claims made 
pursuant to section 16(c).
    (9) The Secretary shall provide a summary procedure for 
determinations regarding claims made pursuant to section 16(c) 
in amounts less than $50,000.
    (10) Such summary procedure need not include an oral 
hearing.
    (11) On a petition by the State agency or sua sponte, the 
Secretary may permit the full administrative review procedure 
to be used in lieu of such summary review procedure for a claim 
of less than $50,000.
    (12) Subject to the right of judicial review hereinafter 
provided, a determination made by an administrative law judge 
regarding a claim made pursuant to section 16(c) shall be final 
and shall take effect thirty days after the date of the 
delivery or service of final notice of such determination.
    (13) If the store, concern, or State agency feels aggrieved 
by such final determination, it may obtain judicial review 
thereof by filing a complaint against the United States in the 
United States court for the district in which it resides or is 
engaged in business, or, in the case of a retail food store or 
wholesale food concern, in any court of record of the State 
having competent jurisdiction, within thirty days after the 
date of delivery or service of the final notice of 
determination upon it, requesting the court to set aside such 
determination.
    (14) The copy of the summons and complaint required to be 
delivered to the official or agency whose order is being 
attacked shall be sent to the Secretary or such person or 
persons as the Secretary may designate to receive service of 
process.
    (15) The suit in the United States district court or State 
court shall be a trial de novo by the court in which the court 
shall determine the validity of the questioned administrative 
action in issue, except that judicial review of determinations 
regarding claims made pursuant to section 16(c) shall be a 
review on the administrative record.
    (16) If the court determines that such administrative 
action is invalid, it shall enter such judgment or order as it 
determines is in accordance with the law and the evidence.
    (17) During the pendency of such judicial review, or any 
appeal therefrom, the administrative action under review shall 
be and remain in full force and effect, unless on application 
to the court on not less than ten days' notice, and after 
hearing thereon and a consideration by the court of the 
applicant's likelihood of prevailing on the merits and of 
irreparable injury, the court temporarily stays such 
administrative action pending disposition of such trial or 
appeal.
            (18) Suspension of stores pending review.--
        Notwithstanding any other provision of this subsection, 
        any permanent disqualification of a retail food store 
        or wholesale food concern under paragraph (3) or (4) of 
        section 12(b) shall be effective from the date of 
        receipt of the notice of disqualification. If the 
        disqualification is reversed through administrative or 
        judicial review, the Secretary shall not be liable for 
        the value of any sales lost during the disqualification 
        period.
          * * * * * * *

                       VIOLATIONS AND ENFORCEMENT

    Sec. 15. (a)  * * *
          * * * * * * *
    (g) The Secretary may subject to forfeiture and denial of 
property rights any nonfood items, moneys, negotiable 
instruments, securities, or other things of value that are 
furnished [or intended to be furnished] by any person in 
exchange for coupons, authorization cards or access devices, or 
anything of value obtained by use of an access device, in any 
manner contrary to this Act or the regulations issued under 
this Act. Any forfeiture and disposal of property forfeited 
under this subsection shall be conducted in accordance with 
procedures contained in regulations issued by the Secretary.
    (h) Criminal Forfeiture.--
            (1) In general.--In imposing a sentence on a person 
        convicted of an offense in violation of subsection (b) 
        or (c), a court shall order, in addition to any other 
        sentence imposed under this subsection, that the person 
        forfeit to the United States all property described in 
        paragraph (2).
            (2) Property subject to forfeiture.--All property, 
        real and personal, used in a transaction or attempted 
        transaction, to commit, or to facilitate the commission 
        of, a violation (other than a misdemeanor) of 
        subsection (b) or (c), or proceeds traceable to a 
        violation of subsection (b) or (c), shall be subject to 
        forfeiture to the United States under paragraph (1).
            (3) Interest of owner.--No interest in property 
        shall be forfeited under this subsection as the result 
        of any act or omission established by the owner of the 
        interest to have been committed or omitted without the 
        knowledge or consent of the owner.
            (4) Proceeds.--The proceeds from any sale of 
        forfeited property and any monies forfeited under this 
        subsection shall be used--
                    (A) first, to reimburse the Department of 
                Justice for the costs incurred by the 
                Department to initiate and complete the 
                forfeiture proceeding;
                    (B) second, to reimburse the Department of 
                Agriculture Office of Inspector General for any 
                costs the Office incurred in the law 
                enforcement effort resulting in the forfeiture;
                    (C) third, to reimburse any Federal or 
                State law enforcement agency for any costs 
                incurred in the law enforcement effort 
                resulting in the forfeiture; and
                    (D) fourth, by the Secretary to carry out 
                the approval, reauthorization, and compliance 
                investigations of retail stores and wholesale 
                food concerns under section 9.

            ADMINISTRATIVE COST-SHARING AND QUALITY CONTROL

    Sec. 16. (a) The Secretary is authorized to pay to each 
State agency an amount equal to 50 per centum of all 
administrative costs involved in each State agency's operation 
of the food stamp program, which costs shall include, but not 
be limited to, the cost of (1) the certification of applicant 
households, (2) the acceptance, storage, protection, control, 
and accounting of coupons after their delivery to receiving 
points within the State, (3) the issuance of coupons to all 
eligible households, (4) food stamp informational activities, 
including those undertaken under section 11(e)(1)(A), but not 
including recruitment activities, (5) fair hearings, (6) 
automated data processing and information retrieval systems 
subject to the conditions set forth in subsection (g), (7) food 
stamp program investigations and prosecutions, and (8) 
implementing and operating the immigration status verification 
system established under section 1137(d) of the Social Security 
Act (42 U.S.C. 1320b-7(d)): Provided, That the Secretary is 
authorized at the Secretary's discretion to pay any State 
agency administering the food stamp program on all or part of 
an Indian reservation under section 11(d) of this Act such 
amounts for administrative costs as the Secretary determines to 
be necessary for effective operation of the food stamp program, 
as well as to permit each State to retain [25 percent during 
the period beginning October 1, 1990, and ending September 30, 
1995, and 50 percent thereafter of the value of all funds or 
allotments recovered or collected pursuant to subsections 
(b)(1) and (c) of section 13 and 10 percent during the period 
beginning October 1, 1990, and ending September 30, 1995, and 
25 percent thereafter of the value of all funds or allotments 
recovered or collected pursuant to section 13(b)(2) of this 
Act, except the value of funds or allotments recovered or 
collected pursuant to section 13(b)(2) which arise from an 
error of a State agency] 25 percent of the overissuances 
collected by the State agency under section 13, except those 
overissuances arising from an error of the State agency. The 
officials responsible for making determinations of 
ineligibility under this Act shall not receive or benefit from 
revenues retained by the State under the provisions of this 
subsection.
    [(b) The Secretary shall (1) establish standards for the 
efficient and effective administration of the food stamp 
program by the States, including standards for the periodic 
review of the hours that food stamp offices are open during the 
day, week, or month to ensure that employed individuals are 
adequately served by the food stamp program, and (2) instruct 
each State to submit, at regular intervals, reports which shall 
specify the specific administrative actions proposed to be 
taken and implemented in order to meet the efficiency and 
effectiveness standards established pursuant to clause (1) of 
this subsection.]
    (b) Work Supplementation or Support Program.--
            (1) Definition of work supplementation or support 
        program.--In this subsection, the term ``work 
        supplementation or support program'' means a program 
        under which, as determined by the Secretary, public 
        assistance (including any benefits provided under a 
        program established by the State and the food stamp 
        program) is provided to an employer to be used for 
        hiring and employing a public assistance recipient who 
        was not employed by the employer at the time the public 
        assistance recipient entered the program.
            (2) Program.--A State agency may elect to use an 
        amount equal to the allotment that would otherwise be 
        issued to a household under the food stamp program, but 
        for the operation of this subsection, for the purpose 
        of subsidizing or supporting a job under a work 
        supplementation or support program established by the 
        State.
            (3) Procedure.--If a State agency makes an election 
        under paragraph (2) and identifies each household that 
        participates in the food stamp program that contains an 
        individual who is participating in the work 
        supplementation or support program--
                    (A) the Secretary shall pay to the State 
                agency an amount equal to the value of the 
                allotment that the household would be eligible 
                to receive but for the operation of this 
                subsection;
                    (B) the State agency shall expend the 
                amount received under subparagraph (A) in 
                accordance with the work supplementation or 
                support program in lieu of providing the 
                allotment that the household would receive but 
                for the operation of this subsection;
                    (C) for purposes of--
                            (i) sections 5 and 8(a), the amount 
                        received under this subsection shall be 
                        excluded from household income and 
                        resources; and
                            (ii) section 8(b), the amount 
                        received under this subsection shall be 
                        considered to be the value of an 
                        allotment provided to the household; 
                        and
                    (D) the household shall not receive an 
                allotment from the State agency for the period 
                during which the member continues to 
                participate in the work supplementation or 
                support program.
            (4) Other work requirements.--No individual shall 
        be excused, by reason of the fact that a State has a 
        work supplementation or support program, from any work 
        requirement under section 6(d), except during the 
        periods in which the individual is employed under the 
        work supplementation or support program.
            (5) Length of participation.--A State agency shall 
        provide a description of how the public assistance 
        recipients in the program shall, within a specific 
        period of time, be moved from supplemented or supported 
        employment to employment that is not supplemented or 
        supported.
            (6) Displacement.--A work supplementation or 
        support program shall not displace the employment of 
        individuals who are not supplemented or supported.
    (c)(1) The program authorized under this Act shall include 
a system that enhances payment accuracy by establishing fiscal 
incentives that require State agencies with high error rates to 
share in the cost of payment error and provide enhanced 
administrative funding to States with the lowest error rates. 
Under such system--
            (A)  * * *
            (B) the Secretary shall foster management 
        improvements by the States [pursuant to subsection (b)] 
        by requiring State agencies other than those receiving 
        adjustments under subparagraph (A) to develop and 
        implement corrective action plans to reduce payment 
        errors; and
          * * * * * * *
    [(h)(1)(A) The Secretary shall allocate among the State 
agencies in each fiscal year, from funds appropriated for the 
fiscal year under section 18(a)(1), the amount of $75,000,000 
for each of the fiscal years 1991 through 2002 to carry out the 
employment and training program under section 6(d)(4), except 
as provided in paragraph (3), during the fiscal year.
    [(B) In making the allocation required by subparagraph (A) 
for each of the fiscal years 1992 through 2002, the Secretary 
shall allocate $15,000,000 among the States based on State 
agency performance under section 6(d)(4), as determined by the 
Secretary.
    [(C) In making the allocation required by subparagraph (A) 
for fiscal year 1992, the Secretary shall allocate 
nonperformance funding of $60,000,000 among the States in a 
manner such that each State is allocated funds equal to--
            [(i) a funding level determined under the 
        nonperformance funding allocation formula used for 
        fiscal year 1991;
            [(ii) increased by one half of the difference 
        between such funding level and an amount, if larger, 
        based on the State's proportion of the number of 
        individuals registered for work under section 6(d)(4); 
        or
            [(iii) decreased by one half of the difference 
        between such funding level and such amount, if such 
        amount is smaller.
    [(D) In making the allocation required by subparagraph (A) 
for each of the fiscal years 1993 through 2002, the Secretary 
shall allocate nonperformance funding of $60,000,000 among the 
States based on each State's proportion of the number of 
individuals registered for work under section 6(d)(4).
    [(E) Notwithstanding subparagraphs (C) and (D), the 
Secretary shall--
            [(i) for fiscal year 1992, ensure that each State 
        is allocated at least $50,000 by reducing, to the 
        extent necessary, the funds allocated to States (other 
        than States allocated less than $50,000) whose funding 
        level has been increased under subparagraph (C); and
            [(ii) for each of the fiscal years 1993 through 
        2002, ensure that each State is allocated at least 
        $50,000 by reducing, to the extent necessary, the funds 
        allocated to those States allocated more than $50,000.
    [(F) Each such State's share of such reduction under 
subparagraph (E) shall represent its proportion of individuals 
registered for work under section 6(d)(4) in all States subject 
to the reduction.]
    (h) Funding of Employment and Training Programs.--
            (1) In general.--
                    (A) Amounts.--To carry out employment and 
                training programs, the Secretary shall reserve 
                for allocation to State agencies from funds 
                made available for each fiscal year under 
                section 18(a)(1) the amount of--
                            (i) for fiscal year 1996, 
                        $75,000,000;
                            (ii) for fiscal year 1997, 
                        $79,000,000;
                            (iii) for fiscal year 1998, 
                        $81,000,000;
                            (iv) for fiscal year 1999, 
                        $84,000,000;
                            (v) for fiscal year 2000, 
                        $86,000,000;
                            (vi) for fiscal year 2001, 
                        $88,000,000; and
                            (vii) for fiscal year 2002, 
                        $90,000,000.
                    (B) Allocation.--The Secretary shall 
                allocate the amounts reserved under 
                subparagraph (A) among the State agencies using 
                a reasonable formula (as determined by the 
                Secretary) that gives consideration to the 
                population in each State affected by section 
                6(o).
                    (C) Reallocation.--
                            (i) Notification.--A State agency 
                        shall promptly notify the Secretary if 
                        the State agency determines that the 
                        State agency will not expend all of the 
                        funds allocated to the State agency 
                        under subparagraph (B).
                            (ii) Reallocation.--On notification 
                        under clause (i), the Secretary shall 
                        reallocate the funds that the State 
                        agency will not expend as the Secretary 
                        considers appropriate and equitable.
                    (D) Minimum allocation.--Notwithstanding 
                subparagraphs (A) through (C), the Secretary 
                shall ensure that each State agency operating 
                an employment and training program shall 
                receive not less than $50,000 in each fiscal 
                year.
    (2) If, in carrying out such program during such fiscal 
year, a State agency incurs costs that exceed the amount 
allocated to the State agency under paragraph (1), the 
Secretary shall pay such State agency an amount equal to 50 per 
centum of such additional costs, subject to the first 
limitation in paragraph (3), including the costs for case 
management and casework to facilitate the transition from 
economic dependency to self-sufficiency through work.
          * * * * * * *
    (5)[(A)] The Secretary shall monitor the employment and 
training programs carried out by State agencies under section 
6(d)(4) to measure their effectiveness in terms of the increase 
in the numbers of household members who obtain employment and 
the numbers of such members who retain such employment as a 
result of their participation in such employment and training 
programs.
    [(B) The Secretary shall, not later than January 1, 1989, 
report to the Committee on Agriculture of the House of 
Representatives and the Committee on Agriculture, Nutrition, 
and Forestry of the Senate on the effectiveness of such 
employment and training programs.]
    [(6) The Secretary shall develop, and transmit to the 
Committee on Agriculture of the House of Representatives and 
the Committee on Agriculture, Nutrition, and Forestry of the 
Senate, a proposal for modifying the rate of Federal payments 
under this subsection so as to reflect the relative 
effectiveness of the various States in carrying out employment 
and training programs under section 6(d)(4).]
            (6) Block grant states.--Each State electing to 
        operate a program under section 27 shall--
                    (A) receive the greater of--
                            (i) the total dollar value of the 
                        funds received under paragraph (1) by 
                        the State during fiscal year 1994; or
                            (ii) the average per fiscal year of 
                        the total dollar value of all funds 
                        received under paragraph (1) by the 
                        State during each of fiscal years 1992 
                        through 1994; and
                    (B) be eligible to receive funds under 
                paragraph (2), within the limitations in 
                section 6(d)(4)(K).
          * * * * * * *

                RESEARCH, DEMONSTRATION, AND EVALUATIONS

    Sec. 17. (a)  * * *
    (b)(1)(A) The Secretary may conduct on a trial basis, in 
one or more areas of the United States, pilot or experimental 
projects designed to test program changes that might increase 
the efficiency of the food stamp program and improve the 
delivery of food stamp [benefits to eligible households, 
including] benefits to eligible households, and may waive any 
requirement of this Act to the extent necessary for the project 
to be conducted.
                    (B) Project requirements.--
                            (i) Program goal.--The Secretary 
                        may not conduct a project under 
                        subparagraph (A) unless the project is 
                        consistent with the goal of the food 
                        stamp program of providing food 
                        assistance to raise levels of nutrition 
                        among low-income individuals.
                            (ii) Permissible projects.--The 
                        Secretary may conduct a project under 
                        subparagraph (A) to--
                                    (I) improve program 
                                administration;
                                    (II) increase the self-
                                sufficiency of food stamp 
                                recipients;
                                    (III) test innovative 
                                welfare reform strategies; and
                                    (IV) allow greater 
                                conformity with the rules of 
                                other programs than would be 
                                allowed but for this paragraph.
                            (iii) Impermissible projects.--The 
                        Secretary may not conduct a project 
                        under subparagraph (A) that--
                                    (I) involves the payment of 
                                the value of an allotment in 
                                the form of cash, unless the 
                                project was approved prior to 
                                the date of enactment of this 
                                subparagraph;
                                    (II) substantially 
                                transfers funds made available 
                                under this Act to services or 
                                benefits provided primarily 
                                through another public 
                                assistance program; or
                                    (III) is not limited to a 
                                specific time period.
                            (iv) Additional included 
                        projects.--Pilot or experimental 
                        projects may include projects involving 
                        the payment of the value of allotments 
                        or the average value of allotments by 
                        household size in the form of cash to 
                        eligible households all of whose 
                        members are age sixty-five or over or 
                        any of whose members are entitled to 
                        supplemental security income benefits 
                        under title XVI of the Social Security 
                        Act or to aid to families with 
                        dependent children under part A of 
                        title IV of the Social Security Act, 
                        the use of countersigned food coupons 
                        or similar identification mechanisms 
                        that do not invade a household's 
                        privacy, and the use of food checks or 
                        other voucher-type forms in place of 
                        food coupons. [The Secretary may waive 
                        the requirements of this Act to the 
                        degree necessary for such projects to 
                        be conducted, except that no project, 
                        other than a project involving the 
                        payment of the average value of 
                        allotments by household size in the 
                        form of cash to eligible households or 
                        a project conducted under paragraph 
                        (3), shall be implemented which would 
                        lower or further restrict the income or 
                        resource standards or benefit levels 
                        provided pursuant to sections 5 and 8 
                        of this Act.] Any pilot or experimental 
                        project implemented under this 
                        paragraph and operating as of October 
                        1, 1981, involving the payment of the 
                        value of allotments in the form of cash 
                        to eligible households all of whose 
                        members are either age sixty-five or 
                        over or entitled to supplemental 
                        security income benefits under title 
                        XVI of the Social Security Act shall be 
                        continued through October 1, 2002, if 
                        the State so requests.
    [(B)] (C)(i) No waiver or demonstration program shall be 
approved under this Act after the date of enactment of this 
subparagraph unless--
            (I) any household whose food assistance is issued 
        in a form other than coupons has its allotment 
        increased to the extent necessary to compensate for any 
        State or local sales tax that may be collected in all 
        or part of the area covered by the demonstration 
        project, the tax on purchases of food by any such 
        household is waived, or the Secretary determines on the 
        basis of information provided by the State agency that 
        the increase is unnecessary on the basis of the limited 
        nature of the items subject to the State or local sales 
        tax; and
            (II) the State agency conducting the demonstration 
        project pays the cost of any increased allotments.
    (ii) Clause (i) shall not apply if a waiver or 
demonstration project already provides a household with 
assistance that exceeds that which the household would 
otherwise be eligible to receive by more than the estimated 
amount of any sales tax on the purchases of food that would be 
collected from the household in the project area in which the 
household resides.
                    (D) Response to waivers.--
                            (i) Response.--Not later than 60 
                        days after the date of receiving a 
                        request for a waiver under subparagraph 
                        (A), the Secretary shall provide a 
                        response that--
                                    (I) approves the waiver 
                                request;
                                    (II) denies the waiver 
                                request and explains any 
                                modification needed for 
                                approval of the waiver request;
                                    (III) denies the waiver 
                                request and explains the 
                                grounds for the denial; or
                                    (IV) requests clarification 
                                of the waiver request.
                            (ii) Failure to respond.--If the 
                        Secretary does not provide a response 
                        in accordance with clause (i), the 
                        waiver shall be considered approved, 
                        unless the approval is specifically 
                        prohibited by this Act.
                            (iii) Notice of denial.--On denial 
                        of a waiver request under clause 
                        (i)(III), the Secretary shall provide a 
                        copy of the waiver request and a 
                        description of the reasons for the 
                        denial to the Committee on Agriculture 
                        of the House of Representatives and the 
                        Committee on Agriculture, Nutrition, 
                        and Forestry of the Senate.
    (2) The Secretary shall, jointly with the Secretary of 
Labor, implement two pilot projects involving the performance 
of work in return for food stamp benefits in each of the seven 
administrative regions of the Food and Nutrition Service of the 
Department of Agriculture, such projects to be (A) 
appropriately divided in each region between locations that are 
urban and rural in characteristics and among locations selected 
to provide a representative cross-section of political 
subdivisions in the States and (B) submitted for approval prior 
to project implementation, together with the names of the 
agencies or organizations that will be engaged in such 
projects, to the Committee on Agriculture of the House of 
Representatives and the Committee on Agriculture, Nutrition, 
and Forestry of the Senate. Under such pilot projects, any 
person who is subject to the work registration requirements 
pursuant to section 6(d) of this Act, and is a member of a 
household that does not have earned income equal to or 
exceeding the allotment to which the household is otherwise 
entitled pursuant to section 8(a) of this Act, shall be 
ineligible to participate in the food stamp program as a member 
of any household during any month in which such person refuses, 
after not being offered employment in the private sector of the 
economy for more than thirty days (ten days in at least one 
pilot project area designated by the Secretary) after the 
initial registration for employment referred to in section 
[6(d)(1)(i)] 6(d)(1)(A)(i) of this Act, to accept an offer of 
employment from a political subdivision or a prime sponsor 
pursuant to the Comprehensive Employment and Training Act of 
1973, as amended (29 U.S.C. 812), for which employment 
compensation shall be paid in the form of the allotment to 
which the household is otherwise entitled pursuant to section 
8(a) of this Act, with each hour of employment entitling the 
household to a portion of the allotment equal in value to 100 
per centum of the Federal minimum hourly rate under the Fair 
Labor Standards Act of 1938, as amended (29 U.S.C. 206(a)(1)); 
which employment shall not, together with any other hours 
worked in any other capacity by such person exceed forty hours 
a week; and which employment shall not be used by the employer 
to fill a job opening created by the action of such employer in 
laying off or terminating the employment of any regular 
employee not supported under this paragraph in anticipation of 
filling the vacancy so created by hiring an employee or 
employees to be supported under this paragraph: Provided, That 
all of the political subdivision's or prime sponsor's public 
service jobs supported under the Comprehensive Employment and 
Training Act of 1973, as amended (29 U.S.C. 812), are filled 
before such subdivision or sponsor can extend a job offer 
pursuant to this paragraph: Provided further, That the sponsor 
of each such project shall provide the assurances required of 
prime sponsors under section 205(c)(7), (8), (15), (19), and 
(24) of the Comprehensive Employment and Training Act of 1973, 
as amended (29 U.S.C. 845(c)), and the Secretary shall require 
such sponsors to comply with the conditions contained in 
sections 208(a)(1), (4), and (5) and (c) and 703(4) of the 
Comprehensive Employment and Training Act of 1973, as amended 
(29 U.S.C. 848 (a) and (c) and 983). The Secretary and the 
Secretary of Labor shall jointly issue reports to the 
appropriate committees of Congress on the progress of such 
pilot projects no later than six and twelve months following 
enactment of this Act, shall issue interim reports no later 
than October 1, 1979, October 1, 1980, and March 30, 1981, 
shall issue a final report describing the results of such pilot 
projects based upon their operation from their commencement 
through the fiscal year ending September 30, 1981, and shall 
pay to the agencies or organizations operating such pilot 
projects 50 per centum of all administrative costs involved in 
such operation.
          * * * * * * *
    [(d)(1) As used in this subsection, the term 
``qualification period'' means a period of time immediately 
preceding--
            [(A) in the case of a new applicant for benefits 
        under this Act, the date on which application for such 
        benefits is made by the individual; or
            [(B) in the case of an otherwise continuing 
        recipient of coupons under this Act, the date on which 
        such coupons would otherwise be issued to the 
        individual.
    [(2) Upon application of a State or political subdivision 
thereof, the Secretary may conduct one pilot project involving 
the employment requirements described in this subsection in 
each of four project areas selected by the Secretary.
    [(3) Under the pilot projects conducted pursuant to this 
subsection, except as provided in paragraphs (4), (5), and (6), 
an individual who resides in a project area shall not be 
eligible for assistance under this Act if the individual was 
not employed a minimum of twenty hours per week, or did not 
participate in a workfare program established under section 20, 
during a qualification period of--
            [(A) thirty or more consecutive days, in the case 
        of an individual whose benefits under a State or 
        Federal unemployment compensation law were terminated 
        immediately before such qualification period began; or
            [(B) sixty or more consecutive days, in the case of 
        an individual not described in clause (A).
    [(4) The provisions of paragraph (3) shall not apply in the 
case of an individual who--
            [(A) is under eighteen or over fifty-nine years of 
        age;
            [(B) is certified by a physician as physically or 
        mentally unfit for employment;
            [(C) is a parent or other member of a household 
        with responsibility for the care of a dependent child 
        under six years of age or of an incapacitated person;
            [(D) is a parent or other caretaker of a child 
        under six years of age in a household in which there is 
        another parent who, unless covered by clause (A) or 
        (B), or both such clauses, is employed a minimum of 
        twenty hours per week or participating in a workfare 
        program established under section 20;
            [(E) is in compliance with section 6(d) and 
        demonstrates, in a manner prescribed by the Secretary, 
        that the individual is able and willing to accept 
        employment but is unable to obtain such employment; or
            [(F) is a member of any other group described by 
        the Secretary.
    [(5) The Secretary may waive the requirements of paragraph 
(3) in the case of all individuals within all or part of a 
project area if the Secretary finds that such area--
            [(A) has an unemployment rate of over 10 per 
        centum; or
            [(B) does not have a sufficient number of jobs to 
        provide employment for individuals subject to this 
        subsection.
    [(6) An individual who has become ineligible for assistance 
under this Act by reason of paragraph (3) may reestablish 
eligibility for assistance after a period of ineligibility by--
            [(1) becoming employed for a minimum of twenty 
        hours per week during any consecutive thirty-day 
        period; or
            [(2) participating in a workfare program 
        established under section 20 during any consecutive 
        thirty-day period.]
    (d) Employment Initiatives Program.--
            (1) Election to participate.--
                    (A) In general.--Subject to the other 
                provisions of this subsection, a State may 
                elect to carry out an employment initiatives 
                program under this subsection.
                    (B) Requirement.--A State shall be eligible 
                to carry out an employment initiatives program 
                under this subsection only if not less than 50 
                percent of the households that received food 
                stamp benefits during the summer of 1993 also 
                received benefits under a State program funded 
                under part A of title IV of the Social Security 
                Act (42 U.S.C. 601 et seq.) during the summer 
                of 1993.
            (2) Procedure.--
                    (A) In general.--A State that has elected 
                to carry out an employment initiatives program 
                under paragraph (1) may use amounts equal to 
                the food stamp allotments that would otherwise 
                be issued to a household under the food stamp 
                program, but for the operation of this 
                subsection, to provide cash benefits in lieu of 
                the food stamp allotments to the household if 
                the household is eligible under paragraph (3).
                    (B) Payment.--The Secretary shall pay to 
                each State that has elected to carry out an 
                employment initiatives program under paragraph 
                (1) an amount equal to the value of the 
                allotment that each household would be eligible 
                to receive under this Act but for the operation 
                of this subsection.
                    (C) Other provisions.--For purposes of the 
                food stamp program (other than this 
                subsection)--
                            (i) cash assistance under this 
                        subsection shall be considered to be an 
                        allotment; and
                            (ii) each household receiving cash 
                        benefits under this subsection shall 
                        not receive any other food stamp 
                        benefit for the period for which the 
                        cash assistance is provided.
                    (D) Additional payments.--Each State that 
                has elected to carry out an employment 
                initiatives program under paragraph (1) shall--
                            (i) increase the cash benefits 
                        provided to each household under this 
                        subsection to compensate for any State 
                        or local sales tax that may be 
                        collected on purchases of food by any 
                        household receiving cash benefits under 
                        this subsection, unless the Secretary 
                        determines on the basis of information 
                        provided by the State that the increase 
                        is unnecessary on the basis of the 
                        limited nature of the items subject to 
                        the State or local sales tax; and
                            (ii) pay the cost of any increase 
                        in cash benefits required by clause 
                        (i).
            (3) Eligibility.--A household shall be eligible to 
        receive cash benefits under paragraph (2) if an adult 
        member of the household--
                    (A) has worked in unsubsidized employment 
                for not less than the preceding 90 days;
                    (B) has earned not less than $350 per month 
                from the employment referred to in subparagraph 
                (A) for not less than the preceding 90 days;
                    (C)(i) is receiving benefits under a State 
                program funded under part A of title IV of the 
                Social Security Act (42 U.S.C. 601 et seq.); or
                    (ii) was receiving benefits under a State 
                program funded under part A of title IV of the 
                Social Security Act (42 U.S.C. 601 et seq.) at 
                the time the member first received cash 
                benefits under this subsection and is no longer 
                eligible for the State program because of 
                earned income;
                    (D) is continuing to earn not less than 
                $350 per month from the employment referred to 
                in subparagraph (A); and
                    (E) elects to receive cash benefits in lieu 
                of food stamp benefits under this subsection.
            (4) Evaluation.--A State that operates a program 
        under this subsection for 2 years shall provide to the 
        Secretary a written evaluation of the impact of cash 
        assistance under this subsection. The State agency, 
        with the concurrence of the Secretary, shall determine 
        the content of the evaluation.
          * * * * * * *
    [(i)(1) The Secretary may conduct four demonstration 
projects, in both urban and rural areas, under which households 
in which each member receives benefits under a State plan 
approved under part A of title IV of the Social Security Act 
(42 U.S.C. 601 et seq.) (hereafter in this subsection referred 
to as an ``eligible household'') shall be issued monthly 
allotments following the rules and procedures of programs under 
part A of title IV of the Social Security Act, and without 
regard to the eligibility, benefit, and administrative rules 
established under this Act other than those terms and 
conditions specified under this subsection or established by 
the Secretary to ensure program integrity.
    [(2) In carrying out the demonstration projects, the 
Secretary shall ensure the following:
            [(A) The third sentence of section 3(i), 
        subsections (b) and (d)(2) of section 6, the first 
        sentence of section 6(c), paragraphs (1)(B), (3), (4), 
        and (9) of section 11(e), and all applicable provisions 
        of this Act dealing with the treatment of homeless 
        individuals and migrant and seasonal farm worker 
        households shall apply.
            [(B) Assistance under the food stamp program shall 
        be furnished to all eligible households who make 
        application for assistance by providing any information 
        that is needed by the State agency to determine the 
        correct monthly allotment and that has not been 
        provided as part of the household's application for 
        assistance under part A of title IV of the Social 
        Security Act.
            [(C) Eligible households' monthly allotments shall 
        be calculated under section 8(a), except that a 
        household's income shall be determined in accordance 
        with subparagraphs (D) and (E). The allotments shall be 
        provided retroactive to the date of application.
            [(D) For purposes of determining monthly allotments 
        under this subsection, household income shall be the 
        benefit provided under part A of title IV of the Social 
        Security Act and the amount used to determine the 
        household's benefit under such part (not including any 
        amount disregarded for dependent care expenses), except 
        that the amount shall be calculated without regard to 
        section 402(a)(7)(C) of such Act (42 U.S.C. 
        602(a)(7)(C)) and shall not include nonrecurring lump-
        sum income and income deemed or allocated to the 
        household under such part.
            [(E) In computing household income for purposes of 
        determining monthly allotments, all eligible households 
        shall be allowed the standard, earned income, excess 
        shelter, and medical expense deductions provided under 
        section 5(e) in lieu of any earned income disregards 
        provided under section 402(a)(8) of the Social Security 
        Act (42 U.S.C. 602(a)(8)). Alternatively, the Secretary 
        may approve demonstration projects under which 
        households without earned income are allowed such 
        standard, excess shelter, and medical expense 
        deductions, and household income for households with 
        earned income is computed using such deductions and the 
        earned income disregards provided under section 
        402(a)(8) of the Social Security Act to the extent that 
        the Secretary determines they are consistent with the 
        purposes of the demonstration projects required under 
        this subsection.
            [(F) Uninterrupted food stamp assistance shall be 
        provided to households who become ineligible to receive 
        the assistance under this subsection but are determined 
        otherwise eligible for food stamp assistance and to 
        households receiving food stamp assistance other than 
        under this subsection who are determined eligible under 
        this subsection.
            [(G) Any other requirements and administrative 
        procedures equivalent to those applicable under part A 
        of title IV of the Social Security Act (42 U.S.C. 601 
        et seq.) may be used in implementing the demonstration 
        projects required under this subsection, if the 
        Secretary determines that the requirements or 
        procedures further the purposes of this subsection and 
        do not undermine program integrity.
    [(3) In establishing the projects, the Secretary shall 
solicit proposals from, and consult with, interested State and 
local agencies and shall consult with the Secretary of Health 
and Human Services on waivers of Federal rules under part A of 
title IV of the Social Security Act that would assist in 
carrying out the projects required under this subsection.
    [(4) Not later than six months after termination of any 
project, the Secretary shall submit a report to the Committee 
on Agriculture of the House of Representatives and the 
Committee on Agriculture, Nutrition, and Forestry of the Senate 
evaluating the results of the demonstration projects 
established under this subsection, including evaluations of the 
effects on recipients and administrators.
    [(j)] (i)(1)(A) Subject to the availability of funds 
specifically appropriated to carry out this subsection and 
subject to the other provisions of this subsection, during each 
of fiscal years 1992 through 2002, the Secretary shall make 
grants competitively awarded to public or private nonprofit 
organizations to fund food stamp outreach demonstration 
projects (hereinafter in this subsection referred to as the 
``projects'') and related evaluations in areas of the United 
States to increase participation by eligible low-income 
households in the food stamp program. The total amount of 
grants provided during a fiscal year may not exceed $5,000,000. 
Funds appropriated to carry out this subsection shall be used 
in the year during which the funds are appropriated. Not more 
than 20 percent of the funds appropriated to carry out this 
subsection shall be used for evaluations.
          * * * * * * *
    [(k)] (j) The Secretary shall conduct, under such terms and 
conditions as the Secretary shall prescribe, for a period not 
to exceed 4 years, projects to test allowing not more than 
11,000 eligible households, in the aggregate, to accumulate 
resources up to $10,000 each (which shall be excluded from 
consideration as a resource) for later expenditure 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 of the household's residence, or for making major 
repairs to the household's home.
    [(l)] (k) The Secretary shall use up to $4,000,000 of the 
funds provided in advance in appropriations Acts for projects 
authorized by this section to conduct demonstration projects in 
which State or local food stamp agencies test innovative ideas 
for working with State or local law enforcement agencies to 
investigate and prosecute coupon trafficking.
    (l) Research On Optional State Food Assistance Block 
Grant.--The Secretary may conduct research on the effects and 
costs of a State program carried out under section 27.

                    AUTHORIZATION FOR APPROPRIATIONS

    Sec. 18. (a)(1) To carry out this Act, there are authorized 
to be appropriated such sums as are necessary for each of the 
fiscal years [1991 through 1997] 1996 through 2002. Not to 
exceed one-fourth of 1 per centum of the previous year's 
appropriation is authorized in each such fiscal year to carry 
out the provisions of section 17 of this Act, subject to 
paragraph (3). The Secretary shall, by the fifteenth day of 
each month, submit a report to the Committee on Agriculture of 
the House of Representatives and the Committee on Agriculture, 
Nutrition, and Forestry of the Senate setting forth the 
Secretary's best estimate of the second preceding month's 
expenditure, including administrative costs, as well as the 
cumulative totals for the fiscal year. In each monthly report, 
the Secretary shall also state whether there is reason to 
believe that supplemental appropriations will be needed to 
support the operation of the program through the end of the 
fiscal year.
          * * * * * * *

                                WORKFARE

    Sec. 20. (a)  * * *
          * * * * * * *
    [(f) In the event that any person fails to comply with the 
requirements of this section, neither that person nor the 
household to which that person belongs shall be eligible to 
participate in the food stamp program for two months, unless 
that person or another person in the household satisfies all 
outstanding workfare obligations prior to the end of the two-
month disqualification period.]
    (f) Disqualification.--An individual or a household may 
become ineligible under section 6(d)(1) to participate in the 
food stamp program for failing to comply with this section.
          * * * * * * *

SEC. 26. SIMPLIFIED FOOD STAMP PROGRAM.

    (a) Definition of Federal Costs.--In this section, the term 
``Federal costs'' does not include any Federal costs incurred 
under section 17.
    (b) Election.--Subject to subsection (d), a State may elect 
to carry out a Simplified Food Stamp Program (referred to in 
this section as a ``Program''), statewide or in a political 
subdivision of the State, in accordance with this section.
    (c) Operation of Program.--If a State elects to carry out a 
Program, within the State or a political subdivision of the 
State--
            (1) a household in which all members receive 
        assistance under a State program funded under part A of 
        title IV of the Social Security Act (42 U.S.C. 601 et 
        seq.) shall automatically be eligible to participate in 
        the Program; and
            (2) subject to subsection (f), benefits under the 
        Program shall be determined under rules and procedures 
        established by the State under--
                    (A) a State program funded under part A of 
                title IV of the Social Security Act (42 U.S.C. 
                601 et seq.);
                    (B) the food stamp program (other than 
                section 27); or
                    (C) a combination of a State program funded 
                under part A of title IV of the Social Security 
                Act (42 U.S.C. 601 et seq.) and the food stamp 
                program (other than section 27).
    (d) Approval of Program.--
            (1) State plan.--A State agency may not operate a 
        Program unless the Secretary approves a State plan for 
        the operation of the Program under paragraph (2).
            (2) Approval of plan.--The Secretary shall approve 
        any State plan to carry out a Program if the Secretary 
        determines that the plan--
                    (A) complies with this section; and
                    (B) contains sufficient documentation that 
                the plan will not increase Federal costs for 
                any fiscal year.
    (e) Increased Federal Costs.--
            (1) Determination.--During each fiscal year and not 
        later than 90 days after the end of each fiscal year, 
        the Secretary shall determine whether a Program being 
        carried out by a State agency is increasing Federal 
        costs under this Act above the Federal costs incurred 
        under the food stamp program in operation in the State 
        or political sub-division of the State for the fiscal 
        year prior to the implementation of the Program, 
        adjusted for any changes in--
                    (A) participation;
                    (B) the income of participants in the food 
                stamp program that is not attributable to 
                public assistance; and
                    (C) the thrifty food plan under section 
                3(o).
            (2) Notification.--If the Secretary determines that 
        the Program has increased Federal costs under this Act 
        for any fiscal year or any portion of any fiscal year, 
        the Secretary shall notify the State not later than 30 
        days after the Secretary makes the determination under 
        paragraph (1).
            (3) Enforcement.--
                    (A) Corrective action.--Not later than 90 
                days after the date of a notification under 
                paragraph (2), the State shall submit a plan 
                for approval by the Secretary for prompt 
                corrective action that is designed to prevent 
                the Program from increasing Federal costs under 
                this Act.
                    (B) Termination.--If the State does not 
                submit a plan under subparagraph (A) or carry 
                out a plan approved by the Secretary, the 
                Secretary shall terminate the approval of the 
                State agency operating the Program and the 
                State agency shall be ineligible to operate a 
                future Program.
    (f) Rules and Procedures.--
            (1) In general.--In operating a Program, a State or 
        political subdivision of a State may follow the rules 
        and procedures established by the State or political 
        subdivision under a State program funded under part A 
        of title IV of the Social Security Act (42 U.S.C. 601 
        et seq.) or under the food stamp program.
            (2) Standardized deductions.--In operating a 
        Program, a State or political subdivision of a State 
        may standardize the deductions provided under section 
        5(e). In developing the standardized deduction, the 
        State shall consider the work expenses, dependent care 
        costs, and shelter costs of participating households.
            (3) Requirements.--In operating a Program, a State 
        or political subdivision shall comply with the 
        requirements of--
                    (A) subsections (a) through (g) of section 
                7;
                    (B) section 8(a) (except that the income of 
                a household may be determined under a State 
                program funded under part A of title IV of the 
                Social Security Act (42 U.S.C. 601 et seq.));
                    (C) subsection (b) and (d) of section 8;
                    (D) subsections (a), (c), (d), and (n) of 
                section 11;
                    (E) paragraphs (8), (12), (16), (18), (20), 
                (24), and (25) of section 11(e);
                    (F) section 11(e)(10) (or a comparable 
                requirement established by the State under a 
                State program funded under part A of title IV 
                of the Social Security Act (42 U.S.C. 601 et 
                seq.)); and
                    (G) section 16.
            (4) Limitation on eligibility.--Notwithstanding any 
        other provision of this section, a household may not 
        receive benefits under this section as a result of the 
        eligibility of the household under a State program 
        funded under part A of title IV of the Social Security 
        Act (42 U.S.C. 601 et seq.), unless the Secretary 
        determines that any household with income above 130 
        percent of the poverty guidelines is not eligible for 
        the program.

SEC. 27. STATE FOOD ASSISTANCE BLOCK GRANT.

    (a) Definitions.--In this section:
            (1) Food assistance.--The term ``food assistance'' 
        means assistance that may be used only to obtain food, 
        as defined in section 3(g).
            (2) State.--The term ``State'' means each of the 50 
        States, the District of Columbia, Guam, and the Virgin 
        Islands of the United States.
    (b) Establishment.--The Secretary shall establish a program 
to make grants to States in accordance with this section to 
provide--
            (1) food assistance to needy individuals and 
        families residing in the State; and
            (2) funds for administrative costs incurred in 
        providing the assistance.
    (c) Election.--
            (1) In general.--A State may annually elect to 
        participate in the program established under subsection 
        (b) if the State--
                    (A) has fully implemented an electronic 
                benefit transfer system that operates in the 
                entire State;
                    (B) has a payment error rate under section 
                16(c) that is not more than 6 percent as 
                announced most recently by the Secretary; or
                    (C) has a payment error rate in excess of 6 
                percent and agrees to contribute non-Federal 
                funds for the fiscal year of the grant, for 
                benefits and administration of the State's food 
                assistance program, the amount determined under 
                paragraph (2).
            (2) State mandatory contributions.--
                    (A) In general.--In the case of a State 
                that elects to participate in the program under 
                paragraph (1)(C), the State shall agree to 
                contribute, for a fiscal year, an amount equal 
                to--
                            (i) the benefits issued in the 
                        State; multiplied by
                            (ii) the payment error rate of the 
                        State; minus
                    (B)(i) the benefits issued in the State; 
                multiplied by
                    (ii) 6 percent.
                    (B) Determination.--Notwithstanding 
                sections 13 and 14, the calculation of the 
                contribution shall be based solely on the 
                determination of the Secretary of the payment 
                error rate.
                    (C) Data.--For purposes of implementing 
                subparagraph (A) for a fiscal year, the 
                Secretary shall use the data for the most 
                recent fiscal year available.
            (3) Election limitation.--
                    (A) Re-entering food stamp program.--A 
                State that elects to participate in the program 
                under paragraph (1) may in a subsequent year 
                decline to elect to participate in the program 
                and instead participate in the food stamp 
                program in accordance with the other sections 
                of this Act.
                    (B) Limitation.--Subsequent to re-entering 
                the food stamp program under subparagraph (A), 
                the State shall only be eligible to participate 
                in the food stamp program in accordance with 
                the other sections of this Act and shall not be 
                eligible to elect to participate in the program 
                established under subsection (b).
            (4) Program exclusive.--
                    (A) In general.--A State that is 
                participating in the program established under 
                subsection (b) shall not be subject to, or 
                receive any benefit under, this Act except as 
                provided in this section.
                    (B) Contract with federal government.--
                Nothing in this section shall prohibit a State 
                from contracting with the Federal Government 
                for the provision of services or materials 
                necessary to carry out a program under this 
                section.
    (d) Lead Agency.--A State desiring to receive a grant under 
this section shall designate, in an application submitted to 
the Secretary under subsection (e)(1), an appropriate State 
agency responsible for the administration of the program under 
this section as the lead agency.
    (e) Application and Plan.--
            (1) Application.--To be eligible to receive 
        assistance under this section, a State shall prepare 
        and submit to the Secretary an application at such 
        time, in such manner, and containing such information 
        as the Secretary shall by regulation require, 
        including--
                    (A) an assurance that the State will comply 
                with the requirements of this section;
                    (B) a State plan that meets the 
                requirements of paragraph (3); and
                    (C) an assurance that the State will comply 
                with the requirements of the State plan under 
                paragraph (3).
            (2) Annual plan.--The State plan contained in the 
        application under paragraph (1) shall be submitted for 
        approval annually.
            (3) Requirements of plan.--
                    (A) Lead agency.--The State plan shall 
                identify the lead agency.
                    (B) Use of block grant funds.--The State 
                plan shall provide that the State shall use the 
                amounts provided to the State for each fiscal 
                year under this section--
                            (i) to provide food assistance to 
                        needy individuals and families residing 
                        in the State, other than residents of 
                        institutions who are ineligible for 
                        food stamps under section 3(i); and
                            (ii) to pay administrative costs 
                        incurred in providing the assistance.
                    (C) Groups served.--The State plan shall 
                describe how and to what extent the program 
                will serve specific groups of individuals and 
                families and how the treatment will differ from 
                treatment under the food stamp program under 
                the other sections of this Act of the 
                individuals and families, including--
                            (i) elderly individuals and 
                        families;
                            (ii) migrants or seasonal 
                        farmworkers;
                            (iii) homeless individuals and 
                        families;
                            (iv) individuals and families who 
                        live in institutions eligible under 
                        section 3(i);
                            (v) individuals and families with 
                        earnings; and
                            (vi) members of Indian tribes or 
                        tribal organizations.
                    (D) Assistance for entire state.--The State 
                plan shall provide that benefits under this 
                section shall be available throughout the 
                entire State.
                    (E) Notice and hearings.--The State plan 
                shall provide that an individual or family who 
                applies for, or receives, assistance under this 
                section shall be provided with notice of, and 
                an opportunity for a hearing on, any action 
                under this section that adversely affects the 
                individual or family.
                    (F) Assessment of Needs.--The State plan 
                shall assess the food and nutrition needs of 
                needy persons residing in the State.
                    (G) Eligibility standards.--The State plan 
                shall describe the income, resource, and other 
                eligibility standards that are established for 
                the receipt of assistance under this section.
                    (H) Disqualification of fleeing felons.--
                The State plan shall provide for the 
                disqualification of any individual who would be 
                disqualified from participating in the food 
                stamp program under section 6(k).
                    (I) Receiving benefits in more than 1 
                jurisdiction.--The State plan shall establish a 
                system for the exchange of information with 
                other States to verify the identity and receipt 
                of benefits by recipients.
                    (J) Privacy.--The State plan shall provide 
                for safeguarding and restricting the use and 
                disclosure of information about any individual 
                or family receiving assistance under this 
                section.
                    (K) Other information.--The State plan 
                shall contain such other information as may be 
                required by the Secretary.
            (4) Approval of application and plan.--The 
        Secretary shall approve an application and State plan 
        that satisfies the requirements of this section.
    (f) No Individual or Family Entitlement to Assistance.--
Nothing in this section--
            (1) entitles any individual or family to assistance 
        under this section; or
            (2) limits the right of a State to impose 
        additional limitations or conditions on assistance 
        under this section.
    (g) Benefits for Aliens.--
            (1) Eligibility.--No individual who is an alien 
        shall be eligible to receive benefits under a State 
        plan approved under subsection (e)(4) if the individual 
        is not eligible to participate in the food stamp 
        program due to the alien status of the individual.
            (2) Income.--The State plan shall provide that the 
        income of an alien shall be determined in accordance 
        with section 5(i).
    (h) Employment and Training.--
            (1) Work requirements.--No individual or household 
        shall be eligible to receive benefits under a State 
        plan funded under this section if the individual or 
        household is not eligible to participate in the food 
        stamp program under subsection (d) or (o) of section 6.
            (2) Work programs.--Each State shall implement an 
        employment and training program in accordance with the 
        terms and conditions of section 6(d)(4) for individuals 
        under the program and shall be eligible to receive 
        funding under section 16(h).
    (i) Enforcement.--
            (1) Review of compliance with state plan.--The 
        Secretary shall review and monitor State compliance 
        with this section and the State plan approved under 
        subsection (e)(4).
            (2) Noncompliance.--
                    (A) In general.--If the Secretary, after 
                reasonable notice to a State and opportunity 
                for a hearing, finds that--
                            (i) there has been a failure by the 
                        State to comply substantially with any 
                        provision or requirement set forth in 
                        the State plan approved under 
                        subsection (e)(4); or
                            (ii) in the operation of any 
                        program or activity for which 
                        assistance is provided under this 
                        section, there is a failure by the 
                        State to comply substantially with any 
                        provision of this section;
                the Secretary shall notify the State of the 
                finding and that no further grants will be made 
                to the State under this section (or, in the 
                case of noncompliance in the operation of a 
                program or activity, that no further grants to 
                the State will be made with respect to the 
                program or activity) until the Secretary is 
                satisfied that there is no longer any failure 
                to comply or that the noncompliance will be 
                promptly corrected.
                    (B) Other penalties.--In the case of a 
                finding of noncompliance made pursuant to 
                subparagraph (A), the Secretary may, in 
                addition to, or in lieu of, imposing the 
                penalties described in subparagraph (A), impose 
                other appropriate penalties, including 
                recoupment of money improperly expended for 
                purposes prohibited or not authorized by this 
                section and disqualification from the receipt 
                of financial assistance under this section.
                    (C) Notice.--The notice required under 
                subparagraph (A) shall include a specific 
                identification of any additional penalty being 
                imposed under subparagraph (B).
            (3) Issuance of regulations.--The Secretary shall 
        establish by regulation procedures for--
                    (A) receiving, processing, and determining 
                the validity of complaints made to the 
                Secretary concerning any failure of a State to 
                comply with the State plan or any requirement 
                of this section; and
                    (B) imposing penalties under this section.
    (j) Grant.--
            (1) In general.--For each fiscal year, the 
        Secretary shall pay to a State that has an application 
        approved by the Secretary under subsection (e)(4) an 
        amount that is equal to the grant of the State under 
        subsection (m) for the fiscal year.
            (2) Method of Grant.--The Secretary shall make a 
        grant to a State for a fiscal year under this section 
        by issuing 1 or more letters of credit for the fiscal 
        year, with necessary adjustments on account of 
        overpayments or underpayments, as determined by the 
        Secretary.
            (3) Spending of grants by state.--
                    (A) In general.--Except as provided in 
                subparagraph (B), a grant to a State determined 
                under subsection (m)(1) for a fiscal year may 
                be expended by the State only in the fiscal 
                year.
                    (B) Carryover.--The State may reserve up to 
                10 percent of a grant determined under 
                subsection (m)(1) for a fiscal year to provide 
                assistance under this section in subsequent 
                fiscal years, except that the reserved funds 
                may not exceed 30 percent of the total grant 
                received under this section for a fiscal year.
            (4) Food assistance and administrative 
        expenditures.--In each fiscal year, not more than 6 
        percent of the Federal and State funds required to be 
        expended by a State under this section shall be used 
        for administrative expenses.
            (5) Provision of food assistance.--A State may 
        provide food assistance under this section in any 
        manner determined appropriate by the State, such as 
        electronic benefit transfer limited to food purchases, 
        coupons limited to food purchases, or direct provision 
        of commodities.
    (k) Quality Control.--Each State participating in the 
program established under this section shall maintain a system 
in accordance with, and shall be subject to section 16(c), 
including sanctions and eligibility for incentive payment under 
section 16(c), adjusted for State specific characteristics 
under regulations issued by the Secretary.
    (l) Nondiscrimination.--
            (1) In general.--The Secretary shall not provide 
        financial assistance for any program, project, or 
        activity under this section if any person with 
        responsibilities for the operation of the program, 
        project, or activity discriminates with respect to the 
        program, project, or activity because of race, 
        religion, color, national origin, sex, or disability.
            (2) Enforcement.--The powers, remedies, and 
        procedures set forth in title VI of the Civil Rights 
        Act of 1964 (42 U.S.C. 2000d et seq.) may be used by 
        the Secretary to enforce paragraph (1).
    (m) Grant Calculation.--
            (1) State grant.--
                    (A) In general.--Except as provided in 
                subparagraph (B), from the amounts made 
                available under section 18 for each fiscal 
                year, the Secretary shall provide a grant to 
                each State participating in the program 
                established under this section an amount that 
                is equal to the sum of--
                            (i) the greater of, as determined 
                        by the Secretary--
                                    (I) the total dollar value 
                                of all benefits issued under 
                                the food stamp program 
                                established under this Act by 
                                the State during fiscal year 
                                1994; or
                                    (II) the average per fiscal 
                                year of the total dollar value 
                                of all benefits issued under 
                                the food stamp program by the 
                                State during each of fiscal 
                                years 1992 through 1994; and
                            (ii) the greater of, as determined 
                        by the Secretary--
                                    (I) the total amount 
                                received by the State for 
                                administrative costs under 
                                section 16(a) (not including 
                                any adjustment under section 
                                16(c)) for fiscal year 1994; or
                                    (II) the average per fiscal 
                                year of the total amount 
                                received by the State for 
                                administrative costs under 
                                section 16(a) (not including 
                                any adjustment under section 
                                16(c)) for each of fiscal years 
                                1992 through 1994.
                    (B) Insufficient funds.--If the Secretary 
                finds that the total amount of grants to which 
                States would otherwise be entitled for a fiscal 
                year under subparagraph (A) will exceed the 
                amount of funds that will be made available to 
                provide the grants for the fiscal year, the 
                Secretary shall reduce the grants made to 
                States under this subsection, on a pro rata 
                basis, to the extent necessary.
            (2) Reduction.--The Secretary shall reduce the 
        grant of a State by the amount a State has agreed to 
        contribute under subsection (c)(1)(C).

SEC. 28. AVAILABILITY OF COMMODITIES FOR THE EMERGENCY FOOD ASSISTANCE 
                    PROGRAM.

    (a) Purchase of Commodities.--From amounts appropriated 
under this Act, for each of fiscal years 1997 through 2002, the 
Secretary shall purchase $300,000,000 of a variety of 
nutritious and useful commodities of the types that the 
Secretary has the authority to acquire through the Commodity 
Credit Corporation or under section 32 of the Act entitled ``An 
Act to amend the Agricultural Adjustment Act, and for other 
purposes'', approved August 24, 1935 (7 U.S.C. 612c), and 
distribute the commodities to States for distribution in 
accordance with section 214 of the Emergency Food Assistance 
Act of 1983 (Public Law 98-8; 7 U.S.C. 612c note).
    (b) Basis for Commodity Purchases.--In purchasing 
commodities under subsection (a), the Secretary shall, to the 
extent practicable and appropriate, make purchases based on--
            (1) agricultural market conditions;
            (2) preferences and needs of States and 
        distributing agencies; and
            (3) preferences of recipients.
                              ----------                              


   SECTION 2605 OF THE LOW-INCOME HOME ENERGY ASSISTANCE ACT OF 1981

                     applications and requirements

    Sec. 2605. (a)  * * *
          * * * * * * *
    (f)[(1)] Notwithstanding any other provision of law unless 
enacted in express limitation of this paragraph, the amount of 
any home energy assistance payments or allowances provided 
directly to, or indirectly for the benefit of, an eligible 
household under this title shall not be considered income or 
resources of such household (or any member thereof) for any 
purpose under any Federal or State law, including any law 
relating to taxation, [food stamps,] public assistance, or 
welfare programs.
    [(2) For purposes of paragraph (1) of this subsection and 
for purposes of determining any excess shelter expense 
deduction under section 5(e) of the Food Stamp Act of 1977 (7 
U.S.C. 2014(e))--
            [(A) the full amount of such payments or allowances 
        shall be deemed to be expended by such household for 
        heating or cooling expenses, without regard to whether 
        such payments or allowances are provided directly to, 
        or indirectly for the benefit of, such household; and
            [(B) no distinction may be made among households on 
        the basis of whether such payments or allowances are 
        provided directly to, or indirectly for the benefit of, 
        any of such households.]
                              ----------                              


                 EMERGENCY FOOD ASSISTANCE ACT OF 1983

          * * * * * * *

            TITLE II--EMERGENCY FOOD ASSISTANCE ACT OF 1983

          * * * * * * *

                    [ELIGIBILITY RECIPIENT AGENCIES

    [Sec. 201A. As used in this Act the term ``eligible 
recipient agencies'' means public or nonprofit organizations 
that administer--
            [(1) activities and projects providing nutrition 
        assistance to relieve situations of emergency and 
        distress through the provision of food to needy 
        persons, including low-income and unemployed persons 
        (including the activities and projects of charitable 
        institutions, food banks, hunger centers, soup 
        kitchens, and similar public or private nonprofit 
        eligible recipient agencies) hereinafter in this title 
        referred to as ``emergency feeding organizations'';
            [(2) school lunch programs, summer camps for 
        children, and other child nutrition programs providing 
        food service;
            [(3) nutrition projects operating under the Older 
        Americans Act of 1965, including congregate nutrition 
        sites and providers of home-delivered meals;
            [(4) activities and projects that are supported 
        under section 4 of the Agricultural and Consumer 
        Protection Act of 1973;
            [(5) activities of charitable institutions, 
        including hospitals and retirement homes, to the extent 
        that needy persons are served; or
            [(6) disaster relief programs;
and that have been designated by the appropriate State agency, 
or by the Secretary, and approved by the Secretary for 
participation in the program established under this Act.

            [AVAILABILITY OF CCC FLOUR, CORNMEAL, AND CHEESE

    [Sec. 202A. Notwithstanding any other provision of law--
    [(a)(1) To the extent provided in advance in an 
appropriation Act, in fiscal year 1988, flour, cornmeal, and 
cheese acquired by the Commodity Credit Corporation that are in 
excess of quantities needed to--
            [(A) carry out other domestic donation programs,
            [(B) meet other domestic obligations (including 
        quantities needed to carry out a payment-in-kind 
        acreage diversion program),
            [(C) meet international market development and food 
        aid commitments, and
            [(D) carry out the farm price and income 
        stabilization purposes of the Agricultural Adjustment 
        Act of 1938, the Agricultural Act of 1949, and the 
        Commodity Credit Corporation Charter Act,
shall be made available as provided in paragraph (2).
    [(2) The Secretary shall make such excess flour, cornmeal, 
and cheese available in any State, in addition to the normal 
allotment of such commodities (adjusted by any reallocation) 
for fiscal year 1988 under this Act, at the request of the 
chief executive officer of such State who certifies to the 
Secretary that--
            [(A)(i) individuals in such State who are eligible 
        to receive flour, cornmeal, and cheese under this Act 
        are not receiving such commodities distributed under 
        other provisions of this Act, or
            [(ii) the number of unemployed individuals in such 
        State has increased during the most recent 90-day 
        period for which unemployment statistics are available 
        prior to the date of the certification is made, and
            [(B) the distribution of flour, cornmeal, and 
        cheese under this section in such State will not 
        substantially displace the commercial sale of such 
        commodities in such State.
    [(b) Flour, cornmeal, and cheese made available under this 
section by the Secretary shall be made available without charge 
or credit in fiscal year 1988, in a usable form, for use by 
eligible recipient agencies in a State.
    [(c) The amount of cheese made available under this section 
in fiscal year 1988 shall not exceed 14,000,000 pounds.
    [(d) Whenever the Secretary receives a request submitted 
under subsection (a)(2), the Secretary shall immediately notify 
the Committee on Agriculture of the House of Representatives 
and the Committee on Agriculture, Nutrition, and Forestry of 
the Senate that such request was received.]

SEC. 201A. DEFINITIONS.

    In this Act:
            (1) Additional commodities.--The term ``additional 
        commodities'' means commodities made available under 
        section 214 in addition to the commodities made 
        available under sections 202 and 203D.
            (2) Average monthly number of unemployed persons.--
        The term ``average monthly number of unemployed 
        persons'' means the average monthly number of 
        unemployed persons in each State in the most recent 
        fiscal year for which information concerning the number 
        of unemployed persons is available, as determined by 
        the Bureau of Labor Statistics of the Department of 
        Labor.
            (3) Eligible recipient agency.--The term ``eligible 
        recipient agency'' means a public or nonprofit 
        organization--
                    (A) that administers--
                            (i) an emergency feeding 
                        organization;
                            (ii) a charitable institution 
                        (including a hospital and a retirement 
                        home, but excluding a penal 
                        institution) to the extent that the 
                        institution serves needy persons;
                            (iii) a summer camp for children, 
                        or a child nutrition program providing 
                        food service;
                            (iv) a nutrition project operating 
                        under the Older Americans Act of 1965 
                        (42 U.S.C. 3001 et seq.), including a 
                        project that operates a congregate 
                        nutrition site and a project that 
                        provides home-delivered meals; or
                            (v) a disaster relief program;
                    (B) that has been designated by the 
                appropriate State agency, or by the Secretary; 
                and
                    (C) that has been approved by the Secretary 
                for participation in the program established 
                under this Act.
            (4) Emergency feeding organization.--The term 
        ``emergency feeding organization'' means a public or 
        nonprofit organization that administers activities and 
        projects (including the activities and projects of a 
        charitable institution, a food bank, a food pantry, a 
        hunger relief center, a soup kitchen, or a similar 
        public or private nonprofit eligible recipient agency) 
        providing nutrition assistance to relieve situations of 
        emergency and distress through the provision of food to 
        needy persons, including low-income and unemployed 
        persons.
            (5) Food bank.--The term ``food bank'' means a 
        public or charitable institution that maintains an 
        established operation involving the provision of food 
        or edible commodities, or the products of food or 
        edible commodities, to food pantries, soup kitchens, 
        hunger relief centers, or other food or feeding centers 
        that, as an integral part of their normal activities, 
        provide meals or food to feed needy persons on a 
        regular basis.
            (6) Food pantry.--The term ``food pantry'' means a 
        public or private nonprofit organization that 
        distributes food to low-income and unemployed 
        households, including food from sources other than the 
        Department of Agriculture, to relieve situations of 
        emergency and distress.
            (7) Poverty line.--The term ``poverty line'' has 
        the same meaning given the term in section 673(2) of 
        the Community Services Block Grant Act (42 U.S.C. 
        9902(2)).
            (8) Soup kitchen.--The term ``soup kitchen'' means 
        a public or charitable institution that, as an integral 
        part of the normal activities of the institution, 
        maintains an established feeding operation to provide 
        food to needy homeless persons on a regular basis.
            (9) Total value of additional commodities.--The 
        term ``total value of additional commodities'' means 
        the actual cost of all additional commodities made 
        available under section 214 that are paid by the 
        Secretary (including the distribution and processing 
        costs incurred by the Secretary).
            (10) Value of additional commodities allocated to 
        each state.--The term ``value of additional commodities 
        allocated to each State'' means the actual cost of 
        additional commodities made available under section 214 
        and allocated to each State that are paid by the 
        Secretary (including the distribution and processing 
        costs incurred by the Secretary).

SEC. 202A. STATE PLAN.

    (a) In General.--To receive commodities under this Act, a 
State shall submit a plan of operation and administration every 
4 years to the Secretary for approval. The plan may be amended 
at any time, with the approval of the Secretary.
    (b) Requirements.--Each plan shall--
            (1) designate the State agency responsible for 
        distributing the commodities received under this Act;
            (2) set forth a plan of operation and 
        administration to expeditiously distribute commodities 
        under this Act;
            (3) set forth the standards of eligibility for 
        recipient agencies; and
            (4) set forth the standards of eligibility for 
        individual or household recipients of commodities, 
        which shall require--
                    (A) individuals or households to be 
                comprised of needy persons; and
                    (B) individual or household members to be 
                residing in the geographic location served by 
                the distributing agency at the time of applying 
                for assistance.
    (c) State Advisory Board.--The Secretary shall encourage 
each State receiving commodities under this Act to establish a 
State advisory board consisting of representatives of all 
interested entities, both public and private, in the 
distribution of commodities received under this Act in the 
State.
          * * * * * * *

                   FEDERAL AND STATE RESPONSIBILITIES

    Sec. 203B. (a) The Secretary shall, as expeditiously as 
possible, provide the commodities made available under this Act 
in such quantities as can be used without waste to State 
agencies designated by the Governor or other appropriate State 
official for distribution to eligible recipient agencies, 
except that the Secretary may provide such commodities directly 
to eligible recipient agencies and to private companies that 
process such commodities for eligible recipient agencies under 
section [203 and 203A of this Act] 203A. Notwithstanding any 
other provision of this Act, in the distribution of commodities 
under this Act, each State agency shall have the option to give 
priority to existing food bank networks and other organizations 
whose ongoing primary function is to facilitate the 
distribution of food to low-income households, including food 
from sources other than the Department of Agriculture.
          * * * * * * *

                    AUTHORIZATION AND APPROPRIATIONS

    Sec. 204. (a)(1) There are authorized to be appropriated 
$50,000,000 for each of the fiscal years 1991 through 2002, for 
the Secretary to make available to the States [for State and 
local payments for costs associated with the distribution of 
commodities by emergency feeding organizations under this 
title] to pay for the direct and indirect administrative costs 
of the State related to the processing, transporting, and 
distributing to eligible recipient agencies of commodities 
provided by the Secretary under this Act and commodities 
secured from other sources. Funds appropriated under this 
paragraph for any fiscal year shall be allocated to the States 
on an advance basis, dividing such funds among the States in 
the same proportions as the commodities distributed under this 
[title] Act for such fiscal year are divided among the States. 
If a State agency is unable to use all of the funds so 
allocated to it, the Secretary shall reallocate such unused 
funds among the other States. [States may also use funds 
provided under this paragraph to pay for the costs associated 
with the distribution of commodities under the program 
authorized under section 110 of the Hunger Prevention Act of 
1988, and to pay for the costs associated with the distribution 
of additional commodities provided pursuant to section 214.]
    (2) Each State shall make available to emergency feeding 
organizations in the State not less than 40 per centum of the 
funds provided as authorized in paragraph (1) that it has been 
allocated for a fiscal year, as necessary to pay for, or 
provide advance payments to cover, the direct expenses of the 
emergency feeding organizations for distributing commodities to 
needy persons, but only to the extent such expenses are 
actually so incurred by such organizations. As used in this 
paragraph, the term direct expenses'' includes costs of 
transporting, storing, handling, repackaging, processing, and 
distributing commodities incurred after they are received by 
the organization; costs associated with determinations of 
eligibility, verification, and documentation; costs of 
providing information to persons receiving commodities under 
this Act concerning the appropriate storage and preparation of 
such commodities; and costs of recordkeeping, auditing, and 
other administrative procedures required for participation in 
the program under this [title] Act. If a State makes a payment, 
using State funds, to cover direct expenses of emergency 
feeding organizations, the amount of such payment shall be 
counted toward the amount a State must make available for 
direct expenses of emergency feeding organizations under this 
paragraph.
          * * * * * * *
    (4)(A) Except as provided in subparagraph (B), effective 
January 1, 1987, to be eligible to receive funds under this 
subsection, a State shall provide in cash or in kind (according 
to procedures approved by the Secretary for certifying these 
in-kind contributions) from non-Federal sources a contribution 
equal to the difference between--
            (i) the amount of such funds so received; and
            (ii) any part of the amount allocated to the State 
        and paid by the State--
                    (I) to emergency feeding organizations; or
                    (II) for the direct expenses of such 
                organizations;
            for use in carrying out this [title] Act.
          * * * * * * *

                              REGULATIONS

    Sec. 210. (a)  * * *
          * * * * * * *
    (e) The Secretary is authorized to issue final regulations 
without first issuing proposed regulations [(except as 
otherwise provided for in section 214(j))] for public comment 
in order to carry out the provisions of sections 213 and 214. 
If final regulations are issued without such prior public 
comment the Secretary shall permit public comment on such 
regulations, consider pertinent comments, and make 
modifications of such regulations as appropriate not later than 
1 year after the date of enactment of this subsection. Such 
final and modified regulations shall be accompanied by a 
statement of the basis and purpose for such regulations.
          * * * * * * *

                          [PROGRAM TERMINATION

    [Sec. 212. Except for section 207, this Act shall terminate 
on September 30, 2002.]
          * * * * * * *

SEC. 214. REQUIRED PURCHASES OF COMMODITIES.

    [(a) Purpose.--It is the purpose of this section to 
establish a formula so that the amount, measured by their 
value, of additional commodities that are to be allocated to 
each State can be precisely calculated for fiscal years 1991 
through 2002. The share of commodities, as measured by their 
value, to be allocated to each State shall be based 60 percent 
on the number of persons in households within the State having 
incomes below the poverty level and 40 percent on the number of 
unemployed persons within the State.
    [(b) Definitions.--As used in this section--
            [(1) Additional commodities.--The term ``additional 
        commodities'' means commodities purchased under this 
        section in addition to the commodities otherwise made 
        available under sections 202 and 203D(a).
            [(2) Average monthly number of unemployed 
        persons.--The term ``average monthly number of 
        unemployed persons'' refers to the average monthly 
        number of unemployed persons within each State in the 
        most recent fiscal year for which such information is 
        available as determined by the Bureau of Labor 
        Statistics of the Department of Labor.
            [(3) Poverty line.--The term ``poverty line'' has 
        the same meaning given such term in section 673(2) of 
        the Community Services Block Grant Act (42 U.S.C. 
        9902(2)).
            [(4) Total value of additional commodities.--The 
        term ``total value of additional commodities'' means 
        the actual cost (including the distribution and 
        processing costs incurred by the Secretary), as paid by 
        the Secretary, for all additional commodities purchased 
        under subsection (e).
            [(5) Value of additional commodities allocated to 
        each state.--The term ``value of additional commodities 
        allocated to each State'' means the actual cost for 
        additional commodities (including the distribution and 
        processing costs incurred by the Secretary) as paid by 
        the Secretary under this section and allocated to such 
        State.
    [(c) Purchase of Commodities.--The Secretary shall purchase 
a variety of nutritious and useful commodities of the types 
that the Secretary has the authority to acquire through the 
Commodity Credit Corporation or under section 32 of the Act 
entitled ``An Act to amend the Agricultural Adjustment Act, and 
for other purposes'', approved August 24, 1935 (7 U.S.C. 612c 
note), to supplement the commodities otherwise provided under 
the program authorized by this Act.
    [(d) Types and Varieties.--The Secretary shall, to the 
extent practicable and appropriate, purchase types and 
varieties of commodities--
            [(1) with high nutrient density per calorie;
            [(2) that are easily and safely stored;
            [(3) that are convenient to use and consume;
            [(4) that are desired by recipient agencies; and
            [(5) that meet the requirement imposed by section 
        203C(a).
    [(e) Amounts.--To carry out this section there are 
authorized to be appropriated $175,000,000 for fiscal year 
1991, $190,000,000 for fiscal year 1992, and $220,000,000 for 
each of the fiscal years 1993 through 2002 to purchase, 
process, and distribute additional commodities under this 
section. Any amounts provided for fiscal years 1991 through 
2002 shall be available only to the extent and in such amounts 
as are provided in advance in appropriations Acts.
    [(f)] (a) Mandatory Allotments.--In each fiscal year, the 
Secretary shall allot--
            (1) 60 percent of the total value of additional 
        commodities provided to States in a manner such that 
        the value of additional commodities allocated to each 
        State bears the same ratio to 60 percent of the total 
        value of additional commodities as the number of 
        persons in households within the State having incomes 
        below the poverty line bears to the total number of 
        persons in households within all States having incomes 
        below such poverty line, and each State shall be 
        entitled to receive such value of additional 
        commodities; and
            (2) 40 percent of the total value of additional 
        commodities provided to States in a manner such that 
        the value of additional commodities allocated to each 
        State bears the same ratio to 40 percent of the total 
        value of additional commodities as the average monthly 
        number of unemployed persons within the State bears to 
        the average monthly number of unemployed persons within 
        all States during the same fiscal year, and each State 
        shall be entitled to receive such value of additional 
        commodities.
    [(g)] (b) Reallocation.--The Secretary shall notify each 
State of the amount of the additional commodities that such 
State is allotted to receive under [subsection (f) or 
subsection (j) if applicable,] subsection (a) and each State 
shall promptly notify the Secretary if such State determines 
that it will not accept any or all of the commodities made 
available under such allocation. On such a notification by a 
State, the Secretary shall reallocate and distribute the amount 
the State was allocated to receive under the formula prescribed 
in [subsection (f)] subsection (a) but declines to accept. The 
Secretary shall further establish procedures to permit States 
to decline to receive portions of such allocation during each 
fiscal year as the State determines is appropriate and the 
Secretary shall reallocate and distribute such allocation. In 
the event of any drought, flood, hurricane, or other natural 
disaster affecting substantial numbers of persons in a State, 
county, or parish, the Secretary may request that States 
unaffected by such a disaster consider assisting affected 
States by allowing the Secretary to reallocate commodities to 
which each such unaffected State is entitled to States 
containing areas adversely affected by the disaster.
    [(h) Administration.--Subject to subsections (e) and (f), 
or subsection (j) if applicable, purchases under this section 
shall be made by the Secretary at such times and under such 
conditions as the Secretary determines appropriate within each 
fiscal year. All such commodities purchased for each such 
fiscal year shall be delivered at reasonable intervals to 
States based on the allotments calculated under subsection (f), 
or reallocated under subsection (g), or calculated under 
subsection (j) if applicable, before the end of such fiscal 
year. Each State shall be entitled to receive that value of 
additional commodities that results from the application of the 
formula set forth in this section to the total value of 
additional commodities.]
    (c) Administration.--
            (1) In general.--Commodities made available for 
        each fiscal year under this section shall be delivered 
        at reasonable intervals to States based on the grants 
        calculated under subsection (a), or reallocated under 
        subsection (b), before December 31 of the following 
        fiscal year.
            (2) Entitlement.--Each State shall be entitled to 
        receive the value of additional commodities determined 
        under subsection (a).
    [(i)] (d) Maintenance of Effort.--If a State uses its own 
funds to provide commodities or services to organizations 
receiving funds or services under this section, such State 
shall not diminish the level of support it provides to such 
organizations [or reduce the amount of funds available for 
other nutrition programs in the State in each fiscal year].
    [(j) New Formula.--Notwithstanding the provisions of this 
section that set forth the specific formula for allocating 
additional commodities to each State, the Secretary is 
authorized to promulgate a different precise formula, after 
prior notice and comment as required by section 553 of title 5, 
United States Code, only to the extent that--
            [(1) any such formula is effective at the outset 
        of, and throughout any given fiscal year;
            [(2) any such formula can be used to precisely 
        calculate the amount of commodities to be made 
        available to each State by the Secretary for each 
        fiscal year; and
            [(3) such formula provides that each State is 
        entitled to receive that value of additional 
        commodities which results from the application of such 
        formula to the total value of additional commodities.]
          * * * * * * *
                              ----------                              


             SECTION 1571 OF THE FOOD SECURITY ACT OF 1985

                                [report

    [Sec. 1571. Not later than April 1, 1987, the Secretary of 
Agriculture shall report to Congress on the activities of the 
program conducted under the Temporary Emergency Food Assistance 
Act of 1983. Such report shall include information on--
            [(1) the volume and types of commodities 
        distributed under the program;
            [(2) the types of State and local agencies 
        receiving commodities for distribution under the 
        program;
            [(3) the populations served under the program and 
        their characteristics;
            [(4) the Federal, State, and local costs of 
        commodity distribution operations under the program 
        (including transportation, storage, refrigeration, 
        handling, distribution, and administrative costs); and
            [(5) the amount of Federal funds provided to cover 
        State and local costs under the program.]
                              ----------                              


    SECTION 3 OF THE CHARITABLE ASSISTANCE AND FOOD BANK ACT OF 1987

[SEC. 3. FOOD BANK DEMONSTRATION PROJECT.

    [(a) The Secretary of Agriculture shall carry out no less 
than one demonstration project to provide and redistribute 
agricultural commodities and food products thereof as 
authorized under section 32 of the Act entitled ``An Act to 
amend the Agricultural Adjustment Act, and for other 
purposes'', approved August 24, 1935, as amended (7 U.S.C. 
612c), to needy individuals and families through community food 
banks. The Secretary may use a State agency or any other food 
distribution system for such provision or redistribution of 
section 32 agricultural commodities and food products through 
community food banks under a demonstration project.
    [(b) Each food bank participating in the demonstration 
projects under this section shall establish a recordkeeping 
system and internal procedures to monitor the use of 
agricultural commodities and food products provided under this 
section. The Secretary shall develop standards by which the 
feasibility and effectiveness of the project shall be measured, 
and shall conduct an ongoing review of the effectiveness of the 
projects.
    [(c) The Secretary shall determine the quantities, 
varieties, and types of agricultural commodities and food 
products to be made available under this section.
    [(d) This section shall be effective for the period 
beginning on the date of enactment of this Act and ending on 
December 31, 1990.
    [(e) The Secretary shall submit annual progress reports to 
Congress beginning on July 1, 1988, and a final report on July 
1, 1990, regarding each demonstration project carried out under 
this section. Such reports shall include analyses and 
evaluations of the provision and redistribution of agricultural 
commodities and food products under the demonstration projects. 
In addition, the Secretary shall include in the final report 
any recommendations regarding improvements in the provision and 
redistribution of agricultural commodities and food products to 
community food banks and the feasibility of expanding such 
method of provisions and redistribution of agricultural 
commodities and food products to other community food banks.]
                              ----------                              


                     HUNGER PREVENTION ACT OF 1988

          * * * * * * *

                  TITLE I--EMERGENCY HUNGER PREVENTION

          * * * * * * *

         Subtitle B--Soup Kitchens and Other Emergency Food Aid

[SEC. 110. SOUP KITCHENS AND FOOD BANKS.

    [(a) Purpose.--It is the purpose of this section to 
establish a formula so that the amount, measured by their 
value, of additional commodities that are to be provided to 
each State for redistribution to soup kitchens and food banks 
can be precisely calculated for fiscal years 1989 through 2002. 
The share of commodities, as measured by their value, to be 
provided to each State shall be based 60 percent on the number 
of persons in households within the State having incomes below 
the poverty level and 40 percent on the number of unemployed 
persons within the State.
    [(b) Definitions.--As used in this section--
            [(1) Additional commodities.--The term ``additional 
        commodities'' means commodities purchased under this 
        section in addition to the commodities otherwise made 
        available to soup kitchens and food banks providing 
        nutrition assistance to relieve situations of emergency 
        and distress.
            [(2) Average monthly number of unemployed 
        persons.--The term ``average monthly number of 
        unemployed persons'' refers to the average monthly 
        number of unemployed persons within each State in the 
        most recent fiscal year for which such information is 
        available as determined by the Bureau of Labor 
        Statistics of the Department of Labor.
            [(3) Food banks.--The term ``food bank'' refers to 
        public and charitable institutions that maintain an 
        established operation involving the provision of food 
        or edible commodities, or the products thereof, to food 
        pantries, soup kitchens, hunger relief centers, or 
        other food or feeding centers that provide meals or 
        food to needy persons on a regular basis as an integral 
        part of their normal activities.
            [(4) Food pantry.--The term `food pantry' means a 
        public or private nonprofit organization that 
        distributes food to low-income and unemployed 
        households, including food from sources other than the 
        Department of Agriculture, to relieve situations of 
        emergency and distress.
            [(5) Poverty line.--The term ``poverty line'' has 
        the same meaning given such term in section 673(2) of 
        the Community Services Block Grant Act (42 U.S.C. 
        9902(2)).
            [(6) Secretary.--The term ``Secretary'' means the 
        Secretary of Agriculture.
            [(7) Soup kitchens.--The term ``soup kitchens'' 
        refers to public and charitable institutions that 
        maintain an established feeding operation to provide 
        food to needy homeless persons on a regular basis as an 
        integral part of their normal activities.
            [(8) Total value of additional commodities.--The 
        term ``total value of additional commodities'' means 
        the actual cost (including the processing and 
        distribution costs of the Secretary), as paid by the 
        Secretary, for all additional commodities purchased 
        under subsection (c).
            [(9) Value of additional commodities allocated to a 
        state.--The term ``value of additional commodities 
        allocated to a State'' means the actual cost for 
        additional commodities (including the processing and 
        distribution costs of the Secretary) as paid by the 
        Secretary for commodities purchased under this section 
        and allocated to such State.
    [(c) Amounts.--
            [(1) 1991 fiscal year.--During fiscal year 1991, 
        the Secretary shall spend $32,000,000, to purchase, 
        process, and distribute additional commodities to 
        States for distribution to soup kitchens and food banks 
        within a given State that provide nutrition assistance 
        to relieve situations of emergency and distress through 
        the provision of food and meals to needy persons and to 
        other institutions that can demonstrate, in accordance 
        with subsection (j)(3), that they serve predominantly 
        needy persons.
            [(2) Subsequent fiscal years.--There are authorized 
        to be appropriated $40,000,000 for each of the fiscal 
        years 1992 through 2002 to purchase, process, and 
        distribute additional commodities to States for 
        distribution to soup kitchens and food banks within a 
        given State that provide nutrition assistance to 
        relieve situations of emergency and distress through 
        the provision of food and meals to needy persons and to 
        other institutions that can demonstrate, in accordance 
        with subsection (j)(3), that they serve predominantly 
        needy persons. Any amounts provided for fiscal years 
        1992 through 2002 shall be available only to the extent 
        and in such amounts as are provided in advance in 
        appropriations Acts.
            [(3) Food pantries.--In instances in which food 
        banks do not operate within a given State, the State 
        may distribute commodities to food pantries.
    [(d) Mandatory Allotments.--In each fiscal year, the 
Secretary shall allot--
            [(1) 60 percent of the total value of additional 
        commodities provided to States in a manner such that 
        the value of additional commodities allocated to each 
        State bears the same ratio to 60 percent of the total 
        value of additional commodities as the number of 
        persons in households within the State having incomes 
        below the poverty line bears to the total number of 
        persons in households within all States having incomes 
        below such poverty line, and each State shall be 
        entitled to receive such value of additional 
        commodities; and
            [(2) 40 percent of the total value of additional 
        commodities provided to States in a manner such that 
        the value of additional commodities allocated to each 
        State bears the same ratio to 40 percent of the total 
        value of additional commodities as the average monthly 
        number of unemployed persons within the State bears to 
        the average monthly number of unemployed persons within 
        all States during the same fiscal year, and each State 
        shall be entitled to receive such value of additional 
        commodities.
    [(e) Allocation and Reallocation.--
            [(1) Notification by secretary.--The Secretary 
        shall notify each State of the amount of the allocation 
        that the State is entitled to receive under subsection 
        (d).
            [(2) Notification by state.--
                    [(A) Acceptance amount.--A State shall 
                promptly notify the Secretary of the amount of 
                commodities that will be accepted by soup 
                kitchens or food banks. In determining such 
                amount, the State shall give priority to 
                institutions that provide meals to homeless 
                individuals.
                    [(B) Less than full amount accepted.--A 
                State shall promptly notify the Secretary if 
                the State determines that it will not accept 
                the full amount of the allocation under 
                subsection (d) (or a portion thereof).
            [(3) Reallocation.--Whenever the Secretary receives 
        a notification under paragraph (2)(B), the Secretary 
        shall reallocate and distribute the amount of such 
        allocation (or any portion thereof) not accepted, in a 
        fair and equitable manner among the States that accept 
        the full amount of their respective allocations under 
        subsection (d) and that have requested receipt of 
        additional allocations.
    [(f) Administration.--Subject to subsection (c), purchases 
under this section shall be made by the Secretary at such times 
and under such conditions as the Secretary determines to be 
appropriate within each fiscal year. All commodities purchased 
under subsection (c) within each fiscal year shall be provided 
to States prior to the end of each such fiscal year.
    [(g) Maintenance of Effort.--If a State uses its own funds 
to provide commodities or services under this section, such 
State funds shall not be obtained from existing Federal or 
State programs.
    [(h) Increased Commodity Levels and Maintenance of 
Effort.--
            [(1) Increased commodity levels.--Commodities 
        provided under the amendments made by section 104 and 
        under this section shall be in addition to the 
        commodities otherwise provided (through commodity 
        donations traditionally provided by the Secretary or 
        the Commodity Credit Corporation) to emergency feeding 
        organizations. The value of the commodity donations 
        traditionally provided to such organizations shall not 
        be diminished as a result of the purchases required by 
        the amendments made by section 104 and this section.
            [(2) Federal maintenance.--The purchase of 
        commodities required under the amendments made by 
        section 104 and under this section, shall not be made 
        in such a manner as to cause any reduction in the value 
        of the bonus commodities that would otherwise be 
        distributed, in the absence of section 104 and this 
        section, to charitable institutions, or to any other 
        domestic food assistance program, such as the programs 
        authorized under the National School Lunch Act, the 
        Child Nutrition Act of 1966, the Food Stamp Act of 
        1977, or sections 4 and 5 of the Agriculture and 
        Consumer Protection Act of 1973.
            [(3) Other maintenance.--Local agencies receiving 
        commodities purchased under this section shall provide 
        an assurance to the State that donations of foodstuffs 
        from other sources shall not be diminished as a result 
        of the receipt of commodities under this section.
    [(i) New Formula.--Notwithstanding the provisions of this 
section that set forth the specific formula for allocating 
additional commodities to each State, the Secretary is 
authorized to establish a different precise formula, after 
prior notice and comment as required by section 553 of title 5, 
United States Code, only to the extent that--
            [(1) any such formula is effective at the outset 
        of, and throughout any given fiscal year;
            [(2) any such formula can be used to precisely 
        calculate the amount of commodities to be made 
        available to each State by the Secretary for each 
        fiscal year; and
            [(3) such formula provides that each State is 
        entitled to receive that value of additional 
        commodities which results from the application of such 
        formula to the total value of additional commodities.
    [(j) Priority System for State Distribution of 
Commodities.--
            [(1) Soup kitchens.--In distributing commodities 
        under this section, the distributing agency, under 
        procedures determined appropriate by the distributing 
        agency, shall offer, or otherwise make available, its 
        full allocation of commodities for distribution to soup 
        kitchens and other like organizations that serve meals 
        to homeless persons, and to food banks for distribution 
        to such organizations.
            [(2) Institutions that serve only low-income 
        recipients.--If distributing agencies determine that 
        they will not likely exhaust their allocation of 
        commodities under this section through distribution to 
        institutions referred to in paragraph (1), the 
        distributing agencies shall make the remaining 
        commodities available to food banks for distribution to 
        institutions that distribute commodities to the needy. 
        When such institutions distribute commodities to 
        individuals for home consumption, eligibility for such 
        commodities shall be determined through a means test as 
        determined appropriate by the State distributing 
        agency.
            [(3) Other institutions.--If the distributing 
        agency's commodity allocation is not likely to be 
        exhausted after distribution under paragraphs (1) and 
        (2) (as determined by the food bank), food banks may 
        distribute the remaining commodities to institutions 
        that serve meals to needy persons and do not employ a 
        means test to determine eligibility for such meals, 
        provided that the organizations have documented, to the 
        satisfaction of the food bank, that the organizations 
        do, in fact, serve predominantly needy persons.
    [(k) Settlement and Adjustment of Claims.--
            [(1) In general.--The Secretary or a designee of 
        the Secretary shall have the authority to--
                    [(A) determine the amount of, settle, and 
                adjust any claim arising under this section; 
                and
                    [(B) waive such a claim if the Secretary 
                determines that to do so will serve the 
                purposes of this section.
            [(2) Litigation.--Nothing contained in this 
        subsection shall be construed to diminish the authority 
        of the Attorney General of the United States under 
        section 516 of title 28, United States Code, to conduct 
        litigation on behalf of the United States.]
          * * * * * * *

                    TITLE II--NUTRITION IMPROVEMENTS

          * * * * * * *

             [Subtitle C--Food Processing and Distribution

[SEC. 220. ENCOURAGEMENT OF FOOD PROCESSING AND DISTRIBUTION BY 
                    ELIGIBLE RECIPIENT AGENCIES.

    [(a) Solicitation of Applications.--
            [(1) In general.--Not later than 60 days after the 
        date of enactment of this Act, the Secretary of 
        Agriculture shall, to the extent that the Commodity 
        Credit Corporation's inventory levels permit, solicit 
        applications, in accordance with paragraph (2), for 
        surplus commodities available for distribution under 
        section 202 of the Emergency Food Assistance Act of 
        1983 (7 U.S.C. 612c note).
            [(2) Requirements.--The solicitation by the 
        Secretary of Agriculture under paragraph (1) shall be 
        in the form of a request that any eligible recipient 
        agency (as defined in section 201A of the Emergency 
        Food Assistance Act of 1983) submit an application to 
        the Secretary that shall include an assurance that such 
        agency will--
                    [(A) process any agricultural commodity 
                received in response to such application into 
                end-use products suitable for distribution 
                through the Emergency Food Assistance Program;
                    [(B) package such products for use by 
                individual households; and
                    [(C) distribute such products to State 
                agencies responsible for the administration of 
                the Emergency Food Assistance Program, at no 
                cost to the State agency, for distribution 
                through the Emergency Food Assistance Program.
            [(3) Prohibition on payment of processing costs.--
        Funds made available under section 204 of the Emergency 
        Food Assistance Act of 1983 (7 U.S.C. 612c note) or 
        funds of the Commodity Credit Corporation shall not be 
        used to pay any costs incurred for the processing, 
        storage, transportation or distribution of the 
        commodities or end-use products prior to their delivery 
        to the State agency.
    [(b) Review of Applications.--
            [(1) Time of review.--Not later than 60 days after 
        the Secretary of Agriculture receives an application 
        solicited under subsection (a), the Secretary shall 
        approve or disapprove such application.
            [(2) Notice of disapproval.--If the Secretary 
        disapproves the application submitted under subsection 
        (a), the Secretary shall inform the applicant of the 
        reasons for such disapproval.]
          * * * * * * *

                    TITLE V--DEMONSTRATION PROJECTS

          * * * * * * *

[SEC. 502. FOOD BANK DEMONSTRATION PROJECTS.

    [(a) In General.--The Secretary of Agriculture may carry 
out demonstration projects to provide and redistribute to needy 
individuals and families through community food banks and other 
charitable food banks--
            [(1) agricultural commodities or the products 
        thereof made available under section 416 of the 
        Agricultural Act of 1949 (7 U.S.C. 1431); and
            [(2) to the extent practicable, agricultural 
        commodities or the products thereof made available 
        under section 32 of the Act entitled ``An Act to amend 
        the Agricultural Adjustment Act, and for other 
        purposes'', approved August 24, 1935 (7 U.S.C. 612c).
    [(b) Food Types.--The Secretary shall determine the 
quantities, varieties, and types of agricultural commodities 
and products thereof to be made available to community food 
banks under this section.
    [(c) Report.--Not later than July 1, 1990, the Secretary 
shall submit, to the Committee on Agriculture of the House of 
Representatives and the Committee on Agriculture, Nutrition, 
and Forestry of the Senate, a report describing any 
demonstration projects carried out under this section. The 
report shall include an analysis and evaluation of the 
distribution and redistribution of food under the demonstration 
projects and the feasibility of expanding the projects to other 
community food banks.
    [(d) Termination.--The authority provided under this 
section shall terminate on September 30, 1990.
    [(e) Authorization of Appropriations.--There are authorized 
to be appropriated to carry out this section, $400,000 for each 
of the fiscal years 1989 through 1990.]
          * * * * * * *
                              ----------                              


 SECTION 1773 OF THE FOOD, AGRICULTURE, CONSERVATION, AND TRADE ACT OF 
                                  1990

SEC. 1773. COMMODITY DISTRIBUTION REFORM.

    (a)  * * *
          * * * * * * *
    [(f) Report on Entitlement Commodity Processing.--
            [(1) In general.--Not later than January 1, 1992, 
        the Comptroller General of the United States shall 
        submit a report regarding processing of entitlement 
        commodities used in child nutrition programs to the 
        Committee on Agriculture of the House of 
        Representatives and the Committee on Agriculture, 
        Nutrition, and Forestry of the Senate.
            [(2) Consultation.--The Comptroller General shall 
        consult with representatives of State and Federal 
        commodity distribution authorities, local elected 
        school authorities, local school food service 
        authorities, and food processors with experience 
        providing service to child nutrition programs regarding 
        the scope and design of the report.
            [(3) Evaluation.--The report shall evaluate the 
        extent to which--
                    [(A) processing of entitlement commodities 
                occurs in the States;
                    [(B) governmental requirements for 
                participation in the processing vary among 
                States; and
                    [(C) entitlement commodity recipients are 
                satisfied with access to and services provided 
                through entitlement commodity processing.]
                              ----------                              


            SECTION 904 OF THE ELECTRONIC FUND TRANSFER ACT

Sec. 904. Regulations

    (a)  * * *
          * * * * * * *
    [(d) In the event] (d) Applicability to Service Providers 
Other Than Certain Financial Institutions.--
            (1) In general.--In the event that electronic fund 
        transfer services are made available to consumers by a 
        person other than a financial institution holding a 
        consumer's account, the Board shall by regulation 
        assure that the disclosures, protections, 
        responsibilities, and remedies created by this title 
        are made applicable to such persons and services.
            (2) State and local government electronic benefit 
        transfer programs.--
                    (A) Exemption generally.--The disclosures, 
                protections, responsibilities, and remedies 
                established under this title, and any 
                regulation prescribed or order issued by the 
                Board in accordance with this title, shall not 
                apply to any electronic benefit transfer 
                program established under State or local law or 
                administered by a State or local government.
                    (B) Exception for direct deposit into 
                recipient's account.--Subparagraph (A) shall 
                not apply with respect to any electronic funds 
                transfer under an electronic benefit transfer 
                program for deposits directly into a consumer 
                account held by the recipient of the benefit.
                    (C) Rule of construction.--No provision of 
                this paragraph may be construed as--
                            (i) affecting or altering the 
                        protections otherwise applicable with 
                        respect to benefits established by 
                        Federal, State, or local law; or
                            (ii) otherwise superseding the 
                        application of any State or local law.
                    (D) Electronic benefit transfer program 
                defined.--For purposes of this paragraph, the 
                term ``electronic benefit transfer program''--
                            (i) means a program under which a 
                        government agency distributes needs-
                        tested benefits by establishing 
                        accounts to be accessed by recipients 
                        electronically, such as through 
                        automated teller machines, or point-of-
                        sale terminals; and
                            (ii) does not include employment-
                        related payments, including salaries 
                        and pension, retirement, or 
                        unemployment benefits established by 
                        Federal, State, or local governments.
                    TITLE II--COMMITTEE ON COMMERCE

                       table of contents of title

                   Subtitle A--Restructuring Medicaid

Sec. 2001. Short title of subtitle.
Sec. 2002. Finding; goals for medicaid restructuring.
Sec. 2003. Restructuring the medicaid program.
    ``Sec. 1500. Purpose; State plans.

                   ``Part A--Eligibility and Benefits

    ``Sec. 1501. Guaranteed eligibility and benefits.
    ``Sec. 1502. Other provisions relating to eligibility and benefits.
    ``Sec. 1503. Limitations on premiums and cost-sharing.
    ``Sec. 1504. Description of process for developing capitation 
              payment rates.
    ``Sec. 1505. Preventing spousal impoverishment.
    ``Sec. 1506. Preventing family impoverishment.
    ``Sec. 1507. State flexibility.
    ``Sec. 1508. Private rights of action.

                      ``Part B--Payments to States

    ``Sec. 1511. Allotment of funds among States.
    ``Sec. 1512. Payments to States.
    ``Sec. 1513. Limitation on use of funds; disallowance.

          ``Part C--Establishment and Amendment of State Plans

    ``Sec. 1521. Description of strategic objectives and performance 
              goals.
    ``Sec. 1522. Annual reports.
    ``Sec. 1523. Periodic, independent evaluations.
    ``Sec. 1524. Description of process for State plan development.
    ``Sec. 1525. Consultation in State plan development.
    ``Sec. 1526. Submittal and approval of State plans.
    ``Sec. 1527. Submittal and approval of plan amendments.
    ``Sec. 1528. Process for State withdrawal from program.
    ``Sec. 1529. Sanctions for noncompliance.
    ``Sec. 1530. Secretarial authority.

                 ``Part D--Program Integrity and Quality

    ``Sec. 1551. Use of audits to achieve fiscal integrity.
    ``Sec. 1552. Fraud prevention program.
    ``Sec. 1553. Information concerning sanctions taken by State 
              licensing authorities against health care practitioners 
              and providers.
    ``Sec. 1554. State fraud control units.
    ``Sec. 1555. Recoveries from third parties and others.
    ``Sec. 1556. Assignment of rights of payment.
    ``Sec. 1557. Quality assurance requirements for nursing facilities.
    ``Sec. 1558. Other provisions promoting program integrity.

                      ``Part E--General Provisions

    ``Sec. 1571. Definitions.
    ``Sec. 1572. Treatment of territories.
    ``Sec. 1573. Description of treatment of Indian Health Service 
              facilities.
    ``Sec. 1574. Application of certain general provisions.
    ``Sec. 1575. Optional master drug rebate agreements.
Sec. 2004. State election; termination of current program; and 
          transition.
Sec. 2005. Integration demonstration project.

                      Subtitle B--Other Provisions

Part 1--Involvement of Commerce Committee in Federal Government Position 
                               Reductions

Sec. 2101. Involvement of Commerce Committee in Federal government 
          position reductions.

             Part 2--Restricting Public Benefits for Aliens

                SUBPART A--ELIGIBILITY FOR FEDERAL BENEFITS

Sec. 2211. Aliens who are not qualified aliens ineligible for Federal 
          public benefits.
Sec. 2212. Limited eligibility of qualified aliens for medical 
          assistance.
Sec. 2213. Five-year limited eligibility of qualified aliens for Federal 
          means-tested public benefit.
Sec. 2214. Notification.

                       SUBPART B--GENERAL PROVISIONS

Sec. 2221. Definitions.
Sec. 2222. Verification of eligibility for Federal public benefits.

                        Part 3--Energy Assistance

Sec. 2131. Energy assistance.

                   Subtitle A--Restructuring Medicaid

SEC. 2001. SHORT TITLE OF SUBTITLE.

    This subtitle may be cited as the ``Medicaid Restructuring 
Act of 1996''.

SEC. 2002. FINDING; GOALS FOR MEDICAID RESTRUCTURING.

    (a) Finding.--The Congress finds that the National 
Governors' Association on February 6, 1996, adopted unanimously 
and on a bipartisan basis goals to guide the restructuring of 
the medicaid program.
    (b) Goals for Restructuring.--The following are the 4 
primary goals so adopted:
            (1) The basic health care needs of the nation's 
        most vulnerable populations must be guaranteed.
            (2) The growth in health care expenditures must be 
        brought under control.
            (3) States must have maximum flexibility in the 
        design and implementation of cost-effective systems of 
        care.
            (4) States must be protected from unanticipated 
        program costs resulting from economic fluctuations in 
        the business cycle, changing demographics, and natural 
        disasters.

SEC. 2003. RESTRUCTURING THE MEDICAID PROGRAM.

    The Social Security Act is amended by inserting after title 
XIV the following new title:

 ``TITLE XV--PROGRAM OF MEDICAL ASSISTANCE FOR LOW-INCOME INDIVIDUALS 
                              AND FAMILIES

                       ``table of contents of title

``Sec. 1500. Purpose; State plans.

                   ``Part A--Eligibility and Benefits

``Sec. 1501. Guaranteed eligibility and benefits.
``Sec. 1502. Other provisions relating to eligibility and benefits.
``Sec. 1503. Limitations on premiums and cost-sharing.
``Sec. 1504. Description of process for developing capitation payment 
          rates.
``Sec. 1505. Preventing spousal impoverishment.
``Sec. 1506. Preventing family impoverishment.
``Sec. 1507. State flexibility.
``Sec. 1508. Private rights of action.

                      ``Part B--Payments to States

``Sec. 1511. Allotment of funds among States.
``Sec. 1512. Payments to States.
``Sec. 1513. Limitation on use of funds; disallowance.

          ``Part C--Establishment and Amendment of State Plans

``Sec. 1521. Description of strategic objectives and performance goals.
``Sec. 1522. Annual reports.
``Sec. 1523. Periodic, independent evaluations.
``Sec. 1524. Description of process for State plan development.
``Sec. 1525. Consultation in State plan development.
``Sec. 1526. Submittal and approval of State plans.
``Sec. 1527. Submittal and approval of plan amendments.
``Sec. 1528. Process for State withdrawal from program.
``Sec. 1529. Sanctions for noncompliance.
``Sec. 1530. Secretarial authority.

                 ``Part D--Program Integrity and Quality

``Sec. 1551. Use of audits to achieve fiscal integrity.
``Sec. 1552. Fraud prevention program.
``Sec. 1553. Information concerning sanctions taken by State licensing 
          authorities against health care practitioners and providers.
``Sec. 1554. State fraud control units.
``Sec. 1555. Recoveries from third parties and others.
``Sec. 1556. Assignment of rights of payment.
``Sec. 1557. Quality assurance requirements for nursing facilities.
``Sec. 1558. Other provisions promoting program integrity.

                      ``Part E--General Provisions

``Sec. 1571. Definitions.
``Sec. 1572. Treatment of territories.
``Sec. 1573. Description of treatment of Indian Health Service 
          facilities.
``Sec. 1574. Application of certain general provisions.
``Sec. 1575. Optional master drug rebate agreements.

``SEC. 1500. PURPOSE; STATE PLANS.

    ``(a) Purpose.--The purpose of this title is to provide 
funds to States to enable them to provide medical assistance to 
low-income individuals and families in a more effective, 
efficient, and responsive manner.
    ``(b) State Plan Required.--A State is not eligible for 
payment under section 1512 unless the State has submitted to 
the Secretary under part C a plan (in this title referred to as 
a `State plan') that--
            ``(1) sets forth how the State intends to use the 
        funds provided under this title to provide medical 
        assistance to needy individuals and families consistent 
        with the provisions of this title, and
            ``(2) is approved under such part.
    ``(c) Continued Approval.--An approved State plan shall 
continue in effect unless and until--
            ``(1) the State amends the plan under section 1527,
            ``(2) the State terminates participation under this 
        title under section 1528, or
            ``(3) the Secretary finds substantial noncompliance 
        of the plan with the requirements of this title under 
        section 1529.
    ``(d) State Entitlement.--This title constitutes budget 
authority in advance of appropriations Acts and represents the 
obligation of the Federal Government to provide for the payment 
to States of amounts provided under part B.
    ``(e) Effective Date.--No State is eligible for payments 
under section 1512 for any calendar quarter beginning before 
October 1, 1996.

                   ``Part A--Eligibility and Benefits

``SEC. 1501. GUARANTEED ELIGIBILITY AND BENEFITS.

    ``(a) Guaranteed Coverage and Benefits for Certain 
Populations.--
            ``(1) In general.--Each State plan shall provide 
        for making medical assistance available for benefits in 
        the guaranteed benefit package (as defined in paragraph 
        (2)) to individuals within each of the following 
        categories:
                    ``(A) Poor pregnant women.--Pregnant women 
                with family income below 133 percent of the 
                poverty line.
                    ``(B) Children under 6.--Children under 6 
                years of age whose family income does not 
                exceed 133 percent of the poverty line.
                    ``(C) Children 6 to 19.--Children born 
                after September 30, 1983, who are over 5 years 
                of age, but under 19 years of age, whose family 
                income does not exceed 100 percent of the 
                poverty line.
                    ``(D) Disabled individuals.--As elected by 
                the State under paragraph (3), either--
                            ``(i) disabled individuals (as 
                        defined by the State) who meet the 
                        income and resource standards 
                        established under the plan, or
                            ``(ii) individuals who are under 65 
                        years of age, who are disabled (as 
                        determined under section 1614(a)(3)), 
                        and who, using the methodology provided 
                        for determining eligibility for payment 
                        of supplemental security income 
                        benefits under title XVI, meet the 
                        income and resource standards for 
                        payment of such benefits.
                    ``(E) Poor elderly individuals.--Subject to 
                paragraph (4), elderly individuals who, using 
                the methodology provided for determining 
                eligibility for payment of supplemental 
                security income benefits under title XVI, meet 
                the income and resource standards for payment 
                of such benefits.
                    ``(F) Children receiving foster care or 
                adoption assistance.--Subject to paragraph (5), 
                children who meet the requirements for receipt 
                of foster care maintenance payments or adoption 
                assistance under title IV.
                    ``(G) Certain low-income families.--Subject 
                to paragraph (6), individuals and members of 
                families who meet current AFDC income and 
                resource standards (as defined in paragraph 
                (6)(C)) in the State, determined using the 
                methodology for determining eligibility for aid 
                under the State plan under part A or part E of 
                title IV (as in effect as of May 1, 1996).
            ``(2) Guaranteed benefits package.--In this title, 
        the term `guaranteed benefit package' means benefits 
        (in an amount, duration, and scope specified under the 
        State plan) for at least the following categories of 
        services:
                    ``(A) Inpatient and outpatient hospital 
                services.
                    ``(B) Physicians' surgical and medical 
                services.
                    ``(C) Laboratory and x-ray services.
                    ``(D) Nursing facility services.
                    ``(E) Home health care.
                    ``(F) Federally-qualified health center 
                services and rural health clinic services.
                    ``(G) Immunizations for children (in 
                accordance with a schedule for immunizations 
                established by the Health Department of the 
                State in consultation with the State agency 
                responsible for the administration of the 
                plan).
                    ``(H) Prepregnancy family planning services 
                and supplies (as specified by the State).
                    ``(I) Prenatal care.
                    ``(J) Physician assistance services, 
                pediatric and family nurse practitioner 
                services and nurse midwife services.
                    ``(K) EPSDT services (as defined in section 
                1571(e)) for individuals who are under the age 
                of 21.
        A State may establish criteria, including utilization 
        review, and cost effectiveness of alternative covered 
        services, for purposes of specifying the amount, 
        duration, and scope of benefits provided under the 
        State plan.
            ``(3) State election of disabled individuals to be 
        guaranteed coverage.--
                    ``(A) In general.--Each State shall specify 
                in its State plan, before the beginning of each 
                Federal fiscal year, whether to guarantee 
                coverage of disabled individuals under the plan 
                under the option described in paragraph 
                (1)(D)(i) or under the option described in 
                paragraph (1)(D)(ii). An election under this 
                paragraph shall continue in effect for the 
                subsequent fiscal year unless the election is 
                changed before the beginning of the fiscal 
                year.
                    ``(B) Consequences of election.--
                            ``(i) State flexible definition 
                        option.--If a State elects the option 
                        described in paragraph (1)(D)(i) for a 
                        fiscal year--
                                    ``(I) the State plan must 
                                provide under section 1502(c) 
                                for a set aside of funds for 
                                disabled individuals for the 
                                fiscal year, and
                                    ``(II) disabled individuals 
                                are not taken into account in 
                                determining a State 
                                supplemental umbrella allotment 
                                under section 1511(g).
                            ``(ii) SSI definition option.--If a 
                        State elects the option described in 
                        paragraph (1)(D)(ii) for a fiscal 
                        year--
                                    ``(I) section 1502(c) shall 
                                not apply for the fiscal year, 
                                and
                                    ``(II) the State is 
                                eligible for an increase under 
                                section 1511(g) in its outlay 
                                allotment for the fiscal year 
                                based on an increase in the 
                                number of guaranteed and 
                                optional disabled individuals 
                                covered under the plan.
            ``(4) Continuation of special eligibility standards 
        for section 209(b) states.--
                    ``(A) In general.--A section 209(b) State 
                (as defined in subparagraph (B)) may elect to 
                treat any reference in paragraph (1)(E) to 
                `elderly individuals who meet the income and 
                resource standards for the payment of 
                supplemental security income benefits under 
                title XVI' as a reference to `elderly 
                individuals who meet the standards described in 
                the first sentence of section 1902(f) (as in 
                effect on the day before the date of the 
                enactment of this title)'.
                    ``(B) Section 209(b) state defined.--In 
                subparagraph (A), the term `section 209(b) 
                State' means a State to which section 1902(f) 
                applied as of the day before the date of the 
                enactment of this title.
            ``(5) Option for application of current 
        requirements for certain children.--A State may elect 
        to apply paragraph (1)(F) by treating any reference to 
        `requirements for receipt of foster care maintenance 
        payments or adoption assistance under title IV' as a 
        reference to `requirements for receipt of foster care 
        maintenance payments or adoption assistance as in 
        effect under its State plan under part E of title IV as 
        of the date of the enactment of this title'.
            ``(6) Special rules for low-income families.--
                    ``(A) Optional use of lower national 
                average standards.--In the case of a State in 
                which the current AFDC income and resource 
                standards are above the national average of the 
                current AFDC income and resource standards for 
                the 50 States and the District of Columbia, as 
                determined and published by the Secretary, in 
                applying paragraph (1)(G), the State may elect 
                to substitute such national average income and 
                resource standards for the current AFDC income 
                and resource standards in that State.
                    ``(B) Optional eligibility based on link to 
                other assistance.--
                            ``(i) In general.--Subject to 
                        clause (ii), in the case of a State 
                        which maintains a link between 
                        eligibility for aid or assistance under 
                        one or more parts of title IV and 
                        eligibility for medical assistance 
                        under this title, in applying paragraph 
                        (1)(G), the State may elect to treat 
                        any reference in such paragraph to 
                        `individuals and members of families 
                        who meet current AFDC income and 
                        resource standards in the State' as a 
                        reference to `members of families who 
                        are receiving assistance under a State 
                        plan under part A or E of title IV'.
                            ``(ii) Limitation on election.--A 
                        State may only make the election 
                        described in clause (i) if, and so long 
                        as, the State demonstrates to the 
                        satisfaction of the Secretary that the 
                        such election does not result in 
                        Federal expenditures under this title 
                        (taking into account any supplemental 
                        amounts provided pursuant to section 
                        1511(g)) that are greater than the 
                        Federal expenditures that would have 
                        been made under this title if the State 
                        had not made such election.
                    ``(C) Current afdc income and resource 
                standards defined.--In this subsection, the 
                term `current AFDC income and resource 
                standards' means, with respect to a State, the 
                income and resource standards for the payment 
                of assistance under the State plan under part A 
                or E of title IV (as in effect as of May 1, 
                1996).
                    ``(D) Medical assistance required to be 
                provided for 1 year for families becoming 
                ineligible for family assistance due to 
                increased earnings from employment or 
                collection of child support.--A State plan 
                shall provide that if any family becomes 
                ineligible to receive assistance under the 
                State program funded under part A of title IV 
                as a result of increased earnings from 
                employment or as a result of the collection or 
                increased collection of child or spousal 
                support, or a combination thereof, having 
                received such assistance in at least 3 of the 6 
                months immediately preceding the month in which 
                such ineligibility begins, the family shall be 
                eligible for medical assistance under the State 
                plan during the immediately succeeding 12-month 
                period for so long as family income is less 
                than the poverty line, and that the family will 
                be appropriately notified of such eligibility.
            ``(7) Methodology.--Family income shall be 
        determined for purposes of subparagraphs (A) through 
        (C) of paragraph (1) in the same manner (and using the 
        same methodology) as income was determined under the 
        State medicaid plan under section 1902(l) (as in effect 
        as of May 1, 1996).
    ``(b) Guaranteed Coverage of Medicare Premiums and Cost-
Sharing for Certain Medicare Beneficiaries.--
            ``(1) Guaranteed eligibility.--Each State plan 
        shall provide--
                    ``(A) for making medical assistance 
                available for required medicare cost-sharing 
                (as defined in paragraph (2)) for qualified 
                medicare beneficiaries described in paragraph 
                (3);
                    ``(B) for making medical assistance 
                available for payment of medicare premiums 
                under section 1818A for qualified disabled and 
                working individuals described in paragraph (4); 
                and
                    ``(C) for making medical assistance 
                available for payment of medicare premiums 
                under section 1839 for individuals who would be 
                qualified medicare beneficiaries described in 
                paragraph (3) but for the fact that their 
                income exceeds 100 percent, but is less than 
                120 percent, of the poverty line for a family 
                of the size involved.
            ``(2) Required medicare cost-sharing defined.--
                    ``(A) In general.--In this subsection, the 
                term `required medicare cost-sharing' means, 
                with respect to an individual, costs incurred 
                for medicare cost-sharing described in 
                paragraphs (1) through (4) of section 1571(c) 
                (and, at the option of a State, section 
                1571(c)(5)) without regard to whether the costs 
                incurred were for items and services for which 
                medical assistance is otherwise available under 
                the plan.
                    ``(B) Limitation on obligation for certain 
                cost-sharing assistance.--In the case of 
                medical assistance furnished under this title 
                for medicare cost-sharing described in 
                paragraph (2), (3), or (4) of section 1571(c) 
                relating to the furnishing of a service or item 
                to a medicare beneficiary, nothing in this 
                title shall be construed as preventing a State 
                plan--
                            ``(i) from limiting the assistance 
                        to the amount (if any) by which (I) the 
                        amount that is otherwise payable under 
                        the plan for the item or service for 
                        eligible individuals who are not such 
                        medicare beneficiaries (or, if payments 
                        for such items or services are made on 
                        a capitated basis, an amount reasonably 
                        related or derived from such capitated 
                        payment amount), exceeds (II) the 
                        amount of payment (if any) made under 
                        title XVIII with respect to the service 
                        or item, and
                            ``(ii) if the amount described in 
                        subclause (II) of clause (i) exceeds 
                        the amount described in subclause (I) 
                        of such clause, from treating the 
                        amount paid under title XVIII as 
                        payment in full and not requiring or 
                        providing for any additional medical 
                        assistance under this subsection.
            ``(3) Qualified medicare beneficiary defined.--In 
        this subsection, the term `qualified medicare 
        beneficiary' means an individual--
                    ``(A) who is entitled to hospital insurance 
                benefits under part A of title XVIII (including 
                an individual entitled to such benefits 
                pursuant to an enrollment under section 1818, 
                but not including an individual entitled to 
                such benefits only pursuant to an enrollment 
                under section 1818A),
                    ``(B) whose income (as determined under 
                section 1612 for purposes of the supplemental 
                security income program, except as provided in 
                paragraph (5)) does not exceed 100 percent of 
                the poverty line applicable to a family of the 
                size involved, and
                    ``(C) whose resources (as determined under 
                section 1613 for purposes of the supplemental 
                security income program) do not exceed twice 
                the maximum amount of resources that an 
                individual may have and obtain benefits under 
                that program.
            ``(4) Qualified disabled and working individual 
        defined.--In this subsection, the term `qualified 
        disabled and working individual' means an individual--
                    ``(A) who is entitled to enroll for 
                hospital insurance benefits under part A of 
                title XVIII under section 1818A;
                    ``(B) whose income (as determined under 
                section 1612 for purposes of the supplemental 
                security income program) does not exceed 200 
                percent of the poverty line applicable to a 
                family of the size involved;
                    ``(C) whose resources (as determined under 
                section 1613 for purposes of the supplemental 
                security income program) do not exceed twice 
                the maximum amount of resources that an 
                individual or a couple (in the case of an 
                individual with a spouse) may have and obtain 
                benefits for supplemental security income 
                benefits under title XVI; and
                    ``(D) who is not otherwise eligible for 
                medical assistance under this title.
            ``(5) Income determinations.--
                    ``(A) In general.--In determining under 
                this subsection the income of an individual who 
                is entitled to monthly insurance benefits under 
                title II for a transition month (as defined in 
                subparagraph (B)) in a year, such income shall 
                not include any amounts attributable to an 
                increase in the level of monthly insurance 
                benefits payable under such title which have 
                occurred pursuant to section 215(i) for 
                benefits payable for months beginning with 
                December of the previous year.
                    ``(B) Transition month defined.--For 
                purposes of subparagraph (A), the term 
                `transition month' means each month in a year 
                through the month following the month in which 
                the annual revision of the poverty line is 
                published.

``SEC. 1502. OTHER PROVISIONS RELATING TO ELIGIBILITY AND BENEFITS.

    ``(a) Optional Eligibility Groups for Which Umbrella 
Supplemental Funding Is Available.--In addition to the 
guaranteed coverage categories described in section 1501(a)(1), 
the following are population groups with respect to which 
supplemental allotments may be made under section 1511(g), but 
only if (for the individual involved) medical assistance is 
made available under the State plan for the guaranteed benefit 
package (as defined in section 1501(a)(2)):
            ``(1) Certain disabled individuals.--Individuals 
        (not described in section 1501(a)(1)(D)(ii)) who are 
        disabled (as determined under section 1614(a)(3)), 
        covered under the State plan, and meet the eligibility 
        standards for coverage under the State medicaid plan 
        under title XIX (as in effect as of May 1, 1996).
            ``(2) Certain elderly individuals.--Elderly 
        individuals (not described in section 1501(a)(1)(E)) 
        who are covered under the State plan and who meet the 
        eligibility standards for coverage under the State 
        medicaid plan under title XIX (as in effect as of May 
        1, 1996) other than solely on the basis of being an 
        individual described in section 1902(a)(10)(E).
Eligibility under paragraphs (1) and (2) shall be determined 
using the methodologies that are not more restrictive than the 
methodologies used under the State medicaid plan as in effect 
as of May 1, 1996.
    ``(b) Other Provisions Relating to General Eligibility and 
Benefits.--
            ``(1) General description.--Each State plan shall 
        include a description (consistent with this title) of 
        the following:
                    ``(A) Eligibility guidelines for the non-
                guaranteed, non-umbrella population.--The 
                general eligibility guidelines of the plan for 
                eligible low-income individuals who are not 
                covered under subsection (a) or (b) of section 
                1501 or under subsection (a) of this section.
                    ``(B) Scope of assistance.--The amount, 
                duration, and scope of health care services and 
                items covered under the plan, including 
                differences among different eligible population 
                groups.
                    ``(C) Delivery method.--The State's 
                approach to delivery of medical assistance, 
                including a general description of--
                            ``(i) the use (or intended use) of 
                        vouchers, fee-for-service, or managed 
                        care arrangements (such as capitated 
                        health care plans, case management, and 
                        case coordination); and
                            ``(ii) utilization control systems.
                    ``(D) Fee-for-service benefits.--To the 
                extent that medical assistance is furnished on 
                a fee-for-service basis--
                            ``(i) how the State determines the 
                        qualifications of health care providers 
                        eligible to provide such assistance; 
                        and
                            ``(ii) how the State determines 
                        rates of reimbursement for providing 
                        such assistance.
                    ``(E) Cost-sharing.--Beneficiary cost-
                sharing (if any), including variations in such 
                cost-sharing by population group or type of 
                service and financial responsibilities of 
                parents of recipients who are children and the 
                spouses of recipients.
                    ``(F) Utilization incentives.--Incentives 
                or requirements (if any) to encourage the 
                appropriate utilization of services.
                    ``(G) Support for certain hospitals.--
                            ``(i) In general.--With respect to 
                        hospitals described in clause (ii) 
                        located in the State, a description of 
                        the extent to which provisions are made 
                        for expenditures for items and services 
                        furnished by such hospitals and covered 
                        under the State plan.
                            ``(ii) Hospitals described.--A 
                        hospital described in this clause is a 
                        short-term acute care general hospital 
                        or a children's hospital, the low-
                        income utilization rate of which 
                        exceeds the lesser of--
                                    ``(I) 1 standard deviation 
                                above the mean low-income 
                                utilization rate for hospitals 
                                receiving payments under a 
                                State plan in the State in 
                                which such hospital is located, 
                                or
                                    ``(II) 1\1/4\ standard 
                                deviations above the mean low-
                                income utilization rate for 
                                hospitals receiving such 
                                payments in the 50 States and 
                                the District of Columbia.
                            ``(iii) Low-income utilization 
                        rate.--For purposes of clause (ii), the 
                        term `low-income utilization rate' 
                        means, for a hospital, a fraction 
                        (expressed as a percentage), the 
                        numerator of which is the hospital's 
                        number of patient days attributable to 
                        patients who (for such days) were 
                        eligible for medical assistance under a 
                        State plan or were uninsured in a 
                        period, and the denominator of which is 
                        the total number of the hospital's 
                        patient days in that period.
                            ``(iv) Patient days.--For purposes 
                        of clause (iii), the term `patient day' 
                        includes each day in which--
                                    ``(I) an individual, 
                                including a newborn, is an 
                                inpatient in the hospital, 
                                whether or not the individual 
                                is in a specialized ward and 
                                whether or not the individual 
                                remains in the hospital for 
                                lack of suitable placement 
                                elsewhere; or
                                    ``(II) an individual makes 
                                one or more outpatient visits 
                                to the hospital.
            ``(2) Conditions for guarantees and relation of 
        guarantees to financing.--The guarantees of States 
        required under subsection (a) and (b) of section 1501 
        and subsection (d) of this section are subject to the 
        limitations on payment to the States provided under 
        section 1511 (including the provisions of subsection 
        (g), relating to supplemental umbrella allotments). In 
        submitting a plan under this title, a State voluntarily 
        agrees to accept payment amounts provided under such 
        section as full payment from the Federal Government in 
        return for providing for the benefits (including the 
        guaranteed benefit package) under this title.
            ``(3) Secondary payment.--Nothing in this section 
        shall be construed as preventing a State from denying 
        benefits to an individual to the extent such benefits 
        are available to the individual under the medicare 
        program under title XVIII or under another public or 
        private health care insurance program.
            ``(4) Residency requirement.--In the case of an 
        individual who--
                    ``(A) is described in section 1501(a)(1),
                    ``(B) changed residence from another State 
                to the State, and
                    ``(C) has resided in the State for less 
                than 180 days,
        the State may limit the benefits provided to such 
        individual in the guaranteed benefits package under 
        paragraph (2) of section 1501(a) to the amount, 
        duration, and scope of benefits available under the 
        State plan of the individual's previous State of 
        residence.
    ``(c) Set-Aside of Funds for the Low-Income Disabled.--
            ``(1) In general.--In the case of a State that has 
        elected the option described in section 
        1501(a)(1)(D)(i) for a fiscal year, the State plan 
        shall provide that the percentage of funds expended 
        under the plan for medical assistance for eligible low-
        income individuals who are not elderly individuals and 
        who are eligible for such assistance on the basis of a 
        disability, including being blind, for the fiscal year 
        is not less than the minimum low-income-disabled 
        percentage specified in paragraph (2) of the total 
        funds expended under the plan for medical assistance 
        for the fiscal year.
            ``(2) Minimum low-income-disabled percentage.--The 
        minimum low-income-disabled percentage specified in 
        this paragraph for a State is equal to 90 percent of 
        the percentage of the expenditures under title XIX for 
        medical assistance in the State during Federal fiscal 
        year 1995 which was attributable to expenditures for 
        medical assistance for benefits furnished to 
        individuals whose coverage (at such time) was on a 
        basis directly related to disability status, including 
        being blind.
            ``(3) Computations.--States shall calculate the 
        minimum percentage under paragraph (2) in a reasonable 
        manner consistent with reports submitted to the 
        Secretary for the fiscal years involved and medical 
        assistance attributable to the exception provided under 
        section 1903(v)(2) shall not be considered to be 
        expenditures for medical assistance.
    ``(d) Transitional Payment for Federally-Qualified Health 
Center Services and Rural Health Clinic Services.--Each State 
plan shall provide that, for Federally-qualified health center 
services and rural health clinic services (as defined in 
section 1571(f)) furnished under the plan during the first 8 
calendar quarters in which the plan is in effect and for which 
payment is made under the plan, payment shall be made for such 
services at a rate based on 100 percent of costs which are 
reasonable and related to the cost of furnishing such services 
or based on such other tests of reasonableness, as the 
Secretary prescribes in regulations under section 1833(a)(3), 
or, in the case of services to which those regulations do not 
apply, on the same methodology used under section 1833(a)(3).
    ``(e) Preexisting Condition Exclusions.--Notwithstanding 
any other provision of this title--
            ``(1) a State plan may not deny or exclude coverage 
        of any item or service for an eligible individual for 
        benefits under the State plan for such item or service 
        on the basis of a preexisting condition; and
            ``(2) if a State contracts or makes other 
        arrangements (through the eligible individual or 
        through another entity) with a capitated health care 
        organization, insurer, or other entity, for the 
        provision of items or services to eligible individuals 
        under the State plan and the State permits such 
        organization, insurer, or other entity to exclude 
        coverage of a covered item or service on the basis of a 
        preexisting condition, the State shall provide, through 
        its State plan, for such coverage (through direct 
        payment or otherwise) for any such covered item or 
        service denied or excluded on the basis of a 
        preexisting condition.
    ``(f) Solvency Standards for Capitated Health Care 
Organizations.--
            ``(1) In general.--A State may not contract with a 
        capitated health care organization, as defined in 
        section 1504(c)(1), for the provision of medical 
        assistance under a State plan under which the 
        organization is--
                    ``(A) at full financial risk, as defined by 
                the State, unless the organization meets 
                solvency standards established by the State for 
                private health maintenance organizations or is 
                described in paragraph (4) and meets other 
                solvency standards established by the State, or
                    ``(B) is not at such risk, unless the 
                organization meets solvency standards that are 
                established under the State plan.
            ``(2) Treatment of public entities.--Paragraph (1) 
        shall not apply to an organization that is a public 
        entity or if the solvency of such organization is 
        guaranteed by the State.
            ``(3) Transition.--In the case of a capitated 
        health care organization that as of the date of the 
        enactment of this title has entered into a contract 
        with a State for the provision of medical assistance 
        under title XIX under which the organization assumes 
        full financial risk and is receiving capitation 
        payments, paragraph (1) shall not apply to such 
        organization until 3 years after the date of the 
        enactment of this title.
            ``(4) Organization described.--An organization 
        described in this paragraph is a capitated health 
        organization which is (or is controlled by) one or more 
        Federally-qualified health centers or rural health 
        clinics. For purposes of this paragraph, the term 
        `control' means the possession, whether direct or 
        indirect, of the power to direct or cause the direction 
        of the management and policies of a capitated health 
        organization through membership, board representation, 
        or an ownership interest equal to or greater than 50.1 
        percent.
    ``(g) For Services Provided at Federally-Qualified Health 
Centers and Rural Health Clinics.--
            ``(1) In general.--Subject to paragraph (2), a 
        State plan shall provide that the amount of funds 
        expended under the plan for medical assistance for 
        services provided at rural health clinics (as defined 
        in section 1861(aa)(2)) and Federally-qualified health 
        centers (as defined in section 1861(aa)(4)), for 
        eligible low-income individuals for a fiscal year is 
        not less than 85 percent of the average annual 
        expenditures under title XIX for medical assistance in 
        the State during Federal fiscal year 1995 which were 
        attributable to expenditures for medical assistance for 
        rural health clinic services and Federally-qualified 
        health center services (as defined in section 1905(l)).
            ``(2) Alternative minimum set-asides.--
                    ``(A) In general.--Beginning with fiscal 
                year 2001, a State may provide in its State 
                plan (through an amendment to the plan) for a 
                lower percentage of expenditures than the 
                minimum percentages specified in paragraph (1) 
                if the State determines to the satisfaction of 
                the Secretary that--
                            ``(i) the health care needs of the 
                        low-income populations described in 
                        such paragraph who are eligible for 
                        medical assistance under the plan 
                        during the previous fiscal year can be 
                        reasonably met without the expenditure 
                        of the percentage otherwise required to 
                        be expended;
                            ``(ii) the performance goals 
                        established under section 1521 relating 
                        to such population can reasonably be 
                        met with the expenditure of such lower 
                        percentage of funds; and
                            ``(iii) the health care needs of 
                        eligible low-income individuals 
                        residing in medically underserved rural 
                        areas can reasonably be met without the 
                        level of expenditure for such services 
                        otherwise required and the performance 
                        goals established under section 1521 
                        relating to such individuals can 
                        reasonably be met with such lower level 
                        of expenditures.
                    ``(B) Period of application.--The 
                determination under subparagraph (A) shall be 
                made for such period as a State may request, 
                but may not be made for a period of more than 3 
                consecutive Federal fiscal years (beginning 
                with the first fiscal year for which the lower 
                percentage is sought). A new determination must 
                be made under such subparagraph for any 
                subsequent period.

``SEC. 1503. LIMITATIONS ON PREMIUMS AND COST-SHARING.

    ``(a) Limitation on Premiums.--
            ``(1) None for guaranteed population.--The State 
        plan shall not impose any enrollment fee, premium, or 
        similar charge for eligible individuals described in 
        subsection (a) or (b) of section 1501 or section 
        1502(a).
            ``(2) Income-related for other populations.--The 
        State plan may impose an enrollment fee, premium, or 
        similar charge for eligible individuals not described 
        in paragraph (1) if it is related to the individual's 
        income (and does not exceed 2 percent of the 
        individual's gross income).
    ``(b) Limitation on Cost-Sharing.--Subject to subsection 
(c)--
            ``(1) Guaranteed populations.--With respect to 
        individuals covered under subsection (a) or (b) of 
        section 1501 or section 1502, the State may not impose 
        any cost-sharing with respect to items and services 
        unless the amount is nominal in amount. For purposes of 
        this paragraph, an amount is nominal if it does not 
        exceed 6 percent of the amount otherwise payable, or, 
        if greater, 50 cents.
            ``(2) Other populations.--With respect to 
        individuals not described in paragraph (1), the State 
        may not impose any cost-sharing with respect to items 
        and services unless such cost sharing is pursuant to a 
        public cost-sharing schedule and such cost-sharing is 
        not in excess of the average, nominal cost-sharing 
        imposed in the State for health plans offered by health 
        maintenance organizations (and similar organizations) 
        for the same or similar items and services, as 
        determined by the State insurance commissioner.
    ``(c) Certain Cost-Sharing Permitted.--
            ``(1) In general.--Subject to paragraph (2), a 
        State may--
                    ``(A) impose additional cost-sharing to 
                discourage the inappropriate use of emergency 
                medical services delivered through a hospital 
                emergency room, a medical transportation 
                provider, or otherwise;
                    ``(B) impose additional cost-sharing 
                differentially in order to encourage the use of 
                primary and preventive care and discourage 
                unnecessary or less economical care; and
                    ``(C) from imposing additional cost-sharing 
                based on the failure to participate in 
                employment training programs, drug or alcohol 
                abuse treatment, counseling programs, or other 
                programs promoting personal responsibility.
            ``(2) Limitation.--The additional cost-sharing 
        imposed under paragraph (1) may not result--
                    ``(A) in the case of an individual 
                described in subsection (b)(1), in aggregate 
                cost-sharing that exceeds the maximum amount of 
                cost-sharing that may be imposed under 
                subsection (b)(2) (determined without regard to 
                this subsection); or
                    ``(B) in the case of an individual 
                described in subsection (b)(2), in aggregate 
                cost-sharing that exceeds twice the maximum 
                amount of cost-sharing that may be imposed 
                under such subsection (determined without 
                regard to this subsection).
    ``(d) Prohibition on Balance Billing.--An individual 
eligible for benefits for items and services under the State 
plan who is furnished such an items or service by a provider 
under the plan may not be billed by the provider for such item 
or service, other than such amount of cost-sharing as is 
permitted with this section.
    ``(e) Cost-Sharing Defined.--In this section, the term 
`cost-sharing' includes copayments, deductibles, coinsurance, 
and other charges for the provision of health care services.

``SEC. 1504. DESCRIPTION OF PROCESS FOR DEVELOPING CAPITATION PAYMENT 
                    RATES.

    ``(a) In General.--If a State contracts (or intends to 
contract) with a capitated health care organization (as defined 
in subsection (c)(1)) under which the State makes a capitation 
payment (as defined in subsection (c)(2)) to the organization 
for providing or arranging for the provision of medical 
assistance under the State plan for a group of services, 
including at least inpatient hospital services and physicians' 
services, the plan shall include a description of the 
following:
            ``(1) Use of actuarial science.--The extent and 
        manner in which the State uses actuarial science--
                    ``(A) to analyze and project health care 
                expenditures and utilization for individuals 
                enrolled (or to be enrolled) in such an 
                organization under the State plan, and
                    ``(B) to develop capitation payment rates, 
                including a brief description of the general 
                methodologies used by actuaries.
            ``(2) Qualifications of organizations.--The general 
        qualifications, including any accreditation, State 
        licensure or certification, or provider network 
        standards, required by the State for participation of 
        capitated health care organizations under the State 
        plan.
            ``(3) Dissemination process.--The process used by 
        the State under subsection (b) and otherwise to 
        disseminate, before entering into contracts with 
        capitated health care organizations, actuarial 
        information to such organizations on the historical 
        fee-for-service costs (or, if not available, other 
        recent financial data associated with providing covered 
        services) and utilization associated with individuals 
        described in paragraph (1)(A).
    ``(b) Public Notice and Comment.--Under the State plan the 
State shall provide a process for providing, before the 
beginning of each contract year--
            ``(1) public notice of--
                    ``(A) the amounts of the capitation 
                payments (if any) made under the plan for the 
                contract year preceding the public notice, and
                    ``(B)(i) the information described under 
                subsection (a)(1) with respect to capitation 
                payments for the contract year involved, or 
                (ii) amounts of the capitation payments the 
                State expects to make for the contract year 
                involved,
        unless such information is designated as proprietary 
        and not subject to public disclosure under State law, 
        and
            ``(2) an opportunity for receiving public comment 
        on the amounts and information for which notice is 
        provided under paragraph (1).
    ``(c) Definitions.--In this title:
            ``(1) Capitated health care organization.--The term 
        `capitated health care organization' means a health 
        maintenance organization or any other entity (including 
        a health insuring organization, managed care 
        organization, prepaid health plan, integrated service 
        network, or similar entity) which under State law is 
        permitted to accept capitation payments for providing 
        (or arranging for the provision of) a group of items 
        and services including at least inpatient hospital 
        services and physicians' services.
            ``(2) Capitation payment.--The term `capitation 
        payment' means, with respect to payment, payment on a 
        prepaid capitation basis or any other risk basis to an 
        entity for the entity's provision (or arranging for the 
        provision) of a group of items and services, including 
        at least inpatient hospital services and physicians' 
        services.

``SEC. 1505. PREVENTING SPOUSAL IMPOVERISHMENT.

    ``(a) Special Treatment for Institutionalized Spouses.--
            ``(1) Supersedes other provisions.--In determining 
        the eligibility for medical assistance of an 
        institutionalized spouse (as defined in subsection 
        (h)(1)), the provisions of this section supersede any 
        other provision of this title which is inconsistent 
        with them.
            ``(2) Does not affect certain determinations.--
        Except as this section specifically provides, this 
        section does not apply to--
                    ``(A) the determination of what constitutes 
                income or resources, or
                    ``(B) the methodology and standards for 
                determining and evaluating income and 
                resources.
            ``(3) No application in commonwealths and 
        territories.--This section shall only apply to a State 
        that is one of the 50 States or the District of 
        Columbia.
    ``(b) Rules for Treatment of Income.--
            ``(1) Separate treatment of income.--During any 
        month in which an institutionalized spouse is in the 
        institution, except as provided in paragraph (2), no 
        income of the community spouse shall be deemed 
        available to the institutionalized spouse.
            ``(2) Attribution of income.--In determining the 
        income of an institutionalized spouse or community 
        spouse for purposes of the post-eligibility income 
        determination described in subsection (d), except as 
        otherwise provided in this section and regardless of 
        any State laws relating to community property or the 
        division of marital property, the following rules 
        apply:
                    ``(A) Non-trust property.--Subject to 
                subparagraphs (C) and (D), in the case of 
                income not from a trust, unless the instrument 
                providing the income otherwise specifically 
                provides--
                            ``(i) if payment of income is made 
                        solely in the name of the 
                        institutionalized spouse or the 
                        community spouse, the income shall be 
                        considered available only to that 
                        respective spouse,
                            ``(ii) if payment of income is made 
                        in the names of the institutionalized 
                        spouse and the community spouse, \1/2\ 
                        of the income shall be considered 
                        available to each of them, and
                            ``(iii) if payment of income is 
                        made in the names of the 
                        institutionalized spouse or the 
                        community spouse, or both, and to 
                        another person or persons, the income 
                        shall be considered available to each 
                        spouse in proportion to the spouse's 
                        interest (or, if payment is made with 
                        respect to both spouses and no such 
                        interest is specified, \1/2\ of the 
                        joint interest shall be considered 
                        available to each spouse).
                    ``(B) Trust property.--In the case of a 
                trust--
                            ``(i) except as provided in clause 
                        (ii), income shall be attributed in 
                        accordance with the provisions of this 
                        title; and
                            ``(ii) income shall be considered 
                        available to each spouse as provided in 
                        the trust, or, in the absence of a 
                        specific provision in the trust--
                                    ``(I) if payment of income 
                                is made solely to the 
                                institutionalized spouse or the 
                                community spouse, the income 
                                shall be considered available 
                                only to that respective spouse,
                                    ``(II) if payment of income 
                                is made to both the 
                                institutionalized spouse and 
                                the community spouse, \1/2\ of 
                                the income shall be considered 
                                available to each of them, and
                                    ``(III) if payment of 
                                income is made to the 
                                institutionalized spouse or the 
                                community spouse, or both, and 
                                to another person or persons, 
                                the income shall be considered 
                                available to each spouse in 
                                proportion to the spouse's 
                                interest (or, if payment is 
                                made with respect to both 
                                spouses and no such interest is 
                                specified, \1/2\ of the joint 
                                interest shall be considered 
                                available to each spouse).
                    ``(C) Property with no instrument.--In the 
                case of income not from a trust in which there 
                is no instrument establishing ownership, 
                subject to subparagraph (D), \1/2\ of the 
                income shall be considered to be available to 
                the institutionalized spouse and \1/2\ to the 
                community spouse.
                    ``(D) Rebutting ownership.--The rules of 
                subparagraphs (A) and (C) are superseded to the 
                extent that an institutionalized spouse can 
                establish, by a preponderance of the evidence, 
                that the ownership interests in income are 
                other than as provided under such 
                subparagraphs.
    ``(c) Rules for Treatment of Resources.--
            ``(1) Computation of spousal share at time of 
        institutionalization.--
                    ``(A) Total joint resources.--There shall 
                be computed (as of the beginning of the first 
                continuous period of institutionalization of 
                the institutionalized spouse)--
                            ``(i) the total value of the 
                        resources to the extent either the 
                        institutionalized spouse or the 
                        community spouse has an ownership 
                        interest, and
                            ``(ii) a spousal share which is 
                        equal to \1/2\ of such total value.
                    ``(B) Assessment.--At the request of an 
                institutionalized spouse or community spouse, 
                at the beginning of the first continuous period 
                of institutionalization of the 
                institutionalized spouse and upon the receipt 
                of relevant documentation of resources, the 
                State shall promptly assess and document the 
                total value described in subparagraph (A)(i) 
                and shall provide a copy of such assessment and 
                documentation to each spouse and shall retain a 
                copy of the assessment for use under this 
                section. If the request is not part of an 
                application for medical assistance under this 
                title, the State may, at its option as a 
                condition of providing the assessment, require 
                payment of a fee not exceeding the reasonable 
                expenses of providing and documenting the 
                assessment. At the time of providing the copy 
                of the assessment, the State shall include a 
                notice indicating that the spouse will have a 
                right to a fair hearing under subsection 
                (e)(2).
            ``(2) Attribution of resources at time of initial 
        eligibility determination.--In determining the 
        resources of an institutionalized spouse at the time of 
        application for medical assistance under this title, 
        regardless of any State laws relating to community 
        property or the division of marital property--
                    ``(A) except as provided in subparagraph 
                (B), all the resources held by either the 
                institutionalized spouse, community spouse, or 
                both, shall be considered to be available to 
                the institutionalized spouse, and
                    ``(B) resources shall be considered to be 
                available to an institutionalized spouse, but 
                only to the extent that the amount of such 
                resources exceeds the amount computed under 
                subsection (f)(2)(A) (as of the time of 
                application for medical assistance).
            ``(3) Assignment of support rights.--The 
        institutionalized spouse shall not be ineligible by 
        reason of resources determined under paragraph (2) to 
        be available for the cost of care where--
                    ``(A) the institutionalized spouse has 
                assigned to the State any rights to support 
                from the community spouse,
                    ``(B) the institutionalized spouse lacks 
                the ability to execute an assignment due to 
                physical or mental impairment but the State has 
                the right to bring a support proceeding against 
                a community spouse without such assignment, or
                    ``(C) the State determines that denial of 
                eligibility would work an undue hardship.
            ``(4) Separate treatment of resources after 
        eligibility for medical assistance established.--During 
        the continuous period in which an institutionalized 
        spouse is in an institution and after the month in 
        which an institutionalized spouse is determined to be 
        eligible for medical assistance under this title, no 
        resources of the community spouse shall be deemed 
        available to the institutionalized spouse.
            ``(5) Resources defined.--In this section, the term 
        `resources' does not include--
                    ``(A) resources excluded under subsection 
                (a) or (d) of section 1613, and
                    ``(B) resources that would be excluded 
                under section 1613(a)(2)(A) but for the 
                limitation on total value described in such 
                section.
    ``(d) Protecting Income for Community Spouse.--
            ``(1) Allowances to be offset from income of 
        institutionalized spouse.--After an institutionalized 
        spouse is determined or redetermined to be eligible for 
        medical assistance, in determining the amount of the 
        spouse's income that is to be applied monthly to 
        payment for the costs of care in the institution, there 
        shall be deducted from the spouse's monthly income the 
        following amounts in the following order:
                    ``(A) A personal needs allowance (described 
                in paragraph (2)(A)), in an amount not less 
                than the amount specified in paragraph (2)(C).
                    ``(B) A community spouse monthly income 
                allowance (as defined in paragraph (3)), but 
                only to the extent income of the 
                institutionalized spouse is made available to 
                (or for the benefit of) the community spouse.
                    ``(C) A family allowance, for each family 
                member, equal to at least \1/3\ of the amount 
                by which the amount described in paragraph 
                (4)(A)(i) exceeds the amount of the monthly 
                income of that family member.
                    ``(D) Amounts for incurred expenses for 
                medical or remedial care for the 
                institutionalized spouse as provided under 
                paragraph (6).
        In subparagraph (C), the term `family member' only 
        includes minor or dependent children, dependent 
        parents, or dependent siblings of the institutionalized 
        or community spouse who are residing with the community 
        spouse.
            ``(2) Personal needs allowance.--
                    ``(A) In general.--The State plan must 
                provide that, in the case of an 
                institutionalized individual or couple 
                described in subparagraph (B), in determining 
                the amount of the individual's or couple's 
                income to be applied monthly to payment for the 
                cost of care in an institution, there shall be 
                deducted from the monthly income (in addition 
                to other allowances otherwise provided under 
                the plan) a monthly personal needs allowance--
                            ``(i) which is reasonable in amount 
                        for clothing and other personal needs 
                        of the individual (or couple) while in 
                        an institution, and
                            ``(ii) which is not less (and may 
                        be greater) than the minimum monthly 
                        personal needs allowance described in 
                        subparagraph (C).
                    ``(B) Institutionalized individual or 
                couple defined.--In this paragraph, the term 
                `institutionalized individual or couple' means 
                an individual or married couple--
                            ``(i) who is an inpatient (or who 
                        are inpatients) in a medical 
                        institution or nursing facility for 
                        which payments are made under this 
                        title throughout a month, and
                            ``(ii) who is or are determined to 
                        be eligible for medical assistance 
                        under the State plan.
                    ``(C) Minimum allowance.--The minimum 
                monthly personal needs allowance described in 
                this subparagraph is $40 for an 
                institutionalized individual and $80 for an 
                institutionalized couple (if both are aged, 
                blind, or disabled, and their incomes are 
                considered available to each other in 
                determining eligibility).
            ``(3) Community spouse monthly income allowance 
        defined.--
                    ``(A) In general.--In this section (except 
                as provided in subparagraph (B)), the community 
                spouse monthly income allowance for a community 
                spouse is an amount by which--
                            ``(i) except as provided in 
                        subsection (e), the minimum monthly 
                        maintenance needs allowance 
                        (established under and in accordance 
                        with paragraph (4)) for the spouse, 
                        exceeds
                            ``(ii) the amount of monthly income 
                        otherwise available to the community 
                        spouse (determined without regard to 
                        such an allowance).
                    ``(B) Court ordered support.--If a court 
                has entered an order against an 
                institutionalized spouse for monthly income for 
                the support of the community spouse, the 
                community spouse monthly income allowance for 
                the spouse shall be not less than the amount of 
                the monthly income so ordered.
            ``(4) Establishment of minimum monthly maintenance 
        needs allowance.--
                    ``(A) In general.--Each State shall 
                establish a minimum monthly maintenance needs 
                allowance for each community spouse which, 
                subject to subparagraph (B), is equal to or 
                exceeds--
                            ``(i) 150 percent of \1/12\ of the 
                        poverty line applicable to a family 
                        unit of 2 members, plus
                            ``(ii) an excess shelter allowance 
                        (as defined in paragraph (4)).
                A revision of the poverty line referred to in 
                clause (i) shall apply to medical assistance 
                furnished during and after the second calendar 
                quarter that begins after the date of 
                publication of the revision.
                    ``(B) Cap on minimum monthly maintenance 
                needs allowance.--The minimum monthly 
                maintenance needs allowance established under 
                subparagraph (A) may not exceed $1,500 (subject 
                to adjustment under subsections (e) and (g)).
            ``(5) Excess shelter allowance defined.--In 
        paragraph (4)(A)(ii), the term `excess shelter 
        allowance' means, for a community spouse, the amount by 
        which the sum of--
                    ``(A) the spouse's expenses for rent or 
                mortgage payment (including principal and 
                interest), taxes and insurance and, in the case 
                of a condominium or cooperative, required 
                maintenance charge, for the community spouse's 
                principal residence, and
                    ``(B) the standard utility allowance (used 
                by the State under section 5(e) of the Food 
                Stamp Act of 1977) or, if the State does not 
                use such an allowance, the spouse's actual 
                utility expenses,
        exceeds 30 percent of the amount described in paragraph 
        (4)(A)(i), except that, in the case of a condominium or 
        cooperative, for which a maintenance charge is included 
        under subparagraph (A), any allowance under 
        subparagraph (B) shall be reduced to the extent the 
        maintenance charge includes utility expenses.
            ``(6) Treatment of incurred expenses.--With respect 
        to the post-eligibility treatment of income under this 
        section, there shall be disregarded reparation payments 
        made by the Federal Republic of Germany and, there 
        shall be taken into account amounts for incurred 
        expenses for medical or remedial care that are not 
        subject to payment by a third party, including--
                    ``(A) medicare and other health insurance 
                premiums, deductibles, or coinsurance, and
                    ``(B) necessary medical or remedial care 
                recognized under State law but not covered 
                under the State plan under this title, subject 
                to reasonable limits the State may establish on 
                the amount of these expenses.
    ``(e) Notice and Fair Hearing.--
            ``(1) Notice.--Upon--
                    ``(A) a determination of eligibility for 
                medical assistance of an institutionalized 
                spouse, or
                    ``(B) a request by either the 
                institutionalized spouse, or the community 
                spouse, or a representative acting on behalf of 
                either spouse,
        each State shall notify both spouses (in the case 
        described in subparagraph (A)) or the spouse making the 
        request (in the case described in subparagraph (B)) of 
        the amount of the community spouse monthly income 
        allowance (described in subsection (d)(1)(B)), of the 
        amount of any family allowances (described in 
        subsection (d)(1)(C)), of the method for computing the 
        amount of the community spouse resources allowance 
        permitted under subsection (f), and of the spouse's 
        right to a fair hearing under the State plan respecting 
        ownership or availability of income or resources, and 
        the determination of the community spouse monthly 
        income or resource allowance.
            ``(2) Fair hearing.--
                    ``(A) In general.--If either the 
                institutionalized spouse or the community 
                spouse is dissatisfied with a determination 
                of--
                            ``(i) the community spouse monthly 
                        income allowance;
                            ``(ii) the amount of monthly income 
                        otherwise available to the community 
                        spouse (as applied under subsection 
                        (d)(3)(A)(ii));
                            ``(iii) the computation of the 
                        spousal share of resources under 
                        subsection (c)(1);
                            ``(iv) the attribution of resources 
                        under subsection (c)(2); or
                            ``(v) the determination of the 
                        community spouse resource allowance (as 
                        defined in subsection (f)(2));
                such spouse is entitled to a fair hearing under 
                the State plan with respect to such 
                determination if an application for benefits 
                under this title has been made on behalf of the 
                institutionalized spouse. Any such hearing 
                respecting the determination of the community 
                spouse resource allowance shall be held within 
                30 days of the date of the request for the 
                hearing.
                    ``(B) Revision of minimum monthly 
                maintenance needs allowance.--If either such 
                spouse establishes that the community spouse 
                needs income, above the level otherwise 
                provided by the minimum monthly maintenance 
                needs allowance, due to exceptional 
                circumstances resulting in significant 
                financial duress, there shall be substituted, 
                for the minimum monthly maintenance needs 
                allowance in subsection (d)(3)(A)(i), an amount 
                adequate to provide such additional income as 
                is necessary.
                    ``(C) Revision of community spouse resource 
                allowance.--If either such spouse establishes 
                that the community spouse resource allowance 
                (in relation to the amount of income generated 
                by such an allowance) is inadequate to raise 
                the community spouse's income to the minimum 
                monthly maintenance needs allowance, there 
                shall be substituted, for the community spouse 
                resource allowance under subsection (f)(2), an 
                amount adequate to provide such a minimum 
                monthly maintenance needs allowance.
    ``(f) Permitting Transfer of Resources to Community 
Spouse.--
            ``(1) In general.--An institutionalized spouse may, 
        without regard to any other provision of the State plan 
        to the contrary, transfer an amount equal to the 
        community spouse resource allowance (as defined in 
        paragraph (2)), but only to the extent the resources of 
        the institutionalized spouse are transferred to, or for 
        the sole benefit of, the community spouse. The transfer 
        under the preceding sentence shall be made as soon as 
        practicable after the date of the initial determination 
        of eligibility, taking into account such time as may be 
        necessary to obtain a court order under paragraph (3).
            ``(2) Community spouse resource allowance 
        defined.--In paragraph (1), the `community spouse 
        resource allowance' for a community spouse is an amount 
        (if any) by which--
                    ``(A) the greatest of--
                            ``(i) $12,000 (subject to 
                        adjustment under subsection (g)), or, 
                        if greater (but not to exceed the 
                        amount specified in clause (ii)(II)) an 
                        amount specified under the State plan,
                            ``(ii) the lesser of (I) the 
                        spousal share computed under subsection 
                        (c)(1), or (II) $60,000 (subject to 
                        adjustment under subsection (g)),
                            ``(iii) the amount established 
                        under subsection (e)(2), or
                            ``(iv) the amount transferred under 
                        a court order under paragraph (3);
                exceeds
                    ``(B) the amount of the resources otherwise 
                available to the community spouse (determined 
                without regard to such an allowance).
            ``(3) Transfers under court orders.--If a court has 
        entered an order against an institutionalized spouse 
        for the support of the community spouse, any provisions 
        under the plan relating to transfers or disposals of 
        assets for less than fair market value shall not apply 
        to amounts of resources transferred pursuant to such 
        order for the support of the spouse or a family member 
        (as defined in subsection (d)(1)).
    ``(g) Indexing Dollar Amounts.--For services furnished 
during a calendar year after 1989, the dollar amounts specified 
in subsections (d)(3)(C), (f)(2)(A)(i), and (f)(2)(A)(ii)(II) 
shall be increased by the same percentage as the percentage 
increase in the consumer price index for all urban consumers 
(all items; U.S. city average) between September 1988 and the 
September before the calendar year involved.
    ``(h) Definitions.--In this section:
            ``(1) Institutionalized spouse.--The term 
        `institutionalized spouse' means an individual--
                    ``(A)(i) who is in a medical institution or 
                nursing facility, or
                    ``(ii) at the option of the State (I) who 
                would be eligible under the State plan under 
                this title if such individual was in a medical 
                institution, (II) with respect to whom there 
                has been a determination that but for the 
                provision of home or community-based services 
                such individual would require the level of care 
                provided in a hospital, nursing facility or 
                intermediate care facility for the mentally 
                retarded the cost of which could be reimbursed 
                under the plan, and (III) who will receive home 
                or community-based services pursuant the plan; 
                and
                    ``(B) who is married to a spouse who is not 
                in a medical institution or nursing facility;
        but does not include any such individual who is not 
        likely to meet the requirements of subparagraph (A) for 
        at least 30 consecutive days.
            ``(2) Community spouse.--The term `community 
        spouse' means the spouse of an institutionalized 
        spouse.

``SEC. 1506. PREVENTING FAMILY IMPOVERISHMENT.

    ``(a) Responsibilities for Long-term and Institutional Care 
Generally.--A State plan may not--
            ``(1) require an adult child or any other 
        individual (other than the applicant or recipient of 
        services or the spouse of such an applicant or 
        recipient) to contribute to the cost of covered nursing 
        facility services, other long-term care services, and 
        hospital and other institutional services under the 
        plan; and
            ``(2) take into account with respect to such 
        services the financial responsibility of any individual 
        for any applicant or recipient of assistance under the 
        plan unless such applicant or recipient is such 
        individual's spouse or such individual's child who is 
        under age 21 or (with respect to States eligible to 
        participate in the State program established under 
        title XVI), is blind or permanently and totally 
        disabled, or is blind or disabled as defined in section 
        1614 (with respect to States which are not eligible to 
        participate in such program).
    ``(b) Limitations on Liens.--
            ``(1) In general.--No lien may be imposed against 
        the property of any individual prior to the 
        individual's death on account of medical assistance 
        paid or to be paid on the individual's behalf under a 
        State plan, except--
                    ``(A) pursuant to the judgment of a court 
                on account of benefits incorrectly paid on 
                behalf of such individual; or
                    ``(B) in the case of the real property of 
                an individual--
                            ``(i) who is an inpatient in a 
                        nursing facility, intermediate care 
                        facility for the mentally retarded, or 
                        other medical institution, if such 
                        individual is required, as a condition 
                        of receiving services in such 
                        institution under the plan, to spend 
                        for costs of medical care all but a 
                        minimal amount of the individual's 
                        income required for personal needs, and
                            ``(ii) with respect to whom the 
                        State determines, after notice and 
                        opportunity for a hearing (in 
                        accordance with procedures established 
                        by the State), that the individual 
                        cannot reasonably be expected to be 
                        discharged from the medical institution 
                        and to return home,
                except as provided in paragraph (2).
            ``(2) Exception.--No lien may be imposed under 
        paragraph (1)(B) on such individual's home if--
                    ``(A) the spouse of such individual,
                    ``(B) such individual's child who is under 
                age 21, or (with respect to States eligible to 
                participate in the State program established 
                under title XVI) is blind or permanently and 
                totally disabled, or (with respect to States 
                which are not eligible to participate in such 
                program) is blind or disabled as defined in 
                section 1614, or
                    ``(C) a sibling of such individual (who has 
                an equity interest in such home and who was 
                residing in such individual's home for a period 
                of at least one year immediately before the 
                date of the individual's admission to the 
                medical institution),
        is lawfully residing in such home.
            ``(3) Dissolution upon return home.--Any lien 
        imposed with respect to an individual pursuant to 
        paragraph (1)(B) shall dissolve upon that individual's 
        discharge from the medical institution and return home.

``SEC. 1507. STATE FLEXIBILITY.

    ``(a) State Flexibility in Benefits, Geographical Coverage 
Area, and Selection of Providers.--The State under its State 
plan may--
            ``(1) specify those items and services for which 
        medical assistance is provided (consistent with 
        guarantees under subsections (a) and (b) of section 
        1501), the providers which may provide such items and 
        services, and the amount and frequency of providing 
        such items and services (consistent with the 
        requirements of section 1502(d));
            ``(2) specify the extent to which the same medical 
        assistance will be provided in all geographical areas 
        or political subdivisions of the State, so long as 
        medical assistance is made available in all such areas 
        or subdivisions;
            ``(3) specify the extent to which the medical 
        assistance made available to any individual eligible 
        for medical assistance is comparable in amount, 
        duration, or scope to the medical assistance made 
        available to any other such individual; and
            ``(4) specify the extent to which an individual 
        eligible for medical assistance with respect to an item 
        or service may choose to obtain such assistance from 
        any institution, agency, or person qualified to provide 
        the item or service.
    ``(b) State Flexibility With Respect to Managed Care.--
Nothing in this title shall be construed--
            ``(1) to limit a State's ability to contract with, 
        on a capitated basis or otherwise, health care plans or 
        individual health care providers for the provision or 
        arrangement of medical assistance,
            ``(2) to limit a State's ability to contract with 
        health care plans or other entities for case management 
        services or for coordination of medical assistance, or
            ``(3) to restrict a State from establishing 
        capitation rates on the basis of competition among 
        health care plans or negotiations between the State and 
        one or more health care plans.

``SEC. 1508. PRIVATE RIGHTS OF ACTION.

    ``(a) Limitation on Federal Causes of Action.--Except as 
provided in this section, no person or entity may bring an 
action against a State in Federal court based on its failure to 
comply with any requirement of this title.
    ``(b) State Causes of Action.--
            ``(1) Administrative and judicial procedures.--A 
        State plan shall provide for--
                    ``(A) an administrative procedure whereby 
                an individual alleging a denial of eligibility 
                for benefits or a denial of benefits under the 
                State plan may receive a hearing regarding such 
                denial, and
                    ``(B) judicial review, through a private 
                right of action in a State court by an 
                individual or class of individuals, regarding 
                such a denial, but a State may require 
                exhaustion of administrative remedies before 
                such an action may be taken.
        The administrative procedure under subparagraph (A) 
        shall include impartial decision makers and a fair 
        process and timely decisions.
            ``(2) Writ of certiorari.--An individual or class 
        may file a petition for certiorari before the Supreme 
        Court of the United States in a case of a denial of 
        benefits under the State plan to review a determination 
        of the highest court of a State regarding such denial.
            ``(3) Construction.--Nothing in this subsection 
        shall be construed as requiring a State to provide a 
        private right of action in State court by a provider, 
        health plan, or a class of providers or health plans.
    ``(c) Secretarial Relief.--
            ``(1) In general.--The Secretary may bring an 
        action in Federal court against a State and on behalf 
        of an individual or class of individuals in order to 
        assure that a State provides benefits to individuals 
        and classes of individuals as guaranteed under 
        subsection (a) or (b) of section 1501 under its State 
        plan.
            ``(2) No private right.--No action may be brought 
        in any court against the Secretary based on the 
        Secretary's bringing, or failure to bring, an action 
        under paragraph (1).
            ``(3) Construction.--Nothing in this title shall be 
        construed as authorizing the Secretary to bring an 
        action on behalf of a provider, health plan, or a class 
        of providers or health plans.

                      ``Part B--Payments to States

``SEC. 1511. ALLOTMENT OF FUNDS AMONG STATES.

    ``(a) Allotments.--
            ``(1) Computation.--The Secretary shall provide for 
        the computation of State obligation and outlay 
        allotments in accordance with this section for each 
        fiscal year beginning with fiscal year 1997. Nothing in 
        this part shall be construed as authorizing payment 
        under this part to any State for fiscal year 1996.
            ``(2) Limitation on obligations.--
                    ``(A) In general.--Subject to the 
                succeeding provisions of this paragraph, the 
                Secretary shall not enter into obligations with 
                any State under this title for a fiscal year in 
                excess of the sum of the following allotments 
                for the State for the fiscal year:
                            ``(i) Base obligation allotment.--
                        The amount of the base obligation 
                        allotment for that State for the fiscal 
                        year under paragraph (4).
                            ``(ii) Supplemental allotment for 
                        certain aliens.--The amount of any 
                        supplemental allotment for that State 
                        for the fiscal year under subsection 
                        (f).
                            ``(iii) Supplemental per 
                        beneficiary umbrella allotment.--The 
                        amount of any supplemental per 
                        beneficiary umbrella allotment for that 
                        State for the fiscal year under 
                        subsection (g).
                            ``(iv) Supplemental allotment for 
                        indian health services.--The amount of 
                        any supplemental allotment for that 
                        State for the fiscal year under 
                        subsection (h).
        The sum of the base obligation allotments for all 
        States in any fiscal year (excluding amounts carried 
        over under subparagraph (B) and excluding changes in 
        allotments effected under paragraph (4)(D)) shall not 
        exceed the aggregate limit on new base obligation 
        authority specified in paragraph (3) for that fiscal 
        year.
                    ``(B) Adjustments.--
                            ``(i) Carryover of base allotment 
                        permitted.--Subject to clauses (ii), if 
                        the amount of obligations entered into 
                        under this part with a State for 
                        quarters in a fiscal year is less than 
                        the amount of the obligation allotment 
                        under this section to the State for the 
                        fiscal year, the amount of the 
                        difference (less any amount computed 
                        under clause (iii)) shall be added to 
                        the amount of the State obligation 
                        allotment otherwise provided under this 
                        section for the succeeding fiscal year.
                            ``(ii) No carryover permitted for 
                        states receiving supplemental umbrella 
                        allotments.--Clause (i) shall not 
                        apply, insofar as it permits a 
                        carryover for a State from a particular 
                        year to the next year, if in the 
                        particular year the State receives a 
                        supplemental umbrella allotment under 
                        subsection (g).
                            ``(iii) No carryover of alien and 
                        indian supplemental allotments.--The 
                        amount of any carryover under clause 
                        (i) from a fiscal year shall be reduced 
                        by the amount (if any) by which the 
                        amount of the outlays for expenditures 
                        described in subsection (f) or (h) for 
                        the fiscal year is less than the amount 
                        of any supplemental allotment provided 
                        under the respective subsection for the 
                        State and fiscal year involved.
                    ``(C) Reduction for new obligations under 
                title xix in fiscal year 1997.--The amount of 
                the base obligation allotment otherwise 
                provided under this section for fiscal year 
                1997 for a State shall be reduced by the amount 
                of the obligations entered into with respect to 
                the State under section 1903(a) during such 
                fiscal year.
                    ``(D) No effect on prior year 
                obligations.--Subparagraph (A) shall not apply 
                to or affect obligations for a fiscal year 
                prior to fiscal year 1997.
                    ``(E) Obligation.--For purposes of this 
                section, the Secretary's establishment of an 
                estimate under section 1512(b) of the amount a 
                State is entitled to receive for a quarter 
                (taking into account any adjustments described 
                in such subsection) beginning during or after 
                fiscal year 1997 shall be treated as the 
                obligation of such amount for the State as of 
                the first day of the quarter.
                    ``(F) Relation to guarantees.--The Federal 
                Government's obligations for payments under 
                this title are limited as provided under 
                subparagraph (A) and are only subject to 
                adjustment based on any guarantee provided 
                under section 1501 as provided under subsection 
                (g).
            ``(3) Aggregate limit on new base obligation 
        authority.--
                    ``(A) In general.--For purposes of this 
                subsection, subject to subparagraph (C), the 
                `aggregate limit on new base obligation 
                authority', for a fiscal year, is the base pool 
                amount under subsection (b) for the fiscal 
                year, divided by the payout adjustment factor 
                (described in subparagraph (B)) for the fiscal 
                year.
                    ``(B) Payout adjustment factor.--For 
                purposes of this subsection, the `payout 
                adjustment factor'--
                            ``(i) for fiscal year 1997 is 
                        0.950,
                            ``(ii) for fiscal year 1998 is 
                        0.986, and
                            ``(iii) for a subsequent fiscal 
                        year is 0.998.
                    ``(C) Transitional adjustment for pre-
                fiscal year 1997-obligation outlays.--In order 
                to account for pre-fiscal year 1997-obligation 
                outlays described in paragraph (4)(C)(iv), in 
                determining the aggregate limit on new 
                obligation authority under subparagraph (A) for 
                fiscal year 1997, the pool amount for such 
                fiscal year is equal to--
                            ``(i) the pool amount for such 
                        year, reduced by
                            ``(ii) $12,000,000,000.
            ``(4) Base obligation allotments.--
                    ``(A) General rule for 50 states and the 
                district of columbia.--Except as provided in 
                this paragraph, the `base obligation allotment' 
                for any of the 50 States or the District of 
                Columbia for a fiscal year (beginning with 
                fiscal year 1997) is an amount that bears the 
                same ratio to the base outlay allotment under 
                subsection (c)(2) for such State or District 
                (not taking into account any adjustment due to 
                an election under subsection (c)(4)) for the 
                fiscal year as the ratio of--
                            ``(i) the aggregate limit on new 
                        base obligation authority (less the 
                        total of the obligation allotments 
                        under subparagraph (B)) for the fiscal 
                        year, to
                            ``(ii) the base pool amount (less 
                        the sum of the base outlay allotments 
                        for the territories) for such fiscal 
                        year.
                    ``(B) Territories.--The base obligation 
                allotment for each of the Commonwealths and 
                territories for a fiscal year is the base 
                outlay allotment for such Commonwealth or 
                Territory (as determined under subsection 
                (c)(5)) for the fiscal year divided by the 
                payout adjustment factor for the fiscal year 
                (as defined in paragraph (3)(B)).
                    ``(C) Transitional rule for fiscal year 
                1997.--
                            ``(i) In general.--The obligation 
                        amount for fiscal year 1997 for any 
                        State (including the District of 
                        Columbia, a Commonwealth, or Territory) 
                        is determined according to the formula: 
                        A=(B-C)/D, where--
                                    ``(I) `A' is the base 
                                obligation amount for such 
                                State,
                                    ``(II) `B' is the base 
                                outlay allotment of such State 
                                for fiscal year 1997, as 
                                determined under subsection 
                                (c),
                                    ``(III) `C' is the amount 
                                of the pre-enactment-obligation 
                                outlays (as established for 
                                such State under clause (ii)), 
                                and
                                    ``(IV) `D' is the payout 
                                adjustment factor for such 
                                fiscal year (as defined in 
                                paragraph (3)(B)).
                            ``(ii) Pre-fiscal year 1997-
                        obligation outlay amounts.--Not later 
                        than November 1, 1996, the Secretary 
                        shall estimate (based on the best data 
                        available) and publish in the Federal 
                        Register the amount of the pre-fiscal 
                        year 1997-obligation outlays (as 
                        defined in clause (iv)) for each State 
                        (including the District of Columbia, 
                        Commonwealths, and Territories). The 
                        total of such amounts shall equal the 
                        dollar amount specified in paragraph 
                        (3)(C)(ii).
                            ``(iii) Agreement.--The submission 
                        of a State plan by a State under this 
                        title is deemed to constitute the 
                        State's acceptance of the obligation 
                        allotment limitations under this 
                        subsection, including the formula for 
                        computing the amount of the base 
                        obligation allotment and any 
                        supplemental obligation allotments.
                            ``(iv) Pre-fiscal year 1997-
                        obligation outlays defined.--In this 
                        subsection, the term `pre-fiscal year 
                        1997-obligation outlays' means, for a 
                        State, the outlays of the Federal 
                        Government that result from obligations 
                        that have been incurred under title XIX 
                        with respect to the State before 
                        October 1, 1996, but for which payments 
                        to States have not been made as of such 
                        date.
                    ``(D) Adjustment to reflect adoption of 
                alternative growth formula.--Any State that has 
                elected an alternative growth formula under 
                subsection (c)(4) which increases or decreases 
                the dollar amount of an outlay allotment for a 
                fiscal year is deemed to have increased or 
                decreased, respectively, its obligation amount 
                for such fiscal year by the amount of such 
                increase or decrease.
                    ``(E) Transitional correction for fiscal 
                year 1997.--
                            ``(i) In general.--The base 
                        obligation amount for fiscal year 1998 
                        for any State described in clause (ii) 
                        shall be increased by the amount by 
                        which the amount described in clause 
                        (ii)(I) exceeds the amount described in 
                        clause (ii)(II), divided by the payout 
                        adjustment factor specified in 
                        paragraph (3)(B) for fiscal year 1997. 
                        The increase under this clause shall be 
                        paid to a State in the first quarter of 
                        fiscal year 1998.
                            ``(ii) States described.--A State 
                        described in this clause is a State for 
                        which--
                                    ``(I) the amount of the 
                                pre-fiscal year 1997-obligation 
                                outlays (as established for 
                                such State under subparagraph 
                                (C)(ii)), exceeded
                                    ``(II) the outlays of the 
                                Federal Government during 
                                fiscal year 1997 that are 
                                attributable to obligations 
                                that were incurred under title 
                                XIX with respect to the State 
                                before October 1, 1996, but for 
                                which payments to States had 
                                not been made as of such date.
            ``(5) Sequence of obligations.--For purposes of 
        carrying out this title, payments under section 1512 to 
        a State eligible for a supplemental outlay allotment 
        that are attributable to--
                    ``(A) expenditures for medical assistance 
                described in the second sentence of subsection 
                (f)(1) or the second sentence of subsection 
                (h)(1) shall first be counted toward the 
                supplemental outlay allotment provided under 
                subsection (f) or (h), respectively, rather 
                than toward the base outlay allotment otherwise 
                provided under this section; or
                    ``(B) subsection (g) (relating to the 
                umbrella fund) shall first be counted toward 
                the allotment provided other than under such 
                subsection, and then to such subsection.
    ``(b) Base Pool of Available Funds.--
            ``(1) In general.--For purposes of this section, 
        the `base pool amount' under this subsection for--
                    ``(A) fiscal year 1996 is $96,601,037,894,
                    ``(B) fiscal year 1997 is $103,447,755,053,
                    ``(C) fiscal year 1998 is $108,430,173,129,
                    ``(D) fiscal year 1999 is $113,652,562,483,
                    ``(E) fiscal year 2000 is $119,126,480,999,
                    ``(F) fiscal year 2001 is $124,864,043,230,
                    ``(G) fiscal year 2002 is $130,877,947,213, 
                and
                    ``(H) each subsequent fiscal year is the 
                pool amount under this paragraph for the 
                previous fiscal year increased by the lesser of 
                4.82 percent or the annual percentage increase 
                in the gross domestic product for the 12-month 
                period ending in June before the beginning of 
                that subsequent fiscal year.
            ``(2) National growth percentage.--For purposes of 
        this section for a fiscal year (beginning with fiscal 
        year 1997), the `national growth percentage' is the 
        percentage by which--
                    ``(A) the base pool amount under paragraph 
                (1) for the fiscal year, exceeds
                    ``(B) such base pool amount for the 
                previous fiscal year.
    ``(c) State Base Outlay Allotments.--
            ``(1) Fiscal year 1996.--For each of the 50 States 
        and the District of Columbia, the amount of the State 
        base outlay allotment under this subsection for fiscal 
        year 1996 is, subject to paragraph (4), determined in 
        accordance with the following table:
``State or District:Outlay allotment (in dollars):
  Alabama...........1,517,652,207.......................................
  Alaska............204,933,213.........................................
  Arizona...........1,385,781,297.......................................
  Arkansas..........1,011,457,933.......................................
  California........8,946,838,461.......................................
  Colorado..........757,492,679.........................................
  Connecticut.......1,463,011,635.......................................
  Delaware..........212,327,763.........................................
  District of Columb501,412,091.........................................
  Florida...........3,715,624,180.......................................
  Georgia...........2,426,320,602.......................................
  Hawaii............323,124,375.........................................
  Idaho.............278,329,686.........................................
  Illinois..........3,467,274,342.......................................
  Indiana...........1,952,467,267.......................................
  Iowa..............835,235,895.........................................
  Kansas............713,700,869.........................................
  Kentucky..........1,577,828,832.......................................
  Louisiana.........2,622,000,000.......................................
  Maine.............694,220,790.........................................
  Maryland..........1,369,699,847.......................................
  Massachusetts.....2,870,346,862.......................................
  Michigan..........3,465,182,886.......................................
  Minnesota.........1,793,776,356.......................................
  Mississippi.......1,261,781,330.......................................
  Missouri..........1,849,248,945.......................................
  Montana...........312,212,472.........................................
  Nebraska..........463,900,417.........................................
  Nevada............257,896,453.........................................
  New Hampshire.....560,000,000.........................................
  New Jersey........2,854,621,241.......................................
  New Mexico........634,756,945.........................................
  New York..........12,901,793,038......................................
  North Carolina....2,587,883,809.......................................
  North Dakota......241,168,563.........................................
  Ohio..............4,034,049,690.......................................
  Oklahoma..........911,198,775.........................................
  Oregon............1,088,670,440.......................................
  Pennsylvania......4,454,423,400.......................................
  Rhode Island......545,686,262.........................................
  South Carolina....1,621,021,815.......................................
  South Dakota......262,804,959.........................................
  Tennessee.........2,519,934,251.......................................
  Texas.............6,351,909,343.......................................
  Utah..............484,274,254.........................................
  Vermont...........248,158,729.........................................
  Virginia..........1,144,962,509.......................................
  Washington........1,763,460,996.......................................
  West Virginia.....1,156,813,157.......................................
  Wisconsin.........1,709,500,642.......................................
  Wyoming...........132,915,390.........................................
            ``(2) For subsequent fiscal years.--
                    ``(A) In general.--Subject to the 
                succeeding provisions of this subsection, the 
                amount of the State base outlay allotment under 
                this subsection for one of the 50 States and 
                the District of Columbia for a fiscal year 
                (beginning with fiscal year 1997) is equal to 
                the product of--
                            ``(i) the needs-based amount 
                        determined under subparagraph (B) for 
                        such State or District for the fiscal 
                        year, and
                            ``(ii) the adjustment factor 
                        described in subparagraph (C) for the 
                        fiscal year.
                    ``(B) Needs-based amount.--The needs-based 
                amount under this subparagraph for a State or 
                the District of Columbia for a fiscal year is 
                equal to the product of--
                            ``(i) the State's or District's 
                        aggregate expenditure need for the 
                        fiscal year (as determined under 
                        subsection (d)), and
                            ``(ii) the State's or District's 
                        old Federal medical assistance 
                        percentage (as defined in section 
                        1512(d)) for the fiscal year (or, in 
                        the case of fiscal year 1997, the 
                        Federal medical assistance percentage 
                        determined under section 1905(b) for 
                        fiscal year 1996).
                    ``(C) Adjustment factor.--The adjustment 
                factor under this subparagraph for a fiscal 
                year is such proportion so that, when it is 
                applied under subparagraph (A)(ii) for the 
                fiscal year (taking into account the floors and 
                ceilings under paragraph (3)), the total of the 
                base outlay allotments under this subsection 
                for all the 50 States and the District of 
                Columbia for the fiscal year (not taking into 
                account any increase in a base outlay allotment 
                for a fiscal year attributable to the election 
                of an alternative growth formula under 
                paragraph (4)) is equal to the amount by which 
                (i) the base pool amount for the fiscal year 
                (as determined under subsection (b)), exceeds 
                (ii) the sum of the base outlay allotments 
                provided under paragraph (5) for the 
                Commonwealths and Territories for the fiscal 
                year.
            ``(3) Floors and ceilings.--
                    ``(A) Floors.--Subject to the ceiling 
                established under subparagraph (B), in no case 
                shall the amount of the State base outlay 
                allotment under paragraph (2) for a fiscal year 
                be less than the greatest of the following:
                            ``(i) In general.--Beginning with 
                        fiscal year 1998, 0.24 percent of the 
                        pool amount for the fiscal year.
                            ``(ii) Floor based on previous 
                        year's outlay allotment.--Subject to 
                        clause (iii)--
                                    ``(I) for fiscal year 1997, 
                                103.5 percent of the amount of 
                                the State base outlay allotment 
                                under this subsection for 
                                fiscal year 1996,
                                    ``(II) for fiscal year 
                                1998, 103 percent of the amount 
                                of the State base outlay 
                                allotment under this subsection 
                                for fiscal year 1997,
                                    ``(III) for fiscal year 
                                1999, 102.5 percent of the 
                                amount of the State base outlay 
                                allotment under this subsection 
                                for fiscal year 1998,
                                    ``(IV) for fiscal year 
                                2000, 102.25 percent of the 
                                amount of the State base outlay 
                                allotment under this subsection 
                                for fiscal year 1999, and
                                    ``(V) for each of fiscal 
                                years 2001 and 2002, 102 
                                percent of the amount of the 
                                State base outlay allotment 
                                under this subsection for the 
                                previous fiscal year.
                            ``(iii) Floor based on outlay 
                        allotment growth rate in first year.--
                        Beginning with fiscal year 1998, in the 
                        case of a State for which the outlay 
                        allotment under this subsection for 
                        fiscal year 1997 exceeded its outlay 
                        allotment under this subsection for the 
                        previous fiscal year by more than 95 
                        percent of the national growth 
                        percentage for fiscal year 1997, 90 
                        percent of the national growth 
                        percentage for the fiscal year 
                        involved.
                    ``(B) Ceilings.--
                            ``(i) In general.--Subject to 
                        clause (ii), in no case shall the 
                        amount of the State base outlay 
                        allotment under paragraph (2) for a 
                        fiscal year be greater than the product 
                        of--
                                    ``(I) the State base outlay 
                                allotment under this subsection 
                                for the State for the preceding 
                                fiscal year, and
                                    ``(II) the applicable 
                                percent (specified in clause 
                                (ii) or (iii)) for the fiscal 
                                year involved.
                            ``(ii) General rule for applicable 
                        percent.--For purposes of clause (i), 
                        subject to clause (iii), the 
                        `applicable percent' for fiscal year 
                        1997 is 126.98 percent and for a 
                        subsequent fiscal year is 133 percent 
                        of the national growth percentage for 
                        the fiscal year.
                            ``(iii) Special rule.--For a fiscal 
                        year after fiscal year 1997, in the 
                        case of a State (among the 50 States 
                        and the District of Columbia) that is 
                        one of the 10 States with the lowest 
                        Federal spending per resident-in-
                        poverty rates (as determined under 
                        clause (iv)) for the fiscal year, the 
                        `applicable percent' is 150 percent of 
                        the national growth percentage for the 
                        fiscal year.
                            ``(iv) Determination of federal 
                        spending per resident-in-poverty 
                        rate.--For purposes of clause (iii), 
                        the `Federal spending per resident-in-
                        poverty rate' for a State for a fiscal 
                        year is equal to--
                                    ``(I) the State's outlay 
                                allotment under this subsection 
                                for the previous fiscal year 
                                (determined without regard to 
                                paragraph (4)), divided by
                                    ``(II) the average annual 
                                number of residents of the 
                                State in poverty (as defined in 
                                subsection (d)(2)) with respect 
                                to the fiscal year.
                    ``(C) Special rule.--
                            ``(i) In general.--Notwithstanding 
                        the preceding subparagraphs of this 
                        paragraph, the State base outlay 
                        allotment for--
                                    ``(I) Louisiana, subject to 
                                subclause (II), for each of the 
                                fiscal years 1997 through 2000, 
                                is $2,622,000,000,
                                    ``(II) Louisiana for fiscal 
                                year 1997 only, as otherwise 
                                determined, shall be increased 
                                by $37,048,207, and
                                    ``(III) Nevada for each of 
                                fiscal years 1997, 1998, and 
                                1999, as otherwise determined, 
                                shall be increased by 
                                $90,000,000.
                            ``(ii) Exception.--A State 
                        described in subclause (I) of clause 
                        (i) may apply to the Secretary for use 
                        of the State base outlay allotment 
                        otherwise determined under this 
                        subsection for any fiscal year, if such 
                        State notifies the Secretary not later 
                        than March 1 preceding such fiscal year 
                        that such State will be able to expend 
                        sufficient State funds in such fiscal 
                        year to qualify for such allotment.
                            ``(iii) Treatment of increase as 
                        supplemental allotment.--Any increase 
                        in an outlay allotment under clause 
                        (i)(II) or (i)(III) shall not be taken 
                        into account for purposes of 
                        determining--
                                    ``(I) the adjustment factor 
                                under paragraph (2) for fiscal 
                                year 1997,
                                    ``(II) any State base 
                                outlay allotment for a fiscal 
                                year after fiscal year 1997,
                                    ``(III) the base pool 
                                amount for a fiscal year after 
                                fiscal year 1997, or
                                    ``(IV) determination of the 
                                national growth percentage for 
                                any fiscal year.
            ``(4) Election of alternative growth formula.--
                    ``(A) Election.--In order to reduce 
                variations in increases in outlay allotments 
                over time, any of the 50 States or the District 
                of Columbia may elect (by notice provided to 
                the Secretary by not later than April 1, 1997) 
                to adopt an alternative growth rate formula 
                under this paragraph for the determination of 
                the State's base outlay allotment in fiscal 
                year 1997 and for the increase in the amount of 
                such allotment in subsequent fiscal years.
                    ``(B) Formula.--The alternative growth 
                formula under this paragraph may be any formula 
                under which a portion of the State base outlay 
                allotment for fiscal year 1997 under paragraph 
                (1) is deferred and applied to increase the 
                amount of its base outlay allotment for one or 
                more subsequent fiscal years, so long as the 
                total amount of such increases for all such 
                subsequent fiscal years does not exceed the 
                amount of the base outlay allotment deferred 
                from fiscal year 1997.
            ``(5) Commonwealths and territories.--
                    ``(A) In general.--The base outlay 
                allotment for each of the Commonwealths and 
                Territories for a fiscal year is the maximum 
                amount that could have been certified under 
                section 1108(c) (as in effect on the day before 
                the date of the enactment of this title) with 
                respect to the Commonwealth or Territory for 
                the fiscal year with respect to title XIX, if 
                the national growth percentage (as determined 
                under subsection (b)(2)) for the fiscal year 
                had been substituted (beginning with fiscal 
                year 1997) for the percentage increase referred 
                to in section 1108(c)(1)(B) (as so in effect).
                    ``(B) Disregard of rounding requirements.--
                For purposes of subparagraph (A), the rounding 
                requirements under section 1108(c) shall not 
                apply.
                    ``(C) Limitation on total amount for fiscal 
                year 1996.--Notwithstanding the provisions of 
                subparagraph (A), the total amount of the base 
                outlay allotments for the Commonwealths and 
                Territories for fiscal year 1996 may not exceed 
                $139,950,000.
    ``(d) State Aggregate Expenditure Need Determined.--
            ``(1) In general.--For purposes of subsection (c), 
        the `State aggregate expenditure need' for a State or 
        the District of Columbia for a fiscal year is equal to 
        the product of the following 4 factors:
                    ``(A) Program need.--The program need for 
                the State for the fiscal year, as determined 
                under paragraph (2).
                    ``(B) Health care cost index.--The health 
                care cost index for the State (as determined 
                under paragraph (3)) for the most recent fiscal 
                year for which data are available.
                    ``(C) Projected inflation.--The CPI 
                increase factor for the fiscal year (as defined 
                in subsection (g)(4)(C)).
                    ``(D) National average spending per 
                resident in poverty.--The national average 
                spending per resident in poverty (as determined 
                under paragraph (4)).
            ``(2) Program need.--
                    ``(A) In general.--In this subsection and 
                subject to subparagraph (D), the `program need' 
                of a State for a fiscal year is equal to the 
                sum, for each of the population groups 
                described in subparagraph (B), of the product 
                described in subparagraph (C) for that 
                population group.
                    ``(B) Population groups described.--The 
                population groups described in this 
                subparagraph are as follows:
                            ``(i) Individuals between 60 and 
                        85.--Individuals who are least 60, but 
                        less than 85, years of age.
                            ``(ii) Individuals 85 or older.--
                        Individuals who are 85 years of age or 
                        older.
                            ``(iii) Disabled individuals.--
                        Individuals who are eligible for 
                        medical assistance because such 
                        individuals are blind or disabled and 
                        are not described in clause (i) or 
                        (ii).
                            ``(iv) Children.--Individuals 
                        described in subsection (g)(2)(B).
                            ``(v) Other individuals.--
                        Individuals not described in a previous 
                        clause of this subparagraph.
                    ``(C) Product described.--The product 
                described in this subparagraph, with respect to 
                a population group for a fiscal year for a 
                State (or District), is the product of the 
                following 2 factors for that group, year, and 
                State (or District):
                            ``(i) Weighting factor reflecting 
                        relative need for the group.--For all 
                        States, the national average per 
                        recipient expenditures under this title 
                        in the 50 States and the District of 
                        Columbia for individuals in such group, 
                        as determined under subparagraph (E), 
                        divided by the national average of such 
                        averages for all such groups (weighted 
                        by the number of recipients in each 
                        group).
                            ``(ii) Number of needy in group.--
                        The product of--
                                    ``(I) for all groups, the 
                                average annual number of 
                                residents in poverty in such 
                                State or District (based on 
                                data made generally available 
                                by the Bureau of the Census 
                                from the Current Population 
                                Survey) for the most recent 3-
                                calendar-year period (ending 
                                before the fiscal year) for 
                                which such data are available; 
                                and
                                    ``(II) the proportion, of 
                                all individuals who received 
                                medical assistance under this 
                                title in such State or 
                                District, that were individuals 
                                in such group.
                        In clause (ii)(II), the term `resident 
                        in poverty' means an individual whose 
                        family income does not exceed the 
                        poverty threshold (as such terms are 
                        defined by the Office of Management and 
                        Budget and are generally interpreted 
                        and applied by the Bureau of the Census 
                        for the year involved).
                    ``(D) Floors and ceilings on program 
                need.--
                            ``(i) In general.--In no case shall 
                        the value of the program need for a 
                        State for a fiscal year be less than 90 
                        percent, or be more than 115 percent, 
                        of the program need based on national 
                        averages (determined under clause (ii)) 
                        for that State for the fiscal year.
                            ``(ii) Program need based on 
                        national averages.--For purposes of 
                        clause (i), the `program need based on 
                        national average' for a fiscal year is 
                        equal to the sum of the product (for 
                        each of the population groups) of the 
                        following 3 factors (for that group, 
                        year, and State or District):
                                    ``(I) Weighting factor for 
                                group.--The weighting factor 
                                for the group (described in 
                                subparagraph (C)(i)).
                                    ``(II) Total number of 
                                needy in state.--For all 
                                groups, the average annual 
                                number of residents in poverty 
                                in such State or District (as 
                                defined in subparagraph 
                                (C)(ii)(I)).
                                    ``(III) National proportion 
                                of needy in group.--The 
                                proportion, of all individuals 
                                who received medical assistance 
                                under this title in all of the 
                                States and the District in all 
                                such groups, that were 
                                individuals in such group.
                    ``(E) Determination of national averages 
                and proportions.--The national averages per 
                recipient and the proportions referred to in 
                subparagraph (C)(ii) and (C)(iii), 
                respectively, shall be determined by the 
                Secretary using the most recent data available.
                    ``(F) Expenditure defined.--For purposes of 
                this paragraph, the term `expenditure' means 
                medical vendor payments by basis of eligibility 
                as reported by HCFA Form 2082.
            ``(3) Health care cost index.--
                    ``(A) In general.--In this section, the 
                `health care cost index' for a State or the 
                District of Columbia for a fiscal year is the 
                sum of--
                            ``(i) 0.15, and
                            ``(ii) 0.85 multiplied by the ratio 
                        of (I) the annual average wages for 
                        hospital employees in such State or 
                        District for the fiscal year (as 
                        determined under subparagraph (B)), to 
                        (II) the annual average wages for 
                        hospital employees in the 50 States and 
                        the District of Columbia for such year 
                        (as determined under such 
                        subparagraph).
                    ``(B) Determination of annual average wages 
                of hospital employees.--The Secretary shall 
                provide for the determination of annual average 
                wages for hospital employees in a State or the 
                District of Columbia and, collectively, in the 
                50 States and the District of Columbia for a 
                fiscal year based on the area wage data 
                applicable to hospitals under section 
                1886(d)(2)(E) (or, if such data no longer 
                exists, comparable data of hospital wages) for 
                discharges occurring during the fiscal year 
                involved.
            ``(4) National average spending per resident in 
        poverty.--For purposes of this subsection, the 
        `national average spending per resident in poverty'--
                    ``(A) for fiscal year 1997 is equal to--
                            ``(i) the sum (for each of the 50 
                        States and the District of Columbia) of 
                        the total of the Federal and State 
                        expenditures under title XIX for 
                        calendar quarters in fiscal year 1994, 
                        increased by the percentage by which 
                        (I) the base pool amount for fiscal 
                        year 1997, exceeds (II) $83,213,431,458 
                        (which represents Federal medicaid 
                        expenditures for such States and 
                        District for fiscal year 1994); divided 
                        by
                            ``(ii) the sum of the number of 
                        residents in poverty (as defined in 
                        paragraph (2)(C)(ii)(I)) for all of the 
                        50 States and the District of Columbia 
                        for fiscal year 1994; and
                    ``(B) for a succeeding fiscal year is equal 
                to the national average spending per resident 
                in poverty under this paragraph for the 
                preceding fiscal year increased by the national 
                growth percentage (as defined in subsection 
                (b)(2)) for the fiscal year involved.
    ``(e) Publication of Obligation and Outlay Allotments.--
            ``(1) Notice of preliminary allotments.--Not later 
        than April 1 before the beginning of each fiscal year 
        (beginning with fiscal year 1997), the Secretary shall 
        initially compute, after consultation with the 
        Comptroller General, and publish in the Federal 
        Register notice of the proposed base obligation 
        allotment, base outlay allotment, and supplemental 
        allotments under subsections (f) and (h) for each State 
        under this section (not taking into account subsection 
        (a)(2)(B)) for the fiscal year. The Secretary shall 
        include in the notice a description of the methodology 
        and data used in deriving such allotments for the year.
            ``(2) Review by gao.--The Comptroller General shall 
        submit to Congress by not later than May 15 of each 
        such fiscal year, a report analyzing such allotments 
        and the extent to which they comply with the precise 
        requirements of this section.
            ``(3) Notice of final allotments.--Not later than 
        July 1 before the beginning of each such fiscal year, 
        the Secretary, taking into consideration the analysis 
        contained in the report of the Comptroller General 
        under paragraph (2), shall compute and publish in the 
        Federal Register notice of the final allotments under 
        this section (both taking into account and not taking 
        into account subsection (a)(2)(B)) for the fiscal year. 
        The Secretary shall include in the notice a description 
        of any changes in such allotments from the initial 
        allotments published under paragraph (1) for the fiscal 
        year and the reasons for such changes. Once published 
        under this paragraph, the Secretary is not authorized 
        to change such allotments.
            ``(4) GAO report on final allotments.--The 
        Comptroller General shall submit to Congress by not 
        later than August 1 of each such fiscal year, a report 
        analyzing the final allotments under paragraph (3) and 
        the extent to which they comply with the precise 
        requirements of this section.
            ``(5) Transitional rule for fiscal year 1997.--With 
        respect to fiscal year 1997, the deadlines under the 
        previous provisions of this subsection shall be 
        extended by a number of days equal to the number of 
        days between May 1, 1996, and the date of the enactment 
        of this title.
    ``(f) Supplemental Allotment for Certain Health Care 
Services to Certain Aliens.--
            ``(1) In general.--For purposes of this section for 
        each of fiscal years 1998 through 2002 in the case of a 
        subsection (f) supplemental allotment eligible State, 
        the amount of the supplemental allotment under this 
        subsection is the amount provided under paragraph (2) 
        for the State for that year. Such amount may only be 
        used for the purpose of providing medical assistance 
        for care and services for aliens described in paragraph 
        (1) of section 1513(f) and for which the exception 
        described in paragraph (2) of such section applies. 
        Section 1512(f)(4) shall apply to such assistance in 
        the same manner as it applies to medical assistance 
        described in such section.
            ``(2) Supplemental amount.--
                    ``(A) In general.--For purposes of 
                paragraph (1), the supplemental amount for a 
                subsection (f) supplemental allotment eligible 
                State for a fiscal year is equal to the 
                subsection (f) supplemental allotment ratio (as 
                defined in subparagraph (C)) multiplied by the 
                subsection (f) supplemental pool amount 
                (specified in subparagraph (D)) for the fiscal 
                year.
                    ``(B) Subsection (f) supplemental allotment 
                eligible state.--In this subsection, the term 
                `subsection (f) supplemental allotment eligible 
                State' means one of the 15 States with the 
                highest number of undocumented alien residents 
                of all the States.
                    ``(C) Subsection (f) supplemental allotment 
                ratio.--In this paragraph, the `subsection (f) 
                supplemental allotment ratio' for a State is 
                the ratio of--
                            ``(i) the number of undocumented 
                        aliens residing in the State, to
                            ``(ii) the sum of such numbers for 
                        all subsection (f) supplemental 
                        allotment eligible States.
                    ``(D) Subsection (f) supplemental pool 
                amount.--In this paragraph, the `subsection (f) 
                supplemental pool amount'--
                            ``(i) for fiscal year 1998 is 
                        $500,000,000,
                            ``(ii) for fiscal year 1999 is 
                        $600,000,000,
                            ``(iii) for fiscal year 2000 is 
                        $700,000,000,
                            ``(iv) for fiscal year 2001 is 
                        $800,000,000, and
                            ``(v) for fiscal year 2002 is 
                        $900,000,000.
                    ``(E) Determination of number.--
                            ``(i) In general.--The number of 
                        undocumented aliens residing in a State 
                        under this paragraph--
                                    ``(I) for fiscal year 1998 
                                shall be determined based on 
                                estimates of the resident 
                                illegal alien population 
                                residing in each State prepared 
                                by the Statistics Division of 
                                the Immigration and 
                                Naturalization Service as of 
                                October 1992, and
                                    ``(II) for a subsequent 
                                fiscal year shall be determined 
                                based on the most recent 
                                updated estimate made under 
                                clause (ii).
                            ``(ii) Updating estimate.--For each 
                        fiscal year beginning with fiscal year 
                        1999, the Secretary, in consultation 
                        with the Commission of the Immigration 
                        and Naturalization Service, States, and 
                        outside experts, shall estimate the 
                        number of undocumented aliens residing 
                        in each of the 50 States and the 
                        District of Columbia.
    ``(g) Supplemental Per Beneficiary Umbrella Allotment for 
States with Excess Growth in Certain Population Groups.--
            ``(1) In general.--Subject to paragraphs (5) 
        through (7), for purposes of this section the amount of 
        the supplemental allotment under this subsection for a 
        State for a fiscal year (beginning with fiscal year 
        1997) is the sum, for each supplemental allotment 
        population group described in paragraph (2), of the 
        product of the following:
                    ``(A) Excess number of individuals.--The 
                excess number of individuals (if any, 
                determined under paragraph (3)) for State and 
                the fiscal year who are in the population 
                group.
                    ``(B) Applicable per beneficiary amount.--
                The applicable per beneficiary amount 
                (determined under paragraph (4)) for the State 
                and fiscal year for the population group.
                    ``(C) FMAP.--The old Federal medical 
                assistance percentage (as defined in section 
                1512(d)) for the State and fiscal year.
            ``(2) Supplemental allotment population group.--In 
        this subsection, each of the following shall be 
        considered to be a separate `supplemental allotment 
        population group':
                    ``(A) Poor pregnant women.--Individuals 
                described in section 1501(a)(1)(A).
                    ``(B) Poor children.--Individuals (not 
                described in subparagraph (C))--
                            ``(i) described in subparagraph (B) 
                        or (C) of section 1501(a)(1), or
                            ``(ii) described in subparagraph 
                        (F) or (G) of section 1501(a)(1) who 
                        are under 21 years of age and who are 
                        not pregnant women.
                    ``(C) Poor disabled individuals.--Only in 
                the case of a State that has elected the option 
                (of guaranteeing coverage of disabled 
                individuals) described in section 
                1501(a)(1)(D)(ii) for the fiscal year (and, in 
                the case of a fiscal year after fiscal year 
                1997, for the previous fiscal year), 
                individuals--
                            ``(i) who are described in such 
                        section; or
                            ``(ii) who are described in section 
                        1502(a) under paragraph (1) of that 
                        section.
                    ``(D) Poor elderly individuals.--
                Individuals who are--
                            ``(i) described in section 
                        1501(a)(1)(E); or
                            ``(ii) described in section 1502(a) 
                        under paragraph (2) of that section.
                    ``(E) Qualified medicare beneficiaries.--
                Individuals described in section 1501(b)(1)(A) 
                who are not described in subparagraph (D).
                    ``(F) Qualified disabled and working 
                individuals.--Individuals described in section 
                1501(b)(1)(B) who are not described in 
                subparagraph (D).
                    ``(G) Certain other medicare 
                beneficiaries.--Individuals described in 
                section 1501(b)(1)(C) who are not described in 
                subparagraph (D).
                    ``(H) Other poor adults.--Individuals 
                described in section 1501(a)(1)(G) who are not 
                within a population group described in a 
                previous subparagraph.
            ``(3) Excess number of individuals.--
                    ``(A) In general.--In this subsection, the 
                `excess number of individuals', for a State for 
                a fiscal year with respect to a supplemental 
                allotment population group, is equal to the 
                amount (if any) by which--
                            ``(i) the number of full-year 
                        equivalent individuals in the 
                        population group for the State and 
                        fiscal year, exceeds
                            ``(ii) the anticipated number of 
                        such individuals (as determined under 
                        subparagraph (B)) for the State and 
                        fiscal year in such group.
                    ``(B) Anticipated number.--
                            ``(i) In general.--In subparagraph 
                        (A)(ii), the `anticipated number' of 
                        individuals for a State in a 
                        supplemental allotment population group 
                        for--
                                    ``(I) fiscal year 1997 is 
                                equal to the number of full-
                                year equivalent individuals in 
                                such group enrolled in the 
                                State medicaid plan under title 
                                XIX in fiscal year 1996 
                                increased by the percentage 
                                increase factor (described in 
                                clause (ii)) for fiscal year 
                                1997; or
                                    ``(II) a subsequent fiscal 
                                year is equal to the number of 
                                full-year equivalent 
                                individuals in the population 
                                group for the State for the 
                                previous fiscal year increased 
                                by the percentage increase 
                                factor (described in clause 
                                (ii)) for that subsequent 
                                fiscal year.
                            ``(ii) Percentage increase 
                        factor.--For purposes of this 
                        subparagraph, the `percentage increase 
                        factor' for a fiscal year is equal to 
                        zero or, if greater, the number of 
                        percentage points by which (I) the 
                        State percentage growth factor (as 
                        defined in subparagraph (C)) for the 
                        fiscal year, exceeds (II) the 
                        percentage increase in the consumer 
                        price index for all urban consumers 
                        (U.S. city average) during the 12-month 
                        period beginning with July before the 
                        beginning of the fiscal year.
                    ``(C) State percentage growth factor.--In 
                this paragraph, the term `State percentage 
                growth factor' means, for a State for a fiscal 
                year, the percentage by which (i) the State 
                outlay allotment for the State for the fiscal 
                year (determined under this section without 
                regard to this subsection or subsection (f) or 
                (h)), exceeds (ii) such outlay allotment for 
                such State for the preceding fiscal year (as so 
                determined).
                    ``(D) Individuals count only once.--An 
                individual may at any time not be counted in 
                more than one supplemental allotment population 
                group.
            ``(4) Applicable per beneficiary amount.--
                    ``(A) In general.--In this subsection, 
                subject to subparagraph (D), the `applicable 
                per beneficiary amount', for a State for a 
                fiscal year for a supplemental allotment 
                population group, is equal to the base per 
                beneficiary amount (determined under 
                subparagraph (B)) for the State for the group, 
                increased by the Secretary's estimate of the 
                increase in the per beneficiary expenditures 
                under this title (and title XIX) for States 
                between fiscal year 1995 and fiscal year 1996, 
                and further increased (for each subsequent 
                fiscal year up to the fiscal year involved and 
                in a compounded manner) by the CPI increase 
                factor (as defined in subparagraph (C)) for 
                each such fiscal year.
                    ``(B) Base per beneficiary amount.--
                            ``(i) In general.--The Secretary 
                        shall determine for each State a base 
                        per beneficiary amount for each 
                        supplemental allotment population group 
                        equal to--
                                    ``(I) the sum of the total 
                                expenditure amounts described 
                                in clauses (ii) and (iii), 
                                divided by
                                    ``(II) the full-year 
                                equivalent number of such 
                                individuals in such group 
                                enrolled under the State plan 
                                under title XIX for fiscal year 
                                1995.
                            ``(ii) Medical assistance 
                        expenditures.--The total expenditure 
                        amount described in this clause, with 
                        respect to a supplemental allotment 
                        population group, is the total amount 
                        of expenditures for which Federal 
                        financial participation was provided to 
                        the State under paragraphs (1) and (5) 
                        of section 1903(a) for fiscal year 1995 
                        with respect to medical assistance 
                        furnished with respect to individuals 
                        included in such group. Such amount 
                        shall not include expenditures 
                        attributable to payment adjustments 
                        under section 1923.
                            ``(iii) Administrative 
                        expenditures.--The total expenditure 
                        amount described in this clause, with 
                        respect to a supplemental allotment 
                        population group, is the product of--
                                    ``(I) the total amount of 
                                administrative expenditures for 
                                which Federal financial 
                                participation was provided to 
                                the State under section 1903(a) 
                                (other than paragraphs (1) and 
                                (5) of such section) for fiscal 
                                year 1995, and
                                    ``(II) the ratio described 
                                in clause (iv) for the 
                                population group.
                    ``(iv) Ratio described.--The ratio 
                described in this clause for a group is the 
                ratio of--
                                    ``(I) the total amount of 
                                expenditures described in 
                                clause (ii) for the group, to
                                    ``(II) the total amount of 
                                expenditures described in such 
                                clause for all individuals 
                                under the State plan under 
                                title XIX in the base fiscal 
                                year.
                    ``(C) CPI increase factor.--In subparagraph 
                (A), the `CPI increase factor' for a fiscal 
                year is the percentage by which--
                            ``(i) the Secretary's estimate of 
                        the average value of the consumer price 
                        index for all urban consumers (all 
                        items, U.S. city average) for months in 
                        the fiscal year, exceeds
                            ``(ii) the average value of such 
                        index for months in the previous fiscal 
                        year.
                    ``(D) Special rules for certain medicare 
                beneficiaries.--
                            ``(i) Qualified disabled and 
                        working individuals.--In the case of 
                        the supplemental allotment population 
                        group described in paragraph (2)(F), 
                        the `applicable per beneficiary 
                        amount', for all States for a fiscal 
                        year is the sum of the medicare 
                        premiums applied under section 1818A 
                        for months in the fiscal year.
                            ``(ii) Other medicare 
                        beneficiaries.--In the case of the 
                        supplemental allotment population group 
                        described in paragraph (2)(G), the 
                        `applicable per beneficiary amount', 
                        for all States for a fiscal year is the 
                        sum of the medicare premiums applied 
                        under section 1839 for months in the 
                        fiscal year.
            ``(5) Conditions for access to umbrella 
        supplemental allotment.--
                    ``(A) In general.--A State may receive a 
                supplemental umbrella allotment under this 
                subsection for a fiscal year only if the 
                following conditions are met:
                            ``(i) The State provides assurances 
                        satisfactory to the Secretary that it 
                        will obligate during the fiscal year 
                        the full amount of the allotment 
                        otherwise provided under this section 
                        for the fiscal year.
                            ``(ii) The State provides 
                        assurances satisfactory to the 
                        Secretary that any amount attributable 
                        to a carryover from a previous fiscal 
                        year under subsection (a)(2)(B) shall 
                        also be obligated under the plan by the 
                        end of the fiscal year.
                            ``(iii) The State submits to the 
                        Secretary on a periodic basis such 
                        reports on numbers of individuals 
                        within each supplemental allotment 
                        population group as the Secretary may 
                        determine necessary to assure the 
                        accuracy of the supplemental umbrella 
                        allotments under this subsection. The 
                        Secretary may not require the 
                        submission of such reports more 
                        frequently than quarterly.
                            ``(iv) The State provides 
                        assurances satisfactory to the 
                        Secretary that it has in effect such 
                        data collection procedures as may be 
                        necessary to provide for the reports 
                        described in clause (iii).
                    ``(B) Estimate.--The amount of any 
                supplemental allotment under this subsection 
                shall be estimated in advance of the fiscal 
                year involved, based on data required to be 
                reported under subparagraph (A)(iii). The 
                Secretary is authorized to adjust such data on 
                a preliminary basis if the Secretary determines 
                that the estimates do not reasonably reflect 
                the actual excess number of individuals in the 
                supplemental allotment population groups for 
                the fiscal year involved. Section 1512(b)(6) 
                provides for adjustment of payments of the 
                supplemental allotment under this subsection 
                based on a final determination using data on 
                actual numbers of individual in each 
                supplemental allotment population group.
            ``(6) Adjustment in allotment for savings from 
        slower population growth.--
                    ``(A) In general.--The amount of the 
                supplemental umbrella allotment to a State 
                under this subsection for a fiscal year shall 
                be reduced (but not below zero) by the sum, for 
                each supplemental allotment population group 
                described in paragraph (2), of the product of 
                the following:
                            ``(i) Less-than-anticipated number 
                        of individuals.--The less-than-
                        anticipated number of individuals (if 
                        any, determined under subparagraph (B)) 
                        for State and the fiscal year who are 
                        in the population group.
                            ``(ii) Applicable per beneficiary 
                        amount.--The applicable per beneficiary 
                        amount (determined under paragraph (4)) 
                        for the State and fiscal year for the 
                        population group.
                            ``(iii) FMAP.--The old Federal 
                        medical assistance percentage (as 
                        defined in section 1512(d)) for the 
                        State and fiscal year.
                    ``(B) Less-than-anticipated number of 
                individuals.--In this paragraph, the `less-
                than-anticipated number of individuals', for a 
                State for a fiscal year with respect to a 
                supplemental allotment population group, is 
                equal to the amount (if any) by which--
                            ``(i) the anticipated number of 
                        such individuals (as determined under 
                        paragraph (3)(B)) for the State and 
                        fiscal year in such group, exceeds
                            ``(ii) the number of full-year 
                        equivalent individuals in the 
                        population group for the State and 
                        fiscal year.
            ``(7) Special rule for fiscal year 1997.--In 
        applying this subsection to fiscal year 1997--
                    ``(A) in determining the excess number of 
                individuals under paragraph (3)--
                            ``(i) the number of full-year 
                        equivalent individuals shall only be 
                        determined based on the portion of 
                        fiscal year 1997 in which the State 
                        plan is in effect under this title, and
                            ``(ii) the anticipated number of 
                        such individuals (referred to in 
                        paragraph (3)(A)(ii)) shall be the 
                        anticipated number otherwise determined 
                        multiplied by the proportion of fiscal 
                        year 1997 in which such State plan will 
                        be in effect; and
                    ``(B) if the State plan is effective before 
                April 1, 1997, the amount of the supplemental 
                allotment otherwise determined under this 
                subsection shall be multiplied by the ratio of 
                the portion of fiscal year 1997 that occurs on 
                or after April 1, 1997, to the total portion of 
                such fiscal year in which the State plan is in 
                effect.
    ``(h) Allotment for Medical Assistance for Services 
Provided in Indian Health Service and Related Facilities.--
            ``(1) In general.--For purposes of this section for 
        each of fiscal years 1998 through 2002 in the case of a 
        subsection (h) supplemental allotment eligible State, 
        the amount of the supplemental allotment under this 
        subsection is the amount provided under paragraph (2) 
        for the State for that year. Such amount may only be 
        used for the purpose of providing medical assistance 
        described in section 1512(f)(3) (relating to services 
        provided by the Indian Health Service and related 
        facilities).
            ``(2) Supplemental outlay allotment.--
                    ``(A) In general.--For purposes of 
                paragraph (1), the amount under this paragraph 
                for a subsection (h) supplemental allotment 
                eligible State for a fiscal year is equal to 
                the subsection (h) supplemental allotment ratio 
                (as defined in subparagraph (C)) multiplied by 
                the subsection (h) supplemental pool amount 
                (specified in subparagraph (D)) for the fiscal 
                year.
                    ``(B) Subsection (h) supplemental allotment 
                eligible state.--In this subsection, the term 
                `subsection (h) supplemental allotment eligible 
                State' means a State that has one or more 
                facilities described in section 1512(f)(3)(A).
                    ``(C) Subsection (h) supplemental allotment 
                ratio.--In this paragraph, the `subsection (h) 
                supplemental allotment ratio' for a State is 
                the ratio of--
                            ``(i) the number of Indians 
                        residing in the State, to
                            ``(ii) the sum of such numbers for 
                        all subsection (h) supplemental 
                        allotment eligible States.
                    ``(D) Subsection (h) supplemental pool 
                amount.--In this paragraph, the `subsection (h) 
                supplemental pool amount', for--
                            ``(i) fiscal year 1998 is 
                        $89,090,082,
                            ``(ii) fiscal year 1999 is 
                        $94,238,788,
                            ``(iii) fiscal year 2000 is 
                        $99,685,050,
                            ``(iv) fiscal year 2001 is 
                        $105,446,063, and
                            ``(v) fiscal year 2002 is 
                        $111,540,017.
                    ``(E) Determination of number.--The number 
                of Indians residing in a State under this 
                paragraph for a fiscal year shall be based on 
                the most recent available estimate of the 
                Secretary of the Interior.
            ``(3) Indian defined.--The term `Indian' has the 
        meaning given such term in section 4(d) of the Indian 
        Self-Determination and Education Assistance Act (25 
        U.S.C. 450b(d)).

``SEC. 1512. PAYMENTS TO STATES.

    ``(a) Amount of Payment.--From the allotment of a State 
under section 1511 for a fiscal year, subject to the succeeding 
provisions of this title, the Secretary shall pay to each State 
which has a State plan approved under part C, for each quarter 
in the fiscal year--
            ``(1) an amount equal to the applicable Federal 
        medical assistance percentage (as defined in subsection 
        (c)) of the total amount expended during such quarter 
        as medical assistance under the plan; plus
            ``(2) an amount equal to the applicable Federal 
        medical assistance percentage of the total amount 
        expended during such quarter for medically-related 
        services (as defined in section 1571(g)); plus
            ``(3) subject to section 1513(c)--
                    ``(A) an amount equal to 90 percent of the 
                amounts expended during such quarter for the 
                design, development, and installation of 
                information systems and for providing 
                incentives to promote the enforcement of 
                medical support orders, plus
                    ``(B) an amount equal to 75 percent of the 
                amounts expended during such quarter for 
                medical personnel, administrative support of 
                medical personnel, operation and maintenance of 
                information systems, modification of 
                information systems, quality assurance 
                activities, utilization review, medical and 
                peer review, anti-fraud activities, independent 
                evaluations, coordination of benefits, and 
                meeting reporting requirements under this 
                title, plus
                    ``(C) an amount equal to 50 percent of so 
                much of the remainder of the amounts expended 
                during such quarter as are expended by the 
                State in the administration of the State plan.
    ``(b) Payment Process.--
            ``(1) Quarterly estimates.--Prior to the beginning 
        of each quarter, the Secretary shall estimate the 
        amount to which a State will be entitled under 
        subsection (a) for such quarter, such estimates to be 
        based on (A) a report filed by the State containing its 
        estimate of the total sum to be expended in such 
        quarter in accordance with the provisions of such 
        subsections, and stating the amount appropriated or 
        made available by the State and its political 
        subdivisions for such expenditures in such quarter, and 
        if such amount is less than the State's proportionate 
        share of the total sum of such estimated expenditures, 
        the source or sources from which the difference is 
        expected to be derived, and (B) such other 
        investigation as the Secretary may find necessary.
            ``(2) Payment.--
                    ``(A) In general.--The Secretary shall then 
                pay to the State, in such installments as the 
                Secretary may determine and in accordance with 
                section 6503(a) of title 31, United States 
                Code, the amount so estimated, reduced or 
                increased to the extent of any overpayment or 
                underpayment which the Secretary determines was 
                made under this section (or section 1903) to 
                such State for any prior quarter and with 
                respect to which adjustment has not already 
                been made under this subsection (or under 
                section 1903(d)).
                    ``(B) Treatment as overpayments.--
                Expenditures for which payments were made to 
                the State under subsection (a) shall be treated 
                as an overpayment to the extent that the State 
                or local agency administering such plan has 
                been reimbursed for such expenditures by a 
                third party pursuant to the provisions of its 
                plan in compliance with section 1555.
                    ``(C) Recovery of overpayments.--For 
                purposes of this subsection, when an 
                overpayment is discovered, which was made by a 
                State to a person or other entity, the State 
                shall have a period of 60 days in which to 
                recover or attempt to recover such overpayment 
                before adjustment is made in the Federal 
                payment to such State on account of such 
                overpayment. Except as otherwise provided in 
                subparagraph (D), the adjustment in the Federal 
                payment shall be made at the end of the 60 
                days, whether or not recovery was made.
                    ``(D) No adjustment for uncollectables.--In 
                any case where the State is unable to recover a 
                debt which represents an overpayment (or any 
                portion thereof) made to a person or other 
                entity on account of such debt having been 
                discharged in bankruptcy or otherwise being 
                uncollectable, no adjustment shall be made in 
                the Federal payment to such State on account of 
                such overpayment (or portion thereof).
            ``(3) Federal share of recoveries.--The pro rata 
        share to which the United States is equitably entitled, 
        as determined by the Secretary, of the net amount 
        recovered during any quarter by the State or any 
        political subdivision thereof with respect to medical 
        assistance furnished under the State plan shall be 
        considered an overpayment to be adjusted under this 
        subsection.
            ``(4) Timing of obligation of funds.--Upon the 
        making of any estimate by the Secretary under this 
        subsection, any appropriations available for payments 
        under this section shall be deemed obligated.
            ``(5) Disallowances.--In any case in which the 
        Secretary estimates that there has been an overpayment 
        under this section to a State on the basis of a claim 
        by such State that has been disallowed by the Secretary 
        under section 1116(d) or in the case described in 
        paragraph (6)(C), and such State disputes such 
        disallowance or an adjustment under such paragraph, the 
        amount of the Federal payment in controversy shall, at 
        the option of the State, be retained by such State or 
        recovered by the Secretary pending a final 
        determination with respect to such payment amount. If 
        such final determination is to the effect that any 
        amount was properly disallowed, and the State chose to 
        retain payment of the amount in controversy, the 
        Secretary shall offset, from any subsequent payments 
        made to such State under this title, an amount equal to 
        the proper amount of the disallowance plus interest on 
        such amount disallowed for the period beginning on the 
        date such amount was disallowed and ending on the date 
        of such final determination at a rate (determined by 
        the Secretary) based on the average of the bond 
        equivalent of the weekly 90-day treasury bill auction 
        rates during such period.
            ``(6) Adjustments in payments reflecting over- and 
        under-estimations of supplemental umbrella allotment.--
                    ``(A) In general.--Based on data reported 
                under section 1511(g)(5)(A)(iii) and annual 
                audits provided for under section 1551(a) on 
                the actual excess number of individuals in each 
                population group for a fiscal year, the 
                Secretary shall determine the final amount of 
                the supplemental umbrella allotment for each 
                State for the fiscal year and whether, based on 
                such final amount, the amount of payment made 
                for the fiscal year was greater, or less, than 
                the amount that should have been paid if 
                payments had been made based on such final 
                amount.
                    ``(B) Payment in case of underestimation.--
                If the Secretary determines under subparagraph 
                (A) there was an underpayment to a State, the 
                Secretary shall increase the amount of the next 
                quarterly payment under this section to the 
                State by the amount of such underpayment.
                    ``(C) Offsetting of payments in case of 
                overestimation.--If the Secretary determines 
                under subparagraph (A) there was an overpayment 
                to a State, the Secretary shall, subject to the 
                procedures provided under paragraph (5), 
                decrease the amount of the payment for the next 
                quarter (or, at the discretion of the 
                Secretary, over a period of not more than 4 
                calendar quarters) by the amount of such 
                overpayment. In the case in which a State seeks 
                review of such a determination in accordance 
                with the procedures under paragraph (5), the 
                Secretary shall provide for completion of such 
                review process within 1 year after the date the 
                State requests such review.
    ``(c) Applicable Federal Medical Assistance Percentage 
Defined.--In this section, except as provided in subsection 
(f), the term `applicable Federal medical assistance 
percentage' means, with respect to one of the 50 States or the 
District of Columbia, at the State's or District's option--
            ``(1) the old Federal medical assistance percentage 
        (as determined in subsection (d));
            ``(2) the lesser of--
                    ``(A) new Federal medical assistance 
                percentage (as determined under subsection (e)) 
                or
                    ``(B) the old Federal medical assistance 
                percentage plus 10 percentage points; or
            ``(3) 60 percent.
    ``(d) Old Federal Medical Assistance Percentage.--
            ``(1) In general.--Except as provided in paragraph 
        (2) and subsection (f), the term `old Federal medical 
        assistance percentage' for any State is 100 percent 
        less the State percentage; and the State percentage is 
        that percentage which bears the same ratio to 45 
        percent as the square of the per capita income of such 
        State bears to the square of the per capita income of 
        the continental United States (including Alaska) and 
        Hawaii.
            ``(2) Limitation on range.--In no case shall the 
        old Federal medical assistance percentage be less than 
        50 percent or more than 83 percent.
            ``(3) Promulgation.--The old Federal medical 
        assistance percentage for any State shall be determined 
        and promulgated in accordance with the provisions of 
        section 1101(a)(8)(B).
    ``(e) New Federal Medical Assistance Percentage Defined.--
            ``(1) In general.--
                    ``(A) Term defined.--Except as provided in 
                paragraph (3) and subsection (f), the term `new 
                Federal medical assistance percentage' means, 
                for each of the 50 States and the District of 
                Columbia, 100 percent reduced by the product 
                0.39 and the ratio of--
                            ``(i)(I) for each of the 50 States, 
                        the total taxable resources (TTR) ratio 
                        of the State specified in subparagraph 
                        (B), or
                            ``(II) for the District of 
                        Columbia, the per capita income ratio 
                        specified in subparagraph (C),
                to--
                            ``(ii) the aggregate expenditure 
                        need ratio of the State or District, as 
                        described in subparagraph (D).
                    ``(B) Total taxable resources (ttr) 
                ratio.--For purposes of subparagraph (A)(i)(I), 
                the total taxable resources (TTR) ratio for 
                each of the 50 States is--
                            ``(i) an amount equal to the most 
                        recent 3-year average of the total 
                        taxable resources (TTR) of the State, 
                        as determined by the Secretary of the 
                        Treasury, divided by
                            ``(ii) an amount equal to the sum 
                        of the 3-year averages determined under 
                        clause (i) for each of the 50 States.
                    ``(C) Per capita income ratio.--For 
                purposes of subparagraph (A)(i)(II), the per 
                capita income ratio of the District of Columbia 
                is--
                            ``(i) an amount equal to the most 
                        recent 3-year average of the total 
                        personal income of the District of 
                        Columbia, as determined in accordance 
                        with the provisions of section 
                        1101(a)(8)(B), divided by
                            ``(ii) an amount equal to the total 
                        personal income of the continental 
                        United States (including Alaska) and 
                        Hawaii, as determined under section 
                        1101(a)(8)(B).
                    ``(D) Aggregate expenditure need ratio.--
                For purposes of subparagraph (A), with respect 
                to each of the 50 States and the District of 
                Columbia for a fiscal year, the aggregate 
                expenditure need ratio is--
                            ``(i) the State aggregate 
                        expenditure need (as defined in section 
                        1511(d)) for the State for the fiscal 
                        year, divided by
                            ``(ii) the sum of such State 
                        aggregate expenditure needs for the 50 
                        States and the District of Columbia for 
                        the fiscal year.
            ``(2) Limitation on range.--Except as provided in 
        subsection (f), the new Federal medical assistance 
        percentage shall in no case be less than 40 percent or 
        greater than 83 percent.
            ``(3) Promulgation.--The new Federal medical 
        assistance percentage for any State shall be 
        promulgated in a timely manner consistent with the 
        promulgation of the old Federal medical assistance 
        percentage under section 1101(a)(8)(B).
    ``(f) Special Rules.--For purposes of this title:
            ``(1) Commonwealths and territories.--In the case 
        of Puerto Rico, the Virgin Islands, Guam, the Northern 
        Mariana Islands, and American Samoa, the old and new 
        Federal medical assistance percentages are 50 percent.
            ``(2) Alaska.--In the case of Alaska, the old 
        Federal medical assistance percentage is that 
        percentage which bears the same ratio to 45 percent as 
        the square of the adjusted per capita income of such 
        State bears to the square of the per capita income of 
        the continental United States. For purposes of the 
        preceding sentence, the adjusted per capita income for 
        Alaska shall be determined by dividing the State's most 
        recent 3-year average per capita by the health care 
        cost index for such State (as determined under section 
        1511(d)(3)).
            ``(3) Indian health service and related 
        facilities.--The old and new Federal medical assistance 
        percentages shall be 100 percent with respect to the 
        amounts expended as medical assistance for services 
        provided by--
                    ``(A) an Indian Health Service facility;
                    ``(B) an Indian health program operated by 
                an Indian tribe or tribal organization (as 
                defined in section 4 of the Indian Health Care 
                Improvement Act) pursuant to a contract, grant, 
                cooperative agreement, or compact with the 
                Indian Health Service under the Indian Self-
                Determination Act; or
                    ``(C) an urban Indian health program 
                operated by an urban Indian organization 
                pursuant to a grant or contract with the Indian 
                Health Service under title V of the Indian 
                Health Care Improvement Act.
            ``(4) No state matching required for certain 
        expenditures.--In applying subsection (a)(1) with 
        respect to medical assistance provided to unlawful 
        aliens pursuant to the exception specified in section 
        1513(f)(2), payment shall be made for the amount of 
        such assistance without regard to any need for a State 
        match.
            ``(5) Special transitional rule.--
                    ``(A) In general.--Notwithstanding 
                subsection (a), in order to receive the full 
                State outlay allotment described in section 
                1511(c)(3)(C)(i), a State described in 
                subparagraph (C) shall expend State funds in a 
                fiscal year (before fiscal year 2000) under a 
                State plan under this title in an amount not 
                less than the adjusted base year State 
                expenditures, plus the applicable percentage of 
                the difference between such expenditures and 
                the amount necessary to qualify for the full 
                State outlay allotment so described in such 
                fiscal year as determined under this section 
                without regard to this paragraph.
                    ``(B) Reduction in allotment if expenditure 
                not met.--In the event a State described in 
                subparagraph (C) fails to expend State funds in 
                an amount required by subparagraph (A) for a 
                fiscal year, the outlay allotment described in 
                section 1511(c)(3)(C)(i) for such year for such 
                State shall be reduced by an amount which bears 
                the same ratio to such outlay allotment as the 
                State funds expended in such fiscal year bears 
                to the amount required by subparagraph (A).
                    ``(C) Adjusted base year state 
                expenditures.--For purposes of this paragraph, 
                the term `adjusted base year State 
                expenditures' means, for Louisiana, 
                $355,000,000.
                    ``(D) Applicable percentage.--For purposes 
                of this paragraph, the applicable percentage 
                for a fiscal year is specified in the following 
                table:

                                                              Applicable
``Fiscal year:                                               Percentage:
    1996......................................................       20 
    1997......................................................       40 
    1998......................................................       60 
    1999......................................................       80.

            ``(6) Treatment of expenditures attributable to 
        umbrella fund.--The `applicable Federal medical 
        assistance percentage' with respect to amounts 
        attributable to supplemental amounts described in 
        section 1511(g), is the old Federal medical assistance 
        percentage.
    ``(g) Use of Local Funds.--
            ``(1) In general.--Subject to paragraph (2), a 
        State may use local funds to meet the non-Federal share 
        of the expenditures under the State plan with respect 
        to which payments may be made under this section.
            ``(2) Limitation.--For any fiscal year local funds 
        may not exceed 40 percent of the total of the non-
        Federal share of such expenditures for the fiscal year.
    ``(h) Permitting Inter-Governmental Funds Transfers.--
            ``(1) In general.--Public funds, as defined in 
        paragraph (2), may be considered as the State's share 
        in determining State financial participation under this 
        title.
            ``(2) Public funds defined.--For purposes of this 
        subsection, the term `public funds' means funds--
                    ``(A) that are--
                            ``(i) appropriated directly to the 
                        State or to the local agency 
                        administering the State plan under this 
                        title, or transferred from other public 
                        agencies (including Indian tribes) to 
                        the State or local agency and under its 
                        administrative control, or
                            ``(ii) certified by the 
                        contributing public agency as 
                        representing expenditures eligible for 
                        Federal financial participation under 
                        this title; and
                    ``(B) that--
                            ``(i) are not Federal funds, or
                            ``(ii) are Federal funds authorized 
                        by Federal law to be used to match 
                        other Federal funds.
    ``(i) Application of Provider Tax and Donation 
Restrictions.--
            ``(1) In general.--Subject to paragraph (2), the 
        provisions of section 1903(w) (as in effect on June 1, 
        1996) shall apply under this title in the same manner 
        as they applied under title XIX (as of such date).
            ``(2) Waiver authority.--Beginning 2 years after 
        the date of the enactment of this title, the Secretary, 
        taking into account the report submitted under section 
        1513(j)(2), may waive, upon the application of a State, 
        paragraph (1) as it applies in that State if the 
        Secretary determines that the waiver would not 
        financially undermine the program under this title and 
        would not otherwise be abusive.

``SEC. 1513. LIMITATION ON USE OF FUNDS; DISALLOWANCE.

    ``(a) In General.--Funds provided to a State under this 
title shall only be used to carry out the purposes of this 
title.
    ``(b) Disallowances For Excluded Providers.--
            ``(1) In general.--Payment shall not be made to a 
        State under this part for expenditures for items and 
        services furnished--
                    ``(A) by a provider who was excluded from 
                participation under title V, XVIII, or XX or 
                under this title pursuant to section 1128, 
                1128A, 1156, or 1842(j)(2), or
                    ``(B) under the medical direction or on the 
                prescription of a physician who was so 
                excluded, if the provider of the services knew 
                or had reason to know of the exclusion.
            ``(2) Exception for emergency services.--Paragraph 
        (1) shall not apply to emergency items or services, not 
        including hospital emergency room services.
    ``(c) Limitations on Payments for Medically-Related 
Services and Administrative Expenses.--
            ``(1) In general.--No Federal financial assistance 
        is available for expenditures under the State plan 
        for--
                    ``(A) medically-related services for a 
                quarter to the extent such expenditures exceed 
                5 percent of the total expenditures under the 
                plan for the quarter, or
                    ``(B) total administrative expenses (other 
                than expenses described in paragraph (2) during 
                the first 8 quarters in which the plan is in 
                effect under this title) for quarters in a 
                fiscal year to the extent such expenditures 
                exceed the sum of $20,000,000 plus 10 percent 
                of the total expenditures under the plan for 
                the year.
            ``(2) Administrative expenses not subject to 
        limitation.--The administrative expenses referred to in 
        this paragraph are expenditures under the State plan 
        for the following activities:
                    ``(A) Quality assurance.
                    ``(B) The development and operation of the 
                certification program for nursing facilities 
                and intermediate care facilities for the 
                mentally retarded under section 1557.
                    ``(C) Utilization review activities, 
                including medical activities and activities of 
                peer review organizations.
                    ``(D) Inspection and oversight of providers 
                and capitated health care organizations.
                    ``(E) Anti-fraud activities.
                    ``(F) Independent evaluations.
                    ``(G) Activities required to meet reporting 
                requirements under this title.
    ``(d) Treatment of Third Party Liability.--No payment shall 
be made to a State under this part for expenditures for medical 
assistance provided for an individual under its State plan to 
the extent that a private insurer (as defined by the Secretary 
by regulation and including a group health plan (as defined in 
section 607(1) of the Employee Retirement Income Security Act 
of 1974), a service benefit plan, and a health maintenance 
organization) would have been obligated to provide such 
assistance but for a provision of its insurance contract which 
has the effect of limiting or excluding such obligation because 
the individual is eligible for or is provided medical 
assistance under the plan.
    ``(e) Secondary Payer Provisions.--Except as otherwise 
provided by law, no payment shall be made to a State under this 
part for expenditures for medical assistance provided for an 
individual under its State plan to the extent that payment has 
been made or can reasonably be expected to be made promptly (as 
determined in accordance with regulations) under any other 
federally operated or financed health care insurance program, 
other than an insurance program operated or financed by the 
Indian Health Service, as identified by the Secretary. For 
purposes of this subsection, rules similar to the rules for 
overpayments under section 1512(b) shall apply.
    ``(f) Limitation on Payments For Services to Nonlawful 
Aliens.--
            ``(1) In general.--Notwithstanding the preceding 
        provisions of this section, except as provided in 
        paragraph (2), no payment may be made to a State under 
        this part for medical assistance furnished to an alien 
        who is not lawfully admitted for permanent residence or 
        otherwise permanently residing in the United States 
        under color of law.
            ``(2) Exception.--Payment may be made under this 
        section for care and services that are furnished to an 
        alien described in paragraph (1) only if--
                    ``(A) such care and services are necessary 
                for the treatment of an emergency medical 
                condition of the alien (or, at the option of 
                the State, for prenatal care),
                    ``(B) such alien otherwise meets the 
                eligibility requirements for medical assistance 
                under the State plan (other than a requirement 
                of the receipt of aid or assistance under title 
                IV, supplemental security income benefits under 
                title XVI, or a State supplementary payment), 
                and
                    ``(C) such care and services are not 
                related to an organ transplant procedure.
            ``(3) Emergency medical condition defined.--For 
        purposes of this subsection, the term `emergency 
        medical condition' means a medical condition (including 
        emergency labor and delivery) manifesting itself by 
        acute symptoms of sufficient severity (including severe 
        pain) such that the absence of immediate medical 
        attention could reasonably be expected to result in--
                    ``(A) placing the patient's health in 
                serious jeopardy,
                    ``(B) serious impairment to bodily 
                functions, or
                    ``(C) serious dysfunction of any bodily 
                organ or part.
    ``(g) Limitation on Payment for Certain Outpatient 
Prescription Drugs.--
            ``(1) In general.--No payment may be made to a 
        State under this part for medical assistance for 
        covered outpatient drugs (as defined in section 
        1575(i)(2)) of a manufacturer provided under the State 
        plan unless the manufacturer (as defined in section 
        1575(i)(4)) of the drug--
                    ``(A) has entered into a master rebate 
                agreement with the Secretary under section 
                1575,
                    ``(B) is otherwise complying with the 
                provisions of such section,
                    ``(C) subject to paragraph (4), is 
                complying with the provisions of section 8126 
                of title 38, United States Code, including the 
                requirement of entering into a master agreement 
                with the Secretary of Veterans Affairs under 
                such section, and
                    ``(D) subject to paragraph (4), is 
                complying with the provisions of section 340B 
                of the Public Health Service Act, including the 
                requirement of entering into an agreement with 
                the Secretary under such section.
            ``(2) Construction.--Nothing in this subsection 
        shall be construed as requiring a State to participate 
        in the master rebate agreement under section 1575.
            ``(3) Effect of subsequent amendments.--For 
        purposes of subparagraphs (C) and (D) of paragraph (1), 
        in determining whether a manufacturer is in compliance 
        with the requirements of section 8126 of title 38, 
        United States Code, or section 340B of the Public 
        Health Service Act--
                    ``(A) the Secretary shall not take into 
                account any amendments to such sections that 
                are enacted after the enactment of title VI of 
                the Veterans Health Care Act of 1992, and
                    ``(B) a manufacturer is deemed to meet such 
                requirements if the manufacturer establishes to 
                the satisfaction of the Secretary that the 
                manufacturer would comply (and has offered to 
                comply) with the provisions of such sections 
                (as in effect immediately after the enactment 
                of the Veterans Health Care Act of 1992) and 
                would have entered into an agreement under such 
                section (as such section was in effect at such 
                time), but for a legislative change in such 
                section after the date of the enactment of the 
                Veterans Health Care Act of 1992.
            ``(4) Effect of establishment of alternative 
        mechanism under public health service act.--If the 
        Secretary does not establish a mechanism to ensure 
        against duplicate discounts or rebates under section 
        340B(a)(5)(A) of the Public Health Service Act within 
        12 months of the date of the enactment of such section, 
        the following requirements shall apply:
                    ``(A) Each covered entity under such 
                section shall inform the State when it is 
                seeking reimbursement from the State plan for 
                medical assistance with respect to a unit of 
                any covered outpatient drug which is subject to 
                an agreement under section 340B(a) of such Act.
                    ``(B) Each such State shall provide a means 
                by which such an entity shall indicate on any 
                drug reimbursement claims form (or format, 
                where electronic claims management is used) 
                that a unit of the drug that is the subject of 
                the form is subject to an agreement under 
                section 340B of such Act, and not submit to any 
                manufacturer a claim for a rebate payment with 
                respect to such a drug.
    ``(h) Limitation on Payment for Abortions.--
            ``(1) In general.--Payment shall not be made to a 
        State under this part for any amount expended under the 
        State plan to pay for any abortion or to assist in the 
        purchase, in whole or in part, of health benefit 
        coverage that includes coverage of abortion.
            ``(2) Exception.--Paragraph (1) shall not apply to 
        an abortion--
                    ``(A) if the pregnancy is the result of an 
                act of rape or incest, or
                    ``(B) in the case where a woman suffers 
                from a physical disorder, illness, or injury 
                that would, as certified by a physician, place 
                the woman in danger of death unless an abortion 
                is performed.
    ``(i) Limitation on Payment for Assisting Deaths.--Payment 
shall not be made to a State under this part for amounts 
expended under the State plan to pay for, or to assist in the 
purchase, in whole or in part, of health benefit coverage that 
includes payment for any drug, biological product, or service 
which was furnished for the purpose of causing, or assisting in 
causing, the death, suicide, euthanasia, or mercy killing of a 
person.
    ``(j) Study and Report on State Funding.--
            ``(1) Study.--The Comptroller General shall provide 
        for a study of the methods by which States provide for 
        financing their share of expenditures under this title. 
        Such study shall include an examination of the use of 
        provider taxes and donations, as well as 
        intergovernmental transfers.
            ``(2) Report.--Not later than 2 years after the 
        date of the enactment of this title, the Comptroller 
        General shall submit to Congress a report on such 
        study. The report shall include such recommendations as 
        the Comptroller General deems appropriate.

          ``Part C--Establishment and Amendment of State Plans

``SEC. 1521. DESCRIPTION OF STRATEGIC OBJECTIVES AND PERFORMANCE GOALS.

    ``(a) Description.--A State plan shall include a 
description of the strategic objectives and performance goals 
the State has established for providing health care services to 
low-income populations under this title, including a general 
description of the manner in which the plan is designed to meet 
these objectives and goals.
    ``(b) Certain Objectives and Goals Required.--A State plan 
shall include strategic objectives and performance goals 
relating to rates of childhood immunizations, reductions in 
infant mortality and morbidity, and access to services for 
children with special health care needs (as defined by the 
State).
    ``(c) Considerations.--In specifying these objectives and 
goals the State may consider factors such as the following:
            ``(1) The State's priorities with respect to 
        providing assistance to low-income populations.
            ``(2) The State's priorities with respect to the 
        general public health and the health status of 
        individuals eligible for assistance under the State 
        plan.
            ``(3) The State's financial resources, the 
        particular economic conditions in the State, and 
        relative adequacy of the health care infrastructure in 
        different regions of the State.
    ``(d) Performance Measures.--To the extent practicable--
            ``(1) one or more performance goals shall be 
        established by the State for each strategic objective 
        identified in the State plan; and
            ``(2) the State plan shall describe, how program 
        performance will be--
                    ``(A) measured through objective, 
                independently verifiable means, and
                    ``(B) compared against performance goals, 
                in order to determine the State's performance 
                under this title.
    ``(e) Period Covered.--
            ``(1) Strategic objectives.--The strategic 
        objectives shall cover a period of not less than 5 
        years and shall be updated and revised at least every 3 
        years.
            ``(2) Performance goals.--The performance goals 
        shall be established for dates that are not more than 3 
        years apart.

``SEC. 1522. ANNUAL REPORTS.

    ``(a) In General.--In the case of a State with a State plan 
that is in effect for part or all of a fiscal year, no later 
than March 31 following such fiscal year the State shall 
prepare and submit to the Secretary and the Congress a report 
on program activities and performance under this title for such 
fiscal year.
    ``(b) Contents.--Each annual report under this section for 
a fiscal year shall include the following:
            ``(1) Expenditure and beneficiary summary.--
                    ``(A) Initial summary.--For the report for 
                fiscal year 1997, a summary of all expenditures 
                under the State plan during the fiscal year as 
                follows:
                            ``(i) Aggregate medical assistance 
                        expenditures, disaggregated to the 
                        extent required to determine compliance 
                        with the set-aside requirement of 
                        section 1502(c) and to determine the 
                        program need of the State under section 
                        1511(d)(2).
                            ``(ii) For each general category of 
                        eligible individuals (specified in 
                        subsection (c)(1)), aggregate medical 
                        assistance expenditures and the total 
                        and average number of eligible 
                        individuals under the State plan.
                            ``(iii) By each general category of 
                        eligible individuals, total 
                        expenditures for each of the categories 
                        of health care items and services 
                        (specified in subsection (c)(2)) which 
                        are covered under the State plan and 
                        provided on a fee-for-service basis.
                            ``(iv) By each general category of 
                        eligible individuals, total 
                        expenditures for payments to capitated 
                        health care organizations (as defined 
                        in section 1504(c)(1)).
                            ``(v) Total administrative 
                        expenditures.
                    ``(B) Subsequent summaries.--For reports 
                for each succeeding fiscal year, a summary of--
                            ``(i) all expenditures under the 
                        State plan, and
                            ``(ii) the total and average number 
                        of eligible individuals under the State 
                        plan for each general category of 
                        eligible individuals.
            ``(2) Utilization summary.--
                    ``(A) Initial summary.--For the report for 
                fiscal year 1997, summary statistics on the 
                utilization of health care services under the 
                State plan during the year as follows:
                            ``(i) For each general category of 
                        eligible individuals and for each of 
                        the categories of health care items and 
                        services which are covered under the 
                        State plan and provided on a fee-for-
                        service basis, the number and 
                        percentage of persons who received such 
                        a type of service or item during the 
                        period covered by the report.
                            ``(ii) Summary of health care 
                        utilization data reported to the State 
                        by capitated health care organizations.
                    ``(B) Subsequent summaries.--For reports 
                for each succeeding fiscal year, summary 
                statistics on the utilization of health care 
                services under the State plan.
            ``(3) Achievement of performance goals.--With 
        respect to each performance goal established under 
        section 1521 and applicable to the year involved--
                    ``(A) a brief description of the goal;
                    ``(B) a description of the methods to be 
                used to measure the attainment of such goal;
                    ``(C) data on the actual performance with 
                respect to the goal;
                    ``(D) a review of the extent to which the 
                goal was achieved, based on such data; and
                    ``(E) if a performance goal has not been 
                met--
                            ``(i) why the goal was not met, and
                            ``(ii) actions to be taken in 
                        response to such performance, including 
                        adjustments in performance goals or 
                        program activities for subsequent 
                        years.
            ``(4) Program evaluations.--A summary of the 
        findings of evaluations under section 1523 completed 
        during the fiscal year covered by the report.
            ``(5) Fraud and abuse and quality control 
        activities.--A general description of the State's 
        activities under part D to detect and deter fraud and 
        abuse and to assure quality of services provided under 
        the program.
            ``(6) Plan administration.--
                    ``(A) A description of the administrative 
                roles and responsibilities of entities in the 
                State responsible for administration of this 
                title.
                    ``(B) Organizational charts for each entity 
                in the State primarily responsible for 
                activities under this title.
                    ``(C) A brief description of each 
                interstate compact (if any) the State has 
                entered into with other States with respect to 
                activities under this title.
                    ``(D) General citations to the State 
                statutes and administrative rules governing the 
                State's activities under this title.
    ``(c) Description of Categories.--In this section:
            ``(1) General categories of eligible individuals.--
        Each of the following is a general category of eligible 
        individuals:
                    ``(A) Pregnant women.
                    ``(B) Children.
                    ``(C) Blind or disabled adults who are not 
                elderly individuals.
                    ``(D) Elderly individuals.
                    ``(E) Other adults.
            ``(2) Categories of health care items and 
        services.--The health care items and services described 
        in each paragraph of section 1571(a) shall be 
        considered a separate category of health care items and 
        services.

``SEC. 1523. PERIODIC, INDEPENDENT EVALUATIONS.

    ``(a) In General.--During fiscal year 1999 and every third 
fiscal year thereafter, each State shall provide for an 
evaluation of the operation of its State plan under this title.
    ``(b) Independent.--Each such evaluation with respect to an 
activity under the State plan shall be conducted by an entity 
that is neither responsible under State law for the submission 
of the State plan (or part thereof) nor responsible for 
administering (or supervising the administration of) the 
activity. If consistent with the previous sentence, such an 
entity may be a college or university, a State agency, a 
legislative branch agency in a State, or an independent 
contractor.
    ``(c) Research Design.--Each such evaluation shall be 
conducted in accordance with a research design that is based on 
generally accepted models of survey design and sampling and 
statistical analysis.

``SEC. 1524. DESCRIPTION OF PROCESS FOR STATE PLAN DEVELOPMENT.

    ``Each State plan shall include a description of the 
process under which the plan shall be developed and implemented 
in the State (consistent with section 1525).

``SEC. 1525. CONSULTATION IN STATE PLAN DEVELOPMENT.

    ``(a) Public Notice Process.--Before submitting a State 
plan or a plan amendment described in subsection (c) to the 
Secretary under this part, a State shall provide--
            ``(1) public notice respecting the submittal of the 
        proposed plan or amendment, including a general 
        description of the plan or amendment,
            ``(2) a means for the public to inspect or obtain a 
        copy (at reasonable charge) of the proposed plan or 
        amendment,
            ``(3) an opportunity for submittal and 
        consideration of public comments on the proposed plan 
        or amendment, and
            ``(4) for consultation with one or more advisory 
        committees established and maintained by the State.
The previous sentence shall not apply to a revision of a State 
plan (or revision of an amendment to a plan) made by a State 
under section 1529(c)(1) or to a plan amendment withdrawal 
described in section 1529(c)(4).
    ``(b) Contents of Notice.--A notice under subsection (a)(1) 
for a proposed plan or amendment shall include a description 
of--
            ``(1) the general purpose of the proposed plan or 
        amendment (including applicable effective dates),
            ``(2) where the public may inspect the proposed 
        plan or amendment,
            ``(3) how the public may obtain a copy of the 
        proposed plan or amendment and the applicable charge 
        (if any) for the copy, and
            ``(4) how the public may submit comments on the 
        proposed plan or amendment, including any deadlines 
        applicable to consideration of such comments.
    ``(c) Amendments Described.--An amendment to a State plan 
described in this subsection is an amendment which makes a 
material and substantial change in eligibility under the State 
plan or the benefits provided under the plan.
    ``(d) Publication.--Notices under this section may be 
published (as selected by the State) in one or more daily 
newspapers of general circulation in the State or in any 
publication used by the State to publish State statutes or 
rules.
    ``(e) Comparable Process.--A separate notice, or notices, 
shall not be required under this section for a State if notice 
of the State plan or an amendment to the plan will be provided 
under a process specified in State law that is substantially 
equivalent to the notice process specified in this section.

``SEC. 1526. SUBMITTAL AND APPROVAL OF STATE PLANS.

    ``(a) Submittal.--As a condition of receiving funding under 
part B, each State shall submit to the Secretary a State plan 
that meets the applicable requirements of this title.
    ``(b) Approval.--Except as the Secretary may provide under 
section 1529 (including subsection (b) relating to 
noncompliance with required guarantees), a State plan submitted 
under subsection (a)--
            ``(1) shall be approved for purposes of this title, 
        and
            ``(2) shall be effective beginning on a date that 
        is specified in the plan, but in no case earlier than 
        60 days after the date the plan is submitted.
    ``(c) Construction.--Nothing in this section shall be 
construed as prohibiting a State from submitting a State plan 
that includes the coverage and benefits (including those 
provided under a waiver granted under section 1115) of its 
State plan under title XIX (as in effect as of the date of the 
enactment of the Medicaid Restructuring Act of 1996), so long 
as such plan complies with the applicable requirements of this 
title, including the guarantees under section 1501, and remains 
subject to the funding provisions of section 1511.

``SEC. 1527. SUBMITTAL AND APPROVAL OF PLAN AMENDMENTS.

    ``(a) Submittal of Amendments.--A State may amend, in whole 
or in part, its State plan at any time through transmittal of a 
plan amendment under this section.
    ``(b) Approval.--Except as the Secretary may provide under 
section 1529 (including subsection (b) relating to 
noncompliance with required guarantees), an amendment to a 
State plan submitted under subsection (a)--
            ``(1) shall be approved for purposes of this title, 
        and
            ``(2) shall be effective as provided in subsection 
        (c).
    ``(c) Effective Dates for Amendments.--
            ``(1) In general.--Subject to the succeeding 
        provisions of this subsection, an amendment to a State 
        plan shall take effect on one or more effective dates 
        specified in the amendment.
            ``(2) Amendments relating to eligibility or 
        benefits.--Except as provided in paragraph (4)--
                    ``(A) Notice requirement.--Any plan 
                amendment that eliminates or restricts 
                eligibility or benefits under the plan may not 
                take effect unless the State certifies that it 
                has provided prior or contemporaneous public 
                notice of the change, in a form and manner 
                provided under applicable State law.
                    ``(B) Timely transmittal.--Any plan 
                amendment that eliminates or restricts 
                eligibility or benefits under the plan shall 
                not be effective for longer than a 60-day 
                period unless the amendment has been 
                transmitted to the Secretary before the end of 
                such period.
            ``(3) Other amendments.--Subject to paragraph (4), 
        any plan amendment that is not described in paragraph 
        (2) becomes effective in a State fiscal year may not 
        remain in effect after the end of such fiscal year (or, 
        if later, the end of the 90-day period on which it 
        becomes effective) unless the amendment has been 
        transmitted to the Secretary.
            ``(4) Exception.--The requirements of paragraphs 
        (2) and (3) shall not apply to a plan amendment that is 
        submitted on a timely basis pursuant to a court order 
        or an order of the Secretary.

``SEC. 1528. PROCESS FOR STATE WITHDRAWAL FROM PROGRAM.

    ``(a) In General.--A State may rescind its State plan and 
discontinue participation in the program under this title at 
any time after providing--
            ``(1) the public with 90 days prior notice in a 
        publication in one or more daily newspapers of general 
        circulation in the State or in any publication used by 
        the State to publish State statutes or rules, and
            ``(2) the Secretary with 90 days prior written 
        notice.
    ``(b) Effective Date.--Such discontinuation shall not apply 
to payments under part B for expenditures made for items and 
services furnished under the State plan before the effective 
date of the discontinuation.
    ``(c) Proration of Allotments.--In the case of any 
withdrawal under this section other than at the end of a 
Federal fiscal year, notwithstanding any provision of section 
1511 to the contrary, the Secretary shall provide for such 
appropriate proration of the application of allotments under 
section 1511 as is appropriate.

``SEC. 1529. SANCTIONS FOR NONCOMPLIANCE.

    ``(a) Prompt Review of Plan Submittals.--The Secretary 
shall promptly review State plans and plan amendments submitted 
under this part to determine if they substantially comply with 
the requirements of this title.
    ``(b) Determinations of Noncompliance with Certain 
Guarantees.--
            ``(1) At time of plan or amendment submittal.--If 
        the Secretary determines that a State plan or plan 
        amendment submitted under this part violates the 
        guarantees of coverage and benefits under subsections 
        (a) and (b) of section 1501, the Secretary shall notify 
        the State in writing of such determination and shall 
        issue an order specifying that the plan or amendment, 
        insofar as it is in violation with such requirement, 
        shall not be effective, except as provided in 
        subsection (d), as of the date specified in the order.
            ``(2) Violations in administration of plan.--If the 
        Secretary determines, after reasonable notice and 
        opportunity for a hearing for the State, that in the 
        administration of a State plan there is a violation of 
        guarantee of coverage and benefits under subsection (a) 
        or (b) of section 1501, the Secretary shall provide the 
        State with written notice of the determination and with 
        an order to remedy such violation. Such an order shall 
        become effective prospectively, as specified in the 
        order, after the date of receipt of such written 
        notice. Such an order may include the withholding of 
        funds, consistent with subsection (g), for parts of the 
        State plan affected by such violation, until the 
        Secretary is satisfied that the violation has been 
        corrected.
            ``(3) Consultation with state.--Before making a 
        determination adverse to a State under this section, 
        the Secretary shall--
                    ``(A) reasonably consult with the State 
                involved,
                    ``(B) offer the State a reasonable 
                opportunity to clarify the submission and 
                submit further information to substantiate 
                compliance with the requirements of subsections 
                (a) and (b) of section 1501, and
                    ``(C) reasonably consider any such 
                clarifications and information submitted.
            ``(4) Justification of any inconsistencies in 
        determinations.--If the Secretary makes a determination 
        under this section that is, in whole or in part, 
        inconsistent with any previous determination issued by 
        the Secretary under this title, the Secretary shall 
        include in the determination a detailed explanation and 
        justification for any such difference.
    ``(c) Determinations of Other Substantial Noncompliance.--
            ``(1) At time of plan or amendment submittal.--
                    ``(A) In general.--If the Secretary, during 
                the 30-day period beginning on the date of 
                submittal of a State plan or plan amendment--
                            ``(i) determines that the plan or 
                        amendment substantially violates 
                        (within the meaning of paragraph (5)) a 
                        requirement of this title, and
                            ``(ii) provides written notice of 
                        such determination to the State,
                the Secretary shall issue an order specifying 
                that the plan or amendment, insofar as it is in 
                substantial violation of such a requirement, 
                shall not be effective, except as provided in 
                subsection (d), beginning at the end of a 
                period of not less than 30 days (or 120 days in 
                the case of the initial submission of the State 
                plan) specified in the order beginning on the 
                date of the notice of the determination.
                    ``(B) Extension of time periods.--The time 
                periods specified in subparagraph (A) may be 
                extended by written agreement of the Secretary 
                and the State involved.
            ``(2) Violations in administration of plan.--
                    ``(A) In general.--If the Secretary 
                determines, after reasonable notice and 
                opportunity for a hearing for the State, that 
                in the administration of a State plan there is 
                a substantial violation of a requirement of 
                this title, the Secretary shall provide the 
                State with written notice of the determination 
                and with an order to remedy such violation. 
                Such an order shall become effective 
                prospectively, as specified in the order, after 
                the date of receipt of such written notice. 
                Such an order may include the withholding of 
                funds, consistent with subsection (g), for 
                parts of the State plan affected by such 
                violation, until the Secretary is satisfied 
                that the violation has been corrected.
                    ``(B) Effectiveness.--If the Secretary 
                issues an order under paragraph (1), the order 
                shall become effective, except as provided in 
                subsection (d), beginning at the end of a 
                period (of not less than 30 days) specified in 
                the order beginning on the date of the notice 
                of the determination to the State.
                    ``(C) Timeliness of determinations relating 
                to report-based compliance.--The Secretary 
                shall make determinations under this paragraph 
                respecting violations relating to information 
                contained in an annual report under section 
                1522, an independent evaluation under section 
                1523, or an audit report under section 1551 not 
                later than 30 days after the date of 
                transmittal of the report or evaluation to the 
                Secretary.
            ``(3) Consultation with state.--Before making a 
        determination adverse to a State under this section, 
        the Secretary shall (within any time periods provided 
        under this section)--
                    ``(A) reasonably consult with the State 
                involved,
                    ``(B) offer the State a reasonable 
                opportunity to clarify the submission and 
                submit further information to substantiate 
                compliance with the requirements of this title, 
                and
                    ``(C) reasonably consider any such 
                clarifications and information submitted.
            ``(4) Justification of any inconsistencies in 
        determinations.--If the Secretary makes a determination 
        under this section that is, in whole or in part, 
        inconsistent with any previous determination issued by 
        the Secretary under this title, the Secretary shall 
        include in the determination a detailed explanation and 
        justification for any such difference.
            ``(5) Substantial violation defined.--For purposes 
        of this title, a State plan (or amendment to such a 
        plan) or the administration of the State plan is 
        considered to `substantially violate' a requirement of 
        this title if a provision of the plan or amendment (or 
        an omission from the plan or amendment) or the 
        administration of the plan--
                    ``(A) is material and substantial in nature 
                and effect, and
                    ``(B) is inconsistent with an express 
                requirement of this title.
        A failure to meet a strategic objective or performance 
        goal (as described in section 1521) shall not be 
        considered to substantially violate a requirement of 
        this title.
            ``(6) Relation to other provision.--This subsection 
        shall not apply to violation of a requirement of 
        subsection (a) or (b) of section 1501.
    ``(d) State Response to Orders.--
            ``(1) State response by revising plan.--
                    ``(A) In general.--Insofar as an order 
                under subsection (b)(1) or (c)(1) relates to a 
                violation by a State plan or plan amendment, a 
                State may respond (before the date the order 
                becomes effective) to such an order by 
                submitting a written revision of the State plan 
                or plan amendment to comply with the 
                requirements of this title.
                    ``(B) Review of revision.--In the case of 
                submission of such a revision, the Secretary 
                shall promptly review the submission and shall, 
                in the case of an order under subsection 
                (c)(1), withhold any action on the order during 
                the period of such review.
                    ``(C) Secretarial response.--
                            ``(i) Orders relating to 
                        guarantees.--In the case of a revision 
                        submitted in response to an order under 
                        subsection (b)(1), the revision shall 
                        not be considered to have corrected the 
                        deficiency unless the Secretary 
                        determines and notifies the State that 
                        the State plan or amendment, as 
                        proposed to be revised complies with 
                        the requirements of subsections (a) and 
                        (b) of section 1501. If the Secretary 
                        determines that the revision does not 
                        correct the deficiency, the Secretary 
                        shall notify the State in writing of 
                        such determination and the State may 
                        respond by seeking reconsideration or a 
                        hearing under paragraph (2).
                            ``(ii) Other orders.--In the case 
                        of a revision submitted in response to 
                        an order under subsection (c)(1), the 
                        revision shall be considered to have 
                        corrected the deficiency (and the order 
                        rescinded insofar as it relates to such 
                        deficiency) unless the Secretary 
                        determines and notifies the State in 
                        writing, within 15 days after the date 
                        the Secretary receives the revision, 
                        that the State plan or amendment, as 
                        proposed to be revised, still 
                        substantially violates a requirement of 
                        this title. In such case the State may 
                        respond by seeking reconsideration or a 
                        hearing under paragraph (2).
                    ``(D) Revision retroactive.--If the 
                revision provides for compliance (in the case 
                of an order under subsection (b)(1)) or 
                substantial compliance (in the case of an order 
                under subsection (c)(1)), the revision may be 
                treated, at the option of the State, as being 
                effective either as of the effective date of 
                the provision to which it relates or such later 
                date as the State and Secretary may agree.
            ``(2) State response by seeking reconsideration or 
        an administrative hearing.--A State may respond to an 
        order under subsection (b) or (c) by filing a request 
        with the Secretary for--
                    ``(A) a reconsideration of the 
                determination, pursuant to subsection (e)(1), 
                or
                    ``(B) a review of the determination through 
                an administrative hearing, pursuant to 
                subsection (e)(2).
        In such case for an order under subsection (c), the 
        order shall not take effect before the completion of 
        the reconsideration or hearing.
            ``(3) State response by corrective action plan.--
                    ``(A) In general.--In the case of an order 
                described in subsection (b)(2) or (c)(2) that 
                relates to a violation in the administration of 
                the State plan, a State may respond to such an 
                order by submitting a corrective action plan 
                with the Secretary to correct deficiencies in 
                the administration of the plan which are the 
                subject of the order.
                    ``(B) Review of corrective action plan.--In 
                the case of a corrective action plan submitted 
                in response to an order under subsection 
                (c)(2), the Secretary shall withhold any action 
                on the order for a period (not to exceed 30 
                days) during which the Secretary reviews the 
                corrective action plan.
                    ``(C) Secretarial response.--
                            ``(i) Orders relating to 
                        guarantees.--In the case of a 
                        corrective action plan submitted in 
                        response to an order under subsection 
                        (b)(2), the plan shall not be 
                        considered to have corrected the 
                        deficiency unless the Secretary 
                        determines and notifies the State that 
                        the State's administration of the State 
                        plan, as proposed to be corrected in 
                        the plan, will not violate a 
                        requirement of subsection (a) or (b) of 
                        section 1501. If the Secretary 
                        determines that the plan does not 
                        correct the deficiency, the Secretary 
                        shall notify the State in writing of 
                        such determination and the State may 
                        respond by seeking reconsideration or a 
                        hearing under paragraph (2).
                            ``(ii) Other orders.--In the case 
                        of a corrective action plan submitted 
                        in response to an order under 
                        subsection (c)(2), the corrective 
                        action plan shall be considered to have 
                        corrected the deficiency (and the order 
                        rescinded insofar as it relates to such 
                        deficiency) unless the Secretary 
                        determines and notifies the State in 
                        writing, within 15 days after the date 
                        the Secretary receives the corrective 
                        action plan, that the State's 
                        administration of the State plan, as 
                        proposed to be corrected in the plan, 
                        will still substantially violate a 
                        requirement of this title. In such case 
                        the State may respond by seeking 
                        reconsideration or a hearing under 
                        paragraph (2).
            ``(4) State response by withdrawal of plan 
        amendment; failure to respond.--Insofar as an order 
        relates to a violation in a plan amendment submitted, a 
        State may respond to such an order by withdrawing the 
        plan amendment and the State plan shall be treated as 
        though the amendment had not been made.
    ``(e) Administrative Review and Hearing.--
            ``(1) Reconsideration.--Within 30 days after the 
        date of receipt of a request under subsection 
        (d)(2)(A), the Secretary shall notify the State of the 
        time and place at which a hearing will be held for the 
        purpose of reconsidering the Secretary's determination. 
        The hearing shall be held not less than 20 days nor 
        more than 60 days after the date notice of the hearing 
        is furnished to the State, unless the Secretary and the 
        State agree in writing to holding the hearing at 
        another time. The Secretary shall affirm, modify, or 
        reverse the original determination within 60 days of 
        the conclusion of the hearing.
            ``(2) Administrative hearing.--Within 30 days after 
        the date of receipt of a request under subsection 
        (d)(2)(B), an administrative law judge shall schedule a 
        hearing for the purpose of reviewing the Secretary's 
        determination. The hearing shall be held not less than 
        20 days nor more than 60 days after the date notice of 
        the hearing is furnished to the State, unless the 
        Secretary and the State agree in writing to holding the 
        hearing at another time. The administrative law judge 
        shall affirm, modify, or reverse the determination 
        within 60 days of the conclusion of the hearing.
    ``(f) Judicial Review.--
            ``(1) In general.--A State which is dissatisfied 
        with a final determination made by the Secretary under 
        subsection (e)(1) or a final determination of an 
        administrative law judge under subsection (e)(2) may, 
        within 60 days after it has been notified of such 
        determination, file with the United States court of 
        appeals for the circuit in which the State is located a 
        petition for review of such determination. A copy of 
        the petition shall be forthwith transmitted by the 
        clerk of the court to the Secretary and, in the case of 
        a determination under subsection (e)(2), to the 
        administrative law judge involved. The Secretary (or 
        judge involved) thereupon shall file in the court the 
        record of the proceedings on which the final 
        determination was based, as provided in section 1502 of 
        title 28, United States Code. Except as provided in 
        section 1508, only the Secretary, in accordance with 
        this title, may compel a State under Federal law to 
        comply with the provisions of this title or a State 
        plan, or otherwise enforce a provision of this title 
        against a State, and no action may be filed under 
        Federal law against a State in relation to the State's 
        compliance, or failure to comply, with the provisions 
        of this title or of a State plan except under section 
        1508 or by the Secretary as provided under this 
        subsection.
            ``(2) Standard for review.--The findings of fact by 
        the Secretary or administrative law judge, if supported 
        by substantial evidence, shall be conclusive, but the 
        court, for good cause shown, may remand the case to the 
        Secretary or judge to take further evidence, and the 
        Secretary or judge may thereupon make new or modified 
        findings of fact and may modify a previous 
        determination, and shall certify to the court the 
        transcript and record of the further proceedings. Such 
        new or modified findings of fact shall likewise be 
        conclusive if supported by substantial evidence.
            ``(3) Jurisdiction of appellate court.--The court 
        shall have jurisdiction to affirm the action of the 
        Secretary or judge or to set it aside, in whole or in 
        part. The judgment of the court shall be subject to 
        review by the Supreme Court of the United States upon 
        certiorari or certification as provided in section 1254 
        of title 28, United States Code.
    ``(g) Withholding of Funds.--
            ``(1) In general.--Any order under this section 
        relating to the withholding of funds shall be effective 
        not earlier than the effective date of the order and 
        shall only relate to the portions of a State plan or 
        administration thereof which violate a requirement of 
        subsection (a) or (b) of section 1501 or substantially 
        violate another requirement of this title. In the case 
        of a failure to meet a set-aside requirement under 
        section 1502(c), any withholding shall only apply to 
        the extent of such failure.
            ``(2) Suspension of withholding.--The Secretary may 
        suspend withholding of funds under paragraph (1) during 
        the period reconsideration or administrative and 
        judicial review is pending under subsection (e) or (f).
            ``(3) Restoration of funds.--Any funds withheld 
        under this subsection under an order shall be 
        immediately restored to a State--
                    ``(A) to the extent and at the time the 
                order is--
                            ``(i) modified or withdrawn by the 
                        Secretary upon reconsideration,
                            ``(ii) modified or reversed by an 
                        administrative law judge, or
                            ``(iii) set aside (in whole or in 
                        part) by an appellate court; or
                    ``(B) when the Secretary determines that 
                the deficiency which was the basis for the 
                order is corrected;
                    ``(C) when the Secretary determines that 
                violation which was the basis for the order is 
                resolved or the amendment which was the basis 
                for the order is withdrawn; or
                    ``(D) at any time upon the initiative of 
                the Secretary.
    ``(h) Individual Complaint Process.--The Secretary shall 
provide for a process under which an individual may notify the 
Secretary concerning a State's failure to provide medical 
assistance as required under the State plan or otherwise comply 
with the requirements of this title or such plan, including any 
failure to comply with a requirement of subsection (a) or (b) 
of section 1501. If the Secretary finds that there is a pattern 
of complaints with respect to a State or that a particular 
failure or finding of noncompliance is egregious, the Secretary 
shall notify the chief executive officer of the State of such 
finding and shall notify the Congress if the State fails to 
respond to such notification within a reasonable period of 
time.

``SEC. 1530. SECRETARIAL AUTHORITY.

    ``(a) Negotiated Agreement and Dispute Resolution.--
            ``(1) Negotiations.--Nothing in this part shall be 
        construed as preventing the Secretary and a State from 
        at any time negotiating a satisfactory resolution to 
        any dispute concerning the approval of a State plan (or 
        amendments to a State plan) or the compliance of a 
        State plan (including its administration) with 
        requirements of this title.
            ``(2) Cooperation.--The Secretary shall act in a 
        cooperative manner with the States in carrying out this 
        title. In the event of a dispute between a State and 
        the Secretary, the Secretary shall, whenever 
        practicable, engage in informal dispute resolution 
        activities in lieu of formal enforcement or sanctions 
        under section 1529.
    ``(b) Limitations on Delegation of Decisionmaking 
Authority.--The Secretary may not delegate (other than to the 
Administrator of the Health Care Financing Administration) the 
authority to make determinations or reconsiderations respecting 
the approval of State plans (or amendments to such plans) or 
the compliance of a State plan (including its administration) 
with requirements of this title. Such Administrator may not 
further delegate such authority to any individual, including 
any regional official of such Administration.
    ``(c) Requiring Formal Rulemaking for Changes in 
Secretarial Administration.--The Secretary shall carry out the 
administration of the program under this title only through a 
prospective formal rulemaking process, including issuing 
notices of proposed rulemaking, publishing proposed rules or 
modifications to rules in the Federal Register, and soliciting 
public comment.

                ``Part D--Program Integrity and Quality

``SEC. 1551. USE OF AUDITS TO ACHIEVE FISCAL INTEGRITY.

    ``(a) Financial Audits of Program.--
            ``(1) In general.--Each State plan shall provide 
        for an annual audit of the State's expenditures from 
        amounts received under this title, in compliance with 
        chapter 75 of title 31, United States Code.
            ``(2) Verification audits.--If, after consultation 
        with the State and the Comptroller General and after a 
        fair hearing, the Secretary determines that a State's 
        audit under paragraph (1) was performed in substantial 
        violation of chapter 75 of title 31, United States 
        Code, the Secretary may--
                    ``(A) require that the State provide for a 
                verification audit in compliance with such 
                chapter, or
                    ``(B) conduct such a verification audit.
            ``(3) Availability of audit reports.--Within 30 
        days after completion of each audit or verification 
        audit under this subsection, the State shall--
                    ``(A) provide the Secretary with a copy of 
                the audit report, including the State's 
                response to any recommendations of the auditor, 
                and
                    ``(B) make the audit report available for 
                public inspection in the same manner as 
                proposed State plan amendments are made 
                available under section 1525.
    ``(b) Fiscal Controls.--
            ``(1) In general.--With respect to the accounting 
        and expenditure of funds under this title, each State 
        shall adopt and maintain such fiscal controls, 
        accounting procedures, and data processing safeguards 
        as the State deems reasonably necessary to assure the 
        fiscal integrity of the State's activities under this 
        title.
            ``(2) Consistency with generally accepted 
        accounting principles.--Such controls and procedures 
        shall be generally consistent with generally accepted 
        accounting principles as recognized by the Governmental 
        Accounting Standards Board or the Comptroller General.
    ``(c) Audits of Providers.--Each State plan shall provide 
that the records of any entity providing items or services for 
which payment may be made under the plan may be audited as 
necessary to ensure that proper payments are made under the 
plan.

``SEC. 1552. FRAUD PREVENTION PROGRAM.

    ``(a) Establishment.--Each State plan shall provide for the 
establishment and maintenance of an effective program for the 
detection and prevention of fraud and abuse by beneficiaries, 
providers, and others in connection with the operation of the 
program.
    ``(b) Program Requirements.--The program established 
pursuant to subsection (a) shall include at least the following 
requirements:
            ``(1) Disclosure of information.--Any disclosing 
        entity (as defined in section 1124(a)) receiving 
        payments under the State plan shall comply with the 
        requirements of section 1124.
            ``(2) Supply of information.--An entity (other than 
        an individual practitioner or a group of practitioners) 
        that furnishes, or arranges for the furnishing of, an 
        item or service under the State plan shall supply upon 
        request specifically addressed to the entity by the 
        Secretary or the State agency the information described 
        in section 1128(b)(9).
            ``(3) Exclusion.--
                    ``(A) In general.--The State plan shall 
                exclude any specified individual or entity from 
                participation in the plan for the period 
                specified by the Secretary when required by the 
                Secretary to do so pursuant to section 1128 or 
                section 1128A, and provide that no payment may 
                be made under the plan with respect to any item 
                or service furnished by such individual or 
                entity during such period.
                    ``(B) Authority.--In addition to any other 
                authority, a State may exclude any individual 
                or entity for purposes of participating under 
                the State plan for any reason for which the 
                Secretary could exclude the individual or 
                entity from participation in a program under 
                title XVIII or under section 1128, 1128A, or 
                1866(b)(2).
            ``(4) Notice.--The State plan shall provide that 
        whenever a provider of services or any other person is 
        terminated, suspended, or otherwise sanctioned or 
        prohibited from participating under the plan, the State 
        agency responsible for administering the plan shall 
        promptly notify the Secretary and, in the case of a 
        physician, the State medical licensing board of such 
        action.
            ``(5) Access to information.--The State plan shall 
        provide that the State will provide information and 
        access to certain information respecting sanctions 
        taken against health care practitioners and providers 
        by State licensing authorities in accordance with 
        section 1553.

``SEC. 1553. INFORMATION CONCERNING SANCTIONS TAKEN BY STATE LICENSING 
                    AUTHORITIES AGAINST HEALTH CARE PRACTITIONERS AND 
                    PROVIDERS.

    ``(a) Information Reporting Requirement.--The requirement 
referred to in section 1552(b)(5) is that the State must 
provide for the following:
            ``(1) Information reporting system.--The State must 
        have in effect a system of reporting the following 
        information with respect to formal proceedings (as 
        defined by the Secretary in regulations) concluded 
        against a health care practitioner or entity by any 
        authority of the State (or of a political subdivision 
        thereof) responsible for the licensing of health care 
        practitioners (or any peer review organization or 
        private accreditation entity reviewing the services 
        provided by health care practitioners) or entities:
                    ``(A) Any adverse action taken by such 
                licensing authority as a result of the 
                proceeding, including any revocation or 
                suspension of a license (and the length of any 
                such suspension), reprimand, censure, or 
                probation.
                    ``(B) Any dismissal or closure of the 
                proceedings by reason of the practitioner or 
                entity surrendering the license or leaving the 
                State or jurisdiction.
                    ``(C) Any other loss of the license of the 
                practitioner or entity, whether by operation of 
                law, voluntary surrender, or otherwise.
                    ``(D) Any negative action or finding by 
                such authority, organization, or entity 
                regarding the practitioner or entity.
            ``(2) Access to documents.--The State must provide 
        the Secretary (or an entity designated by the 
        Secretary) with access to such documents of the 
        authority described in paragraph (1) as may be 
        necessary for the Secretary to determine the facts and 
        circumstances concerning the actions and determinations 
        described in such paragraph for the purpose of carrying 
        out this Act.
    ``(b) Form of Information.--The information described in 
subsection (a)(1) shall be provided to the Secretary (or to an 
appropriate private or public agency, under suitable 
arrangements made by the Secretary with respect to receipt, 
storage, protection of confidentiality, and dissemination of 
information) in such a form and manner as the Secretary 
determines to be appropriate in order to provide for activities 
of the Secretary under this Act and in order to provide, 
directly or through suitable arrangements made by the 
Secretary, information--
            ``(1) to agencies administering Federal health care 
        programs, including private entities administering such 
        programs under contract,
            ``(2) to licensing authorities described in 
        subsection (a)(1),
            ``(3) to State agencies administering or 
        supervising the administration of State health care 
        programs (as defined in section 1128(h)),
            ``(4) to utilization and quality control peer 
        review organizations described in part B of title XI 
        and to appropriate entities with contracts under 
        section 1154(a)(4)(C) with respect to eligible 
        organizations reviewed under the contracts,
            ``(5) to State fraud control units (as defined in 
        section 1534),
            ``(6) to hospitals and other health care entities 
        (as defined in section 431 of the Health Care Quality 
        Improvement Act of 1986), with respect to physicians or 
        other licensed health care practitioners that have 
        entered (or may be entering) into an employment or 
        affiliation relationship with, or have applied for 
        clinical privileges or appointments to the medical 
        staff of, such hospitals or other health care entities 
        (and such information shall be deemed to be disclosed 
        pursuant to section 427 of, and be subject to the 
        provisions of, that Act),
            ``(7) to the Attorney General and such other law 
        enforcement officials as the Secretary deems 
        appropriate, and
            ``(8) upon request, to the Comptroller General,
        in order for such authorities to determine the fitness 
        of individuals to provide health care services, to 
        protect the health and safety of individuals receiving 
        health care through such programs, and to protect the 
        fiscal integrity of such programs.
    ``(c) Confidentiality of Information Provided.--The 
Secretary shall provide for suitable safeguards for the 
confidentiality of the information furnished under subsection 
(a). Nothing in this subsection shall prevent the disclosure of 
such information by a party which is otherwise authorized, 
under applicable State law, to make such disclosure.
    ``(d) Appropriate Coordination.--The Secretary shall 
provide for the maximum appropriate coordination in the 
implementation of subsection (a) of this section and section 
422 of the Health Care Quality Improvement Act of 1986 and 
section 1128E.

``SEC. 1554. STATE FRAUD CONTROL UNITS.

    ``(a) In General.--Each State plan shall provide for a 
State fraud control unit described in subsection (b) that 
effectively carries out the functions and requirements 
described in such subsection, unless the State demonstrates to 
the satisfaction of the Secretary that the effective operation 
of such a unit in the State would not be cost-effective because 
minimal fraud exists in connection with the provision of 
covered services to eligible individuals under the plan, and 
that beneficiaries under the plan will be protected from abuse 
and neglect in connection with the provision of medical 
assistance under the plan without the existence of such a unit.
    ``(b) Units Described.--For purposes of this section, the 
term `State fraud control unit' means a single identifiable 
entity of the State government which meets the following 
requirements:
            ``(1) Organization.--The entity--
                    ``(A) is a unit of the office of the State 
                Attorney General or of another department of 
                State government which possesses statewide 
                authority to prosecute individuals for criminal 
                violations;
                    ``(B) is in a State the constitution of 
                which does not provide for the criminal 
                prosecution of individuals by a statewide 
                authority and has formal procedures that--
                            ``(i) assure its referral of 
                        suspected criminal violations relating 
                        to the program under this title to the 
                        appropriate authority or authorities in 
                        the State for prosecution, and
                            ``(ii) assure its assistance of, 
                        and coordination with, such authority 
                        or authorities in such prosecutions; or
                    ``(C) has a formal working relationship 
                with the office of the State Attorney General 
                and has formal procedures (including procedures 
                for its referral of suspected criminal 
                violations to such office) which provide 
                effective coordination of activities between 
                the entity and such office with respect to the 
                detection, investigation, and prosecution of 
                suspected criminal violations relating to the 
                program under this title.
            ``(2) Independence.--The entity is separate and 
        distinct from any State agency that has principal 
        responsibilities for administering or supervising the 
        administration of the State plan.
            ``(3) Function.--The entity's function is 
        conducting a statewide program for the investigation 
        and prosecution of violations of all applicable State 
        laws regarding any and all aspects of fraud in 
        connection with any aspect of the provision of medical 
        assistance and the activities of providers of such 
        assistance under the State plan.
            ``(4) Review of complaints.--The entity has 
        procedures for reviewing complaints of the abuse and 
        neglect of patients of health care facilities which 
        receive payments under the State plan under this title, 
        and, where appropriate, for acting upon such complaints 
        under the criminal laws of the State or for referring 
        them to other State agencies for action.
            ``(5) Overpayments.--
                    ``(A) In general.--The entity provides for 
                the collection, or referral for collection to a 
                single State agency, of overpayments that are 
                made under the State plan to health care 
                providers and that are discovered by the entity 
                in carrying out its activities.
                    ``(B) Treatment of certain overpayments.--
                If an overpayment is the direct result of the 
                failure of the provider (or the provider's 
                billing agent) to adhere to a change in the 
                State's billing instructions, the entity may 
                recover the overpayment only if the entity 
                demonstrates that the provider (or the 
                provider's billing agent) received prior 
                written or electronic notice of the change in 
                the billing instructions before the submission 
                of the claims on which the overpayment is 
                based.
            ``(6) Personnel.--The entity employs such auditors, 
        attorneys, investigators, and other necessary personnel 
        and is organized in such a manner as is necessary to 
        promote the effective and efficient conduct of the 
        entity's activities.

``SEC. 1555. RECOVERIES FROM THIRD PARTIES AND OTHERS.

    ``(a) Third Party Liability.--Each State plan shall provide 
for reasonable steps--
            ``(1) to ascertain the legal liability of third 
        parties to pay for care and services available under 
        the plan, including the collection of sufficient 
        information to enable States to pursue claims against 
        third parties, and
            ``(2) to seek reimbursement for medical assistance 
        provided to the extent legal liability is established 
        where the amount expected to be recovered exceeds the 
        costs of the recovery.
    ``(b) Beneficiary Protection.--
            ``(1) In general.--Each State plan shall provide 
        that in the case of a person furnishing services under 
        the plan for which a third party may be liable for 
        payment--
                    ``(A) the person may not seek to collect 
                from the individual (or financially responsible 
                relative) payment of an amount for the service 
                more than could be collected under the plan in 
                the absence of such third party liability, and
                    ``(B) may not refuse to furnish services to 
                such an individual because of a third party's 
                potential liability for payment for the 
                service.
            ``(2) Penalty.--A State plan may provide for a 
        reduction of any payment amount otherwise due with 
        respect to a person who furnishes services under the 
        plan in an amount equal to up to 3 times the amount of 
        any payment sought to be collected by that person in 
        violation of paragraph (1)(A).
    ``(c) General Liability.--The State shall prohibit any 
health insurer, including a group health plan as defined in 
section 607 of the Employee Retirement Income Security Act of 
1974, a service benefit plan, or a health maintenance 
organization, in enrolling an individual or in making any 
payments for benefits to the individual or on the individual's 
behalf, from taking into account that the individual is 
eligible for or is provided medical assistance under a State 
plan for any State.
    ``(d) Acquisition of Rights of Beneficiaries.--To the 
extent that payment has been made under a State plan in any 
case where a third party has a legal liability to make payment 
for such assistance, the State shall have in effect laws under 
which, to the extent that payment has been made under the plan 
for health care items or services furnished to an individual, 
the State is considered to have acquired the rights of such 
individual to payment by any other party for such health care 
items or services.
    ``(e) Assignment of Medical Support Rights.--The State plan 
shall provide for mandatory assignment of rights of payment for 
medical support and other medical care owed to recipients in 
accordance with section 1556.
    ``(f) Required Laws Relating to Medical Child Support.--
            ``(1) In general.--Each State with a State plan 
        under this title shall have in effect the following 
        laws:
                    ``(A) A law that prohibits an insurer from 
                denying enrollment of a child under the health 
                coverage of the child's parent on the ground 
                that--
                            ``(i) the child was born out of 
                        wedlock,
                            ``(ii) the child is not claimed as 
                        a dependent on the parent's Federal 
                        income tax return, or
                            ``(iii) the child does not reside 
                        with the parent or in the insurer's 
                        service area.
                    ``(B) In any case in which a parent is 
                required by a court or administrative order to 
                provide health coverage for a child and the 
                parent is eligible for family health coverage 
                through an insurer, a law that requires such 
                insurer--
                            ``(i) to permit such parent to 
                        enroll under such family coverage any 
                        such child who is otherwise eligible 
                        for such coverage (without regard to 
                        any enrollment season restrictions);
                            ``(ii) if such a parent is enrolled 
                        but fails to make application to obtain 
                        coverage of such child, to enroll such 
                        child under such family coverage upon 
                        application by the child's other parent 
                        or by the State agency administering 
                        the program under this title or part D 
                        of title IV; and
                            ``(iii) not to disenroll, or 
                        eliminate coverage of, such a child 
                        unless the insurer is provided 
                        satisfactory written evidence that--
                                    ``(I) such court or 
                                administrative order is no 
                                longer in effect, or
                                    ``(II) the child is or will 
                                be enrolled in comparable 
                                health coverage through another 
                                insurer which will take effect 
                                not later than the effective 
                                date of such disenrollment.
                    ``(C) In any case in which a parent is 
                required by a court or administrative order to 
                provide health coverage for a child and the 
                parent is eligible for family health coverage 
                through an employer doing business in the 
                State, a law that requires such employer--
                            ``(i) to permit such parent to 
                        enroll under such family coverage any 
                        such child who is otherwise eligible 
                        for such coverage (without regard to 
                        any enrollment season restrictions);
                            ``(ii) if such a parent is enrolled 
                        but fails to make application to obtain 
                        coverage of such child, to enroll such 
                        child under such family coverage upon 
                        application by the child's other parent 
                        or by the State agency administering 
                        the program under this title or part D 
                        of title IV; and
                            ``(iii) not to disenroll (or 
                        eliminate coverage of) any such child 
                        unless--
                                    ``(I) the employer is 
                                provided satisfactory written 
                                evidence that such court or 
                                administrative order is no 
                                longer in effect, or the child 
                                is or will be enrolled in 
                                comparable health coverage 
                                which will take effect not 
                                later than the effective date 
                                of such disenrollment, or
                                    ``(II) the employer has 
                                eliminated family health 
                                coverage for all of its 
                                employees; and
                            ``(iv) to withhold from such 
                        employee's compensation the employee's 
                        share (if any) of premiums for health 
                        coverage (except that the amount so 
                        withheld may not exceed the maximum 
                        amount permitted to be withheld under 
                        section 303(b) of the Consumer Credit 
                        Protection Act), and to pay such share 
                        of premiums to the insurer, except that 
                        the Secretary may provide by regulation 
                        for appropriate circumstances under 
                        which an employer may withhold less 
                        than such employee's share of such 
                        premiums.
                    ``(D) A law that prohibits an insurer from 
                imposing requirements on a State agency, which 
                has been assigned the rights of an individual 
                eligible for medical assistance under this 
                title and covered for health benefits from the 
                insurer, that are different from requirements 
                applicable to an agent or assignee of any other 
                individual so covered.
                    ``(E) A law that requires an insurer, in 
                any case in which a child has health coverage 
                through the insurer of a noncustodial parent--
                            ``(i) to provide such information 
                        to the custodial parent as may be 
                        necessary for the child to obtain 
                        benefits through such coverage,
                            ``(ii) to permit the custodial 
                        parent (or provider, with the custodial 
                        parent's approval) to submit claims for 
                        covered services without the approval 
                        of the noncustodial parent, and
                            ``(iii) to make payment on claims 
                        submitted in accordance with clause 
                        (ii) directly to such custodial parent, 
                        the provider, or the State agency.
                    ``(F) A law that permits the State agency 
                under this title to garnish the wages, salary, 
                or other employment income of, and requires 
                withholding amounts from State tax refunds to, 
                any person who--
                            ``(i) is required by court or 
                        administrative order to provide 
                        coverage of the costs of health 
                        services to a child who is eligible for 
                        medical assistance under this title,
                            ``(ii) has received payment from a 
                        third party for the costs of such 
                        services to such child, but
                            ``(iii) has not used such payments 
                        to reimburse, as appropriate, either 
                        the other parent or guardian of such 
                        child or the provider of such services,
                to the extent necessary to reimburse the State 
                agency for expenditures for such costs under 
                its plan under this title, but any claims for 
                current or past-due child support shall take 
                priority over any such claims for the costs of 
                such services.
            ``(2) Definition.--For purposes of this subsection, 
        the term `insurer' includes a group health plan, as 
        defined in section 607(1) of the Employee Retirement 
        Income Security Act of 1974, a health maintenance 
        organization, and an entity offering a service benefit 
        plan.
    ``(g) Estate Recoveries and Liens Permitted.--A State may 
take such actions as it considers appropriate to adjust or 
recover from the individual or the individual's estate any 
amounts paid as medical assistance to or on behalf of the 
individual under the State plan, including through the 
imposition of liens against the property or estate of the 
individual to the extent consistent with section 1506.

``SEC. 1556. ASSIGNMENT OF RIGHTS OF PAYMENT.

    ``(a) In General.--For the purpose of assisting in the 
collection of medical support payments and other payments for 
medical care owed to recipients of medical assistance under the 
State plan, each State plan shall--
            ``(1) provide that, as a condition of eligibility 
        for medical assistance under the plan to an individual 
        who has the legal capacity to execute an assignment for 
        himself, the individual is required--
                    ``(A) to assign the State any rights, of 
                the individual or of any other person who is 
                eligible for medical assistance under the plan 
                and on whose behalf the individual has the 
                legal authority to execute an assignment of 
                such rights, to support (specified as support 
                for the purpose of medical care by a court or 
                administrative order) and to payment for 
                medical care from any third party,
                    ``(B) to cooperate with the State (i) in 
                establishing the paternity of such person 
                (referred to in subparagraph (A)) if the person 
                is a child born out of wedlock, and (ii) in 
                obtaining support and payments (described in 
                subparagraph (A)) for himself and for such 
                person, unless (in either case) the individual 
                is a pregnant woman or the individual is found 
                to have good cause for refusing to cooperate as 
                determined by the State, and
                    ``(C) to cooperate with the State in 
                identifying, and providing information to 
                assist the State in pursuing, any third party 
                who may be liable to pay for care and services 
                available under the plan, unless such 
                individual has good cause for refusing to 
                cooperate as determined by the State; and
            ``(2) provide for entering into cooperative 
        arrangements, including financial arrangements, with 
        any appropriate agency of any State (including, with 
        respect to the enforcement and collection of rights of 
        payment for medical care by or through a parent, with a 
        State's agency established or designated under section 
        454(3)) and with appropriate courts and law enforcement 
        officials, to assist the agency or agencies 
        administering the plan with respect to--
                    ``(A) the enforcement and collection of 
                rights to support or payment assigned under 
                this section, and
                    ``(B) any other matters of common concern.
    ``(b) Use of Amounts Collected.--Such part of any amount 
collected by the State under an assignment made under the 
provisions of this section shall be retained by the State as is 
necessary to reimburse it for medical assistance payments made 
on behalf of an individual with respect to whom such assignment 
was executed (with appropriate reimbursement of the Federal 
Government to the extent of its participation in the financing 
of such medical assistance), and the remainder of such amount 
collected shall be paid to such individual.

``SEC. 1557. QUALITY ASSURANCE REQUIREMENTS FOR NURSING FACILITIES.

    ``(a) Nursing Facility Defined.--In this title, the term 
`nursing facility' means an institution (or a distinct part of 
an institution) which--
            ``(1) is primarily engaged in providing to 
        residents--
                    ``(A) skilled nursing care and related 
                services for residents who require medical or 
                nursing care,
                    ``(B) rehabilitation services for the 
                rehabilitation of injured, disabled, or sick 
                persons, or
                    ``(C) on a regular basis, health-related 
                care and services to individuals who because of 
                their mental or physical condition require care 
                and services (above the level of room and 
                board) which can be made available to them only 
                through institutional facilities,
        and is not primarily for the care and treatment of 
        mental diseases;
            ``(2) has in effect a transfer agreement (meeting 
        the requirements of section 1861(l)) with one or more 
        hospitals having agreements in effect under section 
        1866; and
            ``(3) meets the requirements for a nursing facility 
        described in subsections (b), (c), and (d) of this 
        section.
Such term also includes any facility which is located in a 
State on an Indian reservation and is certified by the 
Secretary as meeting the requirements of paragraph (1) and 
subsections (b), (c), and (d).
    ``(b) Requirements Relating to Provision of Services.--
            ``(1) Quality of life.--
                    ``(A) In general.--A nursing facility must 
                care for its residents in such a manner and in 
                such an environment as will promote maintenance 
                or enhancement of the quality of life of each 
                resident.
                    ``(B) Quality assessment and assurance.--A 
                nursing facility must maintain a quality 
                assessment and assurance committee, consisting 
                of the director of nursing services, a 
                physician designated by the facility, and at 
                least 3 other members of the facility's staff, 
                which (i) meets at least quarterly to identify 
                issues with respect to which quality assessment 
                and assurance activities are necessary and (ii) 
                develops and implements appropriate plans of 
                action to correct identified quality 
                deficiencies. A State or the Secretary may not 
                require disclosure of the records of such 
                committee except insofar as such disclosure is 
                related to the compliance of such committee 
                with the requirements of this subparagraph.
            ``(2) Scope of services and activities under plan 
        of care.--A nursing facility must provide services and 
        activities to attain or maintain the highest 
        practicable physical, mental, and psychosocial well-
        being of each resident in accordance with a written 
        plan of care which--
                    ``(A) describes the medical, nursing, and 
                psychosocial needs of the resident and how such 
                needs will be met;
                    ``(B) is initially prepared, with the 
                participation to the extent practicable of the 
                resident or the resident's family or legal 
                representative, by a team which includes the 
                resident's attending physician and a registered 
                professional nurse with responsibility for the 
                resident; and
                    ``(C) is periodically reviewed and revised 
                by such team after each assessment under 
                paragraph (3).
            ``(3) Residents' assessment.--
                    ``(A) Requirement.--A nursing facility must 
                conduct a comprehensive, accurate, 
                standardized, reproducible assessment of each 
                resident's functional capacity, which 
                assessment--
                            ``(i) describes the resident's 
                        capability to perform daily life 
                        functions and significant impairments 
                        in functional capacity;
                            ``(ii) is based on a uniform 
                        minimum data set specified by the 
                        Secretary under subsection (f)(6)(A);
                            ``(iii) uses an instrument which is 
                        specified by the State under subsection 
                        (e)(5); and
                            ``(iv) includes the identification 
                        of medical problems.
                    ``(B) Certification.--
                            ``(i) In general.--Each such 
                        assessment must be conducted or 
                        coordinated (with the appropriate 
                        participation of health professionals) 
                        by a registered professional nurse who 
                        signs and certifies the completion of 
                        the assessment. Each individual who 
                        completes a portion of such an 
                        assessment shall sign and certify as to 
                        the accuracy of that portion of the 
                        assessment.
                            ``(ii) Penalty for falsification.--
                                    ``(I) An individual who 
                                willfully and knowingly 
                                certifies under clause (i) a 
                                material and false statement in 
                                a resident assessment is 
                                subject to a civil money 
                                penalty of not more than $1,000 
                                with respect to each 
                                assessment.
                                    ``(II) An individual who 
                                willfully and knowingly causes 
                                another individual to certify 
                                under clause (i) a material and 
                                false statement in a resident 
                                assessment is subject to a 
                                civil money penalty of not more 
                                than $5,000 with respect to 
                                each assessment.
                                    ``(III) The provisions of 
                                section 1128A (other than 
                                subsections (a) and (b)) shall 
                                apply to a civil money penalty 
                                under this clause in the same 
                                manner as such provisions apply 
                                to a penalty or proceeding 
                                under section 1128A(a).
                            ``(iii) Use of independent 
                        assessors.--If a State determines, 
                        under a survey under subsection (g) or 
                        otherwise, that there has been a 
                        knowing and willful certification of 
                        false assessments under this paragraph, 
                        the State may require (for a period 
                        specified by the State) that resident 
                        assessments under this paragraph be 
                        conducted and certified by individuals 
                        who are independent of the facility and 
                        who are approved by the State.
                    ``(C) Frequency.--
                            ``(i) In general.--Such an 
                        assessment must be conducted--
                                    ``(I) promptly upon (but no 
                                later than 14 days after the 
                                date of) admission for each 
                                individual admitted;
                                    ``(II) promptly after a 
                                significant change in the 
                                resident's physical or mental 
                                condition; and
                                    ``(III) in no case less 
                                often than once every 12 
                                months.
                            ``(ii) Resident review.--The 
                        nursing facility must examine each 
                        resident no less frequently than once 
                        every 3 months and, as appropriate, 
                        revise the resident's assessment to 
                        assure the continuing accuracy of the 
                        assessment.
                    ``(D) Use.--The results of such an 
                assessment shall be used in developing, 
                reviewing, and revising the resident's plan of 
                care under paragraph (2).
                    ``(E) Coordination.--Such assessments shall 
                be coordinated with any State-required 
                preadmission screening program to the maximum 
                extent practicable in order to avoid 
                duplicative testing and effort. In addition, a 
                nursing facility shall notify the State mental 
                health authority or State mental retardation or 
                developmental disability authority, as 
                applicable, promptly after a significant change 
                in the physical or mental condition of a 
                resident who is mentally ill or mentally 
                retarded.
            ``(4) Provision of services and activities.--
                    ``(A) In general.--To the extent needed to 
                fulfill all plans of care described in 
                paragraph (2), a nursing facility must provide 
                (or arrange for the provision of)--
                            ``(i) nursing and related services 
                        and specialized rehabilitative services 
                        to attain or maintain the highest 
                        practicable physical, mental, and 
                        psychosocial well-being of each 
                        resident;
                            ``(ii) medically-related social 
                        services to attain or maintain the 
                        highest practicable physical, mental, 
                        and psychosocial well-being of each 
                        resident;
                            ``(iii) pharmaceutical services 
                        (including procedures that assure the 
                        accurate acquiring, receiving, 
                        dispensing, and administering of all 
                        drugs and biologicals) to meet the 
                        needs of each resident;
                            ``(iv) dietary services that assure 
                        that the meals meet the daily 
                        nutritional and special dietary needs 
                        of each resident;
                            ``(v) an on-going program, directed 
                        by a qualified professional, of 
                        activities designed to meet the 
                        interests and the physical, mental, and 
                        psychosocial well-being of each 
                        resident;
                            ``(vi) routine dental services (to 
                        the extent covered under the State 
                        plan) and emergency dental services to 
                        meet the needs of each resident; and
                            ``(vii) treatment and services 
                        required by mentally ill and mentally 
                        retarded residents not otherwise 
                        provided or arranged for (or required 
                        to be provided or arranged for) by the 
                        State.
                The services provided or arranged by the 
                facility must meet professional standards of 
                quality.
                    ``(B) Qualified persons providing 
                services.--Services described in clauses (i), 
                (ii), (iii), (iv), and (vi) of subparagraph (A) 
                must be provided by qualified persons in 
                accordance with each resident's written plan of 
                care.
                    ``(C) Required nursing care; facility 
                waivers.--
                            ``(i) General requirements.--A 
                        nursing facility--
                                    ``(I) except as provided in 
                                clause (ii), must provide 24-
                                hour licensed nursing services 
                                which are sufficient to meet 
                                the nursing needs of its 
                                residents, and
                                    ``(II) except as provided 
                                in clause (ii), must use the 
                                services of a registered 
                                professional nurse for at least 
                                8 consecutive hours a day, 7 
                                days a week.
                            ``(ii) Waiver by state.--To the 
                        extent that a facility is unable to 
                        meet the requirements of clause (i), a 
                        State may waive such requirements with 
                        respect to the facility if--
                                    ``(I) the facility 
                                demonstrates to the 
                                satisfaction of the State that 
                                the facility has been unable, 
                                despite diligent efforts 
                                (including offering wages at 
                                the community prevailing rate 
                                for nursing facilities), to 
                                recruit appropriate personnel,
                                    ``(II) the State determines 
                                that a waiver of the 
                                requirement will not endanger 
                                the health or safety of 
                                individuals staying in the 
                                facility,
                                    ``(III) the State finds 
                                that, for any such periods in 
                                which licensed nursing services 
                                are not available, a registered 
                                professional nurse or a 
                                physician is obligated to 
                                respond immediately to 
                                telephone calls from the 
                                facility,
                                    ``(IV) the State agency 
                                granting a waiver of such 
                                requirements provides notice of 
                                the waiver to the State long-
                                term care ombudsman 
                                (established under section 
                                307(a)(12) of the Older 
                                Americans Act of 1965) and the 
                                protection and advocacy system 
                                in the State for the mentally 
                                ill and the mentally retarded, 
                                and
                                    ``(V) the nursing facility 
                                that is granted such a waiver 
                                by a State notifies residents 
                                of the facility (or, where 
                                appropriate, the guardians or 
                                legal representatives of such 
                                residents) and members of their 
                                immediate families of the 
                                waiver.
                        A waiver under this clause shall be 
                        subject to annual review and to the 
                        review of the Secretary and subject to 
                        clause (iii) shall be accepted by the 
                        Secretary for purposes of this title to 
                        the same extent as is the State's 
                        certification of the facility. In 
                        granting or renewing a waiver, a State 
                        may require the facility to use other 
                        qualified, licensed personnel.
                            ``(iii) Assumption of waiver 
                        authority by secretary.--If the 
                        Secretary determines that a State has 
                        shown a clear pattern and practice of 
                        allowing waivers in the absence of 
                        diligent efforts by facilities to meet 
                        the staffing requirements, the 
                        Secretary shall assume and exercise the 
                        authority of the State to grant 
                        waivers.
            ``(5) Required training of nurse aides.--
                    ``(A) In general.--(i) Except as provided 
                in clause (ii), a nursing facility must not use 
                on a full-time basis any individual as a nurse 
                aide in the facility, for more than 4 months 
                unless the individual--
                            ``(I) has completed a training and 
                        competency evaluation program, or a 
                        competency evaluation program, approved 
                        by the State under subsection 
                        (e)(1)(A), and
                            ``(II) is competent to provide 
                        nursing or nursing-related services.
                    ``(ii) A nursing facility must not use on a 
                temporary, per diem, leased, or on any other 
                basis other than as a permanent employee any 
                individual as a nurse aide in the facility, 
                unless the individual meets the requirements 
                described in clause (i).
                    ``(B) Offering competency evaluation 
                programs for current employees.--A nursing 
                facility must provide, for individuals used as 
                a nurse aide by the facility, for a competency 
                evaluation program approved by the State under 
                subsection (e)(1) and such preparation as may 
                be necessary for the individual to complete 
                such a program.
                    ``(C) Competency.--The nursing facility 
                must not permit an individual, other than in a 
                training and competency evaluation program 
                approved by the State, to serve as a nurse aide 
                or provide services of a type for which the 
                individual has not demonstrated competency and 
                must not use such an individual as a nurse aide 
                unless the facility has inquired of any State 
                registry established under subsection (e)(2)(A) 
                that the facility believes will include 
                information concerning the individual.
                    ``(D) Re-training required.--For purposes 
                of subparagraph (A), if, since an individual's 
                most recent completion of a training and 
                competency evaluation program, there has been a 
                continuous period of 24 consecutive months 
                during none of which the individual performed 
                nursing or nursing-related services for 
                monetary compensation, such individual shall 
                complete a new training and competency 
                evaluation program, or a new competency 
                evaluation program.
                    ``(E) Regular in-service education.--The 
                nursing facility must provide such regular 
                performance review and regular in-service 
                education as assures that individuals used as 
                nurse aides are competent to perform services 
                as nurse aides, including training for 
                individuals providing nursing and nursing-
                related services to residents with cognitive 
                impairments.
                    ``(F) Nurse aide defined.--In this 
                paragraph, the term `nurse aide' means any 
                individual providing nursing or nursing-related 
                services to residents in a nursing facility, 
                but does not include an individual--
                            ``(i) who is a licensed health 
                        professional (as defined in 
                        subparagraph (G)) or a registered 
                        dietitian, or
                            ``(ii) who volunteers to provide 
                        such services without monetary 
                        compensation.
                    ``(G) Licensed health professional 
                defined.--In this paragraph, the term `licensed 
                health professional' means a physician, 
                physician assistant, nurse practitioner, 
                physical, speech, or occupational therapist, 
                physical or occupational therapy assistant, 
                registered professional nurse, licensed 
                practical nurse, or licensed or certified 
                social worker.
            ``(6) Physician supervision and clinical records.--
        A nursing facility must--
                    ``(A) require that the health care of every 
                resident be provided under the supervision of a 
                physician (or, at the option of a State, under 
                the supervision of a nurse practitioner, 
                clinical nurse specialist, or physician 
                assistant who is not an employee of the 
                facility but who is working in collaboration 
                with a physician);
                    ``(B) provide for having a physician 
                available to furnish necessary medical care in 
                case of emergency; and
                    ``(C) maintain clinical records on all 
                residents, which records include the plans of 
                care (described in paragraph (2)) and the 
                residents' assessments (described in paragraph 
                (3)), as well as the results of any pre-
                admission screening conducted under subsection 
                (e)(7).
            ``(7) Required social services.--In the case of a 
        nursing facility with more than 120 beds, the facility 
        must have at least one social worker (with at least a 
        bachelor's degree in social work or similar 
        professional qualifications) employed full-time to 
        provide or assure the provision of social services.
    ``(c) Requirements Relating to Residents' Rights.--
            ``(1) General rights.--
                    ``(A) Specified rights.--A nursing facility 
                must protect and promote the rights of each 
                resident, including each of the following 
                rights:
                            ``(i) Free choice.--The right to 
                        choose a personal attending physician, 
                        to be fully informed in advance about 
                        care and treatment, to be fully 
                        informed in advance of any changes in 
                        care or treatment that may affect the 
                        resident's well-being, and (except with 
                        respect to a resident adjudged 
                        incompetent) to participate in planning 
                        care and treatment or changes in care 
                        and treatment.
                            ``(ii) Free from restraints.--The 
                        right to be free from physical or 
                        mental abuse, corporal punishment, 
                        involuntary seclusion, and any physical 
                        or chemical restraints imposed for 
                        purposes of discipline or convenience 
                        and not required to treat the 
                        resident's medical symptoms. Restraints 
                        may only be imposed--
                                    ``(I) to ensure the 
                                physical safety of the resident 
                                or other residents, and
                                    ``(II) only upon the 
                                written order of a physician 
                                that specifies the duration and 
                                circumstances under which the 
                                restraints are to be used 
                                (except in emergency 
                                circumstances specified by the 
                                Secretary until such an order 
                                could reasonably be obtained).
                            ``(iii) Privacy.--The right to 
                        privacy with regard to accommodations, 
                        medical treatment, written and 
                        telephonic communications, visits, and 
                        meetings of family and of resident 
                        groups.
                            ``(iv) Confidentiality.--The right 
                        to confidentiality of personal and 
                        clinical records and to access to 
                        current clinical records of the 
                        resident upon request by the resident 
                        or the resident's legal representative, 
                        within 24 hours (excluding hours 
                        occurring during a weekend or holiday) 
                        after making such a request.
                            ``(v) Accommodation of needs.--The 
                        right--
                                    ``(I) to reside and receive 
                                services with reasonable 
                                accommodation of individual 
                                needs and preferences, except 
                                where the health or safety of 
                                the individual or other 
                                residents would be endangered, 
                                and
                                    ``(II) to receive notice 
                                before the room or roommate of 
                                the resident in the facility is 
                                changed.
                            ``(vi) Grievances.--The right to 
                        voice grievances with respect to 
                        treatment or care that is (or fails to 
                        be) furnished, without discrimination 
                        or reprisal for voicing the grievances 
                        and the right to prompt efforts by the 
                        facility to resolve grievances the 
                        resident may have, including those with 
                        respect to the behavior of other 
                        residents.
                            ``(vii) Participation in resident 
                        and family groups.--The right of the 
                        resident to organize and participate in 
                        resident groups in the facility and the 
                        right of the resident's family to meet 
                        in the facility with the families of 
                        other residents in the facility.
                            ``(viii) Participation in other 
                        activities.--The right of the resident 
                        to participate in social, religious, 
                        and community activities that do not 
                        interfere with the rights of other 
                        residents in the facility.
                            ``(ix) Examination of survey 
                        results.--The right to examine, upon 
                        reasonable request, the results of the 
                        most recent survey of the facility 
                        conducted by the Secretary or a State 
                        with respect to the facility and any 
                        plan of correction in effect with 
                        respect to the facility.
                            ``(x) Refusal of certain 
                        transfers.--The right to refuse a 
                        transfer to another room within the 
                        facility, if a purposes of the transfer 
                        is to relocate the resident from a 
                        portion of the facility that is not a 
                        skilled nursing facility (for purposes 
                        of title XVIII) to a portion of the 
                        facility that is such a skilled nursing 
                        facility.
                            ``(xi) Other rights.--Any other 
                        right established by the Secretary.
                Clause (i) shall not be construed as precluding 
                a State from requiring a resident of a nursing 
                facility to choose a personal attending 
                physician who participates in a managed care 
                network under a contract with the State to 
                provide medical assistance under this title. 
                Clause (iii) shall not be construed as 
                requiring the provision of a private room. A 
                resident's exercise of a right to refuse 
                transfer under clause (x) shall not affect the 
                resident's eligibility or entitlement to 
                medical assistance under this title or a 
                State's entitlement to Federal medical 
                assistance under this title with respect to 
                services furnished to such a resident.
                    ``(B) Notice of rights.--A nursing facility 
                must--
                            ``(i) inform each resident, orally 
                        and in writing at the time of admission 
                        to the facility, of the resident's 
                        legal rights during the stay at the 
                        facility and of the requirements and 
                        procedures for establishing eligibility 
                        for medical assistance under this 
                        title, including the right to request 
                        an assessment under section 
                        1505(c)(1)(B);
                            ``(ii) make available to each 
                        resident, upon reasonable request, a 
                        written statement of such rights (which 
                        statement is updated upon changes in 
                        such rights) including the notice (if 
                        any) of the State developed under 
                        subsection (e)(6);
                            ``(iii) inform each resident who is 
                        entitled to medical assistance under 
                        this title--
                                    ``(I) at the time of 
                                admission to the facility or, 
                                if later, at the time the 
                                resident becomes eligible for 
                                such assistance, of the items 
                                and services that are included 
                                in nursing facility services 
                                under the State plan and for 
                                which the resident may not be 
                                charged, and of those other 
                                items and services that the 
                                facility offers and for which 
                                the resident may be charged and 
                                the amount of the charges for 
                                such items and services, and
                                    ``(II) of changes in the 
                                items and services described in 
                                subclause (I) and of changes in 
                                the charges imposed for items 
                                and services described in that 
                                subclause; and
                            ``(iv) inform each other resident, 
                        in writing before or at the time of 
                        admission and periodically during the 
                        resident's stay, of services available 
                        in the facility and of related charges 
                        for such services, including any 
                        charges for services not covered under 
                        title XVIII or by the facility's basic 
                        per diem charge.
                The written description of legal rights under 
                this subparagraph shall include a description 
                of the protection of personal funds under 
                paragraph (6) and a statement that a resident 
                may file a complaint with a State survey and 
                certification agency respecting resident abuse 
                and neglect and misappropriation of resident 
                property in the facility.
                    ``(C) Rights of incompetent residents.--In 
                the case of a resident adjudged incompetent 
                under the laws of a State, the rights of the 
                resident under this title shall devolve upon, 
                and, to the extent judged necessary by a court 
                of competent jurisdiction, be exercised by, the 
                person appointed under State law to act on the 
                resident's behalf.
                    ``(D) Use of psychopharmacologic drugs.--
                Psychopharmacologic drugs may be administered 
                only on the orders of a physician and only as 
                part of a plan (included in the written plan of 
                care described in paragraph (2)) designed to 
                eliminate or modify the symptoms for which the 
                drugs are prescribed and only if, at least 
                annually an independent, external consultant 
                reviews the appropriateness of the drug plan of 
                each resident receiving such drugs.
            ``(2) Transfer and discharge rights.--
                    ``(A) In general.--A nursing facility must 
                permit each resident to remain in the facility 
                and must not transfer or discharge the resident 
                from the facility unless--
                            ``(i) the transfer or discharge is 
                        necessary to meet the resident's 
                        welfare and the resident's welfare 
                        cannot be met in the facility;
                            ``(ii) the transfer or discharge is 
                        appropriate because the resident's 
                        health has improved sufficiently so the 
                        resident no longer needs the services 
                        provided by the facility;
                            ``(iii) the safety of individuals 
                        in the facility is endangered;
                            ``(iv) the health of individuals in 
                        the facility would otherwise be 
                        endangered;
                            ``(v) the resident has failed, 
                        after reasonable and appropriate 
                        notice, to pay (or to have paid under 
                        this title or title XVIII on the 
                        resident's behalf) for a stay at the 
                        facility; or
                            ``(vi) the facility ceases to 
                        operate.
                In each of the cases described in clauses (i) 
                through (iv), the basis for the transfer or 
                discharge must be documented in the resident's 
                clinical record. In the cases described in 
                clauses (i) and (ii), the documentation must be 
                made by the resident's physician, and in the 
                case described in clause (iv) the documentation 
                must be made by a physician. For purposes of 
                clause (v), in the case of a resident who 
                becomes eligible for assistance under this 
                title after admission to the facility, only 
                charges which may be imposed under this title 
                shall be considered to be allowable.
                    ``(B) Pre-transfer and pre-discharge 
                notice.--
                            ``(i) In general.--Before effecting 
                        a transfer or discharge of a resident, 
                        a nursing facility must--
                                    ``(I) notify the resident 
                                (and, if known, an immediate 
                                family member of the resident 
                                or legal representative) of the 
                                transfer or discharge and the 
                                reasons therefor,
                                    ``(II) record the reasons 
                                in the resident's clinical 
                                record (including any 
                                documentation required under 
                                subparagraph (A)), and
                                    ``(III) include in the 
                                notice the items described in 
                                clause (iii).
                            ``(ii) Timing of notice.--The 
                        notice under clause (i)(I) must be made 
                        at least 30 days in advance of the 
                        resident's transfer or discharge 
                        except--
                                    ``(I) in a case described 
                                in clause (iii) or (iv) of 
                                subparagraph (A);
                                    ``(II) in a case described 
                                in clause (ii) of subparagraph 
                                (A), where the resident's 
                                health improves sufficiently to 
                                allow a more immediate transfer 
                                or discharge;
                                    ``(III) in a case described 
                                in clause (i) of subparagraph 
                                (A), where a more immediate 
                                transfer or discharge is 
                                necessitated by the resident's 
                                urgent medical needs; or
                                    ``(IV) in a case where a 
                                resident has not resided in the 
                                facility for 30 days.
                        In the case of such exceptions, notice 
                        must be given as many days before the 
                        date of the transfer or discharge as is 
                        practicable.
                            ``(iii) Items included in notice.--
                        Each notice under clause (i) must 
                        include--
                                    ``(I) notice of the 
                                resident's right to appeal the 
                                transfer or discharge under the 
                                State process established under 
                                subsection (e)(3);
                                    ``(II) the name, mailing 
                                address, and telephone number 
                                of the State long-term care 
                                ombudsman (established under 
                                title III or VII of the Older 
                                Americans Act of 1965);
                                    ``(III) in the case of 
                                residents with developmental 
                                disabilities, the mailing 
                                address and telephone number of 
                                the agency responsible for the 
                                protection and advocacy system 
                                for developmentally disabled 
                                individuals established under 
                                part C of the Developmental 
                                Disabilities Assistance and 
                                Bill of Rights Act; and
                                    ``(IV) in the case of 
                                mentally ill residents (as 
                                defined in subsection 
                                (e)(7)(G)(i)), the mailing 
                                address and telephone number of 
                                the agency responsible for the 
                                protection and advocacy system 
                                for mentally ill individuals 
                                established under the 
                                Protection and Advocacy for 
                                Mentally Ill Individuals Act.
                    ``(C) Orientation.--A nursing facility must 
                provide sufficient preparation and orientation 
                to residents to ensure safe and orderly 
                transfer or discharge from the facility.
                    ``(D) Notice on bed-hold policy and 
                readmission.--
                            ``(i) Notice before transfer.--
                        Before a resident of a nursing facility 
                        is transferred for hospitalization or 
                        therapeutic leave, a nursing facility 
                        must provide written information to the 
                        resident and an immediate family member 
                        or legal representative concerning--
                                    ``(I) the provisions of the 
                                State plan under this title 
                                regarding the period (if any) 
                                during which the resident will 
                                be permitted under the State 
                                plan to return and resume 
                                residence in the facility, and
                                    ``(II) the policies of the 
                                facility regarding such a 
                                period, which policies must be 
                                consistent with clause (iii).
                            ``(ii) Notice upon transfer.--At 
                        the time of transfer of a resident to a 
                        hospital or for therapeutic leave, a 
                        nursing facility must provide written 
                        notice to the resident and an immediate 
                        family member or legal representative 
                        of the duration of any period described 
                        in clause (i).
                            ``(iii) Permitting resident to 
                        return.--A nursing facility must 
                        establish and follow a written policy 
                        under which a resident--
                                    ``(I) who is eligible for 
                                medical assistance for nursing 
                                facility services under a State 
                                plan,
                                    ``(II) who is transferred 
                                from the facility for 
                                hospitalization or therapeutic 
                                leave, and
                                    ``(III) whose 
                                hospitalization or therapeutic 
                                leave exceeds a period paid for 
                                under the State plan for the 
                                holding of a bed in the 
                                facility for the resident,
                        will be permitted to be readmitted to 
                        the facility immediately upon the first 
                        availability of a bed in a room (not 
                        including a private room) in the 
                        facility if, at the time of 
                        readmission, the resident requires the 
                        services provided by the facility.
            ``(3) Access and visitation rights.--A nursing 
        facility must--
                    ``(A) permit immediate access to any 
                resident by any representative of the 
                Secretary, by any representative of the State, 
                by an ombudsman or agency described in 
                subclause (II), (III), or (IV) of paragraph 
                (2)(B)(iii), or by the resident's individual 
                physician;
                    ``(B) permit immediate access to a 
                resident, subject to the resident's right to 
                deny or withdraw consent at any time, by 
                immediate family or other relatives of the 
                resident;
                    ``(C) permit immediate access to a 
                resident, subject to reasonable restrictions 
                and the resident's right to deny or withdraw 
                consent at any time, by others who are visiting 
                with the consent of the resident;
                    ``(D) permit reasonable access to a 
                resident by any entity or individual that 
                provides health, social, legal, or other 
                services to the resident, subject to the 
                resident's right to deny or withdraw consent at 
                any time; and
                    ``(E) permit representatives of the State 
                ombudsman (described in paragraph 
                (2)(B)(iii)(II)), with the permission of the 
                resident (or the resident's legal 
                representative) and consistent with State law, 
                to examine a resident's clinical records.
            ``(4) Equal access to quality care.--
                    ``(A) In general.--A nursing facility must 
                establish and maintain identical policies and 
                practices regarding transfer, discharge, and 
                the provision of services required under the 
                State plan for all individuals regardless of 
                source of payment.
                    ``(B) Construction.--
                            ``(i) Nothing prohibiting any 
                        charges for non-medical assistance 
                        patients.--Subparagraph (A) shall not 
                        be construed as prohibiting a nursing 
                        facility from charging any amount for 
                        services furnished, consistent with the 
                        notice in paragraph (1)(B) describing 
                        such charges.
                            ``(ii) No additional services 
                        required.--Subparagraph (A) shall not 
                        be construed as requiring a State to 
                        offer additional services on behalf of 
                        a resident than are otherwise provided 
                        under the State plan.
            ``(5) Admissions Policy.--
                    ``(A) Admissions.--With respect to 
                admissions practices, a nursing facility must--
                            ``(i)(I) not require individuals 
                        applying to reside or residing in the 
                        facility to waive their rights to 
                        benefits under a State plan under this 
                        title or title XVIII, (II) not require 
                        oral or written assurance that such 
                        individuals are not eligible for, or 
                        will not apply for, benefits under a 
                        State plan under this title or title 
                        XVIII, and (III) prominently display in 
                        the facility written information, and 
                        provide to such individuals oral and 
                        written information, about how to apply 
                        for and use such benefits and how to 
                        receive refunds for previous payments 
                        covered by such benefits;
                            ``(ii) not require a third party 
                        guarantee of payment to the facility as 
                        a condition of admission (or expedited 
                        admission) to, or continued stay in, 
                        the facility; and
                            ``(iii) in the case of an 
                        individual who is provided medical 
                        assistance for nursing facility 
                        services, not charge, solicit, accept, 
                        or receive, in addition to any amount 
                        otherwise required to be paid under the 
                        State plan under this title, any gift, 
                        money, donation, or other consideration 
                        as a precondition of admitting (or 
                        expediting the admission of) the 
                        individual to the facility or as a 
                        requirement for the individual's 
                        continued stay in the facility.
                    ``(B) Construction.--
                            ``(i) No preemption of stricter 
                        standards.--Subparagraph (A) shall not 
                        be construed as preventing States or 
                        political subdivisions therein from 
                        prohibiting, under State or local law, 
                        the discrimination against individuals 
                        who are provided medical assistance 
                        under the State plan with respect to 
                        admissions practices of nursing 
                        facilities.
                            ``(ii) Contracts with legal 
                        representatives.--Subparagraph (A)(ii) 
                        shall not be construed as preventing a 
                        facility from requiring an individual, 
                        who has legal access to a resident's 
                        income or resources available to pay 
                        for care in the facility, to sign a 
                        contract (without incurring personal 
                        financial liability) to provide payment 
                        from the resident's income or resources 
                        for such care.
                            ``(iii) Charges for additional 
                        services requested.--Subparagraph 
                        (A)(iii) shall not be construed as 
                        preventing a facility from charging a 
                        resident, eligible for medical 
                        assistance under the State plan, for 
                        items or services the resident has 
                        requested and received and that are not 
                        specified in the State plan as included 
                        in covered nursing facility services.
                            ``(iv) Bona fide contributions.--
                        Subparagraph (A)(iii) shall not be 
                        construed as prohibiting a nursing 
                        facility from soliciting, accepting, or 
                        receiving a charitable, religious, or 
                        philanthropic contribution from an 
                        organization or from a person unrelated 
                        to the resident (or potential 
                        resident), but only to the extent that 
                        such contribution is not a condition of 
                        admission, expediting admission, or 
                        continued stay in the facility.
            ``(6) Protection of resident funds.--
                    ``(A) In general.--The nursing facility--
                            ``(i) may not require residents to 
                        deposit their personal funds with the 
                        facility, and
                            ``(ii) upon the written 
                        authorization of the resident, must 
                        hold, safeguard, and account for such 
                        personal funds under a system 
                        established and maintained by the 
                        facility in accordance with this 
                        paragraph.
                    ``(B) Management of personal funds.--Upon 
                written authorization of a resident under 
                subparagraph (A)(ii), the facility must manage 
                and account for the personal funds of the 
                resident deposited with the facility as 
                follows:
                            ``(i) Deposit.--The facility must 
                        deposit any amount of personal funds in 
                        excess of $50 with respect to a 
                        resident in an interest bearing account 
                        (or accounts) that is separate from any 
                        of the facility's operating accounts 
                        and credits all interest earned on such 
                        separate account to such account. With 
                        respect to any other personal funds, 
                        the facility must maintain such funds 
                        in a non-interest bearing account or 
                        petty cash fund.
                            ``(ii) Accounting and records.--The 
                        facility must assure a full and 
                        complete separate accounting of each 
                        such resident's personal funds, 
                        maintain a written record of all 
                        financial transactions involving the 
                        personal funds of a resident deposited 
                        with the facility, and afford the 
                        resident (or a legal representative of 
                        the resident) reasonable access to such 
                        record.
                            ``(iii) Notice of certain 
                        balances.--The facility must notify 
                        each resident receiving medical 
                        assistance under the State plan when 
                        the amount in the resident's account 
                        reaches $200 less than the dollar 
                        amount determined under section 
                        1611(a)(3)(B) and the fact that if the 
                        amount in the account (in addition to 
                        the value of the resident's other 
                        nonexempt resources) reaches the amount 
                        determined under such section the 
                        resident may lose eligibility for such 
                        medical assistance or for benefits 
                        under title XVI.
                            ``(iv) Conveyance upon death.--Upon 
                        the death of a resident with such an 
                        account, the facility must convey 
                        promptly the resident's personal funds 
                        (and a final accounting of such funds) 
                        to the individual administering the 
                        resident's estate. All other personal 
                        property, including medical records, 
                        shall be considered part of the 
                        resident's estate and shall only be 
                        released to the administrator of the 
                        estate.
                    ``(C) Assurance of financial security.--The 
                facility must purchase a surety bond, or 
                otherwise provide assurance satisfactory to the 
                State, to assure the security of all personal 
                funds of residents deposited with the facility.
                    ``(D) Limitation on charges to personal 
                funds.--The facility may not impose a charge 
                against the personal funds of a resident for 
                any item or service for which payment is made 
                under this title or title XVIII.
            ``(7) Limitation on charges in case of medical-
        assistance-eligible individuals.--
                    ``(A) In general.--A nursing facility may 
                not impose charges, for certain medical-
                assistance-eligible individuals for nursing 
                facility services covered by the State under 
                its plan under this title, that exceed the 
                payment amounts established by the State for 
                such services under this title.
                    ``(B) Certain medical-assistance-eligible 
                individuals defined.--In subparagraph (A), the 
                term `certain medical-assistance-eligible 
                individual' means an individual who is entitled 
                to medical assistance for nursing facility 
                services in the facility under this title but 
                with respect to whom such benefits are not 
                being paid because, in determining the amount 
                of the individual's income to be applied 
                monthly to payment for the costs of such 
                services, the amount of such income exceeds the 
                payment amounts established by the State for 
                such services under this title.
            ``(8) Posting of survey results.--A nursing 
        facility must post in a place readily accessible to 
        residents, and family members and legal representatives 
        of residents, the results of the most recent survey of 
        the facility conducted under subsection (g).
    ``(d) Requirements Relating to Administration and Other 
Matters.--
            ``(1) Administration.--
                    ``(A) In general.--A nursing facility must 
                be administered in a manner that enables it to 
                use its resources effectively and efficiently 
                to attain or maintain the highest practicable 
                physical, mental, and psychosocial well-being 
                of each resident (consistent with requirements 
                established under subsection (f)(5)).
                    ``(B) Required notices.--If a change occurs 
                in--
                            ``(i) the persons with an ownership 
                        or control interest (as defined in 
                        section 1124(a)(3)) in the facility,
                            ``(ii) the persons who are 
                        officers, directors, agents, or 
                        managing employees (as defined in 
                        section 1126(b)) of the facility,
                            ``(iii) the corporation, 
                        association, or other company 
                        responsible for the management of the 
                        facility, or
                            ``(iv) the individual who is the 
                        administrator or director of nursing of 
                        the facility,
                the nursing facility must provide notice to the 
                State agency responsible for the licensing of 
                the facility, at the time of the change, of the 
                change and of the identity of each new person, 
                company, or individual described in the 
                respective clause.
                    ``(C) Nursing facility administrator.--The 
                administrator of a nursing facility, whether 
                freestanding or hospital-based, must meet such 
                standards as are established by the Secretary 
                under subsection (f)(4).
            ``(2) Licensing and life safety code.--
                    ``(A) Licensing.--A nursing facility must 
                be licensed under applicable State and local 
                law.
                    ``(B) Life safety code.--A nursing facility 
                must meet such provisions of such edition (as 
                specified by the Secretary in regulation) of 
                the Life Safety Code of the National Fire 
                Protection Association as are applicable to 
                nursing homes; except that--
                            ``(i) the Secretary may waive, for 
                        such periods as he deems appropriate, 
                        specific provisions of such Code which 
                        if rigidly applied would result in 
                        unreasonable hardship upon a facility, 
                        but only if such waiver would not 
                        adversely affect the health and safety 
                        of residents or personnel, and
                            ``(ii) the provisions of such Code 
                        shall not apply in any State if the 
                        Secretary finds that in such State 
                        there is in effect a fire and safety 
                        code, imposed by State law, which 
                        adequately protects residents of and 
                        personnel in nursing facilities.
            ``(3) Sanitary and infection control and physical 
        environment.--A nursing facility must--
                    ``(A) establish and maintain an infection 
                control program designed to provide a safe, 
                sanitary, and comfortable environment in which 
                residents reside and to help prevent the 
                development and transmission of disease and 
                infection, and
                    ``(B) be designed, constructed, equipped, 
                and maintained in a manner to protect the 
                health and safety of residents, personnel, and 
                the general public.
            ``(4) Miscellaneous.--
                    ``(A) Compliance with federal, state, and 
                local laws and professional standards.--A 
                nursing facility, whether freestanding or 
                hospital-based, must operate and provide 
                services in compliance with all applicable 
                Federal, State, and local laws and regulations 
                (including the requirements of section 1124) 
                and with accepted professional standards and 
                principles which apply to professionals 
                providing services in such a facility.
                    ``(B) Other.--A nursing facility must meet 
                such other requirements relating to the health 
                and safety of residents or relating to the 
                physical facilities thereof as the Secretary 
                may find necessary.
    ``(e) State Requirements Relating to Nursing Facility 
Requirements.--A State with a State plan under this title shall 
provide for the following:
            ``(1) Specification and review of nurse aide 
        training and competency evaluation programs and of 
        nurse aide competency evaluation programs.--The State 
        must--
                    ``(A) specify those training and competency 
                evaluation programs, and those competency 
                evaluation programs, that the State approves 
                for purposes of subsection (b)(5) and that meet 
                the requirements established under subsection 
                (f)(2), and
                    ``(B) provide for the review and reapproval 
                of such programs, at a frequency and using a 
                methodology consistent with the requirements 
                established under subsection (f)(2)(A)(iii).
            ``(2) Nurse aide registry.--
                    ``(A) In general.--The State shall 
                establish and maintain a registry of all 
                individuals who have satisfactorily completed a 
                nurse aide training and competency evaluation 
                program, or a nurse aide competency evaluation 
                program, approved under paragraph (1) in the 
                State, or any individual described in 
                subsection (f)(2)(B)(ii) or in subparagraph 
                (B), (C), or (D) of section 6901(b)(4) of the 
                Omnibus Budget Reconciliation Act of 1989.
                    ``(B) Information in registry.--The 
                registry under subparagraph (A) shall provide 
                (in accordance with regulations of the 
                Secretary) for the inclusion of specific 
                documented findings by a State under subsection 
                (g)(1)(C) of resident neglect or abuse or 
                misappropriation of resident property involving 
                an individual listed in the registry, as well 
                as any brief statement of the individual 
                disputing the findings. The State shall make 
                available to the public information in the 
                registry. In the case of inquiries to the 
                registry concerning an individual listed in the 
                registry, any information disclosed concerning 
                such a finding shall also include disclosure of 
                any such statement in the registry relating to 
                the finding or a clear and accurate summary of 
                such a statement.
                    ``(C) Prohibition against charges.--A State 
                may not impose any charges on a nurse aide 
                relating to the registry established and 
                maintained under subparagraph (A).
            ``(3) State appeals process for transfers and 
        discharges.--The State must provide for a fair 
        mechanism, meeting the guidelines established under 
        subsection (f)(3), for hearing appeals on transfers and 
        discharges of residents of such facilities.
            ``(4) Nursing facility administrator standards.--
        The State must implement and enforce the nursing 
        facility administrator standards developed under 
        subsection (f)(4) respecting the qualification of 
        administrators of nursing facilities. Any such 
        standards promulgated shall apply to administrators of 
        hospital-based facilities as well as administrators of 
        freestanding facilities.
            ``(5) Specification of resident assessment 
        instrument.--The State shall specify the instrument to 
        be used by nursing facilities in the State in complying 
        with the requirement of subsection (b)(3)(A)(iii). Such 
        instrument shall be--
                    ``(A) one of the instruments designated 
                under subsection (f)(6)(B), or
                    ``(B) an instrument which the Secretary has 
                approved as being consistent with the minimum 
                data set of core elements, common definitions, 
                and utilization guidelines specified by the 
                Secretary under subsection (f)(6)(A).
            ``(6) Notice of rights.--Each State shall develop 
        (and periodically update) a written notice of the 
        rights and obligations of residents of nursing 
        facilities (and spouses of such residents) under this 
        title.
            ``(7) State requirements for preadmission screening 
        and resident review.--
                    ``(A) Preadmission screening.--
                            ``(i) In general.--The State must 
                        have in effect a preadmission screening 
                        program, for identifying mentally ill 
                        and mentally retarded individuals (as 
                        defined in subparagraph (B)) who are 
                        admitted to nursing facilities and for 
                        determining whether they require the 
                        level of services of such a facility.
                            ``(ii) State requirement for 
                        resident review.--The State shall 
                        notify the State mental health 
                        authority or the State mental 
                        retardation or developmental disability 
                        authority, as appropriate, of the 
                        individuals so identified.
                    ``(B) Definitions.--In this paragraph:
                            ``(i) An individual is considered 
                        to be `mentally ill' if the individual 
                        has a serious mental illness (as 
                        defined by the Secretary in 
                        consultation with the National 
                        Institute of Mental Health) and does 
                        not have a primary diagnosis of 
                        dementia (including Alzheimer's disease 
                        or a related disorder) or a diagnosis 
                        (other than a primary diagnosis) of 
                        dementia and a primary diagnosis that 
                        is not a serious mental illness.
                            ``(ii) An individual is considered 
                        to be `mentally retarded' if the 
                        individual is mentally retarded or a 
                        person with a related condition.
    ``(f) Responsibilities Relating to Nursing Facility 
Requirements.--
            ``(1) General responsibility.--It is the duty and 
        responsibility of the Secretary to assure that 
        requirements which govern the provision of care in 
        nursing facilities under State plans approved under 
        this title, and the enforcement of such requirements, 
        are adequate to protect the health, safety, welfare, 
        and rights of residents and to promote the effective 
        and efficient use of public moneys.
            ``(2) Requirements for nurse aide training and 
        competency evaluation programs and for nurse aide 
        competency evaluation programs.--
                    ``(A) In general.--For purposes of 
                subsections (b)(5) and (e)(1)(A), the Secretary 
                shall establish--
                            ``(i) requirements for the approval 
                        of nurse aide training and competency 
                        evaluation programs, including 
                        requirements relating to (I) the areas 
                        to be covered in such a program 
                        (including at least basic nursing 
                        skills, personal care skills, 
                        recognition of mental health and social 
                        service needs, care of cognitively 
                        impaired residents, basic restorative 
                        services, and residents' rights) and 
                        content of the curriculum, (II) minimum 
                        hours of initial and ongoing training 
                        and retraining (including not less than 
                        75 hours in the case of initial 
                        training), (III) qualifications of 
                        instructors, and (IV) procedures for 
                        determination of competency;
                            ``(ii) requirements for the 
                        approval of nurse aide competency 
                        evaluation programs, including 
                        requirement relating to the areas to be 
                        covered in such a program, including at 
                        least basic nursing skills, personal 
                        care skills, recognition of mental 
                        health and social service needs, care 
                        of cognitively impaired residents, 
                        basic restorative services, and 
                        residents' rights, and procedures for 
                        determination of competency;
                            ``(iii) requirements respecting the 
                        minimum frequency and methodology to be 
                        used by a State in reviewing such 
                        programs' compliance with the 
                        requirements for such programs; and
                            ``(iv) requirements, under both 
                        such programs, that--
                                    ``(I) provide procedures 
                                for determining competency that 
                                permit a nurse aide, at the 
                                nurse aide's option, to 
                                establish competency through 
                                procedures or methods other 
                                than the passing of a written 
                                examination and to have the 
                                competency evaluation conducted 
                                at the nursing facility at 
                                which the aide is (or will be) 
                                employed (unless the facility 
                                is described in subparagraph 
                                (B)(iii)(I)),
                                    ``(II) prohibit the 
                                imposition on a nurse aide who 
                                is employed by (or who has 
                                received an offer of employment 
                                from) a facility on the date on 
                                which the aide begins either 
                                such program of any charges 
                                (including any charges for 
                                textbooks and other required 
                                course materials and any 
                                charges for the competency 
                                evaluation) for either such 
                                program, and
                                    ``(III) in the case of a 
                                nurse aide not described in 
                                subclause (II) who is employed 
                                by (or who has received an 
                                offer of employment from) a 
                                facility not later than 12 
                                months after completing either 
                                such program, the State shall 
                                provide for the reimbursement 
                                of costs incurred in completing 
                                such program on a prorata basis 
                                during the period in which the 
                                nurse aide is so employed.
                    ``(B) Approval of certain programs.--Such 
                requirements--
                            ``(i) may permit approval of 
                        programs offered by or in facilities, 
                        as well as outside facilities 
                        (including employee organizations);
                            ``(ii) shall permit a State to find 
                        that an individual who has completed 
                        (before July 1, 1989) a nurse aide 
                        training and competency evaluation 
                        program shall be deemed to have 
                        completed such a program approved under 
                        subsection (b)(5) if the State 
                        determines that, at the time the 
                        program was offered, the program met 
                        the requirements for approval under 
                        such paragraph; and
                            ``(iii) subject to subparagraph 
                        (C), shall prohibit approval of such a 
                        program--
                                    ``(I) offered by or in a 
                                nursing facility which, within 
                                the previous 2 years--
                                            ``(a) has operated 
                                        under a waiver under 
                                        subsection 
                                        (b)(4)(C)(ii) that was 
                                        granted on the basis of 
                                        a demonstration that 
                                        the facility is unable 
                                        to provide the nursing 
                                        care required under 
                                        subsection (b)(4)(C)(i) 
                                        for a period in excess 
                                        of 48 hours during a 
                                        week;
                                            ``(b) has been 
                                        subject to an extended 
                                        (or partial extended) 
                                        survey under section 
                                        1819(g)(2)(B)(i) or 
                                        subsection (g)(2)(B)(i) 
                                        of this section; or
                                            ``(c) has been 
                                        assessed a civil money 
                                        penalty described in 
                                        section 
                                        1819(h)(2)(B)(ii) or 
                                        subsection 
                                        (h)(2)(A)(ii) of this 
                                        section of not less 
                                        than $5,000, or has 
                                        been subject to a 
                                        remedy described in 
                                        subsection (h)(1)(B)(i) 
                                        of this section, 
                                        clauses (i), (iii), or 
                                        (iv) of subsection 
                                        (h)(2)(A) of this 
                                        section, clauses (i) or 
                                        (iii) of section 
                                        1819(h)(2)(B), or 
                                        section 1819(h)(4), or
                                    ``(II) offered by or in a 
                                nursing facility unless the 
                                State makes the determination, 
                                upon an individual's completion 
                                of the program, that the 
                                individual is competent to 
                                provide nursing and nursing-
                                related services in nursing 
                                facilities.
                        A State may not delegate (through 
                        subcontract or otherwise) its 
                        responsibility under clause (iii)(II) 
                        to the nursing facility.
                    ``(C) Waiver authorized.--Clause (iii) of 
                subparagraph (B) shall not apply to a program 
                offered in (but not by) a nursing facility in a 
                State if the State--
                            ``(i) determines that there is no 
                        other such program offered within a 
                        reasonable distance of the facility,
                            ``(ii) assures, through an 
                        oversight effort, that an adequate 
                        environment exists for operating the 
                        program in the facility, and
                            ``(iii) provides notice of such 
                        determination and assurances to the 
                        State long-term care ombudsman.
            ``(3) Federal guidelines for state appeals process 
        for transfers and discharges.--For purposes of 
        subsections (c)(2)(B)(iii) and (e)(3), the Secretary 
        shall establish guidelines for minimum standards which 
        State appeals processes under subsection (e)(3) must 
        meet to provide a fair mechanism for hearing appeals on 
        transfers and discharges of residents from nursing 
        facilities.
            ``(4) Qualification of administrators.--For 
        purposes of subsections (d)(1)(C) and (e)(4), the 
        Secretary shall develop standards to be applied in 
        assuring the qualifications of administrators of 
        nursing facilities. Any such standards must apply to 
        administrators of hospital-based facilities as well as 
        administrators of freestanding facilities.
            ``(5) Criteria for administration.--The Secretary 
        shall establish criteria for assessing a nursing 
        facility's compliance with the requirement of 
        subsection (d)(1) with respect to--
                    ``(A) its governing body and management,
                    ``(B) agreements with hospitals regarding 
                transfers of residents to and from the 
                hospitals and to and from other nursing 
                facilities,
                    ``(C) disaster preparedness,
                    ``(D) direction of medical care by a 
                physician,
                    ``(E) laboratory and radiological services,
                    ``(F) clinical records, and
                    ``(G) resident and advocate participation.
            ``(6) Specification of resident assessment data set 
        and instruments.--The Secretary shall--
                    ``(A) specify a minimum data set of core 
                elements and common definitions for use by 
                nursing facilities in conducting the 
                assessments required under subsection (b)(3), 
                and establish guidelines for utilization of the 
                data set; and
                    ``(B) designate one or more instruments 
                which are consistent with the specification 
                made under subparagraph (A) and which a State 
                may specify under subsection (e)(5)(A) for use 
                by nursing facilities in complying with the 
                requirements of subsection (b)(3)(A)(iii).
            ``(7) List of items and services furnished in 
        nursing facilities not chargeable to the personal funds 
        of a resident.--The Secretary shall issue regulations 
        that define those costs which may be charged to the 
        personal funds of residents in nursing facilities who 
        are individuals receiving medical assistance with 
        respect to nursing facility services under this title 
        and those costs which are to be included in the payment 
        amount under this title for nursing facility services.
            ``(8) Criteria for monitoring state waivers.--The 
        Secretary shall develop criteria and procedures for 
        monitoring State performances in granting waivers 
        pursuant to subsection (b)(4)(C)(ii).
    ``(g) Survey and Certification Process.--
            ``(1) State and federal responsibility.--
                    ``(A) In general.--Under each State plan 
                under this title, the State shall be 
                responsible for certifying, in accordance with 
                surveys conducted under paragraph (2), the 
                compliance of nursing facilities (other than 
                facilities of the State) with the requirements 
                of subsections (b), (c), and (d). The Secretary 
                shall be responsible for certifying, in 
                accordance with surveys conducted under 
                paragraph (2), the compliance of State nursing 
                facilities with the requirements of such 
                subsections.
                    ``(B) Educational program.--Each State 
                shall conduct periodic educational programs for 
                the staff and residents (and their 
                representatives) of nursing facilities in order 
                to present current regulations, procedures, and 
                policies under this section.
                    ``(C) Investigation of allegations of 
                resident neglect and abuse and misappropriation 
                of resident property.--The State shall provide, 
                through the agency responsible for surveys and 
                certification of nursing facilities under this 
                subsection, for a process for the receipt and 
                timely review and investigation of allegations 
                of neglect and abuse and misappropriation of 
                resident property by a nurse aide of a resident 
                in a nursing facility or by another individual 
                used by the facility in providing services to 
                such a resident. The State shall, after notice 
                to the individual involved and a reasonable 
                opportunity for a hearing for the individual to 
                rebut allegations, make a finding as to the 
                accuracy of the allegations. If the State finds 
                that a nurse aide has neglected or abused a 
                resident or misappropriated resident property 
                in a facility, the State shall notify the nurse 
                aide and the registry of such finding. If the 
                State finds that any other individual used by 
                the facility has neglected or abused a resident 
                or misappropriated resident property in a 
                facility, the State shall notify the 
                appropriate licensure authority. A State shall 
                not make a finding that an individual has 
                neglected a resident if the individual 
                demonstrates that such neglect was caused by 
                factors beyond the control of the individual.
            ``(2) Surveys.--
                    ``(A) Annual standard survey.--
                            ``(i) In general.--Each nursing 
                        facility shall be subject to a standard 
                        survey, to be conducted without any 
                        prior notice to the facility. Any 
                        individual who notifies (or causes to 
                        be notified) a nursing facility of the 
                        time or date on which such a survey is 
                        scheduled to be conducted is subject to 
                        a civil money penalty of not to exceed 
                        $2,000. The provisions of section 1128A 
                        (other than subsections (a) and (b)) 
                        shall apply to a civil money penalty 
                        under the previous sentence in the same 
                        manner as such provisions apply to a 
                        penalty or proceeding under section 
                        1128A(a). The Secretary shall review 
                        each State's procedures for scheduling 
                        and conduct of standard surveys to 
                        assure that the State has taken all 
                        reasonable steps to avoid giving notice 
                        of such a survey through the scheduling 
                        procedures and the conduct of the 
                        surveys themselves.
                            ``(ii) Contents.--Each standard 
                        survey shall include, for a case-mix 
                        stratified sample of residents--
                                    ``(I) a survey of the 
                                quality of care furnished, as 
                                measured by indicators of 
                                medical, nursing, and 
                                rehabilitative care, dietary 
                                and nutrition services, 
                                activities and social 
                                participation, and sanitation, 
                                infection control, and the 
                                physical environment,
                                    ``(II) written plans of 
                                care provided under subsection 
                                (b)(2) and an audit of the 
                                residents' assessments under 
                                subsection (b)(3) to determine 
                                the accuracy of such 
                                assessments and the adequacy of 
                                such plans of care, and
                                    ``(III) a review of 
                                compliance with residents' 
                                rights under subsection (c).
                            ``(iii) Frequency.--
                                    ``(I) In general.--Each 
                                nursing facility shall be 
                                subject to a standard survey 
                                not later than 15 months after 
                                the date of the previous 
                                standard survey conducted under 
                                this subparagraph. The 
                                statewide average interval 
                                between standard surveys of a 
                                nursing facility shall not 
                                exceed 12 months.
                                    ``(II) Special surveys.--If 
                                not otherwise conducted under 
                                subclause (I), a standard 
                                survey (or an abbreviated 
                                standard survey) may be 
                                conducted within 2 months of 
                                any change of ownership, 
                                administration, management of a 
                                nursing facility, or director 
                                of nursing in order to 
                                determine whether the change 
                                has resulted in any decline in 
                                the quality of care furnished 
                                in the facility.
                    ``(B) Extended surveys.--
                            ``(i) In general.--Each nursing 
                        facility which is found, under a 
                        standard survey, to have provided 
                        substandard quality of care shall be 
                        subject to an extended survey. Any 
                        other facility may, at the Secretary's 
                        or State's discretion, be subject to 
                        such an extended survey (or a partial 
                        extended survey).
                            ``(ii) Timing.--The extended survey 
                        shall be conducted immediately after 
                        the standard survey (or, if not 
                        practicable, not later than 2 weeks 
                        after the date of completion of the 
                        standard survey).
                            ``(iii) Contents.--In such an 
                        extended survey, the survey team shall 
                        review and identify the policies and 
                        procedures which produced such 
                        substandard quality of care and shall 
                        determine whether the facility has 
                        complied with all the requirements 
                        described in subsections (b), (c), and 
                        (d). Such review shall include an 
                        expansion of the size of the sample of 
                        residents' assessments reviewed and a 
                        review of the staffing, of in-service 
                        training, and, if appropriate, of 
                        contracts with consultants.
                            ``(iv) Construction.--Nothing in 
                        this paragraph shall be construed as 
                        requiring an extended or partial 
                        extended survey as a prerequisite to 
                        imposing a sanction against a facility 
                        under subsection (h) on the basis of 
                        findings in a standard survey.
                    ``(C) Survey protocol.--Standard and 
                extended surveys shall be conducted--
                            ``(i) based upon the protocol which 
                        the Secretary has developed, tested, 
                        and validated, as of the date of the 
                        enactment of this title, and
                            ``(ii) by individuals, of a survey 
                        team, who meet such minimum 
                        qualifications as the Secretary 
                        establishes.
                    ``(D) Consistency of surveys.--Each State 
                shall implement programs to measure and reduce 
                inconsistency in the application of survey 
                results among surveyors.
                    ``(E) Survey teams.--
                            ``(i) In general.--Surveys under 
                        this subsection shall be conducted by a 
                        multidisciplinary team of professionals 
                        (including a registered professional 
                        nurse).
                            ``(ii) Prohibition of conflicts of 
                        interest.--A State may not use as a 
                        member of a survey team under this 
                        subsection an individual who is serving 
                        (or has served within the previous 2 
                        years) as a member of the staff of, or 
                        as a consultant to, the facility 
                        surveyed respecting compliance with the 
                        requirements of subsections (b), (c), 
                        and (d), or who has a personal or 
                        familial financial interest in the 
                        facility being surveyed.
                            ``(iii) Training.----The Secretary 
                        shall provide for the comprehensive 
                        training of State and Federal surveyors 
                        in the conduct of standard and extended 
                        surveys under this subsection, 
                        including the auditing of resident 
                        assessments and plans of care. No 
                        individual shall serve as a member of a 
                        survey team unless the individual has 
                        successfully completed a training and 
                        testing program in survey and 
                        certification techniques that has been 
                        approved by the Secretary.
            ``(3) Validation surveys.--
                    ``(A) In general.--The Secretary shall 
                conduct onsite surveys of a representative 
                sample of nursing facilities in each State, 
                within 2 months of the date of surveys 
                conducted under paragraph (2) by the State, in 
                a sufficient number to allow inferences about 
                the adequacies of each State's surveys 
                conducted under paragraph (2). In conducting 
                such surveys, the Secretary shall use the same 
                survey protocols as the State is required to 
                use under paragraph (2). If the State has 
                determined that an individual nursing facility 
                meets the requirements of subsections (b), (c), 
                and (d), but the Secretary determines that the 
                facility does not meet such requirements, the 
                Secretary's determination as to the facility's 
                noncompliance with such requirements is binding 
                and supersedes that of the State survey.
                    ``(B) Scope.--With respect to each State, 
                the Secretary shall conduct surveys under 
                subparagraph (A) each year with respect to at 
                least 5 percent of the number of nursing 
                facilities surveyed by the State in the year, 
                but in no case less than 5 nursing facilities 
                in the State.
                    ``(C) Reduction in administrative costs for 
                substandard performance.--If the Secretary 
                finds, on the basis of such surveys, that a 
                State has failed to perform surveys as required 
                under paragraph (2) or that a State's survey 
                and certification performance otherwise is not 
                adequate, the Secretary may provide for the 
                training of survey teams in the State and shall 
                provide for a reduction of the payment 
                otherwise made to the State under section 
                1512(a)(3)(C) with respect to a quarter equal 
                to 33 percent multiplied by a fraction, the 
                denominator of which is equal to the total 
                number of residents in nursing facilities 
                surveyed by the Secretary that quarter and the 
                numerator of which is equal to the total number 
                of residents in nursing facilities which were 
                found pursuant to such surveys to be not in 
                compliance with any of the requirements of 
                subsections (b), (c), and (d). A State that is 
                dissatisfied with the Secretary's findings 
                under this subparagraph may obtain 
                reconsideration and review of the findings 
                under section 1116 in the same manner as a 
                State may seek reconsideration and review under 
                that section of the Secretary's determination 
                under section 1116(a)(1).
                    ``(D) Special surveys of compliance.--Where 
                the Secretary has reason to question the 
                compliance of a nursing facility with any of 
                the requirements of subsections (b), (c), and 
                (d), the Secretary may conduct a survey of the 
                facility and, on the basis of that survey, make 
                independent and binding determinations 
                concerning the extent to which the nursing 
                facility meets such requirements.
            ``(4) Investigation of complaints and monitoring 
        nursing facility compliance.--Each State shall maintain 
        procedures and adequate staff to--
                    ``(A) investigate complaints of violations 
                of requirements by nursing facilities, and
                    ``(B) monitor, on-site, on a regular, as 
                needed basis, a nursing facility's compliance 
                with the requirements of subsections (b), (c), 
                and (d), if--
                            ``(i) the facility has been found 
                        not to be in compliance with such 
                        requirements and is in the process of 
                        correcting deficiencies to achieve such 
                        compliance;
                            ``(ii) the facility was previously 
                        found not to be in compliance with such 
                        requirements, has corrected 
                        deficiencies to achieve such 
                        compliance, and verification of 
                        continued compliance is indicated; or
                            ``(iii) the State has reason to 
                        question the compliance of the facility 
                        with such requirements.
        A State may maintain and utilize a specialized team 
        (including an attorney, an auditor, and appropriate 
        health care professionals) for the purpose of 
        identifying, surveying, gathering and preserving 
        evidence, and carrying out appropriate enforcement 
        actions against substandard nursing facilities.
            ``(5) Disclosure of results of inspections and 
        activities.--
                    ``(A) Public information.--Each State, and 
                the Secretary, shall make available to the 
                public--
                            ``(i) information respecting all 
                        surveys and certifications made 
                        respecting nursing facilities, 
                        including statements of deficiencies, 
                        within 14 calendar days after such 
                        information is made available to those 
                        facilities, and approved plans of 
                        correction,
                            ``(ii) copies of cost reports of 
                        such facilities filed under this title 
                        or under title XVIII,
                            ``(iii) copies of statements of 
                        ownership under section 1124, and
                            ``(iv) information disclosed under 
                        section 1126.
                    ``(B) Notice to ombudsman.--Each State 
                shall notify the State long-term care ombudsman 
                (established under title III or VII of the 
                Older Americans Act of 1965 in accordance with 
                section 712 of the Act) of the State's findings 
                of noncompliance with any of the requirements 
                of subsections (b), (c), and (d), or of any 
                adverse action taken against a nursing facility 
                under paragraphs (1), (2), or (3) of subsection 
                (h), with respect to a nursing facility in the 
                State.
                    ``(C) Notice to physicians and nursing 
                facility administrator licensing board.--If a 
                State finds that a nursing facility has 
                provided substandard quality of care, the State 
                shall notify--
                            ``(i) the attending physician of 
                        each resident with respect to which 
                        such finding is made, and
                            ``(ii) any State board responsible 
                        for the licensing of the nursing 
                        facility administrator of the facility.
                    ``(D) Access to fraud control units.--Each 
                State shall provide its State fraud and abuse 
                control unit (established under section 1554) 
                with access to all information of the State 
                agency responsible for surveys and 
                certifications under this subsection.
    ``(h) Enforcement Process.--
            ``(1) In general.--If a State finds, on the basis 
        of a standard, extended, or partial extended survey 
        under subsection (g)(2) or otherwise, that a nursing 
        facility no longer meets a requirement of subsection 
        (b), (c), or (d)--
                    ``(A) the State shall require the facility 
                to correct the deficiency involved;
                    ``(B) if the State finds that the 
                facility's deficiencies immediately jeopardize 
                the health or safety of its residents, the 
                State shall take immediate action to remove the 
                jeopardy and correct the deficiencies through 
                the remedy specified in paragraph (2)(A)(iii), 
                or terminate the facility's participation under 
                the State plan and may provide, in addition, 
                for one or more of the other remedies described 
                in paragraph (2); and
                    ``(C) if the State finds that the 
                facility's deficiencies do not immediately 
                jeopardize the health or safety of its 
                residents, the State may--
                            ``(i) terminate the facility's 
                        participation under the State plan,
                            ``(ii) provide for one or more of 
                        the remedies described in paragraph 
                        (2), or
                            ``(iii) do both.
        Nothing in this paragraph shall be construed as 
        restricting the remedies available to a State to remedy 
        a nursing facility's deficiencies. If a State finds 
        that a nursing facility meets the requirements of 
        subsections (b), (c), and (d), but, as of a previous 
        period, did not meet such requirements, the State may 
        provide for a civil money penalty under paragraph 
        (2)(A)(ii) for the days in which it finds that the 
        facility was not in compliance with such requirements.
            ``(2) Specified remedies.--
                    ``(A) Listing.--Except as provided in 
                subparagraph (B), each State shall establish by 
                law (whether statute or regulation) at least 
                the following remedies:
                            ``(i) Denial of payment under the 
                        State plan with respect to any 
                        individual admitted to the nursing 
                        facility involved after such notice to 
                        the public and to the facility as may 
                        be provided for by the State.
                            ``(ii) A civil money penalty 
                        assessed and collected, with interest, 
                        for each day in which the facility is 
                        or was out of compliance with a 
                        requirement of subsection (b), (c), or 
                        (d). Funds collected by a State as a 
                        result of imposition of such a penalty 
                        (or as a result of the imposition by 
                        the State of a civil money penalty for 
                        activities described in subsection 
                        (b)(3)(B)(ii)(I), (b)(3)(B)(ii)(II), or 
                        (g)(2)(A)(i)) shall be applied to the 
                        protection of the health or property of 
                        residents of nursing facilities that 
                        the State or the Secretary finds 
                        deficient, including payment for the 
                        costs of relocation of residents to 
                        other facilities, maintenance of 
                        operation of a facility pending 
                        correction of deficiencies or closure, 
                        and reimbursement of residents for 
                        personal funds lost.
                            ``(iii) The appointment of 
                        temporary management to oversee the 
                        operation of the facility and to assure 
                        the health and safety of the facility's 
                        residents, where there is a need for 
                        temporary management while--
                                    ``(I) there is an orderly 
                                closure of the facility, or
                                    ``(II) improvements are 
                                made in order to bring the 
                                facility into compliance with 
                                all the requirements of 
                                subsections (b), (c), and (d).
                        The temporary management under this 
                        clause shall not be terminated under 
                        subclause (II) until the State has 
                        determined that the facility has the 
                        management capability to ensure 
                        continued compliance with all the 
                        requirements of subsections (b), (c), 
                        and (d).
                            ``(iv) The authority, in the case 
                        of an emergency, to close the facility, 
                        to transfer residents in that facility 
                        to other facilities, or both.
                The State also shall specify criteria, as to 
                when and how each of such remedies is to be 
                applied, the amounts of any fines, and the 
                severity of each of these remedies, to be used 
                in the imposition of such remedies. Such 
                criteria shall be designed so as to minimize 
                the time between the identification of 
                violations and final imposition of the remedies 
                and shall provide for the imposition of 
                incrementally more severe fines for repeated or 
                uncorrected deficiencies. In addition, the 
                State may provide for other specified remedies, 
                such as directed plans of correction.
                    ``(B) Guidance and alternative remedies.--
                (i) The Secretary shall provide through 
                regulations guidance to States in establishing 
                remedies under clauses (i) through (iv) of 
                subparagraph (A).
                    ``(ii) A State may establish alternative 
                remedies (other than termination of 
                participation) other than those described in 
                clauses (i) through (iv) of subparagraph (A), 
                if the State demonstrates to the Secretary's 
                satisfaction that the alternative remedies are 
                as effective in deterring noncompliance and 
                correcting deficiencies as those described in 
                such subparagraph.
                    ``(C) Assuring prompt compliance.--If a 
                nursing facility has not complied with any of 
                the requirements of subsections (b), (c), and 
                (d), within 3 months after the date the 
                facility is found to be out of compliance with 
                such requirements, the State shall impose the 
                remedy described in subparagraph (A)(i) for all 
                individuals who are admitted to the facility 
                after such date.
                    ``(D) Repeated noncompliance.--In the case 
                of a nursing facility which, on 3 consecutive 
                standard surveys conducted under subsection 
                (g)(2), has been found to have provided 
                substandard quality of care, the State shall 
                (regardless of what other remedies are 
                provided)--
                            ``(i) impose the remedy described 
                        in subparagraph (A)(i), and
                            ``(ii) monitor the facility under 
                        subsection (g)(4)(B),
                until the facility has demonstrated, to the 
                satisfaction of the State, that it is in 
                compliance with the requirements of subsections 
                (b), (c), and (d), and that it will remain in 
                compliance with such requirements.
                    ``(E) Funding.--The reasonable expenditures 
                of a State to provide for temporary management 
                and other expenses associated with implementing 
                the remedies described in clauses (iii) and 
                (iv) of subparagraph (A) shall be considered, 
                for purposes of section 1512(a)(3)(C), to be 
                necessary for the proper and efficient 
                administration of the State plan.
                    ``(F) Incentives for high quality care.--In 
                addition to the remedies specified in this 
                paragraph, a State may establish a program to 
                reward, through public recognition, incentive 
                payments, or both, nursing facilities that 
                provide the highest quality care to residents 
                who are entitled to medical assistance under 
                this title. For purposes of section 
                1512(a)(3)(C), proper expenses incurred by a 
                State in carrying out such a program shall be 
                considered to be expenses necessary for the 
                proper and efficient administration of the 
                State plan.
            ``(3) Secretarial authority.--
                    ``(A) For state nursing facilities.--With 
                respect to a State nursing facility, the 
                Secretary shall have the authority and duties 
                of a State under this subsection, including the 
                authority to impose remedies described in 
                clauses (i), (ii), and (iii) of paragraph 
                (2)(A). Nothing in this subparagraph shall be 
                construed as restricting the remedies available 
                to the Secretary to remedy a nursing facility's 
                deficiencies.
                    ``(B) Other nursing facilities.--With 
                respect to any other nursing facility in a 
                State, if the Secretary finds that a nursing 
                facility no longer meets a requirement of 
                subsection (b), (c), (d), or (e), and further 
                finds that the facility's deficiencies--
                            ``(i) immediately jeopardize the 
                        health or safety of its residents, the 
                        Secretary shall take immediate action 
                        to remove the jeopardy and correct the 
                        deficiencies through the remedy 
                        specified in subparagraph (C)(iii), or 
                        terminate the facility's participation 
                        under the State plan and may provide, 
                        in addition, for one or more of the 
                        other remedies described in 
                        subparagraph (C); or
                            ``(ii) do not immediately 
                        jeopardize the health or safety of its 
                        residents, the Secretary may impose any 
                        of the remedies described in 
                        subparagraph (C).
                Nothing in this subparagraph shall be construed 
                as restricting the remedies available to the 
                Secretary to remedy a nursing facility's 
                deficiencies. If the Secretary finds that a 
                nursing facility meets such requirements but, 
                as of a previous period, did not meet such 
                requirements, the Secretary may provide for a 
                civil money penalty under subparagraph (C)(ii) 
                for the days on which he finds that the 
                facility was not in compliance with such 
                requirements.
                    ``(C) Specified remedies.--The remedies 
                specified in this subparagraph are as follows:
                            ``(i) Denial of payment.--Denial of 
                        any further payments to the State in 
                        accordance with section 1529(f) for 
                        medical assistance furnished by the 
                        facility to all individuals in the 
                        facility or to individuals admitted to 
                        the facility after the effective date 
                        of the finding.
                            ``(ii) Authority with respect to 
                        civil money penalties.--Imposition of a 
                        civil money penalty against the 
                        facility in an amount not to exceed 
                        $10,000 for each day of noncompliance. 
                        The provisions of section 1128A (other 
                        than subsections (a) and (b)) shall 
                        apply to a civil money penalty under 
                        the previous sentence in the same 
                        manner as such provisions apply to a 
                        penalty or proceeding under section 
                        1128A(a).
                            ``(iii) Appointment of temporary 
                        management.--Appointment of temporary 
                        management to oversee the operation of 
                        the facility and to assure the health 
                        and safety of the facility's residents, 
                        where there is a need for temporary 
                        management while--
                                    ``(I) there is an orderly 
                                closure of the facility, or
                                    ``(II) improvements are 
                                made in order to bring the 
                                facility into compliance with 
                                all the requirements of 
                                subsections (b), (c), and (d).
                        The temporary management under this 
                        clause shall not be terminated under 
                        subclause (II) until the Secretary has 
                        determined that the facility has the 
                        management capability to ensure 
                        continued compliance with all the 
                        requirements of subsections (b), (c), 
                        and (d).
                The Secretary shall specify criteria, as to 
                when and how each of such remedies is to be 
                applied, the amounts of any fines, and the 
                severity of each of these remedies, to be used 
                in the imposition of such remedies. Such 
                criteria shall be designed so as to minimize 
                the time between the identification of 
                violations and final imposition of the remedies 
                and shall provide for the imposition of 
                incrementally more severe fines for repeated or 
                uncorrected deficiencies. In addition, the 
                Secretary may provide for other specified 
                remedies, such as directed plans of correction.
                    ``(D) Continuation of payments pending 
                remediation.--The Secretary may continue 
                payments, over a period of not longer than 6 
                months after the effective date of the 
                findings, under this title with respect to a 
                nursing facility not in compliance with a 
                requirement of subsection (b), (c), or (d), 
                if--
                            ``(i) the State survey agency finds 
                        that it is more appropriate to take 
                        alternative action to assure compliance 
                        of the facility with the requirements 
                        than to terminate the certification of 
                        the facility,
                            ``(ii) the State has submitted a 
                        plan and timetable for corrective 
                        action to the Secretary for approval 
                        and the Secretary approves the plan of 
                        corrective action, and
                            ``(iii) the State agrees to repay 
                        to the Federal Government payments 
                        received under this subparagraph if the 
                        corrective action is not taken in 
                        accordance with the approved plan and 
                        timetable.
                The Secretary shall establish guidelines for 
                approval of corrective actions requested by 
                States under this subparagraph.
            ``(4) Special rules regarding payments to 
        facilities.--
                    ``(A) Continuation of payments pending 
                remediation.--The State or the Secretary, as 
                appropriate, may continue payments, over a 
                period of not longer than 6 months after the 
                effective date of the findings, under this 
                title with respect to a nursing facility not in 
                compliance with a requirement of subsection 
                (b), (c), or (d). The State may continue such 
                payments only if--
                            ``(i) the State survey agency finds 
                        that it is more appropriate to take 
                        alternative action to assure compliance 
                        of the facility with the requirements 
                        than to terminate the certification of 
                        the facility,
                            ``(ii) the State has submitted a 
                        plan and timetable for corrective 
                        action to the Secretary for approval 
                        and the Secretary approves the plan of 
                        corrective action, and
                            ``(iii) the State agrees to repay 
                        to the Federal Government payments 
                        received under this subparagraph if the 
                        corrective action is not taken in 
                        accordance with the approved plan and 
                        timetable.
                The Secretary shall establish guidelines for 
                approval of corrective actions requested by 
                States under this subparagraph.
                    ``(B) Effective period of denial of 
                payment.--A finding to deny payment under this 
                subsection shall terminate when the State or 
                Secretary (as the case may be) finds that the 
                facility is in substantial compliance with all 
                the requirements of subsections (b), (c), and 
                (d).
            ``(5) Immediate termination of participation for 
        facility where state or secretary finds noncompliance 
        and immediate jeopardy.--If either the State or the 
        Secretary finds that a nursing facility has not met a 
        requirement of subsection (b), (c), or (d), and finds 
        that the failure immediately jeopardizes the health or 
        safety of its residents, the State or the Secretary, 
        respectively shall notify the other of such finding, 
        and the State or the Secretary, respectively, shall 
        take immediate action to remove the jeopardy and 
        correct the deficiencies through the remedy specified 
        in paragraph (2)(A)(iii) or (3)(C)(iii), or terminate 
        the facility's participation under the State plan. If 
        the facility's participation in the State plan is 
        terminated by either the State or the Secretary, the 
        State shall provide for the safe and orderly transfer 
        of the residents eligible under the State plan 
        consistent with the requirements of subsection (c)(2).
            ``(6) Special rules where state and secretary do 
        not agree on finding of noncompliance.--
                    ``(A) State finding of noncompliance and no 
                secretarial finding of noncompliance.--If the 
                Secretary finds that a nursing facility has met 
                all the requirements of subsections (b), (c), 
                and (d), but a State finds that the facility 
                has not met such requirements and the failure 
                does not immediately jeopardize the health or 
                safety of its residents, the State's findings 
                shall control and the remedies imposed by the 
                State shall be applied.
                    ``(B) Secretarial finding of noncompliance 
                and no state finding of noncompliance.--If the 
                Secretary finds that a nursing facility has not 
                met all the requirements of subsections (b), 
                (c), and (d), and that the failure does not 
                immediately jeopardize the health or safety of 
                its residents, but the State has not made such 
                a finding, the Secretary--
                            ``(i) may impose any remedies 
                        specified in paragraph (3)(C) with 
                        respect to the facility, and
                            ``(ii) shall (pending any 
                        termination by the Secretary) permit 
                        continuation of payments in accordance 
                        with paragraph (3)(D).
            ``(7) Special rules for timing of termination of 
        participation where remedies overlap.--If both the 
        Secretary and the State find that a nursing facility 
        has not met all the requirements of subsections (b), 
        (c), and (d), and neither finds that the failure 
        immediately jeopardizes the health or safety of its 
        residents--
                    ``(A)(i) if both find that the facility's 
                participation under the State plan should be 
                terminated, the State's timing of any 
                termination shall control so long as the 
                termination date does not occur later than 6 
                months after the date of the finding to 
                terminate;
                    ``(ii) if the Secretary, but not the State, 
                finds that the facility's participation under 
                the State plan should be terminated, the 
                Secretary shall (pending any termination by the 
                Secretary) permit continuation of payments in 
                accordance with paragraph (3)(D); or
                    ``(iii) if the State, but not the 
                Secretary, finds that the facility's 
                participation under the State plan should be 
                terminated, the State's decision to terminate, 
                and timing of such termination, shall control; 
                and
                    ``(B)(i) if the Secretary or the State, but 
                not both, establishes one or more remedies 
                which are additional or alternative to the 
                remedy of terminating the facility's 
                participation under the State plan, such 
                additional or alternative remedies shall also 
                be applied, or
                    ``(ii) if both the Secretary and the State 
                establish one or more remedies which are 
                additional or alternative to the remedy of 
                terminating the facility's participation under 
                the State plan, only the additional or 
                alternative remedies of the Secretary shall 
                apply.
            ``(8) Construction.--The remedies provided under 
        this subsection are in addition to those otherwise 
        available under Federal or State law and shall not be 
        construed as limiting such other remedies, including 
        any remedy available to an individual at common law. 
        The remedies described in clauses (i), (iii), and (iv) 
        of paragraph (2)(A) may be imposed during the pendency 
        of any hearing. The provisions of this subsection shall 
        apply to a nursing facility (or portion thereof) 
        notwithstanding that the facility (or portion thereof) 
        also is a skilled nursing facility for purposes of 
        title XVIII.
            ``(9) Sharing of information.--Notwithstanding any 
        other provision of law, all information concerning 
        nursing facilities required by this section to be filed 
        with the Secretary or a State agency shall be made 
        available by such facilities to Federal or State 
        employees for purposes consistent with the effective 
        administration of programs established under this title 
        and title XVIII, including investigations by State 
        fraud control units.
    ``(i) Construction.--Where requirements or obligations 
under this section are identical to those provided under 
section 1819 of this Act, the fulfillment of those requirements 
or obligations under section 1819 shall be considered to be the 
fulfillment of the corresponding requirements or obligations 
under this section.

``SEC. 1558. OTHER PROVISIONS PROMOTING PROGRAM INTEGRITY.

    ``(a) Public Access to Survey Results.--Each State plan 
shall provide that upon completion of a survey of any health 
care facility or organization by a State agency to carry out 
the plan, the agency shall make public in readily available 
form and place the pertinent findings of the survey relating to 
the compliance of the facility or organization with 
requirements of law.
    ``(b) Record Keeping.--Each State plan shall provide for 
agreements with persons or institutions providing services 
under the plan under which the person or institution agrees--
            ``(1) to keep such records, including ledgers, 
        books, and original evidence of costs, as are necessary 
        to fully disclose the extent of the services provided 
        to individuals receiving assistance under the plan, and
            ``(2) to furnish the State agency with such 
        information regarding any payments claimed by such 
        person or institution for providing services under the 
        plan, as the State agency may from time to time 
        request.
    ``(c) Quality Assurance.--Each State plan shall provide a 
program to assure the quality of services provided under the 
plan, including such services provided to individuals with 
chronic mental or physical illness.

                      ``Part E--General Provisions

``SEC. 1571. DEFINITIONS.

    ``(a) Medical Assistance.--For purposes of this title, the 
term `medical assistance' means payment of part or all of the 
cost of any of the following, or assistance in the purchase, in 
whole or in part, of health benefit coverage that includes any 
of the following, for eligible low-income individuals (as 
defined in subsection (b)) as specified under the State plan:
            ``(1) Inpatient hospital services.
            ``(2) Outpatient hospital services.
            ``(3) Physician services.
            ``(4) Surgical services.
            ``(5) Clinic services and other ambulatory health 
        care services.
            ``(6) Nursing facility services.
            ``(7) Intermediate care facility services for the 
        mentally retarded.
            ``(8) Prescription drugs and biologicals and the 
        administration of such drugs and biologicals, only if 
        such drugs and biologicals are not furnished for the 
        purpose of causing, or assisting in causing, the death, 
        suicide, euthanasia, or mercy killing of a person.
            ``(9) Over-the-counter medications.
            ``(10) Laboratory and radiological services.
            ``(11) Prepregnancy family planning services and 
        supplies.
            ``(12) Inpatient mental health services, including 
        services furnished in a State-operated mental hospital 
        and including residential or other 24-hour 
        therapeutically planned structured services.
            ``(13) Outpatient mental health services, including 
        services furnished in a State-operated mental hospital 
        and including community-based services.
            ``(14) Durable medical equipment and other 
        medically-related or remedial devices (such as 
        prosthetic devices, implants, eyeglasses, hearing aids, 
        dental devices, and adaptive devices).
            ``(15) Disposable medical supplies.
            ``(16) Home and community-based health care 
        services and related supportive services (such as home 
        health nursing services, home health aide services, 
        personal care, assistance with activities of daily 
        living, chore services, day care services, respite care 
        services, training for family members, and minor 
        modifications to the home).
            ``(17) Community supported living arrangements, 
        assisted living arrangements, and transitional living 
        arrangements in the community.
            ``(18) Nursing care services (such as nurse 
        practitioner services, nurse midwife services, advanced 
        practice nurse services, private duty nursing care, 
        pediatric nurse services, and respiratory care 
        services) in a home, school, or other setting.
            ``(19) Abortion only if necessary to save the life 
        of the mother or if the pregnancy is the result of an 
        act of rape or incest.
            ``(20) Dental services.
            ``(21) Inpatient substance abuse treatment services 
        and residential substance abuse treatment services.
            ``(22) Outpatient substance abuse treatment 
        services.
            ``(23) Case management services.
            ``(24) Care coordination services.
            ``(25) Physical therapy, occupational therapy, and 
        services for individuals with speech, hearing, and 
        language disorders.
            ``(26) Hospice care.
            ``(27) Any other medical, diagnostic, screening, 
        preventive, restorative, remedial, therapeutic, or 
        rehabilitative services (whether in a facility, home, 
        school, or other setting) if recognized by State law 
        and only if the service is--
                    ``(A) prescribed by or furnished by a 
                physician or other licensed or registered 
                practitioner within the scope of practice as 
                defined by State law,
                    ``(B) performed under the general 
                supervision or at the direction of a physician, 
                or
                    ``(C) furnished by a health care facility 
                that is operated by a State or local government 
                or is licensed under State law and operating 
                within the scope of the license.
            ``(28) Premiums for private health care insurance 
        coverage, including private long-term care insurance 
        coverage.
            ``(29) Medical transportation.
            ``(30) Medicare cost-sharing (as defined in 
        subsection (c)).
            ``(31) Enabling services (such as transportation, 
        translation, and outreach services) only if designed to 
        increase the accessibility of primary and preventive 
        health care services for eligible low-income 
        individuals.
            ``(32) Federally-qualified health center services 
        (as defined in subsection (f)(2)(A)).
            ``(33) Rural health clinic services (as defined in 
        subsection (f)(1)).
            ``(34) Physician assistant services.
            ``(35) Any other health care services or items 
        specified by the Secretary and not excluded under this 
        section.
    ``(b) Eligible Low-Income Individual.--
            ``(1) State plan eligibility standards.--
                    ``(A) In general.--The term `eligible low-
                income individual' means an individual--
                            ``(i) who has been determined 
                        eligible by the State for medical 
                        assistance under the State plan and is 
                        not an inmate of a public institution 
                        (except as a patient in a State 
                        psychiatric hospital), and
                            ``(ii) whose family income (as 
                        determined under the plan) does not 
                        exceed a percentage (specified in the 
                        State plan and not to exceed 275 
                        percent) of the poverty line for a 
                        family of the size involved.
                    ``(B) Continuation of katie beckett 
                eligibility.--At the option of a State, 
                subparagraph (A)(ii) shall not apply in the 
                case of an individual who--
                            ``(i) is 18 years of age or younger 
                        and qualifies as a disabled individual 
                        under section 1614(a); and
                            ``(ii) with respect to whom there 
                        has been a determination by the State 
                        that--
                                    ``(I) the individual 
                                requires a level of care 
                                provided in a hospital, nursing 
                                facility, or intermediate care 
                                facility for the mentally 
                                retarded; and
                                    ``(II) it is appropriate to 
                                provide such care for the 
                                individual outside such an 
                                institution.
            ``(2) Amount of income.--In determining the amount 
        of income under paragraph (1)(B), a State may exclude 
        costs incurred for medical care or other types of 
        remedial care recognized by the State.
            ``(3) Computation of income for certain children.--
        In determining the amount of family income under 
        paragraph (1)(B) in the case of a child described in 
        section 1501(a)(1)(F), the State shall only count the 
        income of the child and not that of the family in which 
        the child is placed.
    ``(c) Medicare Cost-Sharing.--For purposes of this title, 
the term `medicare cost-sharing' means any of the following:
            ``(1)(A) Premiums under section 1839.
            ``(B) Premiums under section 1818 or 1818A.
            ``(2) Coinsurance under title XVIII (including 
        coinsurance described in section 1813).
            ``(3) Deductibles established under title XVIII 
        (including those described in sections 1813 and 
        1833(b)).
            ``(4) The difference between the amount that is 
        paid under section 1833(a) and the amount that would be 
        paid under such section if any reference to `80 
        percent' therein were deemed a reference to `100 
        percent'.
            ``(5) Premiums for enrollment of an individual with 
        an eligible organization under section 1876.
    ``(d) Additional Definitions.--For purposes of this title:
            ``(1) Child.--The term `child' means an individual 
        under 19 years of age.
            ``(2) Elderly individual.--The term `elderly 
        individual' means an individual who has attained 
        retirement age, as defined under section 216(l)(1).
            ``(3) Poverty line defined.--The term `poverty 
        line' has the meaning given such term in section 673(2) 
        of the Community Services Block Grant Act (42 U.S.C. 
        9902(2)), including any revision required by such 
        section.
            ``(4) Pregnant woman.--The term `pregnant woman' 
        includes a woman during the 60-day period beginning on 
        the last day of the pregnancy.
    ``(e) EPSDT Services.--In this title, the term `EPSDT 
services' means the following items and services:
            ``(1) Screening services--
                    ``(A) which are provided--
                            ``(i) at intervals which meet 
                        reasonable standards of medical and 
                        dental practice, as determined by the 
                        State after consultation with 
                        recognized medical and dental 
                        organizations involved in child health 
                        care and, with respect to immunizations 
                        under section 1501(a)(2)(G) in 
                        accordance with the schedule referred 
                        to in such section for pediatric 
                        vaccines, and
                            ``(ii) at such other intervals, 
                        indicated as medically necessary, to 
                        determine the existence of certain 
                        physical or mental illnesses or 
                        conditions; and
                    ``(B) which shall at a minimum include--
                            ``(i) a comprehensive health and 
                        developmental history (including 
                        assessment of both physical and mental 
                        health development),
                            ``(ii) a comprehensive unclothed 
                        physical exam,
                            ``(iii) appropriate immunizations 
                        (according to the schedule referred to 
                        in section 1501(a)(2)(G) for pediatric 
                        vaccines) according to age and health 
                        history,
                            ``(iv) laboratory tests (including 
                        lead blood level assessment appropriate 
                        for age and risk factors), and
                            ``(v) health education (including 
                        anticipatory guidance).
            ``(2) Vision services--
                    ``(A) which are provided--
                            ``(i) at intervals which meet 
                        reasonable standards of medical 
                        practice, as determined by the State 
                        after consultation with recognized 
                        medical organizations involved in child 
                        health care, and
                            ``(ii) at such other intervals, 
                        indicated as medically necessary, to 
                        determine the existence of a suspected 
                        illness or condition; and
                    ``(B) which shall at a minimum include 
                diagnosis and treatment for defects in vision, 
                including eyeglasses.
            ``(3) Dental services--
                    ``(A) which are provided--
                            ``(i) at intervals which meet 
                        reasonable standards of dental 
                        practice, as determined by the State 
                        after consultation with recognized 
                        dental organizations involved in child 
                        health care, and
                            ``(ii) at such other intervals, 
                        indicated as medically necessary, to 
                        determine the existence of a suspected 
                        illness or condition; and
                    ``(B) which shall at a minimum include 
                relief of pain and infections, restoration of 
                teeth, and maintenance of dental health.
            ``(4) Hearing services--
                    ``(A) which are provided--
                            ``(i) at intervals which meet 
                        reasonable standards of medical 
                        practice, as determined by the State 
                        after consultation with recognized 
                        medical organizations involved in child 
                        health care, and
                            ``(ii) at such other intervals, 
                        indicated as medically necessary, to 
                        determine the existence of a suspected 
                        illness or condition; and
                    ``(B) which shall at a minimum include 
                diagnosis and treatment for defects in hearing, 
                including hearing aids.
    ``(f) Center and Clinic Services.--In this title:
            ``(1) Rural health clinic related definitions.--The 
        terms `rural health clinic services' and `rural health 
        clinic' have the meanings given such terms in section 
        1861(aa), except that (A) clause (ii) of section 
        1861(aa)(2) shall not apply to such terms, and (B) the 
        physician arrangement required under section 
        1861(aa)(2)(B) shall only apply with respect to rural 
        health clinic services and, with respect to other 
        ambulatory care services, the physician arrangement 
        required shall be only such as may be required under 
        the State plan for those services.
            ``(2) Federally-qualified health center related 
        definitions.--
                    ``(A) Services.--The term `Federally-
                qualified health center services' means 
                services of the type described in subparagraphs 
                (A) through (C) of section 1861(aa)(1), and any 
                other ambulatory care services which are 
                otherwise included in the State plan, when 
                furnished to an individual as an patient of a 
                Federally-qualified health center and, for this 
                purpose, any reference to a rural health clinic 
                or a physician described in section 
                1861(aa)(2)(B) is deemed a reference to a 
                Federally-qualified health center or a 
                physician at the center, respectively.
                    ``(B) Center.--The term `Federally-
                qualified health center' means a entity which--
                            ``(i) is receiving a grant under 
                        section 329, 330, 340, or 340A of the 
                        Public Health Service Act,
                            ``(ii)(I) is receiving funding from 
                        such a grant under a contract with the 
                        recipient of such a grant, and
                            ``(II) meets the requirements to 
                        receive a grant under section 329, 330, 
                        340, or 340A of such Act,
                            ``(iii) based on the recommendation 
                        of the Health Resources and Services 
                        Administration within the Public Health 
                        Service, is determined by the Secretary 
                        to meet the requirements for receiving 
                        such a grant, or
                            ``(iv) was treated by the 
                        Secretary, for purposes of part B of 
                        title XVIII, as a comprehensive 
                        Federally funded health center as of 
                        January 1, 1990;
                and includes an outpatient health program or 
                facility operated by a tribe or tribal 
                organization under the Indian Self-
                Determination Act (Public Law 93-638) or by an 
                urban Indian organization receiving funds under 
                title V of the Indian Health Care Improvement 
                Act for the provision of primary health 
                services. In applying clause (ii), the 
                Secretary may waive any requirement referred to 
                in such clause for up to 2 years for good cause 
                shown.
    ``(g) Medically-Related Services.--In this title, the term 
`medically-related services' means services reasonably related 
to, or in direct support of, the State's attainment of one or 
more of the strategic objectives and performance goals 
established under section 1521, but does not include items and 
services included on the list under subsection (a).

``SEC. 1572. TREATMENT OF TERRITORIES.

    ``Notwithstanding any other requirement of this title, the 
Secretary may waive or modify any requirement of this title 
with respect to the medical assistance program for a State 
other than the 50 States and the District of Columbia, other 
than a waiver of--
            ``(1) the applicable Federal medical assistance 
        percentage,
            ``(2) the limitation on total payments in a fiscal 
        year to the amount of the allotment under section 
        1511(c), or
            ``(3) the requirement that payment may be made for 
        medical assistance only with respect to amounts 
        expended by the State for care and services described 
        in section 1571(a) and medically-related services (as 
        defined in section 1571(g)).

``SEC. 1573. DESCRIPTION OF TREATMENT OF INDIAN HEALTH SERVICE 
                    FACILITIES.

    ``In the case of a State in which one or more facilities of 
the Indian Health Service is located or in which a facility of 
an Indian health program described in section 1512(f)(3) is 
located, the State plan shall include a description of--
            ``(1) what provision (if any) has been made for 
        payment for items and services furnished by such 
        facilities, and
            ``(2) the manner in which medical assistance for 
        low-income eligible individuals who are Indians will be 
        provided, as determined by the State in consultation 
        with the appropriate Indian tribes and tribal 
        organizations.

``SEC. 1574. APPLICATION OF CERTAIN GENERAL PROVISIONS.

    ``The following sections in part A of title XI shall apply 
to States under this title in the same manner as they applied 
to a State under title XIX:
            ``(1) Section 1101(a)(1) (relating to definition of 
        State).
            ``(2) Section 1116 (relating to administrative and 
        judicial review), but only insofar as consistent with 
        the provisions of part B.
            ``(3) Section 1124 (relating to disclosure of 
        ownership and related information).
            ``(4) Section 1126 (relating to disclosure of 
        information about certain convicted individuals).
            ``(5) Section 1128B(d) (relating to criminal 
        penalties for certain additional charges).
            ``(6) Section 1132 (relating to periods within 
        which claims must be filed).

``SEC. 1575. OPTIONAL MASTER DRUG REBATE AGREEMENTS.

    ``(a) Requirement for Manufacturer To Enter Into 
Agreement.--
            ``(1) In general.--Pursuant to section 1513(f), in 
        order for payment to be made to a State under part B 
        for medical assistance for covered outpatient drugs of 
        a manufacturer, the manufacturer shall enter into and 
        have in effect a master rebate agreement described in 
        subsection (b) with the Secretary on behalf of States 
        electing to participate in the agreement.
            ``(2) Coverage of drugs not covered under rebate 
        agreements.--Nothing in this section shall be construed 
        to prohibit a State in its discretion from providing 
        coverage under its State plan of a covered outpatient 
        drug for which no rebate agreement is in effect under 
        this section.
            ``(3) Effect on existing agreements.--If a State 
        has a rebate agreement in effect with a manufacturer on 
        the date of the enactment of this section which 
        provides for a minimum aggregate rebate equal to or 
        greater than the minimum aggregate rebate which would 
        otherwise be paid under the master agreement under this 
        section, at the option of the State--
                    ``(A) such agreement shall be considered to 
                meet the requirements of the master rebate 
                agreement, and
                    ``(B) the State shall be considered to have 
                elected to participate in the master rebate 
                agreement.
            ``(4) Limitation on prices of drugs purchased by 
        covered entities.--
                    ``(A) Agreement with secretary.--A 
                manufacturer meets the requirements of this 
                paragraph if the manufacturer has entered into 
                an agreement with the Secretary that meets the 
                requirements of section 340B of the Public 
                Health Service Act with respect to covered 
                outpatient drugs purchased by a covered entity 
                on or after the first day of the first month 
                that begins after the date of the enactment of 
                title VI of the Veterans Health Care Act of 
                1992.
                    ``(B) Covered entity defined.--In this 
                subsection, the term `covered entity' means an 
                entity described in subsection (a)(4) of 
                section 340B of the Public Health Service Act 
                if the entity furnishes the drugs to patients 
                at a cost no greater than acquisition cost plus 
                such dispensing fee as may be allowable as 
                determined by the Office of Drug Pricing in the 
                Public Health Service.
                    ``(C) Establishment of alternative 
                mechanism to ensure against duplicate discounts 
                or rebates.--If the Secretary does not 
                establish a mechanism under section 
                340B(a)(5)(A) of the Public Health Service Act 
                within 12 months of the date of the enactment 
                of such section, the following requirements 
                shall apply:
                            ``(i) Each covered entity shall 
                        inform the single State agency under 
                        this title when it is seeking 
                        reimbursement for medical assistance 
                        with respect to a unit of any covered 
                        outpatient drug which is subject to an 
                        agreement under section 340B(a) of such 
                        Act.
                            ``(ii) Each such single State 
                        agency shall provide a means by which a 
                        covered entity shall indicate on any 
                        drug reimbursement claims form (or 
                        format, where electronic claims 
                        management is used) that a unit of the 
                        drug that is the subject of the form is 
                        subject to an agreement under section 
                        340B of such Act, and not submit to any 
                        manufacturer a claim for a rebate 
                        payment under subsection (b) with 
                        respect to such a drug.
                    ``(D) Effect of subsequent amendments.--In 
                determining whether an agreement under 
                subparagraph (A) meets the requirements of 
                section 340B of the Public Health Service Act, 
                the Secretary shall not take into account any 
                amendments to such section that are enacted 
                after the enactment of title VI of the Veterans 
                Health Care Act of 1992.
                    ``(E) Determination of compliance.--A 
                manufacturer is deemed to meet the requirements 
                of this paragraph if the manufacturer 
                establishes to the satisfaction of the 
                Secretary that the manufacturer would comply 
                (and has offered to comply) with the provisions 
                of section 340B of the Public Health Service 
                Act (as in effect immediately after the 
                enactment title VI of the Veterans Health Care 
                Act of 1992), and would have entered into an 
                agreement under such section (as such section 
                was in effect at such time), but for a 
                legislative change in such section after such 
                enactment.
    ``(b) Terms of Rebate Agreement.--
            ``(1) Periodic rebates.--The master rebate 
        agreement under this section shall require the 
        manufacturer to provide, to the State plan of each 
        State participating in the agreement, a rebate for a 
        rebate period in an amount specified in subsection (c) 
        for covered outpatient drugs of the manufacturer 
        dispensed after the effective date of the agreement, 
        for which payment was made under the plan for such 
        period. Such rebate shall be paid by the manufacturer 
        not later than 30 days after the date of receipt of the 
        information described in paragraph (2) for the period 
        involved.
            ``(2) State provision of information.--
                    ``(A) State responsibility.--Each State 
                participating in the master rebate agreement 
                shall report to each manufacturer not later 
                than 60 days after the end of each rebate 
                period and in a form consistent with a standard 
                reporting format established by the Secretary, 
                information on the total number of units of 
                each dosage form and strength and package size 
                of each covered outpatient drug, for which 
                payment was made under the State plan for the 
                period, and shall promptly transmit a copy of 
                such report to the Secretary.
                    ``(B) Audits.--A manufacturer may audit the 
                information provided (or required to be 
                provided) under subparagraph (A). Adjustments 
                to rebates shall be made to the extent that 
                information indicates that utilization was 
                greater or less than the amount previously 
                specified.
            ``(3) Manufacturer provision of price 
        information.--
                    ``(A) In general.--Each manufacturer which 
                is subject to the master rebate agreement under 
                this section shall report to the Secretary--
                            ``(i) not later than 30 days after 
                        the last day of each rebate period 
                        under the agreement, on the average 
                        manufacturer price (as defined in 
                        subsection (i)(1)) and, for single 
                        source drugs and innovator multiple 
                        source drugs, the manufacturer's best 
                        price (as defined in subsection 
                        (c)(1)(C)) for each covered outpatient 
                        drug for the rebate period under the 
                        agreement, and
                            ``(ii) not later than 30 days after 
                        the date of entering into an agreement 
                        under this section, on the average 
                        manufacturer price (as defined in 
                        subsection (i)(1)) as of October 1, 
                        1990, for each of the manufacturer's 
                        covered outpatient drugs.
                    ``(B) Verification surveys of average 
                manufacturer price.--The Secretary may survey 
                wholesalers and manufacturers that directly 
                distribute their covered outpatient drugs, when 
                necessary, to verify manufacturer prices 
                reported under subparagraph (A). The Secretary 
                may impose a civil monetary penalty in an 
                amount not to exceed $10,000 on a wholesaler, 
                manufacturer, or direct seller, if the 
                wholesaler, manufacturer, or direct seller of a 
                covered outpatient drug refuses a request for 
                information by the Secretary in connection with 
                a survey under this subparagraph. The 
                provisions of section 1128A (other than 
                subsections (a) (with respect to amounts of 
                penalties or additional assessments) and (b)) 
                shall apply to a civil money penalty under this 
                subparagraph in the same manner as such 
                provisions apply to a penalty or proceeding 
                under section 1128A(a).
                    ``(C) Penalties.--
                            ``(i) Failure to provide timely 
                        information.--In the case of a 
                        manufacturer which is subject to the 
                        master rebate agreement that fails to 
                        provide information required under 
                        subparagraph (A) on a timely basis, the 
                        amount of the penalty shall be $10,000 
                        for each day in which such information 
                        has not been provided and such amount 
                        shall be paid to the Treasury. If such 
                        information is not reported within 90 
                        days of the deadline imposed, the 
                        agreement shall be suspended for 
                        services furnished after the end of 
                        such 90-day period and until the date 
                        such information is reported (but in no 
                        case shall such suspension be for a 
                        period of less than 30 days).
                            ``(ii) False information.--Any 
                        manufacturer which is subject to the 
                        master rebate agreement, or a 
                        wholesaler or direct seller, that 
                        knowingly provides false information 
                        under subparagraph (A) or (B) is 
                        subject to a civil money penalty in an 
                        amount not to exceed $100,000 for each 
                        item of false information. Any such 
                        civil money penalty shall be in 
                        addition to other penalties as may be 
                        prescribed by law. The provisions of 
                        section 1128A (other than subsections 
                        (a) and (b)) shall apply to a civil 
                        money penalty under this subparagraph 
                        in the same manner as such provisions 
                        apply to a penalty or proceeding under 
                        section 1128A(a).
                    ``(D) Confidentiality of information.--
                Notwithstanding any other provision of law, 
                information disclosed by manufacturers or 
                wholesalers under this paragraph or under an 
                agreement with the Secretary of Veterans 
                Affairs described in section 1513(f) is 
                confidential and shall not be disclosed by the 
                Secretary or the Secretary of Veterans Affairs 
                or a State agency (or contractor therewith) in 
                a form which discloses the identity of a 
                specific manufacturer or wholesaler or the 
                prices charged for drugs by such manufacturer 
                or wholesaler, except--
                            ``(i) as the Secretary determines 
                        to be necessary to carry out this 
                        section,
                            ``(ii) to permit the Comptroller 
                        General to review the information 
                        provided, and
                            ``(iii) to permit the Director of 
                        the Congressional Budget Office to 
                        review the information provided.
            ``(4) Length of agreement.--
                    ``(A) In general.--The master rebate 
                agreement under this section shall be effective 
                for an initial period of not less than 1 year 
                and shall be automatically renewed for a period 
                of not less than 1 year unless terminated under 
                subparagraph (B).
                    ``(B) Termination.--
                            ``(i) By the secretary.--The 
                        Secretary may provide for termination 
                        of the master rebate agreement with 
                        respect to a manufacturer for violation 
                        of the requirements of the agreement or 
                        other good cause shown. Such 
                        termination shall not be effective 
                        earlier than 60 days after the date of 
                        notice of such termination. The 
                        Secretary shall provide, upon request, 
                        a manufacturer with a hearing 
                        concerning such a termination, but such 
                        hearing shall not delay the effective 
                        date of the termination. Failure of a 
                        State to provide any advance notice of 
                        such a termination as required by 
                        regulation shall not affect the State's 
                        right to terminate coverage of the 
                        drugs affected by such termination as 
                        of the effective date of such 
                        termination.
                            ``(ii) By a manufacturer.--A 
                        manufacturer may terminate its 
                        participation in the master rebate 
                        agreement under this section for any 
                        reason. Any such termination shall not 
                        be effective until the calendar quarter 
                        beginning at least 60 days after the 
                        date the manufacturer provides notice 
                        to the Secretary.
                            ``(iii) Effectiveness of 
                        termination.--Any termination under 
                        this subparagraph shall not affect 
                        rebates due under the agreement before 
                        the effective date of its termination.
                            ``(iv) Notice to states.--In the 
                        case of a termination under this 
                        subparagraph, the Secretary shall 
                        provide notice of such termination to 
                        the States within not less than 30 days 
                        before the effective date of such 
                        termination.
                            ``(v) Application to terminations 
                        of other agreements.--The provisions of 
                        this subparagraph shall apply to the 
                        terminations of master agreements 
                        described in section 8126(a) of title 
                        38, United States Code.
                    ``(C) Delay before reentry.--In the case of 
                any rebate agreement with a manufacturer under 
                this section which is terminated, another such 
                agreement with the manufacturer (or a successor 
                manufacturer) may not be entered into until a 
                period of 1 calendar quarter has elapsed since 
                the date of the termination, unless the 
                Secretary finds good cause for an earlier 
                reinstatement of such an agreement.
            ``(5) Settlement of disputes.--
                    ``(A) Secretary.--The Secretary shall have 
                the authority to resolve, settle, and 
                compromise disputes regarding the amounts of 
                rebates owed under this section and section 
                1927.
                    ``(B) State.--Each State, with respect to 
                covered outpatient drugs paid for under the 
                State plan, shall have authority, independent 
                of the Secretary's authority under subparagraph 
                (A), to resolve, settle, and compromise 
                disputes regarding the amounts of rebates owed 
                under this section. Any such action shall be 
                deemed to comply with the requirements of this 
                title, and such covered outpatient drugs shall 
                be eligible for payment under the State plan 
                under this title.
                    ``(C) Amount of rebate.--The Secretary 
                shall limit the amount of the rebate payable in 
                any case in which the Secretary determines 
                that, because of unusual circumstances or 
                questionable data, the provisions of subsection 
                (c) result in a rebate amount that is 
                inequitable or otherwise inconsistent with the 
                purposes of this section.
    ``(c) Determination of Amount of Rebate.--
            ``(1) Basic rebate for single source drugs and 
        innovator multiple source drugs.--
                    ``(A) In general.--Except as provided in 
                paragraph (2), the amount of the rebate 
                specified in this subsection with respect to a 
                State participating in the master rebate 
                agreement for a rebate period (as defined in 
                subsection (i)(7)) with respect to each dosage 
                form and strength of a single source drug or an 
                innovator multiple source drug shall be equal 
                to the product of--
                            ``(i) the total number of units of 
                        each dosage form and strength paid for 
                        under the State plan in the rebate 
                        period (as reported by the State); and
                            ``(ii) the greater of--
                                    ``(I) the difference 
                                between the average 
                                manufacturer price and the best 
                                price (as defined in 
                                subparagraph (C)) for the 
                                dosage form and strength of the 
                                drug, or
                                    ``(II) the minimum rebate 
                                percentage (specified in 
                                subparagraph (B)) of such 
                                average manufacturer price,
                        for the rebate period.
                    ``(B) Minimum rebate percentage.--For 
                purposes of subparagraph (A)(ii)(II), the 
                `minimum rebate percentage' is 15 percent.
                    ``(C) Best price defined.--For purposes of 
                this section--
                            ``(i) In general.--The term `best 
                        price' means, with respect to a single 
                        source drug or innovator multiple 
                        source drug of a manufacturer, the 
                        lowest price available from the 
                        manufacturer during the rebate period 
                        to any wholesaler, retailer, provider, 
                        health maintenance organization, 
                        nonprofit entity, or governmental 
                        entity within the United States, 
                        excluding--
                                    ``(I) any prices charged on 
                                or after October 1, 1992, to 
                                the Indian Health Service, the 
                                Department of Veterans Affairs, 
                                a State home receiving funds 
                                under section 1741 of title 38, 
                                United States Code, the 
                                Department of Defense, the 
                                Public Health Service, or a 
                                covered entity described in 
                                section 340B(a)(4) of the 
                                Public Health Service Act,
                                    ``(II) any prices charged 
                                under the Federal Supply 
                                Schedule of the General 
                                Services Administration,
                                    ``(III) any prices used 
                                under a State pharmaceutical 
                                assistance program, and
                                    ``(IV) any depot prices and 
                                single award contract prices, 
                                as defined by the Secretary, of 
                                any agency of the Federal 
                                Government.
                            ``(ii) Special rules.--The term 
                        `best price'--
                                    ``(I) shall be inclusive of 
                                cash discounts, free goods that 
                                are contingent on any purchase 
                                requirement, volume discounts, 
                                and rebates (other than rebates 
                                under this section),
                                    ``(II) shall be determined 
                                without regard to special 
                                packaging, labeling, or 
                                identifiers on the dosage form 
                                or product or package,
                                    ``(III) shall not take into 
                                account prices that are merely 
                                nominal in amount, and
                                    ``(IV) shall exclude 
                                rebates paid under this section 
                                or any other rebates paid to a 
                                State participating in the 
                                master rebate agreement.
            ``(2) Additional rebate for single source and 
        innovator multiple source drugs.--
                    ``(A) In general.--The amount of the rebate 
                specified in this subsection with respect to a 
                State participating in the master rebate 
                agreement for a rebate period, with respect to 
                each dosage form and strength of a single 
                source drug or an innovator multiple source 
                drug, shall be increased by an amount equal to 
                the product of--
                            ``(i) the total number of units of 
                        such dosage form and strength dispensed 
                        after December 31, 1990, for which 
                        payment was made under the State plan 
                        for the rebate period; and
                            ``(ii) the amount (if any) by 
                        which--
                                    ``(I) the average 
                                manufacturer price for the 
                                dosage form and strength of the 
                                drug for the period, exceeds
                                    ``(II) the average 
                                manufacturer price for such 
                                dosage form and strength for 
                                the calendar quarter beginning 
                                July 1, 1990 (without regard to 
                                whether or not the drug has 
                                been sold or transferred to an 
                                entity, including a division or 
                                subsidiary of the manufacturer, 
                                after the first day of such 
                                quarter), increased by the 
                                percentage by which the 
                                Consumer Price Index for All 
                                Urban Consumers (United States 
                                city average) for the month 
                                before the month in which the 
                                rebate period begins exceeds 
                                such index for September 1990.
                    ``(B) Treatment of subsequently approved 
                drugs.--In the case of a covered outpatient 
                drug approved by the Food and Drug 
                Administration after October 1, 1990, clause 
                (ii)(II) of subparagraph (A) shall be applied 
                by substituting `the first full calendar 
                quarter after the day on which the drug was 
                first marketed' for `the calendar quarter 
                beginning July 1, 1990' and `the month prior to 
                the first month of the first full calendar 
                quarter after the day on which the drug was 
                first marketed' for `September 1990'.
            ``(3) Rebate for other drugs.--
                    ``(A) In general.--The amount of the rebate 
                paid to a State participating in the master 
                rebate agreement for a rebate period with 
                respect to each dosage form and strength of 
                covered outpatient drugs (other than single 
                source drugs and innovator multiple source 
                drugs) shall be equal to the product of--
                            ``(i) the applicable percentage (as 
                        described in subparagraph (B)) of the 
                        average manufacturer price for the 
                        dosage form and strength for the rebate 
                        period, and
                            ``(ii) the total number of units of 
                        such dosage form and strength dispensed 
                        after December 31, 1990, for which 
                        payment was made under the State plan 
                        for the rebate period.
                    ``(B) Applicable percentage defined.--For 
                purposes of subparagraph (A)(i), the 
                `applicable percentage' is 11 percent.
            ``(4) Limitation on amount of rebate to amounts 
        paid for certain drugs.--
                    ``(A) In general.--Upon request of the 
                manufacturer of a covered outpatient drug, the 
                Secretary shall limit, in accordance with 
                subparagraph (B), the amount of the rebate 
                under this subsection with respect to a dosage 
                form and strength of such drug if the majority 
                of the estimated number of units of such dosage 
                form and strength that are subject to rebates 
                under this section were dispensed to inpatients 
                of nursing facilities.
                    ``(B) Amount of rebate.--In the case of a 
                covered outpatient drug subject to subparagraph 
                (A), the amount of the rebate specified in this 
                subsection for a rebate period, with respect to 
                each dosage form and strength of such drug, 
                shall not exceed the amount paid under the 
                State plan with respect to such dosage form and 
                strength of the drug in the rebate period 
                (without consideration of any dispensing fees 
                paid).
            ``(5) Supplemental rebates prohibited.--No rebates 
        shall be required to be paid by manufacturers with 
        respect to covered outpatient drugs furnished to 
        individuals in any State that provides for the 
        collection of such rebates in excess of the rebate 
        amount payable under this section.
    ``(d) Limitations on Coverage of Drugs by States 
Participating in Master Agreement.--
            ``(1) Permissible restrictions.--A State 
        participating in the master rebate agreement under this 
        section may--
                    ``(A) subject to prior authorization under 
                its State plan any covered outpatient drug so 
                long as any such prior authorization program 
                complies with the requirements of paragraph 
                (5); and
                    ``(B) exclude or otherwise restrict 
                coverage under its plan of a covered outpatient 
                drug if--
                            ``(i) the drug is contained in the 
                        list referred to in paragraph (2);
                            ``(ii) the drug is subject to such 
                        restrictions pursuant to the master 
                        rebate agreement or any agreement 
                        described in subsection (a)(4); or
                            ``(iii) the State has excluded 
                        coverage of the drug from its formulary 
                        established in accordance with 
                        paragraph (4).
            ``(2) List of drugs subject to restriction.--The 
        following drugs or classes of drugs, or their medical 
        uses, may be excluded from coverage or otherwise 
        restricted by a State participating in the master 
        rebate agreement:
                    ``(A) Agents when used for anorexia, weight 
                loss, or weight gain.
                    ``(B) Agents when used to promote 
                fertility.
                    ``(C) Agents when used for cosmetic 
                purposes or hair growth.
                    ``(D) Agents when used for the symptomatic 
                relief of cough and colds.
                    ``(E) Agents when used to promote smoking 
                cessation.
                    ``(F) Prescription vitamins and mineral 
                products, except prenatal vitamins and fluoride 
                preparations.
                    ``(G) Nonprescription drugs.
                    ``(H) Covered outpatient drugs which the 
                manufacturer seeks to require as a condition of 
                sale that associated tests or monitoring 
                services be purchased exclusively from the 
                manufacturer or its designee.
                    ``(I) Barbiturates.
                    ``(J) Benzodiazepines.
            ``(3) Additions to drug listings.--The Secretary 
        shall, by regulation, periodically update the list of 
        drugs or classes of drugs described in paragraph (2), 
        or their medical uses, which the Secretary has 
        determined to be subject to clinical abuse or 
        inappropriate use.
            ``(4) Requirements for formularies.--A State 
        participating in the master rebate agreement may 
        establish a formulary if the formulary meets the 
        following requirements:
                    ``(A) The formulary is developed by a 
                committee consisting of physicians, 
                pharmacists, and other appropriate individuals 
                appointed by the Governor of the State.
                    ``(B) Except as provided in subparagraph 
                (C), the formulary includes the covered 
                outpatient drugs of any manufacturer which has 
                entered into and complies with the agreement 
                under subsection (a) (other than any drug 
                excluded from coverage or otherwise restricted 
                under paragraph (2)).
                    ``(C) A covered outpatient drug may be 
                excluded with respect to the treatment of a 
                specific disease or condition for an identified 
                population (if any) only if, based on the 
                drug's labeling (or, in the case of a drug the 
                prescribed use of which is not approved under 
                the Federal Food, Drug, and Cosmetic Act but is 
                a medically accepted indication, based on 
                information from the appropriate compendia 
                described in subsection (i)(5)), the excluded 
                drug does not have a significant, clinically 
                meaningful therapeutic advantage in terms of 
                safety, effectiveness, or clinical outcome of 
                such treatment for such population over other 
                drugs included in the formulary and there is a 
                written explanation (available to the public) 
                of the basis for the exclusion.
                    ``(D) The State plan permits coverage of a 
                drug excluded from the formulary (other than 
                any drug excluded from coverage or otherwise 
                restricted under paragraph (2)) pursuant to a 
                prior authorization program that is consistent 
                with paragraph (5).
                    ``(E) The formulary meets such other 
                requirements as the Secretary may impose in 
                order to achieve program savings consistent 
                with protecting the health of program 
                beneficiaries.
        A prior authorization program established by a State 
        under paragraph (5) is not a formulary subject to the 
        requirements of this paragraph.
            ``(5) Requirements of prior authorization 
        programs.--The State plan of a State participating in 
        the master rebate agreement may require, as a condition 
        of coverage or payment for a covered outpatient drug 
        for which Federal financial participation is available 
        in accordance with this section, the approval of the 
        drug before its dispensing for any medically accepted 
        indication (as defined in subsection (i)(5)) only if 
        the system providing for such approval--
                    ``(A) provides response by telephone or 
                other telecommunication device within 24 hours 
                of a request for prior authorization, and
                    ``(B) except with respect to the drugs on 
                the list referred to in paragraph (2), provides 
                for the dispensing of at least a 72-hour supply 
                of a covered outpatient prescription drug in an 
                emergency situation (as defined by the 
                Secretary).
            ``(6) Other permissible restrictions.--A State 
        participating in the master rebate agreement may impose 
        limitations, with respect to all such drugs in a 
        therapeutic class, on the minimum or maximum quantities 
        per prescription or on the number of refills, if such 
        limitations are necessary to discourage waste, and may 
        address instances of fraud or abuse by individuals in 
        any manner authorized under this Act.
    ``(e) Drug Use Review.--
            ``(1) In general.--A State participating in the 
        master rebate agreement may provide for a drug use 
        review program to educate physicians and pharmacists to 
        identify and reduce the frequency of patterns of fraud, 
        abuse, gross overuse, or inappropriate or medically 
        unnecessary care, among physicians, pharmacists, and 
        patients, or associated with specific drugs or groups 
        of drugs, as well as potential and actual severe 
        adverse reactions to drugs.
            ``(2) Application of state standards.--A State with 
        a drug use review program under this subsection shall 
        establish and operate the program under such standards 
        as it may establish.
    ``(f) Electronic Claims Management.--In accordance with 
chapter 35 of title 44, United States Code (relating to 
coordination of Federal information policy), the Secretary 
shall encourage each State to establish, as its principal means 
of processing claims for covered outpatient drugs under its 
State plan, a point-of-sale electronic claims management 
system, for the purpose of performing on-line, real time 
eligibility verifications, claims data capture, adjudication of 
claims, and assisting pharmacists (and other authorized 
persons) in applying for and receiving payment.
    ``(g) Annual Report.--
            ``(1) In general.--Not later than May 1 of each 
        year, the Secretary shall transmit to the Committee on 
        Finance of the Senate, and the Committee on Commerce of 
        the House of Representatives, a report on the operation 
        of this section in the preceding fiscal year.
            ``(2) Details.--Each report shall include 
        information on--
                    ``(A) ingredient costs paid under this 
                title for single source drugs, multiple source 
                drugs, and nonprescription covered outpatient 
                drugs,
                    ``(B) the total value of rebates received 
                and number of manufacturers providing such 
                rebates,
                    ``(C) the effect of inflation on the value 
                of rebates required under this section,
                    ``(D) trends in prices paid under this 
                title for covered outpatient drugs, and
                    ``(E) Federal and State administrative 
                costs associated with compliance with the 
                provisions of this title.
    ``(h) Exemption for Capitated Health Care Organizations, 
Hospitals, and Certain Nursing Facilities.--
            ``(1) In general.--Except as provided in paragraph 
        (2), the requirements of the master rebate agreement 
        under this section shall not apply with respect to 
        covered outpatient drugs dispensed by or through--
                    ``(A) a capitated health care organization 
                (as defined in section 1504(c)(1)),
                    ``(B) a hospital that dispenses covered 
                outpatient drugs using a drug formulary system 
                and bills the State no more than the hospital's 
                purchasing costs for covered outpatient drugs, 
                or
                    ``(C) a nursing facility which receives 
                payment under this title for health care 
                services, including prescription drugs, on a 
                capitated basis or which dispenses covered 
                outpatient drugs using a drug formulary system.
            ``(2) Construction in determining best price.--
        Nothing in paragraph (1) shall be construed as 
        excluding amounts paid by the entities described in 
        such paragraph for covered outpatient drugs from the 
        determination of the best price (as defined in 
        subsection (c)(1)(C)) for such drugs.
    ``(i) Definitions.--In the section--
            ``(1) Average manufacturer price.--The term 
        `average manufacturer price' means, with respect to a 
        covered outpatient drug of a manufacturer for a rebate 
        period, the average price paid to the manufacturer for 
        the drug in the United States by wholesalers for drugs 
        distributed to the retail pharmacy class of trade, 
        after deducting customary prompt pay discounts.
            ``(2) Covered outpatient drug.--Subject to the 
        exceptions in paragraph (3), the term `covered 
        outpatient drug' means--
                    ``(A) of those drugs which are treated as 
                prescribed drugs for purposes of section 
                1571(a)(8), a drug which may be dispensed only 
                upon prescription (except as provided in 
                subparagraph (D)), and--
                            ``(i) which is approved as a 
                        prescription drug under section 505 or 
                        507 of the Federal Food, Drug, and 
                        Cosmetic Act;
                            ``(ii)(I) which was commercially 
                        used or sold in the United States 
                        before the date of the enactment of the 
                        Drug Amendments of 1962 or which is 
                        identical, similar, or related (within 
                        the meaning of section 310.6(b)(1) of 
                        title 21 of the Code of Federal 
                        Regulations) to such a drug, and (II) 
                        which has not been the subject of a 
                        final determination by the Secretary 
                        that it is a `new drug' (within the 
                        meaning of section 201(p) of the 
                        Federal Food, Drug, and Cosmetic Act) 
                        or an action brought by the Secretary 
                        under section 301, 302(a), or 304(a) of 
                        such Act to enforce section 502(f) or 
                        505(a) of such Act; or
                            ``(iii)(I) which is described in 
                        section 107(c)(3) of the Drug 
                        Amendments of 1962 and for which the 
                        Secretary has determined there is a 
                        compelling justification for its 
                        medical need, or is identical, similar, 
                        or related (within the meaning of 
                        section 310.6(b)(1) of title 21 of the 
                        Code of Federal Regulations) to such a 
                        drug, and (II) for which the Secretary 
                        has not issued a notice of an 
                        opportunity for a hearing under section 
                        505(e) of the Federal Food, Drug, and 
                        Cosmetic Act on a proposed order of the 
                        Secretary to withdraw approval of an 
                        application for such drug under such 
                        section because the Secretary has 
                        determined that the drug is less than 
                        effective for some or all conditions of 
                        use prescribed, recommended, or 
                        suggested in its labeling;
                    ``(B) a biological product, other than a 
                vaccine which--
                            ``(i) may only be dispensed upon 
                        prescription,
                            ``(ii) is licensed under section 
                        351 of the Public Health Service Act, 
                        and
                            ``(iii) is produced at an 
                        establishment licensed under such 
                        section to produce such product;
                    ``(C) insulin certified under section 506 
                of the Federal Food, Drug, and Cosmetic Act; 
                and
                    ``(D) a drug which may be sold without a 
                prescription (commonly referred to as an `over-
                the-counter drug'), if the drug is prescribed 
                by a physician (or other person authorized to 
                prescribe under State law).
            ``(3) Limiting definition.--The term `covered 
        outpatient drug' does not include any drug, biological 
        product, or insulin provided as part of, or as incident 
        to and in the same setting as, any of the following 
        (and for which payment may be made under a State plan 
        as part of payment for the following and not as direct 
        reimbursement for the drug):
                    ``(A) Inpatient hospital services.
                    ``(B) Hospice services.
                    ``(C) Dental services, except that drugs 
                for which the State plan authorizes direct 
                reimbursement to the dispensing dentist are 
                covered outpatient drugs.
                    ``(D) Physicians' services.
                    ``(E) Outpatient hospital services.
                    ``(F) Nursing facility services and 
                services provided by an intermediate care 
                facility for the mentally retarded.
                    ``(G) Other laboratory and x-ray services.
                    ``(H) Renal dialysis services.
        Such term also does not include any such drug or 
        product for which a National Drug Code number is not 
        required by the Food and Drug Administration or a drug 
        or biological product used for a medical indication 
        which is not a medically accepted indication. Any drug, 
        biological product, or insulin excluded from the 
        definition of such term as a result of this paragraph 
        shall be treated as a covered outpatient drug for 
        purposes of determining the best price (as defined in 
        subsection (c)(1)(C)) for such drug, biological 
        product, or insulin.
            ``(4) Manufacturer.--The term `manufacturer' means, 
        with respect to a covered outpatient drug, the entity 
        holding legal title to or possession of the National 
        Drug Code number for such drug.
            ``(5) Medically accepted indication.--The term 
        `medically accepted indication' means any use for a 
        covered outpatient drug which is approved under the 
        Federal Food, Drug, and Cosmetic Act, or the use of 
        which is supported by one or more citations included or 
        approved for inclusion in any of the following 
        compendia:
                    ``(A) American Hospital Formulary Service 
                Drug Information.
                    ``(B) United States Pharmacopeia-Drug 
                Information.
                    ``(C) American Medical Association Drug 
                Evaluations.
                    ``(D) The DRUGDEX Information System.
                    ``(E) The peer-reviewed medical literature.
            ``(6) Multiple source drug; innovator multiple 
        source drug; noninnovator multiple source drug; single 
        source drug.--
                    ``(A) Defined.--
                            ``(i) Multiple source drug.--The 
                        term `multiple source drug' means, with 
                        respect to a rebate period, a covered 
                        outpatient drug (not including any drug 
                        described in paragraph (2)(D)) for 
                        which there are 2 or more drug products 
                        which--
                                    ``(I) are rated as 
                                therapeutically equivalent 
                                (under the Food and Drug 
                                Administration's most recent 
                                publication of `Approved Drug 
                                Products with Therapeutic 
                                Equivalence Evaluations'),
                                    ``(II) except as provided 
                                in subparagraph (B), are 
                                pharmaceutically equivalent and 
                                bioequivalent, as defined in 
                                subparagraph (C) and as 
                                determined by the Food and Drug 
                                Administration, and
                                    ``(III) are sold or 
                                marketed in the State during 
                                the period.
                            ``(ii) Innovator multiple source 
                        drug.--The term `innovator multiple 
                        source drug' means a multiple source 
                        drug that was originally marketed under 
                        an original new drug application or 
                        product licensing application approved 
                        by the Food and Drug Administration.
                            ``(iii) Noninnovator multiple 
                        source drug.--The term `noninnovator 
                        multiple source drug' means a multiple 
                        source drug that is not an innovator 
                        multiple source drug.
                            ``(iv) Single source drug.--The 
                        term `single source drug' means a 
                        covered outpatient drug (other than a 
                        drug described in subparagraph (C) or 
                        (D) of paragraph (2)) which is produced 
                        or distributed under an original new 
                        drug application approved by the Food 
                        and Drug Administration, including a 
                        drug product marketed by any cross-
                        licensed producers or distributors 
                        operating under the new drug 
                        application or product licensing 
                        application.
                    ``(B) Exception.--Subparagraph (A)(i)(II) 
                shall not apply if the Food and Drug 
                Administration changes by regulation the 
                requirement that, for purposes of the 
                publication described in subparagraph 
                (A)(i)(I), in order for drug products to be 
                rated as therapeutically equivalent, they must 
                be pharmaceutically equivalent and 
                bioequivalent, as defined in subparagraph (C).
                    ``(C) Definitions.--For purposes of this 
                paragraph--
                            ``(i) drug products are 
                        pharmaceutically equivalent if the 
                        products contain identical amounts of 
                        the same active drug ingredient in the 
                        same dosage form and meet compendial or 
                        other applicable standards of strength, 
                        quality, purity, and identity,
                            ``(ii) drugs are bioequivalent if 
                        they do not present a known or 
                        potential bioequivalence problem, or, 
                        if they do present such a problem, they 
                        are shown to meet an appropriate 
                        standard of bioequivalence, and
                            ``(iii) a drug product is 
                        considered to be sold or marketed in a 
                        State if it appears in a published 
                        national listing of average wholesale 
                        prices selected by the Secretary, if 
                        the listed product is generally 
                        available to the public through retail 
                        pharmacies in that State.
            ``(7) Rebate period.--The term `rebate period' 
        means, with respect to an agreement under subsection 
        (a), a calendar quarter or other period specified by 
        the Secretary with respect to the payment of rebates 
        under such agreement.''.

SEC. 2004. STATE ELECTION; TERMINATION OF CURRENT PROGRAM; AND 
                    TRANSITION.

    (a) Termination of Current Program; Limitation on Medicaid 
Payments in Fiscal Year 1997.--
            (1) Repeal of title.--Title XIX of the Social 
        Security Act is repealed effective October 1, 1997, 
        except that the repeal of section 1928 of such Act is 
        effective on the date of the enactment of this Act and 
        the succeeding two sections of such title shall be 
        effective during fiscal year 1996 in the same manner 
        and to the same extent as such sections were effective 
        during fiscal year 1995.
            (2) Limitation on obligation authority.--
        Notwithstanding any other provision of such title--
                    (A) Fiscal year 1997.--Subject to 
                subparagraph (B), the Secretary of Health and 
                Human Services (in this section referred to as 
                the ``Secretary'') may enter into obligations 
                under such title with any State (as defined for 
                purposes of such title) for expenses incurred 
                during fiscal year 1997, but not in excess of 
                the sum determined under clauses (i), (ii) and 
                (iv) of section 1511(a)(2)(A) of the Social 
                Security Act (as added by section 2003) for 
                that State for fiscal year 1997.
                    (B) None after effective date.--The 
                Secretary is not authorized to enter into any 
                obligation with any State under title XIX of 
                such Act for expenses incurred on or after the 
                earlier of--
                            (i) October 1, 1997, or
                            (ii) the first day of the first 
                        quarter on which the State plan under 
                        title XV of such Act (as added by 
                        section 2003) is first effective.
                    (C) Agreement.--A State's submission of 
                claims for payment under section 1903 of such 
                Act on or after October 1, 1996, is deemed to 
                constitute the State's acceptance of the 
                obligation limitation under subparagraph (A) 
                (including the formula for computing the amount 
                of such obligation limitation).
                    (D) Effect on medical assistance.--
                Effective October 1, 1996--
                            (i) except as provided in this 
                        paragraph, the Federal Government has 
                        no obligation to provide payment with 
                        respect to items and services provided 
                        under title XIX of the Social Security 
                        Act, and
                            (ii) such title and title XV of 
                        such Act shall not be construed as 
                        providing for an entitlement, under 
                        Federal law in relation to the Federal 
                        Government, in an individual or person 
                        (including any provider) at the time of 
                        provision or receipt of services.
            (3) Requirement for timely submittal of claims.--No 
        payment shall be made to a State under title XIX of 
        such Act with respect to an obligation incurred before 
        October 1, 1996, unless the State has submitted to the 
        Secretary, by not later than April 1, 1997, a claim for 
        Federal financial participation for expenses paid by 
        the State with respect to such obligations. Nothing in 
        paragraph (2) shall be construed as affecting the 
        obligation of the Federal Government to pay claims 
        described in the previous sentence.
    (b) Transition Provisions.--
            (1) Notwithstanding any other provision of law, in 
        the case where payment has been made under section 
        1903(a) of the Social Security Act to a State before 
        March 1, 1996, and for which a disallowance has not 
        been taken as of such date (or, if so taken, has not 
        been completed, including judicial review, by such 
        date), the Secretary of Health and Human Services shall 
        discontinue the disallowance proceeding and, if such 
        disallowance has been taken as of the date of the 
        enactment of this Act, any payment reductions effected 
        shall be rescinded and the payments returned to the 
        State.
            (2) The repeal under subsection (a)(1) of section 
        1928 of the Social Security Act shall not affect the 
        distribution of vaccines purchased and delivered to the 
        States before the date of the enactment of this Act. No 
        vaccine may be purchased after such date by the Federal 
        Government or any State under any contract under 
        section 1928(d) of the Social Security Act.
            (3) No judicial or administrative decision rendered 
        regarding requirements imposed under title XIX of the 
        Social Security Act with respect to a State shall have 
        any application to the State plan of the State under 
        title XV of such Act. A State may, pursuant to the 
        previous sentence, seek the abrogation or modification 
        of any such decision after the date of termination of 
        the State medicaid plan under title XIX of such Act.
            (4) No cause of action under title XIX of the 
        Social Security Act which seeks to require a State to 
        establish or maintain minimum payment rates under such 
        title or claim which seeks reimbursement for any period 
        before the date of the enactment of this Act based on 
        the alleged failure of the State to comply with such 
        title and which has not become final as of such date 
        shall be brought or continued.
            (5) Section 6408(a)(3) of the Omnibus Budget 
        Reconciliation Act of 1989 (as amended by section 13642 
        of the Omnibus Budget Reconciliation Act of 1993) and 
        section 2 of Public Law 102-276 (as amended by section 
        13644 of the Omnibus Budget Reconciliation Act of 1993) 
        are each amended by striking ``December 31, 1995'' and 
        inserting ``October 1, 1997''.
    (c) Anti-Fraud Provisions.--Section 1128(h)(1) of the 
Social Security Act (42 U.S.C. 1320a-7(h)(1)) is amended by 
inserting ``or a State plan under title XV'' after ``title 
XIX''.
    (d) Technical and Conforming Amendments.--
            (1) Secretarial submission of legislative 
        proposal.--Not later than 90 days after the date of the 
        enactment of this Act, the Secretary of Health and 
        Human Services, in consultation, as appropriate, with 
        heads of other Federal agencies and the States (as 
        defined in section 1101(a)(8) of the Social Security 
        Act for purposes of title XIX of such Act), shall 
        submit to the appropriate committees of Congress a 
        legislative proposal providing for such technical and 
        conforming amendments in the law as are required by the 
        provisions of, and amendments made by, this title.
            (2) Transitional rule.--Any reference in any 
        provision of law to title XIX of the Social Security 
        Act or any provision thereof shall be deemed to be a 
        reference to such title or provision as in effect on 
        the day before the date of the enactment of this Act.

SEC. 2005. INTEGRATION DEMONSTRATION PROJECT.

    (a) Description of Projects.--
            (1) In general.--The Secretary of Health and Human 
        Services (in this section referred to as the 
        ``Secretary'') may waive such requirements of titles 
        XVIII and XV of the Social Security Act as may be 
        necessary for States to conduct demonstration projects 
        under this section. Such projects shall demonstrate the 
        manner in which States may use funds from the programs 
        under such titles to develop and implement innovative 
        programs for individuals dually eligible for benefits 
        under both titles, including such individuals who are 
        chronically ill. The Secretary shall grant waivers in a 
        manner that permits States flexibility in contracting 
        with medicare risk providers and other providers for 
        services, oversight of contract administration and 
        quality management, and administration of a single 
        enrollment process. Such a waiver may restrict time 
        period during which project participants may disenroll 
        without cause from capitated health plans under the 
        medicare program.
            (2) Voluntary participation.--A State may not 
        require an individual eligible to receive items and 
        services under the medicare and title XV programs to 
        participate in a demonstration project under this 
        section.
    (b) Budget Neutrality and Reinvestment of Savings.--
            (1) Budget neutrality.--The Secretary shall not 
        approve a demonstration project under this section for 
        a State unless the State demonstrates that the amount 
        of the Federal expenditures under the program will not 
        exceed the amount of the Federal expenditures that 
        would have been made if the project had not been 
        approve.
            (2) Use of savings.--The Secretary shall permit a 
        State to retain any savings achieved under a project 
        and to use such savings for--
                    (A) expanding eligibility for low income 
                medicare beneficiaries who are risk of 
                institutionalization and who, if 
                institionalized, are likely to qualify for 
                benefits under title XV of the Social Security 
                Act, and
                    (B) providing a scope of services under the 
                project that exceeds the scope of services 
                normally covered under such title.
    (c) Limitation on Number of Projects.--Not more than 10 
demonstration projects shall be conducted under this section.
    (d) Duration.--
            (1) In general.--Subject to paragraph (2), a 
        demonstration project conducted under this section 
        shall be conducted for an initial period of 5 years 
        and, upon the request of a State and a finding by the 
        Secretary that the project has been successful, shall 
        be extended indefinitely.
            (2) Termination.--The Secretary may, with 90 days' 
        notice, terminate any demonstration project conducted 
        under this section that is not in substantial 
        compliance with the terms of the application approved 
        by the Secretary under this section.
    (e) Applications.--Each State, or a coalition of States, 
desiring to conduct a demonstration project under this section 
shall prepare and submit to the Secretary an application at 
such time, in such manner, and containing such information as 
the Secretary may require, including an explanation of a plan 
for evaluating the project. The Secretary shall approve or deny 
an application not later than 90 days after the receipt of such 
application.
    (f) Payments.--For each calendar quarter occurring during a 
demonstration project conducted under this section, the 
Secretary shall provide for payments to the State in a manner 
consistent with subsection (b)(1).
    (g) Oversight.--The Secretary shall establish quality 
standards for evaluating and monitoring the demonstration 
projects conducted under this section. Such quality standards 
shall include reporting requirements which contain the 
following:
            (1) A description of the demonstration project.
            (2) An analysis of beneficiary satisfaction under 
        such project.
            (3) An analysis of the quality of the services 
        delivered under the project.
            (4) A description of the savings to the medicare 
        and title XV programs as a result of the demonstration 
        project.

                      Subtitle B--Other Provisions

    PART 1--INVOLVEMENT OF COMMERCE COMMITTEE IN FEDERAL GOVERNMENT 
                          POSITION REDUCTIONS

SEC. 2101. INVOLVEMENT OF COMMERCE COMMITTEE IN FEDERAL GOVERNMENT 
                    POSITION REDUCTIONS.

    In any provision of law that provides for consultation with 
(or a report to) a relevant committee of Congress respecting 
reductions in Federal Government positions, a reference to the 
Committee on Commerce of the House of Representatives shall be 
deemed to have been made in relation to matters within the 
jurisdiction of such Committee.

             PART 2--RESTRICTING PUBLIC BENEFITS FOR ALIENS

              Subpart A--Eligibility for Federal Benefits

SEC. 2211. ALIENS WHO ARE NOT QUALIFIED ALIENS INELIGIBLE FOR FEDERAL 
                    PUBLIC BENEFITS.

    (a) In General.--Notwithstanding any other provision of law 
and except as provided in subsection (b), an alien who is not a 
qualified alien (as defined in section 2221) is not eligible 
for any Federal public benefit (as defined in subsection (c)).
    (b) Exceptions.--Subsection (a) shall not apply with 
respect to the following Federal public benefits:
            (1) Emergency medical services under title XIX or 
        XV of the Social Security Act.
            (2)(A) Public health assistance for immunizations.
            (B) Public health assistance for testing and 
        treatment of a serious communicable disease if the 
        Secretary of Health and Human Services determines that 
        it is necessary to prevent the spread of such disease.
    (c) Federal Public Benefit Defined.--
            (1) Except as provided in paragraph (2), for 
        purposes of this part, the term ``Federal public 
        benefit'' means--
                    (A) any grant, contract, loan, professional 
                license, or commercial license provided by an 
                agency of the United States or by appropriated 
                funds of the United States; and
                    (B) any retirement, welfare, health, 
                disability, or any other similar benefit for 
                which payments or assistance are provided to an 
                individual, household, or family eligibility 
                unit by an agency of the United States or by 
                appropriated funds of the United States,
        but only if such grant, contract, loan, or license 
        under subparagraph (A) or program providing benefits 
        under subparagraph (B) is under the jurisdiction of the 
        Committee on Commerce of the House of Representatives.
            (2) Such term shall not apply--
                    (A) to any contract, professional license, 
                or commercial license for a nonimmigrant whose 
                visa for entry is related to such employment in 
                the United States; or
                    (B) with respect to benefits for an alien 
                who as a work authorized nonimmigrant or as an 
                alien lawfully admitted for permanent residence 
                under the Immigration and Nationality Act 
                qualified for such benefits and for whom the 
                United States under reciprocal treaty 
                agreements is required to pay benefits, as 
                determined by the Attorney General, after 
                consultation with the Secretary of State.

SEC. 2212. LIMITED ELIGIBILITY OF QUALIFIED ALIENS FOR MEDICAL 
                    ASSISTANCE.

    (a) In General.--Notwithstanding any other provision of law 
and except as provided in section 2213 and subsection (b), a 
State is authorized to determine the eligibility of an alien 
who is a qualified alien (as defined in section 2221) for the 
program of medical assistance under titles XV and XIX of the 
Social Security Act.
    (b) Exceptions.--Qualified aliens under this subsection 
shall be eligible for benefits under such program:
            (1) Time-limited exception for refugees and 
        asylees.--
                    (A) An alien who is admitted to the United 
                States as a refugee under section 207 of the 
                Immigration and Nationality Act until 5 years 
                after the date of an alien's entry into the 
                United States.
                    (B) An alien who is granted asylum under 
                section 208 of such Act until 5 years after the 
                date of such grant of asylum.
                    (C) An alien whose deportation is being 
                withheld under section 243(h) of such Act until 
                5 years after such withholding.
            (2) Certain permanent resident aliens.--An alien 
        who--
                    (A) is lawfully admitted to the United 
                States for permanent residence under the 
                Immigration and Nationality Act; and
                    (B)(i) has worked 40 qualifying quarters of 
                coverage as defined under title II of the 
                Social Security Act or can be credited with 
                such qualifying quarters as provided under 
                subsection (c), and (ii) did not receive any 
                Federal means-tested public benefit (as defined 
                in section 2213(c)) during any such quarter.
            (3) Veteran and active duty exception.--An alien 
        who is lawfully residing in any State and is--
                    (A) a veteran (as defined in section 101 of 
                title 38, United States Code) with a discharge 
                characterized as an honorable discharge and not 
                on account of alienage,
                    (B) on active duty (other than active duty 
                for training) in the Armed Forces of the United 
                States, or
                    (C) the spouse or unmarried dependent child 
                of an individual described in subparagraph (A) 
                or (B).
            (4) Transition for those currently receiving 
        benefits.--An alien who on the date of the enactment of 
        this Act is lawfully residing in any State and is 
        receiving benefits under such program on the date of 
        the enactment of this Act shall continue to be eligible 
        to receive such benefits until January 1, 1997.
    (c) Qualifying Quarters.--For purposes of this section, in 
determining the number of qualifying quarters of coverage under 
title II of the Social Security Act an alien shall be credited 
with--
            (1) all of the qualifying quarters of coverage as 
        defined under title II of the Social Security Act 
        worked by a parent of such alien while the alien was 
        under age 18 if the parent did not receive any Federal 
        means-tested public benefit (as defined by the 
        Secretary and including the medicaid program) during 
        any such quarter, and
            (2) all of the qualifying quarters worked by a 
        spouse of such alien during their marriage if the 
        spouse did not receive any Federal means-tested public 
        benefit (as so defined) during any such quarter and the 
        alien remains married to such spouse or such spouse is 
        deceased.

SEC. 2213. FIVE-YEAR LIMITED ELIGIBILITY OF QUALIFIED ALIENS FOR 
                    FEDERAL MEANS-TESTED PUBLIC BENEFIT.

    (a) In General.--Notwithstanding any other provision of law 
and except as provided in subsection (b), an alien who is a 
qualified alien (as defined in section 2221) and who enters the 
United States on or after the date of the enactment of this Act 
is not eligible for any Federal means-tested public benefit (as 
defined in subsection (c)) for a period of five years beginning 
on the date of the alien's entry into the United States with a 
status within the meaning of the term ``qualified alien''.
    (b) Exceptions.--The limitation under subsection (a) shall 
not apply to the following aliens:
            (1) Exception for refugees and asylees.--
                    (A) An alien who is admitted to the United 
                States as a refugee under section 207 of the 
                Immigration and Nationality Act.
                    (B) An alien who is granted asylum under 
                section 208 of such Act.
                    (C) An alien whose deportation is being 
                withheld under section 243(h) of such Act.
            (2) Veteran and active duty exception.--An alien 
        who is lawfully residing in any State and is--
                    (A) a veteran (as defined in section 101 of 
                title 38, United States Code) with a discharge 
                characterized as an honorable discharge and not 
                on account of alienage,
                    (B) on active duty (other than active duty 
                for training) in the Armed Forces of the United 
                States, or
                    (C) the spouse or unmarried dependent child 
                of an individual described in subparagraph (A) 
                or (B).
    (c) Federal Means-tested Public Benefit Defined.--
            (1) Except as provided in paragraph (2), for 
        purposes of this part, the term ``Federal means-tested 
        public benefit'' means a Federal public benefit 
        described in section 2211(c) in which the eligibility 
        of an individual, household, or family eligibility unit 
        for benefits, or the amount of such benefits, or both 
        are determined on the basis of income, resources, or 
        financial need of the individual, household, or unit.
            (2) Such term does not include the following:
                    (A) Emergency medical services under title 
                XV or XIX of the Social Security Act.
                    (B)(i) Public health assistance for 
                immunizations.
                    (ii) Public health assistance for testing 
                and treatment of a serious communicable disease 
                if the Secretary of Health and Human Services 
                determines that it is necessary to prevent the 
                spread of such disease.

SEC. 2214. NOTIFICATION.

    Each Federal agency that administers a program to which 
section 2211, 2212, or 2213 applies shall, directly or through 
the States, post information and provide general notification 
to the public and to program recipients of the changes 
regarding eligibility for any such program pursuant to this 
subpart.

                     Subpart B--General Provisions

SEC. 2221. DEFINITIONS.

    (a) In General.--Except as otherwise provided in this part, 
the terms used in this part have the same meaning given such 
terms in section 101(a) of the Immigration and Nationality Act.
    (b) Qualified Alien.--For purposes of this part, the term 
``qualified alien'' means an alien who, at the time the alien 
applies for, receives, or attempts to receive a Federal public 
benefit, is--
            (1) an alien who is lawfully admitted for permanent 
        residence under the Immigration and Nationality Act,
            (2) an alien who is granted asylum under section 
        208 of such Act,
            (3) a refugee who is admitted to the United States 
        under section 207 of such Act,
            (4) an alien who is paroled into the United States 
        under section 212(d)(5) of such Act for a period of at 
        least 1 year,
            (5) an alien whose deportation is being withheld 
        under section 243(h) of such Act, or
            (6) an alien who is granted conditional entry 
        pursuant to section 203(a)(7) of such Act as in effect 
        prior to April 1, 1980.

SEC. 2222. VERIFICATION OF ELIGIBILITY FOR FEDERAL PUBLIC BENEFITS.

    (a) In General.--Not later than 18 months after the date of 
the enactment of this Act, the Attorney General of the United 
States, after consultation with the Secretary of Health and 
Human Services, shall promulgate regulations requiring 
verification that a person applying for a Federal public 
benefit (as defined in section 2211(c)), to which the 
limitation under section 2211 applies, is a qualified alien and 
is eligible to receive such benefit. Such regulations shall, to 
the extent feasible, require that information requested and 
exchanged be similar in form and manner to information 
requested and exchanged under section 1137 of the Social 
Security Act.
    (b) State Compliance.--Not later than 24 months after the 
date the regulations described in subsection (a) are adopted, a 
State that administers a program that provides a Federal public 
benefit shall have in effect a verification system that 
complies with the regulations.
    (c) Authorization of Appropriations.--There are authorized 
to be appropriated such sums as may be necessary to carry out 
the purpose of this section.

                       PART 3--ENERGY ASSISTANCE

SEC. 2131. ENERGY ASSISTANCE.

    Section 2605(f) of the Low-Income Home Energy Assistance 
Act of 1981 (42 U.S.C. 8624(f)) is amended--
            (1) by striking ``(f)(1) Notwithstanding'' and 
        inserting ``(f) Notwithstanding''; and
            (2) by striking paragraph (2).
                    TITLE II--COMMITTEE ON COMMERCE

        TITLE II, SUBTITLE A--MEDICAID RESTRUCTURING ACT OF 1996

                          House of Representatives,
                                     Committee on Commerce,
                                     Washington, DC, June 20, 1996.
Hon. John R. Kasich,
Chairman, Committee on the Budget,
Washington, DC.
    Dear Mr. Chairman: On Friday, June 14, 1996, I transmitted 
to you legislative language reflecting the recommendations of 
the Committee on Commerce for changes in laws within its 
jurisdiction with respect to Welfare and Medicaid Reform 
pursuant to the provisions of section 310 of the Congressional 
Budget Act of 1974 and section 201 of H.Con.Res. 178, the 
Concurrent Resolution on the Budget--Fiscal Year 1997.
    This legislative language was incorporated into Title II as 
follows: Subtitle A--Medicaid Restructuring Act of 1996; and 
Subtitle B--Other Provisions.
    Because the committee did not complete markup of the 
Medicaid Restructuring Act of 1996 until late on Thursday, June 
13, 1996, the committee was unable to submit the official 
Congressional Budget Office cost estimate for Title II, a 
Ramsayer submission, or the committee report when it 
transmitted the legislative language to the Budget Committee. 
In addition, the Minority had requested 3 days to file Minority 
Views on the Commerce Committee's action.
    I am pleased to transmit to you at this time the 
accompanying report language for Title II. I understand that 
the Congressional Budget Office submitted a Title II cost 
estimate directly to the Budget Committee on June 17, 1996, and 
that it is also in the process of preparing an updated version 
of that cost estimate which should be submitted to you in the 
near future. In addition, I have been informed that the 
Legislative Counsel's Office has made arrangements with your 
staff to submit the Ramsayer language directly to the Budget 
Committee to expedite your committee's action.
    If you have any questions concerning the committee's 
recommendations, or if I can be of any further assistance to 
you as you proceed with your committee's deliberations, please 
do not hesitate to contact me.
            Sincerely,
                                     Thomas J. Bliley, Jr.,
                                                          Chairman.
    Enclosure.

                                CONTENTS

                                                                   Page
Subtitle A:
    Purpose and Summary..........................................   324
    Background and Need for Legislation..........................   324
    Hearings.....................................................   336
    Committee Consideration......................................   337
    Rollcall Votes...............................................   337
    Committee Oversight Findings.................................   349
    Committee on Government Reform and Oversight.................   349
    New Budget Authority and Tax Expenditures....................   349
    Committee Cost Estimate......................................   349
    Congressional Budget Office Estimate.........................   349
    Inflationary Impact Statement................................   350
    Advisory Committee Statement.................................   350
    Section-by-Section Analysis of the Legislation...............   350
Subtitle B:
    Purpose and Summary..........................................   374
    Background and Need for Legislation..........................   374
    Hearings.....................................................   376
    Committee Consideration......................................   376
    Rollcall Votes...............................................   376
    Committee Oversight Findings.................................   376
    Committee on Government Reform and Oversight.................   377
    New Budget Authority and Tax Expenditures....................   377
    Committee Cost Estimate......................................   377
    Congressional Budget Office Estimate.........................   377
    Inflationary Impact Statement................................   377
    Advisory Committee Statement.................................   377
    Section-by-Section Analysis of the Legislation...............   377
    Changes in Existing Law Made by the Legislation, as Reported.   380
    Technical Appendix to This Title.............................   723
    Appendices to This Title.....................................   730

                          Purpose and Summary

    The purpose of Subtitle A of Title II, the Medicaid 
Restructuring Act of 1996, as amended, is to repeal Title XIX 
and establish Title XV of the Social Security Act to guarantee 
coverage, benefits, and consumer protections to low-income 
individuals and families while providing additional funding and 
operational flexibility to enable the States to provide medical 
assistance in a more effective, efficient, and responsive 
manner.

                  Background and Need for Legislation

    Established by President Lyndon Johnson in 1965, Medicaid 
is a joint Federal-State matching open-ended entitlement 
program that pays for medically necessary health care services 
provided to eligible beneficiaries by qualified providers. 
There are Medicaid programs in all States except Arizona, which 
runs a similar medical assistance program under a Section 1115 
waiver. (Federal funds for the Arizona program come from the 
Medicaid budget.) In addition, the Medicaid program is operated 
in the District of Columbia and U.S. territories, such as 
Puerto Rico and Guam.
    Due to numerous operational and administrative flaws--which 
are detailed below--calls for Medicaid reform have come from 
States and localities, Congress, and the administration. Among 
the proposals for reform is the ``Restructuring Medicaid'' 
proposal unanimously adopted by the National Governors 
Association on February 6, 1996. The nature of this initiative 
and its impact on the Federal legislative process are discussed 
in the section below entitled ``State Perspectives on Medicaid 
Reform'.
    According to the Congressional Budget Office (CBO), the 
Medicaid program will cost a total of $168.0 billion in fiscal 
year 1996. Of this amount, the Federal government will be 
responsible for an estimated $95.7 billion. This expenditure 
represents an increase of nearly 12,000 percent over the 
program's initial cost to the Federal government of $800 
million in fiscal year 1966. Since 1990, Medicaid has been the 
fastest-growing segment of the Federal government's budget, 
with costs soaring at annual rates as high as 31 percent. 
Placed in broader context, the Medicaid program's average 
annual rate of growth since 1990 has been four times that of 
private sector health care costs, which are rising at roughly 
4-5 percent annually. Although CBO projects Medicaid spending 
will rise at a rate of approximately 10 percent per year over 
the next 10 years, at that rate total program costs will double 
by the year 2002 absent reform. As detailed in the section 
entitled ``Program Growth versus Program Cuts'' below, the 
Medicaid Restructuring Act replaces the current Medicaid 
program's unsustainable cost spiral with considerable and 
consistent funding to the States.
    Medicaid's extraordinary rate of growth has made it the 
single largest item in many State budgets. According to the 
testimony of the many Governors and Medicaid officials who have 
appeared before the Committee on Commerce, States have been 
compelled by the program's cost to restrict investment in other 
critical human services, including child welfare, education, 
mental health, and public safety. As described in the ``Fiscal 
Impact of Medicaid Growth on the Federal and State Budgets'' 
section below, the program's cost has been frequently 
underestimated and continues to threaten the budgetary 
stability of virtually every State.
    Despite the vast sums expended on the Medicaid program, 
great disparities exist in the level of funding received by the 
States. Due to varying State match capabilities and an outdated 
funding distribution system, many States experiencing high 
program growth receive much lower levels of Federal funding 
than do more affluent States with lower program growth. This 
persistent inequality indicates that the current Medicaid 
program fails to target Federal funding where it is most 
needed. This flaw is examined in greater detail below in the 
section entitled ``Does Money Follow People?'.
    In addition, the level of flexibility currently accorded 
the States has been restricted over time, thereby reducing 
States' abilities to adjust to changing program needs and the 
existing disparity in Federal funding. Medicaid was intended to 
operate as a joint Federal-State matching entitlement program 
providing medical assistance for low-income persons who are 
aged, blind, disabled, members of families with dependent 
children, and certain other pregnant women and children. 
Accordingly, States were permitted to design and administer 
their own programs, subject to specified Federal guidelines. 
Unfortunately, the current Medicaid program hardly resembles 
that which was originally intended. Instead of allowing State 
and local officials the flexibility to best administer 
Medicaid, the Federal government created an extensive ``one-
size- fits-all'' maze of Federal mandates and administrative 
requirements. The nature of this centralized approach to 
program administration is described in the ``Medicaid 
Micromanagement'' section below.
    Finally, the operational and administrative inflexibility 
of the current Medicaid program has prevented States from 
developing innovative and cost-efficient mechanisms designed to 
meet the health care needs of their residents. Instead, they 
have been forced to shoulder the uncontrollable costs of what 
has become a rigid and ineffective health care program. The 
program's centralized micromanagement, complex bureaucratic 
requirements, and outdated service delivery is often cited by 
the States as impeding their ability to provide the quality 
health coverage, patient responsiveness, and efficient 
administration common in the private sector. As a result, 
States have long sought enhanced operational flexibility so 
that they can better meet the health care needs of their low-
income residents. The current program's complex system of 
waivers and the anticipated impact of the Medicaid 
Restructuring Act's flexibility is described below in the 
section entitled ``Fostering Greater State Innovation.''

                 State Perspectives on Medicaid Reform

    On February 6, 1996, the National Governors Association 
(NGA) adopted a detailed proposal for restructuring the 
Medicaid program (provided in Appendix A). This plan was 
adopted by a unanimous bipartisan vote following the 
President's veto of the Balanced Budget Act of 1995, which 
included a landmark Medicaid reform proposal. As such, the NGA 
agreement signaled the States' strong desire that the Medicaid 
program be reformed, despite apparent political obstacles, to 
provide them the tools and flexibility to give more effective, 
responsive, and efficient medical assistance to their 
vulnerable residents.
    In response to the Governors' historic agreement, the House 
Committee on Commerce drafted the Medicaid Restructuring Act, a 
legislative plan founded on the principles unanimously endorsed 
by the bipartisan National Governors Association. (An analysis 
detailing the similarities between the NGA plan and the 
Medicaid Restructuring Act is provided in Appendix B.) Chief 
among these principles was that coverage and benefits should be 
guaranteed to all needy individuals. As a result, the NGA plan 
and the Medicaid Restructuring Act establish coverage 
guarantees to protect vulnerable Americans: pregnant women with 
family income below 133 percent of the poverty line; children 
under age 6 with family income below 133 percent of the poverty 
line; children age 6 through 12 with family income below 100 
percent of the poverty line; children ages 13 through 18 with 
family income below 100 percent, phased in as per current law; 
children receiving foster care and adoption assistance; 
disabled individuals who meet specified income and resource 
standards; elderly individuals who meet Supplemental Security 
Income (SSI) and resource standards; qualified Medicare 
beneficiaries; qualified disabled and working individuals; 
certain other Medicare beneficiaries; and other poor adults who 
receive public assistance and who are not included in any of 
the above groups. (Appendix C provides a Congressional Research 
Service analysis of the Medicaid Restructuring Act's provisions 
relating to Medicare beneficiaries.)
    In addition, both the NGA plan and the Medicaid 
Restructuring Act provide for a generous package of guaranteed 
benefits, including: inpatient and outpatient hospital 
services; physicians' surgical and medical services; laboratory 
and x-ray services; immunizations for children; prenatal care 
and nurse midwife services; pediatric and family nurse 
practitioner services; nursing facility services and home 
health care; services provided by Federally-qualified health 
centers and rural health centers; prepregnancy family planning 
services and supplies; and early periodic screening and 
diagnostic services for children.
    The funding proposals set forth by the NGA plan have 
similarly been incorporated into the Medicaid Restructuring 
Act. As detailed below, both plans provide for the creation of 
four new funding sources: a base allotment distributing 
annually-increasing funding levels according to a differential 
rate formula, an ``umbrella'' fund to meet States' ``rainy 
day'' needs, a special grant for Native Americans, and a 
special grant for States with large populations of illegal 
aliens. In addition, the Medicaid Restructuring Act adopts the 
NGA provisions requiring a State match as a condition of the 
receipt of ``base allotment'' and ``umbrella fund'' resources 
and establishes a new ceiling for the Federal medical 
assistance percentage (FMAP). (The latter provision has 
attracted bipartisan support in the House, as indicated by the 
New York delegation letter to President Clinton provided in 
Appendix D.)
    Further, in response to concerns raised by a number of 
Governors and program experts, the Medicaid Restructuring Act 
retains current law protections for elderly Medicaid recipients 
who are institutionalized. These include: current law 
protections against the impoverishment of spouses of 
institutionalized recipients, which are retained to protect 
community spouses from becoming impoverished before their 
institutionalized spouses can be deemed eligible for medical 
assistance; current law limitations on the liens that may be 
placed on residents' property; prohibitions on any requirements 
that the adult children of institutionalized or hospitalized 
parents contribute to the cost of nursing facility services; 
and current law (OBRA 87) nursing home standards and 
enforcement provisions. In addition, the NGA plan and the 
Medicaid Restructuring Act set forth important protections for 
recipients seeking to satisfy a grievance against any State. In 
particular, States are required to provide for an 
administrative procedure enabling an individual alleging a 
denial of benefits or eligibility to receive a hearing; States 
are required to provide for judicial review in the State court 
system to an individual or class of individuals alleging a 
denial of benefits; an individual or class of individuals 
alleging a denial of benefits may file a petition for 
certiorari before the United States Supreme Court; and the 
Secretary of the U.S. Department of Health and Human Services 
is authorized to bring an action alleging denial of benefits in 
Federal court against a State on behalf of an individual or 
class of individuals.
    Finally, both the NGA agreement and the Medicaid 
Restructuring Act provide for unprecedented flexibility to 
ensure that all States are able to improve their medical 
assistance programs. The Act provides for: streamlined State 
plan submission and amendment procedures; State capability to 
develop service delivery innovations without a Federal waiver; 
repeal of the Boren Amendment and establishment of disallowance 
protections; and greater coordination in the development and 
implementation of State Medicaid plans through a process of 
public input by providers and the populations served. These 
reforms are intended to expedite plan implementation and pave 
the way to more effective, responsive, and efficient State 
Medicaid programs.

                   Program Growth Versus Program Cuts

    During the debate on the Medicaid Restructuring Act, the 
assertion has been repeatedly made that this legislation 
``cuts'' health care spending for low-income people. This 
assertion is categorically false. Over the 7-year period ending 
in fiscal year 2002, the average annual growth rate is 
approximately 5.2 percent. Total Federal ``base allotment'' 
spending between fiscal years 1996-2002 will total $797.0 
billion. In fact, Federal expenditures in fiscal year 2002 will 
total $130.9 billion, a 46.9 percent increase over actual 
Federal funding in fiscal year 1995. Further, during every year 
during the 7-year budget window, Federal Medicaid spending will 
grow by an annual rate of at least 4.82 percent.
    In addition to the base allotment, the Medicaid 
Restructuring Act establishes three additional new funding 
sources which distribute Federal funds to the States in 
addition to the base allotment. These additional sources 
include an ``umbrella'' fund, a special fund for Native 
Americans, and a special fund for States with large populations 
of illegal aliens. The ``umbrella fund'' is an open-ended 
source of funding that provides additional resources on a per 
capita basis to any State experiencing growth in the guaranteed 
population groups (and specified optional groups) that exceeds 
the States'' financing capacity provided by the base allotments 
and special grants. The $500 million Native American fund is 
dedicated exclusively for services provided by Native American 
providers and is distributed to any State within whose 
boundaries Native Americans reside. Finally, the $3.5 billion 
illegal alien fund is distributed among the fifteen States with 
the largest populations of illegal aliens, as determined 
annually by the Immigration and Naturalization Service.
    The four funding sources established by the Medicaid 
Restructuring Act provide more funding to all States and 
territories than they have ever received under the current 
Medicaid program. Further, just as the Act's funding provisions 
differ significantly from those in current law, they also 
contrast sharply with the proposals set forth by the President 
in this and past years.
    For instance, the Medicaid Restructuring Act provides for 
annual rates of positive growth, whereas President Clinton's 
1993 proposal for Medicaid spending called for a net reduction 
in Medicaid spending. A comparison of the two proposals reveals 
which represents spending growth and which represents a 
spending cut. As the chart below clearly illustrates, H.R. 3600 
(the President's ``Health Security Act,'' introduced November 
20, 1993) proposed a very different first-year Medicaid 
spending than that contained in the Medicaid Restructuring Act. 
In fact, Section 9101 of the Health Security Act actually cut 
the Federal contribution to Medicaid by 5 percent (i.e., a 
growth rate of negative 5 percent). By contrast, the Medicaid 
Restructuring Act increases Medicaid spending by an average of 
nearly 7.1 percent in the first year.




    The Medicaid reform plan proposed by the administration 
this year adopts a different but no less problematic approach 
to Medicaid funding. The President's plan terminates the 
current funding mechanism in favor of a ``per capita cap'' 
which limits the amount of Federal funding available to a State 
to a specified per capita level. This per capita funding limit 
varies depending upon the population--children, nondisabled 
adults, nondisabled elderly, and the disabled--and depending 
upon a State's historical per capita spending level. As a 
result, States with low current per capita spending levels will 
be frozen in place and will never be able to rise to the 
funding levels received by their more affluent and historically 
more generous counterparts.
    The administration plan's impact on States is not limited 
to the funding inequity it locks in, however. Since the 
administration's ``per capita cap'' proposal limits the level 
of funding available to the States, any costs incurred above 
that level are to be assumed solely by the States. Further, 
such an outcome is likely given the proposal's retention of 
many current law mandates and regulations. As a result, the 
``per capita cap'' plan would place tremendous fiscal pressure 
on the States. According to a June 10, 1996 Congressional 
Budget Office letter to Commerce Committee Chairman Thomas J. 
Bliley (provided in Appendix E), States would be able to offset 
the unfunded coverage and benefits requirements of the 
administration's plan only by dropping optional individuals and 
services.

   fiscal impact of medicaid growth on the Federal and State budgets

    Federal expenditures on the Medicaid program during the 
past 7 years have contributed significantly to the Federal 
budget deficit. However, Federal costs--while great--are only 
half the story. The States have been faced with even more 
extraordinary fiscal pressures because Medicaid mandates have 
made health care the fastest growing area of State budgets. 
Since almost all States are constitutionally required to 
annually balance their budgets, the Medicaid financial squeeze 
has had dramatic effects.
    The table below, prepared by the National Association of 
State Budget Officers (NASBO), documents the extraordinary 
growth of Medicaid expenditures as a percentage of State 
expenditures. In 1987, Medicaid represented approximately 10.2 
percent of all State expenditures. By 1991, Medicaid's State 
spending share had risen to 14.2 percent, and by 1994 it was a 
striking 19.4 percent of all State spending.

                            MEDICAID SPENDING AS A PERCENTAGE OF TOTAL STATE SPENDING                           
----------------------------------------------------------------------------------------------------------------
                                                   1987    1988    1989    1990    1991    1992    1993    1994 
----------------------------------------------------------------------------------------------------------------
Medicaid Spending...............................   10.10   10.80   11.30   12.50   14.20   17.50   18.40   19.40
Non-Medicaid Spending...........................   89.90   89.20   88.70   87.50   85.80   82.50   81.60  80.60 
----------------------------------------------------------------------------------------------------------------
Source: National Association of State Budget Officers (NASBO) 1994 State Expenditure Report.                    

    As State Medicaid spending has experienced uncontrollable 
rates of growth, other critical State funding initiatives have 
suffered commensurately. The table below, also prepared by 
NASBO, documents the decline in State spending for (a) 
elementary and secondary education, (b) higher education, (c) 
welfare, and (d) transportation, due to the growth in Medicaid. 
Based on NASBO data, State expenditures for elementary and 
secondary education declined 11 percent between 1987 and 1994; 
State higher education spending dropped 8 percent over the same 
time period; State welfare spending experienced a 13 percent 
decrease; and State investment in public transportation 
declined 16 percent. On the other hand, during the 1987-1994 
time period, Medicaid spending increased by more than 90 
percent.

                     PROGRAM SPENDING WITHIN SECTORS AS A PERCENTAGE OF TOTAL STATE SPENDING                    
----------------------------------------------------------------------------------------------------------------
                                                   1987    1988    1989    1990    1991    1992    1993    1994 
----------------------------------------------------------------------------------------------------------------
Elementary/Secondary Education..................   22.80   23.00   23.40   22.80   22.00   21.10   21.20   20.30
Higher Education................................   12.30   11.80   12.00   12.20   11.50   10.90   10.60   10.50
Welfare.........................................    5.20    5.30    5.10    5.00    5.30    5.00    4.90    4.50
Medicaid........................................   10.20   10.80   11.30   12.50   14.20   17.50   18.40   19.40
Transportation..................................   10.60   10.30   10.10    9.90    9.40    9.10    9.00   8.90 
----------------------------------------------------------------------------------------------------------------
Source: National Association of State Budget Officers (NASBO) 1994 State Expenditure Report.                    

    This data clearly reveals why many State officials have 
described Medicaid mandates as the worst of all the Federal 
unfunded mandates placed on the States. As these mandates were 
enacted into law through budget reconciliation in the late 
1980s and early 1990s, they created havoc with State budgets 
and ultimately drained State funds away from education and 
welfare programs.

     Federal and State Budgetary Havoc Within Budget Reconciliation

    One of the most perplexing issues concerning the 
unconstrained fiscal growth of Medicaid is the manner in which 
it was accomplished. Most of the Medicaid mandates were enacted 
through reconciliation bills which were supposed to be budget-
cutting vehicles.
    How was this accomplished? In the days of the Gramm-Rudman-
Hollings Budgetary Act, it was accomplished by ``budgetary 
tricks.'' For example, in the Concurrent Resolution of the 
Budget for fiscal year 1990 (H.Con.Res. 106), $200 million of 
new budget entitlement authority became available for fiscal 
year 1990 for Medicaid spending. With this $200 million, the 
Energy and Commerce Committee was able to report out five new 
mandated Medicaid expansions by slipping effective dates on 
some of the spending provisions so that only one calendar 
quarter's worth of spending would occur in fiscal year 1990. By 
this ``budgetary trick,'' the Medicaid provisions technically 
met the budget target in the Budget Resolution. However, in the 
out-years, these five Medicaid provisions would cost additional 
billions of dollars. In 1991, the Office of Management and 
Budget (OMB) estimated that, taken together, these Medicaid 
provisions would increase Federal spending by approximately 
$8.6 billion over a 5-year period.
    Another perplexing issue in the enactment of Medicaid 
mandates has been the inability of the Congressional Budget 
Office (CBO) to provide accurate estimates of the projected 
costs of these laws. The table below documents the astounding 
inaccuracies in the CBO analysis of a number of Medicaid 
mandates enacted into law in the Omnibus Reconciliation Act of 
1989 (OBRA 1989).

      CBO OBRA 1989 MEDICAID MANDATES--ESTIMATES VS. ACTUAL FLORIDA     
                      EXPENDITURES FISCAL YEAR 1991                     
                        [In millions of dollars]                        
------------------------------------------------------------------------
                                               CBO scoring     Florida  
                                                 for all       Federal  
                                                  States    expenditures
------------------------------------------------------------------------
Mandatory coverage of pregnant women.........          270            31
EPSDT........................................           25            63
Payment for federally qualified health                                  
 centers.....................................           15             8
Payment for obstetrical and pediatric                                   
 services....................................           11             4
                                              --------------------------
      Total..................................          321           106
------------------------------------------------------------------------
Note.--Florida represents 3.8 percent of all Federal Medicaid           
  expenditures--but accounted for 33 percent of total estimated         
  expenditures.                                                         

    This table lists four major Medicaid mandates enacted into 
law in 1989: (1) mandatory coverage of pregnant women up to 133 
percent; (2) mandatory coverage of early and periodic 
screening, diagnostic, and treatment services (EPSDT); (3) 
enhanced payment for health care centers; and (4) enhanced 
payments for obstetrical and pediatric services.1 The 
first column is the official CBO estimate for all Federal 
expenditures for these benefits in fiscal year 1991. The second 
column is the actual Florida Federal expenditures provided by 
the Florida Medicaid Director at that time. Florida represents 
only 3.8 percent of all Federal Medicaid expenditures.
---------------------------------------------------------------------------
    \1\ In a 1990 official policy document of the National Governors' 
Association (NGA) entitled ``Short-Term Medicaid Policy'' [Appendix G], 
the Nation's Governors identified several of these mandates as 
particularly troublesome. In this NGA official document, they asked for 
relief from mandates in general and specified detailed changes to the 
EPSDT benefit. Governor Florio of New Jersey chaired the NGA Health 
Care Task Force which produced this policy, and then-Governor Bill 
Clinton was a member of the Task Force.
---------------------------------------------------------------------------
    First, compare the totals for fiscal year 1991. The CBO 
calculated that the total Federal expenditures for these four 
mandates would be $321 million in fiscal year 1991 for all 
States. However, Florida's actual total was a whopping $106 
million.
    With regard to the CBO cost estimate of the EPSDT benefit, 
the picture is even more disturbing. Incredibly, the CBO 
estimated that the total Federal expenditures for all States 
would be $25 million for fiscal year 1991. The State of Florida 
alone spent $63 million in fiscal year 1991 to comply with this 
mandate, or more than double the CBO official estimate.\2\
---------------------------------------------------------------------------
    \2\ In 1990, the American Public Welfare Association (APWA), 
conducted a study of the effect of the EPSDT expansions of OBRA 1989. 
Preliminary results from just 13 States showed an increase of $468 
million in State and Federal spending in fiscal year 1991. The States 
responding were: Alabama, Alaska, Arizona, Florida, Idaho, Maryland, 
Missouri, North Dakota, Oregon, South Dakota, Texas, Utah, and 
Wisconsin. The APWA study states ``Please also be advised that this 
total figure is likely to increase as more States complete a budget 
analysis.'' Note that the two largest Medicaid programs--California and 
New York--were not included in this study.
---------------------------------------------------------------------------
    If one projects the Florida cost experience for these OBRA 
1989 mandates to the entire Nation, the analysis leads to a 
disturbing conclusion. While CBO projected expenditures of $323 
million in fiscal year 1991, estimated Federal expenditures 
were closer to $2.8 billion. Though forecasting is not an exact 
science, an error of 888 percent is truly indefensible. This 
staggering forecasting error not only contributed to the growth 
of the Federal budget deficit but was a devastating fiscal blow 
to the States.

                       Does Money Follow People?

    Despite the vast sums expended on the Medicaid program, 
great disparities exist in the level of funding received by the 
States. Due to varying State match capabilities and an outdated 
funding distribution system, many States experiencing high 
program growth receive much lower levels of Federal funding 
than do more affluent States with lower program growth. This 
persistent inequality indicates that the current Medicaid 
program fails to target Federal funding where it is most 
needed.
    According to General Accounting Office analyses (see 
Appendix F), Medicaid differs from most other Federal programs 
in that it does not currently provide funding based on State 
needs. Instead, the current Medicaid program directs 
significant sums to certain States not because they experience 
high program need but because they are able to afford high 
levels of State matching funds. As a result, fully 20 States 
currently receive per capita Federal funding that is less than 
90 percent of the national average. By contrast, 20 other 
States receive per capita grants that exceed 110 percent of the 
same national average, and six of these States receive grants 
that exceed 150 percent of the national average.
    The vast disparities that exist in current Federal Medicaid 
funding can be illustrated by examining the very different 
circumstances of seven States. As the first segment of the 
chart below reveals, Oklahoma and Massachusetts receive highly 
divergent funding levels despite roughly equal poverty 
population sizes. Meanwhile, the grants received by New Mexico 
and Rhode Island are similar despite very different poverty 
populations. Finally, and perhaps most revealing, New York's 
Federal funding level is equivalent to the combined grants 
received by California and Florida, even though those two 
States also have a combined poverty population three times 
larger than New York's.

   THE CURRENT MEDICAID PROGRAM PROVIDES UNEQUAL FUNDING TO THE STATES  
------------------------------------------------------------------------
                                          Poverty      Fiscal year 1995 
                                        population      Federal grant   
------------------------------------------------------------------------
Oklahoma.............................       605,437         $833,975,195
Massachusetts........................       633,322        2,626,336,189
                                      ==================================
New Mexico...........................       333,804         $593,135,963
Rhode Island.........................       109,520          567,026,552
                                      ==================================
California and Florida...............     7,615,972      $12,742,333,244
New York.............................     2,886,553       12,565,107,768
------------------------------------------------------------------------

    By contrast, the Medicaid Restructuring Act utilizes 
differential growth rates to ensure that all States receive 
larger Federal funding grants each year and that existing 
disparities are removed over time. As the following chart 
illustrates, the Medicaid Restructuring Act allows for a much 
higher cumulative increase for Oklahoma, which has an 
historically low per capita expenditure level but relatively 
higher program need, than for Rhode Island, which has low 
program need but a much higher per capita funding level. For 
comparison purposes, the impact on these two States of the 
President's ``per capita cap'' plan is also shown. Because it 
freezes all States at their current per capita level and grows 
them at the same rate, the current funding disparity between 
Oklahoma and Rhode Island is locked in place and no greater 
equality is possible.

----------------------------------------------------------------------------------------------------------------
                                                                Oklahoma                Rhode Island            
                                                             ---------------------------------------------------
                                                                  1996         2002         1996         2002   
----------------------------------------------------------------------------------------------------------------
NGA-based Medicaid Plan.....................................    $1,505.03    $2,325.10    $4,982.52    $5,791.81
                                                                                                                
(1) 55 percent increase                                                                                         
(1) 16 percent increase                                                                                         
----------------------------------------------------------------------------------------------------------------
Per capita cap plan.........................................    $1,505.03    $2,094.63    $4,982.52    $6,934.45
                                                                                                                
(1) 39 percent increase                                                                                         
(1) 39 percent increase                                                                                         
----------------------------------------------------------------------------------------------------------------

                        Medicaid Micromanagement

    According to many State officials, the explosion of 
Medicaid spending that has occurred over the last decade is due 
in large part to congressional and executive directives. During 
that period, Federally mandated eligibility changes fueled the 
expansion of the Medicaid-eligible population and the cost of 
the program. Although States have the discretion of 
supplementing Medicaid's mandated coverage standards, the 
Federal government frequently expanded the scope of these 
standards. As a result, States have been compelled to increase 
their spending levels in order to receive their share of 
Federally-matched Medicaid spending.
    One of the most frequently heard State complaints regarding 
the Medicaid program concerns micromanagement by the Health 
Care Financing Administration (HCFA). At the Federal level, 
Medicaid is administered by HCFA which, through a network of 
regional offices, is supposed to work with State Medicaid 
departments to ensure appropriate management of the Medicaid 
program. However, the reality of HCFA-State relations has been 
described by many State officials as less a matter of 
coordinated cooperation than as an example of Federal 
micromanagement in State affairs.
    Current Democrat and Republican Governors are by no means 
the first, or only, State Executives to describe to Congress 
the burdens of HCFA and the Medicaid program it administers. On 
December 8, 1990, then-Governor Bill Clinton told the House 
Government Operations Committee that ``Medicaid used to be a 
program with a lot of options and few mandates--now, it's just 
the opposite.''
    Not surprisingly, many States have sought to take advantage 
of one of the only forms of relief available to them: waivers 
granted by the Federal government. Faced with the bureaucratic 
complexity and escalating costs of the Medicaid program, States 
have sought to make more efficient use of Medicaid dollars by 
such means as managed care. In many instances, the savings 
realized from these measures have been used to help fund 
program expansions, as part of State initiatives to extend 
coverage to uninsured individuals. Since significant use of 
managed care in Medicaid is not permitted under current 
Medicaid rules, States have sought waivers of statutory and 
regulatory requirements from the Secretary of Health and Human 
Services.
    Currently, Federal Medicaid law makes two basic types of 
waivers available to the States. Section 1915 of the Social 
Security Act provides for ``program waivers,'' which allow 
States meeting specified conditions to operate certain types of 
special programs that are listed in the statute. Section 
1115(a) provides much broader authority to grant 
``demonstration waivers,'' under which nearly any provision of 
Medicaid law may be waived to allow States to experiment with 
program improvements.
    The experience of those States with waivers permitted under 
Sections 1915 and 1115(a) has been mixed. While any relief from 
the Medicaid program's many restrictions is certainly 
appreciated by the States, the waiver process itself is a 
source of great dissatisfaction. The process by which States 
seek Section 1115 waivers is particularly complex and costly. 
In order to comply with HCFA's numerous application 
requirements, States must devote staff time and money to the 
process--resources they charge could be used to provide health 
care services to low-income State residents. When the 
application is complete, it typically contains enough paper to 
measure almost 3 feet in height.
    Unfortunately, States still face often insurmountable 
obstacles to flexibility even after completing their waiver 
applications. To date, only 10 of an estimated 23 Section 1115 
waivers have been approved by HCFA. In addition, the length of 
Federal waiver application review averages at least 12 months.

                   Fostering Greater State Innovation

    All across the Nation, States are working to improve the 
quality, effectiveness, and efficiency of the health care 
assistance they provide to their low-income residents. However, 
they have little of the operational or administrative 
flexibility they need to make their medical assistance programs 
more responsive and efficient. As a result, Governors and other 
State officials have long complained that Medicaid has served 
as an obstacle, rather than as an opportunity, to developing 
innovative health care delivery strategies.
    The limited role that States are currently permitted to 
play has given State officials little choice but to watch, 
almost from the sidelines, as Medicaid has consumed more and 
more of their State resources. With Medicaid already the single 
largest program in virtually every State budget, its projected 
growth raises the prospect of severe financial crisis in the 
States. Already, Medicaid spending has prevented increased 
State investments in education, welfare services, law 
enforcement, and other critical human services.
    Amidst the charges that the Health Care Financing 
Administration has served more as a hindrance than a help in 
States' efforts to get control over Medicaid spending, many 
States have sought relief through the Federal waiver process. 
As described above, however, that process is itself a source of 
considerable State frustration.
    This is particularly difficult for many States to 
understand, given the success achieved by the relatively few 
States that have received waivers. For example, HCFA data 
reveals that States have achieved significant program 
efficiencies by means of waiver-facilitated managed care 
initiatives. In particular, Section 1915(b) waivers have 
enabled some States to establish limited managed care programs. 
Based on State reports to HCFA, the General Accounting Office 
has calculated that the national weighted average of the 
savings realized from such Medicaid managed care initiatives is 
9.4 percent. As a result, States were able to serve the 
populations enrolled in these programs using almost 10 percent 
fewer dollars than required by the traditional Medicaid 
program.
    According to State officials, the lesson to be drawn from 
such experiences is clear: if Medicaid is to be substantially 
improved and the growth rate of its costs brought under 
control, States must be empowered to restructure their Medicaid 
programs. They argue that the millions of low-income Americans 
who need health care assistance will be more effectively and 
efficiently served only when Governors and State legislators 
are given the flexibility to tailor Medicaid to meet the unique 
conditions in their States.
    In light of the inflexibility of the current Medicaid 
program and the ineffectiveness of its waiver process, many 
States have petitioned Congress for significant Medicaid 
reform. In fact, State Governors have forged a close working 
relationship with the 104th Congress in an effort to develop 
the Medicaid Restructuring Act reform initiative. During the 
course of its hearings on the Medicaid program, the full 
Committee on Commerce and the Subcommittee on Health and 
Environment was advised by State Governors, Medicaid Directors, 
and other program experts to replace the current Medicaid 
program and its lengthy waiver process with a reform initiative 
allowing for real flexibility.
    The Medicaid Restructuring Act of 1996 would give States 
unprecedented operational and administrative flexibility. 
According to State officials, the reform principles adopted by 
the National Governors Association and incorporated into the 
Medicaid Restructuring Act would enable States to develop 
innovative service delivery strategies to meet the health care 
needs of their low-income residents. In other words, such a 
reform initiative would free States in a manner far surpassing 
any flexibility they may enjoy under a waiver. In fact, under 
the proposed Medicaid reform initiative, the program would 
become the State-run program it was initially intended to be. 
In place of the current rigid, bureaucratic, and often 
inadequate service delivery system, States would be able to 
develop health service strategies tailored to match the 
differing characteristics of their communities. These can 
include capitation and managed care; enhanced maternal, child, 
and mental health care initiatives; and insurance premium 
subsidy programs. In addition, the Act would allow States that 
have received statewide or demonstration waivers--such as 
utilized by the State of Oregon in developing their prioritized 
list of health services--to maintain their innovative programs, 
subject to the provisions of this Act.
    Administrative and operational flexibility would also 
create compelling incentives for States to achieve 
unprecedented program efficiency. Currently, the Medicaid 
program effectively penalizes States which save Medicaid 
resources. On average, 57 percent of all State savings revert 
to the Federal government, not the States that made the savings 
possible. Under the Medicaid Restructuring Act, States would be 
able to utilize the full value of any savings they achieve 
because they would be free to reinvest those resources into 
better service delivery, expanded benefits, and new program 
innovations.

                                Hearings

    The full Committee on Commerce held three hearings on 
Medicaid issues, covering the National Governors' Association 
Medicaid Proposal and H.R. 3507, the Personal Responsibility 
and Work Opportunity Act of 1996. These hearings were held on: 
February 21, 1996, March 6, 1996, and June 11, 1996. Testimony 
at these hearings was received from 21 witnesses, including 
Governors, representatives of the administration, 
representatives of State health care administrations, 
representatives of health care professionals, representatives 
from the health care industry, and representatives of persons 
served by the Medicaid program.
    Testifying before the full committee on February 21, 1996, 
were: The Honorable John M. Engler, Governor, State of 
Michigan; The Honorable Lawton Chiles, Governor, State of 
Florida; The Honorable Michael O. Leavitt, Governor, State of 
Utah; The Honorable Bob Miller, Governor, State of Nevada; The 
Honorable Tommy G. Thompson, Governor, State of Wisconsin; and 
The Honorable Roy Romer, Governor, State of Colorado.
    Testifying before the full committee on March 6, 1996, 
were: The Honorable Donna E. Shalala, Secretary, Department of 
Health and Human Services; Mr. Gordon Springer, Executive 
Officer, Allina Health System; Mr. Terrence Shirley, Executive 
Director, Tampa Community Health Center; Paul Willging, Ph.D., 
Executive Vice President, American Health Care Association; Ms. 
Gail Willensky, Chair, Board of Directors, Physician Payment 
Review Commission; Mr. Louis F. Rossiter, Ph.D., Professor, 
Health Economics, Medical College of Virginia, Virginia 
Commonwealth University; Mr. Bob Greenstein, Executive 
Director, Center on Budget and Policy; Diane Rowland, SC.D., 
Senior Vice President, Henry J. Kaiser Family Foundation and 
Executive Director Kaiser Commission on the Future of Medicaid; 
Mr. Jeff Crowley, National Association of People with AIDS, 
testifying on behalf of the Consortium for Citizens with 
Disabilities, Health Tasks Force; Stephen McConnell, Ph.D., 
Senior Vice President for Public Policy, Alzheimer's 
Association, testifying on behalf of the Long Term Care 
Campaign; and Mr. Greg Haifley, Senior Health Associate, Health 
Division, Children's Defense Fund, testifying on behalf of 
Maternal and Child Health Coalition.
    Testifying before the full committee on June 11, 1996, 
were: The Honorable Donna E. Shalala, Secretary, Department of 
Health and Human Services; Stephen McConnell, Ph.D., Chairman, 
Long Term Care Campaign; Mr. Joseph Teefey, Deputy Director, 
Department of Medical Assistance Services, Commonwealth of 
Virginia; and Mr. Gail L. Warden, President and CEO, Henry Ford 
Health System, representing the American Hospital Association.

                        Committee Consideration

    On June 13, 1996, the Committee on Commerce met in open 
markup session and considered a Committee Print entitled 
``Title II, Subtitle A--Medicaid Restructuring Act of 1996.'' 
On June 13, 1996, the committee ordered the Committee Print 
entitled ``Title II, Subtitle A--Medicaid Restructuring Act of 
1996,'' as amended, transmitted to the House Committee on the 
Budget for inclusion in the fiscal year 1997 Welfare and 
Medicaid Reform Budget Reconciliation Act, by a rollcall vote 
of 26 yeas to 14 nays.

                             Rollcall Votes

    Pursuant to clause 2(l)(2)(B) of rule XI of the Rules of 
the House of Representatives, following are listed the recorded 
votes on the motion to order the Committee Print entitled 
``Title II, Subtitle A--Medicaid Restructuring Act of 1996'' 
transmitted to the House Committee on the Budget, and on 
amendments offered to the measure, including the names of those 
members voting for and against.

                         ROLLCALL VOTE No. 132

    Bill: Committee Print entitled ``Title II, Subtitle A--
Medicaid Restructuring Act of 1996.''
    Amendment: An amendment by Mr. Waxman to the Deal 
Amendment, No.1A, re: eliminate the sunset provision with 
respect to the transition period.
    Disposition: Agreed to, by a rollcall vote of 20 yeas to 19 
nays.

----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present 
----------------------------------------------------------------------------------------------------------------
Mr. Bliley.....................  ........        X   .........  Mr. Dingell......        X   ........  .........
Mr. Moorhead...................  ........        X   .........  Mr. Waxman.......        X   ........  .........
Mr. Tauzin.....................  ........        X   .........  Mr. Markey.......        X   ........  .........
Mr. Fields.....................  ........  ........  .........  Mr. Collins......  ........  ........  .........
Mr. Oxley......................  ........        X   .........  Mr. Hall.........        X   ........  .........
Mr. Bilirakis..................  ........        X   .........  Mr. Richardson...        X   ........  .........
Mr. Schaefer...................  ........        X   .........  Mr. Bryant.......        X   ........  .........
Mr. Barton.....................  ........        X   .........  Mr. Boucher......        X   ........  .........
Mr. Hastert....................  ........  ........  .........  Mr. Manton.......        X   ........  .........
Mr. Upton......................  ........        X   .........  Mr. Towns........        X   ........  .........
Mr. Stearns....................  ........        X   .........  Mr. Studds.......        X   ........  .........
Mr. Paxon......................  ........  ........  .........  Mr. Pallone......        X   ........  .........
Mr. Gillmor....................  ........  ........  .........  Mr. Brown........        X   ........  .........
Mr. Klug.......................  ........        X   .........  Mrs. Lincoln.....  ........  ........  .........
Mr. Franks.....................  ........        X   .........  Mr. Gordon.......        X   ........  .........
Mr. Greenwood..................  ........        X   .........  Ms. Furse........        X   ........  .........
Mr. Crapo......................  ........  ........  .........  Mr. Deutsch......        X   ........  .........
Mr. Cox........................  ........  ........  .........  Mr. Rush.........        X   ........  .........
Mr. Deal.......................  ........        X   .........  Ms. Eshoo........        X   ........  .........
Mr. Burr.......................  ........        X   .........  Mr. Klink........        X   ........  .........
Mr. Bilbray....................  ........  ........  .........  Mr. Stupak.......        X   ........  .........
Mr. Whitfield..................  ........        X   .........  Mr. Engel........        X   ........  .........
Mr. Ganske.....................  ........        X   .........                                                  
Mr. Frisa......................  ........        X   .........                                                  
Mr. Norwood....................  ........        X   .........                                                  
Mr. White......................  ........        X   .........                                                  
Mr. Coburn.....................  ........  ........  .........                                                  
----------------------------------------------------------------------------------------------------------------

                         ROLLCALL VOTE No. 133

    Bill: Committee Print entitled ``Title II, Subtitle A--
Medicaid Restructuring Act of 1996.''
    Amendment: A substitute amendment by Mr. Bliley to the 
Dingell Amendment, No.2A, re: study and report on State 
financing efforts.
    Disposition: Agreed to, by a rollcall vote of 23 yeas to 20 
nays.

----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present 
----------------------------------------------------------------------------------------------------------------
Mr. Bliley.....................        X   ........  .........  Mr. Dingell......  ........        X   .........
Mr. Moorhead...................        X   ........  .........  Mr. Waxman.......  ........        X   .........
Mr. Tauzin.....................        X   ........  .........  Mr. Markey.......  ........        X   .........
Mr. Fields.....................        X   ........  .........  Mr. Collins......  ........  ........  .........
Mr. Oxley......................        X   ........  .........  Mr. Hall.........  ........        X   .........
Mr. Bilirakis..................        X   ........  .........  Mr. Richardson...  ........        X   .........
Mr. Schaefer...................        X   ........  .........  Mr. Bryant.......  ........        X   .........
Mr. Barton.....................        X   ........  .........  Mr. Boucher......  ........        X   .........
Mr. Hastert....................        X   ........  .........  Mr. Manton.......  ........        X   .........
Mr. Upton......................        X   ........  .........  Mr. Towns........  ........        X   .........
Mr. Stearns....................        X   ........  .........  Mr. Studds.......  ........        X   .........
Mr. Paxon......................        X   ........  .........  Mr. Pallone......  ........        X   .........
Mr. Gillmor....................  ........  ........  .........  Mr. Brown........  ........        X   .........
Mr. Klug.......................  ........        X   .........  Mrs. Lincoln.....  ........  ........  .........
Mr. Franks.....................        X   ........  .........  Mr. Gordon.......  ........  ........  .........
Mr. Greenwood..................        X   ........  .........  Ms. Furse........  ........        X   .........
Mr. Crapo......................        X   ........  .........  Mr. Deutsch......  ........        X   .........
Mr. Cox........................        X   ........  .........  Mr. Rush.........  ........        X   .........
Mr. Deal.......................        X   ........  .........  Ms. Eshoo........  ........        X   .........
Mr. Burr.......................        X   ........  .........  Mr. Klink........  ........        X   .........
Mr. Bilbray....................  ........  ........  .........  Mr. Stupak.......  ........  ........  .........
Mr. Whitfield..................        X   ........  .........  Mr. Engel........  ........        X   .........
Mr. Ganske.....................  ........        X   .........                                                  
Mr. Frisa......................        X   ........  .........                                                  
Mr. Norwood....................        X   ........  .........                                                  
Mr. White......................        X   ........  .........                                                  
Mr. Coburn.....................        X   ........  .........                                                  
----------------------------------------------------------------------------------------------------------------

                         ROLLCALL VOTE No. 134

    Bill: Committee Print entitled ``Title II, Subtitle A--
Medicaid Restructuring Act of 1996.''
    Amendment: An amendment by Ms. Eshoo, No. 4, re: retain 
current guarantees with respect to treatment and screening 
services for children.
    Disposition: Not agreed to, by a rollcall vote of 19 yeas 
to 23 nays.

----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present 
----------------------------------------------------------------------------------------------------------------
Mr. Bliley.....................  ........        X   .........  Mr. Dingell......        X   ........  .........
Mr. Moorhead...................  ........        X   .........  Mr. Waxman.......        X   ........  .........
Mr. Tauzin.....................  ........        X   .........  Mr. Markey.......        X   ........  .........
Mr. Fields.....................  ........        X   .........  Mr. Collins......        X   ........  .........
Mr. Oxley......................  ........        X   .........  Mr. Hall.........        X   ........  .........
Mr. Bilirakis..................  ........        X   .........  Mr. Richardson...        X   ........  .........
Mr. Schaefer...................  ........        X   .........  Mr. Bryant.......  ........  ........  .........
Mr. Barton.....................  ........  ........  .........  Mr. Boucher......        X   ........  .........
Mr. Hastert....................  ........  ........  .........  Mr. Manton.......        X   ........  .........
Mr. Upton......................  ........        X   .........  Mr. Towns........  ........  ........  .........
Mr. Stearns....................  ........        X   .........  Mr. Studds.......        X   ........  .........
Mr. Paxon......................  ........        X   .........  Mr. Pallone......        X   ........  .........
Mr. Gillmor....................  ........  ........  .........  Mr. Brown........        X   ........  .........
Mr. Klug.......................  ........        X   .........  Mrs. Lincoln.....  ........  ........  .........
Mr. Franks.....................  ........        X   .........  Mr. Gordon.......        X   ........  .........
Mr. Greenwood..................  ........        X   .........  Ms. Furse........        X   ........  .........
Mr. Crapo......................  ........        X   .........  Mr. Deutsch......        X   ........  .........
Mr. Cox........................  ........        X   .........  Mr. Rush.........        X   ........  .........
Mr. Deal.......................  ........        X   .........  Ms. Eshoo........        X   ........  .........
Mr. Burr.......................  ........        X   .........  Mr. Klink........        X   ........  .........
Mr. Bilbray....................  ........  ........  .........  Mr. Stupak.......        X   ........  .........
Mr. Whitfield..................  ........        X   .........  Mr. Engel........        X   ........  .........
Mr. Ganske.....................  ........        X   .........                                                  
Mr. Frisa......................  ........        X   .........                                                  
Mr. Norwood....................  ........        X   .........                                                  
Mr. White......................  ........        X   .........                                                  
Mr. Coburn.....................  ........        X   .........                                                  
----------------------------------------------------------------------------------------------------------------

                         ROLLCALL VOTE NO. 135

    Bill: Committee Print entitled ``Title II, Subtitle A--
Medicaid Restructuring Act of 1996.''
    Amendment: An amendment by Mr. Stupak and Mr. Richardson to 
the Upton Amendment No. 5A, re: Federally qualified health 
centers and rural health clinics funding at 100 percent of the 
1995 level.
    Disposition: Not agreed to, by a rollcall vote of 19 yeas 
to 21 nays.

----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present 
----------------------------------------------------------------------------------------------------------------
Mr. Bliley.....................  ........        X   .........  Mr. Dingell......        X   ........  .........
Mr. Moorhead...................  ........        X   .........  Mr. Waxman.......        X   ........  .........
Mr. Tauzin.....................  ........        X   .........  Mr. Markey.......        X   ........  .........
Mr. Fields.....................  ........        X   .........  Mr. Collins......        X   ........  .........
Mr. Oxley......................  ........        X   .........  Mr. Hall.........  ........  ........  .........
Mr. Bilirakis..................  ........        X   .........  Mr. Richardson...        X   ........  .........
Mr. Schaefer...................  ........        X   .........  Mr. Bryant.......  ........  ........  .........
Mr. Barton.....................  ........        X   .........  Mr. Boucher......        X   ........  .........
Mr. Hastert....................  ........  ........  .........  Mr. Manton.......        X   ........  .........
Mr. Upton......................  ........        X   .........  Mr. Towns........        X   ........  .........
Mr. Stearns....................  ........        X   .........  Mr. Studds.......        X   ........  .........
Mr. Paxon......................  ........  ........  .........  Mr. Pallone......        X   ........  .........
Mr. Gillmor....................  ........  ........  .........  Mr. Brown........        X   ........  .........
Mr. Klug.......................  ........  ........  .........  Mrs. Lincoln.....  ........  ........  .........
Mr. Franks.....................  ........        X   .........  Mr. Gordon.......        X   ........  .........
Mr. Greenwood..................  ........        X   .........  Ms. Furse........        X   ........  .........
Mr. Crapo......................  ........  ........  .........  Mr. Deutsch......        X   ........  .........
Mr. Cox........................  ........        X   .........  Mr. Rush.........        X   ........  .........
Mr. Deal.......................  ........        X   .........  Ms. Eshoo........        X   ........  .........
Mr. Burr.......................  ........        X   .........  Mr. Klink........        X   ........  .........
Mr. Bilbray....................  ........  ........  .........  Mr. Stupak.......        X   ........  .........
Mr. Whitfield..................  ........        X   .........  Mr. Engel........        X   ........  .........
Mr. Ganske.....................  ........        X   .........                                                  
Mr. Frisa......................  ........        X   .........                                                  
Mr. Norwood....................  ........        X   .........                                                  
Mr. White......................  ........        X   .........                                                  
Mr. Coburn.....................  ........        X   .........                                                  
----------------------------------------------------------------------------------------------------------------

                         ROLLCALL VOTE No. 136

    Bill: Committee Print entitled ``Title II, Subtitle A--
Medicaid Restructuring Act of 1996.''
    Amendment: An amendment by Mr. Markey and Mr. Pallone, No. 
6, re: continuing current entitlement for elderly individuals 
requiring nursing facility services.
    Disposition: Not agreed to, by a rollcall vote of 19 yeas 
to 24 nays.

----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present 
----------------------------------------------------------------------------------------------------------------
Mr. Bliley.....................  ........        X   .........  Mr. Dingell......        X   ........  .........
Mr. Moorhead...................  ........        X   .........  Mr. Waxman.......        X   ........  .........
Mr. Tauzin.....................  ........        X   .........  Mr. Markey.......        X   ........  .........
Mr. Fields.....................  ........        X   .........  Mr. Collins......        X   ........  .........
Mr. Oxley......................  ........        X   .........  Mr. Hall.........  ........        X   .........
Mr. Bilirakis..................  ........        X   .........  Mr. Richardson...        X   ........  .........
Mr. Schaefer...................  ........        X   .........  Mr. Bryant.......  ........  ........  .........
Mr. Barton.....................  ........        X   .........  Mr. Boucher......        X   ........  .........
Mr. Hastert....................  ........  ........  .........  Mr. Manton.......        X   ........  .........
Mr. Upton......................  ........        X   .........  Mr. Towns........        X   ........  .........
Mr. Stearns....................  ........        X   .........  Mr. Studds.......        X   ........  .........
Mr. Paxon......................  ........        X   .........  Mr. Pallone......        X   ........  .........
Mr. Gillmor....................  ........  ........  .........  Mr. Brown........        X   ........  .........
Mr. Klug.......................  ........  ........  .........  Mrs. Lincoln.....  ........  ........  .........
Mr. Franks.....................  ........        X   .........  Mr. Gordon.......        X   ........  .........
Mr. Greenwood..................  ........        X   .........  Ms. Furse........        X   ........  .........
Mr. Crapo......................  ........        X   .........  Mr. Deutsch......        X   ........  .........
Mr. Cox........................  ........        X   .........  Mr. Rush.........        X   ........  .........
Mr. Deal.......................  ........        X   .........  Ms. Eshoo........        X   ........  .........
Mr. Burr.......................  ........        X   .........  Mr. Klink........        X   ........  .........
Mr. Bilbray....................  ........  ........  .........  Mr. Stupak.......        X   ........  .........
Mr. Whitfield..................  ........        X   .........  Mr. Engel........        X   ........  .........
Mr. Ganske.....................  ........        X   .........                                                  
Mr. Frisa......................  ........        X   .........                                                  
Mr. Norwood....................  ........        X   .........                                                  
Mr. White......................  ........        X   .........                                                  
Mr. Coburn.....................  ........        X   .........                                                  
----------------------------------------------------------------------------------------------------------------

                         ROLLCALL VOTE No. 137

    Bill: Committee Print entitled ``Title II, Subtitle A--
Medicaid Restructuring Act of 1996.''
    Amendment: An amendment by Mr. Deutsch, No. 8, re: 
continuing current entitlement for elderly individuals with 
Alzheimer's disease.
    Disposition: Not agreed to, by a rollcall vote of 16 yeas 
to 20 nays.

----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present 
----------------------------------------------------------------------------------------------------------------
Mr. Bliley.....................  ........        X   .........  Mr. Dingell......        X   ........  .........
Mr. Moorhead...................  ........        X   .........  Mr. Waxman.......        X   ........  .........
Mr. Tauzin.....................  ........        X   .........  Mr. Markey.......        X   ........  .........
Mr. Fields.....................  ........  ........  .........  Mr. Collins......  ........  ........  .........
Mr. Oxley......................  ........        X   .........  Mr. Hall.........  ........  ........  .........
Mr. Bilirakis..................  ........        X   .........  Mr. Richardson...        X   ........  .........
Mr. Schaefer...................  ........        X   .........  Mr. Bryant.......  ........  ........  .........
Mr. Barton.....................  ........  ........  .........  Mr. Boucher......        X   ........  .........
Mr. Hastert....................  ........  ........  .........  Mr. Manton.......        X   ........  .........
Mr. Upton......................  ........        X   .........  Mr. Towns........        X   ........  .........
Mr. Stearns....................  ........        X   .........  Mr. Studds.......  ........  ........  .........
Mr. Paxon......................  ........        X   .........  Mr. Pallone......        X   ........  .........
Mr. Gillmor....................  ........  ........  .........  Mr. Brown........        X   ........  .........
Mr. Klug.......................  ........        X   .........  Mrs. Lincoln.....  ........  ........  .........
Mr. Franks.....................  ........  ........  .........  Mr. Gordon.......        X   ........  .........
Mr. Greenwood..................  ........  ........  .........  Ms. Furse........        X   ........  .........
Mr. Crapo......................  ........        X   .........  Mr. Deutsch......        X   ........  .........
Mr. Cox........................  ........        X   .........  Mr. Rush.........        X   ........  .........
Mr. Deal.......................  ........        X   .........  Ms. Eshoo........        X   ........  .........
Mr. Burr.......................  ........        X   .........  Mr. Klink........  ........  ........  .........
Mr. Bilbray....................  ........  ........  .........  Mr. Stupak.......        X   ........  .........
Mr. Whitfield..................  ........        X   .........  Mr. Engel........        X   ........  .........
Mr. Ganske.....................  ........        X   .........                                                  
Mr. Frisa......................  ........        X   .........                                                  
Mr. Norwood....................  ........        X   .........                                                  
Mr. White......................  ........        X   .........                                                  
Mr. Coburn.....................  ........        X   .........                                                  
----------------------------------------------------------------------------------------------------------------


                         ROLLCALL VOTE No. 138

    Bill: Committee Print entitled ``Title II, Subtitle A--
Medicaid Restructuring Act of 1996.''
    Amendment: An amendment by Mr. Gordon, No. 10, re: 
continuing current entitlement for elderly individuals who are 
veterans and require nursing facility services.
    Disposition: Not agreed to, by a rollcall vote of 17 yeas 
to 22 nays.


----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present 
----------------------------------------------------------------------------------------------------------------
Mr. Bliley.....................  ........        X   .........  Mr. Dingell......        X   ........  .........
Mr. Moorhead...................  ........        X   .........  Mr. Waxman.......        X   ........  .........
Mr. Tauzin.....................  ........        X   .........  Mr. Markey.......        X   ........  .........
Mr. Fields.....................  ........        X   .........  Mr. Collins......  ........  ........  .........
Mr. Oxley......................  ........  ........  .........  Mr. Hall.........        X   ........  .........
Mr. Bilirakis..................  ........        X   .........  Mr. Richardson...        X   ........  .........
Mr. Schaefer...................  ........        X   .........  Mr. Bryant.......  ........  ........  .........
Mr. Barton.....................  ........        X   .........  Mr. Boucher......  ........  ........  .........
Mr. Hastert....................  ........        X   .........  Mr. Manton.......        X   ........  .........
Mr. Upton......................  ........        X   .........  Mr. Towns........        X   ........  .........
Mr. Stearns....................  ........        X   .........  Mr. Studds.......  ........  ........  .........
Mr. Paxon......................  ........        X   .........  Mr. Pallone......        X   ........  .........
Mr. Gillmor....................  ........  ........  .........  Mr. Brown........        X   ........  .........
Mr. Klug.......................  ........        X   .........  Mrs. Lincoln.....  ........  ........  .........
Mr. Franks.....................  ........  ........  .........  Mr. Gordon.......        X   ........  .........
Mr. Greenwood..................  ........        X   .........  Ms. Furse........        X   ........  .........
Mr. Crapo......................  ........        X   .........  Mr. Deutsch......        X   ........  .........
Mr. Cox........................  ........        X   .........  Mr. Rush.........        X   ........  .........
Mr. Deal.......................  ........        X   .........  Ms. Eshoo........        X   ........  .........
Mr. Burr.......................  ........        X   .........  Mr. Klink........        X   ........  .........
Mr. Bilbray....................  ........  ........  .........  Mr. Stupak.......        X   ........  .........
Mr. Whitfield..................  ........        X   .........  Mr. Engel........        X   ........  .........
Mr. Ganske.....................  ........        X   .........                                                  
Mr. Frisa......................  ........  ........  .........                                                  
Mr. Norwood....................  ........        X   .........                                                  
Mr. White......................  ........        X   .........                                                  
Mr. Coburn.....................  ........        X   .........                                                  
----------------------------------------------------------------------------------------------------------------

                         ROLLCALL VOTE No. 139

    Bill: Committee Print entitled ``Title II, Subtitle A--
Medicaid restructuring Act of 1996.''
    Amendment: An amendment by Mr. Dingell to the Ganske 
Amendment, No. 11A, re: strike the waiver authority.
    Disposition: Not agreed to, by a rollcall vote of 17 yeas 
to 25 nays.

----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present 
----------------------------------------------------------------------------------------------------------------
Mr. Bliley.....................  ........        X   .........  Mr. Dingell......        X   ........  .........
Mr. Moorhead...................  ........        X   .........  Mr. Waxman.......        X   ........  .........
Mr. Tauzin.....................  ........        X   .........  Mr. Markey.......        X   ........  .........
Mr. Fields.....................  ........        X   .........  Mr. Collins......  ........  ........  .........
Mr. Oxley......................  ........        X   .........  Mr. Hall.........  ........        X   .........
Mr. Bilirakis..................  ........        X   .........  Mr. Richardson...        X   ........  .........
Mr. Schaefer...................  ........        X   .........  Mr. Bryant.......  ........  ........  .........
Mr. Barton.....................  ........        X   .........  Mr. Boucher......        X   ........  .........
Mr. Hastert....................  ........        X   .........  Mr. Manton.......        X   ........  .........
Mr. Upton......................  ........        X   .........  Mr. Towns........        X   ........  .........
Mr. Stearns....................  ........        X   .........  Mr. Studds.......  ........  ........  .........
Mr. Paxon......................  ........        X   .........  Mr. Pallone......        X   ........  .........
Mr. Gillmor....................  ........  ........  .........  Mr. Brown........        X   ........  .........
Mr. Klug.......................  ........        X   .........  Mrs. Lincoln.....  ........  ........  .........
Mr. Franks.....................  ........  ........  .........  Mr. Gordon.......        X   ........  .........
Mr. Greenwood..................  ........        X   .........  Ms. Furse........        X   ........  .........
Mr. Crapo......................  ........        X   .........  Mr. Deutsch......        X   ........  .........
Mr. Cox........................  ........        X   .........  Mr. Rush.........        X   ........  .........
Mr. Deal.......................  ........        X   .........  Ms. Eshoo........        X   ........  .........
Mr. Burr.......................  ........        X   .........  Mr. Klink........        X   ........  .........
Mr. Bilbray....................  ........  ........  .........  Mr. Stupak.......        X   ........  .........
Mr. Whitfield..................  ........        X   .........  Mr. Engel........        X   ........  .........
Mr. Ganske.....................  ........        X   .........                                                  
Mr. Frisa......................  ........        X   .........                                                  
Mr. Norwood....................  ........        X   .........                                                  
Mr. White......................  ........        X   .........                                                  
Mr. Coburn.....................  ........        X   .........                                                  
----------------------------------------------------------------------------------------------------------------

                         ROLLCALL VOTE No. 140

    Bill: Committee Print entitled ``Title II, Subtitle A--
Medicaid Restructuring Act of 1996.''
    Amendment: An amendment by Mr. Klink, No. 12, re: 
continuing current entitlement for elderly nursing home 
residents.
    Disposition: Not agreed to, by a rollcall vote of 16 yeas 
to 23 nays.

----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present 
----------------------------------------------------------------------------------------------------------------
Mr. Bliley.....................  ........        X   .........  Mr. Dingell......        X   ........  .........
Mr. Moorhead...................  ........        X   .........  Mr. Waxman.......  ........  ........  .........
Mr. Tauzin.....................  ........        X   .........  Mr. Markey.......  ........  ........  .........
Mr. Fields.....................  ........        X   .........  Mr. Collins......  ........  ........  .........
Mr. Oxley......................  ........        X   .........  Mr. Hall.........  ........  ........  .........
Mr. Bilirakis..................  ........        X   .........  Mr. Richardson...        X   ........  .........
Mr. Schaefer...................  ........        X   .........  Mr. Bryant.......        X   ........  .........
Mr. Barton.....................  ........        X   .........  Mr. Boucher......        X   ........  .........
Mr. Hastert....................  ........        X   .........  Mr. Manton.......        X   ........  .........
Mr. Upton......................  ........        X   .........  Mr. Towns........        X   ........  .........
Mr. Stearns....................  ........        X   .........  Mr. Studds.......  ........  ........  .........
Mr. Paxon......................  ........        X   .........  Mr. Pallone......        X   ........  .........
Mr. Gillmor....................  ........  ........  .........  Mr. Brown........        X   ........  .........
Mr. Klug.......................  ........        X   .........  Mrs. Lincoln.....  ........  ........  .........
Mr. Franks.....................        X   ........  .........  Mr. Gordon.......  ........  ........  .........
Mr. Greenwood..................  ........        X   .........  Ms. Furse........        X   ........  .........
Mr. Crapo......................  ........        X   .........  Mr. Deutsch......        X   ........  .........
Mr. Cox........................  ........  ........  .........  Mr. Rush.........        X   ........  .........
Mr. Deal.......................  ........        X   .........  Ms. Eshoo........        X   ........  .........
Mr. Burr.......................  ........        X   .........  Mr. Klink........        X   ........  .........
Mr. Bilbray....................  ........  ........  .........  Mr. Stupak.......        X   ........  .........
Mr. Whitfield..................  ........        X   .........  Mr. Engel........        X   ........  .........
Mr. Ganske.....................  ........        X   .........                                                  
Mr. Frisa......................  ........        X   .........                                                  
Mr. Norwood....................  ........        X   .........                                                  
Mr. White......................  ........        X   .........                                                  
Mr. Coburn.....................  ........        X   .........                                                  
----------------------------------------------------------------------------------------------------------------

                         ROLLCALL VOTE No. 141

    Bill: Committee Print entitled ``Title II, Subtitle A--
Medicaid Restructuring Act of 1996.''
    Amendment: An amendment by Mr. Ganske, No. 13, re: child 
treatment services.
    Disposition: Not agreed to, by a rollcall vote of 18 yeas 
to 22 nays.

----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present 
----------------------------------------------------------------------------------------------------------------
Mr. Bliley.....................  ........        X   .........  Mr. Dingell......        X   ........  .........
Mr. Moorhead...................  ........        X   .........  Mr. Waxman.......  ........  ........  .........
Mr. Tauzin.....................  ........        X   .........  Mr. Markey.......  ........  ........  .........
Mr. Fields.....................  ........        X   .........  Mr. Collins......  ........  ........  .........
Mr. Oxley......................  ........        X   .........  Mr. Hall.........        X   ........  .........
Mr. Bilirakis..................  ........        X   .........  Mr. Richardson...        X   ........  .........
Mr. Schaefer...................  ........        X   .........  Mr. Bryant.......        X   ........  .........
Mr. Barton.....................  ........        X   .........  Mr. Boucher......        X   ........  .........
Mr. Hastert....................  ........        X   .........  Mr. Manton.......        X   ........  .........
Mr. Upton......................  ........        X   .........  Mr. Towns........        X   ........  .........
Mr. Stearns....................  ........        X   .........  Mr. Studds.......  ........  ........  .........
Mr. Paxon......................  ........        X   .........  Mr. Pallone......        X   ........  .........
Mr. Gillmor....................  ........  ........  .........  Mr. Brown........        X   ........  .........
Mr. Klug.......................  ........  ........  .........  Mrs. Lincoln.....  ........  ........  .........
Mr. Franks.....................  ........        X   .........  Mr. Gordon.......  ........  ........  .........
Mr. Greenwood..................  ........        X   .........  Ms. Furse........        X   ........  .........
Mr. Crapo......................  ........        X   .........  Mr. Deutsch......        X   ........  .........
Mr. Cox........................  ........        X   .........  Mr. Rush.........        X   ........  .........
Mr. Deal.......................  ........        X   .........  Ms. Eshoo........        X   ........  .........
Mr. Burr.......................  ........        X   .........  Mr. Klink........        X   ........  .........
Mr. Bilbray....................  ........  ........  .........  Mr. Stupak.......        X   ........  .........
Mr. Whitfield..................  ........        X   .........  Mr. Engel........        X   ........  .........
Mr. Ganske.....................        X   ........  .........                                                  
Mr. Frisa......................  ........        X   .........                                                  
Mr. Norwood....................  ........        X   .........                                                  
Mr. White......................  ........        X   .........                                                  
Mr. Coburn.....................        X   ........  .........                                                  
----------------------------------------------------------------------------------------------------------------

                         ROLLCALL VOTE No. 142

    Bill: Committee Print entitled ``Title II, Subtitle A--
Medicaid Restructuring Act of 1996.''
    Amendment: An amendment by Mr. Richardson, No. 14, re: 
continuing current entitlement for Indians.
    Disposition: Not agreed to, by a rollcall vote of 18 yeas 
to 22 nays.

----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present 
----------------------------------------------------------------------------------------------------------------
Mr. Bliley.....................  ........        X   .........  Mr. Dingell......        X   ........  .........
 Mr. Moorhead..................  ........        X   .........  Mr. Waxman.......  ........  ........  .........
Mr. Tauzin.....................  ........        X   .........  Mr. Markey.......  ........  ........  .........
Mr. Fields.....................  ........        X   .........  Mr. Collins......  ........  ........  .........
Mr. Oxley......................  ........        X   .........  Mr. Hall.........  ........        X   .........
Mr. Bilirakis..................  ........        X   .........  Mr. Richardson...        X   ........  .........
Mr. Schaefer...................  ........        X   .........  Mr. Bryant.......        X   ........  .........
Mr. Barton.....................  ........  ........  .........  Mr. Boucher......        X   ........  .........
Mr. Hastert....................  ........        X   .........  Mr. Manton.......        X   ........  .........
Mr. Upton......................  ........        X   .........  Mr. Towns........        X   ........  .........
Mr. Stearns....................  ........        X   .........  Mr. Studds.......  ........  ........  .........
Mr. Paxon......................  ........        X   .........  Mr. Pallone......        X   ........  .........
Mr. Gillmor....................  ........  ........  .........  Mr. Brown........        X   ........  .........
Mr. Klug.......................  ........  ........  .........  Mrs. Lincoln.....  ........  ........  .........
Mr. Franks.....................  ........        X   .........  Mr. Gordon.......        X   ........  .........
Mr. Greenwood..................  ........        X   .........  Ms. Furse........        X   ........  .........
Mr. Crapo......................  ........        X   .........  Mr. Deutsch......        X   ........  .........
Mr. Cox........................        X   ........  .........  Mr. Rush.........        X   ........  .........
Mr. Deal.......................  ........        X   .........  Ms. Eshoo........        X   ........  .........
Mr. Burr.......................  ........        X   .........  Mr. Klink........        X   ........  .........
Mr. Bilbray....................  ........  ........  .........  Mr. Stupak.......        X   ........  .........
Mr. Whitfield..................  ........        X   .........  Mr. Engel........        X   ........  .........
Mr. Ganske.....................  ........        X   .........                                                  
Mr. Frisa......................  ........        X   .........                                                  
Mr. Norwood....................  ........        X   .........                                                  
Mr. White......................  ........        X   .........                                                  
Mr. Coburn.....................        X   ........  .........                                                  
----------------------------------------------------------------------------------------------------------------

                         ROLLCALL VOTE No. 143

    Bill: Committee Print entitled ``Title II, Subtitle A--
Medicaid Restructuring Act of 1996.''
    Amendment: An amendment by Mr. Engel, No. 15, re: nursing 
home choice.
    Disposition: Not agreed to, by a rollcall vote of 15 yeas 
to 24 nays.

----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present 
----------------------------------------------------------------------------------------------------------------
Mr. Bliley.....................  ........        X   .........  Mr. Dingell......        X   ........  .........
 Mr. Moorhead..................  ........        X   .........  Mr. Waxman.......  ........  ........  .........
Mr. Tauzin.....................  ........        X   .........  Mr. Markey.......  ........  ........  .........
Mr. Fields.....................  ........        X   .........  Mr. Collins......  ........  ........  .........
Mr. Oxley......................  ........        X   .........  Mr. Hall.........        X   ........  .........
Mr. Bilirakis..................  ........        X   .........  Mr. Richardson...  ........  ........  .........
Mr. Schaefer...................  ........        X   .........  Mr. Bryant.......  ........  ........  .........
Mr. Barton.....................  ........        X   .........  Mr. Boucher......        X   ........  .........
Mr. Hastert....................  ........        X   .........  Mr. Manton.......        X   ........  .........
Mr. Upton......................  ........        X   .........  Mr. Towns........        X   ........  .........
Mr. Stearns....................  ........        X   .........  Mr. Studds.......  ........  ........  .........
Mr. Paxon......................  ........        X   .........  Mr. Pallone......        X   ........  .........
Mr. Gillmor....................  ........  ........  .........  Mr. Brown........        X   ........  .........
Mr. Klug.......................  ........        X   .........  Mrs. Lincoln.....  ........  ........  .........
Mr. Franks.....................  ........  ........  .........  Mr. Gordon.......        X   ........  .........
Mr. Greenwood..................  ........        X   .........  Ms. Furse........        X   ........  .........
Mr. Crapo......................  ........        X   .........  Mr. Deutsch......        X   ........  .........
Mr. Cox........................  ........        X   .........  Mr. Rush.........        X   ........  .........
Mr. Deal.......................  ........        X   .........  Ms. Eshoo........        X   ........  .........
Mr. Burr.......................  ........        X   .........  Mr. Klink........        X   ........  .........
Mr. Bilbray....................  ........  ........  .........  Mr. Stupak.......        X   ........  .........
Mr. Whitfield..................  ........        X   .........  Mr. Engel........        X   ........  .........
Mr. Ganske.....................  ........        X   .........                                                  
Mr. Frisa......................  ........        X   .........                                                  
Mr. Norwood....................  ........        X   .........                                                  
Mr. White......................  ........        X   .........                                                  
Mr. Coburn.....................  ........        X   .........                                                  
----------------------------------------------------------------------------------------------------------------

                         rollcall vote No. 144

    Bill: Committee Print entitled ``Title II, Subtitle A--
Medicaid Restructuring Act of 1996.''
    Amendment: An amendment by Ms. Furse, No. 16 re: coverage 
for pregnant women and children.
    Disposition: Not agreed to, by a rollcall vote of 14 yeas 
to 25 nays.

----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present 
----------------------------------------------------------------------------------------------------------------
Mr. Bliley.....................  ........        X   .........  Mr. Dingell......        X   ........  .........
Mr. Moorhead...................  ........        X   .........  Mr. Waxman.......  ........  ........  .........
Mr. Tauzin.....................  ........        X   .........  Mr. Markey.......  ........  ........  .........
Mr. Fields.....................  ........        X   .........  Mr. Collins......  ........  ........  .........
Mr. Oxley......................  ........        X   .........  Mr. Hall.........  ........  ........  .........
Mr. Bilirakis..................  ........        X   .........  Mr. Richardson...  ........  ........  .........
Mr. Schaefer...................  ........        X   .........  Mr. Bryant.......  ........  ........  .........
Mr. Barton.....................  ........        X   .........  Mr. Boucher......        X   ........  .........
Mr. Hastert....................  ........        X   .........  Mr. Manton.......        X   ........  .........
Mr. Upton......................  ........        X   .........  Mr. Towns........        X   ........  .........
Mr. Stearns....................  ........        X   .........  Mr. Studds.......  ........  ........  .........
Mr. Paxon......................  ........        X   .........  Mr. Pallone......        X   ........  .........
Mr. Gillmor....................  ........  ........  .........  Mr. Brown........        X   ........  .........
Mr. Klug.......................  ........        X   .........  Mrs. Lincoln.....  ........  ........  .........
Mr. Franks.....................  ........        X   .........  Mr. Gordon.......        X   ........  .........
Mr. Greenwood..................  ........        X   .........  Ms. Furse........        X   ........  .........
Mr. Crapo......................  ........        X   .........  Mr. Deutsch......        X   ........  .........
Mr. Cox........................  ........        X   .........  Mr. Rush.........        X   ........  .........
Mr. Deal.......................  ........        X   .........  Ms. Eshoo........        X   ........  .........
Mr. Burr.......................  ........        X   .........  Mr. Klink........        X   ........  .........
Mr. Bilbray....................  ........  ........  .........  Mr. Stupak.......        X   ........  .........
Mr. Whitfield..................  ........        X   .........  Mr. Engel........        X   ........  .........
Mr. Ganske.....................  ........        X   .........                                                  
Mr. Frisa......................  ........        X   .........                                                  
Mr. Norwood....................  ........        X   .........                                                  
Mr. White......................  ........        X   .........                                                  
Mr. Coburn.....................  ........        X   .........                                                  
----------------------------------------------------------------------------------------------------------------

                         rollcall vote No. 145

    Bill: Committee Print entitled ``Title II, Subtitle A--
Medicaid Restructuring Act of 1996.''
    Amendment: An amendment by Mr. Brown, No. 17 re: breast and 
cervical cancer.
    Disposition: Not agreed to, by a rollcall vote of 17 yeas 
to 23 nays.

----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present 
----------------------------------------------------------------------------------------------------------------
Mr. Bliley.....................  ........        X   .........  Mr. Dingell......        X   ........  .........
Mr. Moorhead...................  ........        X   .........  Mr. Waxman.......  ........  ........  .........
Mr. Tauzin.....................  ........        X   .........  Mr. Markey.......  ........  ........  .........
Mr. Fields.....................  ........        X   .........  Mr. Collins......  ........  ........  .........
Mr. Oxley......................  ........        X   .........  Mr. Hall.........        X   ........  .........
Mr. Bilirakis..................  ........        X   .........  Mr. Richardson...  ........  ........  .........
Mr. Schaefer...................  ........        X   .........  Mr. Bryant.......  ........  ........  .........
Mr. Barton.....................  ........        X   .........  Mr. Boucher......        X   ........  .........
Mr. Hastert....................  ........        X   .........  Mr. Manton.......        X   ........  .........
Mr. Upton......................  ........        X   .........  Mr. Towns........        X   ........  .........
Mr. Stearns....................  ........        X   .........  Mr. Studds.......  ........  ........  .........
Mr. Paxon......................  ........        X   .........  Mr. Pallone......        X   ........  .........
Mr. Gillmor....................  ........  ........  .........  Mr. Brown........        X   ........  .........
Mr. Klug.......................  ........        X   .........  Mrs. Lincoln.....  ........  ........  .........
Mr. Franks.....................        X   ........  .........  Mr. Gordon.......        X   ........  .........
Mr. Greenwood..................  ........        X   .........  Ms. Furse........        X   ........  .........
Mr. Crapo......................  ........        X   .........  Mr. Deutsch......        X   ........  .........
Mr. Cox........................  ........        X   .........  Mr. Rush.........        X   ........  .........
Mr. Deal.......................  ........        X   .........  Ms. Eshoo........        X   ........  .........
Mr. Burr.......................  ........        X   .........  Mr. Klink........        X   ........  .........
Mr. Bilbray....................  ........  ........  .........  Mr. Stupak.......        X   ........  .........
Mr. Whitfield..................  ........        X   .........  Mr. Engel........        X   ........  .........
Mr. Ganske.....................  ........        X   .........                                                  
Mr. Frisa......................        X   ........  .........                                                  
Mr. Norwood....................  ........        X   .........                                                  
Mr. White......................  ........        X   .........                                                  
Mr. Coburn.....................  ........        X   .........                                                  
----------------------------------------------------------------------------------------------------------------

                         rollcall vote No. 146

    Bill: Committee Print entitled ``Title II, Subtitle A--
Medicaid Restructuring Act of 1996.''
    Amendment: An amendment by Mr. Stupak, No. 18, re: 
treatment services for individuals in rural areas.
    Disposition: Not agreed to, by a rollcall vote of 14 yeas 
to 24 nays.

----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present 
----------------------------------------------------------------------------------------------------------------
Mr. Bliley.....................  ........        X   .........  Mr. Dingell......        X   ........  .........
Mr. Moorhead...................  ........        X   .........  Mr. Waxman.......  ........  ........  .........
Mr. Tauzin.....................  ........        X   .........  Mr. Markey.......  ........  ........  .........
Mr. Fields.....................  ........  ........  .........  Mr. Collins......  ........  ........  .........
Mr. Oxley......................  ........        X   .........  Mr. Hall.........  ........  ........  .........
Mr. Bilirakis..................  ........        X   .........  Mr. Richardson...  ........  ........  .........
Mr. Schaefer...................  ........        X   .........  Mr. Bryant.......  ........  ........  .........
Mr. Barton.....................  ........        X   .........  Mr. Boucher......        X   ........  .........
Mr. Hastert....................  ........        X   .........  Mr. Manton.......        X   ........  .........
Mr. Upton......................  ........        X   .........  Mr. Towns........        X   ........  .........
Mr. Stearns....................  ........        X   .........  Mr. Studds.......  ........  ........  .........
Mr. Paxon......................  ........        X   .........  Mr. Pallone......        X   ........  .........
Mr. Gillmor....................  ........  ........  .........  Mr. Brown........        X   ........  .........
Mr. Klug.......................  ........        X   .........  Mrs. Lincoln.....  ........  ........  .........
Mr. Franks.....................  ........        X   .........  Mr. Gordon.......        X   ........  .........
Mr. Greenwood..................  ........        X   .........  Ms. Furse........        X   ........  .........
Mr. Crapo......................  ........        X   .........  Mr. Deutsch......        X   ........  .........
Mr. Cox........................  ........        X   .........  Mr. Rush.........        X   ........  .........
Mr. Deal.......................  ........        X   .........  Ms. Eshoo........        X   ........  .........
Mr. Burr.......................  ........        X   .........  Mr. Klink........        X   ........  .........
Mr. Bilbray....................  ........  ........  .........  Mr. Stupak.......        X   ........  .........
Mr. Whitfield..................  ........        X   .........  Mr. Engel........        X   ........  .........
Mr. Ganske.....................  ........        X   .........                                                  
Mr. Frisa......................  ........        X   .........                                                  
Mr. Norwood....................  ........        X   .........                                                  
Mr. White......................  ........        X   .........                                                  
Mr. Coburn.....................  ........        X   .........                                                  
----------------------------------------------------------------------------------------------------------------

                         rollcall vote No. 147

    Bill: Committee Print entitled ``Title II, Subtitle A--
Medicaid Restructuring Act of 1996.''
    Amendment: An amendment by Ms. Furse, No. 20, re: 
protection for waivered States.
    Disposition: Not agreed to, by a rollcall vote of 14 yeas 
to 25 nays.

----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present 
----------------------------------------------------------------------------------------------------------------
Mr. Bliley.....................  ........        X   .........  Mr. Dingell......        X   ........  .........
Mr. Moorhead...................  ........        X   .........  Mr. Waxman.......  ........  ........  .........
Mr. Tauzin.....................  ........        X   .........  Mr. Markey.......  ........  ........  .........
Mr. Fields.....................  ........  ........  .........  Mr. Collins......  ........  ........  .........
Mr. Oxley......................  ........        X   .........  Mr. Hall.........        X   ........  .........
Mr. Bilirakis..................  ........        X   .........  Mr. Richardson...  ........  ........  .........
Mr. Schaefer...................  ........        X   .........  Mr. Bryant.......  ........  ........  .........
Mr. Barton.....................  ........        X   .........  Mr. Boucher......        X   ........  .........
Mr. Hastert....................  ........        X   .........  Mr. Manton.......        X   ........  .........
Mr. Upton......................  ........        X   .........  Mr. Towns........        X   ........  .........
Mr. Stearns....................  ........        X   .........  Mr. Studds.......  ........  ........  .........
Mr. Paxon......................  ........        X   .........  Mr. Pallone......        X   ........  .........
Mr. Gillmor....................  ........  ........  .........  Mr. Brown........        X   ........  .........
Mr. Klug.......................  ........        X   .........  Mrs. Lincoln.....  ........  ........  .........
Mr. Franks.....................  ........        X   .........  Mr. Gordon.......        X   ........  .........
Mr. Greenwood..................  ........        X   .........  Ms. Furse........        X   ........  .........
Mr. Crapo......................  ........        X   .........  Mr. Deutsch......        X   ........  .........
Mr. Cox........................  ........        X   .........  Mr. Rush.........        X   ........  .........
Mr. Deal.......................  ........        X   .........  Ms. Eshoo........        X   ........  .........
Mr. Burr.......................  ........        X   .........  Mr. Klink........        X   ........  .........
Mr. Bilbray....................  ........  ........  .........  Mr. Stupak.......        X   ........  .........
Mr. Whitfield..................  ........        X   .........  Mr. Engel........        X   ........  .........
Mr. Ganske.....................  ........        X   .........                                                  
Mr. Frisa......................  ........        X   .........                                                  
Mr. Norwood....................  ........        X   .........                                                  
Mr. White......................  ........        X   .........                                                  
Mr. Coburn.....................  ........        X   .........                                                  
----------------------------------------------------------------------------------------------------------------

                         ROLLCALL VOTE No. 148

    Bill: Committee Print entitled ``Title II, Subtitle A--
Medicaid Restructuring Act of 1996.''
    Amendment: An amendment by Mr. Pallone, No. 21, re: payment 
safeguards.
    Disposition: Not agreed to, by a rollcall vote of 16 yeas 
to 24 nays.

----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present 
----------------------------------------------------------------------------------------------------------------
Mr. Bliley.....................  ........        X   .........  Mr. Dingell......        X   ........  .........
Mr. Moorhead...................  ........        X   .........  Mr. Waxman.......  ........  ........  .........
Mr. Tauzin.....................  ........        X   .........  Mr. Markey.......  ........  ........  .........
Mr. Fields.....................  ........        X   .........  Mr. Collins......  ........  ........  .........
Mr. Oxley......................  ........        X   .........  Mr. Hall.........        X   ........  .........
Mr. Bilirakis..................  ........        X   .........  Mr. Richardson...  ........  ........  .........
Mr. Schaefer...................  ........        X   .........  Mr. Bryant.......  ........  ........  .........
Mr. Barton.....................  ........        X   .........  Mr. Boucher......        X   ........  .........
Mr. Hastert....................  ........        X   .........  Mr. Manton.......        X   ........  .........
Mr. Upton......................  ........        X   .........  Mr. Towns........        X   ........  .........
Mr. Stearns....................  ........        X   .........  Mr. Studds.......  ........  ........  .........
Mr. Paxon......................  ........        X   .........  Mr. Pallone......        X   ........  .........
Mr. Gillmor....................  ........  ........  .........  Mr. Brown........        X   ........  .........
Mr. Klug.......................  ........        X   .........  Mrs. Lincoln.....  ........  ........  .........
Mr. Franks.....................  ........        X   .........  Mr. Gordon.......        X   ........  .........
Mr. Greenwood..................  ........        X   .........  Ms. Furse........        X   ........  .........
Mr. Crapo......................  ........        X   .........  Mr. Deutsch......        X   ........  .........
Mr. Cox........................  ........        X   .........  Mr. Rush.........        X   ........  .........
Mr. Deal.......................  ........        X   .........  Ms. Eshoo........        X   ........  .........
Mr. Burr.......................  ........        X   .........  Mr. Klink........        X   ........  .........
Mr. Bilbray....................  ........  ........  .........  Mr. Stupak.......        X   ........  .........
Mr. Whitfield..................        X   ........  .........  Mr. Engel........        X   ........  .........
 Mr. Ganske....................  ........        X   .........                                                  
Mr. Frisa......................  ........        X   .........                                                  
Mr. Norwood....................  ........        X   .........                                                  
Mr. White......................  ........        X   .........                                                  
 Mr. Coburn....................  ........        X   .........                                                  
----------------------------------------------------------------------------------------------------------------

                         ROLLCALL VOTE No. 149

    Bill: Committee Print entitled ``Title II, Subtitle A--
Medicaid Restructuring Act of 1996.''
    Motion: Motion by Mr. Bliley to order the Committee Print 
entitled ``Title II, Subtitle A--Medicaid Restructuring Act of 
1996,'' as amended, transmitted to the Committee on the Budget 
for inclusion in the fiscal year 1997 Welfare and Medicaid 
Reform Budget Reconciliation Act.
    Disposition: Agreed to, by a rollcall vote of 26 yeas to 14 
nays.

----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present 
----------------------------------------------------------------------------------------------------------------
Mr. Bliley.....................        X   ........  .........  Mr. Dingell......  ........        X   .........
Mr. Moorhead...................        X   ........  .........  Mr. Waxman.......  ........  ........  .........
Mr. Tauzin.....................        X   ........  .........  Mr. Markey.......  ........  ........  .........
Mr. Fields.....................        X   ........  .........  Mr. Collins......  ........  ........  .........
Mr. Oxley......................        X   ........  .........  Mr. Hall.........        X   ........  .........
Mr. Bilirakis..................        X   ........  .........  Mr. Richardson...  ........  ........  .........
Mr. Schaefer...................        X   ........  .........  Mr. Bryant.......  ........  ........  .........
Mr. Barton.....................        X   ........  .........  Mr. Boucher......  ........        X   .........
Mr. Hastert....................        X   ........  .........  Mr. Manton.......  ........        X   .........
Mr. Upton......................        X   ........  .........  Mr. Towns........  ........        X   .........
Mr. Stearns....................        X   ........  .........  Mr. Studds.......  ........        X   .........
Mr. Paxon......................        X   ........  .........  Mr. Pallone......  ........        X   .........
Mr. Gillmor....................  ........  ........  .........  Mr. Brown........  ........        X   .........
Mr. Klug.......................        X   ........  .........  Mrs. Lincoln.....  ........  ........  .........
Mr. Franks.....................        X   ........  .........  Mr. Gordon.......  ........        X   .........
Mr. Greenwood..................        X   ........  .........  Ms. Furse........  ........        X   .........
Mr. Crapo......................        X   ........  .........  Mr. Deutsch......  ........        X   .........
Mr. Cox........................        X   ........  .........  Mr. Rush.........  ........        X   .........
Mr. Deal.......................        X   ........  .........  Ms. Eshoo........  ........        X   .........
Mr. Burr.......................        X   ........  .........  Mr. Klink........  ........        X   .........
Mr. Bilbray....................  ........  ........  .........  Mr. Stupak.......  ........        X   .........
Mr. Whitfield..................  ........        X   .........  Mr. Engel........  ........        X   .........
 Mr. Ganske....................        X   ........  .........                                                  
Mr. Frisa......................        X   ........  .........                                                  
Mr. Norwood....................        X   ........  .........                                                  
Mr. White......................        X   ........  .........                                                  
 Mr. Coburn....................        X   ........  .........                                                  
----------------------------------------------------------------------------------------------------------------

                              voice votes

    Bill: Committee Print entitled ``Title II, Subtitle A--
Medicaid Restructuring Act of 1996.''
    Amendment: An amendment by Mr. Deal, No. 1, re: extend to 1 
year the transition period for which a family leaving the 
welfare system would be covered under the Medicaid Program.
    Disposition: Agreed to, as amended, by a voice vote.
    Amendment: An amendment by Mr. Dingell, No. 2, re: provider 
taxes and conflict of interest provisions.
    Disposition: Superseded by the adoption of the Bliley 
substitute amendment to the Dingell amendment.
    Amendment: An amendment by Mr. Whitfield, No. 3, re: phase 
in coverage of children.
    Disposition: Agreed to, by a voice vote.
    Amendment: An amendment by Mr. Upton, No. 5, re: federally 
qualified health centers and rural health clinics funding at 85 
percent of the 1995 level.
    Disposition: Agreed to, by a voice vote.
    Amendment: An amendment by Mr. Burr, No. 7, re: nursing 
home waivers.
    Disposition: Agreed to, by a voice vote.
    Amendment: An amendment by Mr. Bilirakis, No. 9, re: 
technical amendments.
    Disposition: Agreed to, by unanimous consent.
    Amendment: An amendment by Mr. Ganske, No. 11, re: retain 
current protections against State fraud and abuse.
    Disposition: Agreed to, by a voice vote.
    Amendment: An amendment by Mr. Towns, No. 19, re: physician 
assistant services.
    Disposition: Agreed to, by unanimous consent.

                      Committee Oversight Findings

    Pursuant to clause 2(l)(3)(A) of rule XI of the Rules of 
the House of Representatives, the Committee on Commerce held 
oversight and legislative hearings and made findings that are 
reflected in this report.

              Committee on Government Reform and Oversight

    Pursuant to clause 2(l)(3)(D) of rule XI of the Rules of 
the House of Representatives, no oversight findings have been 
submitted to the committee by the Committee on Government 
Reform and Oversight.

               New Budget Authority and Tax Expenditures

    In compliance with clause 2(l)(3)(B) of rule XI of the 
Rules of the House of Representatives, the committee finds that 
Title II, Subtitle A would result in no new or increased budget 
authority or tax expenditures or revenues.

                        Committee Cost Estimate

    The committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 403 of the Congressional Budget Act of 1974.

                  Congressional Budget Office Estimate

    Pursuant to clause 2(l)(3)(C) of rule XI of the Rules of 
the House of Representatives, the following is the cost 
estimate provided by the Congressional Budget Office pursuant 
to section 403 of the Congressional Budget Act of 1974. [See 
consolidated Congressional Budget Office Cost Estimate on page 
1940.]

                     Inflationary Impact Statement

    Pursuant to clause 2(l)(4) of rule XI of the Rules of the 
House of Representatives, the committee finds that the 
legislation would have no inflationary impact.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act are created by this 
legislation.

             Section-by-Section Analysis of the Legislation

        TITLE II, SUBTITLE A--MEDICAID RESTRUCTURING ACT OF 1996

Sec. 2001. Short title of subtitle A

    This section cites this Subtitle as the Medicaid 
Restructuring Act of 1996.

Sec. 2002. Finding; goals for Medicaid restructuring

    This section cites Congress' finding with regard to 
Medicaid, as follows: The Congress finds that the National 
Governors' Association on February 6, 1996, adopted unanimously 
and on a bipartisan basis goals and principles to guide the 
restructuring of the Medicaid program.
    In addition, this Section cites four primary goals for 
restructuring Medicaid:
          1. The basic health care needs of the Nation's most 
        vulnerable populations must be guaranteed;
          2. The growth in health care expenditures must be 
        brought under control;
          3. States must have maximum flexibility in the design 
        and implementation of cost-effective systems of care; 
        and
          4. States must be protected from unanticipated 
        program costs resulting from economic fluctuations in 
        the business cycle, changing demographics, and natural 
        disasters.

Sec. 2003. Restructuring the Medicaid Program

    This section amends the Social Security Act by inserting 
after Title XIV a new Title XV.

TITLE XV--PROGRAM OF MEDICAL ASSISTANCE FOR LOW-INCOME INDIVIDUALS AND 
                                FAMILIES

Sec. 1500. Purpose; State plans

    Section 1500 states that the purpose of this title is to 
enable States to provide medical assistance to low-income 
individuals and families in a more effective, efficient, and 
responsive manner. A State would be required to provide the 
Secretary of Health and Human Services (the Secretary) with a 
plan that sets forth how the State intends to use the funds 
provided to provide medical assistance. An approved plan would 
continue in effect unless and until (1) the State amends the 
plan; (2) the State terminates participation in the program; or 
(3) the Secretary finds substantial noncompliance of the plan 
with the program's requirements.
    The bill specifies that this title constitutes budget 
authority in advance of appropriations Acts; the Federal 
government would be obligated to provide for payment to States. 
However, no State would be eligible for payments under this 
Title for calendar quarters beginning before October 1, 1996.

                    Part A--Eligibility and Benefits

Sec. 1501. Guaranteed eligibility and benefits

    Section 1501 provides for each participating State to 
guarantee coverage and benefits to certain population groups as 
follows:
          A. Pregnant women with income below 133 percent of 
        the poverty line;
          B. Children under age 6 with family income not over 
        133 percent of the poverty line;
          C. Children born after September 30, 1983, who are 
        over 5 years of age, but under 19 years of age, whose 
        family income does not exceed 100 percent of the 
        poverty line;
          D. Disabled individuals. At the option of the State, 
        either individuals who meet the disability definition, 
        and income and resource standards established by the 
        State; or individuals under age 65 who meet the 
        disability, income, and resource standards for payment 
        of Supplemental Security Income (SSI) benefits under 
        Title XVI;
          E. Elderly individuals who meet the income and 
        resource requirements for payment of SSI benefits under 
        Title XVI;
          F. Children who meet the requirements for receipt of 
        foster care payments or adoption assistance under Title 
        IV. A State would have the option of using the 
        requirements in its State plan in effect under Part E 
        of Title IV as of the date of enactment; and
          G. Individuals and members of families who meet the 
        income and resource standards of the State's plan for 
        its Aid to Families with Dependent Children (AFDC) 
        program, or its foster care and adoption assistance 
        program as in effect on March 1, 1996. A State with 
        AFDC standards above the national average could elect 
        to substitute the national average AFDC standards to 
        determine eligibility under this title.
    A guaranteed benefit package (in an amount, duration, and 
scope specified by the State) would include at least the 
following:
          A. Inpatient and outpatient hospital services;
          B. Physicians' surgical and medical services;
          C. Laboratory and x-ray services;
          D. Nursing facility services;
          E. Home health care;
          F. Federally qualified health center services and 
        rural health clinic services;
          G. Immunizations for children;
          H. Prepregnancy family planning services and 
        supplies;
          I. Prenatal care;
          J. Pediatric and family nurse practitioner services 
        and nurse midwife services; and
          K. Early and periodic screening, diagnostic, and 
        treatment (EPSDT) services for individuals under age 
        21.
    Each State would establish criteria for specifying the 
amount, duration, and scope of benefits provided, subject to 
Secretarial approval under sections 1526 and 1527.
    Before the beginning of each Federal fiscal year, each 
State would be required to specify how it would guarantee 
coverage of the disabled. States would elect to use either 
their own definitions of disability or SSI standards. Unless 
changed before the beginning of the following year, the 
election would continue in effect for the subsequent year. A 
State opting to use its own definition would be required to set 
aside funds for disabled individuals; disabled individuals 
would not be taken into account in determining a supplemental 
umbrella allotment (see Section 1511). A State that chose to 
use SSI standards for disability would not be subject to the 
set-aside requirement and would be eligible for a supplemental 
allotment based on an increase in the number of guaranteed and 
optional disabled individuals covered. States (known as 209(b) 
States) that were using more restrictive eligibility standards 
for Medicaid than for SSI on January 1, 1972, could continue to 
apply their standards and use a spend-down process that allows 
applicants to deduct medical expenses from income.
    A State plan must provide that if any family becomes 
ineligible to receive assistance under the State program funded 
under Part A of Title IV as a result of increased earnings from 
employment, or as a result of the collection or increased 
collection of child or spousal support, the family shall be 
eligible for medical assistance under the State plan during the 
immediately succeeding 12-month period for so long as family 
income is less than the poverty line.
    In the case of a State that maintained a link between 
medical assistance eligibility and eligibility under Title IV, 
the State could elect to treat any reference to individuals and 
members of families who meet March 1, 1996, AFDC income and 
resource standards as a reference to members of families 
receiving assistance under Title IV so long as the election 
would not result in increased Federal expenditures. Each State 
would have the option to continue medical assistance to an 
individual who lost Title IV eligibility because of increased 
employment hours or income.
    This section would carry over the current law requirements 
that States cover Medicare premiums, deductibles, and 
coinsurance for ``qualified Medicare beneficiaries'' (QMBs). 
These are aged and disabled Medicare beneficiaries whose income 
is below 100 percent of the Federal poverty level, and whose 
resources do not exceed twice the allowable amount under SSI. 
Also, States would be required to pay Medicare Part B premiums 
for individuals who would be QMBs except that their incomes are 
up to 120 percent of poverty. States would also be required to 
continue to pay Part A premiums, but no other expenses, for 
``qualified disabled and working individuals'' (QDWIs), i.e., 
persons who formerly received Social Security disability 
benefits and hence Medicare and who have lost eligibility for 
both programs, but are permitted to continue to receive 
Medicare in return for payment of the Part A premium. Each 
State would be required to pay premiums for QDWIs who have 
incomes below 200 percent of poverty and resources no greater 
than twice the SSI standard. States could opt to pay health 
maintenance organization (HMO) premiums for Medicare 
beneficiaries. A State could limit payment for Medicare cost-
sharing to its medical assistance rates that would be paid for 
items or services furnished to eligible individuals who are not 
Medicare beneficiaries.

Sec. 1502. Other provisions relating to eligibility and benefits

    Supplemental umbrella allotments under Section 1511 could 
be made for individuals in the following population groups if 
medical assistance for the guaranteed benefit package were made 
available to disabled (under SSI standards) or elderly or 
disabled individuals who are covered under the State plan and 
meet the State's eligibility standards in effect as of May 1, 
1996.
    Each State's plan would have to describe (a) general 
eligibility guidelines for low-income individuals who are not 
covered under subsection (a) or (b) of section 1501 or 
subsection (a) of this section; (b) the amount, duration, and 
scope of covered items and services; (c) the State's delivery 
method including the use of vouchers, fee-for-service, or 
managed care arrangements; (d) qualifications of providers and 
rates of reimbursement for fee-for-service benefits; (e) 
beneficiary cost-sharing including responsibilities of parents 
and spouses of recipients; (f) utilization incentives (if any) 
to encourage appropriate utilization of services; and (g) the 
State's provisions for short-term acute care hospitals and 
children's hospitals with specified low-income utilization 
rates.
    Guaranteed coverage and benefits would be subject to a 
State's eligibility guidelines and Federal limitations on 
payments to the State including provisions relating to 
supplemental allotments. A State could deny benefits available 
to an individual if such benefits were available under Medicare 
or another public or private health care insurance or program. 
In the case of an individual who has moved from another State 
and has resided in the new State for less than 180 days, the 
State could limit benefits to the benefits that would have been 
provided in the previous State of residence.
    Each State that elected to use its own disability standards 
would be required to devote a minimum percentage of total 
program spending to services for low-income persons eligible on 
the basis of disability, including blindness. The specified 
minimum percentage would be 90 percent of the State's fiscal 
year 1995 Medicaid expenditures attributable to the disabled. 
States would calculate the minimum amounts excluding payments 
for emergency services to undocumented aliens.
    During the first 8 quarters in which its Title XV plan is 
in effect, a State would be required to pay federally qualified 
health centers and rural health clinics rates based on 100 
percent of reasonable costs.
    A State would be prohibited from denying or excluding 
coverage on the basis of a preexisting condition. If a State 
contracted with a capitated organization or other entity and 
allowed the organization to impose preexisting condition 
exclusions, the State would be required to provide alternate 
coverage for any covered services denied as a result.
    A State would be prohibited from contracting with a full 
risk capitated health care organization unless the organization 
met solvency standards established by the State for private 
health maintenance organizations. There would be a 3-year 
exemption for full risk organizations currently contracting 
with State Medicaid programs. An organization not at full risk 
would have to meet solvency standards established under the 
State's plan for medical assistance. States may establish other 
solvency standards for capitated health organizations that are 
controlled by one or more federally qualified health centers or 
rural health clinics. For these purposes, ``control'' means the 
possession, whether direct or indirect, of the power to direct 
the management and policies of a capitated health care 
organization through membership, board representation, or an 
ownership interest equal to or greater than 50.1 percent.
    A State must provide that the amount of funds expended 
under Medicaid at rural health clinics and federally qualified 
health centers for eligible low-income individuals for a fiscal 
year is not less that 85 percent of expenditures under Title 
XIX for medical assistance in the State during fiscal year 1995 
which were attributable to expenditures for medical assistance 
for rural health clinic services and federally qualified health 
center services.
    Beginning with fiscal year 2001, a State may provide in its 
State plan for a lower percentage of expenditures than the 
minimum percentage of 85 percent, if the State determines to 
the satisfaction of the Secretary that: (1) the health care 
needs of low-income populations can be reasonably met without 
the set-aside percentage; (2) the performance goals established 
under section 1521 relating to such populations can be 
reasonably be met without the set-aside percentage; and (3) the 
health care needs of low-income individuals can reasonably be 
met without the level of expenditure for such services 
otherwise required under the set-aside.

Sec. 1503. Limitations on premiums and cost-sharing

    For guaranteed populations and optional population groups 
for which umbrella supplemental funding is available, States 
cannot impose any premium, enrollment fee, or similar charge. 
For other populations, the State may impose a premium or 
enrollment fee if it is related to the individual's income and 
does not exceed 2 percent of the individual's gross income.
    For guaranteed populations and optional populations for 
which umbrella supplemental funding is available, States may 
not impose any cost-sharing with respect to items and services 
unless the amount is nominal in amount. An amount is nominal if 
it does not exceed 6 percent of the amount otherwise payable, 
(or, if greater, 50 cents). For other populations, the State 
may not impose any cost-sharing with respect to items and 
services unless such cost sharing is pursuant to a public cost-
sharing schedule and such cost-sharing is not in excess of the 
average cost-sharing imposed in the State for health care plans 
offered by health maintenance organizations.
    For guaranteed populations and optional populations for 
which umbrella funding is available, additional cost-sharing 
could be imposed under the following conditions: (1) to 
discourage the inappropriate use of emergency medical services; 
(2) to encourage the use of primary and preventive care; and 
(3) to participate in employment training programs, drug or 
alcohol abuse treatments, and counseling programs. In these 
cases, the additional cost-sharing may not exceed the average 
cost-sharing imposed for health plans offered by health 
maintenance organizations in the State.
    For other populations, additional cost-sharing could be 
imposed under the previously described conditions. In these 
cases, the additional cost-sharing may not exceed twice the 
average cost-sharing imposed for health plan offered by health 
maintenance organizations in the State. Finally, an individual 
who is eligible for benefits for items and services under the 
State plan may not be billed by the provider for such item or 
service, other than such amount of cost-sharing as is permitted 
under this section.

Sec. 1504. Description of process for developing capitation payment 
        rates

    If a State contracts with HMOs or similar entities on a 
risk basis for a package of services including at least 
inpatient hospital and physician care, the State's plan would 
have to describe (a) the use of actuarial science in projecting 
expenditures and utilization for enrollees and setting 
capitation payment rates; (b) required qualifications for 
participating organizations; and (c) a process for 
disseminating actuarial information to organizations on 
capitation rates, historical fee-for-service cost, and 
utilization. The State would also have to provide for public 
notice and an opportunity to comment on this information before 
each contract year; the notice would have to include the 
amounts of capitation payments made under the Medicaid plan in 
the preceding year and expected to be made in the coming year 
(unless exempt from disclosure under State law).

Sec. 1505. Preventing spousal impoverishment

    Current Medicaid law includes rules known as ``spousal 
impoverishment protection'' for the treatment of income and 
resources of married couples when one of the spouses requires 
nursing home care and the other remains in the community. 
Section 1505 carries these rules over into Title XV to prevent 
impoverishment of the spouse remaining in the community.
    The income eligibility rules would not permit income of 
community spouses to be used in determining the nursing home 
spouse's eligibility unless the income were actually made 
available to the institutionalized spouse. As in current law, 
after eligibility has been determined, States would be required 
to set a minimum monthly maintenance needs allowance for living 
expenses of the community spouse according to statutory limits. 
(Currently, this minimum is $1,254 per month and the maximum is 
$1,918 per month. These amounts may be increased depending on 
the amount of the community spouse's actual shelter costs and 
other factors.)
    From a couple's combined resources, an amount would be 
protected for the community spouse. This amount would be the 
greater of one-half of the couple's resources at the time the 
institutionalized spouse entered the nursing home, up to a 
maximum, or a standard established by the State. (Currently, 
the State resource standard may be no lower than $15,348 and no 
greater than $76,740.)

Sec. 1506. Preventing family impoverishment

    States would be prohibited from requiring an adult child or 
any other individual (other than the applicant or recipient of 
services or the applicant's or recipient's spouse) to 
contribute to the cost of nursing facility or other long-term 
care services. In addition, for such services, States could 
hold financially responsible only the applicant's or 
recipient's spouse, or the parent of a child who is under age 
21 or is disabled. The bill would carry over current law policy 
regarding the imposition of liens on property.

Sec. 1507. State flexibility

    Subject to the coverage and benefit guarantees in section 
1501, including the guarantees for Medicare beneficiaries, each 
State would determine (1) the items and services for which 
medical assistance would be provided, the limits on them, and 
which providers could provide them; (2) differences, if any, in 
the medical assistance that would be provided in geographical 
areas of the State; (3) the extent to which amount, duration, 
or scope of services would be comparable among eligible 
individuals; and (4) the extent to which eligible individuals 
would have freedom of choice of providers. States would be 
permitted to specify coverage determinations in their State 
plans.
    Title XV would not limit a State's ability to contract with 
managed care plans or individual providers on a capitated or 
other basis, to contract for case management or coordination 
services, or to set capitation rates on the basis of 
competition or negotiation.

Sec. 1508. Private rights of action

    This section sets forth a process for administrative and 
judicial remedies under this Act. Each State would be required 
to provide an administrative procedure with a hearing for an 
individual who alleged a denial of eligibility for benefits or 
a denial of benefits guaranteed under the State plan, and for 
judicial review through a private right of action in a State 
court, with a right to petition the Supreme Court for review. 
There would be no State private right of action for a provider 
or health plan.
    The Secretary could bring an action in Federal court 
against a State on behalf of an individual regarding the 
provision of benefits guaranteed under the State plan. However, 
the Secretary could not be sued for failure to bring an action 
against a State or with regard to any action brought against a 
State.

                       Part B--Payments to States

Sec. 1511. Allotment of funds among States

            (a) Allotments
    Beginning with fiscal year 1997, the Secretary would 
compute each State's obligation and outlay allotment under the 
new program. (Obligations are binding agreements to make 
Federal payments, immediately or in the future. Outlays are 
actual payments to liquidate obligations.) For a fiscal year, 
obligations to any State would be limited to the sum of the 
State's base obligation allotment (subsection (c), below), any 
supplemental allotment for emergency health services to certain 
illegal aliens (subsection (f), below), any supplemental per 
beneficiary umbrella allotment (subsection (g), below), and any 
supplemental allotment for Indian health services (subsection 
(h), below). The sum of the base obligation allotments for all 
States could not exceed the aggregate limit on base obligation 
authority for a fiscal year. The aggregate limit would be 
defined as the base pool amount (the statutory amount available 
for medical assistance for each fiscal year) divided by a 
payout adjustment factor; the payout adjustment factor would be 
set at 0.950 for fiscal year 1997, 0.986 for fiscal year 1998, 
and 0.998 for each subsequent fiscal year.
    A State would be permitted to carry over a particular 
year's unspent obligation allotment into the following year 
unless the State received a supplemental umbrella allotment in 
the particular year. No carryover would be permitted of 
supplemental allotments for services to illegal aliens or 
Indian health services. Any carryovers of base obligation 
allotments or changes in allotments due to election of an 
alternative growth formula (subsection (c) below) would not be 
included in the aggregate limit on base obligation authority.
    A State's base obligation amount for fiscal year 1997 would 
be reduced by Title XIX obligations entered into for the State 
for the year. Fiscal year 1997 allotments to a State would not 
affect obligations for any prior fiscal year. The amount 
established to be obligated to a State for a quarter beginning 
during or after fiscal year 1997 would be treated as the amount 
obligated to the State as of the first day of the quarter.
    The Federal government's obligations for payments under 
Title XV would be limited as stated above and subject to 
adjustment based on guaranteed eligibility and benefits only as 
provided under the provisions on supplemental umbrella 
allotments.
    For each of the 50 States and District of Columbia, a 
fiscal year's base obligation allotment would be an amount that 
bears the same ratio to the State's base outlay allotment as 
the ratio of the aggregate limit on base obligation authority 
to the base pool amount for the year. For each of the 
Commonwealths and Territories, a fiscal year's base obligation 
allotment would be the base outlay allotment for the year 
divided by the payout adjustment factor for the year. (These 
configurations are in recognition of the fact that once an 
obligation is entered into, an outlay must be made in the same 
year or in a subsequent year; outlays cannot be limited in the 
same way that obligations can be limited.) For any jurisdiction 
for fiscal year 1997, the obligation amount would be its base 
outlay allotment adjusted for Title XIX obligations for which 
the Federal government has not made payment to the 
jurisdiction, divided by .950 (the payout adjustment factor for 
fiscal year 1997). By November 1, 1996, the Secretary would be 
required to estimate the adjustment amounts for each State and 
publish them in the Federal Register. The total of the amounts 
must equal $12 billion, the amount by which the fiscal year 
1997 pool would be reduced to account for Title XIX 
obligations.
            (b) Base pool of available funds
    Allotments would be made from a fixed pool of available 
funds. For fiscal year 1997, the pool amount would be reduced 
to account for obligations incurred, but for which Federal 
payment has not been made, under Title XIX before the beginning 
of fiscal year 1997. The base pool amount for fiscal year 1997 
would be $103.4 billion (this represents outlay allotments to 
the States and the District of Columbia plus allotments to 
Commonwealths and Territories). The pool would be $108.4 
billion for fiscal year 1998, $113.7 billion for fiscal year 
1999, $119.1 billion for fiscal year 2000, $124.9 billion for 
fiscal year 2001, and $130.9 billion for fiscal year 2002. For 
later years, the pool amount would be the previous year's 
amount increased by the lesser of 4.82 percent or the annual 
percentage increase in the gross domestic product for the 12-
month period ending in June before the start of the year in 
question. The increase in the base pool amount over that for 
the preceding year would be designated the ``national growth 
percentage'' (NGP).
            (c) State base outlay allotments
    For fiscal year 1996, the base outlay allotment for each of 
the 50 States and the District of Columbia would be determined 
in accordance with a statutory table that shows the amount for 
each State. For fiscal year 1997 and later years, the outlay 
allotment would be based on a formula allocation from the fixed 
pool of total medical assistance funds.
    For fiscal year 1997 and later years, each State's base 
outlay allotment from the pool would equal a needs-based amount 
times an adjustment factor, subject to certain floors and 
ceilings. The needs-based amount for a State would be the 
product of its aggregate need and its old Federal medical 
assistance percentage (FMAP) for the previous year. The 
adjustment factor would be a constant multiplier for all States 
used to ensure that floor and ceiling provisions, along with 
the allotments for Commonwealths and Territories, do not cause 
total allotments to exceed the pool amount.
    Beginning in fiscal year 1998, a higher floor would apply 
for certain States based on the one-time increase in the 
State's allotment from fiscal year 1996 to fiscal year 1997. 
For a State whose fiscal year 1996-97 increase was greater than 
95 percent of the fiscal year 1997 NGP, the floor would be 90 
percent of the NGP for the fiscal year.
    A State's outlay allotment for a fiscal year would be 
limited to the product of the State's allotment for the 
preceding year and an applicable percent, generally 126.98 
percent of the NGP for fiscal year 1996 and 133 percent of the 
NGP for subsequent fiscal years. However, for the 10 States 
with the lowest Federal spending per resident-in-poverty rates, 
the applicable percent would be 150 percent of the NGP for a 
fiscal year after fiscal year 1997. The Federal spending per 
resident-in-poverty rate would be the State's outlay allotment 
for the previous fiscal year divided by the average annual 
number of residents in the State with family incomes not over 
the poverty threshold as defined by the Office of Management 
and Budget.
    For Louisiana, the outlay allotment for each of fiscal 
years 1997-2000 would be $2.622 billion except that the amount 
would be increased by $37,048,207 for fiscal year 1997. To 
receive the full amount, the State would have to spend at least 
$355 million in State funds for medical assistance in a fiscal 
year before 2000 plus the percentage of difference between that 
minimum and the amount necessary to qualify for the full 
allotment. The State could apply to the Secretary for the 
allotment otherwise determined for a fiscal year if the State 
notified the Secretary by the preceding March 1 that it would 
be able to spend enough to qualify for the allotment. Nevada's 
allotment would be increased by $90,000,000 for each of fiscal 
years 1997-1999.
    To reduce variations in increases in outlay allotments over 
time, any State or the District of Columbia could elect an 
alternative growth rate formula. A portion of the State's 
allotment for fiscal year 1996 could be deferred and applied to 
increase its allotment for 1 or more subsequent years, so long 
as the total of the increases did not exceed the amount 
deferred previously. (Obligation allotments for the State would 
be adjusted accordingly.)
            (d) State aggregate expenditure need determined
    As stated above, a State's base outlay allotment would be 
based, in part, on its aggregate need. The State's aggregate 
need would be the product of four factors: program need; a 
health care cost index; projected inflation according to a 
consumer price index increase factor; and national average 
spending per resident-in-poverty. Program need would be based 
on a State's mix of population groups--individuals who are over 
age 60 but under 85, over 85, disabled, children, and others--
and for those groups, the number of needy and the average per 
recipient expenditures. The health care cost index would be 
based on the annual average wages for hospital employees in the 
State. National average spending per resident in poverty would 
be computed for fiscal year 1997 using fiscal year 1994 data; 
for fiscal year 1998 and later years, the figure would be 
increased by the NGP.
            (e) Publication of obligation and outlay allotments
    The Secretary would publish preliminary allotments for each 
fiscal year by April 1 of the preceding fiscal year. The 
General Accounting Office (GAO) would report to Congress by May 
15 on the extent to which the allotments comply with statutory 
requirements. The Secretary would publish final allotments by 
July 1, taking into account the GAO analysis and explaining any 
changes from the preliminary allotments; the Secretary could 
not modify allotments thereafter. By August 1, GAO would report 
to Congress on the statutory compliance of the final 
allotments. Deadlines would be extended according to the date 
of enactment of Title XV.
            (f) Supplemental allotment for certain health care services 
                    to certain aliens
    Supplemental allotments for emergency health care services 
to certain aliens would go to the 15 States with the highest 
number of undocumented alien residents of all the States, based 
on estimates prepared by the Immigration and Naturalization 
Service. For an eligible State, the amount of the supplemental 
allotment would be based on the ratio of the number of 
undocumented aliens residing in the State to the number in all 
eligible States. Supplemental pool amounts would be $500 
million for fiscal year 1998, $600 million for fiscal year 
1999, $700 million for fiscal year 2000, $800 million for 
fiscal year 2001, and $900 million for fiscal year 2002.
            (g) Supplemental per beneficiary umbrella allotment for 
                    States with excess growth in certain population 
                    groups
    The bill provides for supplemental umbrella allotments to 
be available to States that experience unanticipated growth in 
certain population groups, e.g., poor pregnant women, poor 
children, poor disabled individuals (only if the State has 
elected to use SSI standards for the disabled), poor elderly 
individuals, certain Medicare beneficiaries, and other poor 
adults who are guaranteed coverage under section 1501. 
Beginning with fiscal year 1997, a State's outlay allotment 
would be increased by an amount based on the excess number of 
individuals, the applicable per beneficiary amount, and the 
State's old Federal medical assistance percentage (i.e., 
current law FMAP). The excess number of individuals would be 
equal to the amount by which the number of individuals in the 
population group for the fiscal year exceeds the number 
anticipated for the State in the fiscal year. The anticipated 
number would be the number of individuals in the group in the 
preceding year increased by a percentage increase factor 
related to the State's percentage growth factor (a measure of 
the increase in State outlays). The percentage increase factor 
for a fiscal year, if greater than zero, would be the 
percentage by which the State's growth factor exceeded the 
percentage increase in the consumer price index for all urban 
consumers during the 12-month period beginning with July before 
the beginning of the fiscal year. The per beneficiary amount 
for a supplemental allotment population group would be based on 
the State's expenditures for the group (excluding expenditures 
for disproportionate share hospital payments and payments for 
Medicare cost-sharing) for which Federal financial 
participation was provided.
    To receive a supplemental umbrella allotment, a State would 
have to provide assurances that it would obligate the full 
amount of the allotment and any carryover from a previous year 
during the fiscal year. Also, the State would be required to 
submit periodic reports to the Secretary on the numbers of 
individuals within each supplemental allotment population 
group, and assure the Secretary that it can collect such data. 
The amount of the supplemental umbrella allotment to a State 
would be reduced for a less-than-anticipated number of 
individuals in a population group.
            (h) Allotment for medical assistance for services provided 
                    in Indian Health Service and related facilities
    This subsection establishes a supplemental allotment pool 
for each of fiscal years 1996 through 2000 to provide medical 
assistance to Indians in eligible States. A State eligible for 
a supplemental allotment under this subsection would be a State 
with at least one Indian Health Service facility. Pool amounts 
increasing from $89 million in fiscal year 1998 to $111 million 
in fiscal year 2002 would be allocated among eligible States on 
the basis of each eligible State's share of Native American 
residents as estimated by the Secretary of the Interior.

Sec. 1512. Payments to States

    Subject to the allotment limits, payments to States for 
medical assistance and medically related services would equal 
the State's spending for the services times the applicable 
FMAP. This would be the greater of the old FMAP, computed as 
under current law, or a new FMAP, (or, if less, the old FMAP 
plus 10 percentage points). The new FMAP would equal 100 
percent minus the product of (a) 0.39 and (b) the ratio of the 
total taxable resources (TTR) ratio for the State to the 
aggregate expenditure need ratio for the State. The TTR ratio 
would be the ratio of the most recent 3-year average of the 
State's TTR, as determined by the Secretary of the Treasury, to 
the sum of the average TTRs for all States (for the District of 
Columbia, a per capita income ratio would be substituted). The 
aggregate expenditure need ratio would be the ratio of the 
State's aggregate expenditure need (as determined in computing 
the State's allotment; see above) to the sum of the aggregate 
expenditure needs for all States. The new FMAP could not be 
less than 40 percent or greater than 83 percent. The FMAP for 
Commonwealths and Territories would be 50 percent. The FMAP for 
services in Indian Health Service facilities (and for specified 
facilities of Indian tribes that are not Indian Health Service 
facilities) would continue to be 100 percent; in addition, no 
State matching would be required for services to unlawful 
aliens. For administrative services, the Federal matching 
percentage would generally be 50 percent, with enhanced 
matching for specified expenditures as under current law. 
Provisions of current Medicaid law relating to periodic 
payments to States and treatment of overpayments and 
disallowances would be retained.
    Payments to States could be adjusted to reflect over-
estimations and under-estimations of supplemental umbrella 
allotments.
    For the Commonwealths and Territories, the old and new 
FMAPs would be 50 percent. Special rules would apply to 
determination of the FMAP for Alaska. The FMAP would be 100 
percent for services provided by an Indian Health Service 
facility, an Indian health program operated by an Indian tribe 
or tribal organization, or an urban Indian health program. No 
State match would be required for emergency services provided 
to unlawful aliens.
    States would be permitted to use local funds to meet the 
non-Federal share of medical assistance up to 40 percent of the 
total non-Federal share. Inter-governmental fund transfers 
would be permitted and public funds could be considered as the 
State's share. The term ``public funds'' would include funds 
appropriated to the State or transferred from public agencies. 
Such funds could be Federal funds authorized by Federal law to 
be used to match other Federal funds.
    The provisions of section 1903(w) regarding provider tax 
and donation restrictions as in effect on June 1, 1996 shall 
apply under this title in the same manner as they applied under 
Title XIX. However, beginning 2 years after the date of 
enactment of this title, the Secretary, taking into account the 
report submitted under section 1513(j)(2) may waive, upon 
application of a State, the requirements of section 1903(w) if 
the Secretary determines that the waiver would not financially 
undermine the program under this title and would not otherwise 
be abusive.
    The section requires the Comptroller General to conduct a 
study to guide the Secretary's determinations. The study shall 
include the methods by which States provide for financing their 
share of expenditures under this title. The study also shall 
include an examination of the use of provider taxes and 
donations, as well as inter-governmental transfers. The report 
is due 2 years after the date of the enactment of this title.

Sec. 1513. Limitation on use of funds; disallowance

    States could use Federal funds only to carry out the 
purposes of Title XV. Federal payments would not be made to a 
State for nonemergency services provided or ordered by 
providers excluded under the Maternal and Child Health or 
Social Services Block Grant or Medicare. Spending for medically 
related services could not exceed 5 percent of total spending 
under the State's plan. Spending for administration could not 
exceed the sum of $20 million plus 10 percent of total 
expenditures. This limit would not apply to spending for 
quality assurance; the development and operation of the 
certification program for nursing facilities and intermediate 
care facilities for the mentally retarded; utilization review 
activities; inspection and oversight of providers; anti-fraud 
activities; independent evaluations; or activities needed to 
comply with reporting requirements. As under current law, 
Federal matching would not be available for services that would 
have been paid for by a private insurer but for a provision of 
the insurance contract making the insurer secondary to medical 
assistance. Payments for medical assistance to nonlawful aliens 
who are otherwise eligible for medical assistance would be 
limited to expenditures for emergency services not related to 
an organ transplant procedure. Payment could not be made for 
prescription drugs unless the manufacturer had entered into a 
master rebate agreement with the Secretary (see below) and was 
in compliance with current requirements section 8126 of Title 
38, including those for a master agreement with the Secretary 
of Veterans Affairs.
    No payment would be made for abortions or for coverage that 
includes abortions except in case of a pregnancy resulting from 
rape or incest, or in case of life endangerment of the mother. 
No payment would be made for coverage of any drug, product, or 
service furnished for assisting with death or suicide.

           Part C--Establishment and Amendment of State Plans

Sec. 1521. Description of strategic objectives and performance goals

    Each State would be required to include in its State plan a 
description of its strategic objectives and performance goals 
for providing health care services, and the manner in which the 
plan is designed to meet the objectives and goals. Goals and 
objectives related to rates of childhood immunizations and 
reductions in infant mortality and morbidity would be required. 
With regard to other objectives and goals, the State could 
consider factors such as priorities for providing assistance to 
low-income populations, priorities for general public health 
and health status for low-income populations, the State's 
financial resources and economic conditions, and the adequacy 
of the State's health care infrastructure. To the extent 
practicable, a State would be required to establish one or more 
performance goals for each strategic objective and describe how 
performance would be measured and compared against goals. 
Strategic objectives would be required to cover a period of at 
least 5 years and would have to be updated and revised at least 
every 3 years. Performance goals would have to be established 
for dates not more than 3 years apart.

Sec. 1522. Annual reports

    By March 31, each State with a State plan in effect for the 
preceding fiscal year would be required to submit a report to 
the Secretary and the Congress on program activities and 
performance for the previous Federal fiscal year. Each report 
would be required to include: a summary of medical assistance 
expenditures and beneficiaries by eligibility category; 
statistics on the utilization of services, including summary 
statistics, for each category of eligible individuals, of items 
and services provided on a fee-for-service basis and a summary 
of data reported by capitated health care organizations; a 
report on achievement of performance goals including actions to 
be taken in case a goal was not met; a summary of program 
evaluations; a description of fraud and abuse and quality 
control activities; and a description of plan administration, 
including a description of the roles and responsibilities of 
State entities responsible for administering the program and 
organization charts for each, a description of any interstate 
compact entered into, and citations to State law and rules 
governing the State's activities under the program.

Sec. 1523. Periodic, independent evaluations

    During fiscal year 1999 and at least every third year 
thereafter, each State would be required to provide an 
evaluation of the operation of its State plan, conducted by an 
entity that is responsible neither for submission of the State 
plan nor for administering any activity under the plan.

Sec. 1524. Description of process for State plan development

    Each State plan would be required to include a description 
of the process under which the plan was developed consistent 
with section 1525.

Sec. 1525. Consultation in State plan development

    Before submitting a plan or amendment to the Secretary, 
each State would be required to provide a public notice with a 
description of the plan or amendment, a means for the public to 
inspect or obtain a copy of the plan or amendment, and an 
opportunity for submittal and consideration of public comments. 
In addition, the State would be required to provide for 
consultation with one or more advisory committees established 
by the State.
    An amendment to the State plan would be an amendment which 
makes a material and substantial change in eligibility or 
benefits.

Sec. 1526. Submittal and approval of State plans

    Each State would be required to submit to the Secretary a 
plan that meets the requirements of Title XV. Unless the 
Secretary found that a plan was in substantial noncompliance 
with the requirements of Title XV, the plan would be approved 
and would be effective beginning with the date specified in the 
plan, but no earlier than 60 days after the plan is submitted.
    States would have the option of submitting the State plans 
that they used under Title XIX (including a plan provided under 
1115 waiver) so long as the plan met Title XV requirements 
including the guarantees under section 1501 and the funding 
provisions under section 1511.

Sec. 1527. Submittal and approval of plan amendments

    A State would be permitted to submit an amendment to its 
State plan at any time. However, any amendment that would 
eliminate or restrict eligibility or benefits under the plan 
could not take effect unless the State certified that there was 
prior or contemporaneous public notice of the change, as 
provided under State law. Nor could it be effective for longer 
than a 60-day period unless the amendment had been transmitted 
to the Secretary before the end of the period. Any other 
amendment could not remain in effect after the end of a State 
fiscal year (or if later, the end of the 90-day period on which 
it becomes effective) unless the amendment had been transmitted 
to the Secretary. These requirements would not apply to an 
amendment submitted on a timely basis in response to an order 
of a court or the Secretary.

Sec. 1528. Process for State withdrawal from program

    A State could rescind its plan and discontinue 
participation in the program at any time after providing 90 
days prior notice to the public and to the Secretary. Such 
discontinuation would not apply to Federal payments to States 
for expenditures made for items and services furnished under 
the plan before the effective date of the discontinuation.
    In the case of withdrawal other than at the end of a 
Federal fiscal year, the Secretary would prorate allotments.

Sec. 1529. Sanctions for noncompliance

    The Secretary would be required to promptly review State 
plans and plan amendments to determine if they substantially 
comply with requirements. If the Secretary determined that a 
plan or plan amendment substantially violated the requirements 
and, within 30 days of submittal, provided written notice to 
the State, the Secretary would be required to issue an order 
specifying that the plan or amendment would not be effective at 
the end of the 30-day period (or 120 days in the case of the 
initial submission of the State plan). Before making such a 
determination, the Secretary would be required to consult with 
the State and consider any clarifications and additional 
information submitted. The Secretary would be required to 
explain and justify any determination inconsistent with any 
previous determination. A plan or amendment would be considered 
to substantially violate a requirement if a provision were 
material and substantial in nature and effect, and were 
inconsistent with an express requirement. Failure to meet a 
strategic objective or performance goal would not be considered 
a substantial violation. A State could appeal the Secretary's 
determination through administrative and judicial procedures.
    Any order to withhold funds from a State would relate only 
to the portions of the State plan or amendment which 
substantially violated a requirement of Title XV. The Secretary 
could suspend withholding of funds during reconsideration or 
administrative and judicial review.
    The Secretary would be required to provide for a process 
under which an individual could complain of a State's failure 
to comply with the requirements of Title XV or the State plan.

Sec. 1530. Secretarial authority

    The Secretary would be permitted to negotiate a 
satisfactory resolution to any dispute concerning the approval 
of a plan or the compliance of a plan. The Secretary would be 
prohibited from delegating authority for approval of plans 
other than to the Administrator of the Health Care Financing 
Administration. The Administrator would be prohibited from 
making any further delegation of such authority. The Secretary 
would be required to administer the program only through a 
prospective formal rulemaking process, including issuing 
notices of proposed rule making, publishing proposed rules or 
modifications to rules in the Federal Register, and soliciting 
public comment.

                 Part D--Program Integrity and Quality

Sec. 1551. Use of audits to achieve fiscal integrity

    Each State plan would be required to provide for an annual 
audit of the State's medical assistance expenditures in 
compliance with Chapter 75 of Title 31, United States Code. If 
the Secretary determined that a State's audit was performed in 
substantial violation of the Chapter 75 provision, the 
Secretary would be permitted to conduct a verification audit or 
require that the State do so. Within 30 days of completion of 
an audit or verification audit, the State would be required to 
provide a copy of the audit report to the Secretary along with 
the State's response to the auditor's recommendation. The State 
also would be required to make the audit report available for 
public inspection.
    Each State would be required to maintain fiscal controls, 
accounting procedures, and data processing safeguards that are 
reasonably necessary to assure the fiscal integrity of the 
State's activities. The State's controls and procedures would 
be required to be generally consistent with generally accepted 
accounting principles as recognized by the Governmental 
Accounting Standards Board or the Comptroller General.
    Each State plan would be required to provide that the 
records of any provider could be audited to ensure that proper 
payments were made under the plan.

Sec. 1552. Fraud Prevention Program

    To detect fraud and abuse by beneficiaries, providers, and 
others, each State plan would be required to have a program 
that includes the following. Certain program contractors and 
providers would be required to disclose ownership and control 
information to State agencies in accordance with sections 1124 
and 1124(a) of the Social Security Act. An entity (other than 
an individual practitioner or a group of practitioners) would 
be required to supply information on ownership, controlling 
interests, and conviction of certain offenses upon request by 
the Secretary or the State agency. A State could exclude a 
provider from participation in the State plan on its own 
initiative, and would be required to exclude any entity when 
required to do so by the Secretary pursuant to section 1128 or 
1128A of the Act. Whenever a provider was terminated, 
suspended, sanctioned, or prohibited from participating under a 
State's plan, the State agency would be required to notify the 
Secretary and, in the case of a physician, the State medical 
licensing board. States would be required to provide 
information and access to information respecting sanctions 
taken against practitioners and providers by State licensing 
authorities.

Sec. 1553. Information concerning sanctions taken by State licensing 
        authorities against health care practitioners and providers

    As under current law, each State would be required to have 
in effect a system for reporting and providing access to 
information for use by the Secretary and other officials 
concerning licensing revocations and other sanctions taken 
against providers and practitioners by State licensing 
authorities, peer review organizations, or accreditation 
entities. A State would be required to report any adverse 
action taken, whether a provider had surrendered a license or 
left the State, any other loss of license, and any negative 
action taken by a reviewing authority. The State would be 
required to provide the Secretary with access to whatever 
documents the Secretary needed to determine the facts and 
circumstances concerning the actions taken. Such information 
would have to be provided under arrangements made by the 
Secretary, in a form the Secretary determined to be 
appropriate, to (1) provide for the Secretary's activities, and 
(2) provide information to other specified authorities in order 
to protect their programs and services.
    The Secretary would be required to safeguard the 
confidentiality of information furnished. However, any party 
authorized to disclose information would be permitted to do so. 
In implementing this section, the Secretary would be required 
to provide for maximum coordination of section 422 of the 
Health Care Quality Improvement Act of 1986.

Sec. 1554. State fraud control units

    Each State would be required to provide for a State fraud 
control unit (FCU) unless the State demonstrated that such a 
unit would not be cost-effective because minimal fraud existed, 
and that beneficiaries would be protected from abuse and 
neglect without such a unit. The FCU would be required to be 
separate and distinct from the State agency responsible for the 
operation and administration of the State's medical assistance 
plan. It would have to be a part of the State Attorney 
General's office or coordinate with that office. It would be 
required to have statewide prosecutorial authority or the 
ability to refer to local prosecutors. The FCU would 
investigate and prosecute violations of State fraud laws, and 
review and prosecute cases involving neglect or abuse of 
beneficiaries in nursing homes and other facilities. It would 
be required to provide for the collection of overpayments it 
had discovered were made to health care providers. It would be 
required to employ auditors, attorneys, investigators, and 
other necessary personnel.

Sec. 1555. Recoveries from third parties and others

    Each State would be required to ascertain the potential 
third party liability for payment of a beneficiary's medical 
claims and, where legal liability exists, seek reimbursement 
from the third party unless it would not be cost-effective to 
do so. States would be required to prohibit a provider from 
refusing to furnish a covered service to a beneficiary because 
of a third party's potential liability for the service, and 
from trying to collect payment from a beneficiary that exceeded 
payment that would be made under the plan. For violation of the 
collection provision, a State could provide for a payment 
reduction up to 3 times the amount sought to be collected.
    A State would be required to prohibit any health insurer, 
when enrolling an individual or when making payments for 
benefits, from taking into account that the individual was 
eligible for or was provided medical assistance under the 
State's plan.
    A State would be required to have laws in effect under 
which the State is considered to have acquired the rights of an 
individual to payments by a party that is liable for the 
individual's health care items and services. Each State would 
be required to provide for mandatory assignment of rights of 
payment for medical support and care to beneficiaries.
    Each State would be required to have in effect laws 
relating to medical child support. Each State would have to 
prohibit an insurer from denying enrollment of a child because 
the child was born out of wedlock, was not claimed as a 
dependent on the parent's Federal income tax return, or did not 
reside with the parent or in the insurer's area. In a case in 
which a parent was required by a court or administrative order 
to provide health coverage for a child, and the parent was 
eligible for family health coverage, State laws would have to 
require the employer and insurer to permit the parent to enroll 
the child upon application by either parent or by the State 
child support agency, and limit the circumstances under which 
the insurer could disenroll such a child. State laws would be 
required to (1) prohibit an insurer from imposing requirements 
on a State agency that has been assigned the rights of an 
individual that are different from requirements applicable to 
an agent of any other covered individual; (2) require an 
insurer, in the case of a child who has health coverage through 
the insurer of a noncustodial parent, to provide information to 
the custodial parent; (3) permit the custodial parent to submit 
claims for covered services without the approval of the 
noncustodial parent, and make payment on claims to the 
custodial parent, the provider, or the State agency; and (4) 
permit the State agency to garnish the employment income of, 
and require withholding amounts from State tax refunds to, any 
person who is required by court or administrative order to 
cover the medical costs of a child who is eligible for medical 
assistance, has received payment from a third party for the 
costs of the child's services, and has not used the payment to 
reimburse the appropriate party.
    A State would be permitted to take appropriate action to 
adjust or recover from an individual or the individual's estate 
any amounts paid as medical assistance under a State plan. Such 
action could include the imposition of liens against the 
property or estate of an individual to the extent consistent 
with policies discussed above in section 1501.

Sec. 1556. Assignment of rights of payment

    As a condition of eligibility for medical assistance under 
a State's plan, an individual would be required to assign to 
the State any rights to medical support and payment for medical 
care from any third party of the individual or any other person 
who is eligible and on whose behalf the individual has the 
legal authority to execute an assignment of such rights. An 
individual would be required to cooperate with the State agency 
in establishing paternity of a child born out of wedlock and in 
obtaining support and payments for the individual and child 
unless the individual was a pregnant woman or was found to have 
good cause for refusing to cooperate as determined by the 
State. An individual would be required to cooperate with the 
State in identifying and providing information to assist the 
State to pursue any liable third party unless the individual 
had good cause for refusing to cooperate as determined by the 
State. The State would be required to provide for entering into 
cooperative arrangements (including financial arrangements) 
with any appropriate agency of any State and with appropriate 
courts and law enforcement officials, to assist the agency or 
agencies administering the State plan with respect to the 
enforcement and collection of rights to support or payment that 
had been assigned.
    Any amount collected by the State under an assignment would 
be retained by the State to reimburse it for payments made on 
behalf of an individual with respect to whom the assignment was 
executed (with appropriate reimbursement to the Federal 
government of its share of the payment). The remainder of such 
amount collected would be paid to the individual.

Sec. 1557. Quality assurance requirements for nursing facilities

    OBRA 87 comprehensively revised Medicaid requirements for 
nursing homes participating in the program. These provisions, 
collectively referred to as nursing home reform law, have three 
major parts: (1) requirements that nursing homes must meet in 
order to be certified to participate in Medicaid, including 
requirements about assessments of residents, available 
services, nurse staffing, nurse aide training, and resident 
rights; (2) provisions establishing an annual survey and 
certification process that State survey agencies must use for 
determining whether nursing homes comply with the requirements 
for participation; and (3) provisions that expand the range of 
sanctions and penalties that States and the Secretary may 
impose against nursing homes found to be out of compliance with 
the requirements for participation.
    With certain exceptions, the proposal would follow current 
law for purposes of establishing requirements for participating 
nursing facilities, the survey process, and the enforcement 
authority available to States and the Secretary. Changes 
include the following. The proposal would repeal provisions 
prohibiting facilities from admitting mentally ill and mentally 
retarded persons who had not first been determined by States as 
needing nursing facility services. States would be required to 
operate preadmission screening programs for mentally ill and 
mentally retarded persons admitted to nursing facilities to 
determine whether they required the level of care provided by 
the facilities, but would not be required to review such 
residents annually for the appropriate level of care needed. 
Residents of facilities would have the right to choose a 
personal attending physician, but States would not be precluded 
from requiring a resident to choose a personal attending 
physician who participates in a managed care network with which 
the State has a contract. Facilities would not be required to 
have written policies and procedures for advance directives. 
Under certain circumstances, States would be able to continue 
payments over a period of not more than 6 months to a 
noncompliant facility, while the facility takes actions to 
correct its deficiencies.

Sec. 1558. Other provisions promoting program integrity

    State agencies responsible for surveying health care 
facilities or organizations would be required to make public, 
in readily available form and place, pertinent findings on the 
compliance of the facility or organization with the 
requirements of law. Persons or institutions providing services 
under the State's plan would be required to keep such records 
(including ledgers, books, and original evidence of costs) as 
are necessary to fully disclose the extent of the services 
provided, and to furnish information about payments claimed, as 
the State may from time to time request.

                       Part E--General Provisions

Sec. 1571. Definitions

    Medical assistance would be defined as including a list of 
services similar to those specified under current law, and, in 
addition, enabling services to increase accessibility to 
primary and preventive services. ``Medicare cost sharing'' 
would include Medicare premiums, coinsurance, and deductibles. 
The definition of EPSDT services would be modified to eliminate 
mandatory coverage of services not covered under a State's 
plan. Family planning services and supplies would be changed to 
read prepregnancy family planning services and supplies. The 
bill would add ``medically related services''--services 
reasonably related to, or in direct support of, the State's 
attainment of one or more of its strategic objectives and 
performance goals.
    ``Eligible low-income individual'' would mean an individual 
who has been determined eligible by the State and whose family 
income does not exceed a percentage specified in the plan that 
is not greater than 275 percent of the poverty line. In 
determining income, States would be permitted to exclude costs 
incurred for medical care. In the case of a child receiving 
payments under a Title IV foster child or adoption assistance 
program, only the child's income would be counted in 
determinations of family income. Title XV would specifically 
continue ``Katie Beckett'' eligibility rules. That is, at the 
option of the State, family income limits would not apply to an 
individual 18 or younger, disabled under SSI, who requires an 
institutional level of care, and can be cared for outside an 
institution.
    Definitions of child, pregnant woman, and poverty line 
would be the same as in current law.
    Rural health clinics and federally qualified health centers 
(FQHCs) would have the same definitions as in Medicare law. 
FQHCs would include outpatient health programs or facilities 
operated by tribes or tribal organizations under the Indian 
Self-Determination Act or by an urban Indian organization 
receiving funds under Title V of the Indian Health Care 
Improvement Act.

Sec. 1572. Treatment of territories

    The Secretary would retain the current law authority, with 
respect to medical assistance programs in jurisdictions other 
than the 50 States and the District of Columbia, to waive or 
modify any requirement other than a waiver of the Federal 
matching share of expenditures, the annual expenditure limit, 
or the requirement that payment may be made only with respect 
to amounts expended for certain care and services.

Sec. 1573. Description of treatment of Indian Health Service facilities

     In a State in which there is at least one Indian Health 
Service facility, the State plan would have to describe (1) 
what provision, if any, has been made for payment of items and 
services furnished by the facilities, and (2) how medical 
assistance will be provided to eligible Indians, as determined 
by the State in consultation with appropriate Indian tribes and 
tribal organizations.

Sec. 1574. Application of certain general provisions

    Sections of Title XI of the Social Security Act that relate 
to fraud and abuse would apply to States under Title XV in the 
same manner as they apply under Title XIX.

Sec. 1575. Optional master drug rebate agreements

    No Federal funds would be available to a State for covered 
outpatient drugs unless the drug's manufacturer had entered 
into a master rebate agreement with the Secretary and is 
complying with the provisions of section 8126 of Title 38 of 
the United States Code, including entering into a master 
agreement with the Secretary of Veterans Affairs.
    States would not be required to participate in the master 
rebate agreement. States would be permitted to enter into 
rebate agreements on their own. States could opt to cover drugs 
for which there was no rebate agreement in effect. If a State 
had a rebate agreement already in effect which provided for a 
minimum rebate equal to or greater than the minimum rebate that 
would be paid under the master agreement, then at the State's 
option the agreement would be considered to meet the 
requirements of the master rebate agreement and the State would 
be considered to have elected to participate in the master 
agreement.
    Under the master agreement, a drug manufacturer would be 
required to provide a rebate to each State not later than 30 
days after receipt of certain information from participating 
States. Not later than 60 days after the end of a rebate 
period, each State participating in the master rebate agreement 
would be required to report to each manufacturer, with a copy 
to the Secretary, information on the drugs for which the State 
made payment during the period. A manufacturer would be 
permitted to audit the State's information. Adjustments would 
be made as necessary.
    Not later than 30 days after the end of a rebate period, 
each manufacturer subject to the master agreement would be 
required to report to the Secretary on the average manufacturer 
price (AMP) and the best price of each of the manufacturer's 
covered products. In addition, within 30 days of entering into 
the agreement, the manufacturer would have to report the AMP as 
of October 1, 1990. The Secretary would be permitted to verify 
the manufacturer's prices and impose a civil monetary penalty 
of up to $10,000 for refusal of the Secretary's request for 
information. For failure to provide timely information, the 
penalty would be $10,000 paid to the Treasury for each day 
information was not provided. After 90 days, the agreement 
would be suspended until the information was reported. For the 
provision of false information, a civil money penalty of up to 
$100,000 could be imposed in addition to other penalties. 
Information disclosed by manufacturers or wholesalers would be 
confidential. The Secretary of Health and Human Services and 
the Secretary of Veterans Affairs, and a State agency or 
contractor would be prohibited from disclosing information in a 
form that discloses the identity of a specific manufacturer or 
wholesaler or their prices, except as the Secretary of Health 
and Human Services determines is necessary or to permit review 
by the Comptroller General and the Congressional Budget Office.
    Unless terminated, a master rebate agreement would be 
effective for at least 1 year and automatically renewed for 1 
year. The Secretary could terminate an agreement for violation 
of requirements or for good cause. A manufacturer could 
terminate participation for any reason. In case of termination, 
another agreement could not be entered into with that 
manufacturer for at least 1 calendar quarter, unless the 
Secretary found good cause for earlier reinstatement.
    The provision provides for a basic rebate and an additional 
rebate. The basic rebate would be based on the number of 
products paid for by the State during the period, and the 
greater of (1) the minimum rebate percentage, or (2) the 
difference between the AMP and the best price. The minimum 
rebate percentage would be 15.1 percent of the AMP. The best 
price would be the lowest price available from the manufacturer 
during the rebate period. The additional rebate amount would be 
based on the amount, if any, by which the AMP of a product 
exceeded the product's AMP as of July 1, 1990, increased by the 
increase in consumer price index for all urban consumers since 
September 1990.
    For certain drugs, including a brand name drug that a 
physician has certified as ``medically necessary,'' the minimum 
rebate amount would be 11 percent of the AMP. The Secretary 
may, upon request of a manufacturer, limit the rebate amounts 
of covered products of which most were dispensed to inpatients 
of nursing facilities.
    A State that participated in the master rebate agreement 
would be permitted to subject a product to prior authorization 
controls that meet specified requirements, exclude or restrict 
coverage of specified drugs or classes of drugs that are 
updated periodically by the Secretary, establish formularies 
that meet specified requirements, and impose minimum and 
maximum quantities on prescriptions and refills.
    A State would be permitted to operate a drug use review 
program under standards established by the State. The Secretary 
would be required to encourage each State to establish a point-
of-sale electronic system for processing claims for covered 
outpatient drugs. The Secretary would be required to submit 
annual reports on the drug rebate program to the Senate 
Committee on Finance, the House Committee on Commerce, and the 
Senate Committee on Aging.
    The requirements of the master rebate agreement would not 
apply to covered outpatient drugs dispensed by a capitated 
health care organization or a hospital or nursing facility that 
uses a formulary. Amounts paid by such entities could be 
included in the determination of best price.
    If the plan of a State participating in the master rebate 
agreement included coverage of drugs that could be sold without 
a prescription (known as over-the-counter drugs), those drugs 
would be regarded as covered outpatient drugs for purposes of 
the State's participation in the agreement.
    Section 1575(a)(4)(b) includes a provision to ensure that 
patients share the benefit of discounted pharmaceutical prices 
made available under section 340B of the Public Health Service 
Act. The provision requires the Office of Drug Pricing (ODP) to 
establish an allowable dispensing fee for such drugs. Such 
dispensing fee should be comparable to those provided for by 
government programs such as Medicaid and State pharmacy 
assistance programs. ODP may also consider an additional 
dispensing fee for blood clotting factors if and where ODP 
finds specific evidence of actual additional handling costs 
necessarily incurred for dispensing blood clotting factor.

Sec. 2004. State election; termination of current program; and 
        transition

    The Medicaid program and Title XIX of the Social Security 
Act would be repealed effective October 1, 1997, except that 
the repeal of the Vaccines for Children's program in section 
1928 of the Act would be effective on enactment. Distribution 
of vaccines purchased and delivered to States before the date 
of enactment would not be affected; however, no vaccine could 
be purchased under section 1928 after that date. Services 
authorized under sections 1929 and 1930, home and community 
care for functionally disabled elderly individuals and 
community supported living arrangements services for the 
developmentally disabled, would be continued through fiscal 
year 1996.
    The Secretary would be prohibited from entering into any 
obligation with a State under Title XIX for expenses incurred 
on or after the earlier of October 1, 1997, or the effective 
date of the State's plan under Title XV. A State that submitted 
claims for payment under Title XIX after the date of enactment 
would be deemed to have accepted the obligation limitation 
including the formula for computing the obligation. Otherwise, 
the Federal government would have no obligation to provide 
payment for Title XIX claims. Effective October 1, 1996, 
neither Title XIX nor Title XV would provide Federal 
entitlement for an individual (including any provider). No 
Federal payments would be made for Title XIX obligations unless 
claims were submitted by the State by April 1, 1997.
    For any payment made under Title XIX before March 1, 1996, 
for which disallowance was not taken or not completed by that 
date, the Secretary would be required to discontinue the 
disallowance proceeding. If the disallowance had been taken as 
of the date of enactment, the Secretary would be required to 
rescind any effected payment reductions and return payments to 
the State.
    No judicial or administrative decision imposed under Title 
XIX would have any application under Title XV. A State could 
seek abrogation or modification of any decisions after the 
State terminated its State plan under Title XIX. A cause of 
action regarding a State's establishment or maintenance of 
payment rates, or claim for reimbursement under Title XIX which 
was not final as of the date of enactment, could be brought or 
continued.
    Prior legislation that (1) voids any determination that 
certain Michigan hospitals are institutions for mental diseases 
and (2) applies to the enrollment mix of medical assistance 
recipients in the Dayton Area Health Plan would be extended to 
October 1, 1997.
    Section 1128(h)(1) of the Social Security Act, regarding 
anti-fraud provisions, would be amended to included Title XV.
    Not later than 90 days after enactment, the Secretary would 
be required to submit technical and conforming amendment to the 
appropriate committees of Congress. Any legal reference to 
Title XIX would be deemed to be a reference to the Title as in 
effect on the day before enactment of Title XV.

Sec. 2005. Integration demonstration project

    The Secretary would be authorized to waive Medicare and 
medical assistance requirements to allow States to conduct 
demonstration projects for individuals dually eligible for both 
programs. A State could restrict the time period during which 
participants could disenroll from capitated programs, but could 
not require a dually eligible individual to participate in a 
project.
    A project could not be approved unless the State showed 
that Federal expenditures would be exceed the expenditures that 
would have been made without the project. Any savings achieved 
under the project could be retained by the State to expand 
eligibility for low-income Medicare beneficiaries who were at 
risk of institutionalization and likely to qualify for Title XV 
benefits if institutionalized. Also, savings could be used to 
expand the scope of services under the project.
    Demonstrations would be limited to 10 projects conducted 
for initial periods or 5 years and extended indefinitely if 
successful. With 90 days notice, the Secretary could terminate 
any demonstration project that was not in substantial 
compliance with the terms of approval. Applications from a 
State, or a coalition of States, would be submitted to the 
Secretary who would be required to approve or deny such 
applications within 90 days of receipt.
    The Secretary would be required to establish quality 
standards for demonstration projects. The standards would have 
to include reporting requirements which contain a description 
of the project; analysis of beneficiary satisfaction; analysis 
of the quality of services; and a description of the savings to 
the Medicare and Title XV programs.

                 TITLE II, SUBTITLE B--OTHER PROVISIONS

                          Purpose and Summary

    Subtitle B of Title II covers three provisions of H.R. 
3507, the Personal Responsibility and Work Opportunity Act of 
1996, which fall within the jurisdiction of the Committee on 
Commerce, particularly as they relate to the eligibility of 
aliens to Federal benefits and the Low Income Home Energy 
Assistance Program.
    Part 1 of Subtitle B, Involvement of Commerce Committee in 
Federal Government Position Reductions, provides that the 
Committee on Commerce should be consulted regarding reductions 
in Federal Government positions when the reduction applies to a 
program within the jurisdiction of the Commerce Committee.
    Part 2 of Subtitle B, Restricting Public Benefits for 
Aliens, addresses the eligibility of aliens for Federal public 
benefits.
    Part 3 of Subtitle B, Energy Assistance, amends provisions 
of the Low Income Home Energy Assistance Act relating to 
determination of the excess shelter expense deduction under the 
Food Stamp Act.

                  Background and Need for Legislation

    This legislation seeks to further streamline operation of 
this Nation's public assistance programs, while maintaining 
appropriate mechanisms for oversight of program modifications. 
Part 1 of Subtitle B provides authority for the Commerce 
Committee to be fully informed regarding agency or department 
actions taken to comply with legislative programs.
    Part 2 of Subtitle B addresses the eligibility of aliens 
for Federal public benefits. Specifically, Part 2 includes the 
following provisions which would:
          (A) deny to illegal immigrants all Federal benefits 
        except: (1) emergency medical services under Medicaid; 
        (2) immunizations; and (3) testing and treatment for 
        communicable diseases that the Secretary of Health and 
        Human Services has determined is needed to protect the 
        public health;
          (B) authorize States to determine the eligibility of 
        legal aliens to Medicaid. Refugees, asylees, those who 
        have lived and worked in the U.S. for 10 years, and 
        veterans could not be denied coverage;
          (C) provide that legal aliens could not be eligible 
        for any Federal means-tested program for 5 years after 
        entry into the U.S. except for refugees, asylees, and 
        veterans; and
          (D) require that the Attorney General, in 
        consultation with the Secretary of Health and Human 
        Services, to promulgate regulations to provide for a 
        verification system to carry out these provisions.
    The provisions contained in Part 2 are similar to 
provisions included in H.R. 4, the Personal Responsibility and 
Work Opportunity Act of 1995, which passed the House in the 
First Session and was vetoed by the President.
    Part 3 of Subtitle B amends provisions of the Low Income 
Home Energy Assistance Act relating to determination of the 
excess shelter expense deduction under the Food Stamp Act. 
Under current law, section 2605(f) of the Low Income Home 
Energy Assistance Act of 1981 excludes home energy assistance 
benefits provided directly or indirectly to eligible households 
from the definition of income and resources for purposes of any 
Federal or State law. Paragraph (1) establishes the general 
rule, and paragraph (2) clarifies that Low Income Home Energy 
Assistance Program (LIHEAP) benefits received indirectly are 
treated as if they were received directly, ensuring they are 
excluded from the definition of income and resources for 
purposes of other Federal and State laws, and provides that 
LIHEAP benefits are to be treated as expended for purposes of 
determining excess shelter expense deductions under the Food 
Stamp Act of 1977.
    The key phrase in section 2605(f) is ``[n]otwithstanding 
any other provision of law unless enacted in express limitation 
of this paragraph'' LIHEAP benefits--whether received by 
households directly or indirectly--are excluded from income and 
resources for purposes of ``any Federal or State law.'' The 
list of laws following the phrase ``any Federal or State law'' 
is illustrative only. For example, if the Food Stamp Act of 
1977 were amended to provide that all LIHEAP benefits are 
considered income and resources for purposes of the Food Stamp 
Act, that would override the reference to ``food stamps'' in 
paragraph (1), since it would be an ``express limitation of 
this paragraph.''
    Both paragraph (2) and the phrase ``provided directly to, 
or indirectly for the benefit of'' in paragraph (1) in current 
law accomplish the same end: ensuring that benefits received 
indirectly by households are encompassed by the exclusion in 
section 2605(f). Otherwise, LIHEAP benefits received indirectly 
would be considered income and resources for purposes of other 
Federal and State laws, and benefits received by households 
under other programs could be reduced. Indirect receipt of 
benefits is important in the context of LIHEAP because in many 
cases the benefits are paid directly to the utility on behalf 
of the household.
    In addition to providing that indirect benefits are 
included in the general rule in paragraph (1), paragraph (2) 
treats LIHEAP benefits received as expended for purposes of 
determining excess shelter expense deductions under section 
5(e) of the Food Stamp Act of 1977. Under section 5(e), the 
excess shelter expense deduction is only available to 
households whose expenditures exceed 50 percent of their 
monthly income. By treating all LIHEAP benefits as household 
expenditures, paragraph (2) could increase eligibility for the 
excess shelter expense deduction if households actually receive 
monthly LIHEAP benefits in excess of monthly energy costs. In 
that case the excess LIHEAP benefit would be treated as a 
household shelter expenditure and increase expenditures 
compared to costs. Under section 5(e) of the Food Stamp Act of 
1977, only households whose expenditures exceed 50 percent of 
household income are eligible for the excess shelter expense 
deduction.
    Part 3 of Subtitle B amends current law to provide that 
home energy assistance payments or allowances shall be 
considered income for purposes of the Food Stamp Program.

                                Hearings

    The full Committee on Commerce held a hearing on H.R. 3507, 
the Personal Responsibility and Work Opportunity Act of 1996, 
on June 11, 1996. Testifying before the committee on June 11, 
1996, were: The Honorable Donna E. Shalala, Secretary, 
Department of Health and Human Services; Stephen McConnell, 
Ph.D., Chairman, Long Term Care Campaign; Mr Joseph Teefey, 
Deputy Director, Department of Medical Assistance Services, 
Commonwealth of Virginia; and Mr. Gail L. Warden, President and 
CEO, Henry Ford Health System, representing the American 
Hospital Association.

                        Committee Consideration

    On June 13, 1996, the committee met in open session and 
ordered Subtitle B of Title II, Provisions, transmitted to the 
House Committee on the Budget for inclusion in the fiscal year 
1997 Welfare and Medicaid Reform Budget Reconciliation Act, as 
amended, by a voice vote.

                             Rollcall Votes

    Clause 2(l)(2)(B) of rule XI of the Rules of the House of 
Representatives, requires the committee to list the recorded 
votes on the motion to report and on amendments thereto. There 
were no recorded votes taken in connection with ordering 
Subtitle B of Title II transmitted or in adopting the 
amendment. The voice votes taken in committee are as follows:

                              VOICE VOTES

    Bill: Committee Print entitled ``Subtitle II, Subtitle B--
Other Provisions.''
    Amendment: Amendment by Mr. Pallone re: strike the 
provision relating to the Low Income Home Energy Assistance 
Program.
    Disposition: Agreed to, as amended by unanimous consent, by 
a voice vote.
    Motion: Motion by Mr. Bliley to order the Committee Print 
entitled ``Subtitle II, Subtitle B, Other Provisions,'' as 
amended, transmitted to the Committee on the Budget for 
inclusion in the fiscal year 1997 Welfare and Medicaid Reform 
Budget Reconciliation Act.
    Disposition: Agreed to, by a voice vote.

                      Committee Oversight Findings

    Pursuant to clause 2(l)(3)(A) of rule XI of the Rules of 
the House of Representatives, the committee held a legislative 
hearing and made findings that are reflected in this report.

              Committee on Government Reform and Oversight

    Pursuant to clause 2(l)(3)(D) of rule XI of the Rules of 
the House of Representatives, no oversight findings have been 
submitted to the committee by the Committee on Government 
Reform and Oversight.

               New Budget Authority and Tax Expenditures

    In compliance with clause 2(l)(3)(B) of rule XI of the 
Rules of the House of Representatives, the committee finds that 
Subtitle B of Title II would result in no new or increased 
budget authority or tax expenditures or revenues.

                        Committee Cost Estimate

    The committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 403 of the Congressional Budget Act of 1974.

                  Congressional Budget Office Estimate

    Pursuant to clause 2(l)(3)(C) of rule XI of the Rules of 
the House of Representatives, the following is the cost 
estimate provided by the Congressional Budget Office pursuant 
to section 403 of the Congressional Budget Act of 1974. [See 
consolidated Congressional Budget Office Cost Estimate on page 
1940.]

                     Inflationary Impact Statement

    Pursuant to clause 2(l)(4) of rule XI of the Rules of the 
House of Representatives, the committee finds that the Subtitle 
B of Title II would have no inflationary impact.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act are created by this 
legislation.

             Section-by-Section Analysis of the Legislation

                 TITLE II, SUBTITLE B--OTHER PROVISIONS

    Part 1--Involvement of Commerce Committee in Federal Government 
                          Position Reductions

Section 2101. Involvement of Commerce Committee in Federal Government 
        position reductions

     Section 2101 provides that reports made by the Secretaries 
of certain agencies regarding determinations on reductions in 
Federal Government positions with respect to programs within 
the committee's jurisdiction shall be provided to the Committee 
on Commerce.

             Part 2--Restricting Public Benefits for Aliens

              Subpart A--Eligibility for Federal Benefits

Section 2211. Aliens who are not qualified aliens ineligible for 
        Federal benefits

    Section 2211 provides that an alien who is not a qualified 
alien is not eligible for any Federal public benefit with the 
following exceptions: (1) emergency medical services under 
Title XIX or Title XV; (2) public health assistance for 
immunizations; and (3) public health assistance for testing and 
treatment of a serious communicable disease to prevent the 
spread of the disease.
    A Federal public benefit is defined as: (a) any grant, 
contract, loan, professional license, or commercial license 
provided by an agency, or appropriated by funds, of the United 
States and (b) any retirement, welfare, health, disability, or 
other similar benefit for which payments or assistance are 
provided by an agency of the U.S. (But only if such grant, 
contract, loan, license or program is within the jurisdiction 
of the Committee on Commerce). Such term does not apply to a 
contract, professional license, or commercial license for a 
nonimmigrant whose visa is related to employment or with 
respect to benefits for a work authorized nonimmigrant or an 
alien lawfully admitted for permanent residence who qualified 
for such benefits, and for whom the U.S. under a reciprocal 
treaty agreement is required to pay benefits.

Section 2212. Limited eligibility of qualified aliens for medical 
        assistance

    Section 2212 provides that a State is authorized to 
determine the eligibility of an alien who is a qualified alien 
for the program of medical assistance under Title XV or Title 
XIX of the Social Security Act. Time-limited exceptions are 
provided as follows: (1) an alien admitted as a refugee until 5 
years after the date of the alien's entry; (2) an alien granted 
asylum until 5 years after the date of grant of asylum; and (3) 
an alien whose deportation is being withheld until 5 years 
after such withholding.
    This section also provides that certain qualified aliens 
shall be eligible for benefits. Included are certain permanent 
resident aliens such as an alien who is lawfully admitted for 
permanent residence, who has worked 40 qualifying quarters of 
coverage (as defined under Title II of the Social Security Act 
or as defined in this section), and who did not receive any 
Federal means-tested public benefit during any such quarter.
    ``Qualifying quarters of coverage'' include: (1) all 
qualifying quarters of coverage worked by the parent of an 
alien (while the alien was under age 18) if the parent did not 
receive any Federal means-tested public benefit; and (2) all 
qualifying quarters worked by the spouse of an alien during 
marriage if the spouse did not receive any Federal means-tested 
public benefit, and the alien is still married to the spouse or 
the spouse is deceased. Also eligible is an alien who is 
lawfully residing in a State and is a veteran, on active duty 
in the Armed Forces, or is the spouse or unmarried dependent 
child of the veteran or active duty personnel.
    Further, this section provides that an alien who is 
lawfully residing in the U.S. and is receiving benefits on the 
date of enactment of this Act shall continue to be eligible to 
receive such benefits until January 1, 1997.

Section 2213. Five-year limited eligibility of qualified alien for 
        Federal means-tested public benefit

    Section 2213 provides that an alien who enters the U.S. as 
a qualified alien on or after the date of enactment of this Act 
is not eligible for any Federal means-tested public benefit for 
a period of 5 years beginning on the date of the alien's entry 
into the U.S. An exception is provided for the following: (1) 
an alien who is admitted as a refugee; (2) an alien who is 
granted asylum; (3) an alien whose deportation is being 
withheld; and (4) an alien who is lawfully residing in the U.S. 
and is a veteran, on active duty, or the spouse or dependent 
child of such an individual.
    A Federal means-tested public benefit is defined as a 
Federal public benefit (defined above) in which the eligibility 
for benefits or the amount of benefits are determined on the 
basis of income, resources, or financial need. Such term does 
not include: (1) emergency medical assistance under Title XV or 
XIX of the Social Security Act; (2) public assistance for 
immunizations; or (3) public health assistance for testing or 
treatment of a serious communicable disease to prevent the 
spread of the disease.

Section 2214. Notification

    Section 2214 requires each Federal agency that administers 
any of the programs under sections 2211, 2212, or 2213 to post 
information and provide general notification to the public and 
to program recipients of the changes regarding eligibility.

                     Subpart B--General Provisions

Section 2221. Definitions

    Section 2221 provides that the terms in this part have the 
meaning given such terms in section 101(a) of the Immigration 
and Nationality Act, unless otherwise provided.
    This section defines a qualified alien as an alien who, at 
the time the alien applies for, receives, or attempts to 
receive a Federal public benefit, is: (1) an alien lawfully 
admitted for permanent residence; (2) an alien who is granted 
asylum; (3) a refugee; (4) an alien who is paroled into the 
U.S. for a period of at least 1 year; (5) an alien whose 
deportation is being withheld; or (6) an alien who is granted 
conditional entry.

Section 2222. Verification of eligibility for Federal public benefits

    Section 2222 provides that not later than 18 months after 
enactment, the Attorney General, after consultation with the 
Secretary of Health and Human Services, shall promulgate 
regulations requiring verification that a person applying for a 
Federal public benefit is a qualified alien and is eligible to 
receive such benefit. Not later than 24 months after the date 
the regulations are adopted, a State that administers such a 
program shall have in effect a verification system that 
complies with the regulations. The section also authorizes such 
sums as necessary to carry out this section.

                       Part 3--Energy Assistance

Section 2131. Energy assistance

    Section 2131 makes two changes to section 2605(f) of the 
Low Income Home Energy Assistance Act of 1981. First, the 
amendment strikes paragraph (2) from section 2605(f). Second, 
the amendment makes a conforming change to paragraph (1), to 
reflect the deletion of paragraph (2).
    The administration, in its recommendations on welfare, also 
proposed deleting paragraph (2) of section 2605(f) and the 
conforming change to paragraph (1). In addition, the 
administration proposed striking the reference to ``food 
stamps'' in paragraph (1).
    Since both paragraphs (1) and (2) provide that indirect 
LIHEAP benefits are excluded from the definition of income and 
resources under other Federal and State laws, deletion of 
paragraph (2) will not change the treatment of indirect LIHEAP 
benefits for purposes of the Food Stamp Act.
    Deletion of paragraph (2) would have an impact on 
determination of the excess shelter expense deduction under 
section 5(e) of the Food Stamp Act of 1977 only if LIHEAP 
recipients receive pro-rated LIHEAP benefits in excess of home 
energy costs. According to the Energy Assistance Division at 
the U.S. Department of Health and Human Services, no LIHEAP 
recipients receive benefits in excess of home energy costs, so 
as a practical matter deletion of paragraph (2) would have no 
impact on LIHEAP benefits.

   Changes in Existing Law Made by Title II of the Bill, as Reported

    In compliance with clause 3 of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italics, existing law in which no change 
is proposed is shown in roman):

                          SOCIAL SECURITY ACT

          * * * * * * *

              TITLE XI--GENERAL PROVISIONS AND PEER REVIEW

          * * * * * * *

                       Part A--General Provisions

          * * * * * * *

  exclusion of certain individuals and entities from participation in 
                medicare and state health care programs

    Sec. 1128. (a) * * *
          * * * * * * *
    (h) Definition of State Health Care Program.--For purposes 
of this section and sections 1128A and 1128B, the term ``State 
health care program'' means--
            (1) a State plan approved under title XIX or a 
        State plan under title XV,
          * * * * * * *

TITLE XV--PROGRAM OF MEDICAL ASSISTANCE FOR LOW-INCOME INDIVIDUALS AND 
                                FAMILIES

                        table of contents of title

Sec. 1500. Purpose; State plans.

                    Part A--Eligibility and Benefits

Sec. 1501. Guaranteed eligibility and benefits.
Sec. 1502. Other provisions relating to eligibility and benefits.
Sec. 1503. Limitations on premiums and cost-sharing.
Sec. 1504. Description of process for developing capitation payment 
          rates.
Sec. 1505. Preventing spousal impoverishment.
Sec. 1506. Preventing family impoverishment.
Sec. 1507. State flexibility.
Sec. 1508. Private rights of action.

                       Part B--Payments to States

Sec. 1511. Allotment of funds among States.
Sec. 1512. Payments to States.
Sec. 1513. Limitation on use of funds; disallowance.

           Part C--Establishment and Amendment of State Plans

Sec. 1521. Description of strategic objectives and performance goals.
Sec. 1522. Annual reports.
Sec. 1523. Periodic, independent evaluations.
Sec. 1524. Description of process for State plan development.
Sec. 1525. Consultation in State plan development.
Sec. 1526. Submittal and approval of State plans.
Sec. 1527. Submittal and approval of plan amendments.
Sec. 1528. Process for State withdrawal from program.
Sec. 1529. Sanctions for noncompliance.
Sec. 1530. Secretarial authority.

                  Part D--Program Integrity and Quality

Sec. 1551. Use of audits to achieve fiscal integrity.
Sec. 1552. Fraud prevention program.
Sec. 1553. Information concerning sanctions taken by State licensing 
          authorities against health care practitioners and providers.
Sec. 1554. State fraud control units.
Sec. 1555. Recoveries from third parties and others.
Sec. 1556. Assignment of rights of payment.
Sec. 1557. Quality assurance requirements for nursing facilities.
Sec. 1558. Other provisions promoting program integrity.

                       Part E--General Provisions

Sec. 1571. Definitions.
Sec. 1572. Treatment of territories.
Sec. 1573. Description of treatment of Indian Health Service facilities.
Sec. 1574. Application of certain general provisions.
Sec. 1575. Optional master drug rebate agreements.

SEC. 1500. PURPOSE; STATE PLANS.

    (a) Purpose.--The purpose of this title is to provide funds 
to States to enable them to provide medical assistance to low-
income individuals and families in a more effective, efficient, 
and responsive manner.
    (b) State Plan Required.--A State is not eligible for 
payment under section 1512 unless the State has submitted to 
the Secretary under part C a plan (in this title referred to as 
a ``State plan'') that--
            (1) sets forth how the State intends to use the 
        funds provided under this title to provide medical 
        assistance to needy individuals and families consistent 
        with the provisions of this title, and
            (2) is approved under such part.
    (c) Continued Approval.--An approved State plan shall 
continue in effect unless and until--
            (1) the State amends the plan under section 1527,
            (2) the State terminates participation under this 
        title under section 1528, or
            (3) the Secretary finds substantial noncompliance 
        of the plan with the requirements of this title under 
        section 1529.
    (d) State Entitlement.--This title constitutes budget 
authority in advance of appropriations Acts and represents the 
obligation of the Federal Government to provide for the payment 
to States of amounts provided under part B.
    (e) Effective Date.--No State is eligible for payments 
under section 1512 for any calendar quarter beginning before 
October 1, 1996.

                    Part A--Eligibility and Benefits

SEC. 1501. GUARANTEED ELIGIBILITY AND BENEFITS.

    (a) Guaranteed Coverage and Benefits for Certain 
Populations.--
            (1) In general.--Each State plan shall provide for 
        making medical assistance available for benefits in the 
        guaranteed benefit package (as defined in paragraph 
        (2)) to individuals within each of the following 
        categories:
                    (A) Poor pregnant women.--Pregnant women 
                with family income below 133 percent of the 
                poverty line.
                    (B) Children under 6.--Children under 6 
                years of age whose family income does not 
                exceed 133 percent of the poverty line.
                    (C) Children 6 to 19.--Children born after 
                September 30, 1983, who are over 5 years of 
                age, but under 19 years of age, whose family 
                income does not exceed 100 percent of the 
                poverty line.
                    (D) Disabled individuals.--As elected by 
                the State under paragraph (3), either--
                            (i) disabled individuals (as 
                        defined by the State) who meet the 
                        income and resource standards 
                        established under the plan, or
                            (ii) individuals who are under 65 
                        years of age, who are disabled (as 
                        determined under section 1614(a)(3)), 
                        and who, using the methodology provided 
                        for determining eligibility for payment 
                        of supplemental security income 
                        benefits under title XVI, meet the 
                        income and resource standards for 
                        payment of such benefits.
                    (E) Poor elderly individuals.--Subject to 
                paragraph (4), elderly individuals who, using 
                the methodology provided for determining 
                eligibility for payment of supplemental 
                security income benefits under title XVI, meet 
                the income and resource standards for payment 
                of such benefits.
                    (F) Children receiving foster care or 
                adoption assistance.--Subject to paragraph (5), 
                children who meet the requirements for receipt 
                of foster care maintenance payments or adoption 
                assistance under title IV.
                    (G) Certain low-income families.--Subject 
                to paragraph (6), individuals and members of 
                families who meet current AFDC income and 
                resource standards (as defined in paragraph 
                (6)(C)) in the State, determined using the 
                methodology for determining eligibility for aid 
                under the State plan under part A or part E of 
                title IV (as in effect as of May 1, 1996).
            (2) Guaranteed benefits package.--In this title, 
        the term ``guaranteed benefit package'' means benefits 
        (in an amount, duration, and scope specified under the 
        State plan) for at least the following categories of 
        services:
                    (A) Inpatient and outpatient hospital 
                services.
                    (B) Physicians'' surgical and medical 
                services.
                    (C) Laboratory and x-ray services.
                    (D) Nursing facility services.
                    (E) Home health care.
                    (F) Federally-qualified health center 
                services and rural health clinic services.
                    (G) Immunizations for children (in 
                accordance with a schedule for immunizations 
                established by the Health Department of the 
                State in consultation with the State agency 
                responsible for the administration of the 
                plan).
                    (H) Prepregnancy family planning services 
                and supplies (as specified by the State).
                    (I) Prenatal care.
                    (J) Physician assistance services, 
                pediatric and family nurse practitioner 
                services and nurse midwife services.
                    (K) EPSDT services (as defined in section 
                1571(e)) for individuals who are under the age 
                of 21.
        A State may establish criteria, including utilization 
        review, and cost effectiveness of alternative covered 
        services, for purposes of specifying the amount, 
        duration, and scope of benefits provided under the 
        State plan.
            (3) State election of disabled individuals to be 
        guaranteed coverage.--
                    (A) In general.--Each State shall specify 
                in its State plan, before the beginning of each 
                Federal fiscal year, whether to guarantee 
                coverage of disabled individuals under the plan 
                under the option described in paragraph 
                (1)(D)(i) or under the option described in 
                paragraph (1)(D)(ii). An election under this 
                paragraph shall continue in effect for the 
                subsequent fiscal year unless the election is 
                changed before the beginning of the fiscal 
                year.
                    (B) Consequences of election.--
                            (i) State flexible definition 
                        option.--If a State elects the option 
                        described in paragraph (1)(D)(i) for a 
                        fiscal year--
                                    (I) the State plan must 
                                provide under section 1502(c) 
                                for a set aside of funds for 
                                disabled individuals for the 
                                fiscal year, and
                                    (II) disabled individuals 
                                are not taken into account in 
                                determining a State 
                                supplemental umbrella allotment 
                                under section 1511(g).
                            (ii) SSI definition option.--If a 
                        State elects the option described in 
                        paragraph (1)(D)(ii) for a fiscal 
                        year--
                                    (I) section 1502(c) shall 
                                not apply for the fiscal year, 
                                and
                                    (II) the State is eligible 
                                for an increase under section 
                                1511(g) in its outlay allotment 
                                for the fiscal year based on an 
                                increase in the number of 
                                guaranteed and optional 
                                disabled individuals covered 
                                under the plan.
            (4) Continuation of special eligibility standards 
        for section 209(b) states.--
                    (A) In general.--A section 209(b) State (as 
                defined in subparagraph (B)) may elect to treat 
                any reference in paragraph (1)(E) to ``elderly 
                individuals who meet the income and resource 
                standards for the payment of supplemental 
                security income benefits under title XVI'' as a 
                reference to ``elderly individuals who meet the 
                standards described in the first sentence of 
                section 1902(f) (as in effect on the day before 
                the date of the enactment of this title)''.
                    (B) Section 209(b) state defined.--In 
                subparagraph (A), the term ``section 209(b) 
                State'' means a State to which section 1902(f) 
                applied as of the day before the date of the 
                enactment of this title.
            (5) Option for application of current requirements 
        for certain children.--A State may elect to apply 
        paragraph (1)(F) by treating any reference to 
        ``requirements for receipt of foster care maintenance 
        payments or adoption assistance under title IV'' as a 
        reference to ``requirements for receipt of foster care 
        maintenance payments or adoption assistance as in 
        effect under its State plan under part E of title IV as 
        of the date of the enactment of this title''.
            (6) Special rules for low-income families.--
                    (A) Optional use of lower national average 
                standards.--In the case of a State in which the 
                current AFDC income and resource standards are 
                above the national average of the current AFDC 
                income and resource standards for the 50 States 
                and the District of Columbia, as determined and 
                published by the Secretary, in applying 
                paragraph (1)(G), the State may elect to 
                substitute such national average income and 
                resource standards for the current AFDC income 
                and resource standards in that State.
                    (B) Optional eligibility based on link to 
                other assistance.--
                            (i) In general.--Subject to clause 
                        (ii), in the case of a State which 
                        maintains a link between eligibility 
                        for aid or assistance under one or more 
                        parts of title IV and eligibility for 
                        medical assistance under this title, in 
                        applying paragraph (1)(G), the State 
                        may elect to treat any reference in 
                        such paragraph to ``individuals and 
                        members of families who meet current 
                        AFDC income and resource standards in 
                        the State'' as a reference to ``members 
                        of families who are receiving 
                        assistance under a State plan under 
                        part A or E of title IV''.
                            (ii) Limitation on election.--A 
                        State may only make the election 
                        described in clause (i) if, and so long 
                        as, the State demonstrates to the 
                        satisfaction of the Secretary that the 
                        such election does not result in 
                        Federal expenditures under this title 
                        (taking into account any supplemental 
                        amounts provided pursuant to section 
                        1511(g)) that are greater than the 
                        Federal expenditures that would have 
                        been made under this title if the State 
                        had not made such election.
                    (C) Current afdc income and resource 
                standards defined.--In this subsection, the 
                term ``current AFDC income and resource 
                standards'' means, with respect to a State, the 
                income and resource standards for the payment 
                of assistance under the State plan under part A 
                or E of title IV (as in effect as of May 1, 
                1996).
                    (D) Medical assistance required to be 
                provided for 1 year for families becoming 
                ineligible for family assistance due to 
                increased earnings from employment or 
                collection of child support.--A State plan 
                shall provide that if any family becomes 
                ineligible to receive assistance under the 
                State program funded under part A of title IV 
                as a result of increased earnings from 
                employment or as a result of the collection or 
                increased collection of child or spousal 
                support, or a combination thereof, having 
                received such assistance in at least 3 of the 6 
                months immediately preceding the month in which 
                such ineligibility begins, the family shall be 
                eligible for medical assistance under the State 
                plan during the immediately succeeding 12-month 
                period for so long as family income is less 
                than the poverty line, and that the family will 
                be appropriately notified of such eligibility.
            (7) Methodology.--Family income shall be determined 
        for purposes of subparagraphs (A) through (C) of 
        paragraph (1) in the same manner (and using the same 
        methodology) as income was determined under the State 
        medicaid plan under section 1902(l) (as in effect as of 
        May 1, 1996).
    (b) Guaranteed Coverage of Medicare Premiums and Cost-
Sharing for Certain Medicare Beneficiaries.--
            (1) Guaranteed eligibility.--Each State plan shall 
        provide--
                    (A) for making medical assistance available 
                for required medicare cost-sharing (as defined 
                in paragraph (2)) for qualified medicare 
                beneficiaries described in paragraph (3);
                    (B) for making medical assistance available 
                for payment of medicare premiums under section 
                1818A for qualified disabled and working 
                individuals described in paragraph (4); and
                    (C) for making medical assistance available 
                for payment of medicare premiums under section 
                1839 for individuals who would be qualified 
                medicare beneficiaries described in paragraph 
                (3) but for the fact that their income exceeds 
                100 percent, but is less than 120 percent, of 
                the poverty line for a family of the size 
                involved.
            (2) Required medicare cost-sharing defined.--
                    (A) In general.--In this subsection, the 
                term ``required medicare cost-sharing'' means, 
                with respect to an individual, costs incurred 
                for medicare cost-sharing described in 
                paragraphs (1) through (4) of section 1571(c) 
                (and, at the option of a State, section 
                1571(c)(5)) without regard to whether the costs 
                incurred were for items and services for which 
                medical assistance is otherwise available under 
                the plan.
                    (B) Limitation on obligation for certain 
                cost-sharing assistance.--In the case of 
                medical assistance furnished under this title 
                for medicare cost-sharing described in 
                paragraph (2), (3), or (4) of section 1571(c) 
                relating to the furnishing of a service or item 
                to a medicare beneficiary, nothing in this 
                title shall be construed as preventing a State 
                plan--
                            (i) from limiting the assistance to 
                        the amount (if any) by which (I) the 
                        amount that is otherwise payable under 
                        the plan for the item or service for 
                        eligible individuals who are not such 
                        medicare beneficiaries (or, if payments 
                        for such items or services are made on 
                        a capitated basis, an amount reasonably 
                        related or derived from such capitated 
                        payment amount), exceeds (II) the 
                        amount of payment (if any) made under 
                        title XVIII with respect to the service 
                        or item, and
                            (ii) if the amount described in 
                        subclause (II) of clause (i) exceeds 
                        the amount described in subclause (I) 
                        of such clause, from treating the 
                        amount paid under title XVIII as 
                        payment in full and not requiring or 
                        providing for any additional medical 
                        assistance under this subsection.
            (3) Qualified medicare beneficiary defined.--In 
        this subsection, the term ``qualified medicare 
        beneficiary'' means an individual--
                    (A) who is entitled to hospital insurance 
                benefits under part A of title XVIII (including 
                an individual entitled to such benefits 
                pursuant to an enrollment under section 1818, 
                but not including an individual entitled to 
                such benefits only pursuant to an enrollment 
                under section 1818A),
                    (B) whose income (as determined under 
                section 1612 for purposes of the supplemental 
                security income program, except as provided in 
                paragraph (5)) does not exceed 100 percent of 
                the poverty line applicable to a family of the 
                size involved, and
                    (C) whose resources (as determined under 
                section 1613 for purposes of the supplemental 
                security income program) do not exceed twice 
                the maximum amount of resources that an 
                individual may have and obtain benefits under 
                that program.
            (4) Qualified disabled and working individual 
        defined.--In this subsection, the term ``qualified 
        disabled and working individual'' means an individual--
                    (A) who is entitled to enroll for hospital 
                insurance benefits under part A of title XVIII 
                under section 1818A;
                    (B) whose income (as determined under 
                section 1612 for purposes of the supplemental 
                security income program) does not exceed 200 
                percent of the poverty line applicable to a 
                family of the size involved;
                    (C) whose resources (as determined under 
                section 1613 for purposes of the supplemental 
                security income program) do not exceed twice 
                the maximum amount of resources that an 
                individual or a couple (in the case of an 
                individual with a spouse) may have and obtain 
                benefits for supplemental security income 
                benefits under title XVI; and
                    (D) who is not otherwise eligible for 
                medical assistance under this title.
            (5) Income determinations.--
                    (A) In general.--In determining under this 
                subsection the income of an individual who is 
                entitled to monthly insurance benefits under 
                title II for a transition month (as defined in 
                subparagraph (B)) in a year, such income shall 
                not include any amounts attributable to an 
                increase in the level of monthly insurance 
                benefits payable under such title which have 
                occurred pursuant to section 215(i) for 
                benefits payable for months beginning with 
                December of the previous year.
                    (B) Transition month defined.--For purposes 
                of subparagraph (A), the term ``transition 
                month'' means each month in a year through the 
                month following the month in which the annual 
                revision of the poverty line is published.

SEC. 1502. OTHER PROVISIONS RELATING TO ELIGIBILITY AND BENEFITS.

    (a) Optional Eligibility Groups for Which Umbrella 
Supplemental Funding Is Available.--In addition to the 
guaranteed coverage categories described in section 1501(a)(1), 
the following are population groups with respect to which 
supplemental allotments may be made under section 1511(g), but 
only if (for the individual involved) medical assistance is 
made available under the State plan for the guaranteed benefit 
package (as defined in section 1501(a)(2)):
            (1) Certain disabled individuals.--Individuals (not 
        described in section 1501(a)(1)(D)(ii)) who are 
        disabled (as determined under section 1614(a)(3)), 
        covered under the State plan, and meet the eligibility 
        standards for coverage under the State medicaid plan 
        under title XIX (as in effect as of May 1, 1996).
            (2) Certain elderly individuals.--Elderly 
        individuals (not described in section 1501(a)(1)(E)) 
        who are covered under the State plan and who meet the 
        eligibility standards for coverage under the State 
        medicaid plan under title XIX (as in effect as of May 
        1, 1996) other than solely on the basis of being an 
        individual described in section 1902(a)(10)(E).
Eligibility under paragraphs (1) and (2) shall be determined 
using the methodologies that are not more restrictive than the 
methodologies used under the State medicaid plan as in effect 
as of May 1, 1996.
    (b) Other Provisions Relating to General Eligibility and 
Benefits.--
            (1) General description.--Each State plan shall 
        include a description (consistent with this title) of 
        the following:
                    (A) Eligibility guidelines for the non-
                guaranteed, non-umbrella population.--The 
                general eligibility guidelines of the plan for 
                eligible low-income individuals who are not 
                covered under subsection (a) or (b) of section 
                1501 or under subsection (a) of this section.
                    (B) Scope of assistance.--The amount, 
                duration, and scope of health care services and 
                items covered under the plan, including 
                differences among different eligible population 
                groups.
                    (C) Delivery method.--The State's approach 
                to delivery of medical assistance, including a 
                general description of--
                            (i) the use (or intended use) of 
                        vouchers, fee-for-service, or managed 
                        care arrangements (such as capitated 
                        health care plans, case management, and 
                        case coordination); and
                            (ii) utilization control systems.
                    (D) Fee-for-service benefits.--To the 
                extent that medical assistance is furnished on 
                a fee-for-service basis--
                            (i) how the State determines the 
                        qualifications of health care providers 
                        eligible to provide such assistance; 
                        and
                            (ii) how the State determines rates 
                        of reimbursement for providing such 
                        assistance.
                    (E) Cost-sharing.--Beneficiary cost-sharing 
                (if any), including variations in such cost-
                sharing by population group or type of service 
                and financial responsibilities of parents of 
                recipients who are children and the spouses of 
                recipients.
                    (F) Utilization incentives.--Incentives or 
                requirements (if any) to encourage the 
                appropriate utilization of services.
                    (G) Support for certain hospitals.--
                            (i) In general.--With respect to 
                        hospitals described in clause (ii) 
                        located in the State, a description of 
                        the extent to which provisions are made 
                        for expenditures for items and services 
                        furnished by such hospitals and covered 
                        under the State plan.
                            (ii) Hospitals described.--A 
                        hospital described in this clause is a 
                        short-term acute care general hospital 
                        or a children's hospital, the low-
                        income utilization rate of which 
                        exceeds the lesser of--
                                    (I) 1 standard deviation 
                                above the mean low-income 
                                utilization rate for hospitals 
                                receiving payments under a 
                                State plan in the State in 
                                which such hospital is located, 
                                or
                                    (II) 1\1/4\ standard 
                                deviations above the mean low-
                                income utilization rate for 
                                hospitals receiving such 
                                payments in the 50 States and 
                                the District of Columbia.
                            (iii) Low-income utilization 
                        rate.--For purposes of clause (ii), the 
                        term ``low-income utilization rate'' 
                        means, for a hospital, a fraction 
                        (expressed as a percentage), the 
                        numerator of which is the hospital's 
                        number of patient days attributable to 
                        patients who (for such days) were 
                        eligible for medical assistance under a 
                        State plan or were uninsured in a 
                        period, and the denominator of which is 
                        the total number of the hospital's 
                        patient days in that period.
                            (iv) Patient days.--For purposes of 
                        clause (iii), the term ``patient day'' 
                        includes each day in which--
                                    (I) an individual, 
                                including a newborn, is an 
                                inpatient in the hospital, 
                                whether or not the individual 
                                is in a specialized ward and 
                                whether or not the individual 
                                remains in the hospital for 
                                lack of suitable placement 
                                elsewhere; or
                                    (II) an individual makes 
                                one or more outpatient visits 
                                to the hospital.
            (2) Conditions for guarantees and relation of 
        guarantees to financing.--The guarantees of States 
        required under subsection (a) and (b) of section 1501 
        and subsection (d) of this section are subject to the 
        limitations on payment to the States provided under 
        section 1511 (including the provisions of subsection 
        (g), relating to supplemental umbrella allotments). In 
        submitting a plan under this title, a State voluntarily 
        agrees to accept payment amounts provided under such 
        section as full payment from the Federal Government in 
        return for providing for the benefits (including the 
        guaranteed benefit package) under this title.
            (3) Secondary payment.--Nothing in this section 
        shall be construed as preventing a State from denying 
        benefits to an individual to the extent such benefits 
        are available to the individual under the medicare 
        program under title XVIII or under another public or 
        private health care insurance program.
            (4) Residency requirement.--In the case of an 
        individual who--
                    (A) is described in section 1501(a)(1),
                    (B) changed residence from another State to 
                the State, and
                    (C) has resided in the State for less than 
                180 days,
        the State may limit the benefits provided to such 
        individual in the guaranteed benefits package under 
        paragraph (2) of section 1501(a) to the amount, 
        duration, and scope of benefits available under the 
        State plan of the individual's previous State of 
        residence.
    (c) Set-Aside of Funds for the Low-Income Disabled.--
            (1) In general.--In the case of a State that has 
        elected the option described in section 
        1501(a)(1)(D)(i) for a fiscal year, the State plan 
        shall provide that the percentage of funds expended 
        under the plan for medical assistance for eligible low-
        income individuals who are not elderly individuals and 
        who are eligible for such assistance on the basis of a 
        disability, including being blind, for the fiscal year 
        is not less than the minimum low-income-disabled 
        percentage specified in paragraph (2) of the total 
        funds expended under the plan for medical assistance 
        for the fiscal year.
            (2) Minimum low-income-disabled percentage.--The 
        minimum low-income-disabled percentage specified in 
        this paragraph for a State is equal to 90 percent of 
        the percentage of the expenditures under title XIX for 
        medical assistance in the State during Federal fiscal 
        year 1995 which was attributable to expenditures for 
        medical assistance for benefits furnished to 
        individuals whose coverage (at such time) was on a 
        basis directly related to disability status, including 
        being blind.
            (3) Computations.--States shall calculate the 
        minimum percentage under paragraph (2) in a reasonable 
        manner consistent with reports submitted to the 
        Secretary for the fiscal years involved and medical 
        assistance attributable to the exception provided under 
        section 1903(v)(2) shall not be considered to be 
        expenditures for medical assistance.
    (d) Transitional Payment for Federally-Qualified Health 
Center Services and Rural Health Clinic Services.--Each State 
plan shall provide that, for Federally-qualified health center 
services and rural health clinic services (as defined in 
section 1571(f)) furnished under the plan during the first 8 
calendar quarters in which the plan is in effect and for which 
payment is made under the plan, payment shall be made for such 
services at a rate based on 100 percent of costs which are 
reasonable and related to the cost of furnishing such services 
or based on such other tests of reasonableness, as the 
Secretary prescribes in regulations under section 1833(a)(3), 
or, in the case of services to which those regulations do not 
apply, on the same methodology used under section 1833(a)(3).
    (e) Preexisting Condition Exclusions.--Notwithstanding any 
other provision of this title--
            (1) a State plan may not deny or exclude coverage 
        of any item or service for an eligible individual for 
        benefits under the State plan for such item or service 
        on the basis of a preexisting condition; and
            (2) if a State contracts or makes other 
        arrangements (through the eligible individual or 
        through another entity) with a capitated health care 
        organization, insurer, or other entity, for the 
        provision of items or services to eligible individuals 
        under the State plan and the State permits such 
        organization, insurer, or other entity to exclude 
        coverage of a covered item or service on the basis of a 
        preexisting condition, the State shall provide, through 
        its State plan, for such coverage (through direct 
        payment or otherwise) for any such covered item or 
        service denied or excluded on the basis of a 
        preexisting condition.
    (f) Solvency Standards for Capitated Health Care 
Organizations.--
            (1) In general.--A State may not contract with a 
        capitated health care organization, as defined in 
        section 1504(c)(1), for the provision of medical 
        assistance under a State plan under which the 
        organization is--
                    (A) at full financial risk, as defined by 
                the State, unless the organization meets 
                solvency standards established by the State for 
                private health maintenance organizations or is 
                described in paragraph (4) and meets other 
                solvency standards established by the State, or
                    (B) is not at such risk, unless the 
                organization meets solvency standards that are 
                established under the State plan.
            (2) Treatment of public entities.--Paragraph (1) 
        shall not apply to an organization that is a public 
        entity or if the solvency of such organization is 
        guaranteed by the State.
            (3) Transition.--In the case of a capitated health 
        care organization that as of the date of the enactment 
        of this title has entered into a contract with a State 
        for the provision of medical assistance under title XIX 
        under which the organization assumes full financial 
        risk and is receiving capitation payments, paragraph 
        (1) shall not apply to such organization until 3 years 
        after the date of the enactment of this title.
            (4) Organization described.--An organization 
        described in this paragraph is a capitated health 
        organization which is (or is controlled by) one or more 
        Federally-qualified health centers or rural health 
        clinics. For purposes of this paragraph, the term 
        ``control'' means the possession, whether direct or 
        indirect, of the power to direct or cause the direction 
        of the management and policies of a capitated health 
        organization through membership, board representation, 
        or an ownership interest equal to or greater than 50.1 
        percent.
    (g) For Services Provided at Federally-Qualified Health 
Centers and Rural Health Clinics.--
            (1) In general.--Subject to paragraph (2), a State 
        plan shall provide that the amount of funds expended 
        under the plan for medical assistance for services 
        provided at rural health clinics (as defined in section 
        1861(aa)(2)) and Federally-qualified health centers (as 
        defined in section 1861(aa)(4)), for eligible low-
        income individuals for a fiscal year is not less than 
        85 percent of the average annual expenditures under 
        title XIX for medical assistance in the State during 
        Federal fiscal year 1995 which were attributable to 
        expenditures for medical assistance for rural health 
        clinic services and Federally-qualified health center 
        services (as defined in section 1905(l)).
            (2) Alternative minimum set-asides.--
                    (A) In general.--Beginning with fiscal year 
                2001, a State may provide in its State plan 
                (through an amendment to the plan) for a lower 
                percentage of expenditures than the minimum 
                percentages specified in paragraph (1) if the 
                State determines to the satisfaction of the 
                Secretary that--
                            (i) the health care needs of the 
                        low-income populations described in 
                        such paragraph who are eligible for 
                        medical assistance under the plan 
                        during the previous fiscal year can be 
                        reasonably met without the expenditure 
                        of the percentage otherwise required to 
                        be expended;
                            (ii) the performance goals 
                        established under section 1521 relating 
                        to such population can reasonably be 
                        met with the expenditure of such lower 
                        percentage of funds; and
                            (iii) the health care needs of 
                        eligible low-income individuals 
                        residing in medically underserved rural 
                        areas can reasonably be met without the 
                        level of expenditure for such services 
                        otherwise required and the performance 
                        goals established under section 1521 
                        relating to such individuals can 
                        reasonably be met with such lower level 
                        of expenditures.
                    (B) Period of application.--The 
                determination under subparagraph (A) shall be 
                made for such period as a State may request, 
                but may not be made for a period of more than 3 
                consecutive Federal fiscal years (beginning 
                with the first fiscal year for which the lower 
                percentage is sought). A new determination must 
                be made under such subparagraph for any 
                subsequent period.

SEC. 1503. LIMITATIONS ON PREMIUMS AND COST-SHARING.

    (a) Limitation on Premiums.--
            (1) None for guaranteed population.--The State plan 
        shall not impose any enrollment fee, premium, or 
        similar charge for eligible individuals described in 
        subsection (a) or (b) of section 1501 or section 
        1502(a).
            (2) Income-related for other populations.--The 
        State plan may impose an enrollment fee, premium, or 
        similar charge for eligible individuals not described 
        in paragraph (1) if it is related to the individual's 
        income (and does not exceed 2 percent of the 
        individual's gross income).
    (b) Limitation on Cost-Sharing.--Subject to subsection 
(c)--
            (1) Guaranteed populations.--With respect to 
        individuals covered under subsection (a) or (b) of 
        section 1501 or section 1502, the State may not impose 
        any cost-sharing with respect to items and services 
        unless the amount is nominal in amount. For purposes of 
        this paragraph, an amount is nominal if it does not 
        exceed 6 percent of the amount otherwise payable, or, 
        if greater, 50 cents.
            (2) Other populations.--With respect to individuals 
        not described in paragraph (1), the State may not 
        impose any cost-sharing with respect to items and 
        services unless such cost sharing is pursuant to a 
        public cost-sharing schedule and such cost-sharing is 
        not in excess of the average, nominal cost-sharing 
        imposed in the State for health plans offered by health 
        maintenance organizations (and similar organizations) 
        for the same or similar items and services, as 
        determined by the State insurance commissioner.
    (c) Certain Cost-Sharing Permitted.--
            (1) In general.--Subject to paragraph (2), a State 
        may--
                    (A) impose additional cost-sharing to 
                discourage the inappropriate use of emergency 
                medical services delivered through a hospital 
                emergency room, a medical transportation 
                provider, or otherwise;
                    (B) impose additional cost-sharing 
                differentially in order to encourage the use of 
                primary and preventive care and discourage 
                unnecessary or less economical care; and
                    (C) from imposing additional cost-sharing 
                based on the failure to participate in 
                employment training programs, drug or alcohol 
                abuse treatment, counseling programs, or other 
                programs promoting personal responsibility.
            (2) Limitation.--The additional cost-sharing 
        imposed under paragraph (1) may not result--
                    (A) in the case of an individual described 
                in subsection (b)(1), in aggregate cost-sharing 
                that exceeds the maximum amount of cost-sharing 
                that may be imposed under subsection (b)(2) 
                (determined without regard to this subsection); 
                or
                    (B) in the case of an individual described 
                in subsection (b)(2), in aggregate cost-sharing 
                that exceeds twice the maximum amount of cost-
                sharing that may be imposed under such 
                subsection (determined without regard to this 
                subsection).
    (d) Prohibition on Balance Billing.--An individual eligible 
for benefits for items and services under the State plan who is 
furnished such an items or service by a provider under the plan 
may not be billed by the provider for such item or service, 
other than such amount of cost-sharing as is permitted with 
this section.
    (e) Cost-Sharing Defined.--In this section, the term 
``cost-sharing'' includes copayments, deductibles, coinsurance, 
and other charges for the provision of health care services.

SEC. 1504. DESCRIPTION OF PROCESS FOR DEVELOPING CAPITATION PAYMENT 
                    RATES.

    (a) In General.--If a State contracts (or intends to 
contract) with a capitated health care organization (as defined 
in subsection (c)(1)) under which the State makes a capitation 
payment (as defined in subsection (c)(2)) to the organization 
for providing or arranging for the provision of medical 
assistance under the State plan for a group of services, 
including at least inpatient hospital services and physicians' 
services, the plan shall include a description of the 
following:
            (1) Use of actuarial science.--The extent and 
        manner in which the State uses actuarial science--
                    (A) to analyze and project health care 
                expenditures and utilization for individuals 
                enrolled (or to be enrolled) in such an 
                organization under the State plan, and
                    (B) to develop capitation payment rates, 
                including a brief description of the general 
                methodologies used by actuaries.
            (2) Qualifications of organizations.--The general 
        qualifications, including any accreditation, State 
        licensure or certification, or provider network 
        standards, required by the State for participation of 
        capitated health care organizations under the State 
        plan.
            (3) Dissemination process.--The process used by the 
        State under subsection (b) and otherwise to 
        disseminate, before entering into contracts with 
        capitated health care organizations, actuarial 
        information to such organizations on the historical 
        fee-for-service costs (or, if not available, other 
        recent financial data associated with providing covered 
        services) and utilization associated with individuals 
        described in paragraph (1)(A).
    (b) Public Notice and Comment.--Under the State plan the 
State shall provide a process for providing, before the 
beginning of each contract year--
            (1) public notice of--
                    (A) the amounts of the capitation payments 
                (if any) made under the plan for the contract 
                year preceding the public notice, and
                    (B)(i) the information described under 
                subsection (a)(1) with respect to capitation 
                payments for the contract year involved, or 
                (ii) amounts of the capitation payments the 
                State expects to make for the contract year 
                involved,
        unless such information is designated as proprietary 
        and not subject to public disclosure under State law, 
        and
            (2) an opportunity for receiving public comment on 
        the amounts and information for which notice is 
        provided under paragraph (1).
    (c) Definitions.--In this title:
            (1) Capitated health care organization.--The term 
        ``capitated health care organization'' means a health 
        maintenance organization or any other entity (including 
        a health insuring organization, managed care 
        organization, prepaid health plan, integrated service 
        network, or similar entity) which under State law is 
        permitted to accept capitation payments for providing 
        (or arranging for the provision of) a group of items 
        and services including at least inpatient hospital 
        services and physicians' services.
            (2) Capitation payment.--The term ``capitation 
        payment'' means, with respect to payment, payment on a 
        prepaid capitation basis or any other risk basis to an 
        entity for the entity's provision (or arranging for the 
        provision) of a group of items and services, including 
        at least inpatient hospital services and physicians' 
        services.

SEC. 1505. PREVENTING SPOUSAL IMPOVERISHMENT.

    (a) Special Treatment for Institutionalized Spouses.--
            (1) Supersedes other provisions.--In determining 
        the eligibility for medical assistance of an 
        institutionalized spouse (as defined in subsection 
        (h)(1)), the provisions of this section supersede any 
        other provision of this title which is inconsistent 
        with them.
            (2) Does not affect certain determinations.--Except 
        as this section specifically provides, this section 
        does not apply to--
                    (A) the determination of what constitutes 
                income or resources, or
                    (B) the methodology and standards for 
                determining and evaluating income and 
                resources.
            (3) No application in commonwealths and 
        territories.--This section shall only apply to a State 
        that is one of the 50 States or the District of 
        Columbia.
    (b) Rules for Treatment of Income.--
            (1) Separate treatment of income.--During any month 
        in which an institutionalized spouse is in the 
        institution, except as provided in paragraph (2), no 
        income of the community spouse shall be deemed 
        available to the institutionalized spouse.
            (2) Attribution of income.--In determining the 
        income of an institutionalized spouse or community 
        spouse for purposes of the post-eligibility income 
        determination described in subsection (d), except as 
        otherwise provided in this section and regardless of 
        any State laws relating to community property or the 
        division of marital property, the following rules 
        apply:
                    (A) Non-trust property.--Subject to 
                subparagraphs (C) and (D), in the case of 
                income not from a trust, unless the instrument 
                providing the income otherwise specifically 
                provides--
                            (i) if payment of income is made 
                        solely in the name of the 
                        institutionalized spouse or the 
                        community spouse, the income shall be 
                        considered available only to that 
                        respective spouse,
                            (ii) if payment of income is made 
                        in the names of the institutionalized 
                        spouse and the community spouse, \1/2\ 
                        of the income shall be considered 
                        available to each of them, and
                            (iii) if payment of income is made 
                        in the names of the institutionalized 
                        spouse or the community spouse, or 
                        both, and to another person or persons, 
                        the income shall be considered 
                        available to each spouse in proportion 
                        to the spouse's interest (or, if 
                        payment is made with respect to both 
                        spouses and no such interest is 
                        specified, \1/2\ of the joint interest 
                        shall be considered available to each 
                        spouse).
                    (B) Trust property.--In the case of a 
                trust--
                            (i) except as provided in clause 
                        (ii), income shall be attributed in 
                        accordance with the provisions of this 
                        title; and
                            (ii) income shall be considered 
                        available to each spouse as provided in 
                        the trust, or, in the absence of a 
                        specific provision in the trust--
                                    (I) if payment of income is 
                                made solely to the 
                                institutionalized spouse or the 
                                community spouse, the income 
                                shall be considered available 
                                only to that respective spouse,
                                    (II) if payment of income 
                                is made to both the 
                                institutionalized spouse and 
                                the community spouse, \1/2\ of 
                                the income shall be considered 
                                available to each of them, and
                                    (III) if payment of income 
                                is made to the 
                                institutionalized spouse or the 
                                community spouse, or both, and 
                                to another person or persons, 
                                the income shall be considered 
                                available to each spouse in 
                                proportion to the spouse's 
                                interest (or, if payment is 
                                made with respect to both 
                                spouses and no such interest is 
                                specified, \1/2\ of the joint 
                                interest shall be considered 
                                available to each spouse).
                    (C) Property with no instrument.--In the 
                case of income not from a trust in which there 
                is no instrument establishing ownership, 
                subject to subparagraph (D), \1/2\ of the 
                income shall be considered to be available to 
                the institutionalized spouse and \1/2\ to the 
                community spouse.
                    (D) Rebutting ownership.--The rules of 
                subparagraphs (A) and (C) are superseded to the 
                extent that an institutionalized spouse can 
                establish, by a preponderance of the evidence, 
                that the ownership interests in income are 
                other than as provided under such 
                subparagraphs.
    (c) Rules for Treatment of Resources.--
            (1) Computation of spousal share at time of 
        institutionalization.--
                    (A) Total joint resources.--There shall be 
                computed (as of the beginning of the first 
                continuous period of institutionalization of 
                the institutionalized spouse)--
                            (i) the total value of the 
                        resources to the extent either the 
                        institutionalized spouse or the 
                        community spouse has an ownership 
                        interest, and
                            (ii) a spousal share which is equal 
                        to \1/2\ of such total value.
                    (B) Assessment.--At the request of an 
                institutionalized spouse or community spouse, 
                at the beginning of the first continuous period 
                of institutionalization of the 
                institutionalized spouse and upon the receipt 
                of relevant documentation of resources, the 
                State shall promptly assess and document the 
                total value described in subparagraph (A)(i) 
                and shall provide a copy of such assessment and 
                documentation to each spouse and shall retain a 
                copy of the assessment for use under this 
                section. If the request is not part of an 
                application for medical assistance under this 
                title, the State may, at its option as a 
                condition of providing the assessment, require 
                payment of a fee not exceeding the reasonable 
                expenses of providing and documenting the 
                assessment. At the time of providing the copy 
                of the assessment, the State shall include a 
                notice indicating that the spouse will have a 
                right to a fair hearing under subsection 
                (e)(2).
            (2) Attribution of resources at time of initial 
        eligibility determination.--In determining the 
        resources of an institutionalized spouse at the time of 
        application for medical assistance under this title, 
        regardless of any State laws relating to community 
        property or the division of marital property--
                    (A) except as provided in subparagraph (B), 
                all the resources held by either the 
                institutionalized spouse, community spouse, or 
                both, shall be considered to be available to 
                the institutionalized spouse, and
                    (B) resources shall be considered to be 
                available to an institutionalized spouse, but 
                only to the extent that the amount of such 
                resources exceeds the amount computed under 
                subsection (f)(2)(A) (as of the time of 
                application for medical assistance).
            (3) Assignment of support rights.--The 
        institutionalized spouse shall not be ineligible by 
        reason of resources determined under paragraph (2) to 
        be available for the cost of care where--
                    (A) the institutionalized spouse has 
                assigned to the State any rights to support 
                from the community spouse,
                    (B) the institutionalized spouse lacks the 
                ability to execute an assignment due to 
                physical or mental impairment but the State has 
                the right to bring a support proceeding against 
                a community spouse without such assignment, or
                    (C) the State determines that denial of 
                eligibility would work an undue hardship.
            (4) Separate treatment of resources after 
        eligibility for medical assistance established.--During 
        the continuous period in which an institutionalized 
        spouse is in an institution and after the month in 
        which an institutionalized spouse is determined to be 
        eligible for medical assistance under this title, no 
        resources of the community spouse shall be deemed 
        available to the institutionalized spouse.
            (5) Resources defined.--In this section, the term 
        ``resources'' does not include--
                    (A) resources excluded under subsection (a) 
                or (d) of section 1613, and
                    (B) resources that would be excluded under 
                section 1613(a)(2)(A) but for the limitation on 
                total value described in such section.
    (d) Protecting Income for Community Spouse.--
            (1) Allowances to be offset from income of 
        institutionalized spouse.--After an institutionalized 
        spouse is determined or redetermined to be eligible for 
        medical assistance, in determining the amount of the 
        spouse's income that is to be applied monthly to 
        payment for the costs of care in the institution, there 
        shall be deducted from the spouse's monthly income the 
        following amounts in the following order:
                    (A) A personal needs allowance (described 
                in paragraph (2)(A)), in an amount not less 
                than the amount specified in paragraph (2)(C).
                    (B) A community spouse monthly income 
                allowance (as defined in paragraph (3)), but 
                only to the extent income of the 
                institutionalized spouse is made available to 
                (or for the benefit of) the community spouse.
                    (C) A family allowance, for each family 
                member, equal to at least \1/3\ of the amount 
                by which the amount described in paragraph 
                (4)(A)(i) exceeds the amount of the monthly 
                income of that family member.
                    (D) Amounts for incurred expenses for 
                medical or remedial care for the 
                institutionalized spouse as provided under 
                paragraph (6).
        In subparagraph (C), the term ``family member'' only 
        includes minor or dependent children, dependent 
        parents, or dependent siblings of the institutionalized 
        or community spouse who are residing with the community 
        spouse.
            (2) Personal needs allowance.--
                    (A) In general.--The State plan must 
                provide that, in the case of an 
                institutionalized individual or couple 
                described in subparagraph (B), in determining 
                the amount of the individual's or couple's 
                income to be applied monthly to payment for the 
                cost of care in an institution, there shall be 
                deducted from the monthly income (in addition 
                to other allowances otherwise provided under 
                the plan) a monthly personal needs allowance--
                            (i) which is reasonable in amount 
                        for clothing and other personal needs 
                        of the individual (or couple) while in 
                        an institution, and
                            (ii) which is not less (and may be 
                        greater) than the minimum monthly 
                        personal needs allowance described in 
                        subparagraph (C).
                    (B) Institutionalized individual or couple 
                defined.--In this paragraph, the term 
                ``institutionalized individual or couple'' 
                means an individual or married couple--
                            (i) who is an inpatient (or who are 
                        inpatients) in a medical institution or 
                        nursing facility for which payments are 
                        made under this title throughout a 
                        month, and
                            (ii) who is or are determined to be 
                        eligible for medical assistance under 
                        the State plan.
                    (C) Minimum allowance.--The minimum monthly 
                personal needs allowance described in this 
                subparagraph is $40 for an institutionalized 
                individual and $80 for an institutionalized 
                couple (if both are aged, blind, or disabled, 
                and their incomes are considered available to 
                each other in determining eligibility).
            (3) Community spouse monthly income allowance 
        defined.--
                    (A) In general.--In this section (except as 
                provided in subparagraph (B)), the community 
                spouse monthly income allowance for a community 
                spouse is an amount by which--
                            (i) except as provided in 
                        subsection (e), the minimum monthly 
                        maintenance needs allowance 
                        (established under and in accordance 
                        with paragraph (4)) for the spouse, 
                        exceeds
                            (ii) the amount of monthly income 
                        otherwise available to the community 
                        spouse (determined without regard to 
                        such an allowance).
                    (B) Court ordered support.--If a court has 
                entered an order against an institutionalized 
                spouse for monthly income for the support of 
                the community spouse, the community spouse 
                monthly income allowance for the spouse shall 
                be not less than the amount of the monthly 
                income so ordered.
            (4) Establishment of minimum monthly maintenance 
        needs allowance.--
                    (A) In general.--Each State shall establish 
                a minimum monthly maintenance needs allowance 
                for each community spouse which, subject to 
                subparagraph (B), is equal to or exceeds--
                            (i) 150 percent of \1/12\ of the 
                        poverty line applicable to a family 
                        unit of 2 members, plus
                            (ii) an excess shelter allowance 
                        (as defined in paragraph (4)).
                A revision of the poverty line referred to in 
                clause (i) shall apply to medical assistance 
                furnished during and after the second calendar 
                quarter that begins after the date of 
                publication of the revision.
                    (B) Cap on minimum monthly maintenance 
                needs allowance.--The minimum monthly 
                maintenance needs allowance established under 
                subparagraph (A) may not exceed $1,500 (subject 
                to adjustment under subsections (e) and (g)).
            (5) Excess shelter allowance defined.--In paragraph 
        (4)(A)(ii), the term ``excess shelter allowance'' 
        means, for a community spouse, the amount by which the 
        sum of--
                    (A) the spouse's expenses for rent or 
                mortgage payment (including principal and 
                interest), taxes and insurance and, in the case 
                of a condominium or cooperative, required 
                maintenance charge, for the community spouse's 
                principal residence, and
                    (B) the standard utility allowance (used by 
                the State under section 5(e) of the Food Stamp 
                Act of 1977) or, if the State does not use such 
                an allowance, the spouse's actual utility 
                expenses,
        exceeds 30 percent of the amount described in paragraph 
        (4)(A)(i), except that, in the case of a condominium or 
        cooperative, for which a maintenance charge is included 
        under subparagraph (A), any allowance under 
        subparagraph (B) shall be reduced to the extent the 
        maintenance charge includes utility expenses.
            (6) Treatment of incurred expenses.--With respect 
        to the post-eligibility treatment of income under this 
        section, there shall be disregarded reparation payments 
        made by the Federal Republic of Germany and, there 
        shall be taken into account amounts for incurred 
        expenses for medical or remedial care that are not 
        subject to payment by a third party, including--
                    (A) medicare and other health insurance 
                premiums, deductibles, or coinsurance, and
                    (B) necessary medical or remedial care 
                recognized under State law but not covered 
                under the State plan under this title, subject 
                to reasonable limits the State may establish on 
                the amount of these expenses.
    (e) Notice and Fair Hearing.--
            (1) Notice.--Upon--
                    (A) a determination of eligibility for 
                medical assistance of an institutionalized 
                spouse, or
                    (B) a request by either the 
                institutionalized spouse, or the community 
                spouse, or a representative acting on behalf of 
                either spouse,
        each State shall notify both spouses (in the case 
        described in subparagraph (A)) or the spouse making the 
        request (in the case described in subparagraph (B)) of 
        the amount of the community spouse monthly income 
        allowance (described in subsection (d)(1)(B)), of the 
        amount of any family allowances (described in 
        subsection (d)(1)(C)), of the method for computing the 
        amount of the community spouse resources allowance 
        permitted under subsection (f), and of the spouse's 
        right to a fair hearing under the State plan respecting 
        ownership or availability of income or resources, and 
        the determination of the community spouse monthly 
        income or resource allowance.
            (2) Fair hearing.--
                    (A) In general.--If either the 
                institutionalized spouse or the community 
                spouse is dissatisfied with a determination 
                of--
                            (i) the community spouse monthly 
                        income allowance;
                            (ii) the amount of monthly income 
                        otherwise available to the community 
                        spouse (as applied under subsection 
                        (d)(3)(A)(ii));
                            (iii) the computation of the 
                        spousal share of resources under 
                        subsection (c)(1);
                            (iv) the attribution of resources 
                        under subsection (c)(2); or
                            (v) the determination of the 
                        community spouse resource allowance (as 
                        defined in subsection (f)(2));
                such spouse is entitled to a fair hearing under 
                the State plan with respect to such 
                determination if an application for benefits 
                under this title has been made on behalf of the 
                institutionalized spouse. Any such hearing 
                respecting the determination of the community 
                spouse resource allowance shall be held within 
                30 days of the date of the request for the 
                hearing.
                    (B) Revision of minimum monthly maintenance 
                needs allowance.--If either such spouse 
                establishes that the community spouse needs 
                income, above the level otherwise provided by 
                the minimum monthly maintenance needs 
                allowance, due to exceptional circumstances 
                resulting in significant financial duress, 
                there shall be substituted, for the minimum 
                monthly maintenance needs allowance in 
                subsection (d)(3)(A)(i), an amount adequate to 
                provide such additional income as is necessary.
                    (C) Revision of community spouse resource 
                allowance.--If either such spouse establishes 
                that the community spouse resource allowance 
                (in relation to the amount of income generated 
                by such an allowance) is inadequate to raise 
                the community spouse's income to the minimum 
                monthly maintenance needs allowance, there 
                shall be substituted, for the community spouse 
                resource allowance under subsection (f)(2), an 
                amount adequate to provide such a minimum 
                monthly maintenance needs allowance.
    (f) Permitting Transfer of Resources to Community Spouse.--
            (1) In general.--An institutionalized spouse may, 
        without regard to any other provision of the State plan 
        to the contrary, transfer an amount equal to the 
        community spouse resource allowance (as defined in 
        paragraph (2)), but only to the extent the resources of 
        the institutionalized spouse are transferred to, or for 
        the sole benefit of, the community spouse. The transfer 
        under the preceding sentence shall be made as soon as 
        practicable after the date of the initial determination 
        of eligibility, taking into account such time as may be 
        necessary to obtain a court order under paragraph (3).
            (2) Community spouse resource allowance defined.--
        In paragraph (1), the ``community spouse resource 
        allowance'' for a community spouse is an amount (if 
        any) by which--
                    (A) the greatest of--
                            (i) $12,000 (subject to adjustment 
                        under subsection (g)), or, if greater 
                        (but not to exceed the amount specified 
                        in clause (ii)(II)) an amount specified 
                        under the State plan,
                            (ii) the lesser of (I) the spousal 
                        share computed under subsection (c)(1), 
                        or (II) $60,000 (subject to adjustment 
                        under subsection (g)),
                            (iii) the amount established under 
                        subsection (e)(2), or
                            (iv) the amount transferred under a 
                        court order under paragraph (3);
                exceeds
                    (B) the amount of the resources otherwise 
                available to the community spouse (determined 
                without regard to such an allowance).
            (3) Transfers under court orders.--If a court has 
        entered an order against an institutionalized spouse 
        for the support of the community spouse, any provisions 
        under the plan relating to transfers or disposals of 
        assets for less than fair market value shall not apply 
        to amounts of resources transferred pursuant to such 
        order for the support of the spouse or a family member 
        (as defined in subsection (d)(1)).
    (g) Indexing Dollar Amounts.--For services furnished during 
a calendar year after 1989, the dollar amounts specified in 
subsections (d)(3)(C), (f)(2)(A)(i), and (f)(2)(A)(ii)(II) 
shall be increased by the same percentage as the percentage 
increase in the consumer price index for all urban consumers 
(all items; U.S. city average) between September 1988 and the 
September before the calendar year involved.
    (h) Definitions.--In this section:
            (1) Institutionalized spouse.--The term 
        ``institutionalized spouse'' means an individual--
                    (A)(i) who is in a medical institution or 
                nursing facility, or
                    (ii) at the option of the State (I) who 
                would be eligible under the State plan under 
                this title if such individual was in a medical 
                institution, (II) with respect to whom there 
                has been a determination that but for the 
                provision of home or community-based services 
                such individual would require the level of care 
                provided in a hospital, nursing facility or 
                intermediate care facility for the mentally 
                retarded the cost of which could be reimbursed 
                under the plan, and (III) who will receive home 
                or community-based services pursuant the plan; 
                and
                    (B) who is married to a spouse who is not 
                in a medical institution or nursing facility;
        but does not include any such individual who is not 
        likely to meet the requirements of subparagraph (A) for 
        at least 30 consecutive days.
            (2) Community spouse.--The term ``community 
        spouse'' means the spouse of an institutionalized 
        spouse.

SEC. 1506. PREVENTING FAMILY IMPOVERISHMENT.

    (a) Responsibilities for Long-term and Institutional Care 
Generally.--A State plan may not--
            (1) require an adult child or any other individual 
        (other than the applicant or recipient of services or 
        the spouse of such an applicant or recipient) to 
        contribute to the cost of covered nursing facility 
        services, other long-term care services, and hospital 
        and other institutional services under the plan; and
            (2) take into account with respect to such services 
        the financial responsibility of any individual for any 
        applicant or recipient of assistance under the plan 
        unless such applicant or recipient is such individual's 
        spouse or such individual's child who is under age 21 
        or (with respect to States eligible to participate in 
        the State program established under title XVI), is 
        blind or permanently and totally disabled, or is blind 
        or disabled as defined in section 1614 (with respect to 
        States which are not eligible to participate in such 
        program).
    (b) Limitations on Liens.--
            (1) In general.--No lien may be imposed against the 
        property of any individual prior to the individual's 
        death on account of medical assistance paid or to be 
        paid on the individual's behalf under a State plan, 
        except--
                    (A) pursuant to the judgment of a court on 
                account of benefits incorrectly paid on behalf 
                of such individual; or
                    (B) in the case of the real property of an 
                individual--
                            (i) who is an inpatient in a 
                        nursing facility, intermediate care 
                        facility for the mentally retarded, or 
                        other medical institution, if such 
                        individual is required, as a condition 
                        of receiving services in such 
                        institution under the plan, to spend 
                        for costs of medical care all but a 
                        minimal amount of the individual's 
                        income required for personal needs, and
                            (ii) with respect to whom the State 
                        determines, after notice and 
                        opportunity for a hearing (in 
                        accordance with procedures established 
                        by the State), that the individual 
                        cannot reasonably be expected to be 
                        discharged from the medical institution 
                        and to return home,
                except as provided in paragraph (2).
            (2) Exception.--No lien may be imposed under 
        paragraph (1)(B) on such individual's home if--
                    (A) the spouse of such individual,
                    (B) such individual's child who is under 
                age 21, or (with respect to States eligible to 
                participate in the State program established 
                under title XVI) is blind or permanently and 
                totally disabled, or (with respect to States 
                which are not eligible to participate in such 
                program) is blind or disabled as defined in 
                section 1614, or
                    (C) a sibling of such individual (who has 
                an equity interest in such home and who was 
                residing in such individual's home for a period 
                of at least one year immediately before the 
                date of the individual's admission to the 
                medical institution),
        is lawfully residing in such home.
            (3) Dissolution upon return home.--Any lien imposed 
        with respect to an individual pursuant to paragraph 
        (1)(B) shall dissolve upon that individual's discharge 
        from the medical institution and return home.

SEC. 1507. STATE FLEXIBILITY.

    (a) State Flexibility in Benefits, Geographical Coverage 
Area, and Selection of Providers.--The State under its State 
plan may--
            (1) specify those items and services for which 
        medical assistance is provided (consistent with 
        guarantees under subsections (a) and (b) of section 
        1501), the providers which may provide such items and 
        services, and the amount and frequency of providing 
        such items and services (consistent with the 
        requirements of section 1502(d));
            (2) specify the extent to which the same medical 
        assistance will be provided in all geographical areas 
        or political subdivisions of the State, so long as 
        medical assistance is made available in all such areas 
        or subdivisions;
            (3) specify the extent to which the medical 
        assistance made available to any individual eligible 
        for medical assistance is comparable in amount, 
        duration, or scope to the medical assistance made 
        available to any other such individual; and
            (4) specify the extent to which an individual 
        eligible for medical assistance with respect to an item 
        or service may choose to obtain such assistance from 
        any institution, agency, or person qualified to provide 
        the item or service.
    (b) State Flexibility With Respect to Managed Care.--
Nothing in this title shall be construed--
            (1) to limit a State's ability to contract with, on 
        a capitated basis or otherwise, health care plans or 
        individual health care providers for the provision or 
        arrangement of medical assistance,
            (2) to limit a State's ability to contract with 
        health care plans or other entities for case management 
        services or for coordination of medical assistance, or
            (3) to restrict a State from establishing 
        capitation rates on the basis of competition among 
        health care plans or negotiations between the State and 
        one or more health care plans.

SEC. 1508. PRIVATE RIGHTS OF ACTION.

    (a) Limitation on Federal Causes of Action.--Except as 
provided in this section, no person or entity may bring an 
action against a State in Federal court based on its failure to 
comply with any requirement of this title.
    (b) State Causes of Action.--
            (1) Administrative and judicial procedures.--A 
        State plan shall provide for--
                    (A) an administrative procedure whereby an 
                individual alleging a denial of eligibility for 
                benefits or a denial of benefits under the 
                State plan may receive a hearing regarding such 
                denial, and
                    (B) judicial review, through a private 
                right of action in a State court by an 
                individual or class of individuals, regarding 
                such a denial, but a State may require 
                exhaustion of administrative remedies before 
                such an action may be taken.
        The administrative procedure under subparagraph (A) 
        shall include impartial decision makers and a fair 
        process and timely decisions.
            (2) Writ of certiorari.--An individual or class may 
        file a petition for certiorari before the Supreme Court 
        of the United States in a case of a denial of benefits 
        under the State plan to review a determination of the 
        highest court of a State regarding such denial.
            (3) Construction.--Nothing in this subsection shall 
        be construed as requiring a State to provide a private 
        right of action in State court by a provider, health 
        plan, or a class of providers or health plans.
    (c) Secretarial Relief.--
            (1) In general.--The Secretary may bring an action 
        in Federal court against a State and on behalf of an 
        individual or class of individuals in order to assure 
        that a State provides benefits to individuals and 
        classes of individuals as guaranteed under subsection 
        (a) or (b) of section 1501 under its State plan.
            (2) No private right.--No action may be brought in 
        any court against the Secretary based on the 
        Secretary's bringing, or failure to bring, an action 
        under paragraph (1).
            (3) Construction.--Nothing in this title shall be 
        construed as authorizing the Secretary to bring an 
        action on behalf of a provider, health plan, or a class 
        of providers or health plans.

                       Part B--Payments to States

SEC. 1511. ALLOTMENT OF FUNDS AMONG STATES.

    (a) Allotments.--
            (1) Computation.--The Secretary shall provide for 
        the computation of State obligation and outlay 
        allotments in accordance with this section for each 
        fiscal year beginning with fiscal year 1997. Nothing in 
        this part shall be construed as authorizing payment 
        under this part to any State for fiscal year 1996.
            (2) Limitation on obligations.--
                    (A) In general.--Subject to the succeeding 
                provisions of this paragraph, the Secretary 
                shall not enter into obligations with any State 
                under this title for a fiscal year in excess of 
                the sum of the following allotments for the 
                State for the fiscal year:
                            (i) Base obligation allotment.--The 
                        amount of the base obligation allotment 
                        for that State for the fiscal year 
                        under paragraph (4).
                            (ii) Supplemental allotment for 
                        certain aliens.--The amount of any 
                        supplemental allotment for that State 
                        for the fiscal year under subsection 
                        (f).
                            (iii) Supplemental per beneficiary 
                        umbrella allotment.--The amount of any 
                        supplemental per beneficiary umbrella 
                        allotment for that State for the fiscal 
                        year under subsection (g).
                            (iv) Supplemental allotment for 
                        indian health services.--The amount of 
                        any supplemental allotment for that 
                        State for the fiscal year under 
                        subsection (h).
        The sum of the base obligation allotments for all 
        States in any fiscal year (excluding amounts carried 
        over under subparagraph (B) and excluding changes in 
        allotments effected under paragraph (4)(D)) shall not 
        exceed the aggregate limit on new base obligation 
        authority specified in paragraph (3) for that fiscal 
        year.
                    (B) Adjustments.--
                            (i) Carryover of base allotment 
                        permitted.--Subject to clauses (ii), if 
                        the amount of obligations entered into 
                        under this part with a State for 
                        quarters in a fiscal year is less than 
                        the amount of the obligation allotment 
                        under this section to the State for the 
                        fiscal year, the amount of the 
                        difference (less any amount computed 
                        under clause (iii)) shall be added to 
                        the amount of the State obligation 
                        allotment otherwise provided under this 
                        section for the succeeding fiscal year.
                            (ii) No carryover permitted for 
                        states receiving supplemental umbrella 
                        allotments.--Clause (i) shall not 
                        apply, insofar as it permits a 
                        carryover for a State from a particular 
                        year to the next year, if in the 
                        particular year the State receives a 
                        supplemental umbrella allotment under 
                        subsection (g).
                            (iii) No carryover of alien and 
                        indian supplemental allotments.--The 
                        amount of any carryover under clause 
                        (i) from a fiscal year shall be reduced 
                        by the amount (if any) by which the 
                        amount of the outlays for expenditures 
                        described in subsection (f) or (h) for 
                        the fiscal year is less than the amount 
                        of any supplemental allotment provided 
                        under the respective subsection for the 
                        State and fiscal year involved.
                    (C) Reduction for new obligations under 
                title xix in fiscal year 1997.--The amount of 
                the base obligation allotment otherwise 
                provided under this section for fiscal year 
                1997 for a State shall be reduced by the amount 
                of the obligations entered into with respect to 
                the State under section 1903(a) during such 
                fiscal year.
                    (D) No effect on prior year obligations.--
                Subparagraph (A) shall not apply to or affect 
                obligations for a fiscal year prior to fiscal 
                year 1997.
                    (E) Obligation.--For purposes of this 
                section, the Secretary's establishment of an 
                estimate under section 1512(b) of the amount a 
                State is entitled to receive for a quarter 
                (taking into account any adjustments described 
                in such subsection) beginning during or after 
                fiscal year 1997 shall be treated as the 
                obligation of such amount for the State as of 
                the first day of the quarter.
                    (F) Relation to guarantees.--The Federal 
                Government's obligations for payments under 
                this title are limited as provided under 
                subparagraph (A) and are only subject to 
                adjustment based on any guarantee provided 
                under section 1501 as provided under subsection 
                (g).
            (3) Aggregate limit on new base obligation 
        authority.--
                    (A) In general.--For purposes of this 
                subsection, subject to subparagraph (C), the 
                ``aggregate limit on new base obligation 
                authority'', for a fiscal year, is the base 
                pool amount under subsection (b) for the fiscal 
                year, divided by the payout adjustment factor 
                (described in subparagraph (B)) for the fiscal 
                year.
                    (B) Payout adjustment factor.--For purposes 
                of this subsection, the ``payout adjustment 
                factor''--
                            (i) for fiscal year 1997 is 0.950,
                            (ii) for fiscal year 1998 is 0.986, 
                        and
                            (iii) for a subsequent fiscal year 
                        is 0.998.
                    (C) Transitional adjustment for pre-fiscal 
                year 1997-obligation outlays.--In order to 
                account for pre-fiscal year 1997-obligation 
                outlays described in paragraph (4)(C)(iv), in 
                determining the aggregate limit on new 
                obligation authority under subparagraph (A) for 
                fiscal year 1997, the pool amount for such 
                fiscal year is equal to--
                            (i) the pool amount for such year, 
                        reduced by
                            (ii) $12,000,000,000.
            (4) Base obligation allotments.--
                    (A) General rule for 50 states and the 
                district of columbia.--Except as provided in 
                this paragraph, the ``base obligation 
                allotment'' for any of the 50 States or the 
                District of Columbia for a fiscal year 
                (beginning with fiscal year 1997) is an amount 
                that bears the same ratio to the base outlay 
                allotment under subsection (c)(2) for such 
                State or District (not taking into account any 
                adjustment due to an election under subsection 
                (c)(4)) for the fiscal year as the ratio of--
                            (i) the aggregate limit on new base 
                        obligation authority (less the total of 
                        the obligation allotments under 
                        subparagraph (B)) for the fiscal year, 
                        to
                            (ii) the base pool amount (less the 
                        sum of the base outlay allotments for 
                        the territories) for such fiscal year.
                    (B) Territories.--The base obligation 
                allotment for each of the Commonwealths and 
                territories for a fiscal year is the base 
                outlay allotment for such Commonwealth or 
                Territory (as determined under subsection 
                (c)(5)) for the fiscal year divided by the 
                payout adjustment factor for the fiscal year 
                (as defined in paragraph (3)(B)).
                    (C) Transitional rule for fiscal year 
                1997.--
                            (i) In general.--The obligation 
                        amount for fiscal year 1997 for any 
                        State (including the District of 
                        Columbia, a Commonwealth, or Territory) 
                        is determined according to the formula: 
                        A=(B-C)/D, where--
                                    (I) ``A'' is the base 
                                obligation amount for such 
                                State,
                                    (II) ``B'' is the base 
                                outlay allotment of such State 
                                for fiscal year 1997, as 
                                determined under subsection 
                                (c),
                                    (III) ``C'' is the amount 
                                of the pre-enactment-obligation 
                                outlays (as established for 
                                such State under clause (ii)), 
                                and
                                    (IV) ``D'' is the payout 
                                adjustment factor for such 
                                fiscal year (as defined in 
                                paragraph (3)(B)).
                            (ii) Pre-fiscal year 1997-
                        obligation outlay amounts.--Not later 
                        than November 1, 1996, the Secretary 
                        shall estimate (based on the best data 
                        available) and publish in the Federal 
                        Register the amount of the pre-fiscal 
                        year 1997-obligation outlays (as 
                        defined in clause (iv)) for each State 
                        (including the District of Columbia, 
                        Commonwealths, and Territories). The 
                        total of such amounts shall equal the 
                        dollar amount specified in paragraph 
                        (3)(C)(ii).
                            (iii) Agreement.--The submission of 
                        a State plan by a State under this 
                        title is deemed to constitute the 
                        State's acceptance of the obligation 
                        allotment limitations under this 
                        subsection, including the formula for 
                        computing the amount of the base 
                        obligation allotment and any 
                        supplemental obligation allotments.
                            (iv) Pre-fiscal year 1997-
                        obligation outlays defined.--In this 
                        subsection, the term ``pre-fiscal year 
                        1997-obligation outlays'' means, for a 
                        State, the outlays of the Federal 
                        Government that result from obligations 
                        that have been incurred under title XIX 
                        with respect to the State before 
                        October 1, 1996, but for which payments 
                        to States have not been made as of such 
                        date.
                    (D) Adjustment to reflect adoption of 
                alternative growth formula.--Any State that has 
                elected an alternative growth formula under 
                subsection (c)(4) which increases or decreases 
                the dollar amount of an outlay allotment for a 
                fiscal year is deemed to have increased or 
                decreased, respectively, its obligation amount 
                for such fiscal year by the amount of such 
                increase or decrease.
                    (E) Transitional correction for fiscal year 
                1997.--
                            (i) In general.--The base 
                        obligation amount for fiscal year 1998 
                        for any State described in clause (ii) 
                        shall be increased by the amount by 
                        which the amount described in clause 
                        (ii)(I) exceeds the amount described in 
                        clause (ii)(II), divided by the payout 
                        adjustment factor specified in 
                        paragraph (3)(B) for fiscal year 1997. 
                        The increase under this clause shall be 
                        paid to a State in the first quarter of 
                        fiscal year 1998.
                            (ii) States described.--A State 
                        described in this clause is a State for 
                        which--
                                    (I) the amount of the pre-
                                fiscal year 1997-obligation 
                                outlays (as established for 
                                such State under subparagraph 
                                (C)(ii)), exceeded
                                    (II) the outlays of the 
                                Federal Government during 
                                fiscal year 1997 that are 
                                attributable to obligations 
                                that were incurred under title 
                                XIX with respect to the State 
                                before October 1, 1996, but for 
                                which payments to States had 
                                not been made as of such date.
            (5) Sequence of obligations.--For purposes of 
        carrying out this title, payments under section 1512 to 
        a State eligible for a supplemental outlay allotment 
        that are attributable to--
                    (A) expenditures for medical assistance 
                described in the second sentence of subsection 
                (f)(1) or the second sentence of subsection 
                (h)(1) shall first be counted toward the 
                supplemental outlay allotment provided under 
                subsection (f) or (h), respectively, rather 
                than toward the base outlay allotment otherwise 
                provided under this section; or
                    (B) subsection (g) (relating to the 
                umbrella fund) shall first be counted toward 
                the allotment provided other than under such 
                subsection, and then to such subsection.
    (b) Base Pool of Available Funds.--
            (1) In general.--For purposes of this section, the 
        ``base pool amount'' under this subsection for--
                    (A) fiscal year 1996 is $96,601,037,894,
                    (B) fiscal year 1997 is $103,447,755,053,
                    (C) fiscal year 1998 is $108,430,173,129,
                    (D) fiscal year 1999 is $113,652,562,483,
                    (E) fiscal year 2000 is $119,126,480,999,
                    (F) fiscal year 2001 is $124,864,043,230,
                    (G) fiscal year 2002 is $130,877,947,213, 
                and
                    (H) each subsequent fiscal year is the pool 
                amount under this paragraph for the previous 
                fiscal year increased by the lesser of 4.82 
                percent or the annual percentage increase in 
                the gross domestic product for the 12-month 
                period ending in June before the beginning of 
                that subsequent fiscal year.
            (2) National growth percentage.--For purposes of 
        this section for a fiscal year (beginning with fiscal 
        year 1997), the ``national growth percentage'' is the 
        percentage by which--
                    (A) the base pool amount under paragraph 
                (1) for the fiscal year, exceeds
                    (B) such base pool amount for the previous 
                fiscal year.
    (c) State Base Outlay Allotments.--
            (1) Fiscal year 1996.--For each of the 50 States 
        and the District of Columbia, the amount of the State 
        base outlay allotment under this subsection for fiscal 
        year 1996 is, subject to paragraph (4), determined in 
        accordance with the following table:
State or District:  Outlay allotment (in dollars):
  Alabama...........1,517,652,207.......................................
  Alaska............204,933,213.........................................
  Arizona...........1,385,781,297.......................................
  Arkansas..........1,011,457,933.......................................
  California........8,946,838,461.......................................
  Colorado..........757,492,679.........................................
  Connecticut.......1,463,011,635.......................................
  Delaware..........212,327,763.........................................
  District of Columb501,412,091.........................................
  Florida...........3,715,624,180.......................................
  Georgia...........2,426,320,602.......................................
  Hawaii............323,124,375.........................................
  Idaho.............278,329,686.........................................
  Illinois..........3,467,274,342.......................................
  Indiana...........1,952,467,267.......................................
  Iowa..............835,235,895.........................................
  Kansas............713,700,869.........................................
  Kentucky..........1,577,828,832.......................................
  Louisiana.........2,622,000,000.......................................
  Maine.............694,220,790.........................................
  Maryland..........1,369,699,847.......................................
  Massachusetts.....2,870,346,862.......................................
  Michigan..........3,465,182,886.......................................
  Minnesota.........1,793,776,356.......................................
  Mississippi.......1,261,781,330.......................................
  Missouri..........1,849,248,945.......................................
  Montana...........312,212,472.........................................
  Nebraska..........463,900,417.........................................
  Nevada............257,896,453.........................................
  New Hampshire.....560,000,000.........................................
  New Jersey........2,854,621,241.......................................
  New Mexico........634,756,945.........................................
  New York..........12,901,793,038......................................
  North Carolina....2,587,883,809.......................................
  North Dakota......241,168,563.........................................
  Ohio..............4,034,049,690.......................................
  Oklahoma..........911,198,775.........................................
  Oregon............1,088,670,440.......................................
  Pennsylvania......4,454,423,400.......................................
  Rhode Island......545,686,262.........................................
  South Carolina....1,621,021,815.......................................
  South Dakota......262,804,959.........................................
  Tennessee.........2,519,934,251.......................................
  Texas.............6,351,909,343.......................................
  Utah..............484,274,254.........................................
  Vermont...........248,158,729.........................................
  Virginia..........1,144,962,509.......................................
  Washington........1,763,460,996.......................................
  West Virginia.....1,156,813,157.......................................
  Wisconsin.........1,709,500,642.......................................
  Wyoming...........132,915,390.........................................
            (2) For subsequent fiscal years.--
                    (A) In general.--Subject to the succeeding 
                provisions of this subsection, the amount of 
                the State base outlay allotment under this 
                subsection for one of the 50 States and the 
                District of Columbia for a fiscal year 
                (beginning with fiscal year 1997) is equal to 
                the product of--
                            (i) the needs-based amount 
                        determined under subparagraph (B) for 
                        such State or District for the fiscal 
                        year, and
                            (ii) the adjustment factor 
                        described in subparagraph (C) for the 
                        fiscal year.
                    (B) Needs-based amount.--The needs-based 
                amount under this subparagraph for a State or 
                the District of Columbia for a fiscal year is 
                equal to the product of--
                            (i) the State's or District's 
                        aggregate expenditure need for the 
                        fiscal year (as determined under 
                        subsection (d)), and
                            (ii) the State's or District's old 
                        Federal medical assistance percentage 
                        (as defined in section 1512(d)) for the 
                        fiscal year (or, in the case of fiscal 
                        year 1997, the Federal medical 
                        assistance percentage determined under 
                        section 1905(b) for fiscal year 1996).
                    (C) Adjustment factor.--The adjustment 
                factor under this subparagraph for a fiscal 
                year is such proportion so that, when it is 
                applied under subparagraph (A)(ii) for the 
                fiscal year (taking into account the floors and 
                ceilings under paragraph (3)), the total of the 
                base outlay allotments under this subsection 
                for all the 50 States and the District of 
                Columbia for the fiscal year (not taking into 
                account any increase in a base outlay allotment 
                for a fiscal year attributable to the election 
                of an alternative growth formula under 
                paragraph (4)) is equal to the amount by which 
                (i) the base pool amount for the fiscal year 
                (as determined under subsection (b)), exceeds 
                (ii) the sum of the base outlay allotments 
                provided under paragraph (5) for the 
                Commonwealths and Territories for the fiscal 
                year.
            (3) Floors and ceilings.--
                    (A) Floors.--Subject to the ceiling 
                established under subparagraph (B), in no case 
                shall the amount of the State base outlay 
                allotment under paragraph (2) for a fiscal year 
                be less than the greatest of the following:
                            (i) In general.--Beginning with 
                        fiscal year 1998, 0.24 percent of the 
                        pool amount for the fiscal year.
                            (ii) Floor based on previous year's 
                        outlay allotment.--Subject to clause 
                        (iii)--
                                    (I) for fiscal year 1997, 
                                103.5 percent of the amount of 
                                the State base outlay allotment 
                                under this subsection for 
                                fiscal year 1996,
                                    (II) for fiscal year 1998, 
                                103 percent of the amount of 
                                the State base outlay allotment 
                                under this subsection for 
                                fiscal year 1997,
                                    (III) for fiscal year 1999, 
                                102.5 percent of the amount of 
                                the State base outlay allotment 
                                under this subsection for 
                                fiscal year 1998,
                                    (IV) for fiscal year 2000, 
                                102.25 percent of the amount of 
                                the State base outlay allotment 
                                under this subsection for 
                                fiscal year 1999, and
                                    (V) for each of fiscal 
                                years 2001 and 2002, 102 
                                percent of the amount of the 
                                State base outlay allotment 
                                under this subsection for the 
                                previous fiscal year.
                            (iii) Floor based on outlay 
                        allotment growth rate in first year.--
                        Beginning with fiscal year 1998, in the 
                        case of a State for which the outlay 
                        allotment under this subsection for 
                        fiscal year 1997 exceeded its outlay 
                        allotment under this subsection for the 
                        previous fiscal year by more than 95 
                        percent of the national growth 
                        percentage for fiscal year 1997, 90 
                        percent of the national growth 
                        percentage for the fiscal year 
                        involved.
                    (B) Ceilings.--
                            (i) In general.--Subject to clause 
                        (ii), in no case shall the amount of 
                        the State base outlay allotment under 
                        paragraph (2) for a fiscal year be 
                        greater than the product of--
                                    (I) the State base outlay 
                                allotment under this subsection 
                                for the State for the preceding 
                                fiscal year, and
                                    (II) the applicable percent 
                                (specified in clause (ii) or 
                                (iii)) for the fiscal year 
                                involved.
                            (ii) General rule for applicable 
                        percent.--For purposes of clause (i), 
                        subject to clause (iii), the 
                        ``applicable percent'' for fiscal year 
                        1997 is 126.98 percent and for a 
                        subsequent fiscal year is 133 percent 
                        of the national growth percentage for 
                        the fiscal year.
                            (iii) Special rule.--For a fiscal 
                        year after fiscal year 1997, in the 
                        case of a State (among the 50 States 
                        and the District of Columbia) that is 
                        one of the 10 States with the lowest 
                        Federal spending per resident-in-
                        poverty rates (as determined under 
                        clause (iv)) for the fiscal year, the 
                        ``applicable percent'' is 150 percent 
                        of the national growth percentage for 
                        the fiscal year.
                            (iv) Determination of federal 
                        spending per resident-in-poverty 
                        rate.--For purposes of clause (iii), 
                        the ``Federal spending per resident-in-
                        poverty rate'' for a State for a fiscal 
                        year is equal to--
                                    (I) the State's outlay 
                                allotment under this subsection 
                                for the previous fiscal year 
                                (determined without regard to 
                                paragraph (4)), divided by
                                    (II) the average annual 
                                number of residents of the 
                                State in poverty (as defined in 
                                subsection (d)(2)) with respect 
                                to the fiscal year.
                    (C) Special rule.--
                            (i) In general.--Notwithstanding 
                        the preceding subparagraphs of this 
                        paragraph, the State base outlay 
                        allotment for--
                                    (I) Louisiana, subject to 
                                subclause (II), for each of the 
                                fiscal years 1997 through 2000, 
                                is $2,622,000,000,
                                    (II) Louisiana for fiscal 
                                year 1997 only, as otherwise 
                                determined, shall be increased 
                                by $37,048,207, and
                                    (III) Nevada for each of 
                                fiscal years 1997, 1998, and 
                                1999, as otherwise determined, 
                                shall be increased by 
                                $90,000,000.
                            (ii) Exception.--A State described 
                        in subclause (I) of clause (i) may 
                        apply to the Secretary for use of the 
                        State base outlay allotment otherwise 
                        determined under this subsection for 
                        any fiscal year, if such State notifies 
                        the Secretary not later than March 1 
                        preceding such fiscal year that such 
                        State will be able to expend sufficient 
                        State funds in such fiscal year to 
                        qualify for such allotment.
                            (iii) Treatment of increase as 
                        supplemental allotment.--Any increase 
                        in an outlay allotment under clause 
                        (i)(II) or (i)(III) shall not be taken 
                        into account for purposes of 
                        determining--
                                    (I) the adjustment factor 
                                under paragraph (2) for fiscal 
                                year 1997,
                                    (II) any State base outlay 
                                allotment for a fiscal year 
                                after fiscal year 1997,
                                    (III) the base pool amount 
                                for a fiscal year after fiscal 
                                year 1997, or
                                    (IV) determination of the 
                                national growth percentage for 
                                any fiscal year.
            (4) Election of alternative growth formula.--
                    (A) Election.--In order to reduce 
                variations in increases in outlay allotments 
                over time, any of the 50 States or the District 
                of Columbia may elect (by notice provided to 
                the Secretary by not later than April 1, 1997) 
                to adopt an alternative growth rate formula 
                under this paragraph for the determination of 
                the State's base outlay allotment in fiscal 
                year 1997 and for the increase in the amount of 
                such allotment in subsequent fiscal years.
                    (B) Formula.--The alternative growth 
                formula under this paragraph may be any formula 
                under which a portion of the State base outlay 
                allotment for fiscal year 1997 under paragraph 
                (1) is deferred and applied to increase the 
                amount of its base outlay allotment for one or 
                more subsequent fiscal years, so long as the 
                total amount of such increases for all such 
                subsequent fiscal years does not exceed the 
                amount of the base outlay allotment deferred 
                from fiscal year 1997.
            (5) Commonwealths and territories.--
                    (A) In general.--The base outlay allotment 
                for each of the Commonwealths and Territories 
                for a fiscal year is the maximum amount that 
                could have been certified under section 1108(c) 
                (as in effect on the day before the date of the 
                enactment of this title) with respect to the 
                Commonwealth or Territory for the fiscal year 
                with respect to title XIX, if the national 
                growth percentage (as determined under 
                subsection (b)(2)) for the fiscal year had been 
                substituted (beginning with fiscal year 1997) 
                for the percentage increase referred to in 
                section 1108(c)(1)(B) (as so in effect).
                    (B) Disregard of rounding requirements.--
                For purposes of subparagraph (A), the rounding 
                requirements under section 1108(c) shall not 
                apply.
                    (C) Limitation on total amount for fiscal 
                year 1996.--Notwithstanding the provisions of 
                subparagraph (A), the total amount of the base 
                outlay allotments for the Commonwealths and 
                Territories for fiscal year 1996 may not exceed 
                $139,950,000.
    (d) State Aggregate Expenditure Need Determined.--
            (1) In general.--For purposes of subsection (c), 
        the ``State aggregate expenditure need'' for a State or 
        the District of Columbia for a fiscal year is equal to 
        the product of the following 4 factors:
                    (A) Program need.--The program need for the 
                State for the fiscal year, as determined under 
                paragraph (2).
                    (B) Health care cost index.--The health 
                care cost index for the State (as determined 
                under paragraph (3)) for the most recent fiscal 
                year for which data are available.
                    (C) Projected inflation.--The CPI increase 
                factor for the fiscal year (as defined in 
                subsection (g)(4)(C)).
                    (D) National average spending per resident 
                in poverty.--The national average spending per 
                resident in poverty (as determined under 
                paragraph (4)).
            (2) Program need.--
                    (A) In general.--In this subsection and 
                subject to subparagraph (D), the ``program 
                need'' of a State for a fiscal year is equal to 
                the sum, for each of the population groups 
                described in subparagraph (B), of the product 
                described in subparagraph (C) for that 
                population group.
                    (B) Population groups described.--The 
                population groups described in this 
                subparagraph are as follows:
                            (i) Individuals between 60 and 
                        85.--Individuals who are least 60, but 
                        less than 85, years of age.
                            (ii) Individuals 85 or older.--
                        Individuals who are 85 years of age or 
                        older.
                            (iii) Disabled individuals.--
                        Individuals who are eligible for 
                        medical assistance because such 
                        individuals are blind or disabled and 
                        are not described in clause (i) or 
                        (ii).
                            (iv) Children.--Individuals 
                        described in subsection (g)(2)(B).
                            (v) Other individuals.--Individuals 
                        not described in a previous clause of 
                        this subparagraph.
                    (C) Product described.--The product 
                described in this subparagraph, with respect to 
                a population group for a fiscal year for a 
                State (or District), is the product of the 
                following 2 factors for that group, year, and 
                State (or District):
                            (i) Weighting factor reflecting 
                        relative need for the group.--For all 
                        States, the national average per 
                        recipient expenditures under this title 
                        in the 50 States and the District of 
                        Columbia for individuals in such group, 
                        as determined under subparagraph (E), 
                        divided by the national average of such 
                        averages for all such groups (weighted 
                        by the number of recipients in each 
                        group).
                            (ii) Number of needy in group.--The 
                        product of--
                                    (I) for all groups, the 
                                average annual number of 
                                residents in poverty in such 
                                State or District (based on 
                                data made generally available 
                                by the Bureau of the Census 
                                from the Current Population 
                                Survey) for the most recent 3-
                                calendar-year period (ending 
                                before the fiscal year) for 
                                which such data are available; 
                                and
                                    (II) the proportion, of all 
                                individuals who received 
                                medical assistance under this 
                                title in such State or 
                                District, that were individuals 
                                in such group.
                        In clause (ii)(II), the term ``resident 
                        in poverty'' means an individual whose 
                        family income does not exceed the 
                        poverty threshold (as such terms are 
                        defined by the Office of Management and 
                        Budget and are generally interpreted 
                        and applied by the Bureau of the Census 
                        for the year involved).
                    (D) Floors and ceilings on program need.--
                            (i) In general.--In no case shall 
                        the value of the program need for a 
                        State for a fiscal year be less than 90 
                        percent, or be more than 115 percent, 
                        of the program need based on national 
                        averages (determined under clause (ii)) 
                        for that State for the fiscal year.
                            (ii) Program need based on national 
                        averages.--For purposes of clause (i), 
                        the ``program need based on national 
                        average'' for a fiscal year is equal to 
                        the sum of the product (for each of the 
                        population groups) of the following 3 
                        factors (for that group, year, and 
                        State or District):
                                    (I) Weighting factor for 
                                group.--The weighting factor 
                                for the group (described in 
                                subparagraph (C)(i)).
                                    (II) Total number of needy 
                                in state.--For all groups, the 
                                average annual number of 
                                residents in poverty in such 
                                State or District (as defined 
                                in subparagraph (C)(ii)(I)).
                                    (III) National proportion 
                                of needy in group.--The 
                                proportion, of all individuals 
                                who received medical assistance 
                                under this title in all of the 
                                States and the District in all 
                                such groups, that were 
                                individuals in such group.
                    (E) Determination of national averages and 
                proportions.--The national averages per 
                recipient and the proportions referred to in 
                subparagraph (C)(ii) and (C)(iii), 
                respectively, shall be determined by the 
                Secretary using the most recent data available.
                    (F) Expenditure defined.--For purposes of 
                this paragraph, the term ``expenditure'' means 
                medical vendor payments by basis of eligibility 
                as reported by HCFA Form 2082.
            (3) Health care cost index.--
                    (A) In general.--In this section, the 
                ``health care cost index'' for a State or the 
                District of Columbia for a fiscal year is the 
                sum of--
                            (i) 0.15, and
                            (ii) 0.85 multiplied by the ratio 
                        of (I) the annual average wages for 
                        hospital employees in such State or 
                        District for the fiscal year (as 
                        determined under subparagraph (B)), to 
                        (II) the annual average wages for 
                        hospital employees in the 50 States and 
                        the District of Columbia for such year 
                        (as determined under such 
                        subparagraph).
                    (B) Determination of annual average wages 
                of hospital employees.--The Secretary shall 
                provide for the determination of annual average 
                wages for hospital employees in a State or the 
                District of Columbia and, collectively, in the 
                50 States and the District of Columbia for a 
                fiscal year based on the area wage data 
                applicable to hospitals under section 
                1886(d)(2)(E) (or, if such data no longer 
                exists, comparable data of hospital wages) for 
                discharges occurring during the fiscal year 
                involved.
            (4) National average spending per resident in 
        poverty.--For purposes of this subsection, the 
        ``national average spending per resident in poverty''--
                    (A) for fiscal year 1997 is equal to--
                            (i) the sum (for each of the 50 
                        States and the District of Columbia) of 
                        the total of the Federal and State 
                        expenditures under title XIX for 
                        calendar quarters in fiscal year 1994, 
                        increased by the percentage by which 
                        (I) the base pool amount for fiscal 
                        year 1997, exceeds (II) $83,213,431,458 
                        (which represents Federal medicaid 
                        expenditures for such States and 
                        District for fiscal year 1994); divided 
                        by
                            (ii) the sum of the number of 
                        residents in poverty (as defined in 
                        paragraph (2)(C)(ii)(I)) for all of the 
                        50 States and the District of Columbia 
                        for fiscal year 1994; and
                    (B) for a succeeding fiscal year is equal 
                to the national average spending per resident 
                in poverty under this paragraph for the 
                preceding fiscal year increased by the national 
                growth percentage (as defined in subsection 
                (b)(2)) for the fiscal year involved.
    (e) Publication of Obligation and Outlay Allotments.--
            (1) Notice of preliminary allotments.--Not later 
        than April 1 before the beginning of each fiscal year 
        (beginning with fiscal year 1997), the Secretary shall 
        initially compute, after consultation with the 
        Comptroller General, and publish in the Federal 
        Register notice of the proposed base obligation 
        allotment, base outlay allotment, and supplemental 
        allotments under subsections (f) and (h) for each State 
        under this section (not taking into account subsection 
        (a)(2)(B)) for the fiscal year. The Secretary shall 
        include in the notice a description of the methodology 
        and data used in deriving such allotments for the year.
            (2) Review by gao.--The Comptroller General shall 
        submit to Congress by not later than May 15 of each 
        such fiscal year, a report analyzing such allotments 
        and the extent to which they comply with the precise 
        requirements of this section.
            (3) Notice of final allotments.--Not later than 
        July 1 before the beginning of each such fiscal year, 
        the Secretary, taking into consideration the analysis 
        contained in the report of the Comptroller General 
        under paragraph (2), shall compute and publish in the 
        Federal Register notice of the final allotments under 
        this section (both taking into account and not taking 
        into account subsection (a)(2)(B)) for the fiscal year. 
        The Secretary shall include in the notice a description 
        of any changes in such allotments from the initial 
        allotments published under paragraph (1) for the fiscal 
        year and the reasons for such changes. Once published 
        under this paragraph, the Secretary is not authorized 
        to change such allotments.
            (4) GAO report on final allotments.--The 
        Comptroller General shall submit to Congress by not 
        later than August 1 of each such fiscal year, a report 
        analyzing the final allotments under paragraph (3) and 
        the extent to which they comply with the precise 
        requirements of this section.
            (5) Transitional rule for fiscal year 1997.--With 
        respect to fiscal year 1997, the deadlines under the 
        previous provisions of this subsection shall be 
        extended by a number of days equal to the number of 
        days between May 1, 1996, and the date of the enactment 
        of this title.
    (f) Supplemental Allotment for Certain Health Care Services 
to Certain Aliens.--
            (1) In general.--For purposes of this section for 
        each of fiscal years 1998 through 2002 in the case of a 
        subsection (f) supplemental allotment eligible State, 
        the amount of the supplemental allotment under this 
        subsection is the amount provided under paragraph (2) 
        for the State for that year. Such amount may only be 
        used for the purpose of providing medical assistance 
        for care and services for aliens described in paragraph 
        (1) of section 1513(f) and for which the exception 
        described in paragraph (2) of such section applies. 
        Section 1512(f)(4) shall apply to such assistance in 
        the same manner as it applies to medical assistance 
        described in such section.
            (2) Supplemental amount.--
                    (A) In general.--For purposes of paragraph 
                (1), the supplemental amount for a subsection 
                (f) supplemental allotment eligible State for a 
                fiscal year is equal to the subsection (f) 
                supplemental allotment ratio (as defined in 
                subparagraph (C)) multiplied by the subsection 
                (f) supplemental pool amount (specified in 
                subparagraph (D)) for the fiscal year.
                    (B) Subsection (f) supplemental allotment 
                eligible state.--In this subsection, the term 
                ``subsection (f) supplemental allotment 
                eligible State'' means one of the 15 States 
                with the highest number of undocumented alien 
                residents of all the States.
                    (C) Subsection (f) supplemental allotment 
                ratio.--In this paragraph, the ``subsection (f) 
                supplemental allotment ratio'' for a State is 
                the ratio of--
                            (i) the number of undocumented 
                        aliens residing in the State, to
                            (ii) the sum of such numbers for 
                        all subsection (f) supplemental 
                        allotment eligible States.
                    (D) Subsection (f) supplemental pool 
                amount.--In this paragraph, the ``subsection 
                (f) supplemental pool amount''--
                            (i) for fiscal year 1998 is 
                        $500,000,000,
                            (ii) for fiscal year 1999 is 
                        $600,000,000,
                            (iii) for fiscal year 2000 is 
                        $700,000,000,
                            (iv) for fiscal year 2001 is 
                        $800,000,000, and
                            (v) for fiscal year 2002 is 
                        $900,000,000.
                    (E) Determination of number.--
                            (i) In general.--The number of 
                        undocumented aliens residing in a State 
                        under this paragraph--
                                    (I) for fiscal year 1998 
                                shall be determined based on 
                                estimates of the resident 
                                illegal alien population 
                                residing in each State prepared 
                                by the Statistics Division of 
                                the Immigration and 
                                Naturalization Service as of 
                                October 1992, and
                                    (II) for a subsequent 
                                fiscal year shall be determined 
                                based on the most recent 
                                updated estimate made under 
                                clause (ii).
                            (ii) Updating estimate.--For each 
                        fiscal year beginning with fiscal year 
                        1999, the Secretary, in consultation 
                        with the Commission of the Immigration 
                        and Naturalization Service, States, and 
                        outside experts, shall estimate the 
                        number of undocumented aliens residing 
                        in each of the 50 States and the 
                        District of Columbia.
    (g) Supplemental Per Beneficiary Umbrella Allotment for 
States with Excess Growth in Certain Population Groups.--
            (1) In general.--Subject to paragraphs (5) through 
        (7), for purposes of this section the amount of the 
        supplemental allotment under this subsection for a 
        State for a fiscal year (beginning with fiscal year 
        1997) is the sum, for each supplemental allotment 
        population group described in paragraph (2), of the 
        product of the following:
                    (A) Excess number of individuals.--The 
                excess number of individuals (if any, 
                determined under paragraph (3)) for State and 
                the fiscal year who are in the population 
                group.
                    (B) Applicable per beneficiary amount.--The 
                applicable per beneficiary amount (determined 
                under paragraph (4)) for the State and fiscal 
                year for the population group.
                    (C) FMAP.--The old Federal medical 
                assistance percentage (as defined in section 
                1512(d)) for the State and fiscal year.
            (2) Supplemental allotment population group.--In 
        this subsection, each of the following shall be 
        considered to be a separate ``supplemental allotment 
        population group':
                    (A) Poor pregnant women.--Individuals 
                described in section 1501(a)(1)(A).
                    (B) Poor children.--Individuals (not 
                described in subparagraph (C))--
                            (i) described in subparagraph (B) 
                        or (C) of section 1501(a)(1), or
                            (ii) described in subparagraph (F) 
                        or (G) of section 1501(a)(1) who are 
                        under 21 years of age and who are not 
                        pregnant women.
                    (C) Poor disabled individuals.--Only in the 
                case of a State that has elected the option (of 
                guaranteeing coverage of disabled individuals) 
                described in section 1501(a)(1)(D)(ii) for the 
                fiscal year (and, in the case of a fiscal year 
                after fiscal year 1997, for the previous fiscal 
                year), individuals--
                            (i) who are described in such 
                        section; or
                            (ii) who are described in section 
                        1502(a) under paragraph (1) of that 
                        section.
                    (D) Poor elderly individuals.--Individuals 
                who are--
                            (i) described in section 
                        1501(a)(1)(E); or
                            (ii) described in section 1502(a) 
                        under paragraph (2) of that section.
                    (E) Qualified medicare beneficiaries.--
                Individuals described in section 1501(b)(1)(A) 
                who are not described in subparagraph (D).
                    (F) Qualified disabled and working 
                individuals.--Individuals described in section 
                1501(b)(1)(B) who are not described in 
                subparagraph (D).
                    (G) Certain other medicare beneficiaries.--
                Individuals described in section 1501(b)(1)(C) 
                who are not described in subparagraph (D).
                    (H) Other poor adults.--Individuals 
                described in section 1501(a)(1)(G) who are not 
                within a population group described in a 
                previous subparagraph.
            (3) Excess number of individuals.--
                    (A) In general.--In this subsection, the 
                ``excess number of individuals'', for a State 
                for a fiscal year with respect to a 
                supplemental allotment population group, is 
                equal to the amount (if any) by which--
                            (i) the number of full-year 
                        equivalent individuals in the 
                        population group for the State and 
                        fiscal year, exceeds
                            (ii) the anticipated number of such 
                        individuals (as determined under 
                        subparagraph (B)) for the State and 
                        fiscal year in such group.
                    (B) Anticipated number.--
                            (i) In general.--In subparagraph 
                        (A)(ii), the ``anticipated number'' of 
                        individuals for a State in a 
                        supplemental allotment population group 
                        for--
                                    (I) fiscal year 1997 is 
                                equal to the number of full-
                                year equivalent individuals in 
                                such group enrolled in the 
                                State medicaid plan under title 
                                XIX in fiscal year 1996 
                                increased by the percentage 
                                increase factor (described in 
                                clause (ii)) for fiscal year 
                                1997; or
                                    (II) a subsequent fiscal 
                                year is equal to the number of 
                                full-year equivalent 
                                individuals in the population 
                                group for the State for the 
                                previous fiscal year increased 
                                by the percentage increase 
                                factor (described in clause 
                                (ii)) for that subsequent 
                                fiscal year.
                            (ii) Percentage increase factor.--
                        For purposes of this subparagraph, the 
                        ``percentage increase factor'' for a 
                        fiscal year is equal to zero or, if 
                        greater, the number of percentage 
                        points by which (I) the State 
                        percentage growth factor (as defined in 
                        subparagraph (C)) for the fiscal year, 
                        exceeds (II) the percentage increase in 
                        the consumer price index for all urban 
                        consumers (U.S. city average) during 
                        the 12-month period beginning with July 
                        before the beginning of the fiscal 
                        year.
                    (C) State percentage growth factor.--In 
                this paragraph, the term ``State percentage 
                growth factor'' means, for a State for a fiscal 
                year, the percentage by which (i) the State 
                outlay allotment for the State for the fiscal 
                year (determined under this section without 
                regard to this subsection or subsection (f) or 
                (h)), exceeds (ii) such outlay allotment for 
                such State for the preceding fiscal year (as so 
                determined).
                    (D) Individuals count only once.--An 
                individual may at any time not be counted in 
                more than one supplemental allotment population 
                group.
            (4) Applicable per beneficiary amount.--
                    (A) In general.--In this subsection, 
                subject to subparagraph (D), the ``applicable 
                per beneficiary amount'', for a State for a 
                fiscal year for a supplemental allotment 
                population group, is equal to the base per 
                beneficiary amount (determined under 
                subparagraph (B)) for the State for the group, 
                increased by the Secretary's estimate of the 
                increase in the per beneficiary expenditures 
                under this title (and title XIX) for States 
                between fiscal year 1995 and fiscal year 1996, 
                and further increased (for each subsequent 
                fiscal year up to the fiscal year involved and 
                in a compounded manner) by the CPI increase 
                factor (as defined in subparagraph (C)) for 
                each such fiscal year.
                    (B) Base per beneficiary amount.--
                            (i) In general.--The Secretary 
                        shall determine for each State a base 
                        per beneficiary amount for each 
                        supplemental allotment population group 
                        equal to--
                                    (I) the sum of the total 
                                expenditure amounts described 
                                in clauses (ii) and (iii), 
                                divided by
                                    (II) the full-year 
                                equivalent number of such 
                                individuals in such group 
                                enrolled under the State plan 
                                under title XIX for fiscal year 
                                1995.
                            (ii) Medical assistance 
                        expenditures.--The total expenditure 
                        amount described in this clause, with 
                        respect to a supplemental allotment 
                        population group, is the total amount 
                        of expenditures for which Federal 
                        financial participation was provided to 
                        the State under paragraphs (1) and (5) 
                        of section 1903(a) for fiscal year 1995 
                        with respect to medical assistance 
                        furnished with respect to individuals 
                        included in such group. Such amount 
                        shall not include expenditures 
                        attributable to payment adjustments 
                        under section 1923.
                            (iii) Administrative 
                        expenditures.--The total expenditure 
                        amount described in this clause, with 
                        respect to a supplemental allotment 
                        population group, is the product of--
                                    (I) the total amount of 
                                administrative expenditures for 
                                which Federal financial 
                                participation was provided to 
                                the State under section 1903(a) 
                                (other than paragraphs (1) and 
                                (5) of such section) for fiscal 
                                year 1995, and
                                    (II) the ratio described in 
                                clause (iv) for the population 
                                group.
                    (iv) Ratio described.--The ratio described 
                in this clause for a group is the ratio of--
                                    (I) the total amount of 
                                expenditures described in 
                                clause (ii) for the group, to
                                    (II) the total amount of 
                                expenditures described in such 
                                clause for all individuals 
                                under the State plan under 
                                title XIX in the base fiscal 
                                year.
                    (C) CPI increase factor.--In subparagraph 
                (A), the ``CPI increase factor'' for a fiscal 
                year is the percentage by which--
                            (i) the Secretary's estimate of the 
                        average value of the consumer price 
                        index for all urban consumers (all 
                        items, U.S. city average) for months in 
                        the fiscal year, exceeds
                            (ii) the average value of such 
                        index for months in the previous fiscal 
                        year.
                    (D) Special rules for certain medicare 
                beneficiaries.--
                            (i) Qualified disabled and working 
                        individuals.--In the case of the 
                        supplemental allotment population group 
                        described in paragraph (2)(F), the 
                        ``applicable per beneficiary amount'', 
                        for all States for a fiscal year is the 
                        sum of the medicare premiums applied 
                        under section 1818A for months in the 
                        fiscal year.
                            (ii) Other medicare 
                        beneficiaries.--In the case of the 
                        supplemental allotment population group 
                        described in paragraph (2)(G), the 
                        ``applicable per beneficiary amount'', 
                        for all States for a fiscal year is the 
                        sum of the medicare premiums applied 
                        under section 1839 for months in the 
                        fiscal year.
            (5) Conditions for access to umbrella supplemental 
        allotment.--
                    (A) In general.--A State may receive a 
                supplemental umbrella allotment under this 
                subsection for a fiscal year only if the 
                following conditions are met:
                            (i) The State provides assurances 
                        satisfactory to the Secretary that it 
                        will obligate during the fiscal year 
                        the full amount of the allotment 
                        otherwise provided under this section 
                        for the fiscal year.
                            (ii) The State provides assurances 
                        satisfactory to the Secretary that any 
                        amount attributable to a carryover from 
                        a previous fiscal year under subsection 
                        (a)(2)(B) shall also be obligated under 
                        the plan by the end of the fiscal year.
                            (iii) The State submits to the 
                        Secretary on a periodic basis such 
                        reports on numbers of individuals 
                        within each supplemental allotment 
                        population group as the Secretary may 
                        determine necessary to assure the 
                        accuracy of the supplemental umbrella 
                        allotments under this subsection. The 
                        Secretary may not require the 
                        submission of such reports more 
                        frequently than quarterly.
                            (iv) The State provides assurances 
                        satisfactory to the Secretary that it 
                        has in effect such data collection 
                        procedures as may be necessary to 
                        provide for the reports described in 
                        clause (iii).
                    (B) Estimate.--The amount of any 
                supplemental allotment under this subsection 
                shall be estimated in advance of the fiscal 
                year involved, based on data required to be 
                reported under subparagraph (A)(iii). The 
                Secretary is authorized to adjust such data on 
                a preliminary basis if the Secretary determines 
                that the estimates do not reasonably reflect 
                the actual excess number of individuals in the 
                supplemental allotment population groups for 
                the fiscal year involved. Section 1512(b)(6) 
                provides for adjustment of payments of the 
                supplemental allotment under this subsection 
                based on a final determination using data on 
                actual numbers of individual in each 
                supplemental allotment population group.
            (6) Adjustment in allotment for savings from slower 
        population growth.--
                    (A) In general.--The amount of the 
                supplemental umbrella allotment to a State 
                under this subsection for a fiscal year shall 
                be reduced (but not below zero) by the sum, for 
                each supplemental allotment population group 
                described in paragraph (2), of the product of 
                the following:
                            (i) Less-than-anticipated number of 
                        individuals.--The less-than-anticipated 
                        number of individuals (if any, 
                        determined under subparagraph (B)) for 
                        State and the fiscal year who are in 
                        the population group.
                            (ii) Applicable per beneficiary 
                        amount.--The applicable per beneficiary 
                        amount (determined under paragraph (4)) 
                        for the State and fiscal year for the 
                        population group.
                            (iii) FMAP.--The old Federal 
                        medical assistance percentage (as 
                        defined in section 1512(d)) for the 
                        State and fiscal year.
                    (B) Less-than-anticipated number of 
                individuals.--In this paragraph, the ``less-
                than-anticipated number of individuals'', for a 
                State for a fiscal year with respect to a 
                supplemental allotment population group, is 
                equal to the amount (if any) by which--
                            (i) the anticipated number of such 
                        individuals (as determined under 
                        paragraph (3)(B)) for the State and 
                        fiscal year in such group, exceeds
                            (ii) the number of full-year 
                        equivalent individuals in the 
                        population group for the State and 
                        fiscal year.
            (7) Special rule for fiscal year 1997.--In applying 
        this subsection to fiscal year 1997--
                    (A) in determining the excess number of 
                individuals under paragraph (3)--
                            (i) the number of full-year 
                        equivalent individuals shall only be 
                        determined based on the portion of 
                        fiscal year 1997 in which the State 
                        plan is in effect under this title, and
                            (ii) the anticipated number of such 
                        individuals (referred to in paragraph 
                        (3)(A)(ii)) shall be the anticipated 
                        number otherwise determined multiplied 
                        by the proportion of fiscal year 1997 
                        in which such State plan will be in 
                        effect; and
                    (B) if the State plan is effective before 
                April 1, 1997, the amount of the supplemental 
                allotment otherwise determined under this 
                subsection shall be multiplied by the ratio of 
                the portion of fiscal year 1997 that occurs on 
                or after April 1, 1997, to the total portion of 
                such fiscal year in which the State plan is in 
                effect.
    (h) Allotment for Medical Assistance for Services Provided 
in Indian Health Service and Related Facilities.--
            (1) In general.--For purposes of this section for 
        each of fiscal years 1998 through 2002 in the case of a 
        subsection (h) supplemental allotment eligible State, 
        the amount of the supplemental allotment under this 
        subsection is the amount provided under paragraph (2) 
        for the State for that year. Such amount may only be 
        used for the purpose of providing medical assistance 
        described in section 1512(f)(3) (relating to services 
        provided by the Indian Health Service and related 
        facilities).
            (2) Supplemental outlay allotment.--
                    (A) In general.--For purposes of paragraph 
                (1), the amount under this paragraph for a 
                subsection (h) supplemental allotment eligible 
                State for a fiscal year is equal to the 
                subsection (h) supplemental allotment ratio (as 
                defined in subparagraph (C)) multiplied by the 
                subsection (h) supplemental pool amount 
                (specified in subparagraph (D)) for the fiscal 
                year.
                    (B) Subsection (h) supplemental allotment 
                eligible state.--In this subsection, the term 
                ``subsection (h) supplemental allotment 
                eligible State'' means a State that has one or 
                more facilities described in section 
                1512(f)(3)(A).
                    (C) Subsection (h) supplemental allotment 
                ratio.--In this paragraph, the ``subsection (h) 
                supplemental allotment ratio'' for a State is 
                the ratio of--
                            (i) the number of Indians residing 
                        in the State, to
                            (ii) the sum of such numbers for 
                        all subsection (h) supplemental 
                        allotment eligible States.
                    (D) Subsection (h) supplemental pool 
                amount.--In this paragraph, the ``subsection 
                (h) supplemental pool amount'', for--
                            (i) fiscal year 1998 is 
                        $89,090,082,
                            (ii) fiscal year 1999 is 
                        $94,238,788,
                            (iii) fiscal year 2000 is 
                        $99,685,050,
                            (iv) fiscal year 2001 is 
                        $105,446,063, and
                            (v) fiscal year 2002 is 
                        $111,540,017.
                    (E) Determination of number.--The number of 
                Indians residing in a State under this 
                paragraph for a fiscal year shall be based on 
                the most recent available estimate of the 
                Secretary of the Interior.
            (3) Indian defined.--The term ``Indian'' has the 
        meaning given such term in section 4(d) of the Indian 
        Self-Determination and Education Assistance Act (25 
        U.S.C. 450b(d)).

SEC. 1512. PAYMENTS TO STATES.

    (a) Amount of Payment.--From the allotment of a State under 
section 1511 for a fiscal year, subject to the succeeding 
provisions of this title, the Secretary shall pay to each State 
which has a State plan approved under part C, for each quarter 
in the fiscal year--
            (1) an amount equal to the applicable Federal 
        medical assistance percentage (as defined in subsection 
        (c)) of the total amount expended during such quarter 
        as medical assistance under the plan; plus
            (2) an amount equal to the applicable Federal 
        medical assistance percentage of the total amount 
        expended during such quarter for medically-related 
        services (as defined in section 1571(g)); plus
            (3) subject to section 1513(c)--
                    (A) an amount equal to 90 percent of the 
                amounts expended during such quarter for the 
                design, development, and installation of 
                information systems and for providing 
                incentives to promote the enforcement of 
                medical support orders, plus
                    (B) an amount equal to 75 percent of the 
                amounts expended during such quarter for 
                medical personnel, administrative support of 
                medical personnel, operation and maintenance of 
                information systems, modification of 
                information systems, quality assurance 
                activities, utilization review, medical and 
                peer review, anti-fraud activities, independent 
                evaluations, coordination of benefits, and 
                meeting reporting requirements under this 
                title, plus
                    (C) an amount equal to 50 percent of so 
                much of the remainder of the amounts expended 
                during such quarter as are expended by the 
                State in the administration of the State plan.
    (b) Payment Process.--
            (1) Quarterly estimates.--Prior to the beginning of 
        each quarter, the Secretary shall estimate the amount 
        to which a State will be entitled under subsection (a) 
        for such quarter, such estimates to be based on (A) a 
        report filed by the State containing its estimate of 
        the total sum to be expended in such quarter in 
        accordance with the provisions of such subsections, and 
        stating the amount appropriated or made available by 
        the State and its political subdivisions for such 
        expenditures in such quarter, and if such amount is 
        less than the State's proportionate share of the total 
        sum of such estimated expenditures, the source or 
        sources from which the difference is expected to be 
        derived, and (B) such other investigation as the 
        Secretary may find necessary.
            (2) Payment.--
                    (A) In general.--The Secretary shall then 
                pay to the State, in such installments as the 
                Secretary may determine and in accordance with 
                section 6503(a) of title 31, United States 
                Code, the amount so estimated, reduced or 
                increased to the extent of any overpayment or 
                underpayment which the Secretary determines was 
                made under this section (or section 1903) to 
                such State for any prior quarter and with 
                respect to which adjustment has not already 
                been made under this subsection (or under 
                section 1903(d)).
                    (B) Treatment as overpayments.--
                Expenditures for which payments were made to 
                the State under subsection (a) shall be treated 
                as an overpayment to the extent that the State 
                or local agency administering such plan has 
                been reimbursed for such expenditures by a 
                third party pursuant to the provisions of its 
                plan in compliance with section 1555.
                    (C) Recovery of overpayments.--For purposes 
                of this subsection, when an overpayment is 
                discovered, which was made by a State to a 
                person or other entity, the State shall have a 
                period of 60 days in which to recover or 
                attempt to recover such overpayment before 
                adjustment is made in the Federal payment to 
                such State on account of such overpayment. 
                Except as otherwise provided in subparagraph 
                (D), the adjustment in the Federal payment 
                shall be made at the end of the 60 days, 
                whether or not recovery was made.
                    (D) No adjustment for uncollectables.--In 
                any case where the State is unable to recover a 
                debt which represents an overpayment (or any 
                portion thereof) made to a person or other 
                entity on account of such debt having been 
                discharged in bankruptcy or otherwise being 
                uncollectable, no adjustment shall be made in 
                the Federal payment to such State on account of 
                such overpayment (or portion thereof).
            (3) Federal share of recoveries.--The pro rata 
        share to which the United States is equitably entitled, 
        as determined by the Secretary, of the net amount 
        recovered during any quarter by the State or any 
        political subdivision thereof with respect to medical 
        assistance furnished under the State plan shall be 
        considered an overpayment to be adjusted under this 
        subsection.
            (4) Timing of obligation of funds.--Upon the making 
        of any estimate by the Secretary under this subsection, 
        any appropriations available for payments under this 
        section shall be deemed obligated.
            (5) Disallowances.--In any case in which the 
        Secretary estimates that there has been an overpayment 
        under this section to a State on the basis of a claim 
        by such State that has been disallowed by the Secretary 
        under section 1116(d) or in the case described in 
        paragraph (6)(C), and such State disputes such 
        disallowance or an adjustment under such paragraph, the 
        amount of the Federal payment in controversy shall, at 
        the option of the State, be retained by such State or 
        recovered by the Secretary pending a final 
        determination with respect to such payment amount. If 
        such final determination is to the effect that any 
        amount was properly disallowed, and the State chose to 
        retain payment of the amount in controversy, the 
        Secretary shall offset, from any subsequent payments 
        made to such State under this title, an amount equal to 
        the proper amount of the disallowance plus interest on 
        such amount disallowed for the period beginning on the 
        date such amount was disallowed and ending on the date 
        of such final determination at a rate (determined by 
        the Secretary) based on the average of the bond 
        equivalent of the weekly 90-day treasury bill auction 
        rates during such period.
            (6) Adjustments in payments reflecting over- and 
        under-estimations of supplemental umbrella allotment.--
                    (A) In general.--Based on data reported 
                under section 1511(g)(5)(A)(iii) and annual 
                audits provided for under section 1551(a) on 
                the actual excess number of individuals in each 
                population group for a fiscal year, the 
                Secretary shall determine the final amount of 
                the supplemental umbrella allotment for each 
                State for the fiscal year and whether, based on 
                such final amount, the amount of payment made 
                for the fiscal year was greater, or less, than 
                the amount that should have been paid if 
                payments had been made based on such final 
                amount.
                    (B) Payment in case of underestimation.--If 
                the Secretary determines under subparagraph (A) 
                there was an underpayment to a State, the 
                Secretary shall increase the amount of the next 
                quarterly payment under this section to the 
                State by the amount of such underpayment.
                    (C) Offsetting of payments in case of 
                overestimation.--If the Secretary determines 
                under subparagraph (A) there was an overpayment 
                to a State, the Secretary shall, subject to the 
                procedures provided under paragraph (5), 
                decrease the amount of the payment for the next 
                quarter (or, at the discretion of the 
                Secretary, over a period of not more than 4 
                calendar quarters) by the amount of such 
                overpayment. In the case in which a State seeks 
                review of such a determination in accordance 
                with the procedures under paragraph (5), the 
                Secretary shall provide for completion of such 
                review process within 1 year after the date the 
                State requests such review.
    (c) Applicable Federal Medical Assistance Percentage 
Defined.--In this section, except as provided in subsection 
(f), the term ``applicable Federal medical assistance 
percentage'' means, with respect to one of the 50 States or the 
District of Columbia, at the State's or District's option--
            (1) the old Federal medical assistance percentage 
        (as determined in subsection (d));
            (2) the lesser of--
                    (A) new Federal medical assistance 
                percentage (as determined under subsection (e)) 
                or
                    (B) the old Federal medical assistance 
                percentage plus 10 percentage points; or
            (3) 60 percent.
    (d) Old Federal Medical Assistance Percentage.--
            (1) In general.--Except as provided in paragraph 
        (2) and subsection (f), the term ``old Federal medical 
        assistance percentage'' for any State is 100 percent 
        less the State percentage; and the State percentage is 
        that percentage which bears the same ratio to 45 
        percent as the square of the per capita income of such 
        State bears to the square of the per capita income of 
        the continental United States (including Alaska) and 
        Hawaii.
            (2) Limitation on range.--In no case shall the old 
        Federal medical assistance percentage be less than 50 
        percent or more than 83 percent.
            (3) Promulgation.--The old Federal medical 
        assistance percentage for any State shall be determined 
        and promulgated in accordance with the provisions of 
        section 1101(a)(8)(B).
    (e) New Federal Medical Assistance Percentage Defined.--
            (1) In general.--
                    (A) Term defined.--Except as provided in 
                paragraph (3) and subsection (f), the term 
                ``new Federal medical assistance percentage'' 
                means, for each of the 50 States and the 
                District of Columbia, 100 percent reduced by 
                the product 0.39 and the ratio of--
                            (i)(I) for each of the 50 States, 
                        the total taxable resources (TTR) ratio 
                        of the State specified in subparagraph 
                        (B), or
                            (II) for the District of Columbia, 
                        the per capita income ratio specified 
                        in subparagraph (C),
                to--
                            (ii) the aggregate expenditure need 
                        ratio of the State or District, as 
                        described in subparagraph (D).
                    (B) Total taxable resources (ttr) ratio.--
                For purposes of subparagraph (A)(i)(I), the 
                total taxable resources (TTR) ratio for each of 
                the 50 States is--
                            (i) an amount equal to the most 
                        recent 3-year average of the total 
                        taxable resources (TTR) of the State, 
                        as determined by the Secretary of the 
                        Treasury, divided by
                            (ii) an amount equal to the sum of 
                        the 3-year averages determined under 
                        clause (i) for each of the 50 States.
                    (C) Per capita income ratio.--For purposes 
                of subparagraph (A)(i)(II), the per capita 
                income ratio of the District of Columbia is--
                            (i) an amount equal to the most 
                        recent 3-year average of the total 
                        personal income of the District of 
                        Columbia, as determined in accordance 
                        with the provisions of section 
                        1101(a)(8)(B), divided by
                            (ii) an amount equal to the total 
                        personal income of the continental 
                        United States (including Alaska) and 
                        Hawaii, as determined under section 
                        1101(a)(8)(B).
                    (D) Aggregate expenditure need ratio.--For 
                purposes of subparagraph (A), with respect to 
                each of the 50 States and the District of 
                Columbia for a fiscal year, the aggregate 
                expenditure need ratio is--
                            (i) the State aggregate expenditure 
                        need (as defined in section 1511(d)) 
                        for the State for the fiscal year, 
                        divided by
                            (ii) the sum of such State 
                        aggregate expenditure needs for the 50 
                        States and the District of Columbia for 
                        the fiscal year.
            (2) Limitation on range.--Except as provided in 
        subsection (f), the new Federal medical assistance 
        percentage shall in no case be less than 40 percent or 
        greater than 83 percent.
            (3) Promulgation.--The new Federal medical 
        assistance percentage for any State shall be 
        promulgated in a timely manner consistent with the 
        promulgation of the old Federal medical assistance 
        percentage under section 1101(a)(8)(B).
    (f) Special Rules.--For purposes of this title:
            (1) Commonwealths and territories.--In the case of 
        Puerto Rico, the Virgin Islands, Guam, the Northern 
        Mariana Islands, and American Samoa, the old and new 
        Federal medical assistance percentages are 50 percent.
            (2) Alaska.--In the case of Alaska, the old Federal 
        medical assistance percentage is that percentage which 
        bears the same ratio to 45 percent as the square of the 
        adjusted per capita income of such State bears to the 
        square of the per capita income of the continental 
        United States. For purposes of the preceding sentence, 
        the adjusted per capita income for Alaska shall be 
        determined by dividing the State's most recent 3-year 
        average per capita by the health care cost index for 
        such State (as determined under section 1511(d)(3)).
            (3) Indian health service and related facilities.--
        The old and new Federal medical assistance percentages 
        shall be 100 percent with respect to the amounts 
        expended as medical assistance for services provided 
        by--
                    (A) an Indian Health Service facility;
                    (B) an Indian health program operated by an 
                Indian tribe or tribal organization (as defined 
                in section 4 of the Indian Health Care 
                Improvement Act) pursuant to a contract, grant, 
                cooperative agreement, or compact with the 
                Indian Health Service under the Indian Self-
                Determination Act; or
                    (C) an urban Indian health program operated 
                by an urban Indian organization pursuant to a 
                grant or contract with the Indian Health 
                Service under title V of the Indian Health Care 
                Improvement Act.
            (4) No state matching required for certain 
        expenditures.--In applying subsection (a)(1) with 
        respect to medical assistance provided to unlawful 
        aliens pursuant to the exception specified in section 
        1513(f)(2), payment shall be made for the amount of 
        such assistance without regard to any need for a State 
        match.
            (5) Special transitional rule.--
                    (A) In general.--Notwithstanding subsection 
                (a), in order to receive the full State outlay 
                allotment described in section 
                1511(c)(3)(C)(i), a State described in 
                subparagraph (C) shall expend State funds in a 
                fiscal year (before fiscal year 2000) under a 
                State plan under this title in an amount not 
                less than the adjusted base year State 
                expenditures, plus the applicable percentage of 
                the difference between such expenditures and 
                the amount necessary to qualify for the full 
                State outlay allotment so described in such 
                fiscal year as determined under this section 
                without regard to this paragraph.
                    (B) Reduction in allotment if expenditure 
                not met.--In the event a State described in 
                subparagraph (C) fails to expend State funds in 
                an amount required by subparagraph (A) for a 
                fiscal year, the outlay allotment described in 
                section 1511(c)(3)(C)(i) for such year for such 
                State shall be reduced by an amount which bears 
                the same ratio to such outlay allotment as the 
                State funds expended in such fiscal year bears 
                to the amount required by subparagraph (A).
                    (C) Adjusted base year state 
                expenditures.--For purposes of this paragraph, 
                the term ``adjusted base year State 
                expenditures'' means, for Louisiana, 
                $355,000,000.
                    (D) Applicable percentage.--For purposes of 
                this paragraph, the applicable percentage for a 
                fiscal year is specified in the following 
                table:
                                                              Applicable
Fiscal year:                                                 Percentage:
    1996......................................................       20 
    1997......................................................       40 
    1998......................................................       60 
    1999......................................................       80.

            (6) Treatment of expenditures attributable to 
        umbrella fund.--The ``applicable Federal medical 
        assistance percentage'' with respect to amounts 
        attributable to supplemental amounts described in 
        section 1511(g), is the old Federal medical assistance 
        percentage.
    (g) Use of Local Funds.--
            (1) In general.--Subject to paragraph (2), a State 
        may use local funds to meet the non-Federal share of 
        the expenditures under the State plan with respect to 
        which payments may be made under this section.
            (2) Limitation.--For any fiscal year local funds 
        may not exceed 40 percent of the total of the non-
        Federal share of such expenditures for the fiscal year.
    (h) Permitting Inter-Governmental Funds Transfers.--
            (1) In general.--Public funds, as defined in 
        paragraph (2), may be considered as the State's share 
        in determining State financial participation under this 
        title.
            (2) Public funds defined.--For purposes of this 
        subsection, the term ``public funds'' means funds--
                    (A) that are--
                            (i) appropriated directly to the 
                        State or to the local agency 
                        administering the State plan under this 
                        title, or transferred from other public 
                        agencies (including Indian tribes) to 
                        the State or local agency and under its 
                        administrative control, or
                            (ii) certified by the contributing 
                        public agency as representing 
                        expenditures eligible for Federal 
                        financial participation under this 
                        title; and
                    (B) that--
                            (i) are not Federal funds, or
                            (ii) are Federal funds authorized 
                        by Federal law to be used to match 
                        other Federal funds.
    (i) Application of Provider Tax and Donation 
Restrictions.--
            (1) In general.--Subject to paragraph (2), the 
        provisions of section 1903(w) (as in effect on June 1, 
        1996) shall apply under this title in the same manner 
        as they applied under title XIX (as of such date).
            (2) Waiver authority.--Beginning 2 years after the 
        date of the enactment of this title, the Secretary, 
        taking into account the report submitted under section 
        1513(j)(2), may waive, upon the application of a State, 
        paragraph (1) as it applies in that State if the 
        Secretary determines that the waiver would not 
        financially undermine the program under this title and 
        would not otherwise be abusive.

SEC. 1513. LIMITATION ON USE OF FUNDS; DISALLOWANCE.

    (a) In General.--Funds provided to a State under this title 
shall only be used to carry out the purposes of this title.
    (b) Disallowances For Excluded Providers.--
            (1) In general.--Payment shall not be made to a 
        State under this part for expenditures for items and 
        services furnished--
                    (A) by a provider who was excluded from 
                participation under title V, XVIII, or XX or 
                under this title pursuant to section 1128, 
                1128A, 1156, or 1842(j)(2), or
                    (B) under the medical direction or on the 
                prescription of a physician who was so 
                excluded, if the provider of the services knew 
                or had reason to know of the exclusion.
            (2) Exception for emergency services.--Paragraph 
        (1) shall not apply to emergency items or services, not 
        including hospital emergency room services.
    (c) Limitations on Payments for Medically-Related Services 
and Administrative Expenses.--
            (1) In general.--No Federal financial assistance is 
        available for expenditures under the State plan for--
                    (A) medically-related services for a 
                quarter to the extent such expenditures exceed 
                5 percent of the total expenditures under the 
                plan for the quarter, or
                    (B) total administrative expenses (other 
                than expenses described in paragraph (2) during 
                the first 8 quarters in which the plan is in 
                effect under this title) for quarters in a 
                fiscal year to the extent such expenditures 
                exceed the sum of $20,000,000 plus 10 percent 
                of the total expenditures under the plan for 
                the year.
            (2) Administrative expenses not subject to 
        limitation.--The administrative expenses referred to in 
        this paragraph are expenditures under the State plan 
        for the following activities:
                    (A) Quality assurance.
                    (B) The development and operation of the 
                certification program for nursing facilities 
                and intermediate care facilities for the 
                mentally retarded under section 1557.
                    (C) Utilization review activities, 
                including medical activities and activities of 
                peer review organizations.
                    (D) Inspection and oversight of providers 
                and capitated health care organizations.
                    (E) Anti-fraud activities.
                    (F) Independent evaluations.
                    (G) Activities required to meet reporting 
                requirements under this title.
    (d) Treatment of Third Party Liability.--No payment shall 
be made to a State under this part for expenditures for medical 
assistance provided for an individual under its State plan to 
the extent that a private insurer (as defined by the Secretary 
by regulation and including a group health plan (as defined in 
section 607(1) of the Employee Retirement Income Security Act 
of 1974), a service benefit plan, and a health maintenance 
organization) would have been obligated to provide such 
assistance but for a provision of its insurance contract which 
has the effect of limiting or excluding such obligation because 
the individual is eligible for or is provided medical 
assistance under the plan.
    (e) Secondary Payer Provisions.--Except as otherwise 
provided by law, no payment shall be made to a State under this 
part for expenditures for medical assistance provided for an 
individual under its State plan to the extent that payment has 
been made or can reasonably be expected to be made promptly (as 
determined in accordance with regulations) under any other 
federally operated or financed health care insurance program, 
other than an insurance program operated or financed by the 
Indian Health Service, as identified by the Secretary. For 
purposes of this subsection, rules similar to the rules for 
overpayments under section 1512(b) shall apply.
    (f) Limitation on Payments For Services to Nonlawful 
Aliens.--
            (1) In general.--Notwithstanding the preceding 
        provisions of this section, except as provided in 
        paragraph (2), no payment may be made to a State under 
        this part for medical assistance furnished to an alien 
        who is not lawfully admitted for permanent residence or 
        otherwise permanently residing in the United States 
        under color of law.
            (2) Exception.--Payment may be made under this 
        section for care and services that are furnished to an 
        alien described in paragraph (1) only if--
                    (A) such care and services are necessary 
                for the treatment of an emergency medical 
                condition of the alien (or, at the option of 
                the State, for prenatal care),
                    (B) such alien otherwise meets the 
                eligibility requirements for medical assistance 
                under the State plan (other than a requirement 
                of the receipt of aid or assistance under title 
                IV, supplemental security income benefits under 
                title XVI, or a State supplementary payment), 
                and
                    (C) such care and services are not related 
                to an organ transplant procedure.
            (3) Emergency medical condition defined.--For 
        purposes of this subsection, the term ``emergency 
        medical condition'' means a medical condition 
        (including emergency labor and delivery) manifesting 
        itself by acute symptoms of sufficient severity 
        (including severe pain) such that the absence of 
        immediate medical attention could reasonably be 
        expected to result in--
                    (A) placing the patient's health in serious 
                jeopardy,
                    (B) serious impairment to bodily functions, 
                or
                    (C) serious dysfunction of any bodily organ 
                or part.
    (g) Limitation on Payment for Certain Outpatient 
Prescription Drugs.--
            (1) In general.--No payment may be made to a State 
        under this part for medical assistance for covered 
        outpatient drugs (as defined in section 1575(i)(2)) of 
        a manufacturer provided under the State plan unless the 
        manufacturer (as defined in section 1575(i)(4)) of the 
        drug--
                    (A) has entered into a master rebate 
                agreement with the Secretary under section 
                1575,
                    (B) is otherwise complying with the 
                provisions of such section,
                    (C) subject to paragraph (4), is complying 
                with the provisions of section 8126 of title 
                38, United States Code, including the 
                requirement of entering into a master agreement 
                with the Secretary of Veterans Affairs under 
                such section, and
                    (D) subject to paragraph (4), is complying 
                with the provisions of section 340B of the 
                Public Health Service Act, including the 
                requirement of entering into an agreement with 
                the Secretary under such section.
            (2) Construction.--Nothing in this subsection shall 
        be construed as requiring a State to participate in the 
        master rebate agreement under section 1575.
            (3) Effect of subsequent amendments.--For purposes 
        of subparagraphs (C) and (D) of paragraph (1), in 
        determining whether a manufacturer is in compliance 
        with the requirements of section 8126 of title 38, 
        United States Code, or section 340B of the Public 
        Health Service Act--
                    (A) the Secretary shall not take into 
                account any amendments to such sections that 
                are enacted after the enactment of title VI of 
                the Veterans Health Care Act of 1992, and
                    (B) a manufacturer is deemed to meet such 
                requirements if the manufacturer establishes to 
                the satisfaction of the Secretary that the 
                manufacturer would comply (and has offered to 
                comply) with the provisions of such sections 
                (as in effect immediately after the enactment 
                of the Veterans Health Care Act of 1992) and 
                would have entered into an agreement under such 
                section (as such section was in effect at such 
                time), but for a legislative change in such 
                section after the date of the enactment of the 
                Veterans Health Care Act of 1992.
            (4) Effect of establishment of alternative 
        mechanism under public health service act.--If the 
        Secretary does not establish a mechanism to ensure 
        against duplicate discounts or rebates under section 
        340B(a)(5)(A) of the Public Health Service Act within 
        12 months of the date of the enactment of such section, 
        the following requirements shall apply:
                    (A) Each covered entity under such section 
                shall inform the State when it is seeking 
                reimbursement from the State plan for medical 
                assistance with respect to a unit of any 
                covered outpatient drug which is subject to an 
                agreement under section 340B(a) of such Act.
                    (B) Each such State shall provide a means 
                by which such an entity shall indicate on any 
                drug reimbursement claims form (or format, 
                where electronic claims management is used) 
                that a unit of the drug that is the subject of 
                the form is subject to an agreement under 
                section 340B of such Act, and not submit to any 
                manufacturer a claim for a rebate payment with 
                respect to such a drug.
    (h) Limitation on Payment for Abortions.--
            (1) In general.--Payment shall not be made to a 
        State under this part for any amount expended under the 
        State plan to pay for any abortion or to assist in the 
        purchase, in whole or in part, of health benefit 
        coverage that includes coverage of abortion.
            (2) Exception.--Paragraph (1) shall not apply to an 
        abortion--
                    (A) if the pregnancy is the result of an 
                act of rape or incest, or
                    (B) in the case where a woman suffers from 
                a physical disorder, illness, or injury that 
                would, as certified by a physician, place the 
                woman in danger of death unless an abortion is 
                performed.
    (i) Limitation on Payment for Assisting Deaths.--Payment 
shall not be made to a State under this part for amounts 
expended under the State plan to pay for, or to assist in the 
purchase, in whole or in part, of health benefit coverage that 
includes payment for any drug, biological product, or service 
which was furnished for the purpose of causing, or assisting in 
causing, the death, suicide, euthanasia, or mercy killing of a 
person.
    (j) Study and Report on State Funding.--
            (1) Study.--The Comptroller General shall provide 
        for a study of the methods by which States provide for 
        financing their share of expenditures under this title. 
        Such study shall include an examination of the use of 
        provider taxes and donations, as well as 
        intergovernmental transfers.
            (2) Report.--Not later than 2 years after the date 
        of the enactment of this title, the Comptroller General 
        shall submit to Congress a report on such study. The 
        report shall include such recommendations as the 
        Comptroller General deems appropriate.

           Part C--Establishment and Amendment of State Plans

SEC. 1521. DESCRIPTION OF STRATEGIC OBJECTIVES AND PERFORMANCE GOALS.

    (a) Description.--A State plan shall include a description 
of the strategic objectives and performance goals the State has 
established for providing health care services to low-income 
populations under this title, including a general description 
of the manner in which the plan is designed to meet these 
objectives and goals.
    (b) Certain Objectives and Goals Required.--A State plan 
shall include strategic objectives and performance goals 
relating to rates of childhood immunizations, reductions in 
infant mortality and morbidity, and access to services for 
children with special health care needs (as defined by the 
State).
    (c) Considerations.--In specifying these objectives and 
goals the State may consider factors such as the following:
            (1) The State's priorities with respect to 
        providing assistance to low-income populations.
            (2) The State's priorities with respect to the 
        general public health and the health status of 
        individuals eligible for assistance under the State 
        plan.
            (3) The State's financial resources, the particular 
        economic conditions in the State, and relative adequacy 
        of the health care infrastructure in different regions 
        of the State.
    (d) Performance Measures.--To the extent practicable--
            (1) one or more performance goals shall be 
        established by the State for each strategic objective 
        identified in the State plan; and
            (2) the State plan shall describe, how program 
        performance will be--
                    (A) measured through objective, 
                independently verifiable means, and
                    (B) compared against performance goals, in 
                order to determine the State's performance 
                under this title.
    (e) Period Covered.--
            (1) Strategic objectives.--The strategic objectives 
        shall cover a period of not less than 5 years and shall 
        be updated and revised at least every 3 years.
            (2) Performance goals.--The performance goals shall 
        be established for dates that are not more than 3 years 
        apart.

SEC. 1522. ANNUAL REPORTS.

    (a) In General.--In the case of a State with a State plan 
that is in effect for part or all of a fiscal year, no later 
than March 31 following such fiscal year the State shall 
prepare and submit to the Secretary and the Congress a report 
on program activities and performance under this title for such 
fiscal year.
    (b) Contents.--Each annual report under this section for a 
fiscal year shall include the following:
            (1) Expenditure and beneficiary summary.--
                    (A) Initial summary.--For the report for 
                fiscal year 1997, a summary of all expenditures 
                under the State plan during the fiscal year as 
                follows:
                            (i) Aggregate medical assistance 
                        expenditures, disaggregated to the 
                        extent required to determine compliance 
                        with the set-aside requirement of 
                        section 1502(c) and to determine the 
                        program need of the State under section 
                        1511(d)(2).
                            (ii) For each general category of 
                        eligible individuals (specified in 
                        subsection (c)(1)), aggregate medical 
                        assistance expenditures and the total 
                        and average number of eligible 
                        individuals under the State plan.
                            (iii) By each general category of 
                        eligible individuals, total 
                        expenditures for each of the categories 
                        of health care items and services 
                        (specified in subsection (c)(2)) which 
                        are covered under the State plan and 
                        provided on a fee-for-service basis.
                            (iv) By each general category of 
                        eligible individuals, total 
                        expenditures for payments to capitated 
                        health care organizations (as defined 
                        in section 1504(c)(1)).
                            (v) Total administrative 
                        expenditures.
                    (B) Subsequent summaries.--For reports for 
                each succeeding fiscal year, a summary of--
                            (i) all expenditures under the 
                        State plan, and
                            (ii) the total and average number 
                        of eligible individuals under the State 
                        plan for each general category of 
                        eligible individuals.
            (2) Utilization summary.--
                    (A) Initial summary.--For the report for 
                fiscal year 1997, summary statistics on the 
                utilization of health care services under the 
                State plan during the year as follows:
                            (i) For each general category of 
                        eligible individuals and for each of 
                        the categories of health care items and 
                        services which are covered under the 
                        State plan and provided on a fee-for-
                        service basis, the number and 
                        percentage of persons who received such 
                        a type of service or item during the 
                        period covered by the report.
                            (ii) Summary of health care 
                        utilization data reported to the State 
                        by capitated health care organizations.
                    (B) Subsequent summaries.--For reports for 
                each succeeding fiscal year, summary statistics 
                on the utilization of health care services 
                under the State plan.
            (3) Achievement of performance goals.--With respect 
        to each performance goal established under section 1521 
        and applicable to the year involved--
                    (A) a brief description of the goal;
                    (B) a description of the methods to be used 
                to measure the attainment of such goal;
                    (C) data on the actual performance with 
                respect to the goal;
                    (D) a review of the extent to which the 
                goal was achieved, based on such data; and
                    (E) if a performance goal has not been 
                met--
                            (i) why the goal was not met, and
                            (ii) actions to be taken in 
                        response to such performance, including 
                        adjustments in performance goals or 
                        program activities for subsequent 
                        years.
            (4) Program evaluations.--A summary of the findings 
        of evaluations under section 1523 completed during the 
        fiscal year covered by the report.
            (5) Fraud and abuse and quality control 
        activities.--A general description of the State's 
        activities under part D to detect and deter fraud and 
        abuse and to assure quality of services provided under 
        the program.
            (6) Plan administration.--
                    (A) A description of the administrative 
                roles and responsibilities of entities in the 
                State responsible for administration of this 
                title.
                    (B) Organizational charts for each entity 
                in the State primarily responsible for 
                activities under this title.
                    (C) A brief description of each interstate 
                compact (if any) the State has entered into 
                with other States with respect to activities 
                under this title.
                    (D) General citations to the State statutes 
                and administrative rules governing the State's 
                activities under this title.
    (c) Description of Categories.--In this section:
            (1) General categories of eligible individuals.--
        Each of the following is a general category of eligible 
        individuals:
                    (A) Pregnant women.
                    (B) Children.
                    (C) Blind or disabled adults who are not 
                elderly individuals.
                    (D) Elderly individuals.
                    (E) Other adults.
            (2) Categories of health care items and services.--
        The health care items and services described in each 
        paragraph of section 1571(a) shall be considered a 
        separate category of health care items and services.

SEC. 1523. PERIODIC, INDEPENDENT EVALUATIONS.

    (a) In General.--During fiscal year 1999 and every third 
fiscal year thereafter, each State shall provide for an 
evaluation of the operation of its State plan under this title.
    (b) Independent.--Each such evaluation with respect to an 
activity under the State plan shall be conducted by an entity 
that is neither responsible under State law for the submission 
of the State plan (or part thereof) nor responsible for 
administering (or supervising the administration of) the 
activity. If consistent with the previous sentence, such an 
entity may be a college or university, a State agency, a 
legislative branch agency in a State, or an independent 
contractor.
    (c) Research Design.--Each such evaluation shall be 
conducted in accordance with a research design that is based on 
generally accepted models of survey design and sampling and 
statistical analysis.

SEC. 1524. DESCRIPTION OF PROCESS FOR STATE PLAN DEVELOPMENT.

    Each State plan shall include a description of the process 
under which the plan shall be developed and implemented in the 
State (consistent with section 1525).

SEC. 1525. CONSULTATION IN STATE PLAN DEVELOPMENT.

    (a) Public Notice Process.--Before submitting a State plan 
or a plan amendment described in subsection (c) to the 
Secretary under this part, a State shall provide--
            (1) public notice respecting the submittal of the 
        proposed plan or amendment, including a general 
        description of the plan or amendment,
            (2) a means for the public to inspect or obtain a 
        copy (at reasonable charge) of the proposed plan or 
        amendment,
            (3) an opportunity for submittal and consideration 
        of public comments on the proposed plan or amendment, 
        and
            (4) for consultation with one or more advisory 
        committees established and maintained by the State.
The previous sentence shall not apply to a revision of a State 
plan (or revision of an amendment to a plan) made by a State 
under section 1529(c)(1) or to a plan amendment withdrawal 
described in section 1529(c)(4).
    (b) Contents of Notice.--A notice under subsection (a)(1) 
for a proposed plan or amendment shall include a description 
of--
            (1) the general purpose of the proposed plan or 
        amendment (including applicable effective dates),
            (2) where the public may inspect the proposed plan 
        or amendment,
            (3) how the public may obtain a copy of the 
        proposed plan or amendment and the applicable charge 
        (if any) for the copy, and
            (4) how the public may submit comments on the 
        proposed plan or amendment, including any deadlines 
        applicable to consideration of such comments.
    (c) Amendments Described.--An amendment to a State plan 
described in this subsection is an amendment which makes a 
material and substantial change in eligibility under the State 
plan or the benefits provided under the plan.
    (d) Publication.--Notices under this section may be 
published (as selected by the State) in one or more daily 
newspapers of general circulation in the State or in any 
publication used by the State to publish State statutes or 
rules.
    (e) Comparable Process.--A separate notice, or notices, 
shall not be required under this section for a State if notice 
of the State plan or an amendment to the plan will be provided 
under a process specified in State law that is substantially 
equivalent to the notice process specified in this section.

SEC. 1526. SUBMITTAL AND APPROVAL OF STATE PLANS.

    (a) Submittal.--As a condition of receiving funding under 
part B, each State shall submit to the Secretary a State plan 
that meets the applicable requirements of this title.
    (b) Approval.--Except as the Secretary may provide under 
section 1529 (including subsection (b) relating to 
noncompliance with required guarantees), a State plan submitted 
under subsection (a)--
            (1) shall be approved for purposes of this title, 
        and
            (2) shall be effective beginning on a date that is 
        specified in the plan, but in no case earlier than 60 
        days after the date the plan is submitted.
    (c) Construction.--Nothing in this section shall be 
construed as prohibiting a State from submitting a State plan 
that includes the coverage and benefits (including those 
provided under a waiver granted under section 1115) of its 
State plan under title XIX (as in effect as of the date of the 
enactment of the Medicaid Restructuring Act of 1996), so long 
as such plan complies with the applicable requirements of this 
title, including the guarantees under section 1501, and remains 
subject to the funding provisions of section 1511.

SEC. 1527. SUBMITTAL AND APPROVAL OF PLAN AMENDMENTS.

    (a) Submittal of Amendments.--A State may amend, in whole 
or in part, its State plan at any time through transmittal of a 
plan amendment under this section.
    (b) Approval.--Except as the Secretary may provide under 
section 1529 (including subsection (b) relating to 
noncompliance with required guarantees), an amendment to a 
State plan submitted under subsection (a)--
            (1) shall be approved for purposes of this title, 
        and
            (2) shall be effective as provided in subsection 
        (c).
    (c) Effective Dates for Amendments.--
            (1) In general.--Subject to the succeeding 
        provisions of this subsection, an amendment to a State 
        plan shall take effect on one or more effective dates 
        specified in the amendment.
            (2) Amendments relating to eligibility or 
        benefits.--Except as provided in paragraph (4)--
                    (A) Notice requirement.--Any plan amendment 
                that eliminates or restricts eligibility or 
                benefits under the plan may not take effect 
                unless the State certifies that it has provided 
                prior or contemporaneous public notice of the 
                change, in a form and manner provided under 
                applicable State law.
                    (B) Timely transmittal.--Any plan amendment 
                that eliminates or restricts eligibility or 
                benefits under the plan shall not be effective 
                for longer than a 60-day period unless the 
                amendment has been transmitted to the Secretary 
                before the end of such period.
            (3) Other amendments.--Subject to paragraph (4), 
        any plan amendment that is not described in paragraph 
        (2) becomes effective in a State fiscal year may not 
        remain in effect after the end of such fiscal year (or, 
        if later, the end of the 90-day period on which it 
        becomes effective) unless the amendment has been 
        transmitted to the Secretary.
            (4) Exception.--The requirements of paragraphs (2) 
        and (3) shall not apply to a plan amendment that is 
        submitted on a timely basis pursuant to a court order 
        or an order of the Secretary.

SEC. 1528. PROCESS FOR STATE WITHDRAWAL FROM PROGRAM.

    (a) In General.--A State may rescind its State plan and 
discontinue participation in the program under this title at 
any time after providing--
            (1) the public with 90 days prior notice in a 
        publication in one or more daily newspapers of general 
        circulation in the State or in any publication used by 
        the State to publish State statutes or rules, and
            (2) the Secretary with 90 days prior written 
        notice.
    (b) Effective Date.--Such discontinuation shall not apply 
to payments under part B for expenditures made for items and 
services furnished under the State plan before the effective 
date of the discontinuation.
    (c) Proration of Allotments.--In the case of any withdrawal 
under this section other than at the end of a Federal fiscal 
year, notwithstanding any provision of section 1511 to the 
contrary, the Secretary shall provide for such appropriate 
proration of the application of allotments under section 1511 
as is appropriate.

SEC. 1529. SANCTIONS FOR NONCOMPLIANCE.

    (a) Prompt Review of Plan Submittals.--The Secretary shall 
promptly review State plans and plan amendments submitted under 
this part to determine if they substantially comply with the 
requirements of this title.
    (b) Determinations of Noncompliance with Certain 
Guarantees.--
            (1) At time of plan or amendment submittal.--If the 
        Secretary determines that a State plan or plan 
        amendment submitted under this part violates the 
        guarantees of coverage and benefits under subsections 
        (a) and (b) of section 1501, the Secretary shall notify 
        the State in writing of such determination and shall 
        issue an order specifying that the plan or amendment, 
        insofar as it is in violation with such requirement, 
        shall not be effective, except as provided in 
        subsection (d), as of the date specified in the order.
            (2) Violations in administration of plan.--If the 
        Secretary determines, after reasonable notice and 
        opportunity for a hearing for the State, that in the 
        administration of a State plan there is a violation of 
        guarantee of coverage and benefits under subsection (a) 
        or (b) of section 1501, the Secretary shall provide the 
        State with written notice of the determination and with 
        an order to remedy such violation. Such an order shall 
        become effective prospectively, as specified in the 
        order, after the date of receipt of such written 
        notice. Such an order may include the withholding of 
        funds, consistent with subsection (g), for parts of the 
        State plan affected by such violation, until the 
        Secretary is satisfied that the violation has been 
        corrected.
            (3) Consultation with state.--Before making a 
        determination adverse to a State under this section, 
        the Secretary shall--
                    (A) reasonably consult with the State 
                involved,
                    (B) offer the State a reasonable 
                opportunity to clarify the submission and 
                submit further information to substantiate 
                compliance with the requirements of subsections 
                (a) and (b) of section 1501, and
                    (C) reasonably consider any such 
                clarifications and information submitted.
            (4) Justification of any inconsistencies in 
        determinations.--If the Secretary makes a determination 
        under this section that is, in whole or in part, 
        inconsistent with any previous determination issued by 
        the Secretary under this title, the Secretary shall 
        include in the determination a detailed explanation and 
        justification for any such difference.
    (c) Determinations of Other Substantial Noncompliance.--
            (1) At time of plan or amendment submittal.--
                    (A) In general.--If the Secretary, during 
                the 30-day period beginning on the date of 
                submittal of a State plan or plan amendment--
                            (i) determines that the plan or 
                        amendment substantially violates 
                        (within the meaning of paragraph (5)) a 
                        requirement of this title, and
                            (ii) provides written notice of 
                        such determination to the State,
                the Secretary shall issue an order specifying 
                that the plan or amendment, insofar as it is in 
                substantial violation of such a requirement, 
                shall not be effective, except as provided in 
                subsection (d), beginning at the end of a 
                period of not less than 30 days (or 120 days in 
                the case of the initial submission of the State 
                plan) specified in the order beginning on the 
                date of the notice of the determination.
                    (B) Extension of time periods.--The time 
                periods specified in subparagraph (A) may be 
                extended by written agreement of the Secretary 
                and the State involved.
            (2) Violations in administration of plan.--
                    (A) In general.--If the Secretary 
                determines, after reasonable notice and 
                opportunity for a hearing for the State, that 
                in the administration of a State plan there is 
                a substantial violation of a requirement of 
                this title, the Secretary shall provide the 
                State with written notice of the determination 
                and with an order to remedy such violation. 
                Such an order shall become effective 
                prospectively, as specified in the order, after 
                the date of receipt of such written notice. 
                Such an order may include the withholding of 
                funds, consistent with subsection (g), for 
                parts of the State plan affected by such 
                violation, until the Secretary is satisfied 
                that the violation has been corrected.
                    (B) Effectiveness.--If the Secretary issues 
                an order under paragraph (1), the order shall 
                become effective, except as provided in 
                subsection (d), beginning at the end of a 
                period (of not less than 30 days) specified in 
                the order beginning on the date of the notice 
                of the determination to the State.
                    (C) Timeliness of determinations relating 
                to report-based compliance.--The Secretary 
                shall make determinations under this paragraph 
                respecting violations relating to information 
                contained in an annual report under section 
                1522, an independent evaluation under section 
                1523, or an audit report under section 1551 not 
                later than 30 days after the date of 
                transmittal of the report or evaluation to the 
                Secretary.
            (3) Consultation with state.--Before making a 
        determination adverse to a State under this section, 
        the Secretary shall (within any time periods provided 
        under this section)--
                    (A) reasonably consult with the State 
                involved,
                    (B) offer the State a reasonable 
                opportunity to clarify the submission and 
                submit further information to substantiate 
                compliance with the requirements of this title, 
                and
                    (C) reasonably consider any such 
                clarifications and information submitted.
            (4) Justification of any inconsistencies in 
        determinations.--If the Secretary makes a determination 
        under this section that is, in whole or in part, 
        inconsistent with any previous determination issued by 
        the Secretary under this title, the Secretary shall 
        include in the determination a detailed explanation and 
        justification for any such difference.
            (5) Substantial violation defined.--For purposes of 
        this title, a State plan (or amendment to such a plan) 
        or the administration of the State plan is considered 
        to ``substantially violate'' a requirement of this 
        title if a provision of the plan or amendment (or an 
        omission from the plan or amendment) or the 
        administration of the plan--
                    (A) is material and substantial in nature 
                and effect, and
                    (B) is inconsistent with an express 
                requirement of this title.
        A failure to meet a strategic objective or performance 
        goal (as described in section 1521) shall not be 
        considered to substantially violate a requirement of 
        this title.
            (6) Relation to other provision.--This subsection 
        shall not apply to violation of a requirement of 
        subsection (a) or (b) of section 1501.
    (d) State Response to Orders.--
            (1) State response by revising plan.--
                    (A) In general.--Insofar as an order under 
                subsection (b)(1) or (c)(1) relates to a 
                violation by a State plan or plan amendment, a 
                State may respond (before the date the order 
                becomes effective) to such an order by 
                submitting a written revision of the State plan 
                or plan amendment to comply with the 
                requirements of this title.
                    (B) Review of revision.--In the case of 
                submission of such a revision, the Secretary 
                shall promptly review the submission and shall, 
                in the case of an order under subsection 
                (c)(1), withhold any action on the order during 
                the period of such review.
                    (C) Secretarial response.--
                            (i) Orders relating to 
                        guarantees.--In the case of a revision 
                        submitted in response to an order under 
                        subsection (b)(1), the revision shall 
                        not be considered to have corrected the 
                        deficiency unless the Secretary 
                        determines and notifies the State that 
                        the State plan or amendment, as 
                        proposed to be revised complies with 
                        the requirements of subsections (a) and 
                        (b) of section 1501. If the Secretary 
                        determines that the revision does not 
                        correct the deficiency, the Secretary 
                        shall notify the State in writing of 
                        such determination and the State may 
                        respond by seeking reconsideration or a 
                        hearing under paragraph (2).
                            (ii) Other orders.--In the case of 
                        a revision submitted in response to an 
                        order under subsection (c)(1), the 
                        revision shall be considered to have 
                        corrected the deficiency (and the order 
                        rescinded insofar as it relates to such 
                        deficiency) unless the Secretary 
                        determines and notifies the State in 
                        writing, within 15 days after the date 
                        the Secretary receives the revision, 
                        that the State plan or amendment, as 
                        proposed to be revised, still 
                        substantially violates a requirement of 
                        this title. In such case the State may 
                        respond by seeking reconsideration or a 
                        hearing under paragraph (2).
                    (D) Revision retroactive.--If the revision 
                provides for compliance (in the case of an 
                order under subsection (b)(1)) or substantial 
                compliance (in the case of an order under 
                subsection (c)(1)), the revision may be 
                treated, at the option of the State, as being 
                effective either as of the effective date of 
                the provision to which it relates or such later 
                date as the State and Secretary may agree.
            (2) State response by seeking reconsideration or an 
        administrative hearing.--A State may respond to an 
        order under subsection (b) or (c) by filing a request 
        with the Secretary for--
                    (A) a reconsideration of the determination, 
                pursuant to subsection (e)(1), or
                    (B) a review of the determination through 
                an administrative hearing, pursuant to 
                subsection (e)(2).
        In such case for an order under subsection (c), the 
        order shall not take effect before the completion of 
        the reconsideration or hearing.
            (3) State response by corrective action plan.--
                    (A) In general.--In the case of an order 
                described in subsection (b)(2) or (c)(2) that 
                relates to a violation in the administration of 
                the State plan, a State may respond to such an 
                order by submitting a corrective action plan 
                with the Secretary to correct deficiencies in 
                the administration of the plan which are the 
                subject of the order.
                    (B) Review of corrective action plan.--In 
                the case of a corrective action plan submitted 
                in response to an order under subsection 
                (c)(2), the Secretary shall withhold any action 
                on the order for a period (not to exceed 30 
                days) during which the Secretary reviews the 
                corrective action plan.
                    (C) Secretarial response.--
                            (i) Orders relating to 
                        guarantees.--In the case of a 
                        corrective action plan submitted in 
                        response to an order under subsection 
                        (b)(2), the plan shall not be 
                        considered to have corrected the 
                        deficiency unless the Secretary 
                        determines and notifies the State that 
                        the State's administration of the State 
                        plan, as proposed to be corrected in 
                        the plan, will not violate a 
                        requirement of subsection (a) or (b) of 
                        section 1501. If the Secretary 
                        determines that the plan does not 
                        correct the deficiency, the Secretary 
                        shall notify the State in writing of 
                        such determination and the State may 
                        respond by seeking reconsideration or a 
                        hearing under paragraph (2).
                            (ii) Other orders.--In the case of 
                        a corrective action plan submitted in 
                        response to an order under subsection 
                        (c)(2), the corrective action plan 
                        shall be considered to have corrected 
                        the deficiency (and the order rescinded 
                        insofar as it relates to such 
                        deficiency) unless the Secretary 
                        determines and notifies the State in 
                        writing, within 15 days after the date 
                        the Secretary receives the corrective 
                        action plan, that the State's 
                        administration of the State plan, as 
                        proposed to be corrected in the plan, 
                        will still substantially violate a 
                        requirement of this title. In such case 
                        the State may respond by seeking 
                        reconsideration or a hearing under 
                        paragraph (2).
            (4) State response by withdrawal of plan amendment; 
        failure to respond.--Insofar as an order relates to a 
        violation in a plan amendment submitted, a State may 
        respond to such an order by withdrawing the plan 
        amendment and the State plan shall be treated as though 
        the amendment had not been made.
    (e) Administrative Review and Hearing.--
            (1) Reconsideration.--Within 30 days after the date 
        of receipt of a request under subsection (d)(2)(A), the 
        Secretary shall notify the State of the time and place 
        at which a hearing will be held for the purpose of 
        reconsidering the Secretary's determination. The 
        hearing shall be held not less than 20 days nor more 
        than 60 days after the date notice of the hearing is 
        furnished to the State, unless the Secretary and the 
        State agree in writing to holding the hearing at 
        another time. The Secretary shall affirm, modify, or 
        reverse the original determination within 60 days of 
        the conclusion of the hearing.
            (2) Administrative hearing.--Within 30 days after 
        the date of receipt of a request under subsection 
        (d)(2)(B), an administrative law judge shall schedule a 
        hearing for the purpose of reviewing the Secretary's 
        determination. The hearing shall be held not less than 
        20 days nor more than 60 days after the date notice of 
        the hearing is furnished to the State, unless the 
        Secretary and the State agree in writing to holding the 
        hearing at another time. The administrative law judge 
        shall affirm, modify, or reverse the determination 
        within 60 days of the conclusion of the hearing.
    (f) Judicial Review.--
            (1) In general.--A State which is dissatisfied with 
        a final determination made by the Secretary under 
        subsection (e)(1) or a final determination of an 
        administrative law judge under subsection (e)(2) may, 
        within 60 days after it has been notified of such 
        determination, file with the United States court of 
        appeals for the circuit in which the State is located a 
        petition for review of such determination. A copy of 
        the petition shall be forthwith transmitted by the 
        clerk of the court to the Secretary and, in the case of 
        a determination under subsection (e)(2), to the 
        administrative law judge involved. The Secretary (or 
        judge involved) thereupon shall file in the court the 
        record of the proceedings on which the final 
        determination was based, as provided in section 1502 of 
        title 28, United States Code. Except as provided in 
        section 1508, only the Secretary, in accordance with 
        this title, may compel a State under Federal law to 
        comply with the provisions of this title or a State 
        plan, or otherwise enforce a provision of this title 
        against a State, and no action may be filed under 
        Federal law against a State in relation to the State's 
        compliance, or failure to comply, with the provisions 
        of this title or of a State plan except under section 
        1508 or by the Secretary as provided under this 
        subsection.
            (2) Standard for review.--The findings of fact by 
        the Secretary or administrative law judge, if supported 
        by substantial evidence, shall be conclusive, but the 
        court, for good cause shown, may remand the case to the 
        Secretary or judge to take further evidence, and the 
        Secretary or judge may thereupon make new or modified 
        findings of fact and may modify a previous 
        determination, and shall certify to the court the 
        transcript and record of the further proceedings. Such 
        new or modified findings of fact shall likewise be 
        conclusive if supported by substantial evidence.
            (3) Jurisdiction of appellate court.--The court 
        shall have jurisdiction to affirm the action of the 
        Secretary or judge or to set it aside, in whole or in 
        part. The judgment of the court shall be subject to 
        review by the Supreme Court of the United States upon 
        certiorari or certification as provided in section 1254 
        of title 28, United States Code.
    (g) Withholding of Funds.--
            (1) In general.--Any order under this section 
        relating to the withholding of funds shall be effective 
        not earlier than the effective date of the order and 
        shall only relate to the portions of a State plan or 
        administration thereof which violate a requirement of 
        subsection (a) or (b) of section 1501 or substantially 
        violate another requirement of this title. In the case 
        of a failure to meet a set-aside requirement under 
        section 1502(c), any withholding shall only apply to 
        the extent of such failure.
            (2) Suspension of withholding.--The Secretary may 
        suspend withholding of funds under paragraph (1) during 
        the period reconsideration or administrative and 
        judicial review is pending under subsection (e) or (f).
            (3) Restoration of funds.--Any funds withheld under 
        this subsection under an order shall be immediately 
        restored to a State--
                    (A) to the extent and at the time the order 
                is--
                            (i) modified or withdrawn by the 
                        Secretary upon reconsideration,
                            (ii) modified or reversed by an 
                        administrative law judge, or
                            (iii) set aside (in whole or in 
                        part) by an appellate court; or
                    (B) when the Secretary determines that the 
                deficiency which was the basis for the order is 
                corrected;
                    (C) when the Secretary determines that 
                violation which was the basis for the order is 
                resolved or the amendment which was the basis 
                for the order is withdrawn; or
                    (D) at any time upon the initiative of the 
                Secretary.
    (h) Individual Complaint Process.--The Secretary shall 
provide for a process under which an individual may notify the 
Secretary concerning a State's failure to provide medical 
assistance as required under the State plan or otherwise comply 
with the requirements of this title or such plan, including any 
failure to comply with a requirement of subsection (a) or (b) 
of section 1501. If the Secretary finds that there is a pattern 
of complaints with respect to a State or that a particular 
failure or finding of noncompliance is egregious, the Secretary 
shall notify the chief executive officer of the State of such 
finding and shall notify the Congress if the State fails to 
respond to such notification within a reasonable period of 
time.

SEC. 1530. SECRETARIAL AUTHORITY.

    (a) Negotiated Agreement and Dispute Resolution.--
            (1) Negotiations.--Nothing in this part shall be 
        construed as preventing the Secretary and a State from 
        at any time negotiating a satisfactory resolution to 
        any dispute concerning the approval of a State plan (or 
        amendments to a State plan) or the compliance of a 
        State plan (including its administration) with 
        requirements of this title.
            (2) Cooperation.--The Secretary shall act in a 
        cooperative manner with the States in carrying out this 
        title. In the event of a dispute between a State and 
        the Secretary, the Secretary shall, whenever 
        practicable, engage in informal dispute resolution 
        activities in lieu of formal enforcement or sanctions 
        under section 1529.
    (b) Limitations on Delegation of Decisionmaking 
Authority.--The Secretary may not delegate (other than to the 
Administrator of the Health Care Financing Administration) the 
authority to make determinations or reconsiderations respecting 
the approval of State plans (or amendments to such plans) or 
the compliance of a State plan (including its administration) 
with requirements of this title. Such Administrator may not 
further delegate such authority to any individual, including 
any regional official of such Administration.
    (c) Requiring Formal Rulemaking for Changes in Secretarial 
Administration.--The Secretary shall carry out the 
administration of the program under this title only through a 
prospective formal rulemaking process, including issuing 
notices of proposed rulemaking, publishing proposed rules or 
modifications to rules in the Federal Register, and soliciting 
public comment.

                 Part D--Program Integrity and Quality

SEC. 1551. USE OF AUDITS TO ACHIEVE FISCAL INTEGRITY.

    (a) Financial Audits of Program.--
            (1) In general.--Each State plan shall provide for 
        an annual audit of the State's expenditures from 
        amounts received under this title, in compliance with 
        chapter 75 of title 31, United States Code.
            (2) Verification audits.--If, after consultation 
        with the State and the Comptroller General and after a 
        fair hearing, the Secretary determines that a State's 
        audit under paragraph (1) was performed in substantial 
        violation of chapter 75 of title 31, United States 
        Code, the Secretary may--
                    (A) require that the State provide for a 
                verification audit in compliance with such 
                chapter, or
                    (B) conduct such a verification audit.
            (3) Availability of audit reports.--Within 30 days 
        after completion of each audit or verification audit 
        under this subsection, the State shall--
                    (A) provide the Secretary with a copy of 
                the audit report, including the State's 
                response to any recommendations of the auditor, 
                and
                    (B) make the audit report available for 
                public inspection in the same manner as 
                proposed State plan amendments are made 
                available under section 1525.
    (b) Fiscal Controls.--
            (1) In general.--With respect to the accounting and 
        expenditure of funds under this title, each State shall 
        adopt and maintain such fiscal controls, accounting 
        procedures, and data processing safeguards as the State 
        deems reasonably necessary to assure the fiscal 
        integrity of the State's activities under this title.
            (2) Consistency with generally accepted accounting 
        principles.--Such controls and procedures shall be 
        generally consistent with generally accepted accounting 
        principles as recognized by the Governmental Accounting 
        Standards Board or the Comptroller General.
    (c) Audits of Providers.--Each State plan shall provide 
that the records of any entity providing items or services for 
which payment may be made under the plan may be audited as 
necessary to ensure that proper payments are made under the 
plan.

SEC. 1552. FRAUD PREVENTION PROGRAM.

    (a) Establishment.--Each State plan shall provide for the 
establishment and maintenance of an effective program for the 
detection and prevention of fraud and abuse by beneficiaries, 
providers, and others in connection with the operation of the 
program.
    (b) Program Requirements.--The program established pursuant 
to subsection (a) shall include at least the following 
requirements:
            (1) Disclosure of information.--Any disclosing 
        entity (as defined in section 1124(a)) receiving 
        payments under the State plan shall comply with the 
        requirements of section 1124.
            (2) Supply of information.--An entity (other than 
        an individual practitioner or a group of practitioners) 
        that furnishes, or arranges for the furnishing of, an 
        item or service under the State plan shall supply upon 
        request specifically addressed to the entity by the 
        Secretary or the State agency the information described 
        in section 1128(b)(9).
            (3) Exclusion.--
                    (A) In general.--The State plan shall 
                exclude any specified individual or entity from 
                participation in the plan for the period 
                specified by the Secretary when required by the 
                Secretary to do so pursuant to section 1128 or 
                section 1128A, and provide that no payment may 
                be made under the plan with respect to any item 
                or service furnished by such individual or 
                entity during such period.
                    (B) Authority.--In addition to any other 
                authority, a State may exclude any individual 
                or entity for purposes of participating under 
                the State plan for any reason for which the 
                Secretary could exclude the individual or 
                entity from participation in a program under 
                title XVIII or under section 1128, 1128A, or 
                1866(b)(2).
            (4) Notice.--The State plan shall provide that 
        whenever a provider of services or any other person is 
        terminated, suspended, or otherwise sanctioned or 
        prohibited from participating under the plan, the State 
        agency responsible for administering the plan shall 
        promptly notify the Secretary and, in the case of a 
        physician, the State medical licensing board of such 
        action.
            (5) Access to information.--The State plan shall 
        provide that the State will provide information and 
        access to certain information respecting sanctions 
        taken against health care practitioners and providers 
        by State licensing authorities in accordance with 
        section 1553.

SEC. 1553. INFORMATION CONCERNING SANCTIONS TAKEN BY STATE LICENSING 
                    AUTHORITIES AGAINST HEALTH CARE PRACTITIONERS AND 
                    PROVIDERS.

    (a) Information Reporting Requirement.--The requirement 
referred to in section 1552(b)(5) is that the State must 
provide for the following:
            (1) Information reporting system.--The State must 
        have in effect a system of reporting the following 
        information with respect to formal proceedings (as 
        defined by the Secretary in regulations) concluded 
        against a health care practitioner or entity by any 
        authority of the State (or of a political subdivision 
        thereof) responsible for the licensing of health care 
        practitioners (or any peer review organization or 
        private accreditation entity reviewing the services 
        provided by health care practitioners) or entities:
                    (A) Any adverse action taken by such 
                licensing authority as a result of the 
                proceeding, including any revocation or 
                suspension of a license (and the length of any 
                such suspension), reprimand, censure, or 
                probation.
                    (B) Any dismissal or closure of the 
                proceedings by reason of the practitioner or 
                entity surrendering the license or leaving the 
                State or jurisdiction.
                    (C) Any other loss of the license of the 
                practitioner or entity, whether by operation of 
                law, voluntary surrender, or otherwise.
                    (D) Any negative action or finding by such 
                authority, organization, or entity regarding 
                the practitioner or entity.
            (2) Access to documents.--The State must provide 
        the Secretary (or an entity designated by the 
        Secretary) with access to such documents of the 
        authority described in paragraph (1) as may be 
        necessary for the Secretary to determine the facts and 
        circumstances concerning the actions and determinations 
        described in such paragraph for the purpose of carrying 
        out this Act.
    (b) Form of Information.--The information described in 
subsection (a)(1) shall be provided to the Secretary (or to an 
appropriate private or public agency, under suitable 
arrangements made by the Secretary with respect to receipt, 
storage, protection of confidentiality, and dissemination of 
information) in such a form and manner as the Secretary 
determines to be appropriate in order to provide for activities 
of the Secretary under this Act and in order to provide, 
directly or through suitable arrangements made by the 
Secretary, information--
            (1) to agencies administering Federal health care 
        programs, including private entities administering such 
        programs under contract,
            (2) to licensing authorities described in 
        subsection (a)(1),
            (3) to State agencies administering or supervising 
        the administration of State health care programs (as 
        defined in section 1128(h)),
            (4) to utilization and quality control peer review 
        organizations described in part B of title XI and to 
        appropriate entities with contracts under section 
        1154(a)(4)(C) with respect to eligible organizations 
        reviewed under the contracts,
            (5) to State fraud control units (as defined in 
        section 1534),
            (6) to hospitals and other health care entities (as 
        defined in section 431 of the Health Care Quality 
        Improvement Act of 1986), with respect to physicians or 
        other licensed health care practitioners that have 
        entered (or may be entering) into an employment or 
        affiliation relationship with, or have applied for 
        clinical privileges or appointments to the medical 
        staff of, such hospitals or other health care entities 
        (and such information shall be deemed to be disclosed 
        pursuant to section 427 of, and be subject to the 
        provisions of, that Act),
            (7) to the Attorney General and such other law 
        enforcement officials as the Secretary deems 
        appropriate, and
            (8) upon request, to the Comptroller General,
        in order for such authorities to determine the fitness 
        of individuals to provide health care services, to 
        protect the health and safety of individuals receiving 
        health care through such programs, and to protect the 
        fiscal integrity of such programs.
    (c) Confidentiality of Information Provided.--The Secretary 
shall provide for suitable safeguards for the confidentiality 
of the information furnished under subsection (a). Nothing in 
this subsection shall prevent the disclosure of such 
information by a party which is otherwise authorized, under 
applicable State law, to make such disclosure.
    (d) Appropriate Coordination.--The Secretary shall provide 
for the maximum appropriate coordination in the implementation 
of subsection (a) of this section and section 422 of the Health 
Care Quality Improvement Act of 1986 and section 1128E.

SEC. 1554. STATE FRAUD CONTROL UNITS.

    (a) In General.--Each State plan shall provide for a State 
fraud control unit described in subsection (b) that effectively 
carries out the functions and requirements described in such 
subsection, unless the State demonstrates to the satisfaction 
of the Secretary that the effective operation of such a unit in 
the State would not be cost-effective because minimal fraud 
exists in connection with the provision of covered services to 
eligible individuals under the plan, and that beneficiaries 
under the plan will be protected from abuse and neglect in 
connection with the provision of medical assistance under the 
plan without the existence of such a unit.
    (b) Units Described.--For purposes of this section, the 
term ``State fraud control unit'' means a single identifiable 
entity of the State government which meets the following 
requirements:
            (1) Organization.--The entity--
                    (A) is a unit of the office of the State 
                Attorney General or of another department of 
                State government which possesses statewide 
                authority to prosecute individuals for criminal 
                violations;
                    (B) is in a State the constitution of which 
                does not provide for the criminal prosecution 
                of individuals by a statewide authority and has 
                formal procedures that--
                            (i) assure its referral of 
                        suspected criminal violations relating 
                        to the program under this title to the 
                        appropriate authority or authorities in 
                        the State for prosecution, and
                            (ii) assure its assistance of, and 
                        coordination with, such authority or 
                        authorities in such prosecutions; or
                    (C) has a formal working relationship with 
                the office of the State Attorney General and 
                has formal procedures (including procedures for 
                its referral of suspected criminal violations 
                to such office) which provide effective 
                coordination of activities between the entity 
                and such office with respect to the detection, 
                investigation, and prosecution of suspected 
                criminal violations relating to the program 
                under this title.
            (2) Independence.--The entity is separate and 
        distinct from any State agency that has principal 
        responsibilities for administering or supervising the 
        administration of the State plan.
            (3) Function.--The entity's function is conducting 
        a statewide program for the investigation and 
        prosecution of violations of all applicable State laws 
        regarding any and all aspects of fraud in connection 
        with any aspect of the provision of medical assistance 
        and the activities of providers of such assistance 
        under the State plan.
            (4) Review of complaints.--The entity has 
        procedures for reviewing complaints of the abuse and 
        neglect of patients of health care facilities which 
        receive payments under the State plan under this title, 
        and, where appropriate, for acting upon such complaints 
        under the criminal laws of the State or for referring 
        them to other State agencies for action.
            (5) Overpayments.--
                    (A) In general.--The entity provides for 
                the collection, or referral for collection to a 
                single State agency, of overpayments that are 
                made under the State plan to health care 
                providers and that are discovered by the entity 
                in carrying out its activities.
                    (B) Treatment of certain overpayments.--If 
                an overpayment is the direct result of the 
                failure of the provider (or the provider's 
                billing agent) to adhere to a change in the 
                State's billing instructions, the entity may 
                recover the overpayment only if the entity 
                demonstrates that the provider (or the 
                provider's billing agent) received prior 
                written or electronic notice of the change in 
                the billing instructions before the submission 
                of the claims on which the overpayment is 
                based.
            (6) Personnel.--The entity employs such auditors, 
        attorneys, investigators, and other necessary personnel 
        and is organized in such a manner as is necessary to 
        promote the effective and efficient conduct of the 
        entity's activities.

SEC. 1555. RECOVERIES FROM THIRD PARTIES AND OTHERS.

    (a) Third Party Liability.--Each State plan shall provide 
for reasonable steps--
            (1) to ascertain the legal liability of third 
        parties to pay for care and services available under 
        the plan, including the collection of sufficient 
        information to enable States to pursue claims against 
        third parties, and
            (2) to seek reimbursement for medical assistance 
        provided to the extent legal liability is established 
        where the amount expected to be recovered exceeds the 
        costs of the recovery.
    (b) Beneficiary Protection.--
            (1) In general.--Each State plan shall provide that 
        in the case of a person furnishing services under the 
        plan for which a third party may be liable for 
        payment--
                    (A) the person may not seek to collect from 
                the individual (or financially responsible 
                relative) payment of an amount for the service 
                more than could be collected under the plan in 
                the absence of such third party liability, and
                    (B) may not refuse to furnish services to 
                such an individual because of a third party's 
                potential liability for payment for the 
                service.
            (2) Penalty.--A State plan may provide for a 
        reduction of any payment amount otherwise due with 
        respect to a person who furnishes services under the 
        plan in an amount equal to up to 3 times the amount of 
        any payment sought to be collected by that person in 
        violation of paragraph (1)(A).
    (c) General Liability.--The State shall prohibit any health 
insurer, including a group health plan as defined in section 
607 of the Employee Retirement Income Security Act of 1974, a 
service benefit plan, or a health maintenance organization, in 
enrolling an individual or in making any payments for benefits 
to the individual or on the individual's behalf, from taking 
into account that the individual is eligible for or is provided 
medical assistance under a State plan for any State.
    (d) Acquisition of Rights of Beneficiaries.--To the extent 
that payment has been made under a State plan in any case where 
a third party has a legal liability to make payment for such 
assistance, the State shall have in effect laws under which, to 
the extent that payment has been made under the plan for health 
care items or services furnished to an individual, the State is 
considered to have acquired the rights of such individual to 
payment by any other party for such health care items or 
services.
    (e) Assignment of Medical Support Rights.--The State plan 
shall provide for mandatory assignment of rights of payment for 
medical support and other medical care owed to recipients in 
accordance with section 1556.
    (f) Required Laws Relating to Medical Child Support.--
            (1) In general.--Each State with a State plan under 
        this title shall have in effect the following laws:
                    (A) A law that prohibits an insurer from 
                denying enrollment of a child under the health 
                coverage of the child's parent on the ground 
                that--
                            (i) the child was born out of 
                        wedlock,
                            (ii) the child is not claimed as a 
                        dependent on the parent's Federal 
                        income tax return, or
                            (iii) the child does not reside 
                        with the parent or in the insurer's 
                        service area.
                    (B) In any case in which a parent is 
                required by a court or administrative order to 
                provide health coverage for a child and the 
                parent is eligible for family health coverage 
                through an insurer, a law that requires such 
                insurer--
                            (i) to permit such parent to enroll 
                        under such family coverage any such 
                        child who is otherwise eligible for 
                        such coverage (without regard to any 
                        enrollment season restrictions);
                            (ii) if such a parent is enrolled 
                        but fails to make application to obtain 
                        coverage of such child, to enroll such 
                        child under such family coverage upon 
                        application by the child's other parent 
                        or by the State agency administering 
                        the program under this title or part D 
                        of title IV; and
                            (iii) not to disenroll, or 
                        eliminate coverage of, such a child 
                        unless the insurer is provided 
                        satisfactory written evidence that--
                                    (I) such court or 
                                administrative order is no 
                                longer in effect, or
                                    (II) the child is or will 
                                be enrolled in comparable 
                                health coverage through another 
                                insurer which will take effect 
                                not later than the effective 
                                date of such disenrollment.
                    (C) In any case in which a parent is 
                required by a court or administrative order to 
                provide health coverage for a child and the 
                parent is eligible for family health coverage 
                through an employer doing business in the 
                State, a law that requires such employer--
                            (i) to permit such parent to enroll 
                        under such family coverage any such 
                        child who is otherwise eligible for 
                        such coverage (without regard to any 
                        enrollment season restrictions);
                            (ii) if such a parent is enrolled 
                        but fails to make application to obtain 
                        coverage of such child, to enroll such 
                        child under such family coverage upon 
                        application by the child's other parent 
                        or by the State agency administering 
                        the program under this title or part D 
                        of title IV; and
                            (iii) not to disenroll (or 
                        eliminate coverage of) any such child 
                        unless--
                                    (I) the employer is 
                                provided satisfactory written 
                                evidence that such court or 
                                administrative order is no 
                                longer in effect, or the child 
                                is or will be enrolled in 
                                comparable health coverage 
                                which will take effect not 
                                later than the effective date 
                                of such disenrollment, or
                                    (II) the employer has 
                                eliminated family health 
                                coverage for all of its 
                                employees; and
                            (iv) to withhold from such 
                        employee's compensation the employee's 
                        share (if any) of premiums for health 
                        coverage (except that the amount so 
                        withheld may not exceed the maximum 
                        amount permitted to be withheld under 
                        section 303(b) of the Consumer Credit 
                        Protection Act), and to pay such share 
                        of premiums to the insurer, except that 
                        the Secretary may provide by regulation 
                        for appropriate circumstances under 
                        which an employer may withhold less 
                        than such employee's share of such 
                        premiums.
                    (D) A law that prohibits an insurer from 
                imposing requirements on a State agency, which 
                has been assigned the rights of an individual 
                eligible for medical assistance under this 
                title and covered for health benefits from the 
                insurer, that are different from requirements 
                applicable to an agent or assignee of any other 
                individual so covered.
                    (E) A law that requires an insurer, in any 
                case in which a child has health coverage 
                through the insurer of a noncustodial parent--
                            (i) to provide such information to 
                        the custodial parent as may be 
                        necessary for the child to obtain 
                        benefits through such coverage,
                            (ii) to permit the custodial parent 
                        (or provider, with the custodial 
                        parent's approval) to submit claims for 
                        covered services without the approval 
                        of the noncustodial parent, and
                            (iii) to make payment on claims 
                        submitted in accordance with clause 
                        (ii) directly to such custodial parent, 
                        the provider, or the State agency.
                    (F) A law that permits the State agency 
                under this title to garnish the wages, salary, 
                or other employment income of, and requires 
                withholding amounts from State tax refunds to, 
                any person who--
                            (i) is required by court or 
                        administrative order to provide 
                        coverage of the costs of health 
                        services to a child who is eligible for 
                        medical assistance under this title,
                            (ii) has received payment from a 
                        third party for the costs of such 
                        services to such child, but
                            (iii) has not used such payments to 
                        reimburse, as appropriate, either the 
                        other parent or guardian of such child 
                        or the provider of such services,
                to the extent necessary to reimburse the State 
                agency for expenditures for such costs under 
                its plan under this title, but any claims for 
                current or past-due child support shall take 
                priority over any such claims for the costs of 
                such services.
            (2) Definition.--For purposes of this subsection, 
        the term ``insurer'' includes a group health plan, as 
        defined in section 607(1) of the Employee Retirement 
        Income Security Act of 1974, a health maintenance 
        organization, and an entity offering a service benefit 
        plan.
    (g) Estate Recoveries and Liens Permitted.--A State may 
take such actions as it considers appropriate to adjust or 
recover from the individual or the individual's estate any 
amounts paid as medical assistance to or on behalf of the 
individual under the State plan, including through the 
imposition of liens against the property or estate of the 
individual to the extent consistent with section 1506.

SEC. 1556. ASSIGNMENT OF RIGHTS OF PAYMENT.

    (a) In General.--For the purpose of assisting in the 
collection of medical support payments and other payments for 
medical care owed to recipients of medical assistance under the 
State plan, each State plan shall--
            (1) provide that, as a condition of eligibility for 
        medical assistance under the plan to an individual who 
        has the legal capacity to execute an assignment for 
        himself, the individual is required--
                    (A) to assign the State any rights, of the 
                individual or of any other person who is 
                eligible for medical assistance under the plan 
                and on whose behalf the individual has the 
                legal authority to execute an assignment of 
                such rights, to support (specified as support 
                for the purpose of medical care by a court or 
                administrative order) and to payment for 
                medical care from any third party,
                    (B) to cooperate with the State (i) in 
                establishing the paternity of such person 
                (referred to in subparagraph (A)) if the person 
                is a child born out of wedlock, and (ii) in 
                obtaining support and payments (described in 
                subparagraph (A)) for himself and for such 
                person, unless (in either case) the individual 
                is a pregnant woman or the individual is found 
                to have good cause for refusing to cooperate as 
                determined by the State, and
                    (C) to cooperate with the State in 
                identifying, and providing information to 
                assist the State in pursuing, any third party 
                who may be liable to pay for care and services 
                available under the plan, unless such 
                individual has good cause for refusing to 
                cooperate as determined by the State; and
            (2) provide for entering into cooperative 
        arrangements, including financial arrangements, with 
        any appropriate agency of any State (including, with 
        respect to the enforcement and collection of rights of 
        payment for medical care by or through a parent, with a 
        State's agency established or designated under section 
        454(3)) and with appropriate courts and law enforcement 
        officials, to assist the agency or agencies 
        administering the plan with respect to--
                    (A) the enforcement and collection of 
                rights to support or payment assigned under 
                this section, and
                    (B) any other matters of common concern.
    (b) Use of Amounts Collected.--Such part of any amount 
collected by the State under an assignment made under the 
provisions of this section shall be retained by the State as is 
necessary to reimburse it for medical assistance payments made 
on behalf of an individual with respect to whom such assignment 
was executed (with appropriate reimbursement of the Federal 
Government to the extent of its participation in the financing 
of such medical assistance), and the remainder of such amount 
collected shall be paid to such individual.

SEC. 1557. QUALITY ASSURANCE REQUIREMENTS FOR NURSING FACILITIES.

    (a) Nursing Facility Defined.--In this title, the term 
``nursing facility'' means an institution (or a distinct part 
of an institution) which--
            (1) is primarily engaged in providing to 
        residents--
                    (A) skilled nursing care and related 
                services for residents who require medical or 
                nursing care,
                    (B) rehabilitation services for the 
                rehabilitation of injured, disabled, or sick 
                persons, or
                    (C) on a regular basis, health-related care 
                and services to individuals who because of 
                their mental or physical condition require care 
                and services (above the level of room and 
                board) which can be made available to them only 
                through institutional facilities,
        and is not primarily for the care and treatment of 
        mental diseases;
            (2) has in effect a transfer agreement (meeting the 
        requirements of section 1861(l)) with one or more 
        hospitals having agreements in effect under section 
        1866; and
            (3) meets the requirements for a nursing facility 
        described in subsections (b), (c), and (d) of this 
        section.
Such term also includes any facility which is located in a 
State on an Indian reservation and is certified by the 
Secretary as meeting the requirements of paragraph (1) and 
subsections (b), (c), and (d).
    (b) Requirements Relating to Provision of Services.--
            (1) Quality of life.--
                    (A) In general.--A nursing facility must 
                care for its residents in such a manner and in 
                such an environment as will promote maintenance 
                or enhancement of the quality of life of each 
                resident.
                    (B) Quality assessment and assurance.--A 
                nursing facility must maintain a quality 
                assessment and assurance committee, consisting 
                of the director of nursing services, a 
                physician designated by the facility, and at 
                least 3 other members of the facility's staff, 
                which (i) meets at least quarterly to identify 
                issues with respect to which quality assessment 
                and assurance activities are necessary and (ii) 
                develops and implements appropriate plans of 
                action to correct identified quality 
                deficiencies. A State or the Secretary may not 
                require disclosure of the records of such 
                committee except insofar as such disclosure is 
                related to the compliance of such committee 
                with the requirements of this subparagraph.
            (2) Scope of services and activities under plan of 
        care.--A nursing facility must provide services and 
        activities to attain or maintain the highest 
        practicable physical, mental, and psychosocial well-
        being of each resident in accordance with a written 
        plan of care which--
                    (A) describes the medical, nursing, and 
                psychosocial needs of the resident and how such 
                needs will be met;
                    (B) is initially prepared, with the 
                participation to the extent practicable of the 
                resident or the resident's family or legal 
                representative, by a team which includes the 
                resident's attending physician and a registered 
                professional nurse with responsibility for the 
                resident; and
                    (C) is periodically reviewed and revised by 
                such team after each assessment under paragraph 
                (3).
            (3) Residents' assessment.--
                    (A) Requirement.--A nursing facility must 
                conduct a comprehensive, accurate, 
                standardized, reproducible assessment of each 
                resident's functional capacity, which 
                assessment--
                            (i) describes the resident's 
                        capability to perform daily life 
                        functions and significant impairments 
                        in functional capacity;
                            (ii) is based on a uniform minimum 
                        data set specified by the Secretary 
                        under subsection (f)(6)(A);
                            (iii) uses an instrument which is 
                        specified by the State under subsection 
                        (e)(5); and
                            (iv) includes the identification of 
                        medical problems.
                    (B) Certification.--
                            (i) In general.--Each such 
                        assessment must be conducted or 
                        coordinated (with the appropriate 
                        participation of health professionals) 
                        by a registered professional nurse who 
                        signs and certifies the completion of 
                        the assessment. Each individual who 
                        completes a portion of such an 
                        assessment shall sign and certify as to 
                        the accuracy of that portion of the 
                        assessment.
                            (ii) Penalty for falsification.--
                                    (I) An individual who 
                                willfully and knowingly 
                                certifies under clause (i) a 
                                material and false statement in 
                                a resident assessment is 
                                subject to a civil money 
                                penalty of not more than $1,000 
                                with respect to each 
                                assessment.
                                    (II) An individual who 
                                willfully and knowingly causes 
                                another individual to certify 
                                under clause (i) a material and 
                                false statement in a resident 
                                assessment is subject to a 
                                civil money penalty of not more 
                                than $5,000 with respect to 
                                each assessment.
                                    (III) The provisions of 
                                section 1128A (other than 
                                subsections (a) and (b)) shall 
                                apply to a civil money penalty 
                                under this clause in the same 
                                manner as such provisions apply 
                                to a penalty or proceeding 
                                under section 1128A(a).
                            (iii) Use of independent 
                        assessors.--If a State determines, 
                        under a survey under subsection (g) or 
                        otherwise, that there has been a 
                        knowing and willful certification of 
                        false assessments under this paragraph, 
                        the State may require (for a period 
                        specified by the State) that resident 
                        assessments under this paragraph be 
                        conducted and certified by individuals 
                        who are independent of the facility and 
                        who are approved by the State.
                    (C) Frequency.--
                            (i) In general.--Such an assessment 
                        must be conducted--
                                    (I) promptly upon (but no 
                                later than 14 days after the 
                                date of) admission for each 
                                individual admitted;
                                    (II) promptly after a 
                                significant change in the 
                                resident's physical or mental 
                                condition; and
                                    (III) in no case less often 
                                than once every 12 months.
                            (ii) Resident review.--The nursing 
                        facility must examine each resident no 
                        less frequently than once every 3 
                        months and, as appropriate, revise the 
                        resident's assessment to assure the 
                        continuing accuracy of the assessment.
                    (D) Use.--The results of such an assessment 
                shall be used in developing, reviewing, and 
                revising the resident's plan of care under 
                paragraph (2).
                    (E) Coordination.--Such assessments shall 
                be coordinated with any State-required 
                preadmission screening program to the maximum 
                extent practicable in order to avoid 
                duplicative testing and effort. In addition, a 
                nursing facility shall notify the State mental 
                health authority or State mental retardation or 
                developmental disability authority, as 
                applicable, promptly after a significant change 
                in the physical or mental condition of a 
                resident who is mentally ill or mentally 
                retarded.
            (4) Provision of services and activities.--
                    (A) In general.--To the extent needed to 
                fulfill all plans of care described in 
                paragraph (2), a nursing facility must provide 
                (or arrange for the provision of)--
                            (i) nursing and related services 
                        and specialized rehabilitative services 
                        to attain or maintain the highest 
                        practicable physical, mental, and 
                        psychosocial well-being of each 
                        resident;
                            (ii) medically-related social 
                        services to attain or maintain the 
                        highest practicable physical, mental, 
                        and psychosocial well-being of each 
                        resident;
                            (iii) pharmaceutical services 
                        (including procedures that assure the 
                        accurate acquiring, receiving, 
                        dispensing, and administering of all 
                        drugs and biologicals) to meet the 
                        needs of each resident;
                            (iv) dietary services that assure 
                        that the meals meet the daily 
                        nutritional and special dietary needs 
                        of each resident;
                            (v) an on-going program, directed 
                        by a qualified professional, of 
                        activities designed to meet the 
                        interests and the physical, mental, and 
                        psychosocial well-being of each 
                        resident;
                            (vi) routine dental services (to 
                        the extent covered under the State 
                        plan) and emergency dental services to 
                        meet the needs of each resident; and
                            (vii) treatment and services 
                        required by mentally ill and mentally 
                        retarded residents not otherwise 
                        provided or arranged for (or required 
                        to be provided or arranged for) by the 
                        State.
                The services provided or arranged by the 
                facility must meet professional standards of 
                quality.
                    (B) Qualified persons providing services.--
                Services described in clauses (i), (ii), (iii), 
                (iv), and (vi) of subparagraph (A) must be 
                provided by qualified persons in accordance 
                with each resident's written plan of care.
                    (C) Required nursing care; facility 
                waivers.--
                            (i) General requirements.--A 
                        nursing facility--
                                    (I) except as provided in 
                                clause (ii), must provide 24-
                                hour licensed nursing services 
                                which are sufficient to meet 
                                the nursing needs of its 
                                residents, and
                                    (II) except as provided in 
                                clause (ii), must use the 
                                services of a registered 
                                professional nurse for at least 
                                8 consecutive hours a day, 7 
                                days a week.
                            (ii) Waiver by state.--To the 
                        extent that a facility is unable to 
                        meet the requirements of clause (i), a 
                        State may waive such requirements with 
                        respect to the facility if--
                                    (I) the facility 
                                demonstrates to the 
                                satisfaction of the State that 
                                the facility has been unable, 
                                despite diligent efforts 
                                (including offering wages at 
                                the community prevailing rate 
                                for nursing facilities), to 
                                recruit appropriate personnel,
                                    (II) the State determines 
                                that a waiver of the 
                                requirement will not endanger 
                                the health or safety of 
                                individuals staying in the 
                                facility,
                                    (III) the State finds that, 
                                for any such periods in which 
                                licensed nursing services are 
                                not available, a registered 
                                professional nurse or a 
                                physician is obligated to 
                                respond immediately to 
                                telephone calls from the 
                                facility,
                                    (IV) the State agency 
                                granting a waiver of such 
                                requirements provides notice of 
                                the waiver to the State long-
                                term care ombudsman 
                                (established under section 
                                307(a)(12) of the Older 
                                Americans Act of 1965) and the 
                                protection and advocacy system 
                                in the State for the mentally 
                                ill and the mentally retarded, 
                                and
                                    (V) the nursing facility 
                                that is granted such a waiver 
                                by a State notifies residents 
                                of the facility (or, where 
                                appropriate, the guardians or 
                                legal representatives of such 
                                residents) and members of their 
                                immediate families of the 
                                waiver.
                        A waiver under this clause shall be 
                        subject to annual review and to the 
                        review of the Secretary and subject to 
                        clause (iii) shall be accepted by the 
                        Secretary for purposes of this title to 
                        the same extent as is the State's 
                        certification of the facility. In 
                        granting or renewing a waiver, a State 
                        may require the facility to use other 
                        qualified, licensed personnel.
                            (iii) Assumption of waiver 
                        authority by secretary.--If the 
                        Secretary determines that a State has 
                        shown a clear pattern and practice of 
                        allowing waivers in the absence of 
                        diligent efforts by facilities to meet 
                        the staffing requirements, the 
                        Secretary shall assume and exercise the 
                        authority of the State to grant 
                        waivers.
            (5) Required training of nurse aides.--
                    (A) In general.--(i) Except as provided in 
                clause (ii), a nursing facility must not use on 
                a full-time basis any individual as a nurse 
                aide in the facility, for more than 4 months 
                unless the individual--
                            (I) has completed a training and 
                        competency evaluation program, or a 
                        competency evaluation program, approved 
                        by the State under subsection 
                        (e)(1)(A), and
                            (II) is competent to provide 
                        nursing or nursing-related services.
                    (ii) A nursing facility must not use on a 
                temporary, per diem, leased, or on any other 
                basis other than as a permanent employee any 
                individual as a nurse aide in the facility, 
                unless the individual meets the requirements 
                described in clause (i).
                    (B) Offering competency evaluation programs 
                for current employees.--A nursing facility must 
                provide, for individuals used as a nurse aide 
                by the facility, for a competency evaluation 
                program approved by the State under subsection 
                (e)(1) and such preparation as may be necessary 
                for the individual to complete such a program.
                    (C) Competency.--The nursing facility must 
                not permit an individual, other than in a 
                training and competency evaluation program 
                approved by the State, to serve as a nurse aide 
                or provide services of a type for which the 
                individual has not demonstrated competency and 
                must not use such an individual as a nurse aide 
                unless the facility has inquired of any State 
                registry established under subsection (e)(2)(A) 
                that the facility believes will include 
                information concerning the individual.
                    (D) Re-training required.--For purposes of 
                subparagraph (A), if, since an individual's 
                most recent completion of a training and 
                competency evaluation program, there has been a 
                continuous period of 24 consecutive months 
                during none of which the individual performed 
                nursing or nursing-related services for 
                monetary compensation, such individual shall 
                complete a new training and competency 
                evaluation program, or a new competency 
                evaluation program.
                    (E) Regular in-service education.--The 
                nursing facility must provide such regular 
                performance review and regular in-service 
                education as assures that individuals used as 
                nurse aides are competent to perform services 
                as nurse aides, including training for 
                individuals providing nursing and nursing-
                related services to residents with cognitive 
                impairments.
                    (F) Nurse aide defined.--In this paragraph, 
                the term ``nurse aide'' means any individual 
                providing nursing or nursing-related services 
                to residents in a nursing facility, but does 
                not include an individual--
                            (i) who is a licensed health 
                        professional (as defined in 
                        subparagraph (G)) or a registered 
                        dietitian, or
                            (ii) who volunteers to provide such 
                        services without monetary compensation.
                    (G) Licensed health professional defined.--
                In this paragraph, the term ``licensed health 
                professional'' means a physician, physician 
                assistant, nurse practitioner, physical, 
                speech, or occupational therapist, physical or 
                occupational therapy assistant, registered 
                professional nurse, licensed practical nurse, 
                or licensed or certified social worker.
            (6) Physician supervision and clinical records.--A 
        nursing facility must--
                    (A) require that the health care of every 
                resident be provided under the supervision of a 
                physician (or, at the option of a State, under 
                the supervision of a nurse practitioner, 
                clinical nurse specialist, or physician 
                assistant who is not an employee of the 
                facility but who is working in collaboration 
                with a physician);
                    (B) provide for having a physician 
                available to furnish necessary medical care in 
                case of emergency; and
                    (C) maintain clinical records on all 
                residents, which records include the plans of 
                care (described in paragraph (2)) and the 
                residents' assessments (described in paragraph 
                (3)), as well as the results of any pre-
                admission screening conducted under subsection 
                (e)(7).
            (7) Required social services.--In the case of a 
        nursing facility with more than 120 beds, the facility 
        must have at least one social worker (with at least a 
        bachelor's degree in social work or similar 
        professional qualifications) employed full-time to 
        provide or assure the provision of social services.
    (c) Requirements Relating to Residents' Rights.--
            (1) General rights.--
                    (A) Specified rights.--A nursing facility 
                must protect and promote the rights of each 
                resident, including each of the following 
                rights:
                            (i) Free choice.--The right to 
                        choose a personal attending physician, 
                        to be fully informed in advance about 
                        care and treatment, to be fully 
                        informed in advance of any changes in 
                        care or treatment that may affect the 
                        resident's well-being, and (except with 
                        respect to a resident adjudged 
                        incompetent) to participate in planning 
                        care and treatment or changes in care 
                        and treatment.
                            (ii) Free from restraints.--The 
                        right to be free from physical or 
                        mental abuse, corporal punishment, 
                        involuntary seclusion, and any physical 
                        or chemical restraints imposed for 
                        purposes of discipline or convenience 
                        and not required to treat the 
                        resident's medical symptoms. Restraints 
                        may only be imposed--
                                    (I) to ensure the physical 
                                safety of the resident or other 
                                residents, and
                                    (II) only upon the written 
                                order of a physician that 
                                specifies the duration and 
                                circumstances under which the 
                                restraints are to be used 
                                (except in emergency 
                                circumstances specified by the 
                                Secretary until such an order 
                                could reasonably be obtained).
                            (iii) Privacy.--The right to 
                        privacy with regard to accommodations, 
                        medical treatment, written and 
                        telephonic communications, visits, and 
                        meetings of family and of resident 
                        groups.
                            (iv) Confidentiality.--The right to 
                        confidentiality of personal and 
                        clinical records and to access to 
                        current clinical records of the 
                        resident upon request by the resident 
                        or the resident's legal representative, 
                        within 24 hours (excluding hours 
                        occurring during a weekend or holiday) 
                        after making such a request.
                            (v) Accommodation of needs.--The 
                        right--
                                    (I) to reside and receive 
                                services with reasonable 
                                accommodation of individual 
                                needs and preferences, except 
                                where the health or safety of 
                                the individual or other 
                                residents would be endangered, 
                                and
                                    (II) to receive notice 
                                before the room or roommate of 
                                the resident in the facility is 
                                changed.
                            (vi) Grievances.--The right to 
                        voice grievances with respect to 
                        treatment or care that is (or fails to 
                        be) furnished, without discrimination 
                        or reprisal for voicing the grievances 
                        and the right to prompt efforts by the 
                        facility to resolve grievances the 
                        resident may have, including those with 
                        respect to the behavior of other 
                        residents.
                            (vii) Participation in resident and 
                        family groups.--The right of the 
                        resident to organize and participate in 
                        resident groups in the facility and the 
                        right of the resident's family to meet 
                        in the facility with the families of 
                        other residents in the facility.
                            (viii) Participation in other 
                        activities.--The right of the resident 
                        to participate in social, religious, 
                        and community activities that do not 
                        interfere with the rights of other 
                        residents in the facility.
                            (ix) Examination of survey 
                        results.--The right to examine, upon 
                        reasonable request, the results of the 
                        most recent survey of the facility 
                        conducted by the Secretary or a State 
                        with respect to the facility and any 
                        plan of correction in effect with 
                        respect to the facility.
                            (x) Refusal of certain transfers.--
                        The right to refuse a transfer to 
                        another room within the facility, if a 
                        purposes of the transfer is to relocate 
                        the resident from a portion of the 
                        facility that is not a skilled nursing 
                        facility (for purposes of title XVIII) 
                        to a portion of the facility that is 
                        such a skilled nursing facility.
                            (xi) Other rights.--Any other right 
                        established by the Secretary.
                Clause (i) shall not be construed as precluding 
                a State from requiring a resident of a nursing 
                facility to choose a personal attending 
                physician who participates in a managed care 
                network under a contract with the State to 
                provide medical assistance under this title. 
                Clause (iii) shall not be construed as 
                requiring the provision of a private room. A 
                resident's exercise of a right to refuse 
                transfer under clause (x) shall not affect the 
                resident's eligibility or entitlement to 
                medical assistance under this title or a 
                State's entitlement to Federal medical 
                assistance under this title with respect to 
                services furnished to such a resident.
                    (B) Notice of rights.--A nursing facility 
                must--
                            (i) inform each resident, orally 
                        and in writing at the time of admission 
                        to the facility, of the resident's 
                        legal rights during the stay at the 
                        facility and of the requirements and 
                        procedures for establishing eligibility 
                        for medical assistance under this 
                        title, including the right to request 
                        an assessment under section 
                        1505(c)(1)(B);
                            (ii) make available to each 
                        resident, upon reasonable request, a 
                        written statement of such rights (which 
                        statement is updated upon changes in 
                        such rights) including the notice (if 
                        any) of the State developed under 
                        subsection (e)(6);
                            (iii) inform each resident who is 
                        entitled to medical assistance under 
                        this title--
                                    (I) at the time of 
                                admission to the facility or, 
                                if later, at the time the 
                                resident becomes eligible for 
                                such assistance, of the items 
                                and services that are included 
                                in nursing facility services 
                                under the State plan and for 
                                which the resident may not be 
                                charged, and of those other 
                                items and services that the 
                                facility offers and for which 
                                the resident may be charged and 
                                the amount of the charges for 
                                such items and services, and
                                    (II) of changes in the 
                                items and services described in 
                                subclause (I) and of changes in 
                                the charges imposed for items 
                                and services described in that 
                                subclause; and
                            (iv) inform each other resident, in 
                        writing before or at the time of 
                        admission and periodically during the 
                        resident's stay, of services available 
                        in the facility and of related charges 
                        for such services, including any 
                        charges for services not covered under 
                        title XVIII or by the facility's basic 
                        per diem charge.
                The written description of legal rights under 
                this subparagraph shall include a description 
                of the protection of personal funds under 
                paragraph (6) and a statement that a resident 
                may file a complaint with a State survey and 
                certification agency respecting resident abuse 
                and neglect and misappropriation of resident 
                property in the facility.
                    (C) Rights of incompetent residents.--In 
                the case of a resident adjudged incompetent 
                under the laws of a State, the rights of the 
                resident under this title shall devolve upon, 
                and, to the extent judged necessary by a court 
                of competent jurisdiction, be exercised by, the 
                person appointed under State law to act on the 
                resident's behalf.
                    (D) Use of psychopharmacologic drugs.--
                Psychopharmacologic drugs may be administered 
                only on the orders of a physician and only as 
                part of a plan (included in the written plan of 
                care described in paragraph (2)) designed to 
                eliminate or modify the symptoms for which the 
                drugs are prescribed and only if, at least 
                annually an independent, external consultant 
                reviews the appropriateness of the drug plan of 
                each resident receiving such drugs.
            (2) Transfer and discharge rights.--
                    (A) In general.--A nursing facility must 
                permit each resident to remain in the facility 
                and must not transfer or discharge the resident 
                from the facility unless--
                            (i) the transfer or discharge is 
                        necessary to meet the resident's 
                        welfare and the resident's welfare 
                        cannot be met in the facility;
                            (ii) the transfer or discharge is 
                        appropriate because the resident's 
                        health has improved sufficiently so the 
                        resident no longer needs the services 
                        provided by the facility;
                            (iii) the safety of individuals in 
                        the facility is endangered;
                            (iv) the health of individuals in 
                        the facility would otherwise be 
                        endangered;
                            (v) the resident has failed, after 
                        reasonable and appropriate notice, to 
                        pay (or to have paid under this title 
                        or title XVIII on the resident's 
                        behalf) for a stay at the facility; or
                            (vi) the facility ceases to 
                        operate.
                In each of the cases described in clauses (i) 
                through (iv), the basis for the transfer or 
                discharge must be documented in the resident's 
                clinical record. In the cases described in 
                clauses (i) and (ii), the documentation must be 
                made by the resident's physician, and in the 
                case described in clause (iv) the documentation 
                must be made by a physician. For purposes of 
                clause (v), in the case of a resident who 
                becomes eligible for assistance under this 
                title after admission to the facility, only 
                charges which may be imposed under this title 
                shall be considered to be allowable.
                    (B) Pre-transfer and pre-discharge 
                notice.--
                            (i) In general.--Before effecting a 
                        transfer or discharge of a resident, a 
                        nursing facility must--
                                    (I) notify the resident 
                                (and, if known, an immediate 
                                family member of the resident 
                                or legal representative) of the 
                                transfer or discharge and the 
                                reasons therefor,
                                    (II) record the reasons in 
                                the resident's clinical record 
                                (including any documentation 
                                required under subparagraph 
                                (A)), and
                                    (III) include in the notice 
                                the items described in clause 
                                (iii).
                            (ii) Timing of notice.--The notice 
                        under clause (i)(I) must be made at 
                        least 30 days in advance of the 
                        resident's transfer or discharge 
                        except--
                                    (I) in a case described in 
                                clause (iii) or (iv) of 
                                subparagraph (A);
                                    (II) in a case described in 
                                clause (ii) of subparagraph 
                                (A), where the resident's 
                                health improves sufficiently to 
                                allow a more immediate transfer 
                                or discharge;
                                    (III) in a case described 
                                in clause (i) of subparagraph 
                                (A), where a more immediate 
                                transfer or discharge is 
                                necessitated by the resident's 
                                urgent medical needs; or
                                    (IV) in a case where a 
                                resident has not resided in the 
                                facility for 30 days.
                        In the case of such exceptions, notice 
                        must be given as many days before the 
                        date of the transfer or discharge as is 
                        practicable.
                            (iii) Items included in notice.--
                        Each notice under clause (i) must 
                        include--
                                    (I) notice of the 
                                resident's right to appeal the 
                                transfer or discharge under the 
                                State process established under 
                                subsection (e)(3);
                                    (II) the name, mailing 
                                address, and telephone number 
                                of the State long-term care 
                                ombudsman (established under 
                                title III or VII of the Older 
                                Americans Act of 1965);
                                    (III) in the case of 
                                residents with developmental 
                                disabilities, the mailing 
                                address and telephone number of 
                                the agency responsible for the 
                                protection and advocacy system 
                                for developmentally disabled 
                                individuals established under 
                                part C of the Developmental 
                                Disabilities Assistance and 
                                Bill of Rights Act; and
                                    (IV) in the case of 
                                mentally ill residents (as 
                                defined in subsection 
                                (e)(7)(G)(i)), the mailing 
                                address and telephone number of 
                                the agency responsible for the 
                                protection and advocacy system 
                                for mentally ill individuals 
                                established under the 
                                Protection and Advocacy for 
                                Mentally Ill Individuals Act.
                    (C) Orientation.--A nursing facility must 
                provide sufficient preparation and orientation 
                to residents to ensure safe and orderly 
                transfer or discharge from the facility.
                    (D) Notice on bed-hold policy and 
                readmission.--
                            (i) Notice before transfer.--Before 
                        a resident of a nursing facility is 
                        transferred for hospitalization or 
                        therapeutic leave, a nursing facility 
                        must provide written information to the 
                        resident and an immediate family member 
                        or legal representative concerning--
                                    (I) the provisions of the 
                                State plan under this title 
                                regarding the period (if any) 
                                during which the resident will 
                                be permitted under the State 
                                plan to return and resume 
                                residence in the facility, and
                                    (II) the policies of the 
                                facility regarding such a 
                                period, which policies must be 
                                consistent with clause (iii).
                            (ii) Notice upon transfer.--At the 
                        time of transfer of a resident to a 
                        hospital or for therapeutic leave, a 
                        nursing facility must provide written 
                        notice to the resident and an immediate 
                        family member or legal representative 
                        of the duration of any period described 
                        in clause (i).
                            (iii) Permitting resident to 
                        return.--A nursing facility must 
                        establish and follow a written policy 
                        under which a resident--
                                    (I) who is eligible for 
                                medical assistance for nursing 
                                facility services under a State 
                                plan,
                                    (II) who is transferred 
                                from the facility for 
                                hospitalization or therapeutic 
                                leave, and
                                    (III) whose hospitalization 
                                or therapeutic leave exceeds a 
                                period paid for under the State 
                                plan for the holding of a bed 
                                in the facility for the 
                                resident,
                        will be permitted to be readmitted to 
                        the facility immediately upon the first 
                        availability of a bed in a room (not 
                        including a private room) in the 
                        facility if, at the time of 
                        readmission, the resident requires the 
                        services provided by the facility.
            (3) Access and visitation rights.--A nursing 
        facility must--
                    (A) permit immediate access to any resident 
                by any representative of the Secretary, by any 
                representative of the State, by an ombudsman or 
                agency described in subclause (II), (III), or 
                (IV) of paragraph (2)(B)(iii), or by the 
                resident's individual physician;
                    (B) permit immediate access to a resident, 
                subject to the resident's right to deny or 
                withdraw consent at any time, by immediate 
                family or other relatives of the resident;
                    (C) permit immediate access to a resident, 
                subject to reasonable restrictions and the 
                resident's right to deny or withdraw consent at 
                any time, by others who are visiting with the 
                consent of the resident;
                    (D) permit reasonable access to a resident 
                by any entity or individual that provides 
                health, social, legal, or other services to the 
                resident, subject to the resident's right to 
                deny or withdraw consent at any time; and
                    (E) permit representatives of the State 
                ombudsman (described in paragraph 
                (2)(B)(iii)(II)), with the permission of the 
                resident (or the resident's legal 
                representative) and consistent with State law, 
                to examine a resident's clinical records.
            (4) Equal access to quality care.--
                    (A) In general.--A nursing facility must 
                establish and maintain identical policies and 
                practices regarding transfer, discharge, and 
                the provision of services required under the 
                State plan for all individuals regardless of 
                source of payment.
                    (B) Construction.--
                            (i) Nothing prohibiting any charges 
                        for non-medical assistance patients.--
                        Subparagraph (A) shall not be construed 
                        as prohibiting a nursing facility from 
                        charging any amount for services 
                        furnished, consistent with the notice 
                        in paragraph (1)(B) describing such 
                        charges.
                            (ii) No additional services 
                        required.--Subparagraph (A) shall not 
                        be construed as requiring a State to 
                        offer additional services on behalf of 
                        a resident than are otherwise provided 
                        under the State plan.
            (5) Admissions Policy.--
                    (A) Admissions.--With respect to admissions 
                practices, a nursing facility must--
                            (i)(I) not require individuals 
                        applying to reside or residing in the 
                        facility to waive their rights to 
                        benefits under a State plan under this 
                        title or title XVIII, (II) not require 
                        oral or written assurance that such 
                        individuals are not eligible for, or 
                        will not apply for, benefits under a 
                        State plan under this title or title 
                        XVIII, and (III) prominently display in 
                        the facility written information, and 
                        provide to such individuals oral and 
                        written information, about how to apply 
                        for and use such benefits and how to 
                        receive refunds for previous payments 
                        covered by such benefits;
                            (ii) not require a third party 
                        guarantee of payment to the facility as 
                        a condition of admission (or expedited 
                        admission) to, or continued stay in, 
                        the facility; and
                            (iii) in the case of an individual 
                        who is provided medical assistance for 
                        nursing facility services, not charge, 
                        solicit, accept, or receive, in 
                        addition to any amount otherwise 
                        required to be paid under the State 
                        plan under this title, any gift, money, 
                        donation, or other consideration as a 
                        precondition of admitting (or 
                        expediting the admission of) the 
                        individual to the facility or as a 
                        requirement for the individual's 
                        continued stay in the facility.
                    (B) Construction.--
                            (i) No preemption of stricter 
                        standards.--Subparagraph (A) shall not 
                        be construed as preventing States or 
                        political subdivisions therein from 
                        prohibiting, under State or local law, 
                        the discrimination against individuals 
                        who are provided medical assistance 
                        under the State plan with respect to 
                        admissions practices of nursing 
                        facilities.
                            (ii) Contracts with legal 
                        representatives.--Subparagraph (A)(ii) 
                        shall not be construed as preventing a 
                        facility from requiring an individual, 
                        who has legal access to a resident's 
                        income or resources available to pay 
                        for care in the facility, to sign a 
                        contract (without incurring personal 
                        financial liability) to provide payment 
                        from the resident's income or resources 
                        for such care.
                            (iii) Charges for additional 
                        services requested.--Subparagraph 
                        (A)(iii) shall not be construed as 
                        preventing a facility from charging a 
                        resident, eligible for medical 
                        assistance under the State plan, for 
                        items or services the resident has 
                        requested and received and that are not 
                        specified in the State plan as included 
                        in covered nursing facility services.
                            (iv) Bona fide contributions.--
                        Subparagraph (A)(iii) shall not be 
                        construed as prohibiting a nursing 
                        facility from soliciting, accepting, or 
                        receiving a charitable, religious, or 
                        philanthropic contribution from an 
                        organization or from a person unrelated 
                        to the resident (or potential 
                        resident), but only to the extent that 
                        such contribution is not a condition of 
                        admission, expediting admission, or 
                        continued stay in the facility.
            (6) Protection of resident funds.--
                    (A) In general.--The nursing facility--
                            (i) may not require residents to 
                        deposit their personal funds with the 
                        facility, and
                            (ii) upon the written authorization 
                        of the resident, must hold, safeguard, 
                        and account for such personal funds 
                        under a system established and 
                        maintained by the facility in 
                        accordance with this paragraph.
                    (B) Management of personal funds.--Upon 
                written authorization of a resident under 
                subparagraph (A)(ii), the facility must manage 
                and account for the personal funds of the 
                resident deposited with the facility as 
                follows:
                            (i) Deposit.--The facility must 
                        deposit any amount of personal funds in 
                        excess of $50 with respect to a 
                        resident in an interest bearing account 
                        (or accounts) that is separate from any 
                        of the facility's operating accounts 
                        and credits all interest earned on such 
                        separate account to such account. With 
                        respect to any other personal funds, 
                        the facility must maintain such funds 
                        in a non-interest bearing account or 
                        petty cash fund.
                            (ii) Accounting and records.--The 
                        facility must assure a full and 
                        complete separate accounting of each 
                        such resident's personal funds, 
                        maintain a written record of all 
                        financial transactions involving the 
                        personal funds of a resident deposited 
                        with the facility, and afford the 
                        resident (or a legal representative of 
                        the resident) reasonable access to such 
                        record.
                            (iii) Notice of certain balances.--
                        The facility must notify each resident 
                        receiving medical assistance under the 
                        State plan when the amount in the 
                        resident's account reaches $200 less 
                        than the dollar amount determined under 
                        section 1611(a)(3)(B) and the fact that 
                        if the amount in the account (in 
                        addition to the value of the resident's 
                        other nonexempt resources) reaches the 
                        amount determined under such section 
                        the resident may lose eligibility for 
                        such medical assistance or for benefits 
                        under title XVI.
                            (iv) Conveyance upon death.--Upon 
                        the death of a resident with such an 
                        account, the facility must convey 
                        promptly the resident's personal funds 
                        (and a final accounting of such funds) 
                        to the individual administering the 
                        resident's estate. All other personal 
                        property, including medical records, 
                        shall be considered part of the 
                        resident's estate and shall only be 
                        released to the administrator of the 
                        estate.
                    (C) Assurance of financial security.--The 
                facility must purchase a surety bond, or 
                otherwise provide assurance satisfactory to the 
                State, to assure the security of all personal 
                funds of residents deposited with the facility.
                    (D) Limitation on charges to personal 
                funds.--The facility may not impose a charge 
                against the personal funds of a resident for 
                any item or service for which payment is made 
                under this title or title XVIII.
            (7) Limitation on charges in case of medical-
        assistance-eligible individuals.--
                    (A) In general.--A nursing facility may not 
                impose charges, for certain medical-assistance-
                eligible individuals for nursing facility 
                services covered by the State under its plan 
                under this title, that exceed the payment 
                amounts established by the State for such 
                services under this title.
                    (B) Certain medical-assistance-eligible 
                individuals defined.--In subparagraph (A), the 
                term ``certain medical-assistance-eligible 
                individual'' means an individual who is 
                entitled to medical assistance for nursing 
                facility services in the facility under this 
                title but with respect to whom such benefits 
                are not being paid because, in determining the 
                amount of the individual's income to be applied 
                monthly to payment for the costs of such 
                services, the amount of such income exceeds the 
                payment amounts established by the State for 
                such services under this title.
            (8) Posting of survey results.--A nursing facility 
        must post in a place readily accessible to residents, 
        and family members and legal representatives of 
        residents, the results of the most recent survey of the 
        facility conducted under subsection (g).
    (d) Requirements Relating to Administration and Other 
Matters.--
            (1) Administration.--
                    (A) In general.--A nursing facility must be 
                administered in a manner that enables it to use 
                its resources effectively and efficiently to 
                attain or maintain the highest practicable 
                physical, mental, and psychosocial well-being 
                of each resident (consistent with requirements 
                established under subsection (f)(5)).
                    (B) Required notices.--If a change occurs 
                in--
                            (i) the persons with an ownership 
                        or control interest (as defined in 
                        section 1124(a)(3)) in the facility,
                            (ii) the persons who are officers, 
                        directors, agents, or managing 
                        employees (as defined in section 
                        1126(b)) of the facility,
                            (iii) the corporation, association, 
                        or other company responsible for the 
                        management of the facility, or
                            (iv) the individual who is the 
                        administrator or director of nursing of 
                        the facility,
                the nursing facility must provide notice to the 
                State agency responsible for the licensing of 
                the facility, at the time of the change, of the 
                change and of the identity of each new person, 
                company, or individual described in the 
                respective clause.
                    (C) Nursing facility administrator.--The 
                administrator of a nursing facility, whether 
                freestanding or hospital-based, must meet such 
                standards as are established by the Secretary 
                under subsection (f)(4).
            (2) Licensing and life safety code.--
                    (A) Licensing.--A nursing facility must be 
                licensed under applicable State and local law.
                    (B) Life safety code.--A nursing facility 
                must meet such provisions of such edition (as 
                specified by the Secretary in regulation) of 
                the Life Safety Code of the National Fire 
                Protection Association as are applicable to 
                nursing homes; except that--
                            (i) the Secretary may waive, for 
                        such periods as he deems appropriate, 
                        specific provisions of such Code which 
                        if rigidly applied would result in 
                        unreasonable hardship upon a facility, 
                        but only if such waiver would not 
                        adversely affect the health and safety 
                        of residents or personnel, and
                            (ii) the provisions of such Code 
                        shall not apply in any State if the 
                        Secretary finds that in such State 
                        there is in effect a fire and safety 
                        code, imposed by State law, which 
                        adequately protects residents of and 
                        personnel in nursing facilities.
            (3) Sanitary and infection control and physical 
        environment.--A nursing facility must--
                    (A) establish and maintain an infection 
                control program designed to provide a safe, 
                sanitary, and comfortable environment in which 
                residents reside and to help prevent the 
                development and transmission of disease and 
                infection, and
                    (B) be designed, constructed, equipped, and 
                maintained in a manner to protect the health 
                and safety of residents, personnel, and the 
                general public.
            (4) Miscellaneous.--
                    (A) Compliance with federal, state, and 
                local laws and professional standards.--A 
                nursing facility, whether freestanding or 
                hospital-based, must operate and provide 
                services in compliance with all applicable 
                Federal, State, and local laws and regulations 
                (including the requirements of section 1124) 
                and with accepted professional standards and 
                principles which apply to professionals 
                providing services in such a facility.
                    (B) Other.--A nursing facility must meet 
                such other requirements relating to the health 
                and safety of residents or relating to the 
                physical facilities thereof as the Secretary 
                may find necessary.
    (e) State Requirements Relating to Nursing Facility 
Requirements.--A State with a State plan under this title shall 
provide for the following:
            (1) Specification and review of nurse aide training 
        and competency evaluation programs and of nurse aide 
        competency evaluation programs.--The State must--
                    (A) specify those training and competency 
                evaluation programs, and those competency 
                evaluation programs, that the State approves 
                for purposes of subsection (b)(5) and that meet 
                the requirements established under subsection 
                (f)(2), and
                    (B) provide for the review and reapproval 
                of such programs, at a frequency and using a 
                methodology consistent with the requirements 
                established under subsection (f)(2)(A)(iii).
            (2) Nurse aide registry.--
                    (A) In general.--The State shall establish 
                and maintain a registry of all individuals who 
                have satisfactorily completed a nurse aide 
                training and competency evaluation program, or 
                a nurse aide competency evaluation program, 
                approved under paragraph (1) in the State, or 
                any individual described in subsection 
                (f)(2)(B)(ii) or in subparagraph (B), (C), or 
                (D) of section 6901(b)(4) of the Omnibus Budget 
                Reconciliation Act of 1989.
                    (B) Information in registry.--The registry 
                under subparagraph (A) shall provide (in 
                accordance with regulations of the Secretary) 
                for the inclusion of specific documented 
                findings by a State under subsection (g)(1)(C) 
                of resident neglect or abuse or 
                misappropriation of resident property involving 
                an individual listed in the registry, as well 
                as any brief statement of the individual 
                disputing the findings. The State shall make 
                available to the public information in the 
                registry. In the case of inquiries to the 
                registry concerning an individual listed in the 
                registry, any information disclosed concerning 
                such a finding shall also include disclosure of 
                any such statement in the registry relating to 
                the finding or a clear and accurate summary of 
                such a statement.
                    (C) Prohibition against charges.--A State 
                may not impose any charges on a nurse aide 
                relating to the registry established and 
                maintained under subparagraph (A).
            (3) State appeals process for transfers and 
        discharges.--The State must provide for a fair 
        mechanism, meeting the guidelines established under 
        subsection (f)(3), for hearing appeals on transfers and 
        discharges of residents of such facilities.
            (4) Nursing facility administrator standards.--The 
        State must implement and enforce the nursing facility 
        administrator standards developed under subsection 
        (f)(4) respecting the qualification of administrators 
        of nursing facilities. Any such standards promulgated 
        shall apply to administrators of hospital-based 
        facilities as well as administrators of freestanding 
        facilities.
            (5) Specification of resident assessment 
        instrument.--The State shall specify the instrument to 
        be used by nursing facilities in the State in complying 
        with the requirement of subsection (b)(3)(A)(iii). Such 
        instrument shall be--
                    (A) one of the instruments designated under 
                subsection (f)(6)(B), or
                    (B) an instrument which the Secretary has 
                approved as being consistent with the minimum 
                data set of core elements, common definitions, 
                and utilization guidelines specified by the 
                Secretary under subsection (f)(6)(A).
            (6) Notice of rights.--Each State shall develop 
        (and periodically update) a written notice of the 
        rights and obligations of residents of nursing 
        facilities (and spouses of such residents) under this 
        title.
            (7) State requirements for preadmission screening 
        and resident review.--
                    (A) Preadmission screening.--
                            (i) In general.--The State must 
                        have in effect a preadmission screening 
                        program, for identifying mentally ill 
                        and mentally retarded individuals (as 
                        defined in subparagraph (B)) who are 
                        admitted to nursing facilities and for 
                        determining whether they require the 
                        level of services of such a facility.
                            (ii) State requirement for resident 
                        review.--The State shall notify the 
                        State mental health authority or the 
                        State mental retardation or 
                        developmental disability authority, as 
                        appropriate, of the individuals so 
                        identified.
                    (B) Definitions.--In this paragraph:
                            (i) An individual is considered to 
                        be ``mentally ill'' if the individual 
                        has a serious mental illness (as 
                        defined by the Secretary in 
                        consultation with the National 
                        Institute of Mental Health) and does 
                        not have a primary diagnosis of 
                        dementia (including Alzheimer's disease 
                        or a related disorder) or a diagnosis 
                        (other than a primary diagnosis) of 
                        dementia and a primary diagnosis that 
                        is not a serious mental illness.
                            (ii) An individual is considered to 
                        be ``mentally retarded'' if the 
                        individual is mentally retarded or a 
                        person with a related condition.
    (f) Responsibilities Relating to Nursing Facility 
Requirements.--
            (1) General responsibility.--It is the duty and 
        responsibility of the Secretary to assure that 
        requirements which govern the provision of care in 
        nursing facilities under State plans approved under 
        this title, and the enforcement of such requirements, 
        are adequate to protect the health, safety, welfare, 
        and rights of residents and to promote the effective 
        and efficient use of public moneys.
            (2) Requirements for nurse aide training and 
        competency evaluation programs and for nurse aide 
        competency evaluation programs.--
                    (A) In general.--For purposes of 
                subsections (b)(5) and (e)(1)(A), the Secretary 
                shall establish--
                            (i) requirements for the approval 
                        of nurse aide training and competency 
                        evaluation programs, including 
                        requirements relating to (I) the areas 
                        to be covered in such a program 
                        (including at least basic nursing 
                        skills, personal care skills, 
                        recognition of mental health and social 
                        service needs, care of cognitively 
                        impaired residents, basic restorative 
                        services, and residents' rights) and 
                        content of the curriculum, (II) minimum 
                        hours of initial and ongoing training 
                        and retraining (including not less than 
                        75 hours in the case of initial 
                        training), (III) qualifications of 
                        instructors, and (IV) procedures for 
                        determination of competency;
                            (ii) requirements for the approval 
                        of nurse aide competency evaluation 
                        programs, including requirement 
                        relating to the areas to be covered in 
                        such a program, including at least 
                        basic nursing skills, personal care 
                        skills, recognition of mental health 
                        and social service needs, care of 
                        cognitively impaired residents, basic 
                        restorative services, and residents' 
                        rights, and procedures for 
                        determination of competency;
                            (iii) requirements respecting the 
                        minimum frequency and methodology to be 
                        used by a State in reviewing such 
                        programs' compliance with the 
                        requirements for such programs; and
                            (iv) requirements, under both such 
                        programs, that--
                                    (I) provide procedures for 
                                determining competency that 
                                permit a nurse aide, at the 
                                nurse aide's option, to 
                                establish competency through 
                                procedures or methods other 
                                than the passing of a written 
                                examination and to have the 
                                competency evaluation conducted 
                                at the nursing facility at 
                                which the aide is (or will be) 
                                employed (unless the facility 
                                is described in subparagraph 
                                (B)(iii)(I)),
                                    (II) prohibit the 
                                imposition on a nurse aide who 
                                is employed by (or who has 
                                received an offer of employment 
                                from) a facility on the date on 
                                which the aide begins either 
                                such program of any charges 
                                (including any charges for 
                                textbooks and other required 
                                course materials and any 
                                charges for the competency 
                                evaluation) for either such 
                                program, and
                                    (III) in the case of a 
                                nurse aide not described in 
                                subclause (II) who is employed 
                                by (or who has received an 
                                offer of employment from) a 
                                facility not later than 12 
                                months after completing either 
                                such program, the State shall 
                                provide for the reimbursement 
                                of costs incurred in completing 
                                such program on a prorata basis 
                                during the period in which the 
                                nurse aide is so employed.
                    (B) Approval of certain programs.--Such 
                requirements--
                            (i) may permit approval of programs 
                        offered by or in facilities, as well as 
                        outside facilities (including employee 
                        organizations);
                            (ii) shall permit a State to find 
                        that an individual who has completed 
                        (before July 1, 1989) a nurse aide 
                        training and competency evaluation 
                        program shall be deemed to have 
                        completed such a program approved under 
                        subsection (b)(5) if the State 
                        determines that, at the time the 
                        program was offered, the program met 
                        the requirements for approval under 
                        such paragraph; and
                            (iii) subject to subparagraph (C), 
                        shall prohibit approval of such a 
                        program--
                                    (I) offered by or in a 
                                nursing facility which, within 
                                the previous 2 years--
                                            (a) has operated 
                                        under a waiver under 
                                        subsection 
                                        (b)(4)(C)(ii) that was 
                                        granted on the basis of 
                                        a demonstration that 
                                        the facility is unable 
                                        to provide the nursing 
                                        care required under 
                                        subsection (b)(4)(C)(i) 
                                        for a period in excess 
                                        of 48 hours during a 
                                        week;
                                            (b) has been 
                                        subject to an extended 
                                        (or partial extended) 
                                        survey under section 
                                        1819(g)(2)(B)(i) or 
                                        subsection (g)(2)(B)(i) 
                                        of this section; or
                                            (c) has been 
                                        assessed a civil money 
                                        penalty described in 
                                        section 
                                        1819(h)(2)(B)(ii) or 
                                        subsection 
                                        (h)(2)(A)(ii) of this 
                                        section of not less 
                                        than $5,000, or has 
                                        been subject to a 
                                        remedy described in 
                                        subsection (h)(1)(B)(i) 
                                        of this section, 
                                        clauses (i), (iii), or 
                                        (iv) of subsection 
                                        (h)(2)(A) of this 
                                        section, clauses (i) or 
                                        (iii) of section 
                                        1819(h)(2)(B), or 
                                        section 1819(h)(4), or
                                    (II) offered by or in a 
                                nursing facility unless the 
                                State makes the determination, 
                                upon an individual's completion 
                                of the program, that the 
                                individual is competent to 
                                provide nursing and nursing-
                                related services in nursing 
                                facilities.
                        A State may not delegate (through 
                        subcontract or otherwise) its 
                        responsibility under clause (iii)(II) 
                        to the nursing facility.
                    (C) Waiver authorized.--Clause (iii) of 
                subparagraph (B) shall not apply to a program 
                offered in (but not by) a nursing facility in a 
                State if the State--
                            (i) determines that there is no 
                        other such program offered within a 
                        reasonable distance of the facility,
                            (ii) assures, through an oversight 
                        effort, that an adequate environment 
                        exists for operating the program in the 
                        facility, and
                            (iii) provides notice of such 
                        determination and assurances to the 
                        State long-term care ombudsman.
            (3) Federal guidelines for state appeals process 
        for transfers and discharges.--For purposes of 
        subsections (c)(2)(B)(iii) and (e)(3), the Secretary 
        shall establish guidelines for minimum standards which 
        State appeals processes under subsection (e)(3) must 
        meet to provide a fair mechanism for hearing appeals on 
        transfers and discharges of residents from nursing 
        facilities.
            (4) Qualification of administrators.--For purposes 
        of subsections (d)(1)(C) and (e)(4), the Secretary 
        shall develop standards to be applied in assuring the 
        qualifications of administrators of nursing facilities. 
        Any such standards must apply to administrators of 
        hospital-based facilities as well as administrators of 
        freestanding facilities.
            (5) Criteria for administration.--The Secretary 
        shall establish criteria for assessing a nursing 
        facility's compliance with the requirement of 
        subsection (d)(1) with respect to--
                    (A) its governing body and management,
                    (B) agreements with hospitals regarding 
                transfers of residents to and from the 
                hospitals and to and from other nursing 
                facilities,
                    (C) disaster preparedness,
                    (D) direction of medical care by a 
                physician,
                    (E) laboratory and radiological services,
                    (F) clinical records, and
                    (G) resident and advocate participation.
            (6) Specification of resident assessment data set 
        and instruments.--The Secretary shall--
                    (A) specify a minimum data set of core 
                elements and common definitions for use by 
                nursing facilities in conducting the 
                assessments required under subsection (b)(3), 
                and establish guidelines for utilization of the 
                data set; and
                    (B) designate one or more instruments which 
                are consistent with the specification made 
                under subparagraph (A) and which a State may 
                specify under subsection (e)(5)(A) for use by 
                nursing facilities in complying with the 
                requirements of subsection (b)(3)(A)(iii).
            (7) List of items and services furnished in nursing 
        facilities not chargeable to the personal funds of a 
        resident.--The Secretary shall issue regulations that 
        define those costs which may be charged to the personal 
        funds of residents in nursing facilities who are 
        individuals receiving medical assistance with respect 
        to nursing facility services under this title and those 
        costs which are to be included in the payment amount 
        under this title for nursing facility services.
            (8) Criteria for monitoring state waivers.--The 
        Secretary shall develop criteria and procedures for 
        monitoring State performances in granting waivers 
        pursuant to subsection (b)(4)(C)(ii).
    (g) Survey and Certification Process.--
            (1) State and federal responsibility.--
                    (A) In general.--Under each State plan 
                under this title, the State shall be 
                responsible for certifying, in accordance with 
                surveys conducted under paragraph (2), the 
                compliance of nursing facilities (other than 
                facilities of the State) with the requirements 
                of subsections (b), (c), and (d). The Secretary 
                shall be responsible for certifying, in 
                accordance with surveys conducted under 
                paragraph (2), the compliance of State nursing 
                facilities with the requirements of such 
                subsections.
                    (B) Educational program.--Each State shall 
                conduct periodic educational programs for the 
                staff and residents (and their representatives) 
                of nursing facilities in order to present 
                current regulations, procedures, and policies 
                under this section.
                    (C) Investigation of allegations of 
                resident neglect and abuse and misappropriation 
                of resident property.--The State shall provide, 
                through the agency responsible for surveys and 
                certification of nursing facilities under this 
                subsection, for a process for the receipt and 
                timely review and investigation of allegations 
                of neglect and abuse and misappropriation of 
                resident property by a nurse aide of a resident 
                in a nursing facility or by another individual 
                used by the facility in providing services to 
                such a resident. The State shall, after notice 
                to the individual involved and a reasonable 
                opportunity for a hearing for the individual to 
                rebut allegations, make a finding as to the 
                accuracy of the allegations. If the State finds 
                that a nurse aide has neglected or abused a 
                resident or misappropriated resident property 
                in a facility, the State shall notify the nurse 
                aide and the registry of such finding. If the 
                State finds that any other individual used by 
                the facility has neglected or abused a resident 
                or misappropriated resident property in a 
                facility, the State shall notify the 
                appropriate licensure authority. A State shall 
                not make a finding that an individual has 
                neglected a resident if the individual 
                demonstrates that such neglect was caused by 
                factors beyond the control of the individual.
            (2) Surveys.--
                    (A) Annual standard survey.--
                            (i) In general.--Each nursing 
                        facility shall be subject to a standard 
                        survey, to be conducted without any 
                        prior notice to the facility. Any 
                        individual who notifies (or causes to 
                        be notified) a nursing facility of the 
                        time or date on which such a survey is 
                        scheduled to be conducted is subject to 
                        a civil money penalty of not to exceed 
                        $2,000. The provisions of section 1128A 
                        (other than subsections (a) and (b)) 
                        shall apply to a civil money penalty 
                        under the previous sentence in the same 
                        manner as such provisions apply to a 
                        penalty or proceeding under section 
                        1128A(a). The Secretary shall review 
                        each State's procedures for scheduling 
                        and conduct of standard surveys to 
                        assure that the State has taken all 
                        reasonable steps to avoid giving notice 
                        of such a survey through the scheduling 
                        procedures and the conduct of the 
                        surveys themselves.
                            (ii) Contents.--Each standard 
                        survey shall include, for a case-mix 
                        stratified sample of residents--
                                    (I) a survey of the quality 
                                of care furnished, as measured 
                                by indicators of medical, 
                                nursing, and rehabilitative 
                                care, dietary and nutrition 
                                services, activities and social 
                                participation, and sanitation, 
                                infection control, and the 
                                physical environment,
                                    (II) written plans of care 
                                provided under subsection 
                                (b)(2) and an audit of the 
                                residents' assessments under 
                                subsection (b)(3) to determine 
                                the accuracy of such 
                                assessments and the adequacy of 
                                such plans of care, and
                                    (III) a review of 
                                compliance with residents' 
                                rights under subsection (c).
                            (iii) Frequency.--
                                    (I) In general.--Each 
                                nursing facility shall be 
                                subject to a standard survey 
                                not later than 15 months after 
                                the date of the previous 
                                standard survey conducted under 
                                this subparagraph. The 
                                statewide average interval 
                                between standard surveys of a 
                                nursing facility shall not 
                                exceed 12 months.
                                    (II) Special surveys.--If 
                                not otherwise conducted under 
                                subclause (I), a standard 
                                survey (or an abbreviated 
                                standard survey) may be 
                                conducted within 2 months of 
                                any change of ownership, 
                                administration, management of a 
                                nursing facility, or director 
                                of nursing in order to 
                                determine whether the change 
                                has resulted in any decline in 
                                the quality of care furnished 
                                in the facility.
                    (B) Extended surveys.--
                            (i) In general.--Each nursing 
                        facility which is found, under a 
                        standard survey, to have provided 
                        substandard quality of care shall be 
                        subject to an extended survey. Any 
                        other facility may, at the Secretary's 
                        or State's discretion, be subject to 
                        such an extended survey (or a partial 
                        extended survey).
                            (ii) Timing.--The extended survey 
                        shall be conducted immediately after 
                        the standard survey (or, if not 
                        practicable, not later than 2 weeks 
                        after the date of completion of the 
                        standard survey).
                            (iii) Contents.--In such an 
                        extended survey, the survey team shall 
                        review and identify the policies and 
                        procedures which produced such 
                        substandard quality of care and shall 
                        determine whether the facility has 
                        complied with all the requirements 
                        described in subsections (b), (c), and 
                        (d). Such review shall include an 
                        expansion of the size of the sample of 
                        residents' assessments reviewed and a 
                        review of the staffing, of in-service 
                        training, and, if appropriate, of 
                        contracts with consultants.
                            (iv) Construction.--Nothing in this 
                        paragraph shall be construed as 
                        requiring an extended or partial 
                        extended survey as a prerequisite to 
                        imposing a sanction against a facility 
                        under subsection (h) on the basis of 
                        findings in a standard survey.
                    (C) Survey protocol.--Standard and extended 
                surveys shall be conducted--
                            (i) based upon the protocol which 
                        the Secretary has developed, tested, 
                        and validated, as of the date of the 
                        enactment of this title, and
                            (ii) by individuals, of a survey 
                        team, who meet such minimum 
                        qualifications as the Secretary 
                        establishes.
                    (D) Consistency of surveys.--Each State 
                shall implement programs to measure and reduce 
                inconsistency in the application of survey 
                results among surveyors.
                    (E) Survey teams.--
                            (i) In general.--Surveys under this 
                        subsection shall be conducted by a 
                        multidisciplinary team of professionals 
                        (including a registered professional 
                        nurse).
                            (ii) Prohibition of conflicts of 
                        interest.--A State may not use as a 
                        member of a survey team under this 
                        subsection an individual who is serving 
                        (or has served within the previous 2 
                        years) as a member of the staff of, or 
                        as a consultant to, the facility 
                        surveyed respecting compliance with the 
                        requirements of subsections (b), (c), 
                        and (d), or who has a personal or 
                        familial financial interest in the 
                        facility being surveyed.
                            (iii) Training.----The Secretary 
                        shall provide for the comprehensive 
                        training of State and Federal surveyors 
                        in the conduct of standard and extended 
                        surveys under this subsection, 
                        including the auditing of resident 
                        assessments and plans of care. No 
                        individual shall serve as a member of a 
                        survey team unless the individual has 
                        successfully completed a training and 
                        testing program in survey and 
                        certification techniques that has been 
                        approved by the Secretary.
            (3) Validation surveys.--
                    (A) In general.--The Secretary shall 
                conduct onsite surveys of a representative 
                sample of nursing facilities in each State, 
                within 2 months of the date of surveys 
                conducted under paragraph (2) by the State, in 
                a sufficient number to allow inferences about 
                the adequacies of each State's surveys 
                conducted under paragraph (2). In conducting 
                such surveys, the Secretary shall use the same 
                survey protocols as the State is required to 
                use under paragraph (2). If the State has 
                determined that an individual nursing facility 
                meets the requirements of subsections (b), (c), 
                and (d), but the Secretary determines that the 
                facility does not meet such requirements, the 
                Secretary's determination as to the facility's 
                noncompliance with such requirements is binding 
                and supersedes that of the State survey.
                    (B) Scope.--With respect to each State, the 
                Secretary shall conduct surveys under 
                subparagraph (A) each year with respect to at 
                least 5 percent of the number of nursing 
                facilities surveyed by the State in the year, 
                but in no case less than 5 nursing facilities 
                in the State.
                    (C) Reduction in administrative costs for 
                substandard performance.--If the Secretary 
                finds, on the basis of such surveys, that a 
                State has failed to perform surveys as required 
                under paragraph (2) or that a State's survey 
                and certification performance otherwise is not 
                adequate, the Secretary may provide for the 
                training of survey teams in the State and shall 
                provide for a reduction of the payment 
                otherwise made to the State under section 
                1512(a)(3)(C) with respect to a quarter equal 
                to 33 percent multiplied by a fraction, the 
                denominator of which is equal to the total 
                number of residents in nursing facilities 
                surveyed by the Secretary that quarter and the 
                numerator of which is equal to the total number 
                of residents in nursing facilities which were 
                found pursuant to such surveys to be not in 
                compliance with any of the requirements of 
                subsections (b), (c), and (d). A State that is 
                dissatisfied with the Secretary's findings 
                under this subparagraph may obtain 
                reconsideration and review of the findings 
                under section 1116 in the same manner as a 
                State may seek reconsideration and review under 
                that section of the Secretary's determination 
                under section 1116(a)(1).
                    (D) Special surveys of compliance.--Where 
                the Secretary has reason to question the 
                compliance of a nursing facility with any of 
                the requirements of subsections (b), (c), and 
                (d), the Secretary may conduct a survey of the 
                facility and, on the basis of that survey, make 
                independent and binding determinations 
                concerning the extent to which the nursing 
                facility meets such requirements.
            (4) Investigation of complaints and monitoring 
        nursing facility compliance.--Each State shall maintain 
        procedures and adequate staff to--
                    (A) investigate complaints of violations of 
                requirements by nursing facilities, and
                    (B) monitor, on-site, on a regular, as 
                needed basis, a nursing facility's compliance 
                with the requirements of subsections (b), (c), 
                and (d), if--
                            (i) the facility has been found not 
                        to be in compliance with such 
                        requirements and is in the process of 
                        correcting deficiencies to achieve such 
                        compliance;
                            (ii) the facility was previously 
                        found not to be in compliance with such 
                        requirements, has corrected 
                        deficiencies to achieve such 
                        compliance, and verification of 
                        continued compliance is indicated; or
                            (iii) the State has reason to 
                        question the compliance of the facility 
                        with such requirements.
        A State may maintain and utilize a specialized team 
        (including an attorney, an auditor, and appropriate 
        health care professionals) for the purpose of 
        identifying, surveying, gathering and preserving 
        evidence, and carrying out appropriate enforcement 
        actions against substandard nursing facilities.
            (5) Disclosure of results of inspections and 
        activities.--
                    (A) Public information.--Each State, and 
                the Secretary, shall make available to the 
                public--
                            (i) information respecting all 
                        surveys and certifications made 
                        respecting nursing facilities, 
                        including statements of deficiencies, 
                        within 14 calendar days after such 
                        information is made available to those 
                        facilities, and approved plans of 
                        correction,
                            (ii) copies of cost reports of such 
                        facilities filed under this title or 
                        under title XVIII,
                            (iii) copies of statements of 
                        ownership under section 1124, and
                            (iv) information disclosed under 
                        section 1126.
                    (B) Notice to ombudsman.--Each State shall 
                notify the State long-term care ombudsman 
                (established under title III or VII of the 
                Older Americans Act of 1965 in accordance with 
                section 712 of the Act) of the State's findings 
                of noncompliance with any of the requirements 
                of subsections (b), (c), and (d), or of any 
                adverse action taken against a nursing facility 
                under paragraphs (1), (2), or (3) of subsection 
                (h), with respect to a nursing facility in the 
                State.
                    (C) Notice to physicians and nursing 
                facility administrator licensing board.--If a 
                State finds that a nursing facility has 
                provided substandard quality of care, the State 
                shall notify--
                            (i) the attending physician of each 
                        resident with respect to which such 
                        finding is made, and
                            (ii) any State board responsible 
                        for the licensing of the nursing 
                        facility administrator of the facility.
                    (D) Access to fraud control units.--Each 
                State shall provide its State fraud and abuse 
                control unit (established under section 1554) 
                with access to all information of the State 
                agency responsible for surveys and 
                certifications under this subsection.
    (h) Enforcement Process.--
            (1) In general.--If a State finds, on the basis of 
        a standard, extended, or partial extended survey under 
        subsection (g)(2) or otherwise, that a nursing facility 
        no longer meets a requirement of subsection (b), (c), 
        or (d)--
                    (A) the State shall require the facility to 
                correct the deficiency involved;
                    (B) if the State finds that the facility's 
                deficiencies immediately jeopardize the health 
                or safety of its residents, the State shall 
                take immediate action to remove the jeopardy 
                and correct the deficiencies through the remedy 
                specified in paragraph (2)(A)(iii), or 
                terminate the facility's participation under 
                the State plan and may provide, in addition, 
                for one or more of the other remedies described 
                in paragraph (2); and
                    (C) if the State finds that the facility's 
                deficiencies do not immediately jeopardize the 
                health or safety of its residents, the State 
                may--
                            (i) terminate the facility's 
                        participation under the State plan,
                            (ii) provide for one or more of the 
                        remedies described in paragraph (2), or
                            (iii) do both.
        Nothing in this paragraph shall be construed as 
        restricting the remedies available to a State to remedy 
        a nursing facility's deficiencies. If a State finds 
        that a nursing facility meets the requirements of 
        subsections (b), (c), and (d), but, as of a previous 
        period, did not meet such requirements, the State may 
        provide for a civil money penalty under paragraph 
        (2)(A)(ii) for the days in which it finds that the 
        facility was not in compliance with such requirements.
            (2) Specified remedies.--
                    (A) Listing.--Except as provided in 
                subparagraph (B), each State shall establish by 
                law (whether statute or regulation) at least 
                the following remedies:
                            (i) Denial of payment under the 
                        State plan with respect to any 
                        individual admitted to the nursing 
                        facility involved after such notice to 
                        the public and to the facility as may 
                        be provided for by the State.
                            (ii) A civil money penalty assessed 
                        and collected, with interest, for each 
                        day in which the facility is or was out 
                        of compliance with a requirement of 
                        subsection (b), (c), or (d). Funds 
                        collected by a State as a result of 
                        imposition of such a penalty (or as a 
                        result of the imposition by the State 
                        of a civil money penalty for activities 
                        described in subsection 
                        (b)(3)(B)(ii)(I), (b)(3)(B)(ii)(II), or 
                        (g)(2)(A)(i)) shall be applied to the 
                        protection of the health or property of 
                        residents of nursing facilities that 
                        the State or the Secretary finds 
                        deficient, including payment for the 
                        costs of relocation of residents to 
                        other facilities, maintenance of 
                        operation of a facility pending 
                        correction of deficiencies or closure, 
                        and reimbursement of residents for 
                        personal funds lost.
                            (iii) The appointment of temporary 
                        management to oversee the operation of 
                        the facility and to assure the health 
                        and safety of the facility's residents, 
                        where there is a need for temporary 
                        management while--
                                    (I) there is an orderly 
                                closure of the facility, or
                                    (II) improvements are made 
                                in order to bring the facility 
                                into compliance with all the 
                                requirements of subsections 
                                (b), (c), and (d).
                        The temporary management under this 
                        clause shall not be terminated under 
                        subclause (II) until the State has 
                        determined that the facility has the 
                        management capability to ensure 
                        continued compliance with all the 
                        requirements of subsections (b), (c), 
                        and (d).
                            (iv) The authority, in the case of 
                        an emergency, to close the facility, to 
                        transfer residents in that facility to 
                        other facilities, or both.
                The State also shall specify criteria, as to 
                when and how each of such remedies is to be 
                applied, the amounts of any fines, and the 
                severity of each of these remedies, to be used 
                in the imposition of such remedies. Such 
                criteria shall be designed so as to minimize 
                the time between the identification of 
                violations and final imposition of the remedies 
                and shall provide for the imposition of 
                incrementally more severe fines for repeated or 
                uncorrected deficiencies. In addition, the 
                State may provide for other specified remedies, 
                such as directed plans of correction.
                    (B) Guidance and alternative remedies.--(i) 
                The Secretary shall provide through regulations 
                guidance to States in establishing remedies 
                under clauses (i) through (iv) of subparagraph 
                (A).
                    (ii) A State may establish alternative 
                remedies (other than termination of 
                participation) other than those described in 
                clauses (i) through (iv) of subparagraph (A), 
                if the State demonstrates to the Secretary's 
                satisfaction that the alternative remedies are 
                as effective in deterring noncompliance and 
                correcting deficiencies as those described in 
                such subparagraph.
                    (C) Assuring prompt compliance.--If a 
                nursing facility has not complied with any of 
                the requirements of subsections (b), (c), and 
                (d), within 3 months after the date the 
                facility is found to be out of compliance with 
                such requirements, the State shall impose the 
                remedy described in subparagraph (A)(i) for all 
                individuals who are admitted to the facility 
                after such date.
                    (D) Repeated noncompliance.--In the case of 
                a nursing facility which, on 3 consecutive 
                standard surveys conducted under subsection 
                (g)(2), has been found to have provided 
                substandard quality of care, the State shall 
                (regardless of what other remedies are 
                provided)--
                            (i) impose the remedy described in 
                        subparagraph (A)(i), and
                            (ii) monitor the facility under 
                        subsection (g)(4)(B),
                until the facility has demonstrated, to the 
                satisfaction of the State, that it is in 
                compliance with the requirements of subsections 
                (b), (c), and (d), and that it will remain in 
                compliance with such requirements.
                    (E) Funding.--The reasonable expenditures 
                of a State to provide for temporary management 
                and other expenses associated with implementing 
                the remedies described in clauses (iii) and 
                (iv) of subparagraph (A) shall be considered, 
                for purposes of section 1512(a)(3)(C), to be 
                necessary for the proper and efficient 
                administration of the State plan.
                    (F) Incentives for high quality care.--In 
                addition to the remedies specified in this 
                paragraph, a State may establish a program to 
                reward, through public recognition, incentive 
                payments, or both, nursing facilities that 
                provide the highest quality care to residents 
                who are entitled to medical assistance under 
                this title. For purposes of section 
                1512(a)(3)(C), proper expenses incurred by a 
                State in carrying out such a program shall be 
                considered to be expenses necessary for the 
                proper and efficient administration of the 
                State plan.
            (3) Secretarial authority.--
                    (A) For state nursing facilities.--With 
                respect to a State nursing facility, the 
                Secretary shall have the authority and duties 
                of a State under this subsection, including the 
                authority to impose remedies described in 
                clauses (i), (ii), and (iii) of paragraph 
                (2)(A). Nothing in this subparagraph shall be 
                construed as restricting the remedies available 
                to the Secretary to remedy a nursing facility's 
                deficiencies.
                    (B) Other nursing facilities.--With respect 
                to any other nursing facility in a State, if 
                the Secretary finds that a nursing facility no 
                longer meets a requirement of subsection (b), 
                (c), (d), or (e), and further finds that the 
                facility's deficiencies--
                            (i) immediately jeopardize the 
                        health or safety of its residents, the 
                        Secretary shall take immediate action 
                        to remove the jeopardy and correct the 
                        deficiencies through the remedy 
                        specified in subparagraph (C)(iii), or 
                        terminate the facility's participation 
                        under the State plan and may provide, 
                        in addition, for one or more of the 
                        other remedies described in 
                        subparagraph (C); or
                            (ii) do not immediately jeopardize 
                        the health or safety of its residents, 
                        the Secretary may impose any of the 
                        remedies described in subparagraph (C).
                Nothing in this subparagraph shall be construed 
                as restricting the remedies available to the 
                Secretary to remedy a nursing facility's 
                deficiencies. If the Secretary finds that a 
                nursing facility meets such requirements but, 
                as of a previous period, did not meet such 
                requirements, the Secretary may provide for a 
                civil money penalty under subparagraph (C)(ii) 
                for the days on which he finds that the 
                facility was not in compliance with such 
                requirements.
                    (C) Specified remedies.--The remedies 
                specified in this subparagraph are as follows:
                            (i) Denial of payment.--Denial of 
                        any further payments to the State in 
                        accordance with section 1529(f) for 
                        medical assistance furnished by the 
                        facility to all individuals in the 
                        facility or to individuals admitted to 
                        the facility after the effective date 
                        of the finding.
                            (ii) Authority with respect to 
                        civil money penalties.--Imposition of a 
                        civil money penalty against the 
                        facility in an amount not to exceed 
                        $10,000 for each day of noncompliance. 
                        The provisions of section 1128A (other 
                        than subsections (a) and (b)) shall 
                        apply to a civil money penalty under 
                        the previous sentence in the same 
                        manner as such provisions apply to a 
                        penalty or proceeding under section 
                        1128A(a).
                            (iii) Appointment of temporary 
                        management.--Appointment of temporary 
                        management to oversee the operation of 
                        the facility and to assure the health 
                        and safety of the facility's residents, 
                        where there is a need for temporary 
                        management while--
                                    (I) there is an orderly 
                                closure of the facility, or
                                    (II) improvements are made 
                                in order to bring the facility 
                                into compliance with all the 
                                requirements of subsections 
                                (b), (c), and (d).
                        The temporary management under this 
                        clause shall not be terminated under 
                        subclause (II) until the Secretary has 
                        determined that the facility has the 
                        management capability to ensure 
                        continued compliance with all the 
                        requirements of subsections (b), (c), 
                        and (d).
                The Secretary shall specify criteria, as to 
                when and how each of such remedies is to be 
                applied, the amounts of any fines, and the 
                severity of each of these remedies, to be used 
                in the imposition of such remedies. Such 
                criteria shall be designed so as to minimize 
                the time between the identification of 
                violations and final imposition of the remedies 
                and shall provide for the imposition of 
                incrementally more severe fines for repeated or 
                uncorrected deficiencies. In addition, the 
                Secretary may provide for other specified 
                remedies, such as directed plans of correction.
                    (D) Continuation of payments pending 
                remediation.--The Secretary may continue 
                payments, over a period of not longer than 6 
                months after the effective date of the 
                findings, under this title with respect to a 
                nursing facility not in compliance with a 
                requirement of subsection (b), (c), or (d), 
                if--
                            (i) the State survey agency finds 
                        that it is more appropriate to take 
                        alternative action to assure compliance 
                        of the facility with the requirements 
                        than to terminate the certification of 
                        the facility,
                            (ii) the State has submitted a plan 
                        and timetable for corrective action to 
                        the Secretary for approval and the 
                        Secretary approves the plan of 
                        corrective action, and
                            (iii) the State agrees to repay to 
                        the Federal Government payments 
                        received under this subparagraph if the 
                        corrective action is not taken in 
                        accordance with the approved plan and 
                        timetable.
                The Secretary shall establish guidelines for 
                approval of corrective actions requested by 
                States under this subparagraph.
            (4) Special rules regarding payments to 
        facilities.--
                    (A) Continuation of payments pending 
                remediation.--The State or the Secretary, as 
                appropriate, may continue payments, over a 
                period of not longer than 6 months after the 
                effective date of the findings, under this 
                title with respect to a nursing facility not in 
                compliance with a requirement of subsection 
                (b), (c), or (d). The State may continue such 
                payments only if--
                            (i) the State survey agency finds 
                        that it is more appropriate to take 
                        alternative action to assure compliance 
                        of the facility with the requirements 
                        than to terminate the certification of 
                        the facility,
                            (ii) the State has submitted a plan 
                        and timetable for corrective action to 
                        the Secretary for approval and the 
                        Secretary approves the plan of 
                        corrective action, and
                            (iii) the State agrees to repay to 
                        the Federal Government payments 
                        received under this subparagraph if the 
                        corrective action is not taken in 
                        accordance with the approved plan and 
                        timetable.
                The Secretary shall establish guidelines for 
                approval of corrective actions requested by 
                States under this subparagraph.
                    (B) Effective period of denial of 
                payment.--A finding to deny payment under this 
                subsection shall terminate when the State or 
                Secretary (as the case may be) finds that the 
                facility is in substantial compliance with all 
                the requirements of subsections (b), (c), and 
                (d).
            (5) Immediate termination of participation for 
        facility where state or secretary finds noncompliance 
        and immediate jeopardy.--If either the State or the 
        Secretary finds that a nursing facility has not met a 
        requirement of subsection (b), (c), or (d), and finds 
        that the failure immediately jeopardizes the health or 
        safety of its residents, the State or the Secretary, 
        respectively shall notify the other of such finding, 
        and the State or the Secretary, respectively, shall 
        take immediate action to remove the jeopardy and 
        correct the deficiencies through the remedy specified 
        in paragraph (2)(A)(iii) or (3)(C)(iii), or terminate 
        the facility's participation under the State plan. If 
        the facility's participation in the State plan is 
        terminated by either the State or the Secretary, the 
        State shall provide for the safe and orderly transfer 
        of the residents eligible under the State plan 
        consistent with the requirements of subsection (c)(2).
            (6) Special rules where state and secretary do not 
        agree on finding of noncompliance.--
                    (A) State finding of noncompliance and no 
                secretarial finding of noncompliance.--If the 
                Secretary finds that a nursing facility has met 
                all the requirements of subsections (b), (c), 
                and (d), but a State finds that the facility 
                has not met such requirements and the failure 
                does not immediately jeopardize the health or 
                safety of its residents, the State's findings 
                shall control and the remedies imposed by the 
                State shall be applied.
                    (B) Secretarial finding of noncompliance 
                and no state finding of noncompliance.--If the 
                Secretary finds that a nursing facility has not 
                met all the requirements of subsections (b), 
                (c), and (d), and that the failure does not 
                immediately jeopardize the health or safety of 
                its residents, but the State has not made such 
                a finding, the Secretary--
                            (i) may impose any remedies 
                        specified in paragraph (3)(C) with 
                        respect to the facility, and
                            (ii) shall (pending any termination 
                        by the Secretary) permit continuation 
                        of payments in accordance with 
                        paragraph (3)(D).
            (7) Special rules for timing of termination of 
        participation where remedies overlap.--If both the 
        Secretary and the State find that a nursing facility 
        has not met all the requirements of subsections (b), 
        (c), and (d), and neither finds that the failure 
        immediately jeopardizes the health or safety of its 
        residents--
                    (A)(i) if both find that the facility's 
                participation under the State plan should be 
                terminated, the State's timing of any 
                termination shall control so long as the 
                termination date does not occur later than 6 
                months after the date of the finding to 
                terminate;
                    (ii) if the Secretary, but not the State, 
                finds that the facility's participation under 
                the State plan should be terminated, the 
                Secretary shall (pending any termination by the 
                Secretary) permit continuation of payments in 
                accordance with paragraph (3)(D); or
                    (iii) if the State, but not the Secretary, 
                finds that the facility's participation under 
                the State plan should be terminated, the 
                State's decision to terminate, and timing of 
                such termination, shall control; and
                    (B)(i) if the Secretary or the State, but 
                not both, establishes one or more remedies 
                which are additional or alternative to the 
                remedy of terminating the facility's 
                participation under the State plan, such 
                additional or alternative remedies shall also 
                be applied, or
                    (ii) if both the Secretary and the State 
                establish one or more remedies which are 
                additional or alternative to the remedy of 
                terminating the facility's participation under 
                the State plan, only the additional or 
                alternative remedies of the Secretary shall 
                apply.
            (8) Construction.--The remedies provided under this 
        subsection are in addition to those otherwise available 
        under Federal or State law and shall not be construed 
        as limiting such other remedies, including any remedy 
        available to an individual at common law. The remedies 
        described in clauses (i), (iii), and (iv) of paragraph 
        (2)(A) may be imposed during the pendency of any 
        hearing. The provisions of this subsection shall apply 
        to a nursing facility (or portion thereof) 
        notwithstanding that the facility (or portion thereof) 
        also is a skilled nursing facility for purposes of 
        title XVIII.
            (9) Sharing of information.--Notwithstanding any 
        other provision of law, all information concerning 
        nursing facilities required by this section to be filed 
        with the Secretary or a State agency shall be made 
        available by such facilities to Federal or State 
        employees for purposes consistent with the effective 
        administration of programs established under this title 
        and title XVIII, including investigations by State 
        fraud control units.
    (i) Construction.--Where requirements or obligations under 
this section are identical to those provided under section 1819 
of this Act, the fulfillment of those requirements or 
obligations under section 1819 shall be considered to be the 
fulfillment of the corresponding requirements or obligations 
under this section.

SEC. 1558. OTHER PROVISIONS PROMOTING PROGRAM INTEGRITY.

    (a) Public Access to Survey Results.--Each State plan shall 
provide that upon completion of a survey of any health care 
facility or organization by a State agency to carry out the 
plan, the agency shall make public in readily available form 
and place the pertinent findings of the survey relating to the 
compliance of the facility or organization with requirements of 
law.
    (b) Record Keeping.--Each State plan shall provide for 
agreements with persons or institutions providing services 
under the plan under which the person or institution agrees--
            (1) to keep such records, including ledgers, books, 
        and original evidence of costs, as are necessary to 
        fully disclose the extent of the services provided to 
        individuals receiving assistance under the plan, and
            (2) to furnish the State agency with such 
        information regarding any payments claimed by such 
        person or institution for providing services under the 
        plan, as the State agency may from time to time 
        request.
    (c) Quality Assurance.--Each State plan shall provide a 
program to assure the quality of services provided under the 
plan, including such services provided to individuals with 
chronic mental or physical illness.

                       Part E--General Provisions

SEC. 1571. DEFINITIONS.

    (a) Medical Assistance.--For purposes of this title, the 
term ``medical assistance'' means payment of part or all of the 
cost of any of the following, or assistance in the purchase, in 
whole or in part, of health benefit coverage that includes any 
of the following, for eligible low-income individuals (as 
defined in subsection (b)) as specified under the State plan:
            (1) Inpatient hospital services.
            (2) Outpatient hospital services.
            (3) Physician services.
            (4) Surgical services.
            (5) Clinic services and other ambulatory health 
        care services.
            (6) Nursing facility services.
            (7) Intermediate care facility services for the 
        mentally retarded.
            (8) Prescription drugs and biologicals and the 
        administration of such drugs and biologicals, only if 
        such drugs and biologicals are not furnished for the 
        purpose of causing, or assisting in causing, the death, 
        suicide, euthanasia, or mercy killing of a person.
            (9) Over-the-counter medications.
            (10) Laboratory and radiological services.
            (11) Prepregnancy family planning services and 
        supplies.
            (12) Inpatient mental health services, including 
        services furnished in a State-operated mental hospital 
        and including residential or other 24-hour 
        therapeutically planned structured services.
            (13) Outpatient mental health services, including 
        services furnished in a State-operated mental hospital 
        and including community-based services.
            (14) Durable medical equipment and other medically-
        related or remedial devices (such as prosthetic 
        devices, implants, eyeglasses, hearing aids, dental 
        devices, and adaptive devices).
            (15) Disposable medical supplies.
            (16) Home and community-based health care services 
        and related supportive services (such as home health 
        nursing services, home health aide services, personal 
        care, assistance with activities of daily living, chore 
        services, day care services, respite care services, 
        training for family members, and minor modifications to 
        the home).
            (17) Community supported living arrangements, 
        assisted living arrangements, and transitional living 
        arrangements in the community.
            (18) Nursing care services (such as nurse 
        practitioner services, nurse midwife services, advanced 
        practice nurse services, private duty nursing care, 
        pediatric nurse services, and respiratory care 
        services) in a home, school, or other setting.
            (19) Abortion only if necessary to save the life of 
        the mother or if the pregnancy is the result of an act 
        of rape or incest.
            (20) Dental services.
            (21) Inpatient substance abuse treatment services 
        and residential substance abuse treatment services.
            (22) Outpatient substance abuse treatment services.
            (23) Case management services.
            (24) Care coordination services.
            (25) Physical therapy, occupational therapy, and 
        services for individuals with speech, hearing, and 
        language disorders.
            (26) Hospice care.
            (27) Any other medical, diagnostic, screening, 
        preventive, restorative, remedial, therapeutic, or 
        rehabilitative services (whether in a facility, home, 
        school, or other setting) if recognized by State law 
        and only if the service is--
                    (A) prescribed by or furnished by a 
                physician or other licensed or registered 
                practitioner within the scope of practice as 
                defined by State law,
                    (B) performed under the general supervision 
                or at the direction of a physician, or
                    (C) furnished by a health care facility 
                that is operated by a State or local government 
                or is licensed under State law and operating 
                within the scope of the license.
            (28) Premiums for private health care insurance 
        coverage, including private long-term care insurance 
        coverage.
            (29) Medical transportation.
            (30) Medicare cost-sharing (as defined in 
        subsection (c)).
            (31) Enabling services (such as transportation, 
        translation, and outreach services) only if designed to 
        increase the accessibility of primary and preventive 
        health care services for eligible low-income 
        individuals.
            (32) Federally-qualified health center services (as 
        defined in subsection (f)(2)(A)).
            (33) Rural health clinic services (as defined in 
        subsection (f)(1)).
            (34) Physician assistant services.
            (35) Any other health care services or items 
        specified by the Secretary and not excluded under this 
        section.
    (b) Eligible Low-Income Individual.--
            (1) State plan eligibility standards.--
                    (A) In general.--The term ``eligible low-
                income individual'' means an individual--
                            (i) who has been determined 
                        eligible by the State for medical 
                        assistance under the State plan and is 
                        not an inmate of a public institution 
                        (except as a patient in a State 
                        psychiatric hospital), and
                            (ii) whose family income (as 
                        determined under the plan) does not 
                        exceed a percentage (specified in the 
                        State plan and not to exceed 275 
                        percent) of the poverty line for a 
                        family of the size involved.
                    (B) Continuation of katie beckett 
                eligibility.--At the option of a State, 
                subparagraph (A)(ii) shall not apply in the 
                case of an individual who--
                            (i) is 18 years of age or younger 
                        and qualifies as a disabled individual 
                        under section 1614(a); and
                            (ii) with respect to whom there has 
                        been a determination by the State 
                        that--
                                    (I) the individual requires 
                                a level of care provided in a 
                                hospital, nursing facility, or 
                                intermediate care facility for 
                                the mentally retarded; and
                                    (II) it is appropriate to 
                                provide such care for the 
                                individual outside such an 
                                institution.
            (2) Amount of income.--In determining the amount of 
        income under paragraph (1)(B), a State may exclude 
        costs incurred for medical care or other types of 
        remedial care recognized by the State.
            (3) Computation of income for certain children.--In 
        determining the amount of family income under paragraph 
        (1)(B) in the case of a child described in section 
        1501(a)(1)(F), the State shall only count the income of 
        the child and not that of the family in which the child 
        is placed.
    (c) Medicare Cost-Sharing.--For purposes of this title, the 
term ``medicare cost-sharing'' means any of the following:
            (1)(A) Premiums under section 1839.
            (B) Premiums under section 1818 or 1818A.
            (2) Coinsurance under title XVIII (including 
        coinsurance described in section 1813).
            (3) Deductibles established under title XVIII 
        (including those described in sections 1813 and 
        1833(b)).
            (4) The difference between the amount that is paid 
        under section 1833(a) and the amount that would be paid 
        under such section if any reference to ``80 percent'' 
        therein were deemed a reference to ``100 percent''.
            (5) Premiums for enrollment of an individual with 
        an eligible organization under section 1876.
    (d) Additional Definitions.--For purposes of this title:
            (1) Child.--The term ``child'' means an individual 
        under 19 years of age.
            (2) Elderly individual.--The term ``elderly 
        individual'' means an individual who has attained 
        retirement age, as defined under section 216(l)(1).
            (3) Poverty line defined.--The term ``poverty 
        line'' has the meaning given such term in section 
        673(2) of the Community Services Block Grant Act (42 
        U.S.C. 9902(2)), including any revision required by 
        such section.
            (4) Pregnant woman.--The term ``pregnant woman'' 
        includes a woman during the 60-day period beginning on 
        the last day of the pregnancy.
    (e) EPSDT Services.--In this title, the term ``EPSDT 
services'' means the following items and services:
            (1) Screening services--
                    (A) which are provided--
                            (i) at intervals which meet 
                        reasonable standards of medical and 
                        dental practice, as determined by the 
                        State after consultation with 
                        recognized medical and dental 
                        organizations involved in child health 
                        care and, with respect to immunizations 
                        under section 1501(a)(2)(G) in 
                        accordance with the schedule referred 
                        to in such section for pediatric 
                        vaccines, and
                            (ii) at such other intervals, 
                        indicated as medically necessary, to 
                        determine the existence of certain 
                        physical or mental illnesses or 
                        conditions; and
                    (B) which shall at a minimum include--
                            (i) a comprehensive health and 
                        developmental history (including 
                        assessment of both physical and mental 
                        health development),
                            (ii) a comprehensive unclothed 
                        physical exam,
                            (iii) appropriate immunizations 
                        (according to the schedule referred to 
                        in section 1501(a)(2)(G) for pediatric 
                        vaccines) according to age and health 
                        history,
                            (iv) laboratory tests (including 
                        lead blood level assessment appropriate 
                        for age and risk factors), and
                            (v) health education (including 
                        anticipatory guidance).
            (2) Vision services--
                    (A) which are provided--
                            (i) at intervals which meet 
                        reasonable standards of medical 
                        practice, as determined by the State 
                        after consultation with recognized 
                        medical organizations involved in child 
                        health care, and
                            (ii) at such other intervals, 
                        indicated as medically necessary, to 
                        determine the existence of a suspected 
                        illness or condition; and
                    (B) which shall at a minimum include 
                diagnosis and treatment for defects in vision, 
                including eyeglasses.
            (3) Dental services--
                    (A) which are provided--
                            (i) at intervals which meet 
                        reasonable standards of dental 
                        practice, as determined by the State 
                        after consultation with recognized 
                        dental organizations involved in child 
                        health care, and
                            (ii) at such other intervals, 
                        indicated as medically necessary, to 
                        determine the existence of a suspected 
                        illness or condition; and
                    (B) which shall at a minimum include relief 
                of pain and infections, restoration of teeth, 
                and maintenance of dental health.
            (4) Hearing services--
                    (A) which are provided--
                            (i) at intervals which meet 
                        reasonable standards of medical 
                        practice, as determined by the State 
                        after consultation with recognized 
                        medical organizations involved in child 
                        health care, and
                            (ii) at such other intervals, 
                        indicated as medically necessary, to 
                        determine the existence of a suspected 
                        illness or condition; and
                    (B) which shall at a minimum include 
                diagnosis and treatment for defects in hearing, 
                including hearing aids.
    (f) Center and Clinic Services.--In this title:
            (1) Rural health clinic related definitions.--The 
        terms ``rural health clinic services'' and ``rural 
        health clinic'' have the meanings given such terms in 
        section 1861(aa), except that (A) clause (ii) of 
        section 1861(aa)(2) shall not apply to such terms, and 
        (B) the physician arrangement required under section 
        1861(aa)(2)(B) shall only apply with respect to rural 
        health clinic services and, with respect to other 
        ambulatory care services, the physician arrangement 
        required shall be only such as may be required under 
        the State plan for those services.
            (2) Federally-qualified health center related 
        definitions.--
                    (A) Services.--The term ``Federally-
                qualified health center services'' means 
                services of the type described in subparagraphs 
                (A) through (C) of section 1861(aa)(1), and any 
                other ambulatory care services which are 
                otherwise included in the State plan, when 
                furnished to an individual as an patient of a 
                Federally-qualified health center and, for this 
                purpose, any reference to a rural health clinic 
                or a physician described in section 
                1861(aa)(2)(B) is deemed a reference to a 
                Federally-qualified health center or a 
                physician at the center, respectively.
                    (B) Center.--The term ``Federally-qualified 
                health center'' means a entity which--
                            (i) is receiving a grant under 
                        section 329, 330, 340, or 340A of the 
                        Public Health Service Act,
                            (ii)(I) is receiving funding from 
                        such a grant under a contract with the 
                        recipient of such a grant, and
                            (II) meets the requirements to 
                        receive a grant under section 329, 330, 
                        340, or 340A of such Act,
                            (iii) based on the recommendation 
                        of the Health Resources and Services 
                        Administration within the Public Health 
                        Service, is determined by the Secretary 
                        to meet the requirements for receiving 
                        such a grant, or
                            (iv) was treated by the Secretary, 
                        for purposes of part B of title XVIII, 
                        as a comprehensive Federally funded 
                        health center as of January 1, 1990;
                and includes an outpatient health program or 
                facility operated by a tribe or tribal 
                organization under the Indian Self-
                Determination Act (Public Law 93-638) or by an 
                urban Indian organization receiving funds under 
                title V of the Indian Health Care Improvement 
                Act for the provision of primary health 
                services. In applying clause (ii), the 
                Secretary may waive any requirement referred to 
                in such clause for up to 2 years for good cause 
                shown.
    (g) Medically-Related Services.--In this title, the term 
``medically-related services'' means services reasonably 
related to, or in direct support of, the State's attainment of 
one or more of the strategic objectives and performance goals 
established under section 1521, but does not include items and 
services included on the list under subsection (a).

SEC. 1572. TREATMENT OF TERRITORIES.

    Notwithstanding any other requirement of this title, the 
Secretary may waive or modify any requirement of this title 
with respect to the medical assistance program for a State 
other than the 50 States and the District of Columbia, other 
than a waiver of--
            (1) the applicable Federal medical assistance 
        percentage,
            (2) the limitation on total payments in a fiscal 
        year to the amount of the allotment under section 
        1511(c), or
            (3) the requirement that payment may be made for 
        medical assistance only with respect to amounts 
        expended by the State for care and services described 
        in section 1571(a) and medically-related services (as 
        defined in section 1571(g)).

SEC. 1573. DESCRIPTION OF TREATMENT OF INDIAN HEALTH SERVICE 
                    FACILITIES.

    In the case of a State in which one or more facilities of 
the Indian Health Service is located or in which a facility of 
an Indian health program described in section 1512(f)(3) is 
located, the State plan shall include a description of--
            (1) what provision (if any) has been made for 
        payment for items and services furnished by such 
        facilities, and
            (2) the manner in which medical assistance for low-
        income eligible individuals who are Indians will be 
        provided, as determined by the State in consultation 
        with the appropriate Indian tribes and tribal 
        organizations.

SEC. 1574. APPLICATION OF CERTAIN GENERAL PROVISIONS.

    The following sections in part A of title XI shall apply to 
States under this title in the same manner as they applied to a 
State under title XIX:
            (1) Section 1101(a)(1) (relating to definition of 
        State).
            (2) Section 1116 (relating to administrative and 
        judicial review), but only insofar as consistent with 
        the provisions of part B.
            (3) Section 1124 (relating to disclosure of 
        ownership and related information).
            (4) Section 1126 (relating to disclosure of 
        information about certain convicted individuals).
            (5) Section 1128B(d) (relating to criminal 
        penalties for certain additional charges).
            (6) Section 1132 (relating to periods within which 
        claims must be filed).

SEC. 1575. OPTIONAL MASTER DRUG REBATE AGREEMENTS.

    (a) Requirement for Manufacturer To Enter Into Agreement.--
            (1) In general.--Pursuant to section 1513(f), in 
        order for payment to be made to a State under part B 
        for medical assistance for covered outpatient drugs of 
        a manufacturer, the manufacturer shall enter into and 
        have in effect a master rebate agreement described in 
        subsection (b) with the Secretary on behalf of States 
        electing to participate in the agreement.
            (2) Coverage of drugs not covered under rebate 
        agreements.--Nothing in this section shall be construed 
        to prohibit a State in its discretion from providing 
        coverage under its State plan of a covered outpatient 
        drug for which no rebate agreement is in effect under 
        this section.
            (3) Effect on existing agreements.--If a State has 
        a rebate agreement in effect with a manufacturer on the 
        date of the enactment of this section which provides 
        for a minimum aggregate rebate equal to or greater than 
        the minimum aggregate rebate which would otherwise be 
        paid under the master agreement under this section, at 
        the option of the State--
                    (A) such agreement shall be considered to 
                meet the requirements of the master rebate 
                agreement, and
                    (B) the State shall be considered to have 
                elected to participate in the master rebate 
                agreement.
            (4) Limitation on prices of drugs purchased by 
        covered entities.--
                    (A) Agreement with secretary.--A 
                manufacturer meets the requirements of this 
                paragraph if the manufacturer has entered into 
                an agreement with the Secretary that meets the 
                requirements of section 340B of the Public 
                Health Service Act with respect to covered 
                outpatient drugs purchased by a covered entity 
                on or after the first day of the first month 
                that begins after the date of the enactment of 
                title VI of the Veterans Health Care Act of 
                1992.
                    (B) Covered entity defined.--In this 
                subsection, the term ``covered entity'' means 
                an entity described in subsection (a)(4) of 
                section 340B of the Public Health Service Act 
                if the entity furnishes the drugs to patients 
                at a cost no greater than acquisition cost plus 
                such dispensing fee as may be allowable as 
                determined by the Office of Drug Pricing in the 
                Public Health Service.
                    (C) Establishment of alternative mechanism 
                to ensure against duplicate discounts or 
                rebates.--If the Secretary does not establish a 
                mechanism under section 340B(a)(5)(A) of the 
                Public Health Service Act within 12 months of 
                the date of the enactment of such section, the 
                following requirements shall apply:
                            (i) Each covered entity shall 
                        inform the single State agency under 
                        this title when it is seeking 
                        reimbursement for medical assistance 
                        with respect to a unit of any covered 
                        outpatient drug which is subject to an 
                        agreement under section 340B(a) of such 
                        Act.
                            (ii) Each such single State agency 
                        shall provide a means by which a 
                        covered entity shall indicate on any 
                        drug reimbursement claims form (or 
                        format, where electronic claims 
                        management is used) that a unit of the 
                        drug that is the subject of the form is 
                        subject to an agreement under section 
                        340B of such Act, and not submit to any 
                        manufacturer a claim for a rebate 
                        payment under subsection (b) with 
                        respect to such a drug.
                    (D) Effect of subsequent amendments.--In 
                determining whether an agreement under 
                subparagraph (A) meets the requirements of 
                section 340B of the Public Health Service Act, 
                the Secretary shall not take into account any 
                amendments to such section that are enacted 
                after the enactment of title VI of the Veterans 
                Health Care Act of 1992.
                    (E) Determination of compliance.--A 
                manufacturer is deemed to meet the requirements 
                of this paragraph if the manufacturer 
                establishes to the satisfaction of the 
                Secretary that the manufacturer would comply 
                (and has offered to comply) with the provisions 
                of section 340B of the Public Health Service 
                Act (as in effect immediately after the 
                enactment title VI of the Veterans Health Care 
                Act of 1992), and would have entered into an 
                agreement under such section (as such section 
                was in effect at such time), but for a 
                legislative change in such section after such 
                enactment.
    (b) Terms of Rebate Agreement.--
            (1) Periodic rebates.--The master rebate agreement 
        under this section shall require the manufacturer to 
        provide, to the State plan of each State participating 
        in the agreement, a rebate for a rebate period in an 
        amount specified in subsection (c) for covered 
        outpatient drugs of the manufacturer dispensed after 
        the effective date of the agreement, for which payment 
        was made under the plan for such period. Such rebate 
        shall be paid by the manufacturer not later than 30 
        days after the date of receipt of the information 
        described in paragraph (2) for the period involved.
            (2) State provision of information.--
                    (A) State responsibility.--Each State 
                participating in the master rebate agreement 
                shall report to each manufacturer not later 
                than 60 days after the end of each rebate 
                period and in a form consistent with a standard 
                reporting format established by the Secretary, 
                information on the total number of units of 
                each dosage form and strength and package size 
                of each covered outpatient drug, for which 
                payment was made under the State plan for the 
                period, and shall promptly transmit a copy of 
                such report to the Secretary.
                    (B) Audits.--A manufacturer may audit the 
                information provided (or required to be 
                provided) under subparagraph (A). Adjustments 
                to rebates shall be made to the extent that 
                information indicates that utilization was 
                greater or less than the amount previously 
                specified.
            (3) Manufacturer provision of price information.--
                    (A) In general.--Each manufacturer which is 
                subject to the master rebate agreement under 
                this section shall report to the Secretary--
                            (i) not later than 30 days after 
                        the last day of each rebate period 
                        under the agreement, on the average 
                        manufacturer price (as defined in 
                        subsection (i)(1)) and, for single 
                        source drugs and innovator multiple 
                        source drugs, the manufacturer's best 
                        price (as defined in subsection 
                        (c)(1)(C)) for each covered outpatient 
                        drug for the rebate period under the 
                        agreement, and
                            (ii) not later than 30 days after 
                        the date of entering into an agreement 
                        under this section, on the average 
                        manufacturer price (as defined in 
                        subsection (i)(1)) as of October 1, 
                        1990, for each of the manufacturer's 
                        covered outpatient drugs.
                    (B) Verification surveys of average 
                manufacturer price.--The Secretary may survey 
                wholesalers and manufacturers that directly 
                distribute their covered outpatient drugs, when 
                necessary, to verify manufacturer prices 
                reported under subparagraph (A). The Secretary 
                may impose a civil monetary penalty in an 
                amount not to exceed $10,000 on a wholesaler, 
                manufacturer, or direct seller, if the 
                wholesaler, manufacturer, or direct seller of a 
                covered outpatient drug refuses a request for 
                information by the Secretary in connection with 
                a survey under this subparagraph. The 
                provisions of section 1128A (other than 
                subsections (a) (with respect to amounts of 
                penalties or additional assessments) and (b)) 
                shall apply to a civil money penalty under this 
                subparagraph in the same manner as such 
                provisions apply to a penalty or proceeding 
                under section 1128A(a).
                    (C) Penalties.--
                            (i) Failure to provide timely 
                        information.--In the case of a 
                        manufacturer which is subject to the 
                        master rebate agreement that fails to 
                        provide information required under 
                        subparagraph (A) on a timely basis, the 
                        amount of the penalty shall be $10,000 
                        for each day in which such information 
                        has not been provided and such amount 
                        shall be paid to the Treasury. If such 
                        information is not reported within 90 
                        days of the deadline imposed, the 
                        agreement shall be suspended for 
                        services furnished after the end of 
                        such 90-day period and until the date 
                        such information is reported (but in no 
                        case shall such suspension be for a 
                        period of less than 30 days).
                            (ii) False information.--Any 
                        manufacturer which is subject to the 
                        master rebate agreement, or a 
                        wholesaler or direct seller, that 
                        knowingly provides false information 
                        under subparagraph (A) or (B) is 
                        subject to a civil money penalty in an 
                        amount not to exceed $100,000 for each 
                        item of false information. Any such 
                        civil money penalty shall be in 
                        addition to other penalties as may be 
                        prescribed by law. The provisions of 
                        section 1128A (other than subsections 
                        (a) and (b)) shall apply to a civil 
                        money penalty under this subparagraph 
                        in the same manner as such provisions 
                        apply to a penalty or proceeding under 
                        section 1128A(a).
                    (D) Confidentiality of information.--
                Notwithstanding any other provision of law, 
                information disclosed by manufacturers or 
                wholesalers under this paragraph or under an 
                agreement with the Secretary of Veterans 
                Affairs described in section 1513(f) is 
                confidential and shall not be disclosed by the 
                Secretary or the Secretary of Veterans Affairs 
                or a State agency (or contractor therewith) in 
                a form which discloses the identity of a 
                specific manufacturer or wholesaler or the 
                prices charged for drugs by such manufacturer 
                or wholesaler, except--
                            (i) as the Secretary determines to 
                        be necessary to carry out this section,
                            (ii) to permit the Comptroller 
                        General to review the information 
                        provided, and
                            (iii) to permit the Director of the 
                        Congressional Budget Office to review 
                        the information provided.
            (4) Length of agreement.--
                    (A) In general.--The master rebate 
                agreement under this section shall be effective 
                for an initial period of not less than 1 year 
                and shall be automatically renewed for a period 
                of not less than 1 year unless terminated under 
                subparagraph (B).
                    (B) Termination.--
                            (i) By the secretary.--The 
                        Secretary may provide for termination 
                        of the master rebate agreement with 
                        respect to a manufacturer for violation 
                        of the requirements of the agreement or 
                        other good cause shown. Such 
                        termination shall not be effective 
                        earlier than 60 days after the date of 
                        notice of such termination. The 
                        Secretary shall provide, upon request, 
                        a manufacturer with a hearing 
                        concerning such a termination, but such 
                        hearing shall not delay the effective 
                        date of the termination. Failure of a 
                        State to provide any advance notice of 
                        such a termination as required by 
                        regulation shall not affect the State's 
                        right to terminate coverage of the 
                        drugs affected by such termination as 
                        of the effective date of such 
                        termination.
                            (ii) By a manufacturer.--A 
                        manufacturer may terminate its 
                        participation in the master rebate 
                        agreement under this section for any 
                        reason. Any such termination shall not 
                        be effective until the calendar quarter 
                        beginning at least 60 days after the 
                        date the manufacturer provides notice 
                        to the Secretary.
                            (iii) Effectiveness of 
                        termination.--Any termination under 
                        this subparagraph shall not affect 
                        rebates due under the agreement before 
                        the effective date of its termination.
                            (iv) Notice to states.--In the case 
                        of a termination under this 
                        subparagraph, the Secretary shall 
                        provide notice of such termination to 
                        the States within not less than 30 days 
                        before the effective date of such 
                        termination.
                            (v) Application to terminations of 
                        other agreements.--The provisions of 
                        this subparagraph shall apply to the 
                        terminations of master agreements 
                        described in section 8126(a) of title 
                        38, United States Code.
                    (C) Delay before reentry.--In the case of 
                any rebate agreement with a manufacturer under 
                this section which is terminated, another such 
                agreement with the manufacturer (or a successor 
                manufacturer) may not be entered into until a 
                period of 1 calendar quarter has elapsed since 
                the date of the termination, unless the 
                Secretary finds good cause for an earlier 
                reinstatement of such an agreement.
            (5) Settlement of disputes.--
                    (A) Secretary.--The Secretary shall have 
                the authority to resolve, settle, and 
                compromise disputes regarding the amounts of 
                rebates owed under this section and section 
                1927.
                    (B) State.--Each State, with respect to 
                covered outpatient drugs paid for under the 
                State plan, shall have authority, independent 
                of the Secretary's authority under subparagraph 
                (A), to resolve, settle, and compromise 
                disputes regarding the amounts of rebates owed 
                under this section. Any such action shall be 
                deemed to comply with the requirements of this 
                title, and such covered outpatient drugs shall 
                be eligible for payment under the State plan 
                under this title.
                    (C) Amount of rebate.--The Secretary shall 
                limit the amount of the rebate payable in any 
                case in which the Secretary determines that, 
                because of unusual circumstances or 
                questionable data, the provisions of subsection 
                (c) result in a rebate amount that is 
                inequitable or otherwise inconsistent with the 
                purposes of this section.
    (c) Determination of Amount of Rebate.--
            (1) Basic rebate for single source drugs and 
        innovator multiple source drugs.--
                    (A) In general.--Except as provided in 
                paragraph (2), the amount of the rebate 
                specified in this subsection with respect to a 
                State participating in the master rebate 
                agreement for a rebate period (as defined in 
                subsection (i)(7)) with respect to each dosage 
                form and strength of a single source drug or an 
                innovator multiple source drug shall be equal 
                to the product of--
                            (i) the total number of units of 
                        each dosage form and strength paid for 
                        under the State plan in the rebate 
                        period (as reported by the State); and
                            (ii) the greater of--
                                    (I) the difference between 
                                the average manufacturer price 
                                and the best price (as defined 
                                in subparagraph (C)) for the 
                                dosage form and strength of the 
                                drug, or
                                    (II) the minimum rebate 
                                percentage (specified in 
                                subparagraph (B)) of such 
                                average manufacturer price,
                        for the rebate period.
                    (B) Minimum rebate percentage.--For 
                purposes of subparagraph (A)(ii)(II), the 
                ``minimum rebate percentage'' is 15 percent.
                    (C) Best price defined.--For purposes of 
                this section--
                            (i) In general.--The term ``best 
                        price'' means, with respect to a single 
                        source drug or innovator multiple 
                        source drug of a manufacturer, the 
                        lowest price available from the 
                        manufacturer during the rebate period 
                        to any wholesaler, retailer, provider, 
                        health maintenance organization, 
                        nonprofit entity, or governmental 
                        entity within the United States, 
                        excluding--
                                    (I) any prices charged on 
                                or after October 1, 1992, to 
                                the Indian Health Service, the 
                                Department of Veterans Affairs, 
                                a State home receiving funds 
                                under section 1741 of title 38, 
                                United States Code, the 
                                Department of Defense, the 
                                Public Health Service, or a 
                                covered entity described in 
                                section 340B(a)(4) of the 
                                Public Health Service Act,
                                    (II) any prices charged 
                                under the Federal Supply 
                                Schedule of the General 
                                Services Administration,
                                    (III) any prices used under 
                                a State pharmaceutical 
                                assistance program, and
                                    (IV) any depot prices and 
                                single award contract prices, 
                                as defined by the Secretary, of 
                                any agency of the Federal 
                                Government.
                            (ii) Special rules.--The term 
                        ``best price''--
                                    (I) shall be inclusive of 
                                cash discounts, free goods that 
                                are contingent on any purchase 
                                requirement, volume discounts, 
                                and rebates (other than rebates 
                                under this section),
                                    (II) shall be determined 
                                without regard to special 
                                packaging, labeling, or 
                                identifiers on the dosage form 
                                or product or package,
                                    (III) shall not take into 
                                account prices that are merely 
                                nominal in amount, and
                                    (IV) shall exclude rebates 
                                paid under this section or any 
                                other rebates paid to a State 
                                participating in the master 
                                rebate agreement.
            (2) Additional rebate for single source and 
        innovator multiple source drugs.--
                    (A) In general.--The amount of the rebate 
                specified in this subsection with respect to a 
                State participating in the master rebate 
                agreement for a rebate period, with respect to 
                each dosage form and strength of a single 
                source drug or an innovator multiple source 
                drug, shall be increased by an amount equal to 
                the product of--
                            (i) the total number of units of 
                        such dosage form and strength dispensed 
                        after December 31, 1990, for which 
                        payment was made under the State plan 
                        for the rebate period; and
                            (ii) the amount (if any) by which--
                                    (I) the average 
                                manufacturer price for the 
                                dosage form and strength of the 
                                drug for the period, exceeds
                                    (II) the average 
                                manufacturer price for such 
                                dosage form and strength for 
                                the calendar quarter beginning 
                                July 1, 1990 (without regard to 
                                whether or not the drug has 
                                been sold or transferred to an 
                                entity, including a division or 
                                subsidiary of the manufacturer, 
                                after the first day of such 
                                quarter), increased by the 
                                percentage by which the 
                                Consumer Price Index for All 
                                Urban Consumers (United States 
                                city average) for the month 
                                before the month in which the 
                                rebate period begins exceeds 
                                such index for September 1990.
                    (B) Treatment of subsequently approved 
                drugs.--In the case of a covered outpatient 
                drug approved by the Food and Drug 
                Administration after October 1, 1990, clause 
                (ii)(II) of subparagraph (A) shall be applied 
                by substituting ``the first full calendar 
                quarter after the day on which the drug was 
                first marketed'' for ``the calendar quarter 
                beginning July 1, 1990'' and ``the month prior 
                to the first month of the first full calendar 
                quarter after the day on which the drug was 
                first marketed'' for ``September 1990''.
            (3) Rebate for other drugs.--
                    (A) In general.--The amount of the rebate 
                paid to a State participating in the master 
                rebate agreement for a rebate period with 
                respect to each dosage form and strength of 
                covered outpatient drugs (other than single 
                source drugs and innovator multiple source 
                drugs) shall be equal to the product of--
                            (i) the applicable percentage (as 
                        described in subparagraph (B)) of the 
                        average manufacturer price for the 
                        dosage form and strength for the rebate 
                        period, and
                            (ii) the total number of units of 
                        such dosage form and strength dispensed 
                        after December 31, 1990, for which 
                        payment was made under the State plan 
                        for the rebate period.
                    (B) Applicable percentage defined.--For 
                purposes of subparagraph (A)(i), the 
                ``applicable percentage'' is 11 percent.
            (4) Limitation on amount of rebate to amounts paid 
        for certain drugs.--
                    (A) In general.--Upon request of the 
                manufacturer of a covered outpatient drug, the 
                Secretary shall limit, in accordance with 
                subparagraph (B), the amount of the rebate 
                under this subsection with respect to a dosage 
                form and strength of such drug if the majority 
                of the estimated number of units of such dosage 
                form and strength that are subject to rebates 
                under this section were dispensed to inpatients 
                of nursing facilities.
                    (B) Amount of rebate.--In the case of a 
                covered outpatient drug subject to subparagraph 
                (A), the amount of the rebate specified in this 
                subsection for a rebate period, with respect to 
                each dosage form and strength of such drug, 
                shall not exceed the amount paid under the 
                State plan with respect to such dosage form and 
                strength of the drug in the rebate period 
                (without consideration of any dispensing fees 
                paid).
            (5) Supplemental rebates prohibited.--No rebates 
        shall be required to be paid by manufacturers with 
        respect to covered outpatient drugs furnished to 
        individuals in any State that provides for the 
        collection of such rebates in excess of the rebate 
        amount payable under this section.
    (d) Limitations on Coverage of Drugs by States 
Participating in Master Agreement.--
            (1) Permissible restrictions.--A State 
        participating in the master rebate agreement under this 
        section may--
                    (A) subject to prior authorization under 
                its State plan any covered outpatient drug so 
                long as any such prior authorization program 
                complies with the requirements of paragraph 
                (5); and
                    (B) exclude or otherwise restrict coverage 
                under its plan of a covered outpatient drug 
                if--
                            (i) the drug is contained in the 
                        list referred to in paragraph (2);
                            (ii) the drug is subject to such 
                        restrictions pursuant to the master 
                        rebate agreement or any agreement 
                        described in subsection (a)(4); or
                            (iii) the State has excluded 
                        coverage of the drug from its formulary 
                        established in accordance with 
                        paragraph (4).
            (2) List of drugs subject to restriction.--The 
        following drugs or classes of drugs, or their medical 
        uses, may be excluded from coverage or otherwise 
        restricted by a State participating in the master 
        rebate agreement:
                    (A) Agents when used for anorexia, weight 
                loss, or weight gain.
                    (B) Agents when used to promote fertility.
                    (C) Agents when used for cosmetic purposes 
                or hair growth.
                    (D) Agents when used for the symptomatic 
                relief of cough and colds.
                    (E) Agents when used to promote smoking 
                cessation.
                    (F) Prescription vitamins and mineral 
                products, except prenatal vitamins and fluoride 
                preparations.
                    (G) Nonprescription drugs.
                    (H) Covered outpatient drugs which the 
                manufacturer seeks to require as a condition of 
                sale that associated tests or monitoring 
                services be purchased exclusively from the 
                manufacturer or its designee.
                    (I) Barbiturates.
                    (J) Benzodiazepines.
            (3) Additions to drug listings.--The Secretary 
        shall, by regulation, periodically update the list of 
        drugs or classes of drugs described in paragraph (2), 
        or their medical uses, which the Secretary has 
        determined to be subject to clinical abuse or 
        inappropriate use.
            (4) Requirements for formularies.--A State 
        participating in the master rebate agreement may 
        establish a formulary if the formulary meets the 
        following requirements:
                    (A) The formulary is developed by a 
                committee consisting of physicians, 
                pharmacists, and other appropriate individuals 
                appointed by the Governor of the State.
                    (B) Except as provided in subparagraph (C), 
                the formulary includes the covered outpatient 
                drugs of any manufacturer which has entered 
                into and complies with the agreement under 
                subsection (a) (other than any drug excluded 
                from coverage or otherwise restricted under 
                paragraph (2)).
                    (C) A covered outpatient drug may be 
                excluded with respect to the treatment of a 
                specific disease or condition for an identified 
                population (if any) only if, based on the 
                drug's labeling (or, in the case of a drug the 
                prescribed use of which is not approved under 
                the Federal Food, Drug, and Cosmetic Act but is 
                a medically accepted indication, based on 
                information from the appropriate compendia 
                described in subsection (i)(5)), the excluded 
                drug does not have a significant, clinically 
                meaningful therapeutic advantage in terms of 
                safety, effectiveness, or clinical outcome of 
                such treatment for such population over other 
                drugs included in the formulary and there is a 
                written explanation (available to the public) 
                of the basis for the exclusion.
                    (D) The State plan permits coverage of a 
                drug excluded from the formulary (other than 
                any drug excluded from coverage or otherwise 
                restricted under paragraph (2)) pursuant to a 
                prior authorization program that is consistent 
                with paragraph (5).
                    (E) The formulary meets such other 
                requirements as the Secretary may impose in 
                order to achieve program savings consistent 
                with protecting the health of program 
                beneficiaries.
        A prior authorization program established by a State 
        under paragraph (5) is not a formulary subject to the 
        requirements of this paragraph.
            (5) Requirements of prior authorization programs.--
        The State plan of a State participating in the master 
        rebate agreement may require, as a condition of 
        coverage or payment for a covered outpatient drug for 
        which Federal financial participation is available in 
        accordance with this section, the approval of the drug 
        before its dispensing for any medically accepted 
        indication (as defined in subsection (i)(5)) only if 
        the system providing for such approval--
                    (A) provides response by telephone or other 
                telecommunication device within 24 hours of a 
                request for prior authorization, and
                    (B) except with respect to the drugs on the 
                list referred to in paragraph (2), provides for 
                the dispensing of at least a 72-hour supply of 
                a covered outpatient prescription drug in an 
                emergency situation (as defined by the 
                Secretary).
            (6) Other permissible restrictions.--A State 
        participating in the master rebate agreement may impose 
        limitations, with respect to all such drugs in a 
        therapeutic class, on the minimum or maximum quantities 
        per prescription or on the number of refills, if such 
        limitations are necessary to discourage waste, and may 
        address instances of fraud or abuse by individuals in 
        any manner authorized under this Act.
    (e) Drug Use Review.--
            (1) In general.--A State participating in the 
        master rebate agreement may provide for a drug use 
        review program to educate physicians and pharmacists to 
        identify and reduce the frequency of patterns of fraud, 
        abuse, gross overuse, or inappropriate or medically 
        unnecessary care, among physicians, pharmacists, and 
        patients, or associated with specific drugs or groups 
        of drugs, as well as potential and actual severe 
        adverse reactions to drugs.
            (2) Application of state standards.--A State with a 
        drug use review program under this subsection shall 
        establish and operate the program under such standards 
        as it may establish.
    (f) Electronic Claims Management.--In accordance with 
chapter 35 of title 44, United States Code (relating to 
coordination of Federal information policy), the Secretary 
shall encourage each State to establish, as its principal means 
of processing claims for covered outpatient drugs under its 
State plan, a point-of-sale electronic claims management 
system, for the purpose of performing on-line, real time 
eligibility verifications, claims data capture, adjudication of 
claims, and assisting pharmacists (and other authorized 
persons) in applying for and receiving payment.
    (g) Annual Report.--
            (1) In general.--Not later than May 1 of each year, 
        the Secretary shall transmit to the Committee on 
        Finance of the Senate, and the Committee on Commerce of 
        the House of Representatives, a report on the operation 
        of this section in the preceding fiscal year.
            (2) Details.--Each report shall include information 
        on--
                    (A) ingredient costs paid under this title 
                for single source drugs, multiple source drugs, 
                and nonprescription covered outpatient drugs,
                    (B) the total value of rebates received and 
                number of manufacturers providing such rebates,
                    (C) the effect of inflation on the value of 
                rebates required under this section,
                    (D) trends in prices paid under this title 
                for covered outpatient drugs, and
                    (E) Federal and State administrative costs 
                associated with compliance with the provisions 
                of this title.
    (h) Exemption for Capitated Health Care Organizations, 
Hospitals, and Certain Nursing Facilities.--
            (1) In general.--Except as provided in paragraph 
        (2), the requirements of the master rebate agreement 
        under this section shall not apply with respect to 
        covered outpatient drugs dispensed by or through--
                    (A) a capitated health care organization 
                (as defined in section 1504(c)(1)),
                    (B) a hospital that dispenses covered 
                outpatient drugs using a drug formulary system 
                and bills the State no more than the hospital's 
                purchasing costs for covered outpatient drugs, 
                or
                    (C) a nursing facility which receives 
                payment under this title for health care 
                services, including prescription drugs, on a 
                capitated basis or which dispenses covered 
                outpatient drugs using a drug formulary system.
            (2) Construction in determining best price.--
        Nothing in paragraph (1) shall be construed as 
        excluding amounts paid by the entities described in 
        such paragraph for covered outpatient drugs from the 
        determination of the best price (as defined in 
        subsection (c)(1)(C)) for such drugs.
    (i) Definitions.--In the section--
            (1) Average manufacturer price.--The term ``average 
        manufacturer price'' means, with respect to a covered 
        outpatient drug of a manufacturer for a rebate period, 
        the average price paid to the manufacturer for the drug 
        in the United States by wholesalers for drugs 
        distributed to the retail pharmacy class of trade, 
        after deducting customary prompt pay discounts.
            (2) Covered outpatient drug.--Subject to the 
        exceptions in paragraph (3), the term ``covered 
        outpatient drug'' means--
                    (A) of those drugs which are treated as 
                prescribed drugs for purposes of section 
                1571(a)(8), a drug which may be dispensed only 
                upon prescription (except as provided in 
                subparagraph (D)), and--
                            (i) which is approved as a 
                        prescription drug under section 505 or 
                        507 of the Federal Food, Drug, and 
                        Cosmetic Act;
                            (ii)(I) which was commercially used 
                        or sold in the United States before the 
                        date of the enactment of the Drug 
                        Amendments of 1962 or which is 
                        identical, similar, or related (within 
                        the meaning of section 310.6(b)(1) of 
                        title 21 of the Code of Federal 
                        Regulations) to such a drug, and (II) 
                        which has not been the subject of a 
                        final determination by the Secretary 
                        that it is a ``new drug'' (within the 
                        meaning of section 201(p) of the 
                        Federal Food, Drug, and Cosmetic Act) 
                        or an action brought by the Secretary 
                        under section 301, 302(a), or 304(a) of 
                        such Act to enforce section 502(f) or 
                        505(a) of such Act; or
                            (iii)(I) which is described in 
                        section 107(c)(3) of the Drug 
                        Amendments of 1962 and for which the 
                        Secretary has determined there is a 
                        compelling justification for its 
                        medical need, or is identical, similar, 
                        or related (within the meaning of 
                        section 310.6(b)(1) of title 21 of the 
                        Code of Federal Regulations) to such a 
                        drug, and (II) for which the Secretary 
                        has not issued a notice of an 
                        opportunity for a hearing under section 
                        505(e) of the Federal Food, Drug, and 
                        Cosmetic Act on a proposed order of the 
                        Secretary to withdraw approval of an 
                        application for such drug under such 
                        section because the Secretary has 
                        determined that the drug is less than 
                        effective for some or all conditions of 
                        use prescribed, recommended, or 
                        suggested in its labeling;
                    (B) a biological product, other than a 
                vaccine which--
                            (i) may only be dispensed upon 
                        prescription,
                            (ii) is licensed under section 351 
                        of the Public Health Service Act, and
                            (iii) is produced at an 
                        establishment licensed under such 
                        section to produce such product;
                    (C) insulin certified under section 506 of 
                the Federal Food, Drug, and Cosmetic Act; and
                    (D) a drug which may be sold without a 
                prescription (commonly referred to as an 
                ``over-the-counter drug''), if the drug is 
                prescribed by a physician (or other person 
                authorized to prescribe under State law).
            (3) Limiting definition.--The term ``covered 
        outpatient drug'' does not include any drug, biological 
        product, or insulin provided as part of, or as incident 
        to and in the same setting as, any of the following 
        (and for which payment may be made under a State plan 
        as part of payment for the following and not as direct 
        reimbursement for the drug):
                    (A) Inpatient hospital services.
                    (B) Hospice services.
                    (C) Dental services, except that drugs for 
                which the State plan authorizes direct 
                reimbursement to the dispensing dentist are 
                covered outpatient drugs.
                    (D) Physicians' services.
                    (E) Outpatient hospital services.
                    (F) Nursing facility services and services 
                provided by an intermediate care facility for 
                the mentally retarded.
                    (G) Other laboratory and x-ray services.
                    (H) Renal dialysis services.
        Such term also does not include any such drug or 
        product for which a National Drug Code number is not 
        required by the Food and Drug Administration or a drug 
        or biological product used for a medical indication 
        which is not a medically accepted indication. Any drug, 
        biological product, or insulin excluded from the 
        definition of such term as a result of this paragraph 
        shall be treated as a covered outpatient drug for 
        purposes of determining the best price (as defined in 
        subsection (c)(1)(C)) for such drug, biological 
        product, or insulin.
            (4) Manufacturer.--The term ``manufacturer'' means, 
        with respect to a covered outpatient drug, the entity 
        holding legal title to or possession of the National 
        Drug Code number for such drug.
            (5) Medically accepted indication.--The term 
        ``medically accepted indication'' means any use for a 
        covered outpatient drug which is approved under the 
        Federal Food, Drug, and Cosmetic Act, or the use of 
        which is supported by one or more citations included or 
        approved for inclusion in any of the following 
        compendia:
                    (A) American Hospital Formulary Service 
                Drug Information.
                    (B) United States Pharmacopeia-Drug 
                Information.
                    (C) American Medical Association Drug 
                Evaluations.
                    (D) The DRUGDEX Information System.
                    (E) The peer-reviewed medical literature.
            (6) Multiple source drug; innovator multiple source 
        drug; noninnovator multiple source drug; single source 
        drug.--
                    (A) Defined.--
                            (i) Multiple source drug.--The term 
                        ``multiple source drug'' means, with 
                        respect to a rebate period, a covered 
                        outpatient drug (not including any drug 
                        described in paragraph (2)(D)) for 
                        which there are 2 or more drug products 
                        which--
                                    (I) are rated as 
                                therapeutically equivalent 
                                (under the Food and Drug 
                                Administration's most recent 
                                publication of ``Approved Drug 
                                Products with Therapeutic 
                                Equivalence Evaluations''),
                                    (II) except as provided in 
                                subparagraph (B), are 
                                pharmaceutically equivalent and 
                                bioequivalent, as defined in 
                                subparagraph (C) and as 
                                determined by the Food and Drug 
                                Administration, and
                                    (III) are sold or marketed 
                                in the State during the period.
                            (ii) Innovator multiple source 
                        drug.--The term ``innovator multiple 
                        source drug'' means a multiple source 
                        drug that was originally marketed under 
                        an original new drug application or 
                        product licensing application approved 
                        by the Food and Drug Administration.
                            (iii) Noninnovator multiple source 
                        drug.--The term ``noninnovator multiple 
                        source drug'' means a 
                        multiple source drug that is not an 
                        innovator multiple source drug.
                            (iv) Single source drug.--The term 
                        ``single source drug'' means a covered 
                        outpatient drug (other than a drug 
                        described in subparagraph (C) or (D) of 
                        paragraph (2)) which is produced or 
                        distributed under an original new drug 
                        application approved by the Food and 
                        Drug Administration, including a drug 
                        product marketed by any cross-licensed 
                        producers or distributors operating 
                        under the new drug application or 
                        product licensing application.
                    (B) Exception.--Subparagraph (A)(i)(II) 
                shall not apply if the Food and Drug 
                Administration changes by regulation the 
                requirement that, for purposes of the 
                publication described in subparagraph 
                (A)(i)(I), in order for drug products to be 
                rated as therapeutically equivalent, they must 
                be pharmaceutically equivalent and 
                bioequivalent, as defined in subparagraph (C).
                    (C) Definitions.--For purposes of this 
                paragraph--
                            (i) drug products are 
                        pharmaceutically equivalent if the 
                        products contain identical amounts of 
                        the same active drug ingredient in the 
                        same dosage form and meet compendial or 
                        other applicable standards of strength, 
                        quality, purity, and identity,
                            (ii) drugs are bioequivalent if 
                        they do not present a known or 
                        potential bioequivalence problem, or, 
                        if they do present such a problem, they 
                        are shown to meet an appropriate 
                        standard of bioequivalence, and
                            (iii) a drug product is considered 
                        to be sold or marketed in a State if it 
                        appears in a published national listing 
                        of average wholesale prices selected by 
                        the Secretary, if the listed product is 
                        generally available to the public 
                        through retail pharmacies in that 
                        State.
            (7) Rebate period.--The term ``rebate period'' 
        means, with respect to an agreement under subsection 
        (a), a calendar quarter or other period specified by 
        the Secretary with respect to the payment of rebates 
        under such agreement.
          * * * * * * *

 [Title XIX is repealed effective on October 1, 1997. Section 1928 of 
      this title is repealed effective on the date of enactment.]

      [TITLE XIX--GRANTS TO STATES FOR MEDICAL ASSISTANCE PROGRAMS

                             [APPROPRIATION

    [Sec. 1901. For the purpose of enabling each State, as far 
as practicable under the conditions in such State, to furnish 
(1) medical assistance on behalf of families with dependent 
children and of aged, blind, or disabled individuals, whose 
income and resources are insufficient to meet the costs of 
necessary medical services, and (2) rehabilitation and other 
services to help such families and individuals attain or retain 
capability for independence or self-care, there is hereby 
authorized to be appropriated for each fiscal year a sum 
sufficient to carry out the purposes of this title. The sums 
made available under this section shall be used for making 
payments to States which have submitted, and had approved by 
the Secretary, State plans for medical assistance.

                  [STATE PLANS FOR MEDICAL ASSISTANCE

    [Sec. 1902. (a) A State plan for medical assistance must--
            [(1) provide that it shall be in effect in all 
        political subdivisions of the State, and, if 
        administered by them, be mandatory upon them;
            [(2) provide for financial participation by the 
        State equal to not less than 40 per centum of the non-
        Federal share of the expenditures under the plan with 
        respect to which payments under section 1903 are 
        authorized by this title; and, effective July 1, 1969, 
        provide for financial participation by the State equal 
        to all of such non-Federal share or provide for 
        distribution of funds from Federal or State sources, 
        for carrying out the State plan, on an equalization or 
        other basis which will assure that the lack of adequate 
        funds from local sources will not result in lowering 
        the amount, duration, scope, or quality of care and 
        services available under the plan;
            [(3) provide for granting an opportunity for a fair 
        hearing before the State agency to any individual whose 
        claim for medical assistance under the plan is denied 
        or is not acted upon with reasonable promptness;
            [(4) provide (A) such methods of administration 
        (including methods relating to the establishment and 
        maintenance of personnel standards on a merit basis, 
        except that the Secretary shall exercise no authority 
        with respect to the selection, tenure of office, and 
        compensation of any individual employed in accordance 
        with such methods, and including provision for 
        utilization of professional medical personnel in the 
        administration and, where administered locally, 
        supervision of administration of the plan) as are found 
        by the Secretary to be necessary for the proper and 
        efficient operation of the plan, (B) for the training 
        and effective use of paid subprofessional staff, with 
        particular emphasis on the full-time or part-time 
        employment of recipients and other persons of low 
        income, as community service aides, in the 
        administration of the plan and for the use of nonpaid 
        or partially paid volunteers in a social service 
        volunteer program in providing services to applicants 
        and recipients and in assisting any advisory committees 
        established by the State agency, and (C) that each 
        State or local officer or employee who is responsible 
        for the expenditure of substantial amounts of funds 
        under the State plan, each individual who formerly was 
        such an officer or employee, and each partner of such 
        an officer or employee shall be prohibited from 
        committing any act, in relation to any activity under 
        the plan, the commission of which, in connection with 
        any activity concerning the United States Government, 
        by an officer or employee of the United States 
        Government, an individual who was such an officer or 
        employee, or a partner of such an officer or employee 
        is prohibited by section 207 or 208 of title 18, United 
        States Code;
            [(5) either provide for the establishment or 
        designation of a single State agency to administer or 
        to supervise the administration of the plan; or provide 
        for the establishment or designation of a single State 
        agency to administer or to supervise the administration 
        of the plan, except that the determination of 
        eligibility for medical assistance under the plan shall 
        be made by the State or local agency administering the 
        State plan approved under title I or XVI (insofar as it 
        relates to the aged) if the State is eligible to 
        participate in the State plan program established under 
        title XVI, or by the agency or agencies administering 
        the supplemental security income program established 
        under title XVI or the State plan approved under part A 
        of title IV if the State is not eligible to participate 
        in the State plan program established under title XVI;
            [(6) provide that the State agency will make such 
        reports, in such form and containing such information, 
        as the Secretary may from time to time require, and 
        comply with such provisions as the Secretary may from 
        time to time find necessary to assure the correctness 
        and verification of such reports;
            [(7) provide safeguards which restrict the use or 
        disclosure of information concerning applicants and 
        recipients to purposes directly connected with the 
        administration of the plan;
            [(8) provide that all individuals wishing to make 
        application for medical assistance under the plan shall 
        have opportunity to do so, and that such assistance 
        shall be furnished with reasonable promptness to all 
        eligible individuals;
            [(9) provide--
                    [(A) that the State health agency, or other 
                appropriate State medical agency (whichever is 
                utilized by the Secretary for the purpose 
                specified in the first sentence of section 
                1864(a)), shall be responsible for establishing 
                and maintaining health standards for private or 
                public institutions in which recipients of 
                medical assistance under the plan may receive 
                care or services,
                    [(B) for the establishment or designation 
                of a State authority or authorities which shall 
                be responsible for establishing and maintaining 
                standards, other than those relating to health, 
                for such institutions, and
                    [(C) that any laboratory services paid for 
                under such plan must be provided by a 
                laboratory which meets the applicable 
                requirements of section 1861(e)(9) or 
                paragraphs (15) and (16) of section 1861(s), 
                or, in the case of a laboratory which is in a 
                rural health clinic, of section 1861(aa)(2)(G);
            [(10) provide--
                    [(A) for making medical assistance 
                available, including at least the care and 
                services listed in paragraphs (1) through (5), 
                (17) and (21) of section 1905(a), to--
                            [(i) all individuals--
                                    [(I) who are receiving aid 
                                or assistance under any plan of 
                                the State approved under title 
                                I, X, XIV, or XVI, or part A or 
                                part E of title IV (including 
                                individuals eligible under this 
                                title by reason of section 
                                402(a)(37), 406(h), or 473(b), 
                                or considered by the State to 
                                be receiving such aid as 
                                authorized under section 
                                482(e)(6)),
                                    [(II) with respect to whom 
                                supplemental security income 
                                benefits are being paid under 
                                title XVI or who are qualified 
                                severely impaired individuals 
                                (as defined in section 
                                1905(q)),
                                    [(III) who are qualified 
                                pregnant women or children as 
                                defined in section 1905(n),
                                    [(IV) who are described in 
                                subparagraph (A) or (B) of 
                                subsection (l)(1) and whose 
                                family income does not exceed 
                                the minimum income level the 
                                State is required to establish 
                                under subsection (l)(2)(A) for 
                                such a family;
                                    [(V) who are qualified 
                                family members as defined in 
                                section 1905(m)(1),
                                    [(VI) who are described in 
                                subparagraph (C) of subsection 
                                (l)(1) and whose family income 
                                does not exceed the income 
                                level the State is required to 
                                establish under subsection 
                                (l)(2)(B) for such a family, or
                                    [(VII) who are described in 
                                subparagraph (D) of subsection 
                                (l)(1) and whose family income 
                                does not exceed the income 
                                level the State is required to 
                                establish under subsection 
                                (l)(2)(C) for such a family;
                            [(ii) at the option of the State, 
                        to any group or groups of individuals 
                        described in section 1905(a) (or, in 
                        the case of individuals described in 
                        section 1905(a)(i), to any reasonable 
                        categories of such individuals) who are 
                        not individuals described in clause (i) 
                        of this subparagraph but--
                                    [(I) who meet the income 
                                and resources requirements of 
                                the appropriate State plan 
                                described in clause (i) or the 
                                supplemental security income 
                                program (as the case may be),
                                    [(II) who would meet the 
                                income and resources 
                                requirements of the appropriate 
                                State plan described in clause 
                                (i) if their work-related child 
                                care costs were paid from their 
                                earnings rather than by a State 
                                agency as a service 
                                expenditure,
                                    [(III) who would be 
                                eligible to receive aid under 
                                the appropriate State plan 
                                described in clause (i) if 
                                coverage under such plan was as 
                                broad as allowed under Federal 
                                law,
                                    [(IV) with respect to whom 
                                there is being paid, or who are 
                                eligible, or would be eligible 
                                if they were not in a medical 
                                institution, to have paid with 
                                respect to them, aid or 
                                assistance under the 
                                appropriate State plan 
                                described in clause (i), 
                                supplemental security income 
                                benefits under title XVI, or a 
                                State supplementary payment;
                                    [(V) who are in a medical 
                                institution for a period of not 
                                less than 30 consecutive days 
                                (with eligibility by reason of 
                                this subclause beginning on the 
                                first day of such period), who 
                                meet the resource requirements 
                                of the appropriate State plan 
                                described in clause (i) or the 
                                supplemental security income 
                                program, and whose income does 
                                not exceed a separate income 
                                standard established by the 
                                State which is consistent with 
                                the limit established under 
                                section 1903(f)(4)(C),
                                    [(VI) who would be eligible 
                                under the State plan under this 
                                title if they were in a medical 
                                institution, with respect to 
                                whom there has been a 
                                determination that but for the 
                                provision of home or community-
                                based services described in 
                                subsection (c), (d), or (e) of 
                                section 1915 they would require 
                                the level of care provided in a 
                                hospital, nursing facility or 
                                intermediate care facility for 
                                the mentally retarded the cost 
                                of which could be reimbursed 
                                under the State plan, and who 
                                will receive home or community-
                                based services pursuant to a 
                                waiver granted by the Secretary 
                                under subsection (c), (d), or 
                                (e) of section 1915,
                                    [(VII) who would be 
                                eligible under the State plan 
                                under this title if they were 
                                in a medical institution, who 
                                are terminally ill, and who 
                                will receive hospice care 
                                pursuant to a voluntary 
                                election described in section 
                                1905(o);
                                    [(VIII) who is a child 
                                described in section 
                                1905(a)(i)--
                                            [(aa) for whom 
                                        there is in effect an 
                                        adoption assistance 
                                        agreement (other than 
                                        an agreement under part 
                                        E of title IV) between 
                                        the State and an 
                                        adoptive parent or 
                                        parents,
                                            [(bb) who the State 
                                        agency responsible for 
                                        adoption assistance has 
                                        determined cannot be 
                                        placed with adoptive 
                                        parents without medical 
                                        assistance because such 
                                        child has special needs 
                                        for medical or 
                                        rehabilitative care, 
                                        and
                                            [(cc) who was 
                                        eligible for medical 
                                        assistance under the 
                                        State plan prior to the 
                                        adoption assistance 
                                        agreement being entered 
                                        into, or who would have 
                                        been eligible for 
                                        medical assistance at 
                                        such time if the 
                                        eligibility standards 
                                        and methodologies of 
                                        the State's foster care 
                                        program under part E of 
                                        title IV were applied 
                                        rather than the 
                                        eligibility standards 
                                        and methodologies of 
                                        the State's aid to 
                                        families with dependent 
                                        children program under 
                                        part A of title IV;
                                    [(IX) who are described in 
                                subsection (l)(1) and are not 
                                described in clause (i)(IV), 
                                clause (i)(VI), or clause 
                                (i)(VII);
                                    [(X) who are described in 
                                subsection (m)(1);
                                    [(XI) who receive only an 
                                optional State supplementary 
                                payment based on need and paid 
                                on a regular basis, equal to 
                                the difference between the 
                                individual's countable income 
                                and the income standard used to 
                                determine eligibility for such 
                                supplementary payment (with 
                                countable income being the 
                                income remaining after 
                                deductions as established by 
                                the State pursuant to standards 
                                that may be more restrictive 
                                than the standards for 
                                supplementary security income 
                                benefits under title XVI), 
                                which are available to all 
                                individuals in the State (but 
                                which may be based on different 
                                income standards by political 
                                subdivision according to cost 
                                of living differences), and 
                                which are paid by a State that 
                                does not have an agreement with 
                                the Commissioner of Social 
                                Security under section 1616 or 
                                1634; or
                                    [(XII) who are described in 
                                subsection (z)(1) (relating to 
                                certain TB-infected 
                                individuals);
                    [(B) that the medical assistance made 
                available to any individual described in 
                subparagraph (A)--
                            [(i) shall not be less in amount, 
                        duration, or scope than the medical 
                        assistance made available to any other 
                        such individual, and
                            [(ii) shall not be less in amount, 
                        duration, or scope than the medical 
                        assistance made available to 
                        individuals not described in 
                        subparagraph (A);
                    [(C) that if medical assistance is included 
                for any group of individuals described in 
                section 1905(a) who are not described in 
                subparagraph (A) or (E), then--
                            [(i) the plan must include a 
                        description of (I) the criteria for 
                        determining eligibility of individuals 
                        in the group for such medical 
                        assistance, (II) the amount, duration, 
                        and scope of medical assistance made 
                        available to individuals in the group, 
                        and (III) the single standard to be 
                        employed in determining income and 
                        resource eligibility for all such 
                        groups, and the methodology to be 
                        employed in determining such 
                        eligibility, which shall be no more 
                        restrictive than the methodology which 
                        would be employed under the 
                        supplemental security income program in 
                        the case of groups consisting of aged, 
                        blind, or disabled individuals in a 
                        State in which such program is in 
                        effect, and which shall be no more 
                        restrictive than the methodology which 
                        would be employed under the appropriate 
                        State plan (described in subparagraph 
                        (A)(i)) to which such group is most 
                        closely categorically related in the 
                        case of other groups;
                            [(ii) the plan must make available 
                        medical assistance--
                                    [(I) to individuals under 
                                the age of 18 who (but for 
                                income and resources) would be 
                                eligible for medical assistance 
                                as an individual described in 
                                subparagraph (A)(i), and
                                    [(II) to pregnant women, 
                                during the course of their 
                                pregnancy, who (but for income 
                                and resources) would be 
                                eligible for medical assistance 
                                as an individual described in 
                                subparagraph (A);
                            [(iii) such medical assistance must 
                        include (I) with respect to children 
                        under 18 and individuals entitled to 
                        institutional services, ambulatory 
                        services, and (II) with respect to 
                        pregnant women, prenatal care and 
                        delivery services; and
                            [(iv) if such medical assistance 
                        includes services in institutions for 
                        mental diseases or in an intermediate 
                        care facility for the mentally retarded 
                        (or both) for any such group, it also 
                        must include for all groups covered at 
                        least the care and services listed in 
                        paragraphs (1) through (5) and (17) of 
                        section 1905(a) or the care and 
                        services listed in any 7 of the 
                        paragraphs numbered (1) through (24) of 
                        such section;
                    [(D) for the inclusion of home health 
                services for any individual who, under the 
                State plan, is entitled to nursing facility 
                services;
                    [(E)(i) for making medical assistance 
                available for medicare cost-sharing (as defined 
                in section 1905(p)(3)) for qualified medicare 
                beneficiaries described in section 1905(p)(1);
                    [(ii) for making medical assistance 
                available for payment of medicare cost-sharing 
                described in section 1905(p)(3)(A)(i) for 
                qualified disabled and working individuals 
                described in section 1905(s); and
                    [(iii) for making medical assistance 
                available for medicare cost sharing described 
                in section 1905(p)(3)(A)(ii) subject to section 
                1905(p)(4), for individuals who would be 
                qualified medicare beneficiaries described in 
                section 1905(p)(1) but for the fact that their 
                income exceeds the income level established by 
                the State under section 1905(p)(2) but is less 
                than 110 percent in 1993 and 1994, and 120 
                percent in 1995 and years thereafter of the 
                official poverty line (referred to in such 
                section) for a family of the size involved; and
                    [(F) at the option of a State, for making 
                medical assistance available for COBRA premiums 
                (as defined in subsection (u)(2)) for qualified 
                COBRA continuation beneficiaries described in 
                section 1902(u)(1);
        except that (I) the making available of the services 
        described in paragraph (4), (14), or (16) of section 
        1905(a) to individuals meeting the age requirements 
        prescribed therein shall not, by reason of this 
        paragraph (10), require the making available of any 
        such services, or the making available of such services 
        of the same amount, duration, and scope, to individuals 
        of any other ages, (II) the making available of 
        supplementary medical insurance benefits under part B 
        of title XVIII to individuals eligible therefor (either 
        pursuant to an agreement entered into under section 
        1843 or by reason of the payment of premiums under such 
        title by the State agency on behalf of such 
        individuals), or provision for meeting part or all of 
        the cost of deductibles, cost sharing, or similar 
        charges under part B of title XVIII for individuals 
        eligible for benefits under such part, shall not, by 
        reason of this paragraph (10), require the making 
        available of any such benefits, or the making available 
        of services of the same amount, duration, and scope, to 
        any other individuals, (III) the making available of 
        medical assistance equal in amount, duration, and scope 
        to the medical assistance made available to individuals 
        described in clause (A) to any classification of 
        individuals approved by the Secretary with respect to 
        whom there is being paid, or who are eligible, or would 
        be eligible if they were not in a medical institution, 
        to have paid with respect to them, a State 
        supplementary payment shall not, by reason of this 
        paragraph (10), require the making available of any 
        such assistance, or the making available of such 
        assistance of the same amount, duration, and scope, to 
        any other individuals not described in clause (A), (IV) 
        the imposition of a deductible, cost sharing, or 
        similar charge for any item or service furnished to an 
        individual not eligible for the exemption under section 
        1916(a)(2) or (b)(2) shall not require the imposition 
        of a deductible, cost sharing, or similar charge for 
        the same item or service furnished to an individual who 
        is eligible for such exemption, (V) the making 
        available to pregnant women covered under the plan of 
        services relating to pregnancy (including prenatal, 
        delivery, and postpartum services) or to any other 
        condition which may complicate pregnancy shall not, by 
        reason of this paragraph (10), require the making 
        available of such services, or the making available of 
        such services of the same amount, duration, and scope, 
        to any other individuals, provided such services are 
        made available (in the same amount, duration, and 
        scope) to all pregnant women covered under the State 
        plan, (VI) with respect to the making available of 
        medical assistance for hospice care to terminally ill 
        individuals who have made a voluntary election 
        described in section 1905(o) to receive hospice care 
        instead of medical assistance for certain other 
        services, such assistance may not be made available in 
        an amount, duration, or scope less than that provided 
        under title XVIII, and the making available of such 
        assistance shall not, by reason of this paragraph (10), 
        require the making available of medical assistance for 
        hospice care to other individuals or the making 
        available of medical assistance for services waived by 
        such terminally ill individuals, (VII) the medical 
        assistance made available to an individual described in 
        subsection (l)(1)(A) who is eligible for medical 
        assistance only because of subparagraph (A)(i)(IV) or 
        (A)(ii)(IX) shall be limited to medical assistance for 
        services related to pregnancy (including prenatal, 
        delivery, postpartum, and family planning services) and 
        to other conditions which may complicate pregnancy, 
        (VIII) the medical assistance made available to a 
        qualified medicare beneficiary described in section 
        1905(p)(1) who is only entitled to medical assistance 
        because the individual is such a beneficiary shall be 
        limited to medical assistance for medicare cost-sharing 
        (described in section 1905(p)(3)), subject to the 
        provisions of subsection (n) and section 1916(b), (IX) 
        the making available of respiratory care services in 
        accordance with subsection (e)(9) shall not, by reason 
        of this paragraph (10), require the making available of 
        such services, or the making available of such services 
        of the same amount, duration, and scope, to any 
        individuals not included under subsection (e)(9)(A), 
        provided such services are made available (in the same 
        amount, duration, and scope) to all individuals 
        described in such subsection, (X) if the plan provides 
        for any fixed durational limit on medical assistance 
        for inpatient hospital services (whether or not such a 
        limit varies by medical condition or diagnosis), the 
        plan must establish exceptions to such a limit for 
        medically necessary inpatient hospital services 
        furnished with respect to individuals under one year of 
        age in a hospital defined under the State plan, 
        pursuant to section 1923(a)(1)(A), as a 
        disproportionate share hospital and subparagraph (B) 
        (relating to comparability) shall not be construed as 
        requiring such an exception for other individuals, 
        services, or hospitals, (XI) the making available of 
        medical assistance to cover the costs of premiums, 
        deductibles, coinsurance, and other cost-sharing 
        obligations for certain individuals for private health 
        coverage as described in section 1906 shall not, by 
        reason of paragraph (10), require the making available 
        of any such benefits or the making available of 
        services of the same amount, duration, and scope of 
        such private coverage to any other individuals, (XII) 
        the medical assistance made available to an individual 
        described in subsection (u)(1) who is eligible for 
        medical assistance only because of subparagraph (F) 
        shall be limited to medical assistance for COBRA 
        continuation premiums (as defined in subsection 
        (u)(2)), and (XIII) the medical assistance made 
        available to an individual described in subsection 
        (z)(1) who is eligible for medical assistance only 
        because of subparagraph (A)(ii)(XII) shall be limited 
        to medical assistance for TB-related services 
        (described in subsection (z)(2));
            [(11)(A) provide for entering into cooperative 
        arrangements with the State agencies responsible for 
        administering or supervising the administration of 
        health services and vocational rehabilitation services 
        in the State looking toward maximum utilization of such 
        services in the provision of medical assistance under 
        the plan, (B) provide, to the extent prescribed by the 
        Secretary, for entering into agreements, with any 
        agency, institution, or organization receiving payments 
        under (or through an allotment under) title V, (i) 
        providing for utilizing such agency, institution, or 
        organization in furnishing care and services which are 
        available under such title or allotment and which are 
        included in the State plan approved under this section 
        (ii) making such provision as may be appropriate for 
        reimbursing such agency, institution, or organization 
        for the cost of any such care and services furnished 
        any individual for which payment would otherwise be 
        made to the State with respect to the individual under 
        section 1903, and (iii) providing for coordination of 
        information and education on pediatric vaccinations and 
        delivery of immunization services, and (C) provide for 
        coordination of the operations under this title, 
        including the provision of information and education on 
        pediatric vaccinations and the delivery of immunization 
        services, with the State's operations under the special 
        supplemental nutrition program for women, infants, and 
        children under section 17 of the Child Nutrition Act of 
        1966;
            [(12) provide that, in determining whether an 
        individual is blind, there shall be an examination by a 
        physician skilled in the diseases of the eye or by an 
        optometrist, whichever the individual may select;
            [(13) provide--
                    [(A) for payment (except where the State 
                agency is subject to an order under section 
                1914) of the hospital services, nursing 
                facility services, and services in an 
                intermediate care facility for the mentally 
                retarded provided under the plan through the 
                use of rates (determined in accordance with 
                methods and standards developed by the State 
                which, in the case of nursing facilities, take 
                into account the costs (including the costs of 
                services required to attain or maintain the 
                highest practicable physical, mental, and 
                psychosocial well-being of each resident 
                eligible for benefits under this title) of 
                complying with subsections (b) (other than 
                paragraph (3)(F) thereof), (c), and (d) of 
                section 1919 and provide (in the case of a 
                nursing facility with a waiver under section 
                1919(b)(4)(C)(ii)) for an appropriate reduction 
                to take into account the lower costs (if any) 
                of the facility for nursing care, and which, in 
                the case of hospitals, take into account the 
                situation of hospitals which serve a 
                disproportionate number of low income patients 
                with special needs and provide, in the case of 
                hospital patients receiving services at an 
                inappropriate level of care (under conditions 
                similar to those described in section 
                1861(v)(1)(G)), for lower reimbursement rates 
                reflecting the level of care actually received 
                (in a manner consistent with section 
                1861(v)(1)(G)) which the State finds, and makes 
                assurances satisfactory to the Secretary, are 
                reasonable and adequate to meet the costs which 
                must be incurred by efficiently and 
                economically operated facilities in order to 
                provide care and services in conformity with 
                applicable State and Federal laws, regulations, 
                and quality and safety standards and to assure 
                that individuals eligible for medical 
                assistance have reasonable access (taking into 
                account geographic location and reasonable 
                travel time) to inpatient hospital services of 
                adequate quality; and such State makes further 
                assurances, satisfactory to the Secretary, for 
                the filing of uniform cost reports by each 
                hospital, nursing facility, and intermediate 
                care facility for the mentally retarded and 
                periodic audits by the State of such reports;
                    [(B) that the State shall provide 
                assurances satisfactory to the Secretary that 
                the payment methodology utilized by the State 
                for payments to hospitals can reasonably be 
                expected not to increase such payments, solely 
                as a result of a change of ownership, in excess 
                of the increase which would result from the 
                application of section 1861(v)(1)(O);
                    [(C) that the State shall provide 
                assurances satisfactory to the Secretary that 
                the valuation of capital assets, for purposes 
                of determining payment rates for nursing 
                facilities and for intermediate care facilities 
                for the mentally retarded, will not be 
                increased (as measured from the date of 
                acquisition by the seller to the date of the 
                change of ownership), solely as a result of a 
                change of ownership, by more than the lesser 
                of--
                            [(i) one-half of the percentage 
                        increase (as measured over the same 
                        period of time, or, if necessary, as 
                        extrapolated retrospectively by the 
                        Secretary) in the Dodge Construction 
                        Systems Costs for Nursing Homes, 
                        applied in the aggregate with respect 
                        to those facilities which have 
                        undergone a change of ownership during 
                        the fiscal year, or
                            [(ii) one-half of the percentage 
                        increase (as measured over the same 
                        period of time) in the Consumer Price 
                        Index for All Urban Consumers (United 
                        States city average);
                    [(D) for payment for hospice care in 
                amounts no lower than the amounts, using the 
                same methodology, used under part A of title 
                XVIII and for payment of amounts under section 
                1905(o)(3); except that in the case of hospice 
                care which is furnished to an individual who is 
                a resident of a nursing facility or 
                intermediate care facility for the mentally 
                retarded, and who would be eligible under the 
                plan for nursing facility services or services 
                in an intermediate care facility for the 
                mentally retarded if he had not elected to 
                receive hospice care, there shall be paid an 
                additional amount, to take into account the 
                room and board furnished by the facility, equal 
                to at least 95 percent of the rate that would 
                have been paid by the State under the plan for 
                facility services in that facility for that 
                individual;
                    [(E) for payment for services described in 
                clause (B) or (C) of section 1905(a)(2) under 
                the plan, of 100 percent of costs which are 
                reasonable and related to the cost of 
                furnishing such services or based on such other 
                tests of reasonableness, as the Secretary 
                prescribes in regulations under section 
                1833(a)(3), or, in the case of services to 
                which those regulations do not apply, on the 
                same methodology used under section 1833(a)(3); 
                and
                    [(F) for payment for home and community 
                care (as defined in section 1929(a) and 
                provided under such section) through rates 
                which are reasonable and adequate to meet the 
                costs of providing care, efficiently and 
                economically, in conformity with applicable 
                State and Federal laws, regulations, and 
                quality and safety standards;
            [(14) provide that enrollment fees, premiums, or 
        similar charges, and deductions, cost sharing, or 
        similar charges, may be imposed only as provided in 
        section 1916;
            [(16) provide for inclusion, to the extent required 
        by regulations prescribed by the Secretary, of 
        provisions (conforming to such regulations) with 
        respect to the furnishing of medical assistance under 
        the plan to individuals who are residents of the State 
        but are absent therefrom;
            [(17) except as provided in subsections (l)(3), 
        (m)(3), and (m)(4), include reasonable standards (which 
        shall be comparable for all groups and may, in 
        accordance with standards prescribed by the Secretary, 
        differ with respect to income levels, but only in the 
        case of applicants or recipients of assistance under 
        the plan who are not receiving aid or assistance under 
        any plan of the State approved under title I, X, XIV, 
        or XVI, or part A of title IV, and with respect to whom 
        supplemental security income benefits are not being 
        paid under title XVI, based on the variations between 
        shelter costs in urban areas and in rural areas) for 
        determining eligibility for and the extent of medical 
        assistance under the plan which (A) are consistent with 
        the objectives of this title, (B) provide for taking 
        into account only such income and resources as are, as 
        determined in accordance with standards prescribed by 
        the Secretary, available to the applicant or recipient 
        and (in the case of any applicant or recipient who 
        would, except for income and resources, be eligible for 
        aid or assistance in the form of money payments under 
        any plan of the State approved under title I, X, XIV, 
        or XVI, or part A of title IV, or to have paid with 
        respect to him supplemental security income benefits 
        under title XVI) as would not be disregarded (or set 
        aside for future needs) in determining his eligibility 
        for such aid, assistance, or benefits, (C) provide for 
        reasonable evaluation of any such income or resources, 
        and (D) do not take into account the financial 
        responsibility of any individual for any applicant or 
        recipient of assistance under the plan unless such 
        applicant or recipient is such individual's spouse or 
        such individual's child who is under age 21 or (with 
        respect to States eligible to participate in the State 
        program established under title XVI), is blind or 
        permanently and totally disabled, or is blind or 
        disabled as defined in section 1614 (with respect to 
        States which are not eligible to participate in such 
        program); and provide for flexibility in the 
        application of such standards with respect to income by 
        taking into account, except to the extent prescribed by 
        the Secretary, the costs (whether in the form of 
        insurance premiums, payments made to the State under 
        section 1903(f)(2)(B), or otherwise and regardless of 
        whether such costs are reimbursed under another public 
        program of the State or political subdivision thereof) 
        incurred for medical care or for any other type of 
        remedial care recognized under State law;
            [(18) comply with the provisions of section 1917 
        with respect to liens, adjustments and recoveries of 
        medical assistance correctly paid, transfers of assets, 
        and treatment of certain trusts;
            [(19) provide such safeguards as may be necessary 
        to assure that eligibility for care and services under 
        the plan will be determined, and such care and services 
        will be provided, in a manner consistent with 
        simplicity of administration and the best interests of 
        the recipients;
            [(20) if the State plan includes medical assistance 
        in behalf of individuals 65 years of age or older who 
        are patients in institutions for mental diseases--
                    [(A) provide for having in effect such 
                agreements or other arrangements with State 
                authorities concerned with mental diseases, 
                and, where appropriate, with such institutions, 
                as may be necessary for carrying out the State 
                plan, including arrangements for joint planning 
                and for development of alternate methods of 
                care, arrangements providing assurance of 
                immediate readmittance to institutions where 
                needed for individuals under alternate plans of 
                care, and arrangements providing for access to 
                patients and facilities, for furnishing 
                information, and for making reports;
                    [(B) provide for an individual plan for 
                each such patient to assure that the 
                institutional care provided to him is in his 
                best interests, including, to that end, 
                assurances that there will be initial and 
                periodic review of his medical and other needs, 
                that he will be given appropriate medical 
                treatment within the institution, and that 
                there will be a periodic determination of his 
                need for continued treatment in the 
                institution; and
                    [(C) provide for the development of 
                alternate plans of care, making maximum 
                utilization of available resources, for 
                recipients 65 years of age or older who would 
                otherwise need care in such institutions, 
                including appropriate medical treatment and 
                other aid or assistance; for services referred 
                to in section 3(a)(4)(A)(i) and (ii) or section 
                1603(a)(4)(A)(i) and (ii) which are appropriate 
                for such recipients and for such patients; and 
                for methods of administration necessary to 
                assure that the responsibilities of the State 
                agency under the State plan with respect to 
                such recipients and such patients will be 
                effectively carried out;
            [(21) if the State plan includes medical assistance 
        in behalf of individuals 65 years of age or older who 
        are patients in public institutions for mental 
        diseases, show that the State is making satisfactory 
        progress toward developing and implementing a 
        comprehensive mental health program, including 
        provision for utilization of community mental health 
        centers, nursing facilities, and other alternatives to 
        care in public institutions for mental diseases;
            [(22) include descriptions of (A) the kinds and 
        numbers of professional medical personnel and 
        supporting staff that will be used in the 
        administration of the plan and of the responsibilities 
        they will have, (B) the standards, for private or 
        public institutions in which recipients of medical 
        assistance under the plan may receive care or services, 
        that will be utilized by the State authority or 
        authorities responsible for establishing and 
        maintaining such standards, (C) the cooperative 
        arrangements with State health agencies and State 
        vocational rehabilitation agencies entered into with a 
        view to maximum utilization of and coordination of the 
        provision of medical assistance with the services 
        administered or supervised by such agencies, and (D) 
        other standards and methods that the State will use to 
        assure that medical or remedial care and services 
        provided to recipients of medical assistance are of 
        high quality;
            [(23) except as provided in subsection (g) and in 
        section 1915 and except in the case of Puerto Rico, the 
        Virgin Islands, and Guam, provide that (A) any 
        individual eligible for medical assistance (including 
        drugs) may obtain such assistance from any institution, 
        agency, community pharmacy, or person, qualified to 
        perform the service or services required (including an 
        organization which provides such services, or arranges 
        for their availability, on a prepayment basis), who 
        undertakes to provide him such services, and (B) an 
        enrollment of an individual eligible for medical 
        assistance in a primary care case-management system 
        (described in section 1915(b)(1)), a health maintenance 
        organization, or a similar entity shall not restrict 
        the choice of the qualified person from whom the 
        individual may receive services under section 
        1905(a)(4)(C);
            [(24) effective July 1, 1969, provide for 
        consultative services by health agencies and other 
        appropriate agencies of the State to hospitals, nursing 
        facilities, home health agencies, clinics, 
        laboratories, and such other institutions as the 
        Secretary may specify in order to assist them (A) to 
        qualify for payments under this Act, (B) to establish 
        and maintain such fiscal records as may be necessary 
        for the proper and efficient administration of this 
        Act, and (C) to provide information needed to determine 
        payments due under this Act on account of care and 
        services furnished to individuals;
            [(25) provide--
                    [(A) that the State or local agency 
                administering such plan will take all 
                reasonable measures to ascertain the legal 
                liability of third parties (including health 
                insurers, group health plans (as defined in 
                section 607(1) of the Employee Retirement 
                Income Security Act of 1974), service benefit 
                plans, and health maintenance organizations) to 
                pay for care and services available under the 
                plan, including--
                            [(i) the collection of sufficient 
                        information (including the use of 
                        information collected by the Medicare 
                        and Medicaid Coverage Data Bank under 
                        section 1144 and any additional 
                        measures as specified by the Secretary 
                        in regulations) to enable the State to 
                        pursue claims against such third 
                        parties, with such information being 
                        collected at the time of any 
                        determination or redetermination of 
                        eligibility for medical assistance, and
                            [(ii) the submission to the 
                        Secretary of a plan (subject to 
                        approval by the Secretary) for pursuing 
                        claims against such third parties, 
                        which plan shall--
                                    [(I) be integrated with, 
                                and be monitored as a part of 
                                the Secretary's review of, the 
                                State's mechanized claims 
                                processing and information 
                                retrieval system under section 
                                1903(r), and
                                    [(II) be subject to the 
                                provisions of section 
                                1903(r)(4) relating to 
                                reductions in Federal payments 
                                for failure to meet conditions 
                                of approval, but shall not be 
                                subject to any other financial 
                                penalty as a result of any 
                                other monitoring, quality 
                                control, or auditing 
                                requirements;
                    [(B) that in any case where such a legal 
                liability is found to exist after medical 
                assistance has been made available on behalf of 
                the individual and where the amount of 
                reimbursement the State can reasonably expect 
                to recover exceeds the costs of such recovery, 
                the State or local agency will seek 
                reimbursement for such assistance to the extent 
                of such legal liability;
                    [(C) that in the case of an individual who 
                is entitled to medical assistance under the 
                State plan with respect to a service for which 
                a third party is liable for payment, the person 
                furnishing the service may not seek to collect 
                from the individual (or any financially 
                responsible relative or representative of that 
                individual) payment of an amount for that 
                service (i) if the total of the amount of the 
                liabilities of third parties for that service 
                is at least equal to the amount payable for 
                that service under the plan (disregarding 
                section 1916), or (ii) in an amount which 
                exceeds the lesser of (I) the amount which may 
                be collected under section 1916, or (II) the 
                amount by which the amount payable for that 
                service under the plan (disregarding section 
                1916) exceeds the total of the amount of the 
                liabilities of third parties for that service;
                    [(D) that a person who furnishes services 
                and is participating under the plan may not 
                refuse to furnish services to an individual 
                (who is entitled to have payment made under the 
                plan for the services the person furnishes) 
                because of a third party's potential liability 
                for payment for the service;
                    [(E) that in the case of prenatal or 
                preventive pediatric care (including early and 
                periodic screening and diagnosis services under 
                section 1905(a)(4)(B)) covered under the State 
                plan, the State shall--
                            [(i) make payment for such service 
                        in accordance with the usual payment 
                        schedule under such plan for such 
                        services without regard to the 
                        liability of a third party for payment 
                        for such services; and
                            [(ii) seek reimbursement from such 
                        third party in accordance with 
                        subparagraph (B);
                    [(F) that in the case of any services 
                covered under such plan which are provided to 
                an individual on whose behalf child support 
                enforcement is being carried out by the State 
                agency under part D of title IV of this Act, 
                the State shall--
                            [(i) make payment for such service 
                        in accordance with the usual payment 
                        schedule under such plan for such 
                        services without regard to any third-
                        party liability for payment for such 
                        services, if such third-party liability 
                        is derived (through insurance or 
                        otherwise) from the parent whose 
                        obligation to pay support is being 
                        enforced by such agency, if payment has 
                        not been made by such third party 
                        within 30 days after such services are 
                        furnished;
                            [(ii) seek reimbursement from such 
                        third party in accordance with 
                        subparagraph (B);
                    [(G) that the State plan shall meet the 
                requirements of section 1906 (relating to 
                enrollment of individuals under group health 
                plans in certain cases);
                    [(H) that the State prohibits any health 
                insurer (including a group health plan, as 
                defined in section 607(1) of the Employee 
                Retirement Income Security Act of 1974, a 
                service benefit plan, and a health maintenance 
                organization), in enrolling an individual or in 
                making any payments for benefits to the 
                individual or on the individual's behalf, from 
                taking into account that the individual is 
                eligible for or is provided medical assistance 
                under a plan under this title for such State, 
                or any other State; and
                    [(I) that to the extent that payment has 
                been made under the State plan for medical 
                assistance in any case where a third party has 
                a legal liability to make payment for such 
                assistance, the State has in effect laws under 
                which, to the extent that payment has been made 
                under the State plan for medical assistance for 
                health care items or services furnished to an 
                individual, the State is considered to have 
                acquired the rights of such individual to 
                payment by any other party for such health care 
                items or services;
            [(26) if the State plan includes medical assistance 
        for inpatientmental hospital services, provide--
                    [(A) with respect to each patient receiving 
                such services, for a regular program of medical 
                review (including medical evaluation) of his 
                need for such services, and for a written plan 
                of care;
                    [(B) for periodic inspections to be made in 
                all mental institutions within the State by one 
                or more medical review teams (composed of 
                physicians and other appropriate health and 
                social service personnel) of the care being 
                provided to each person receiving medical 
                assistance, including (i) the adequacy of the 
                services available to meet his current health 
                needs and promote his maximum physical well-
                being, (ii) the necessity and desirability of 
                his continued placement in the institution, and 
                (iii) the feasibility of meeting his health 
                care needs through alternative institutional or 
                noninstitutional services; and
                    [(C) for full reports to the State agency 
                by each medical review team of the findings of 
                each inspection under subparagraph (B), 
                together with any recommendations;
            [(27) provide for agreements with every person or 
        institution providing services under the State plan 
        under which such person or institution agrees (A) to 
        keep such records as are necessary fully to disclose 
        the extent of the services provided to individuals 
        receiving assistance under the State plan, and (B) to 
        furnish the State agency or the Secretary with such 
        information, regarding any payments claimed by such 
        person or institution for providing services under the 
        State plan, as the State agency or the Secretary may 
        from time to time request;
            [(28) provide--
                    [(A) that any nursing facility receiving 
                payments under such plan must satisfy all the 
                requirements of subsections (b) through (d) of 
                section 1919 as they apply to such facilities;
                    [(B) for including in ``nursing facility 
                services'' at least the items and services 
                specified (or deemed to be specified) by the 
                Secretary under section 1919(f)(7) and making 
                available upon request a description of the 
                items and services so included;
                    [(C) for procedures to make available to 
                the public the data and methodology used in 
                establishing payment rates for nursing 
                facilities under this title; and
                    [(D) for compliance (by the date specified 
                in the respective sections) with the 
                requirements of--
                            [(i) section 1919(e);
                            [(ii) section 1919(g) (relating to 
                        responsibility for survey and 
                        certification of nursing facilities); 
                        and
                            [(iii) sections 1919(h)(2)(B) and 
                        1919(h)(2)(D) (relating to 
                        establishment and application of 
                        remedies);
            [(29) include a State program which meets the 
        requirements set forth in section 1908, for the 
        licensing of administrators of nursing homes;
            [(30)(A) provide such methods and procedures 
        relating to the utilization of, and the payment for, 
        care and services available under the plan (including 
        but not limited to utilization review plans as provided 
        for in section 1903(i)(4)) as may be necessary to 
        safeguard against unnecessary utilization of such care 
        and services and to assure that payments are consistent 
        with efficiency, economy, and quality of care and are 
        sufficient to enlist enough providers so that care and 
        services are available under the plan at least to the 
        extent that such care and services are available to the 
        general population in the geographic area ;
            [(B) provide, under the program described in 
        subparagraph (A), that--
                    [(i) each admission to a hospital, 
                intermediate care facility for the mentally 
                retarded, or hospital for mental diseases is 
                reviewed or screened in accordance with 
                criteria established by medical and other 
                professional personnel who are not themselves 
                directly responsible for the care of the 
                patient involved, and who do not have a 
                significant financial interest in any such 
                institution and are not, except in the case of 
                a hospital, employed by the institution 
                providing the care involved, and
                    [(ii) the information developed from such 
                review or screening, along with the data 
                obtained from prior reviews of the necessity 
                for admission and continued stay of patients by 
                such professional personnel, shall be used as 
                the basis for establishing the size and 
                composition of the sample of admissions to be 
                subject to review and evaluation by such 
                personnel, and any such sample may be of any 
                size up to 100 percent of all admissions and 
                must be of sufficient size to serve the purpose 
                of (I) identifying the patterns of care being 
                provided and the changes occurring over time in 
                such patterns so that the need for modification 
                may be ascertained, and (II) subjecting 
                admissions to early or more extensive review 
                where information indicates that such 
                consideration is warranted to a hospital, 
                intermediate care facility for the mentally 
                retarded, or hospital for mental diseases; and
            [(C) use a utilization and quality control peer 
        review organization (under part B of title XI), an 
        entity which meets the requirements of section 1152, as 
        determined by the Secretary, or a private accreditation 
        body to conduct (on an annual basis) an independent, 
        external review of the quality of services furnished 
        under each contract under section 1903(m), with the 
        results of such review made available to the State and, 
        upon request, to the Secretary, the Inspector General 
        in the Department of Health and Human Services, and the 
        Comptroller General;
            [(31) with respect to services in an intermediate 
        care facility for the mentally retarded (where the 
        State plan includes medical assistance for such 
        services) provide--
                    [(A) with respect to each patient receiving 
                such services, for a written plan of care, 
                prior to admission to or authorization of 
                benefits in such facility, in accordance with 
                regulations of the Secretary, and for a regular 
                program of independent professional review 
                (including medical evaluation) which shall 
                periodically review his need for such services;
                    [(B) with respect to each intermediate care 
                facility for the mentally retarded within the 
                State, for periodic onsite inspections of the 
                care being provided to each person receiving 
                medical assistance, by one or more independent 
                professional review teams (composed of a 
                physician or registered nurse and other 
                appropriate health and social service 
                personnel), including with respect to each such 
                person (i) the adequacy of the services 
                available to meet his current health needs and 
                promote his maximum physical well-being, (ii) 
                the necessity and desirability of his continued 
                placement in the facility, and (iii) the 
                feasibility of meeting his health care needs 
                through alternative institutional or 
                noninstitutional services; and
                    [(C) for full reports to the State agency 
                by each independent professional review team of 
                the findings of each inspection under 
                subparagraph (B), together with any 
                recommendations;
            [(32) provide that no payment under the plan for 
        any care or service provided to an individual shall be 
        made to anyone other than such individual or the person 
        or institution providing such care or service, under an 
        assignment or power of attorney or otherwise; except 
        that--
                    [(A) in the case of any care or service 
                provided by a physician, dentist, or other 
                individual practitioner, such payment may be 
                made (i) to the employer of such physician, 
                dentist, or other practitioner if such 
                physician, dentist, or practitioner is required 
                as a condition of his employment to turn over 
                his fee for such care or service to his 
                employer, or (ii) (where the care or service 
                was provided in a hospital, clinic, or other 
                facility) to the facility in which the care or 
                service was provided if there is a contractual 
                arrangement between such physician, dentist, or 
                practitioner and such facility under which such 
                facility submits the bill for such care or 
                service;
                    [(B) nothing in this paragraph shall be 
                construed (i) to prevent the making of such a 
                payment in accordance with an assignment from 
                the person or institution providing the care or 
                service involved if such assignment is made to 
                a governmental agency or entity or is 
                established by or pursuant to the order of a 
                court of competent jurisdiction, or (ii) to 
                preclude an agent of such person or institution 
                from receiving any such payment if (but only 
                if) such agent does so pursuant to an agency 
                agreement under which the compensation to be 
                paid to the agent for his services for or in 
                connection with the billing or collection of 
                payments due such person or institution under 
                the plan is unrelated (directly or indirectly) 
                to the amount of such payments or the billings 
                therefor, and is not dependent upon the actual 
                collection of any such payment;
                    [(C) in the case of services furnished 
                (during a period that does not exceed 14 
                continuous days in the case of an informal 
                reciprocal arrangement or 90 continuous days 
                (or such longer period as the Secretary may 
                provide) in the case of an arrangement 
                involving per diem or other fee-for-time 
                compensation) by, or incident to the services 
                of, one physician to the patients of another 
                physician who submits the claim for such 
                services, payment shall be made to the 
                physician submitting the claim (as if the 
                services were furnished by, or incident to, the 
                physician's services), but only if the claim 
                identifies (in a manner specified by the 
                Secretary) the physician who furnished the 
                services; and
                    [(D) in the case of payment for a childhood 
                vaccine administered before October 1, 1994, to 
                individuals entitled to medical assistance 
                under the State plan, the State plan may make 
                payment directly to the manufacturer of the 
                vaccine under a voluntary replacement program 
                agreed to by the State pursuant to which the 
                manufacturer (i) supplies doses of the vaccine 
                to providers administering the vaccine, (ii) 
                periodically replaces the supply of the 
                vaccine, and (iii) charges the State the 
                manufacturer's price to the Centers for Disease 
                Control and Prevention for the vaccine so 
                administered (which price includes a reasonable 
                amount to cover shipping and the handling of 
                returns);
            [(33) provide--
                    [(A) that the State health agency, or other 
                appropriate State medical agency, shall be 
                responsible for establishing a plan, consistent 
                with regulations prescribed by the Secretary, 
                for the review by appropriate professional 
                health personnel of the appropriateness and 
                quality of care and services furnished to 
                recipients of medical assistance under the plan 
                in order to provide guidance with respect 
                thereto in the administration of the plan to 
                the State agency established or designated 
                pursuant to paragraph (5) and, where 
                applicable, to the State agency described in 
                the second sentence of this subsection; and
                    [(B) that, except as provided in section 
                1919(g), the State or local agency utilized by 
                the Secretary for the purpose specified in the 
                first sentence of section 1864(a), or, if such 
                agency is not the State agency which is 
                responsible for licensing health institutions, 
                the State agency responsible for such 
                licensing, will perform for the State agency 
                administering or supervising the administration 
                of the plan approved under this title the 
                function of determining whether institutions 
                and agencies meet the requirements for 
                participation in the program under such plan, 
                except that, if the Secretary has cause to 
                question the adequacy of such determinations, 
                the Secretary is authorized to validate State 
                determinations and, on that basis, make 
                independent and binding determinations 
                concerning the extent to which individual 
                institutions and agencies meet the requirements 
                for participation;
            [(34) provide that in the case of any individual 
        who has been determined to be eligible for medical 
        assistance under the plan, such assistance will be made 
        available to him for care and services included under 
        the plan and furnished in or after the third month 
        before the month in which he made application (or 
        application was made on his behalf in the case of a 
        deceased individual) for such assistance if such 
        individual was (or upon application would have been) 
        eligible for such assistance at the time such care and 
        services were furnished;
            [(35) provide that any disclosing entity (as 
        defined in section 1124(a)(2)) receiving payments under 
        such plan complies with the requirements of section 
        1124;
            [(36) provide that within 90 days following the 
        completion of each survey of any health care facility, 
        laboratory, agency, clinic, or organization, by the 
        appropriate State agency described in paragraph (9), 
        such agency shall (in accordance with regulations of 
        the Secretary) make public in readily available form 
        and place the pertinent findings of each such survey 
        relating to the compliance of each such health care 
        facility, laboratory, clinic, agency, or organization 
        with (A) the statutory conditions of participation 
        imposed under this title, and (B) the major additional 
        conditions which the Secretary finds necessary in the 
        interest of health and safety of individuals who are 
        furnished care or services by any such facility, 
        laboratory, clinic, agency, or organization;
            [(37) provide for claims payment procedures which 
        (A) ensure that 90 per centum of claims for payment 
        (for which no further written information or 
        substantiation is required in order to make payment) 
        made for services covered under the plan and furnished 
        by health care practitioners through individual or 
        group practices or through shared health facilities are 
        paid within 30 days of the date of receipt of such 
        claims and that 99 per centum of such claims are paid 
        within 90 days of the date of receipt of such claims, 
        and (B) provide for procedures of prepayment and 
        postpayment claims review, including review of 
        appropriate data with respect to the recipient and 
        provider of a service and the nature of the service for 
        which payment is claimed, to ensure the proper and 
        efficient payment of claims and management of the 
        program;
            [(38) require that an entity (other than an 
        individual practitioner or a group of practitioners) 
        that furnishes, or arranges for the furnishing of, 
        items or services under the plan, shall supply (within 
        such period as may be specified in regulations by the 
        Secretary or by the single State agency which 
        administers or supervises the administration of the 
        plan) upon request specifically addressed to such 
        entity by the Secretary or such State agency, the 
        information described in section 1128(b)(9);
            [(39) provide that the State agency shall exclude 
        any specified individual or entity from participation 
        in the program under the State plan for the period 
        specified by the Secretary, when required by him to do 
        so pursuant to section 1128 or section 1128A, and 
        provide that no payment may be made under the plan with 
        respect to any item or service furnished by such 
        individual or entity during such period;
            [(40) require each health services facility or 
        organization which receives payments under the plan and 
        of a type for which a uniform reporting system has been 
        established under section 1121(a) to make reports to 
        the Secretary of information described in such section 
        in accordance with the uniform reporting system 
        (established under such section) for that type of 
        facility or organization;
            [(41) provide that whenever a provider of services 
        or any other person is terminated, suspended, or 
        otherwise sanctioned or prohibited from participating 
        under the State plan, the State agency shall promptly 
        notify the Secretary and, in the case of a physician 
        and notwithstanding paragraph (7), the State medical 
        licensing board of such action;
            [(42) provide that the records of any entity 
        participating in the plan and providing services 
        reimbursable on a cost-related basis will be audited as 
        the Secretary determines to be necessary to insure that 
        proper payments are made under the plan;
            [(43) provide for--
                    [(A) informing all persons in the State who 
                are under the age of 21 and who have been 
                determined to be eligible for medical 
                assistance including services described in 
                section 1905(a)(4)(B), of the availability of 
                early and periodic screening, diagnostic, and 
                treatment services as described in section 
                1905(r) and the need for age-appropriate 
                immunizations against vaccine-preventable 
                diseases,
                    [(B) providing or arranging for the 
                provision of such screening services in all 
                cases where they are requested,
                    [(C) arranging for (directly or through 
                referral to appropriate agencies, 
                organizations, or individuals) corrective 
                treatment the need for which is disclosed by 
                such child health screening services, and
                    [(D) reporting to the Secretary (in a 
                uniform form and manner established by the 
                Secretary, by age group and by basis of 
                eligibility for medical assistance, and by not 
                later than April 1 after the end of each fiscal 
                year, beginning with fiscal year 1990) the 
                following information relating to early and 
                periodic screening, diagnostic, and treatment 
                services provided under the plan during each 
                fiscal year:
                            [(i) the number of children 
                        provided child health screening 
                        services,
                            [(ii) the number of children 
                        referred for corrective treatment (the 
                        need for which is disclosed by such 
                        child health screening services),
                            [(iii) the number of children 
                        receiving dental services, and
                            [(iv) the State's results in 
                        attaining the participation goals set 
                        for the State under section 1905(r);
            [(44) in each case for which payment for inpatient 
        hospital services, services in an intermediate care 
        facility for the mentally retarded, or inpatient mental 
        hospital services is made under the State plan--
                    [(A) a physician (or, in the case of 
                skilled nursing facility services or 
                intermediate care facility services, a 
                physician, or a nurse practitioner or clinical 
                nurse specialist who is not an employee of the 
                facility but is working in collaboration with a 
                physician) certifies at the time of admission, 
                or, if later, the time the individual applies 
                for medical assistance under the State plan 
                (and a physician, a physician assistant under 
                the supervision of a physician, or, in the case 
                of skilled nursing facility services or 
                intermediate care facility services, a 
                physician, or a nurse practitioner or clinical 
                nurse specialist who is not an employee of the 
                facility but is working in collaboration with a 
                physician, recertifies, where such services are 
                furnished over a period of time, in such cases, 
                at least as often as required under section 
                1903(g)(6) (or, in the case of services that 
                are services provided in an intermediate care 
                facility for the mentally retarded, every 
                year), and accompanied by such supporting 
                material, appropriate to the case involved, as 
                may be provided in regulations of the 
                Secretary), that such services are or were 
                required to be given on an inpatient basis 
                because the individual needs or needed such 
                services, and
                    [(B) such services were furnished under a 
                plan established and periodically reviewed and 
                evaluated by a physician, or, in the case of 
                skilled nursing facility services or 
                intermediate care facility services, a 
                physician, or a nurse practitioner or clinical 
                nurse specialist who is not an employee of the 
                facility but is working in collaboration with a 
                physician;
            [(45) provide for mandatory assignment of rights of 
        payment for medical support and other medical care owed 
        to recipients, in accordance with section 1912;
            [(46) provide that information is requested and 
        exchanged for purposes of income and eligibility 
        verification in accordance with a State system which 
        meets the requirements of section 1137 of this Act;
            [(47) at the option of the State, provide for 
        making ambulatory prenatal care available to pregnant 
        women during a presumptive eligibility period in 
        accordance with section 1920;
            [(48) provide a method of making cards evidencing 
        eligibility for medical assistance available to an 
        eligible individual who does not reside in a permanent 
        dwelling or does not have a fixed home or mailing 
        address;
            [(49) provide that the State will provide 
        information and access to certain information 
        respecting sanctions taken against health care 
        practitioners and providers by State licensing 
        authorities in accordance with section 1921;
            [(50) provide, in accordance with subsection (q), 
        for a monthly personal needs allowance for certain 
        institutionalized individuals and couples;
            [(51) meet the requirements of section 1924 
        (relating to protection of community spouses);
            [(52) meet the requirements of section 1925 
        (relating to extension of eligibility for medical 
        assistance);
            [(53) provide--
                    [(A) for notifying in a timely manner all 
                individuals in the State who are determined to 
                be eligible for medical assistance and who are 
                pregnant women, breastfeeding or postpartum 
                women (as defined in section 17 of the Child 
                Nutrition Act of 1966), or children below the 
                age of 5, of the availability of benefits 
                furnished by the special supplemental nutrition 
                program under such section, and
                    [(B) for referring any such individual to 
                the State agency responsible for administering 
                such program;
            [(54) in the case of a State plan that provides 
        medical assistance for covered outpatient drugs (as 
        defined in section 1927(k)), comply with the applicable 
        requirements of section 1927;
            [(55) provide for receipt and initial processing of 
        applications of individuals for medical assistance 
        under subsection (a)(10)(A)(i)(IV), (a)(10)(A)(i)(VI), 
        (a)(10)(A)(i)(VII), or (a)(10)(A)(ii)(IX)--
                    [(A) at locations which are other than 
                those used for the receipt and processing of 
                applications for aid under part A of title IV 
                and which include facilities defined as 
                disproportionate share hospitals under section 
                1923(a)(1)(A) and Federally-qualified health 
                centers described in section 1905(1)(2)(B), and
                    [(B) using applications which are other 
                than those used for applications for aid under 
                such part;
            [(56) provide, in accordance with subsection (s), 
        for adjusted payments for certain inpatient hospital 
        services;
            [(57) provide that each hospital, nursing facility, 
        provider of home health care or personal care services, 
        hospice program, or health maintenance organization (as 
        defined in section 1903(m)(1)(A)) receiving funds under 
        the plan shall comply with the requirements of 
        subsection (w);
            [(58) provide that the State, acting through a 
        State agency, association, or other private nonprofit 
        entity, develop a written description of the law of the 
        State (whether statutory or as recognized by the courts 
        of the State) concerning advance directives that would 
        be distributed by providers or organizations under the 
        requirements of subsection (w);
            [(59) maintain a list (updated not less often than 
        monthly, and containing each physician's unique 
        identifier provided under the system established under 
        subsection (v)) of all physicians who are certified to 
        participate under the State plan;
            [(60) provide that the State agency shall provide 
        assurances satisfactory to the Secretary that the State 
        has in effect the laws relating to medical child 
        support required under section 1908;
            [(61) provide that the State must demonstrate that 
        it operates a medicaid fraud and abuse control unit 
        described in section 1903(q) that effectively carries 
        out the functions and requirements described in such 
        section, as determined in accordance with standards 
        established by the Secretary, unless the State 
        demonstrates to the satisfaction of the Secretary that 
        the effective operation of such a unit in the State 
        would not be cost-effective because minimal fraud 
        exists in connection with the provision of covered 
        services to eligible individuals under the State plan, 
        and that beneficiaries under the plan will be protected 
        from abuse and neglect in connection with the provision 
        of medical assistance under the plan without the 
        existence of such a unit; and
            [(62) provide for a program for the distribution of 
        pediatric vaccines to program-registered providers for 
        the immunization of vaccine-eligible children in 
        accordance with section 1928.
Notwithstanding paragraph (5), if on January 1, 1965, and on 
the date on which a State submits its plan for approval under 
this title, the State agency which administered or supervised 
the administration of the plan of such State approved under 
title X (or title XVI, insofar as it relates to the blind) was 
different from the State agency which administered or 
supervised the administration of the State plan approved under 
title I (or title XVI, insofar as it relates to the aged), the 
State agency which administered or supervised the 
administration of such plan approved under title X (or title 
XVI, insofar as it relates to the blind) may be designated to 
administer or supervise the administration of the portion of 
the State plan for medical assistance which relates to blind 
individuals and a different State agency may be established or 
designated to administer or supervise the administration of the 
rest of the State plan for medical assistance; and in such case 
the part of the plan which each such agency administers, or the 
administration of which each such agency supervises, shall be 
regarded as a separate plan for purposes of this title (except 
for purposes of paragraph (10)). The provisions of paragraphs 
(9)(A), (31), and (33) and of section 1903(i)(4) shall not 
apply to a Christian Science sanatorium operated, or listed and 
certified, by the First Church of Christ, Scientist, Boston, 
Massachusetts.
    [For purposes of paragraph (10) any individual who, for the 
month of August 1972, was eligible for or receiving aid or 
assistance under a State plan approved under title I, X, XIV, 
or XVI, or part A of title IV and who for such month was 
entitled to monthly insurance benefits under title II shall for 
purposes of this title only be deemed to be eligible for 
financial aid or assistance for any month thereafter if such 
individual would have been eligible for financial aid or 
assistance for such month had the increase in monthly insurance 
benefits under title II resulting from enactment of Public Law 
92-336 not been applicable to such individual.
    [The requirement of clause (A) of paragraph (37) with 
respect to a State plan may be waived by the Secretary if he 
finds that the State has exercised good faith in trying to meet 
such requirement. For purposes of this title, any child who 
meets the requirements of paragraph (1) or (2) of section 
473(b) shall be deemed to be a dependent child as defined in 
section 406 and shall be deemed to be a recipient of aid to 
families with dependent children under part A of title IV in 
the State where such child resides. Notwithstanding paragraph 
(10)(B) or any other provision of this subsection, a State plan 
shall provide medical assistance with respect to an alien who 
is not lawfully admitted for permanent residence or otherwise 
permanently residing in the United States under color of law 
only in accordance with section 1903(v).
    [(b) The Secretary shall approve any plan which fulfills 
the conditions specified in subsection (a) of this section, 
except that he shall not approve any plan which imposes, as a 
condition of eligibility for medical assistance under the 
plan--
            [(1) an age requirement of more than 65 years; or
            [(2) any residence requirement which excludes any 
        individual who resides in the State, regardless of 
        whether or not the residence is maintained permanently 
        or at a fixed address; or
            [(3) any citizenship requirement which excludes any 
        citizen of the United States.
    [(c) Notwithstanding subsection (b), the Secretary shall 
not approve any State plan for medical assistance if--
            [(1) the State has in effect, under its plan 
        established under part A of title IV, payment levels 
        that are less than the payment levels in effect under 
        such plan on May 1, 1988; or
            [(2) the State requires individuals described in 
        subsection (l)(1) to apply for benefits under such part 
        as a condition of applying for, or receiving, medical 
        assistance under this title.
    [(d) If a State contracts with an entity which meets the 
requirements of section 1152, as determined by the Secretary, 
for the performance of the quality review functions described 
in subsection (a)(30)(C), or a utilization and quality control 
peer review organization having a contract with the Secretary 
under part B of title XI for the performance of medical or 
utilization review functions (including quality review 
functions described in subsection (a)(30)(C)) required under 
this title of a State plan with respect to specific services or 
providers (or services or providers in a geographic area of the 
State), such requirements shall be deemed to be met for those 
services or providers (or services or providers in that area) 
by delegation to such an entity or organization under the 
contract of the State's authority to conduct such review 
activities if the contract provides for the performance of 
activities not inconsistent with part B of title XI and 
provides for such assurances of satisfactory performance by 
such an entity or organization as the Secretary may prescribe.
    [(e)(1)(A) Notwithstanding any other provision of this 
title, effective January 1, 1974, subject to subparagraph (B) 
each State plan approved under this title must provide that 
each family which was receiving aid pursuant to a plan of the 
State approved under part A of title IV in at least 3 of the 6 
months immediately preceding the month in which such family 
became ineligible for such aid because of increased hours of, 
or increased income from, employment, shall, while a member of 
such family is employed, remain eligible for assistance under 
the plan approved under this title (as though the family was 
receiving aid under the plan approved under part A of title IV) 
for 4 calendar months beginning with the month in which such 
family became ineligible for aid under the plan approved under 
part A of title IV because of income and resources or hours of 
work limitations contained in such plan.
    [(B) Subparagraph (A) shall not apply with respect to 
families that cease to be eligible for aid under part A of 
title IV during the period beginning on April 1, 1990, and 
ending on September 30, 1998. During such period, for 
provisions relating to extension of eligibility for medical 
assistance for certain families who have received aid pursuant 
to a State plan approved under part A of title IV and have 
earned income, see section 1925.
    [(2)(A) In the case of an individual who is enrolled with a 
qualified health maintenance organization (as defined in title 
XIII of the Public Health Service Act or with an entity 
described in paragraph (2)(B)(iii), (2)(E), (2)(G), or (6) of 
section 1903(m) under a contract described in section 
1903(m)(2)(A) or with an eligible organization with a contract 
under section 1876 and who would (but for this paragraph) lose 
eligibility for benefits under this title before the end of the 
minimum enrollment period (defined in subparagraph (B)), the 
State plan may provide, notwithstanding any other provision of 
this title, that the individual shall be deemed to continue to 
be eligible for such benefits until the end of such minimum 
period, but, except for benefits furnished under section 
1905(a)(4)(C), only with respect to such benefits provided to 
the individual as an enrollee of such organization or entity.
    [(B) For purposes of subparagraph (A), the term ""minimum 
enrollment period'' means, with respect to an individual's 
enrollment with an organization or entity under a State plan, a 
period, established by the State, of not more than six months 
beginning on the date the individual's enrollment with the 
organization or entity becomes effective.
    [(3) At the option of the State, any individual who--
            [(A) is 18 years of age or younger and qualifies as 
        a disabled individual under section 1614(a);
            [(B) with respect to whom there has been a 
        determination by the State that--
                    [(i) the individual requires a level of 
                care provided in a hospital, nursing facility, 
                or intermediate care facility for the mentally 
                retarded,
                    [(ii) it is appropriate to provide such 
                care for the individual outside such an 
                institution, and
                    [(iii) the estimated amount which would be 
                expended for medical assistance for the 
                individual for such care outside an institution 
                is not greater than the estimated amount which 
                would otherwise be expended for medical 
                assistance for the individual within an 
                appropriate institution; and
            [(C) if the individual were in a medical 
        institution, would be eligible for medical assistance 
        under the State plan under this title,
        shall be deemed, for purposes of this title only, to be 
        an individual with respect to whom a supplemental 
        security income payment, or State supplemental payment, 
        respectively, is being paid under title XVI.
    [(4) A child born to a woman eligible for and receiving 
medical assistance under a State plan on the date of the 
child's birth shall be deemed to have applied for medical 
assistance and to have been found eligible for such assistance 
under such plan on the date of such birth and to remain 
eligible for such assistance for a period of one year so long 
as the child is a member of the woman's household and the woman 
remains (or would remain if pregnant) eligible for such 
assistance. During the period in which a child is deemed under 
the preceding sentence to be eligible for medical assistance, 
the medical assistance eligibility identification number of the 
mother shall also serve as the identification number of the 
child, and all claims shall be submitted and paid under such 
number (unless the State issues a separate identification 
number for the child before such period expires).
    [(5) A woman who, while pregnant, is eligible for, has 
applied for, and has received medical assistance under the 
State plan, shall continue to be eligible under the plan, as 
though she were pregnant, for all pregnancy-related and 
postpartum medical assistance under the plan, through the end 
of the month in which the 60-day period (beginning on the last 
day of her pregnancy) ends.
    [(6) In the case of a pregnant woman described in 
subsection (a)(10) who, because of a change in income of the 
family of which she is a member, would not otherwise continue 
to be described in such subsection, the woman shall be deemed 
to continue to be an individual described in subsection 
(a)(10)(A)(i)(IV) and subsection (l)(1)(A) without regard to 
such change of income through the end of the month in which the 
60-day period (beginning on the last day of her pregnancy) 
ends. The preceding sentence shall not apply in the case of a 
woman who has been provided ambulatory prenatal care pursuant 
to section 1920 during a presumptive eligibility period and is 
then, in accordance with such section, determined to be 
ineligible for medical assistance under the State plan.
    [(7) In the case of an infant or child described in 
subparagraph (B), (C), or (D) of subsection (l)(1) or paragraph 
(2) of section 1905(n)--
            [(A) who is receiving inpatient services for which 
        medical assistance is provided on the date the infant 
        or child attains the maximum age with respect to which 
        coverage is provided under the State plan for such 
        individuals, and
            [(B) who, but for attaining such age, would remain 
        eligible for medical assistance under such subsection,
the infant or child shall continue to be treated as an 
individual described in such respective provision until the end 
of the stay for which the inpatient services are furnished.
    [(8) If an individual is determined to be a qualified 
medicare beneficiary (as defined in section 1905(p)(1)), such 
determination shall apply to services furnished after the end 
of the month in which the determination first occurs. For 
purposes of payment to a State under section 1903(a), such 
determination shall be considered to be valid for an individual 
for a period of 12 months, except that a State may provide for 
such determinations more frequently, but not more frequently 
than once every 6 months for an individual.
    [(9)(A) At the option of the State, the plan may include as 
medical assistance respiratory care services for any individual 
who--
            [(i) is medically dependent on a ventilator for 
        life support at least six hours per day;
            [(ii) has been so dependent for at least 30 
        consecutive days (or the maximum number of days 
        authorized under the State plan, whichever is less) as 
        an inpatient;
            [(iii) but for the availability of respiratory care 
        services, would require respiratory care as an 
        inpatient in a hospital, nursing facility, or 
        intermediate care facility for the mentally retarded 
        and would be eligible to have payment made for such 
        inpatient care under the State plan;
            [(iv) has adequate social support services to be 
        cared for at home; and
            [(v) wishes to be cared for at home.
    [(B) The requirements of subparagraph (A)(ii) may be 
satisfied by a continuous stay in one or more hospitals, 
nursing facilities, or intermediate care facilities for the 
mentally retarded.
    [(C) For purposes of this paragraph, respiratory care 
services means services provided on a part-time basis in the 
home of the individual by a respiratory therapist or other 
health care professional trained in respiratory therapy (as 
determined by the State), payment for which is not otherwise 
included within other items and services furnished to such 
individual as medical assistance under the plan.
    [(10)(A) The fact that an individual, child, or pregnant 
woman may be denied aid under part A of title IV pursuant to 
section 402(a)(43) shall not be construed as denying (or 
permitting a State to deny) medical assistance under this title 
to such individual, child, or woman who is eligible for 
assistance under this title on a basis other than the receipt 
of aid under such part.
    [(B) If an individual, child, or pregnant woman is 
receiving aid under part A of title IV and such aid is 
terminated pursuant to section 402(a)(43), the State may not 
discontinue medical assistance under this title for the 
individual, child, or woman until the State has determined that 
the individual, child, or woman is not eligible for assistance 
under this title on a basis other than the receipt of aid under 
such part.
    [(11)(A) In the case of an individual who is enrolled with 
a group health plan under section 1906 and who would (but for 
this paragraph) lose eligibility for benefits under this title 
before the end of the minimum enrollment period (defined in 
subparagraph (B)), the State plan may provide, notwithstanding 
any other provision of this title, that the individual shall be 
deemed to continue to be eligible for such benefits until the 
end of such minimum period, but only with respect to such 
benefits provided to the individual as an enrollee of such 
plan.
    [(B) For purposes of subparagraph (A), the term ``minimum 
enrollment period'' means, with respect to an individual's 
enrollment with a group health plan, a period established by 
the State, of not more than 6 months beginning on the date the 
individual's enrollment under the plan becomes effective.
    [(f) Notwithstanding any other provision of this title, 
except as provided in subsection (e) and section 1619(b)(3) and 
section 1924, except with respect to qualified disabled and 
working individuals (described in section 1905(s)), and except 
with respect to qualified medicare beneficiaries, qualified 
severely impaired individuals, and individuals described in 
subsection (m)(1), no State not eligible to participate in the 
State plan program established under title XVI shall be 
required to provide medical assistance to any aged, blind, or 
disabled individual (within the meaning of title XVI) for any 
month unless such State would be (or would have been) required 
to provide medical assistance to such individual for such month 
had its plan for medical assistance approved under this title 
and in effect on January 1, 1972, been in effect in such month, 
except that for this purpose any such individual shall be 
deemed eligible for medical assistance under such State plan if 
(in addition to meeting such other requirements as are or may 
be imposed under the State plan) the income of any such 
individual as determined in accordance with section 1903(f) 
(after deducting any supplemental security income payment and 
State supplementary payment made with respect to such 
individual, and incurred expenses for medical care as 
recognized under State law regardless of whether such expenses 
are reimbursed under another public program of the State or 
political subdivision thereof) is not in excess of the standard 
for medical assistance established under the State plan as in 
effect on January 1, 1972. In States which provide medical 
assistance to individuals pursuant to paragraph (10)(C) of 
subsection (a) of this section, an individual who is eligible 
for medical assistance by reason of the requirements of this 
section concerning the deduction of incurred medical expenses 
from income shall be considered an individual eligible for 
medical assistance under paragraph (10)(A) of that subsection 
if that individual is, or is eligible to be (1) an individual 
with respect to whom there is payable a State supplementary 
payment on the basis of which similarly situated individuals 
are eligible to receive medical assistance equal in amount, 
duration, and scope to that provided to individuals eligible 
under paragraph (10)(A), or (2) an eligible individual or 
eligible spouse, as defined in title XVI, with respect to whom 
supplemental security income benefits are payable; otherwise 
that individual shall be considered to be an individual 
eligible for medical assistance under paragraph (10)(C) of that 
subsection. In States which do not provide medical assistance 
to individuals pursuant to paragraph (10)(C) of that 
subsection, an individual who is eligible for medical 
assistance by reason of the requirements of this section 
concerning the deduction of incurred medical expenses from 
income shall be considered an individual eligible for medical 
assistance under paragraph (10)(A) of that subsection.
    [(g) In addition to any other sanction available to a 
State, a State may provide for a reduction of any payment 
amount otherwise due with respect to a person who furnishes 
services under the plan in an amount equal to up to three times 
the amount of any payment sought to be collected by that person 
in violation of subsection (a)(25)(C).
    [(h) Nothing in this title (including subsections (a)(13) 
and (a)(30) of this section) shall be construed as authorizing 
the Secretary to limit the amount of payment that may be made 
under a plan under this title for home and community care.
    [(i)(1) In addition to any other authority under State law, 
where a State determines that a intermediate care facility for 
the mentally retarded which is certified for participation 
under its plan no longer substantially meets the requirements 
for such a facility under this title and further determines 
that the facility's deficiencies--
            [(A) immediately jeopardize the health and safety 
        of its patients, the State shall provide for the 
        termination of the facility's certification for 
        participation under the plan and may provide, or
            [(B) do not immediately jeopardize the health and 
        safety of its patients, the State may, in lieu of 
        providing for terminating the facility's certification 
        for participation under the plan, provide
that no payment will be made under the State plan with respect 
to any individual admitted to such facility after a date 
specified by the State.
    [(2) The State shall not make such a decision with respect 
to a facility until the facility has had a reasonable 
opportunity, following the initial determination that it no 
longer substantially meets the requirements for such a facility 
under this title, to correct its deficiencies, and, following 
this period, has been given reasonable notice and opportunity 
for a hearing.
    [(3) The State's decision to deny payment may be made 
effective only after such notice to the public and to the 
facility as may be provided for by the State, and its 
effectiveness shall terminate (A) when the State finds that the 
facility is in substantial compliance (or is making good faith 
efforts to achieve substantial compliance) with the 
requirements for such a facility under this title, or (B) in 
the case described in paragraph (1)(B), with the end of the 
eleventh month following the month such decision is made 
effective, whichever occurs first. If a facility to which 
clause (B) of the previous sentence applies still fails to 
substantially meet the provisions of the respective section on 
the date specified in such clause, the State shall terminate 
such facility's certification for participation under the plan 
effective with the first day of the first month following the 
month specified in such clause.
    [(j) Notwithstanding any other requirement of this title, 
the Secretary may waive or modify any requirement of this title 
with respect to the medical assistance program in American 
Samoa and the Northern Mariana Islands, other than a waiver of 
the Federal medical assistance percentage, the limitation in 
section 1108(c), or the requirement that payment may be made 
for medical assistance only with respect to amounts expended by 
American Samoa or the Northern Mariana Islands for care and 
services described in paragraphs (1) through (25) of section 
1905(a).
    [(l)(1) Individuals described in this paragraph are--
            [(A) women during pregnancy (and during the 60-day 
        period beginning on the last day of the pregnancy),
            [(B) infants under one year of age,
            [(C) children children who have attained one year 
        of age but have not attained 6 years of age, and
            [(D) children born after September 30, 1983, who 
        have attained 6 years of age but have not attained 19 
        years of age,
who are not described in any of subclauses (I) through (III) of 
subsection (a)(10)(A)(i) and whose family income does not 
exceed the income level established by the State under 
paragraph (2) for a family size equal to the size of the 
family, including the woman, infant, or child.
    [(2)(A)(i) For purposes of paragraph (1) with respect to 
individuals described in subparagraph (A) or (B) of that 
paragraph, the State shall establish an income level which is a 
percentage (not less than the percentage provided under clause 
(ii) and not more than 185 percent) of the income official 
poverty line (as defined by the Office of Management and 
Budget, and revised annually in accordance with section 673(2) 
of the Omnibus Budget Reconciliation Act of 1981) applicable to 
a family of the size involved.
    [(ii) The percentage provided under this clause, with 
respect to eligibility for medical assistance on or after--
            [(I) July 1, 1989, is 75 percent, or, if greater, 
        the percentage provided under clause (iii), and
            [(II) April 1, 1990, 133 percent, or, if greater, 
        the percentage provided under clause (iv).
    [(iii) In the case of a State which, as of the date of the 
enactment of this clause, has elected to provide, and provides, 
medical assistance to individuals described in this subsection 
or has enacted legislation authorizing, or appropriating funds, 
to provide such assistance to such individuals before July 1, 
1989, the percentage provided under clause (ii)(I) shall not be 
less than--
            [(I) the percentage specified by the State in an 
        amendment to its State plan (whether approved or not) 
        as of the date of the enactment of this clause, or
            [(II) if no such percentage is specified as of the 
        date of the enactment of this clause, the percentage 
        established under the State's authorizing legislation 
        or provided for under the State's appropriations;
but in no case shall this clause require the percentage 
provided under clause (ii)(I) to exceed 100 percent.
    [(iv) In the case of a State which, as of the date of the 
enactment of this clause, has established under clause (i), or 
has enacted legislation authorizing, or appropriating funds, to 
provide for, a percentage (of the income official poverty line) 
that is greater than 133 percent, the percentage provided under 
clause (ii) for medical assistance on or after April 1, 1990, 
shall not be less than--
            [(I) the percentage specified by the State in an 
        amendment to its State plan (whether approved or not) 
        as of the date of the enactment of this clause, or
            [(II) if no such percentage is specified as of the 
        date of the enactment of this clause, the percentage 
        established under the State's authorizing legislation 
        or provided for under the State's appropriations.
    [(B) For purposes of paragraph (1) with respect to 
individuals described in subparagraph (C) of such paragraph, 
the State shall establish an income level which is equal to 133 
percent of the income official poverty line described in 
subparagraph (A) applicable to a family of the size involved.
    [(C) For purposes of paragraph (1) with respect to 
individuals described in subparagraph (D) of that paragraph, 
the State shall establish an income level which is equal to 100 
percent of the income official poverty line described in 
subparagraph (A) applicable to a family of the size involved.
    [(3) Notwithstanding subsection (a)(17), for individuals 
who are eligible for medical assistance because of subsection 
(a)(10)(A)(i)(IV), (a)(10)(A)(i)(VI), (a)(10)(A)(i)(VII),, or 
(a)(10)(A)(ii)(IX)--
            [(A) application of a resource standard shall be at 
        the option of the State;
            [(B) any resource standard or methodology that is 
        applied with respect to an individual described in 
        subparagraph (A) of paragraph (1) may not be more 
        restrictive than the resource standard or methodology 
        that is applied under title XVI;
            [(C) any resource standard or methodology that is 
        applied with respect to an individual described in 
        subparagraph (B), (C), or (D) of paragraph (1) may not 
        be more restrictive than the corresponding methodology 
        that is applied under the State plan under part A of 
        title IV;
            [(D) the income standard to be applied is the 
        appropriate income standard established under paragraph 
        (2); and
            [(E) family income shall be determined in 
        accordance with the methodology employed under the 
        State plan under part A or E of title IV (except to the 
        extent such methodology is inconsistent with clause (D) 
        of subsection (a)(17)), and costs incurred for medical 
        care or for any other type of remedial care shall not 
        be taken into account.
Any different treatment provided under this paragraph for such 
individuals shall not, because of subsection (a)(17), require 
or permit such treatment for other individuals.
    [(4)(A) In the case of any State which is providing medical 
assistance to its residents under a waiver granted under 
section 1115, the Secretary shall require the State to provide 
medical assistance for pregnant women and infants under age 1 
described in subsection (a)(10)(A)(i)(IV) and for children 
described in subsection (a)(10)(A)(i)(VI) or subsection 
(a)(10)(A)(i)(VII) in the same manner as the State would be 
required to provide such assistance for such individuals if the 
State had in effect a plan approved under this title.
    [(B) In the case of a State which is not one of the 50 
States or the District of Columbia, the State need not meet the 
requirement of subsection (a)(10)(A)(i)(IV) (a)(10)(A)(i)(VI), 
or (a)(10)(A)(i)(VII) and, for purposes of paragraph (2)(A), 
the State may substitute for the percentage provided under 
clause (ii) of such paragraph any percentage.
    [(m)(1) Individuals described in this paragraph are 
individuals--
            [(A) who are 65 years of age or older or are 
        disabled individuals (as determined under section 
        1614(a)(3)),
            [(B) whose income (as determined under section 1612 
        for purposes of the supplemental security income 
        program, except as provided in paragraph (2)(C)) does 
        not exceed an income level established by the State 
        consistent with paragraph (2)(A), and
            [(C) whose resources (as determined under section 
        1613 for purposes of the supplemental security income 
        program) do not exceed (except as provided in paragraph 
        (2)(B)) the maximum amount of resources that an 
        individual may have and obtain benefits under that 
        program.
    [(2)(A) The income level established under paragraph (1)(B) 
may not exceed a percentage (not more than 100 percent) of the 
official poverty line (as defined by the Office of Management 
and Budget, and revised annually in accordance with section 
673(2) of the Omnibus Budget Reconciliation Act of 1981) 
applicable to a family of the size involved.
    [(B) In the case of a State that provides medical 
assistance to individuals not described in subsection 
(a)(10)(A) and at the State's option, the State may use under 
paragraph (1)(C) such resource level (which is higher than the 
level described in that paragraph) as may be applicable with 
respect to individuals described in paragraph (1)(A) who are 
not described in subsection (a)(10)(A).
    [(C) The provisions of section 1905(p)(2)(D) shall apply to 
determinations of income under this subsection in the same 
manner as they apply to determinations of income under section 
1905(p).
    [(3) Notwithstanding subsection (a)(17), for individuals 
described in paragraph (1) who are covered under the State plan 
by virtue of subsection (a)(10)(A)(ii)(X)--
            [(A) the income standard to be applied is the 
        income standard described in paragraph (1)(B), and
            [(B) except as provided in section 
        1612(b)(4)(B)(ii), costs incurred for medical care or 
        for any other type of remedial care shall not be taken 
        into account in determining income.
Any different treatment provided under this paragraph for such 
individuals shall not, because of subsection (a)(17), require 
or permit such treatment for other individuals.
    [(4) Notwithstanding subsection (a)(17), for qualified 
medicare beneficiaries described in section 1905(p)(1)--
            [(A) the income standard to be applied is the 
        income standard described in section 1905(p)(1)(B), and
            [(B) except as provided in section 
        1612(b)(4)(B)(ii), costs incurred for medical care or 
        for any other type of remedial care shall not be taken 
        into account in determining income.
Any different treatment provided under this paragraph for such 
individuals shall not, because of subsection (a)(17), require 
or permit such treatment for other individuals.
    [(n) In the case of medical assistance furnished under this 
title for medicare cost-sharing respecting the furnishing of a 
service or item to a qualified medicare beneficiary, the State 
plan may provide payment in an amount with respect to the 
service or item that results in the sum of such payment amount 
and any amount of payment made under title XVIII with respect 
to the service or item exceeding the amount that is otherwise 
payable under the State plan for the item or service for 
eligible individuals who are not qualified medicare 
beneficiaries.
    [(o) Notwithstanding any provision of subsection (a) to the 
contrary, a State plan under this title shall provide that any 
supplemental security income benefits paid by reason of 
subparagraph (E) or (G) of section 1611(e)(1) to an individual 
who--
            [(1) is eligible for medical assistance under the 
        plan, and
            [(2) is in a hospital, skilled nursing facility, or 
        intermediate care facility at the time such benefits 
        are paid,
will be disregarded for purposes of determining the amount of 
any post-eligibility contribution by the individual to the cost 
of the care and services provided by the hospital, skilled 
nursing facility, or intermediate care facility.
    [(p)(1) In addition to any other authority, a State may 
exclude any individual or entity for purposes of participating 
under the State plan under this title for any reason for which 
the Secretary could exclude the individual or entity from 
participation in a program under title XVIII under section 
1128, 1128A, or 1866(b)(2).
    [(2) In order for a State to receive payments for medical 
assistance under section 1903(a), with respect to payments the 
State makes to a health maintenance organization (as defined in 
section 1903(m)) or to an entity furnishing services under a 
waiver approved under section 1915(b)(1), the State must 
provide that it will exclude from participation, as such an 
organization or entity, any organization or entity that--
            [(A) could be excluded under section 1128(b)(8) 
        (relating to owners and managing employees who have 
        been convicted of certain crimes or received other 
        sanctions),
            [(B) has, directly or indirectly, a substantial 
        contractual relationship (as defined by the Secretary) 
        with an individual or entity that is described in 
        section 1128(b)(8)(B), or
            [(C) employs or contracts with any individual or 
        entity that is excluded from participation under this 
        title under section 1128 or 1128A for the provision of 
        health care, utilization review, medical social work, 
        or administrative services or employs or contracts with 
        any entity for the provision (directly or indirectly) 
        through such an excluded individual or entity of such 
        services.
    [(3) As used in this subsection, the term ``exclude'' 
includes the refusal to enter into or renew a participation 
agreement or the termination of such an agreement.
    [(q)(1)(A) In order to meet the requirement of subsection 
(a)(50), the State plan must provide that, in the case of an 
institutionalized individual or couple described in 
subparagraph (B), in determining the amount of the individual's 
or couple's income to be applied monthly to payment for the 
cost of care in an institution, there shall be deducted from 
the monthly income (in addition to other allowances otherwise 
provided under the State plan) a monthly personal needs 
allowance--
            [(i) which is reasonable in amount for clothing and 
        other personal needs of the individual (or couple) 
        while in an institution, and
            [(ii) which is not less (and may be greater) than 
        the minimum monthly personal needs allowance described 
        in paragraph (2).
    [(B) In this subsection, the term ``institutionalized 
individual or couple'' means an individual or married couple--
            [(i) who is an inpatient (or who are inpatients) in 
        a medical institution or nursing facility for which 
        payments are made under this title throughout a month, 
        and
            [(ii) who is or are determined to be eligible for 
        medical assistance under the State plan.
    [(2) The minimum monthly personal needs allowance described 
in this paragraph is $30 for an institutionalized individual 
and $60 for an institutionalized couple (if both are aged, 
blind, or disabled, and their incomes are considered available 
to each other in determining eligibility).
    [(r)(1) For purposes of sections 1902(a)(17) and 
1924(d)(1)(D) and for purposes of a waiver under section 1915, 
with respect to the post-eligibility treatment of income of 
individuals who are institutionalized or receiving home or 
community-based services under such a waiver there shall be 
disregarded reparation payments made by the Federal Republic of 
Germany and, there shall be taken into account amounts for 
incurred expenses for medical or remedial care that are not 
subject to payment by a third party, including--
            [(i) medicare and other health insurance premiums, 
        deductibles, or coinsurance, and
            [(ii) necessary medical or remedial care recognized 
        under State law but not covered under the State plan 
        under this title, subject to reasonable limits the 
        State may establish on the amount of these expenses.
    [(2)(A) The methodology to be employed in determining 
income and resource eligibility for individuals under 
subsection (a)(10)(A)(i)(III), (a)(10)(A)(i)(IV), 
(a)(10)(A)(i)(VI), (a)(10)(A)(i)(VII), (a)(10)(A)(ii), 
(a)(10)(C)(i)(III), or (f) or under section 1905(p) may be less 
restrictive, and shall be no more restrictive, than the 
methodology--
            [(i) in the case of groups consisting of aged, 
        blind, or disabled individuals, under the supplemental 
        security income program under title XVI, or
            [(ii) in the case of other groups, under the State 
        plan most closely categorically related.
    [(B) For purposes of this subsection and subsection 
(a)(10), methodology is considered to be ``no more 
restrictive'' if, using the methodology, additional individuals 
may be eligible for medical assistance and no individuals who 
are otherwise eligible are made ineligible for such assistance.
    [(s) In order to meet the requirements of subsection 
(a)(55), the State plan must provide that payments to hospitals 
under the plan for inpatient hospital services furnished to 
infants who have not attained the age of 1 year, and to 
children who have not attained the age of 6 years and who 
receive such services in a disproportionate share hospital 
described in section 1923(b)(1), shall--
            [(1) if made on a prospective basis (whether per 
        diem, per case, or otherwise) provide for an outlier 
        adjustment in payment amounts for medically necessary 
        inpatient hospital services involving exceptionally 
        high costs or exceptionally long lengths of stay,
            [(2) not be limited by the imposition of day limits 
        with respect to the delivery of such services to such 
        individuals, and
            [(3) not be limited by the imposition of dollar 
        limits (other than such limits resulting from 
        prospective payments as adjusted pursuant to paragraph 
        (1)) with respect to the delivery of such services to 
        any such individual who has not attained their first 
        birthday (or in the case of such an individual who is 
        an inpatient on his first birthday until such 
        individual is discharged).
    [(t) Nothing in this title (including sections 1903(a) and 
1905(a)) shall be construed as authorizing the Secretary to 
deny or limit payments to a State for expenditures, for medical 
assistance for items or services, attributable to taxes of 
general applicability imposed with respect to the provision of 
such items or services.
    [(u)(1) Individuals described in this paragraph are 
individuals--
            [(A) who are entitled to elect COBRA continuation 
        coverage (as defined in paragraph (3)),
            [(B) whose income (as determined under section 1612 
        for purposes of the supplemental security income 
        program) does not exceed 100 percent of the official 
        poverty line (as defined by the Office of Management 
        and Budget, and revised annually in accordance with 
        section 673(2) of the Omnibus Budget Reconciliation Act 
        of 1981) applicable to a family of the size involved,
            [(C) whose resources (as determined under section 
        1613 for purposes of the supplemental security income 
        program) do not exceed twice the maximum amount of 
        resources that an individual may have and obtain 
        benefits under that program, and
            [(D) with respect to whose enrollment for COBRA 
        continuation coverage the State has determined that the 
        savings in expenditures under this title resulting from 
        such enrollment is likely to exceed the amount of 
        payments for COBRA premiums made.
    [(2) For purposes of subsection (a)(10)(F) and this 
subsection, the term ``COBRA premiums'' means the applicable 
premium imposed with respect to COBRA continuation coverage.
    [(3) In this subsection, the term ``COBRA continuation 
coverage'' means coverage under a group health plan provided by 
an employer with 75 or more employees provided pursuant to 
title XXII of the Public Health Service Act, section 4980B of 
the Internal Revenue Code of 1986, or title VI of the Employee 
Retirement Income Security Act of 1974.
    [(4) Notwithstanding subsection (a)(17), for individuals 
described in paragraph (1) who are covered under the State plan 
by virtue of subsection (a)(10)(A)(ii)(XI)--
            [(A) the income standard to be applied is the 
        income standard described in paragraph (1)(B), and
            [(B) except as provided in section 
        1612(b)(4)(B)(ii), costs incurred for medical care or 
        for any other type of remedial care shall not be taken 
        into account in determining income.
Any different treatment provided under this paragraph for such 
individuals shall not, because of subsection (a)(10)(B) or 
(a)(17), require or permit such treatment for other 
individuals.
    [(v)(1) A State plan may provide for the making of 
determinations of disability or blindness for the purpose of 
determining eligibility for medical assistance under the State 
plan by the single State agency or its designee, and make 
medical assistance available to individuals whom it finds to be 
blind or disabled and who are determined otherwise eligible for 
such assistance during the period of time prior to which a 
final determination of disability or blindness is made by the 
Social Security Administration with respect to such an 
individual. In making such determinations, the State must apply 
the definitions of disability and blindness found in section 
1614(a) of the Social Security Act.
    [(w)(1) For purposes of subsection (a)(57) and sections 
1903(m)(1)(A) and 1919(c)(2)(E), the requirement of this 
subsection is that a provider or organization (as the case may 
be) maintain written policies and procedures with respect to 
all adult individuals receiving medical care by or through the 
provider or organization--
            [(A) to provide written information to each such 
        individual concerning--
                    [(i) an individual's rights under State law 
                (whether statutory or as recognized by the 
                courts of the State) to make decisions 
                concerning such medical care, including the 
                right to accept or refuse medical or surgical 
                treatment and the right to formulate advance 
                directives (as defined in paragraph (3)), and
                    [(ii) the provider's or organization's 
                written policies respecting the implementation 
                of such rights;
            [(B) to document in the individual's medical record 
        whether or not the individual has executed an advance 
        directive;
            [(C) not to condition the provision of care or 
        otherwise discriminate against an individual based on 
        whether or not the individual has executed an advance 
        directive;
            [(D) to ensure compliance with requirements of 
        State law (whether statutory or as recognized by the 
        courts of the State) respecting advance directives; and
            [(E) to provide (individually or with others) for 
        education for staff and the community on issues 
        concerning advance directives.
Subparagraph (C) shall not be construed as requiring the 
provision of care which conflicts with an advance directive.
    [(2) The written information described in paragraph (1)(A) 
shall be provided to an adult individual--
            [(A) in the case of a hospital, at the time of the 
        individual's admission as an inpatient,
            [(B) in the case of a nursing facility, at the time 
        of the individual's admission as a resident,
            [(C) in the case of a provider of home health care 
        or personal care services, in advance of the individual 
        coming under the care of the provider,
            [(D) in the case of a hospice program, at the time 
        of initial receipt of hospice care by the individual 
        from the program, and
            [(E) in the case of a health maintenance 
        organization, at the time of enrollment of the 
        individual with the organization.
    [(3) Nothing in this section shall be construed to prohibit 
the application of a State law which allows for an objection on 
the basis of conscience for any health care provider or any 
agent of such provider which as a matter of conscience cannot 
implement an advance directive.
    [(4) In this subsection, the term ``advance directive'' 
means a written instruction, such as a living will or durable 
power of attorney for health care, recognized under State law 
(whether statutory or as recognized by the courts of the State) 
and relating to the provision of such care when the individual 
is incapacitated.
    [(x) The Secretary shall establish a system, for 
implementation by not later than July 1, 1991, which provides 
for a unique identifier for each physician who furnishes 
services for which payment may be made under a State plan 
approved under this title.
    [(y)(1) In addition to any other authority under State law, 
where a State determines that a psychiatric hospital which is 
certified for participation under its plan no longer meets the 
requirements for a psychiatric hospital (referred to in section 
1905(h)) and further finds that the hospital's deficiencies--
            [(A) immediately jeopardize the health and safety 
        of its patients, the State shall terminate the 
        hospital's participation under the State plan; or
            [(B) do not immediately jeopardize the health and 
        safety of its patients, the State may terminate the 
        hospital's participation under the State plan, or 
        provide that no payment will be made under the State 
        plan with respect to any individual admitted to such 
        hospital after the effective date of the finding, or 
        both.
    [(2) Except as provided in paragraph (3), if a psychiatric 
hospital described in paragraph (1)(B) has not complied with 
the requirements for a psychiatric hospital under this title--
            [(A) within 3 months after the date the hospital is 
        found to be out of compliance with such requirements, 
        the State shall provide that no payment will be made 
        under the State plan with respect to any individual 
        admitted to such hospital after the end of such 3-month 
        period, or
            [(B) within 6 months after the date the hospital is 
        found to be out of compliance with such requirements, 
        no Federal financial participation shall be provided 
        under section 1903(a) with respect to further services 
        provided in the hospital until the State finds that the 
        hospital is in compliance with the requirements of this 
        title.
    [(3) The Secretary may continue payments, over a period of 
not longer than 6 months from the date the hospital is found to 
be out of compliance with such requirements, if--
            [(A) the State finds that it is more appropriate to 
        take alternative action to assure compliance of the 
        hospital with the requirements than to terminate the 
        certification of the hospital,
            [(B) the State has submitted a plan and timetable 
        for corrective action to the Secretary for approval and 
        the Secretary approves the plan of corrective action, 
        and
            [(C) the State agrees to repay to the Federal 
        Government payments received under this paragraph if 
        the corrective action is not taken in accordance with 
        the approved plan and timetable.
    [(z)(1) Individuals described in this paragraph are 
individuals not described in subsection (a)(10)(A)(i)--
            [(A) who are infected with tuberculosis;
            [(B) whose income (as determined under the State 
        plan under this title with respect to disabled 
        individuals) does not exceed the maximum amount of 
        income a disabled individual described in subsection 
        (a)(10)(A)(i) may have and obtain medical assistance 
        under the plan; and
            [(C) whose resources (as determined under the State 
        plan under this title with respect to disabled 
        individuals) do not exceed the maximum amount of 
        resources a disabled individual described in subsection 
        (a)(10)(A)(i) may have and obtain medical assistance 
        under the plan.
    [(2) For purposes of subsection (a)(10), the term ``TB-
related services'' means each of the following services 
relating to treatment of infection with tuberculosis:
            [(A) Prescribed drugs.
            [(B) Physicians' services and services described in 
        section 1905(a)(2).
            [(C) Laboratory and X-ray services (including 
        services to confirm the presence of infection).
            [(D) Clinic services and Federally-qualified health 
        center services.
            [(E) Case management services (as defined in 
        section 1915(g)(2)).
            [(F) Services (other than room and board) designed 
        to encourage completion of regimens of prescribed drugs 
        by outpatients, including services to observe directly 
        the intake of prescribed drugs.

                           [PAYMENT TO STATES

    [Sec. 1903. (a) From the sums appropriated therefor, the 
Secretary (except as otherwise provided in this section) shall 
pay to each State which has a plan approved under this title, 
for each quarter, beginning with the quarter commencing January 
1, 1966--
            [(1) an amount equal to the Federal medical 
        assistance percentage (as defined in section 1905(b), 
        subject to subsections (g) and (j) of this section and 
        subsection 1923(f)) of the total amount expended during 
        such quarter as medical assistance under the State 
        plan; plus
            [(2)(A) an amount equal to 75 per centum of so much 
        of the sums expended during such quarter (as found 
        necessary by the Secretary for the proper and efficient 
        administration of the State plan) as are attributable 
        to compensation or training of skilled professional 
        medical personnel, and staff directly supporting such 
        personnel, of the State agency or any other public 
        agency; plus
            [(B) notwithstanding paragraph (1) or subparagraph 
        (A), with respect to amounts expended for nursing aide 
        training and competency evaluation programs, and 
        competency evaluation programs, described in section 
        1919(e)(1) (including the costs for nurse aides to 
        complete such competency evaluation programs), 
        regardless of whether the programs are provided in or 
        outside nursing facilities or of the skill of the 
        personnel involved in such programs, an amount equal to 
        50 percent (or, for calendar quarters beginning on or 
        after July 1, 1988, and before October 1, 1990, the 
        lesser of 90 percent or the Federal medical assistance 
        percentage plus 25 percentage points) of so much of the 
        sums expended during such quarter (as found necessary 
        by the Secretary for the proper and efficient 
        administration of the State plan) as are attributable 
        to such programs; plus
            [(C) an amount equal to 75 percent of so much of 
        the sums expended during such quarter (as found 
        necessary by the Secretary for the proper and efficient 
        administration of the State plan) as are attributable 
        to preadmission screening and resident review 
        activities conducted by the State under section 
        1919(e)(7); plus
            [(D) for each calendar quarter during--
                    [(i) fiscal year 1991, an amount equal to 
                90 percent,
                    [(ii) fiscal year 1992, an amount equal to 
                85 percent,
                    [(iii) fiscal year 1993, an amount equal to 
                80 percent, and
                    [(iv) fiscal year 1994 and thereafter, an 
                amount equal to 75 percent,
        of so much of the sums expended during such quarter (as 
        found necessary by the Secretary for the proper and 
        efficient administration of the State plan) as are 
        attributable to State activities under section 1919(g); 
        plus
            [(3) an amount equal to--
                    [(A)(i) 90 per centum of so much of the 
                sums expended during such quarter as are 
                attributable to the design, development, or 
                installation of such mechanized claims 
                processing and information retrieval systems as 
                the Secretary determines are likely to provide 
                more efficient, economical, and effective 
                administration of the plan and to be compatible 
                with the claims processing and information 
                retrieval systems utilized in the 
                administration of title XVIII, including the 
                State's share of the cost of installing such a 
                system to be used jointly in the administration 
                of such State's plan and the plan of any other 
                State approved under this title, and
                    [(ii) 90 per centum of so much of the sums 
                expended during any such quarter in the fiscal 
                year ending June 30, 1972, or the fiscal year 
                ending June 30, 1973, as are attributable to 
                the design, development, or installation of 
                cost determination systems for State-owned 
                general hospitals (except that the total amount 
                paid to all States under this clause for either 
                such fiscal year shall not exceed $150,000), 
                and
                    [(B) 75 per centum of so much of the sums 
                expended during such quarter as are 
                attributable to the operation of systems 
                (whether such systems are operated directly by 
                the State or by another person under a contract 
                with the State) of the type described in 
                subparagraph (A)(i) (whether or not designed, 
                developed, or installed with assistance under 
                such subparagraph) which are approved by the 
                Secretary and which include provision for 
                prompt written notice to each individual who is 
                furnished services covered by the plan, or to 
                each individual in a sample group of 
                individuals who are furnished such services, of 
                the specific services (other than confidential 
                services) so covered, the name of the person or 
                persons furnishing the services, the date or 
                dates on which the services were furnished, and 
                the amount of the payment or payments made 
                under the plan on account of the services; and
                    [(C) 75 per centum of the sums expended 
                with respect to costs incurred during such 
                quarter (as found necessary by the Secretary 
                for the proper and efficient administration of 
                the State plan) as are attributable to the 
                performance of medical and utilization review 
                or quality review by a utilization and quality 
                control peer review organization or by an 
                entity which meets the requirements of section 
                1152, as determined by the Secretary, under a 
                contract entered into under section 1902(d); 
                and
                    [(D) 75 percent of so much of the sums 
                expended by the State plan during a quarter in 
                1991, 1992, or 1993, as the Secretary 
                determines is attributable to the statewide 
                adoption of a drug use review program which 
                conforms to the requirements of section 
                1927(g); plus
            [(4) an amount equal to 100 percent of the sums 
        expended during the quarter which are attributable to 
        the costs of the implementation and operation of the 
        immigration status verification system described in 
        section 1137(d); plus
            [(5) an amount equal to 90 per centum of the sums 
        expended during such quarter which are attributable to 
        the offering, arranging, and furnishing (directly or on 
        a contract basis) of family planning services and 
        supplies;
            [(6) subject to subsection (b)(3), an amount equal 
        to--
                    [(A) 90 per centum of the sums expended 
                during such a quarter within the twelve-quarter 
                period beginning with the first quarter in 
                which a payment is made to the State pursuant 
                to this paragraph, and
                    [(B) 75 per centum of the sums expended 
                during each succeeding calendar quarter,
        with respect to costs incurred during such quarter (as 
        found necessary by the Secretary for the elimination of 
        fraud in the provision and administration of medical 
        assistance provided under the State plan) which are 
        attributable to the establishment and operation of 
        (including the training of personnel employed by) a 
        State medicaid fraud control unit (described in 
        subsection (q)); plus
            [(7) subject to section 1919(g)(3)(B), an amount 
        equal to 50 per centum of the remainder of the amounts 
        expended during such quarter as found necessary by the 
        Secretary for the proper and efficient administration 
        of the State plan.
    [(b)(1) Notwithstanding the preceding provisions of this 
section, the amount determined under subsection (a)(1) for any 
State for any quarter beginning after December 31, 1969, shall 
not take into account any amounts expended as medical 
assistance with respect to individuals aged 65 or over and 
disabled individuals entitled to hospital insurance benefits 
under title XVIII which would not have been so expended if the 
individuals involved had been enrolled in the insurance program 
established by part B of title XVIII, other than amounts 
expended under provisions of the plan of such State required by 
section 1902(a)(34).
    [(2) For limitation on Federal participation for capital 
expenditures which are out of conformity with a comprehensive 
plan of a State or areawide planning agency, see section 1122.
    [(3) The amount of funds which the Secretary is otherwise 
obligated to pay a State during a quarter under subsection 
(a)(6) may not exceed the higher of--
            [(A) $125,000, or
            [(B) one-quarter of 1 per centum of the sums 
        expended by the Federal, State, and local governments 
        during the previous quarter in carrying out the State's 
        plan under this title.
    [(c) Nothing in this title shall be construed as 
prohibiting or restricting, or authorizing the Secretary to 
prohibit or restrict, payment under subsection (a) for medical 
assistance for covered services furnished to a child with a 
disability because such services are included in the child's 
individualized education program established pursuant to part B 
of the Individuals with Disabilities Education Act or furnished 
to an infant or toddler with a disability because such services 
are included in the child's individualized family service plan 
adopted pursuant to part H of such Act.
    [(d)(1) Prior to the beginning of each quarter, the 
Secretary shall estimate the amount to which a State will be 
entitled under subsections (a) and (b) for such quarter, such 
estimates to be based on (A) a report filed by the State 
containing its estimate of the total sum to be expended in such 
quarter in accordance with the provisions of such subsections, 
and stating the amount appropriated or made available by the 
State and its political subdivisions for such expenditures in 
such quarter, and if such amount is less than the State's 
proportionate share of the total sum of such estimated 
expenditures, the source or sources from which the difference 
is expected to be derived, and (B) such other investigation as 
the Secretary may find necessary.
    [(2)(A) The Secretary shall then pay to the State, in such 
installments as he may determine, the amount so estimated, 
reduced or increased to the extent of any overpayment or 
underpayment which the Secretary determines was made under this 
section to such State for any prior quarter and with respect to 
which adjustment has not already been made under this 
subsection.
    [(B) Expenditures for which payments were made to the State 
under subsection (a) shall be treated as an overpayment to the 
extent that the State or local agency administering such plan 
has been reimbursed for such expenditures by a third party 
pursuant to the provisions of its plan in compliance with 
section 1902(a)(25).
    [(C) For purposes of this subsection, when an overpayment 
is discovered, which was made by a State to a person or other 
entity, the State shall have a period of 60 days in which to 
recover or attempt to recover such overpayment before 
adjustment is made in the Federal payment to such State on 
account of such overpayment. Except as otherwise provided in 
subparagraph (D), the adjustment in the Federal payment shall 
be made at the end of the 60 days, whether or not recovery was 
made.
    [(D) In any case where the State is unable to recover a 
debt which represents an overpayment (or any portion thereof) 
made to a person or other entity on account of such debt having 
been discharged in bankruptcy or otherwise being uncollectable, 
no adjustment shall be made in the Federal payment to such 
State on account of such overpayment (or portion thereof).
    [(3) The pro rata share to which the United States is 
equitably entitled, as determined by the Secretary, of the net 
amount recovered during any quarter by the State or any 
political subdivision thereof with respect to medical 
assistance furnished under the State plan shall be considered 
an overpayment to be adjusted under this subsection.
    [(4) Upon the making of any estimate by the Secretary under 
this subsection, any appropriations available for payments 
under this section shall be deemed obligated.
    [(5) In any case in which the Secretary estimates that 
there has been an overpayment under this section to a State on 
the basis of a claim by such State that has been disallowed by 
the Secretary under section 1116(d), and such State disputes 
such disallowance, the amount of the Federal payment in 
controversy shall, at the option of the State, be retained by 
such State or recovered by the Secretary pending a final 
determination with respect to such payment amount. If such 
final determination is to the effect that any amount was 
properly disallowed, and the State chose to retain payment of 
the amount in controversy, the Secretary shall offset, from any 
subsequent payments made to such State under this title, an 
amount equal to the proper amount of the disallowance plus 
interest on such amount disallowed for the period beginning on 
the date such amount was disallowed and ending on the date of 
such final determination at a rate (determined by the 
Secretary) based on the average of the bond equivalent of the 
weekly 90-day treasury bill auction rates during such period.
    [(6)(A) Each State (as defined in subsection (w)(7)(D)) 
shall include, in the first report submitted under paragraph 
(1) after the end of each fiscal year, information related to--
            [(i) provider-related donations made to the State 
        or units of local government during such fiscal year, 
        and
            [(ii) health care related taxes collected by the 
        State or such units during such fiscal year.
    [(B) Each State shall include, in the first report 
submitted under paragraph (1) after the end of each fiscal 
year, information related to the total amount of payment 
adjustments made, and the amount of payment adjustments made to 
individual providers (by provider), under section 1923(c) 
during such fiscal year.
    [(e) A State plan approved under this title may include, as 
a cost with respect to hospital services under the plan under 
this title, periodic expenditures made to reflect transitional 
allowances established with respect to a hospital closure or 
conversion under section 1884.
    [(f)(1)(A) Except as provided in paragraph (4), payment 
under the preceding provisions of this section shall not be 
made with respect to any amount expended as medical assistance 
in a calendar quarter, in any State, for any member of a family 
the annual income of which exceeds the applicable income 
limitation determined under this paragraph.
    [(B)(i) Except as provided in clause (ii) of this 
subparagraph, the applicable income limitation with respect to 
any family is the amount determined, in accordance with 
standards prescribed by the Secretary, to be equivalent to 
133\1/3\ percent of the highest amount which would ordinarily 
be paid to a family of the same size without any income or 
resources, in the form of money payments, under the plan of the 
State approved under part A of title IV of this Act.
    [(ii) If the Secretary finds that the operation of a 
uniform maximum limits payments to families of more than one 
size, he may adjust the amount otherwise determined under 
clause (i) to take account of families of different sizes.
    [(C) The total amount of any applicable income limitation 
determined under subparagraph (B) shall, if it is not a 
multiple of $100 or such other amount as the Secretary may 
prescribe, be rounded to the next higher multiple of $100 or 
such other amount, as the case may be.
    [(2)(A) In computing a family's income for purposes of 
paragraph (1), there shall be excluded any costs (whether in 
the form of insurance premiums or otherwise and regardless of 
whether such costs are reimbursed under another public program 
of the State or political subdivision thereof) incurred by such 
family for medical care or for any other type of remedial care 
recognized under State law or, (B) notwithstanding section 1916 
at State option, an amount paid by such family, at the family's 
option, to the State, provided that the amount, when combined 
with costs incurred in prior months, is sufficient when 
excluded from the family's income to reduce such family's 
income below the applicable income limitation described in 
paragraph (1). The amount of State expenditures for which 
medical assistance is available under subsection (a)(1) will be 
reduced by amounts paid to the State pursuant to this 
subparagraph..
    [(3) For purposes of paragraph (1)(B), in the case of a 
family consisting of only one individual, the ``highest amount 
which would ordinarily be paid'' to such family under the 
State's plan approved under part A of title IV of this Act 
shall be the amount determined by the State agency (on the 
basis of reasonable relationship to the amounts payable under 
such plan to families consisting of two or more persons) to be 
the amount of the aid which would ordinarily be payable under 
such plan to a family (without any income or resources) 
consisting of one person if such plan provided for aid to such 
a family.
    [(4) The limitations on payment imposed by the preceding 
provisions of this subsection shall not apply with respect to 
any amount expended by a State as medical assistance for any 
individual described in section 1902(a)(10)(A)(i)(III), 
1902(a)(10)(A)(i)(IV), 1902(a)(10)(A)(i)(V), 
1902(a)(10)(A)(i)(VI), 1902(a)(10)(A)(i)(VII), 
1902(a)(10)(A)(ii)(IX), 1902(a)(10)(A)(ii)(X), or 1905(p)(1) or 
for any individual--
            [(A) who is receiving aid or assistance under any 
        plan of the State approved under title I, X, XIV or 
        XVI, or part A of title IV, or with respect to whom 
        supplemental security income benefits are being paid 
        under title XVI, or
            [(B) who is not receiving such aid or assistance, 
        and with respect to whom such benefits are not being 
        paid, but (i) is eligible to receive such aid or 
        assistance, or to have such benefits paid with respect 
        to him, or (ii) would be eligible to receive such aid 
        or assistance, or to have such benefits paid with 
        respect to him if he were not in a medical institution, 
        or
            [(C) with respect to whom there is being paid, or 
        who is eligible, or would be eligible if he were not in 
        a medical institution, to have paid with respect to 
        him, a State supplementary payment and is eligible for 
        medical assistance equal in amount, duration, and scope 
        to the medical assistance made available to individuals 
        described in section 1902(a)(10)(A), but only if the 
        income of such individual (as determined under section 
        1612, but without regard to subsection (b) thereof) 
        does not exceed 300 percent of the supplemental 
        security income benefit rate established by section 
        1611(b)(1),
at the time of the provision of the medical assistance giving 
rise to such expenditure.
    [(g)(1) Subject to paragraph (3), with respect to amounts 
paid for the following services furnished under the State plan 
after June 30, 1973 (other than services furnished pursuant to 
a contract with a health maintenance organization as defined in 
section 1876 or which is a qualified health maintenance 
organization (as defined in section 1310(d) of the Public 
Health Service Act)), the Federal medical assistance percentage 
shall be decreased as follows: After an individual has received 
inpatient hospital services or services in an intermediate care 
facility for the mentally retarded for 60 days or inpatient 
mental hospital services for 90 days (whether or not such days 
are consecutive), during any fiscal year, the Federal medical 
assistance percentage with respect to amounts paid for any such 
care furnished thereafter to such individual shall be decreased 
by a per centum thereof (determined under paragraph (5)) unless 
the State agency responsible for the administration of the plan 
makes a showing satisfactory to the Secretary that, with 
respect to each calendar quarter for which the State submits a 
request for payment at the full Federal medical assistance 
percentage for amounts paid for inpatient hospital services or 
services in an intermediate care facility for the mentally 
retarded furnished beyond 60 days (or inpatient mental hospital 
services furnished beyond 90 days), such State has an effective 
program of medical review of the care of patients in mental 
hospitals and intermediate care facilities for the mentally 
retarded pursuant to paragraphs (26) and (31) of section 
1902(a) whereby the professional management of each case is 
reviewed and evaluated at least annually by independent 
professional review teams. In determining the number of days on 
which an individual has received services described in this 
subsection, there shall not be counted any days with respect to 
which such individual is entitled to have payments made (in 
whole or in part) on his behalf under section 1812.
    [(2) The Secretary shall, as part of his validation 
procedures under this subsection, conduct timely sample onsite 
surveys of private and public institutions in which recipients 
of medical assistance may receive care and services under a 
State plan approved under this title, and his findings with 
respect to such surveys (as well as the showings of the State 
agency required under this subsection) shall be made available 
for public inspection.
    [(3)(A) No reduction in the Federal medical assistance 
percentage of a State otherwise required to be imposed under 
this subsection shall take effect--
            [(i) if such reduction is due to the State's 
        unsatisfactory or invalid showing made with respect to 
        a calendar quarter beginning before January 1, 1977;
            [(ii) before January 1, 1978;
            [(iii) unless a notice of such reduction has been 
        provided to the State at least 30 days before the date 
        such reduction takes effect; or
            [(iv) due to the State's unsatisfactory or invalid 
        showing made with respect to a calendar quarter 
        beginning after September 30, 1977, unless notice of 
        such reduction has been provided to the State no later 
        than the first day of the fourth calendar quarter 
        following the calendar quarter with respect to which 
        such showing was made.
    [(B) The Secretary shall waive application of any reduction 
in the Federal medical assistance percentage of a State 
otherwise required to be imposed under paragraph (1) because a 
showing by the State, made under such paragraph with respect to 
a calendar quarter ending after January 1, 1977, and before 
January 1, 1978, is determined to be either unsatisfactory 
under such paragraph or invalid under paragraph (2), if the 
Secretary determines that the State's showing made under 
paragraph (1) with respect to any calendar quarter ending on or 
before December 31, 1978, is satisfactory under such paragraph 
and is valid under paragraph (2).
    [(4)(A) The Secretary may not find the showing of a State, 
with respect to a calendar quarter under paragraph (1), to be 
satisfactory if the showing is submitted to the Secretary later 
than the 30th day after the last day of the calendar quarter, 
unless the State demonstrates to the satisfaction of the 
Secretary good cause for not meeting such deadline.
    [(B) The Secretary shall find a showing of a State, with 
respect to a calendar quarter under paragraph (1), to be 
satisfactory under such paragraph with respect to the 
requirement that the State conduct annual onsite inspections in 
mental hospitals and intermediate care facilities for the 
mentally retarded under paragraphs (26) and (31) of section 
1902(a), if the showing demonstrates that the State has 
conducted such an onsite inspection during the 12-month period 
ending on the last date of the calendar quarter--
            [(i) in each of not less than 98 per centum of the 
        number of such hospitals and facilities requiring such 
        inspection, and
            [(ii) in every such hospital or facility which has 
        200 or more beds,
and that, with respect to such hospitals and facilities not 
inspected within such period, the State has exercised good 
faith and due diligence in attempting to conduct such 
inspection, or if the State demonstrates to the satisfaction of 
the Secretary that it would have made such a showing but for 
failings of a technical nature only.
    [(5) In the case of a State's unsatisfactory or invalid 
showing made with respect to a type of facility or 
institutional services in a calendar quarter, the per centum 
amount of the reduction of the State's Federal medical 
assistance percentage for that type of services under paragraph 
(1) is equal to 33\1/3\ per centum multiplied by a fraction, 
the denominator of which is equal to the total number of 
patients receiving that type of services in that quarter under 
the State plan in facilities or institutions for which a 
showing was required to be made under this subsection, and the 
numerator of which is equal to the number of such patients 
receiving such type of services in that quarter in those 
facilities or institutions for which a satisfactory and valid 
showing was not made for that calendar quarter.
    [(6)(A) Recertifications required under section 1902(a)(44) 
shall be conducted at least every 60 days in the case of 
inpatient hospital services.
    [(B) Such recertifications in the case of services in an 
intermediate care facility for the mentally retarded shall be 
conducted at least--
            [(i) 60 days after the date of the initial 
        certification,
            [(ii) 180 days after the date of the initial 
        certification,
            [(iii) 12 months after the date of the initial 
        certification,
            [(iv) 18 months after the date of the initial 
        certification,
            [(v) 24 months after the date of the initial 
        certification, and
            [(vi) every 12 months thereafter.
    [(C) For purposes of determining compliance with the 
schedule established by this paragraph, a recertification shall 
be considered to have been done on a timely basis if it was 
performed not later than 10 days after the date the 
recertification was otherwise required and the State 
establishes good cause why the physician or other person making 
such recertification did not meet such schedule.
    [(i) Payment under the preceding provisions of this section 
shall not be made--
            [(1) for organ transplant procedures unless the 
        State plan provides for written standards respecting 
        the coverage of such procedures and unless such 
        standards provide that--
                    [(A) similarly situated individuals are 
                treated alike; and
                    [(B) any restriction, on the facilities or 
                practitioners which may provide such 
                procedures, is consistent with the 
                accessibility of high quality care to 
                individuals eligible for the procedures under 
                the State plan; or
            [(2) with respect to any amount expended for an 
        item or service (other than an emergency item or 
        service, not including items or services furnished in 
        an emergency room of a hospital) furnished--
                    [(A) under the plan by any individual or 
                entity during any period when the individual or 
                entity is excluded from participation under 
                title V, XVIII, or XX or under this title 
                pursuant to section 1128, 1128A, 1156, or 
                1842(j)(2), or
                    [(B) at the medical direction or on the 
                prescription of a physician, during the period 
                when such physician is excluded from 
                participation under title V, XVIII, or XX or 
                under this title pursuant to section 1128, 
                1128A, 1156, or 1842(j)(2) and when the person 
                furnishing such item or service knew or had 
                reason to know of the exclusion (after a 
                reasonable time period after reasonable notice 
                has been furnished to the person).
            [(3) with respect to any amount expended for 
        inpatient hospital services furnished under the plan 
        (other than amounts attributable to the special 
        situation of a hospital which serves a disproportionate 
        number of low income patients with special needs) to 
        the extent that such amount exceeds the hospital's 
        customary charges with respect to such services or (if 
        such services are furnished under the plan by a public 
        institution free of charge or at nominal charges to the 
        public) exceeds an amount determined on the basis of 
        those items (specified in regulations prescribed by the 
        Secretary) included in the determination of such 
        payment which the Secretary finds will provide fair 
        compensation to such institution for such services; or
            [(4) with respect to any amount expended for care 
        or services furnished under the plan by a hospital 
        unless such hospital has in effect a utilization review 
        plan which meets the requirements imposed by section 
        1861(k) for purposes of title XVIII; and if such 
        hospital has in effect such a utilization review plan 
        for purposes of title XVIII, such plan shall serve as 
        the plan required by this subsection (with the same 
        standards and procedures and the same review committee 
        or group) as a condition of payment under this title; 
        the Secretary is authorized to waive the requirements 
        of this paragraph if the State agency demonstrates to 
        his satisfaction that it has in operation utilization 
        review procedures which are superior in their 
        effectiveness to the procedures required under section 
        1861(k); or
            [(5) with respect to any amount expended for any 
        drug product for which payment may not be made under 
        part B of title XVIII because of section 1862(c); or
            [(6) with respect to any amount expended for 
        inpatient hospital tests (other than in emergency 
        situations) not specifically ordered by the attending 
        physician or other responsible practitioner; or
            [(7) with respect to any amount expended for 
        clinical diagnostic laboratory tests performed by a 
        physician, independent laboratory, or hospital, to the 
        extent such amount exceeds the amount that would be 
        recognized under section 1833(h) for such tests 
        performed for an individual enrolled under part B of 
        title XVIII; or
            [(8) with respect to any amount expended for 
        medical assistance (A) for nursing facility services to 
        reimburse (or otherwise compensate) a nursing facility 
        for payment of a civil money penalty imposed under 
        section 1919(h) or (B) for home and community care to 
        reimburse (or otherwise compensate) a provider of such 
        care for payment of a civil money penalty imposed under 
        this title or title XI or for legal expenses in defense 
        of an exclusion or civil money penalty under this title 
        or title XI if there is no reasonable legal ground for 
        the provider's case; or
            [(9) with respect to any amount of medical 
        assistance for pregnant women and children described in 
        section 1902(a)(10)(A)(ii)(IX), if the State has in 
        effect, under its plan established under part A of 
        title IV, payment levels that are less than the payment 
        levels in effect under such plan on July 1, 1987;
            [(10)(A) with respect to covered outpatient drugs 
        unless there is a rebate agreement in effect under 
        section 1927 with respect to such drugs or unless 
        section 1927(a)(3) applies, and
            [(B) with respect to any amount expended for an 
        innovator multiple source drug (as defined in section 
        1927(k)) dispensed on or after July 1, 1991, if, under 
        applicable State law, a less expensive multiple source 
        drug could have been dispensed, but only to the extent 
        that such amount exceeds the upper payment limit for 
        such multiple source drug;
            [(11) with respect to any amount expended for 
        physicians' services furnished on or after the first 
        day of the first quarter beginning more than 60 days 
        after the date of establishment of the physician 
        identifier system under section 1902(x), unless the 
        claim for the services includes the unique physician 
        identifier provided under such system;
            [(12) with respect to any amount expended for 
        physicians' services furnished by a physician on or 
        after January 1, 1992, to--
                    [(A) a child under 21 years of age, unless 
                the physician--
                            [(i) is certified in family 
                        practice or pediatrics by the medical 
                        specialty board recognized by the 
                        American Board of Medical Specialties 
                        for family practice or pediatrics,
                            [(ii) is employed by, or affiliated 
                        with, a Federally-qualified health 
                        center (as defined in section 
                        1905(l)(2)(B)),
                            [(iii) holds admitting privileges 
                        at a hospital participating in a State 
                        plan approved under this title,
                            [(iv) is a member of the National 
                        Health Service Corps,
                            [(v) documents a current, formal, 
                        consultation and referral arrangement 
                        with a pediatrician or family 
                        practitioner who has the certification 
                        described in clause (i) for purposes of 
                        specialized treatment and admission to 
                        a hospital, or
                            [(vi) has been certified by the 
                        Secretary as qualified to provide 
                        physicians' services to a child under 
                        21 years of age; or
                    [(B) to a pregnant woman (or during the 60 
                day period beginning on the date of termination 
                of the pregnancy) unless the physician--
                            [(i) is certified in family 
                        practice or obstetrics by the medical 
                        specialty board recognized by the 
                        American Board of Medical Specialties 
                        for family practice or obstetrics,
                            [(ii) is employed by, or affiliated 
                        with, a Federally-qualified health 
                        center (as defined in section 
                        1905(l)(2)(B)),
                            [(iii) holds admitting privileges 
                        at a hospital participating in a State 
                        plan approved under this title,
                            [(iv) is a member of the National 
                        Health Service Corps,
                            [(v) documents a current, formal, 
                        consultation and referral arrangement 
                        with an obstetrician or family 
                        practitioner who has the certification 
                        described in clause (i) for purposes of 
                        specialized treatment and admission to 
                        a hospital, or
                            [(vi) has been certified by the 
                        Secretary as qualified to provide 
                        physicians' services to pregnant women; 
                        or
            [(13) with respect to any amount expended to 
        reimburse (or otherwise compensate) a nursing facility 
        for payment of legal expenses associated with any 
        action initiated by the facility that is dismissed on 
        the basis that no reasonable legal ground existed for 
        the institution of such action;
            [(14) with respect to any amount expended on 
        administrative costs to carry out the program under 
        section 1928; or
            [(15) with respect to any amount expended for a 
        single-antigen vaccine and its administration in any 
        case in which the administration of a combined-antigen 
        vaccine was medically appropriate (as determined by the 
        Secretary).
Nothing in paragraph (1) shall be construed as permitting a 
State to provide services under its plan under this title that 
are not reasonable in amount, duration, and scope to achieve 
their purpose.
    [(j) Notwithstanding the preceding provisions of this 
section, the amount determined under subsection (a)(1) for any 
State for any quarter shall be adjusted in accordance with 
section 1914.
    [(k) The Secretary is authorized to provide at the request 
of any State (and without cost to such State) such technical 
and actuarial assistance as may be necessary to assist such 
State to contract with any health maintenance organization 
which meets the requirements of subsection (m) of this section 
for the purpose of providing medical care and services to 
individuals who are entitled to medical assistance under this 
title.
    [(m)(1)(A) The term ``health maintenance organization'' 
means a public or private organization, organized under the 
laws of any State, which meets the requirement of section 
1902(w) is a qualified health maintenance organization (as 
defined in section 1310(d) of the Public Health Service Act) or 
which meets the requirement of section 1902(a) and--
            [(i) makes services it provides to individuals 
        eligible for benefits under this title accessible to 
        such individuals, within the area served by the 
        organization, to the same extent as such services are 
        made accessible to individuals (eligible for medical 
        assistance under the State plan) not enrolled with the 
        organization, and
            [(ii) has made adequate provision against the risk 
        of insolvency, which provision is satisfactory to the 
        State and which assures that individuals eligible for 
        benefits under this title are in no case held liable 
        for debts of the organization in case of the 
        organization's insolvency.
    [(B) The duties and functions of the Secretary, insofar as 
they involve making determinations as to whether an 
organization is a health maintenance organization within the 
meaning of subparagraph (A), shall be integrated with the 
administration of section 1312 (a) and (b) of the Public Health 
Service Act.
    [(2)(A) Except as provided in subparagraphs (B), (C), and 
(G), no payment shall be made under this title to a State with 
respect to expenditures incurred by it for payment (determined 
under a prepaid capitation basis or under any other risk basis) 
for services provided by any entity (including a health 
insuring organization) which is responsible for the provision 
(directly or through arrangements with providers of services) 
of inpatient hospital services and any other service described 
in paragraph (2), (3), (4), (5), or (7) of section 1905(a) or 
for the provision of any three or more of the services 
described in such paragraphs unless--
            [(i) the Secretary has determined that the entity 
        is a health maintenance organization as defined in 
        paragraph (1);
            [(ii) less than 75 percent of the membership of the 
        entity which is enrolled on a prepaid basis consists of 
        individuals who (I) are insured for benefits under part 
        B of title XVIII or for benefits under both parts A and 
        B of such title, or (II) are eligible to receive 
        benefits under this title;
            [(iii) such services are provided for the benefit 
        of individuals eligible for benefits under this title 
        in accordance with a contract between the State and the 
        entity under which prepaid payments to the entity are 
        made on an actuarially sound basis and under which the 
        Secretary must provide prior approval for contracts 
        providing for expenditures in excess of $100,000;
            [(iv) such contract provides that the Secretary and 
        the State (or any person or organization designated by 
        either) shall have the right to audit and inspect any 
        books and records of the entity (and of any 
        subcontractor) that pertain (I) to the ability of the 
        entity to bear the risk of potential financial losses, 
        or (II) to services performed or determinations of 
        amounts payable under the contract;
            [(v) such contract provides that in the entity's 
        enrollment, reenrollment, or disenrollment of 
        individuals who are eligible for benefits under this 
        title and eligible to enroll, reenroll, or disenroll 
        with the entity pursuant to the contract, the entity 
        will not discriminate among such individuals on the 
        basis of their health status or requirements for health 
        care services;
            [(vi) such contract (I) except as provided under 
        subparagraph (F), permits individuals who have elected 
        under the plan to enroll with the entity for provision 
        of such benefits to terminate such enrollment without 
        cause as of the beginning of the first calendar month 
        following a full calendar month after the request is 
        made for such termination, and (II) provides for 
        notification of each such individual, at the time of 
        the individual's enrollment, of such right to terminate 
        such enrollment;
            [(vii) such contract provides that, in the case of 
        medically necessary services which were provided (I) to 
        an individual enrolled with the entity under the 
        contract and entitled to benefits with respect to such 
        services under the State's plan and (II) other than 
        through the organization because the services were 
        immediately required due to an unforeseen illness, 
        injury, or condition, either the entity or the State 
        provides for reimbursement with respect to those 
        services,
            [(viii) such contract provides for disclosure of 
        information in accordance with section 1124 and 
        paragraph (4) of this subsection;
                    [(ix) such contract provides, in the case 
                of an entity that has entered into a contract 
                for the provision of services of such center 
                with a federally qualified health center, that 
                (I) rates of prepayment from the State are 
                adjusted to reflect fully the rates of payment 
                specified in section 1902(a)(13)(E), and (II) 
                at the election of such center payments made by 
                the entity to such a center for services 
                described in 1905(a)(2)(C) are made at the 
                rates of payment specified in section 
                1902(a)(13)(E);
            [(x) any physician incentive plan that it operates 
        meets the requirements described in section 1876(i)(8); 
        and
            [(xi) such contract provides for maintenance of 
        sufficient patient encounter data to identify the 
        physician who delivers services to patients.
    [(B) Subparagraph (A) except with respect to clause (ix) of 
subparagraph (A), does not apply with respect to payments under 
this title to a State with respect to expenditures incurred by 
it for payment for services provided by an entity which--
            [(i)(I) received a grant of at least $100,000 in 
        the fiscal year ending June 30, 1976, under section 
        329(d)(1)(A) or 330(d)(1) of the Public Health Service 
        Act, and for the period beginning July 1, 1976, and 
        ending on the expiration of the period for which 
        payments are to be made under this title has been the 
        recipient of a grant under either such section; and
            [(II) provides to its enrollees, on a prepaid 
        capitation risk basis or on any other risk basis, all 
        of the services and benefits described in paragraphs 
        (1), (2), (3), (4)(C), and (5) of section 1905(a) and, 
        to the extent required by section 1902(a)(10)(D) to be 
        provided under a State plan for medical assistance, the 
        services and benefits described in paragraph (7) of 
        section 1905(a); or
            [(ii) is a nonprofit primary health care entity 
        located in a rural area (as defined by the Appalachian 
        Regional Commission)--
                    [(I) which received in the fiscal year 
                ending June 30, 1976, at least $100,000 (by 
                grant, subgrant, or subcontract) under the 
                Appalachian Regional Development Act of 1965, 
                and
                    [(II) for the period beginning July 1, 
                1976, and ending on the expiration of the 
                period for which payments are to be made under 
                this title either has been the recipient of a 
                grant, subgrant, or subcontract under such Act 
                or has provided services under a contract 
                (initially entered into during a year in which 
                the entity was the recipient of such a grant, 
                subgrant, or subcontract) with a State agency 
                under this title on a prepaid capitation risk 
                basis or on any other risk basis; or
            [(iii) which has contracted with the single State 
        agency for the provision of services (but not including 
        inpatient hospital services) to persons eligible under 
        this title on a prepaid risk basis prior to 1970.
    [(C) Subparagraph (A)(ii) shall not apply with respect to 
payments under this title to a State with respect to 
expenditures incurred by it for payment for services by an 
entity during the three-year period beginning on the date of 
enactment of this subsection or beginning on the date the 
entity qualifies as a health maintenance organization (as 
determined by the Secretary), whichever occurs later, but only 
if the entity demonstrates to the satisfaction of the Secretary 
by the submission of plans for each year of such three-year 
period that it is making continuous efforts and progress toward 
achieving compliance with subparagraph (A)(ii).
    [(D) In the case of a health maintenance organization that 
is a public entity, the Secretary may modify or waive the 
requirement described in subparagraph (A)(ii) but only if the 
Secretary determines that the organization has taken and is 
taking reasonable efforts to enroll individuals who are not 
entitled to benefits under the State plan approved under this 
title or under title XVIII.
    [(E) In the case of a health maintenance organization 
that--
            [(i) is a nonprofit organization with at least 
        25,000 members,
            [(ii) is and has been a qualified health 
        maintenance organization (as defined in section 1310(d) 
        of the Public Health Service Act) for a period of at 
        least four years,
            [(iii) provides basic health services through 
        members of the staff of the organization,
            [(iv) is located in an area designated as medically 
        underserved under section 1302(7) of the Public Health 
        Service Act, and
            [(v) previously received a waiver of the 
        requirement described in subparagraph (A)(ii) under 
        section 1115,
the Secretary may modify or waive the requirement described in 
subparagraph (A)(ii) but only if the Secretary determines that 
special circumstances warrant such modification or waiver and 
that the organization has taken and is taking reasonable 
efforts to enroll individuals who are not entitled to benefits 
under the State plan approved under this title or under title 
XVIII.
    [(F) In the case of--
            [(i) a contract with an entity described in 
        subparagraph (E) or (G), with a qualified health 
        maintenance organization (as defined in section 1310(d) 
        of the Public Health Service Act) which meets the 
        requirement of subparagraph (A)(ii), or or with an 
        eligible organization with a contract under section 
        1876 which meets the requirement of subparagraph 
        (A)(ii), or
            [(ii) a program pursuant to an undertaking 
        described in paragraph (6) in which at least 25 percent 
        of the membership enrolled on a prepaid basis are 
        individuals who (I) are not insured for benefits under 
        part B of title XVIII or eligible for benefits under 
        this title, and (II) (in the case of such individuals 
        whose prepayments are made in whole or in part by any 
        government entity) had the opportunity at the time of 
        enrollment in the program to elect other coverage of 
        health care costs that would have been paid in whole or 
        in part by any governmental entity,
a State plan may restrict the period in which requests for 
termination of enrollment without cause under subparagraph 
(A)(vi)(I) are permitted to the first month of each period of 
enrollment, each such period of enrollment not to exceed six 
months in duration, but only if the State provides 
notification, at least twice per year, to individuals enrolled 
with such entity or organization of the right to terminate such 
enrollment and the restriction on the exercise of this right. 
Such restriction shall not apply to requests for termination of 
enrollment for cause.
    [(G) In the case of an entity which is receiving (and has 
received during the previous two years) a grant of at least 
$100,000 under section 329(d)(1)(A) or 330(d)(1) of the Public 
Health Service Act or is receiving (and has received during the 
previous two years) at least $100,000 (by grant, subgrant, or 
subcontract) under the Appalachian Regional Development Act of 
1965, clauses (i) and (ii) of subparagraph (A) shall not apply.
    [(H) In the case of an individual who--
            [(i) in a month is eligible for benefits under this 
        title and enrolled with a health maintenance 
        organization with a contract under this paragraph,
            [(ii) in the next month (or in the next 2 months) 
        is not eligible for such benefits, but
            [(iii) in the succeeding month is again eligible 
        for such benefits,
the State plan, subject to subparagraph (A)(vi), may enroll the 
individual for that succeeding month with the health 
maintenance organization described in clause (i) if the 
organization continues to have a contract under this paragraph 
with the State.
    [(4)(A) Each health maintenance organization which is not a 
qualified health maintenance organization (as defined in 
section 1310(d) of the Public Health Service Act) must report 
to the State and, upon request, to the Secretary, the Inspector 
General of the Department of Health and Human Services, and the 
Comptroller General a description of transactions between the 
organization and a party in interest (as defined in section 
1318(b) of such Act), including the following transactions:
            [(i) Any sale or exchange, or leasing of any 
        property between the organization and such a party.
            [(ii) Any furnishing for consideration of goods, 
        services (including management services), or facilities 
        between the organization and such a party, but not 
        including salaries paid to employees for services 
        provided in the normal course of their employment.
            [(iii) Any lending of money or other extension of 
        credit between the organization and such a party.
The State or Secretary may require that information reported 
respecting an organization which controls, or is controlled by, 
or is under common control with, another entity be in the form 
of a consolidated financial statement for the organization and 
such entity.
    [(B) Each organization shall make the information reported 
pursuant to subparagraph (A) available to its enrollees upon 
reasonable request.
    [(5)(A) If the Secretary determines that an entity with a 
contract under this subsection--
            [(i) fails substantially to provide medically 
        necessary items and services that are required (under 
        law or under the contract) to be provided to an 
        individual covered under the contract, if the failure 
        has adversely affected (or has substantial likelihood 
        of adversely affecting) the individual;
            [(ii) imposes premiums on individuals enrolled 
        under this subsection in excess of the premiums 
        permitted under this title;
            [(iii) acts to discriminate among individuals in 
        violation of the provision of paragraph (2)(A)(v), 
        including expulsion or refusal to re-enroll an 
        individual or engaging in any practice that would 
        reasonably be expected to have the effect of denying or 
        discouraging enrollment (except as permitted by this 
        subsection) by eligible individuals with the 
        organization whose medical condition or history 
        indicates a need for substantial future medical 
        services;
            [(iv) misrepresents or falsifies information that 
        is furnished--
                    [(I) to the Secretary or the State under 
                this subsection, or
                    [(II) to an individual or to any other 
                entity under this subsection, or
            [(v) fails to comply with the requirements of 
        section 1876(i)(8),
the Secretary may provide, in addition to any other remedies 
available under law, for any of the remedies described in 
subparagraph (B).
    [(B) The remedies described in this subparagraph are--
            [(i) civil money penalties of not more than $25,000 
        for each determination under subparagraph (A), or, with 
        respect to a determination under clause (iii) or 
        (iv)(I) of such subparagraph, of not more than $100,000 
        for each such determination, plus, with respect to a 
        determination under subparagraph (A)(ii), double the 
        excess amount charged in violation of such subparagraph 
        (and the excess amount charged shall be deducted from 
        the penalty and returned to the individual concerned), 
        and plus, with respect to a determination under 
        subparagraph (A)(iii), $15,000 for each individual not 
        enrolled as a result of a practice described in such 
        subparagraph, or
            [(ii) denial of payment to the State for medical 
        assistance furnished under the contract under this 
        subsection for individuals enrolled after the date the 
        Secretary notifies the organization of a determination 
        under subparagraph (A) and until the Secretary is 
        satisfied that the basis for such determination has 
        been corrected and is not likely to recur.
The provisions of section 1128A (other than subsections (a) and 
(b)) shall apply to a civil money penalty under clause (i) in 
the same manner as such provisions apply to a penalty or 
proceeding under section 1128A(a).
    [(6)(A) For purposes of this subsection and section 
1902(e)(2)(A), in the case of the State of New Jersey, the term 
``contract'' shall be deemed to include an undertaking by the 
State agency, in the State plan under this title, to operate a 
program meeting all requirements of this subsection.
    [(B) The undertaking described in subparagraph (A) must 
provide--
            [(i) for the establishment of a separate entity 
        responsible for the operation of a program meeting the 
        requirements of this subsection, which entity may be a 
        subdivision of the State agency administering the State 
        plan under this title;
            [(ii) for separate accounting for the funds used to 
        operate such program;
            [(iii) for setting the capitation rates and any 
        other payment rates for services provided in accordance 
        with this subsection using a methodology satisfactory 
        to the Secretary designed to ensure that total Federal 
        matching payments under this title for such services 
        will be lower than the matching payments that would be 
        made for the same services, if provided under the State 
        plan on a fee for service basis to an actuarially 
        equivalent population; and
            [(iv) that the State agency will contract, for 
        purposes of meeting the requirement under section 
        1902(a)(30)(C), with an organization or entity that 
        under section 1154 reviews services provided by an 
        eligible organization pursuant to a contract under 
        section 1876 for the purpose of determining whether the 
        quality of services meets professionally recognized 
        standards of health care.
    [(C) The undertaking described in subparagraph (A) shall be 
subject to approval (and annual re-approval) by the Secretary 
in the same manner as a contract under this subsection.
    [(D) The undertaking described in subparagraph (A) shall 
not be eligible for a waiver under section 1915(b).
    [(o) Notwithstanding the preceding provisions of this 
section, no payment shall be made to a State under the 
preceding provisions of this section for expenditures for 
medical assistance provided for an individual under its State 
plan approved under this title to the extent that a private 
insurer (as defined by the Secretary by regulation and 
including a group health plan (as defined in section 607(1) of 
the Employee Retirement Income Security Act of 1974)),, a 
service benefit plan, and a health maintenance organization) 
would have been obligated to provide such assistance but for a 
provision of its insurance contract which has the effect of 
limiting or excluding such obligation because the individual is 
eligible for or is provided medical assistance under the plan.
    [(p)(1) When a political subdivision of a State makes, for 
the State of which it is a political subdivision, or one State 
makes, for another State, the enforcement and collection of 
rights of support or payment assigned under section 1912, 
pursuant to a cooperative arrangement under such section 
(either within or outside of such State), there shall be paid 
to such political subdivision or such other State from amounts 
which would otherwise represent the Federal share of payments 
for medical assistance provided to the eligible individuals on 
whose behalf such enforcement and collection was made, an 
amount equal to 15 percent of any amount collected which is 
attributable to such rights of support or payment.
    [(2) Where more than one jurisdiction is involved in such 
enforcement or collection, the amount of the incentive payment 
determined under paragraph (1) shall be allocated among the 
jurisdictions in a manner to be prescribed by the Secretary.
    [(q) For the purposes of this section, the term ``State 
medicaid fraud control unit'' means a single identifiable 
entity of the State government which the Secretary certifies 
(and annually recertifies) as meeting the following 
requirements:
            [(1) The entity (A) is a unit of the office of the 
        State Attorney General or of another department of 
        State government which possesses statewide authority to 
        prosecute individuals for criminal violations, (B) is 
        in a State the constitution of which does not provide 
        for the criminal prosecution of individuals by a 
        statewide authority and has formal procedures, approved 
        by the Secretary, that (i) assure its referral of 
        suspected criminal violations relating to the program 
        under this title to the appropriate authority or 
        authorities in the State for prosecution and (ii) 
        assure its assistance of, and coordination with, such 
        authority or authorities in such prosecutions, or (C) 
        has a formal working relationship with the office of 
        the State Attorney General and has formal procedures 
        (including procedures for its referral of suspected 
        criminal violations to such office) which are approved 
        by the Secretary and which provide effective 
        coordination of activities between the entity and such 
        office with respect to the detection, investigation, 
        and prosecution of suspected criminal violations 
        relating to the program under this title.
            [(2) The entity is separate and distinct from the 
        single State agency that administers or supervises the 
        administration of the State plan under this title.
            [(3) The entity's function is conducting a 
        statewide program for the investigation and prosecution 
        of violations of all applicable State laws regarding 
        any and all aspects of fraud in connection with any 
        aspect of the provision of medical assistance and the 
        activities of providers of such assistance under the 
        State plan under this title.
            [(4) The entity has procedures for reviewing 
        complaints of the abuse and neglect of patients of 
        health care facilities which receive payments under the 
        State plan under this title, and, where appropriate, 
        for acting upon such complaints under the criminal laws 
        of the State or for referring them to other State 
        agencies for action.
            [(5) The entity provides for the collection, or 
        referral for collection to a single State agency, of 
        overpayments that are made under the State plan to 
        health care facilities and that are discovered by the 
        entity in carrying out its activities.
            [(6) The entity employs such auditors, attorneys, 
        investigators, and other necessary personnel and is 
        organized in such a manner as is necessary to promote 
        the effective and efficient conduct of the entity's 
        activities.
            [(7) The entity submits to the Secretary an 
        application and annual reports containing such 
        information as the Secretary determines, by regulation, 
        to be necessary to determine whether the entity meets 
        the other requirements of this subsection.
    [(r)(1)(A) In order to receive payments under paragraphs 
(2)(A) and (7) of subsection (a) without being subject to per 
centum reductions set forth in subparagraph (C) of this 
paragraph, a State must provide that mechanized claims 
processing and information retrieval systems of the type 
described in subsection (a)(3)(B) and detailed in an advance 
planning document approved by the Secretary are operational on 
or before the deadline established under subparagraph (B).
    [(B) The deadline for operation of such systems for a State 
is September 30, 1985.
    [(C) If a State fails to meet the deadline established 
under subparagraph (B), the per centums specified in paragraphs 
(2)(A) and (7) of subsection (a) with respect to that State 
shall each be reduced by 5 percentage points for the first two 
quarters beginning on or after such deadline, and shall be 
further reduced by an additional 5 percentage points after each 
period consisting of two quarters during which the Secretary 
determines the State fails to meet the requirements of 
subparagraph (A); except that--
            [(i) neither such per centum may be reduced by more 
        than 25 percentage points by reason of this paragraph; 
        and
            [(ii) no reduction shall be made under this 
        paragraph for any quarter following the quarter during 
        which such State meets the requirements of subparagraph 
        (A).
    [(2)(A) In order to receive payments under paragraphs 
(2)(A) and (7) of subsection (a) without being subject to the 
per centum reductions set forth in subparagraph (C) of this 
paragraph, a State must have its mechanized claims processing 
and information retrieval systems, of the type required to be 
operational under paragraph (1), initially approved by the 
Secretary in accordance with paragraph (5)(A) on or before the 
deadline established under subparagraph (B).
    [(B) The deadline for approval of such systems for a State 
is the last day of the fourth quarter that begins after the 
date on which the Secretary determines that such systems became 
operational as required under paragraph (1).
    [(C) If a State fails to meet the deadline established 
under subparagraph (B), the per centums specified in paragraphs 
(2)(A) and (7) of subsection (a) with respect to that State 
shall each be reduced by 5 percentage points for the first two 
quarters beginning after such deadline, and shall be further 
reduced by an additional 5 percentage points at the end of each 
period consisting of two quarters during which the State fails 
to meet the requirements of subparagraph (A); except that--
            [(i) neither such per centum may be reduced by more 
        than 25 percentage points by reason of this paragraph, 
        and
            [(ii) no reduction shall be made under this 
        paragraph for any quarter following the quarter during 
        which such State's systems are approved by the 
        Secretary as provided in subparagraph (A).
    [(D) Any State's systems which are approved by the 
Secretary for purposes of subsection (a)(3)(B) on or before the 
date of the enactment of this subsection shall be deemed to be 
initially approved for purposes of this subsection.
    [(3)(A) When a State's systems are initially approved, the 
75 per centum Federal matching provided in subsection (a)(3)(B) 
shall become effective with respect to such systems, 
retroactive to the first quarter beginning after the date on 
which such systems became operational as required under 
paragraph (1), except as provided in subparagraph (B).
    [(B) In the case of any State which was subject to a per 
centum reduction under paragraph (2), the per centum specified 
in subsection (a)(3)(B) shall be reduced by 5 percentage points 
for the first two quarters beginning after the deadline 
established under paragraph (2)(B), and shall be further 
reduced by an additional 5 percentage points at the end of each 
period consisting of two quarters beginning after such deadline 
and before the date on which such systems are initially 
approved, except that no reduction shall be made under this 
paragraph for any quarter following the quarter during which 
the State's systems are initially approved by the Secretary.
    [(4)(A) The Secretary shall review all approved systems not 
less often than once every three years, and shall reapprove or 
disapprove any such systems. Systems which fail to meet the 
current performance standards, system requirements, and any 
other conditions for approval developed by the Secretary under 
paragraph (6) shall be disapproved. Any State having systems 
which are so disapproved shall be subject to a per centum 
reduction under subparagraph (B). The Secretary shall make the 
determination of reapproval or disapproval and so notify the 
States not later than the end of the first quarter following 
the review period. Reviews may, at the Secretary's discretion, 
constitute reviews of the entire system or of only those 
standards, systems requirements, and other conditions which 
have demonstrated weakness in previous reviews.
    [(B) If the Secretary disapproves a State's systems under 
subparagraph (A), the Secretary shall, with respect to such 
State for quarters beginning after the determination of 
disapproval and before the first quarter beginning after such 
systems are reapproved, reduce the per centum specified in 
subsection (a)(3)(B) to a per centum of not less than 50 per 
centum and not more than 70 per centum as the Secretary 
determines to be appropriate and commensurate with the nature 
of noncompliance by such State; except that such per centum may 
not be reduced by more than 10 percentage points in any 4-
quarter period by reason of this subparagraph. No State shall 
be subject to a per centum reduction under this paragraph (i) 
before the fifth quarter beginning after such State's systems 
were initially approved, or (ii) on the basis of a review 
conducted before October 1, 1981.
    [(C) The Secretary may retroactively waive a per centum 
reduction imposed under subparagraph (B), if the Secretary 
determines that the State's systems meet all current 
performance standards and other requirements for reapproval and 
that such action would improve the administration of the 
State's plan under this title, except that no such waiver may 
extend beyond the four quarters immediately prior to the 
quarter in which the State's systems are reapproved.
    [(5)(A) In order to be initially approved by the Secretary, 
mechanized claims processing and information retrieval systems 
must be of the type described in subsection (a)(3)(B) and must 
meet the following requirements:
            [(i) The systems must be capable of developing 
        provider, physician, and patient profiles which are 
        sufficient to provide specific information as to the 
        use of covered types of services and items, including 
        prescribed drugs.
            [(ii) The State must provide that information on 
        probable fraud or abuse which is obtained from, or 
        developed by, the systems, is made available to the 
        State's medicaid fraud control unit (if any) certified 
        under subsection (q) of this section.
            [(iii) The systems must meet all performance 
        standards and other requirements for initial approval 
        developed by the Secretary under paragraph (6).
    [(B) In order to be reapproved by the Secretary, mechanized 
claims processing and information retrieval systems must meet 
the requirements of subparagraphs (A)(i) and (A)(ii) and 
performance standards and other requirements for reapproval 
developed by the Secretary under paragraph (6).
    [(6) The Secretary, with respect to State systems, shall--
            [(A) develop performance standards, system 
        requirements, and other conditions for approval for use 
        in initially approving such State systems, and shall 
        further develop written approval procedures for 
        conducting reviews for initial approval, including 
        specific criteria for assessing systems in operation to 
        insure that all such performance standards and other 
        requirements are met;
            [(B) by not later than October 1, 1980, develop an 
        initial set of performance standards, system 
        requirements, and other conditions for reapproval for 
        use in reapproving or disapproving State systems, and 
        shall further develop written reapproval procedures for 
        conducting reviews for reapproval, including specific 
        criteria for reassessing systems operations over a 
        period of at least six months during each fiscal year 
        to insure that all such performance standards and other 
        requirements are met on a continuous basis;
            [(C) provide that reviews for reapproval, conducted 
        before October 1, 1981, shall be for the purpose of 
        developing a systems performance data base and 
        assisting States to improve their systems, and that no 
        per centum reduction shall be made under paragraph (4) 
        on the basis of such a review;
            [(D) insure that review procedures, performance 
        standards, and other requirements developed under 
        subparagraph (B) are sufficiently flexible to allow for 
        differing administrative needs among the States, and 
        that such procedures, standards, and requirements are 
        of a nature which will permit their use by the States 
        for self-evaluation;
            [(E) notify all States of proposed procedures, 
        standards, and other requirements at least one quarter 
        prior to the fiscal year in which such procedures, 
        standards, and other requirements will be used for 
        conducting reviews for reapproval;
            [(F) periodically update the systems performance 
        standards, system requirements, review criteria, 
        objectives, regulations, and guides as the Secretary 
        shall from time to time deem appropriate;
            [(G) provide technical assistance to States in the 
        development and improvement of the systems so as to 
        continually improve the capacity of such systems to 
        effectively detect cases of fraud or abuse;
            [(H) for the purpose of insuring compatibility 
        between the State systems and the systems utilized in 
        the administration of title XVIII--
                    [(i) develop a uniform identification 
                coding system (to the extent feasible) for 
                providers, other persons receiving payments 
                under the State plans (approved under this 
                title) or under title XVIII, and beneficiaries 
                of medical services under such plans or title;
                    [(ii) provide liaison between States and 
                carriers and intermediaries having agreements 
                under title XVIII to facilitate timely exchange 
                of appropriate data; and
                    [(iii) improve the exchange of data between 
                the States and the Secretary with respect to 
                providers and other persons who have been 
                terminated, suspended, or otherwise sanctioned 
                under a State plan (approved under this title) 
                or under title XVIII;
            [(I) develop and disseminate clear definitions of 
        those types of reasonable costs relating to State 
        systems which are reimbursable under the provisions of 
        subsection (a)(3) of this section; and
            [(J) develop and disseminate performance standards 
        for assessing the State's third party collection 
        efforts in accordance with section 1902(a)(25)(A)(ii).
    [(7)(A) The Secretary shall waive the provisions of this 
subsection with respect to initial operation and approval of 
mechanized claims processing and information retrieval systems 
with respect to any State which--
            [(i) had a 1976 population (as reported by the 
        Bureau of the Census) of less than 1,000,000 and which 
        made total expenditures (including Federal 
        reimbursement) for which Federal financial 
        participation is authorized under this title of less 
        than $100,000,000 in fiscal year 1976 (as reported by 
        such State for such year), or
            [(ii) is a Commonwealth, or territory or 
        possession, of the United States,
if such State reasonably demonstrates, and the Secretary does 
not formally disagree, that the application of such provisions 
would not significantly improve the efficiency of the 
administration of such State's plan under this title.
    [(B) If the Secretary determines that the application of 
the provisions described in subparagraph (A) to a State would 
significantly improve the efficiency of the administration of 
the State's plan under this title, the Secretary may withdraw 
the State's waiver under subparagraph (A) and, in such case, 
the Secretary shall impose a timetable for such State with 
respect to compliance with the provisions of this subsection 
and the imposition of per centum reductions. Such timetable 
shall be comparable to the timetable established under this 
subsection as to the amount of time allowed such State to 
comply and the timing of per centum reductions.
    [(8)(A) The per centum reductions provided for under this 
subsection shall not apply to a State for any quarter with 
respect to which the Secretary determines that such State is 
unable to comply with the relevant requirements of this 
subsection--
            [(i) for good cause (but such a waiver may not be 
        for a period in excess of 2 quarters), or
            [(ii) due to circumstances beyond the control of 
        such State.
    [(B) If the Secretary determines under subparagraph (A) 
that such a reduction will not apply to a State, the Secretary 
shall report to the Congress on the basis for each such 
determination and on the modification of all time limitations 
and deadlines as described in subparagraph (C).
    [(C) For purposes of determining all time limitations and 
deadlines imposed under this subsection, any time period during 
which a State was found under subparagraph (A)(ii) to be unable 
to comply with requirements of this subsection due to 
circumstances beyond its control shall not be taken into 
account, and the Secretary shall modify all such time 
limitations and deadlines with respect to such State 
accordingly.
    [(s) Notwithstanding the preceding provisions of this 
section, no payment shall be made to a State under this section 
for expenditures for medical assistance under the State plan 
consisting of a designated health service (as defined in 
subsection (h)(6) of section 1877) furnished to an individual 
on the basis of a referral that would result in the denial of 
payment for the service under title XVIII if such title 
provided for coverage of such service to the same extent and 
under the same terms and conditions as under the State plan, 
and subsections (f) and (g)(5) of such section shall apply to a 
provider of such a designated health service for which payment 
may be made under this title in the same manner as such 
subsections apply to a provider of such a service for which 
payment may be made under such title.
    [(u)(1)(A) Notwithstanding subsection (a)(1), if the ratio 
of a State's erroneous excess payments for medical assistance 
(as defined in subparagraph (D)) to its total expenditures for 
medical assistance under the State plan approved under this 
title exceeds 0.03, for the period consisting of the third and 
fourth quarters of fiscal year 1983, or for any full fiscal 
year thereafter, then the Secretary shall make no payment for 
such period or fiscal year with respect to so much of such 
erroneous excess payments as exceeds such allowable error rate 
of 0.03.
    [(B) The Secretary may waive, in certain limited cases, all 
or part of the reduction required under subparagraph (A) with 
respect to any State if such State is unable to reach the 
allowable error rate for a period or fiscal year despite a good 
faith effort by such State.
    [(C) In estimating the amount to be paid to a State under 
subsection (d), the Secretary shall take into consideration the 
limitation on Federal financial participation imposed by 
subparagraph (A) and shall reduce the estimate he makes under 
subsection (d)(1), for purposes of payment to the State under 
subsection (d)(3), in light of any expected erroneous excess 
payments for medical assistance (estimated in accordance with 
such criteria, including sampling procedures, as he may 
prescribe and subject to subsequent adjustment, if necessary, 
under subsection (d)(2)).
    [(D)(i) For purposes of this subsection, the term 
``erroneous excess payments for medical assistance'' means the 
total of--
            [(I) payments under the State plan with respect to 
        ineligible individuals and families, and
            [(II) overpayments on behalf of eligible 
        individuals and families by reason of error in 
        determining the amount of expenditures for medical care 
        required of an individual or family as a condition of 
        eligibility.
    [(ii) In determining the amount of erroneous excess 
payments for medical assistance to an ineligible individual or 
family under clause (i)(I), if such ineligibility is the result 
of an error in determining the amount of the resources of such 
individual or family, the amount of the erroneous excess 
payment shall be the smaller of (I) the amount of the payment 
with respect to such individual or family, or (II) the 
difference between the actual amount of such resources and the 
allowable resource level established under the State plan.
    [(iii) In determining the amount of erroneous excess 
payments for medical assistance to an individual or family 
under clause (i)(II), the amount of the erroneous excess 
payment shall be the smaller of (I) the amount of the payment 
on behalf of the individual or family, or (II) the difference 
between the actual amount incurred for medical care by the 
individual or family and the amount which should have been 
incurred in order to establish eligibility for medical 
assistance.
    [(iv) In determining the amount of erroneous excess 
payments, there shall not be included any error resulting from 
a failure of an individual to cooperate or give correct 
information with respect to third-party liability as required 
under section 1912(a)(1)(C) or 402(a)(26)(C) or with respect to 
payments made in violation of section 1906.
    [(v) In determining the amount of erroneous excess 
payments, there shall not be included any erroneous payments 
made for ambulatory prenatal care provided during a presumptive 
eligibility period (as defined in section 1920(b)(1)).
    [(E) For purposes of subparagraph (D), there shall be 
excluded, in determining both erroneous excess payments for 
medical assistance and total expenditures for medical 
assistance--
            [(i) payments with respect to any individual whose 
        eligibility therefor was determined exclusively by the 
        Secretary under an agreement pursuant to section 1634 
        and such other classes of individuals as the Secretary 
        may by regulation prescribe whose eligibility was 
        determined in part under such an agreement; and
            [(ii) payments made as the result of a technical 
        error.
    [(2) The State agency administering the plan approved under 
this title shall, at such times and in such form as the 
Secretary may specify, provide information on the rates of 
erroneous excess payments made (or expected, with respect to 
future periods specified by the Secretary) in connection with 
its administration of such plan, together with any other data 
he requests that are reasonably necessary for him to carry out 
the provisions of this subsection.
    [(3)(A) If a State fails to cooperate with the Secretary in 
providing information necessary to carry out this subsection, 
the Secretary, directly or through contractual or such other 
arrangements as he may find appropriate, shall establish the 
error rates for that State on the basis of the best data 
reasonably available to him and in accordance with such 
techniques for sampling and estimating as he finds appropriate.
    [(B) In any case in which it is necessary for the Secretary 
to exercise his authority under subparagraph (A) to determine a 
State's error rates for a fiscal year, the amount that would 
otherwise be payable to such State under this title for 
quarters in such year shall be reduced by the costs incurred by 
the Secretary in making (directly or otherwise) such 
determination.
    [(4) This subsection shall not apply with respect to Puerto 
Rico, Guam, the Virgin Islands, the Northern Mariana Islands, 
or American Samoa.
    [(v)(1) Notwithstanding the preceding provisions of this 
section, except as provided in paragraph (2), no payment may be 
made to a State under this section for medical assistance 
furnished to an alien who is not lawfully admitted for 
permanent residence or otherwise permanently residing in the 
United States under color of law.
    [(2) Payment shall be made under this section for care and 
services that are furnished to an alien described in paragraph 
(1) only if--
            [(A) such care and services are necessary for the 
        treatment of an emergency medical condition of the 
        alien,
            [(B) such alien otherwise meets the eligibility 
        requirements for medical assistance under the State 
        plan approved under this title (other than the 
        requirement of the receipt of aid or assistance under 
        title IV, supplemental security income benefits under 
        title XVI, or a State supplementary payment), and
            [(C) such care and services are not related to an 
        organ transplant procedure.
    [(3) For purposes of this subsection, the term ``emergency 
medical condition'' means a medical condition (including 
emergency labor and delivery) manifesting itself by acute 
symptoms of sufficient severity (including severe pain) such 
that the absence of immediate medical attention could 
reasonably be expected to result in--
            [(A) placing the patient's health in serious 
        jeopardy,
            [(B) serious impairment to bodily functions, or
            [(C) serious dysfunction of any bodily organ or 
        part.
    [(w)(1)(A) Notwithstanding the previous provisions of this 
section, for purposes of determining the amount to be paid to a 
State (as defined in paragraph (7)(D)) under subsection (a)(1) 
for quarters in any fiscal year, the total amount expended 
during such fiscal year as medical assistance under the State 
plan (as determined without regard to this subsection) shall be 
reduced by the sum of any revenues received by the State (or by 
a unit of local government in the State) during the fiscal 
year--
            [(i) from provider-related donations (as defined in 
        paragraph (2)(A)), other than--
                    [(I) bona fide provider-related donations 
                (as defined in paragraph (2)(B)), and
                    [(II) donations described in paragraph 
                (2)(C);
            [(ii) from health care related taxes (as defined in 
        paragraph (3)(A)), other than broad-based health care 
        related taxes (as defined in paragraph (3)(B));
            [(iii) from a broad-based health care related tax, 
        if there is in effect a hold harmless provision 
        (described in paragraph (4)) with respect to the tax; 
        or
            [(iv) only with respect to State fiscal years (or 
        portions thereof) occurring on or after January 1, 
        1992, and before October 1, 1995, from broad-based 
        health care related taxes to the extent the amount of 
        such taxes collected exceeds the limit established 
        under paragraph (5).
    [(B) Notwithstanding the previous provisions of this 
section, for puroses of determining the amount to be paid to a 
State under subsection (a)(7) for all quarters in a Federal 
fiscal year (beginning with fiscal year 1993), the total amount 
expended during the fiscal year for administrative expenditures 
under the State plan (as determined without regard to this 
subsection) shall be reduced by the sum of any revenues 
received by the State (or by a unit of local government in the 
State) during such quarters from donations described in 
paragraph (2)(C), to the extent the amount of such donations 
exceeds 10 percent of the amounts expended under the State plan 
under this title during the fiscal year for purposes described 
in paragraphs (2), (3), (4), (6), and (7) of subsection (a).
    [(C)(i) Except as otherwise provided in clause (ii), 
subparagraph (A)(i) shall apply to donations received on or 
after January 1, 1992.
    [(ii) Subject to the limits described in clause (iii) and 
subparagraph (E), subparagraph (A)(i) shall not apply to 
donations received before the effective date specified in 
subparagraph (F) if such donations are received under programs 
in effect or as described in State plan amendments or related 
documents submitted to the Secretary by September 30, 1991, and 
applicable to State fiscal year 1992, as demonstrated by State 
plan amendments, written agreements, State budget 
documentation, or other documentary evidence in existence on 
that date.
    [(iii) In applying clause (ii) in the case of donations 
received in State fiscal year 1993, the maximum amount of such 
donations to which such clause may be applied may not exceed 
the total amount of such donations received in the 
corresponding period in State fiscal year 1992 (or not later 
than 5 days after the last day of the corresponding period).
    [(D)(i) Except as otherwise provided in clause (ii), 
subparagraphs (A)(ii) and (A)(iii) shall apply to taxes 
received on or after January 1, 1992.
    [(ii) Subparagraphs (A)(ii) and (A)(iii) shall not apply to 
impermissible taxes (as defined in clause (iii)) received 
before the effective date specified in subparagraph (F) to the 
extent the taxes (including the tax rate or base) were in 
effect, or the legislation or regulations imposing such taxes 
were enacted or adopted, as of November 22, 1991.
    [(iii) In this subparagraph and subparagraph (E), the term 
``impermissible tax'' means a health care related tax for which 
a reduction may be made under clause (ii) or (iii) of 
subparagraph (A).
    [(E)(i) In no case may the total amount of donations and 
taxes permitted under the exception provided in subparagraphs 
(C)(ii) and (D)(ii) for the portion of State fiscal year 1992 
occurring during calendar year 1992 exceed the limit under 
paragraph (5) minus the total amount of broad-based health care 
related taxes received in the portion of that fiscal year.
    [(ii) In no case may the total amount of donations and 
taxes permitted under the exception provided in subparagraphs 
(C)(ii) and (D)(ii) for State fiscal year 1993 exceed the limit 
under paragraph (5) minus the total amount of broad-based 
health care related taxes received in that fiscal year.
    [(F) In this paragraph in the case of a State--
            [(i) except as provided in clause (iii), with a 
        State fiscal year beginning on or before July 1, the 
        effective date is October 1, 1992,
            [(ii) except as provided in clause (iii), with a 
        State fiscal year that begins after July 1, the 
        effective date is January 1, 1993, or
            [(iii) with a State legislature which is not 
        scheduled to have a regular legislative session in 
        1992, with a State legislature which is not scheduled 
        to have a regular legislative session in 1993, or with 
        a provider-specific tax enacted on November 4, 1991, 
        the effective date is July 1, 1993.
    [(2)(A) In this subsection (except as provided in paragraph 
(6)), the term ``provider-related donation'' means any donation 
or other voluntary payment (whether in cash or in kind) made 
(directly or indirectly) to a State or unit of local government 
by--
            [(i) a health care provider (as defined in 
        paragraph (7)(B)),
            [(ii) an entity related to a health care provider 
        (as defined in paragraph (7)(C)), or
            [(iii) an entity providing goods or services under 
        the State plan for which payment is made to the State 
        under paragraph (2), (3), (4), (6), or (7) of 
        subsection (a).
    [(B) For purposes of paragraph (1)(A)(i)(I), the term 
``bona fide provider-related donation'' means a provider-
related donation that has no direct or indirect relationship 
(as determined by the Secretary) to payments made under this 
title to that provider, to providers furnishing the same class 
of items and services as that provider, or to any related 
entity, as established by the State to the satisfaction of the 
Secretary. The Secretary may by regulation specify types of 
provider-related donations described in the previous sentence 
that will be considered to be bona fide provider-related 
donations.
    [(C) For purposes of paragraph (1)(A)(i)(II), donations 
described in this subparagraph are funds expended by a 
hospital, clinic, or similar entity for the direct cost 
(including costs of training and of preparing and distributing 
outreach materials) of State or local agency personnel who are 
stationed at the hospital, clinic, or entity to determine the 
eligibility of individuals for medical assistance under this 
title and to provide outreach services to eligible or 
potentially eligible individuals.
    [(3)(A) In this subsection (except as provided in paragraph 
(6)), the term ``health care related tax'' means a tax (as 
defined in paragraph (7)(F)) that--
            [(i) is related to health care items or services, 
        or to the provision of, the authority to provide, or 
        payment for, such items or services, or
            [(ii) is not limited to such items or services but 
        provides for treatment of individuals or entities that 
        are providing or paying for such items or services that 
        is different from the treatment provided to other 
        individuals or entities.
In applying clause (i), a tax is considered to relate to health 
care items or services if at least 85 percent of the burden of 
such tax falls on health care providers.
    [(B) In this subsection, the term ``broad-based health care 
related tax'' means a health care related tax which is imposed 
with respect to a class of health care items or services (as 
described in paragraph (7)(A)) or with respect to providers of 
such items or services and which, except as provided in 
subparagraphs (D) and (E)--
            [(i) is imposed at least with respect to all items 
        or services in the class furnished by all non-Federal, 
        nonpublic providers in the State (or, in the case of a 
        tax imposed by a unit of local government, the area 
        over which the unit has jurisdiction) or is imposed 
        with respect to all non-Federal, nonpublic providers in 
        the class; and
            [(ii) is imposed uniformly (in accordance with 
        subparagraph (C)).
    [(C)(i) Subject to clause (ii), for purposes of 
subparagraph (B)(ii), a tax is considered to be imposed 
uniformly if--
            [(I) in the case of a tax consisting of a licensing 
        fee or similar tax on a class of health care items or 
        services (or providers of such items or services), the 
        amount of the tax imposed is the same for every 
        provider providing items or services within the class;
            [(II) in the case of a tax consisting of a 
        licensing fee or similar tax imposed on a class of 
        health care items or services (or providers of such 
        services) on the basis of the number of beds (licensed 
        or otherwise) of the provider, the amount of the tax is 
        the same for each bed of each provider of such items or 
        services in the class;
            [(III) in the case of a tax based on revenues or 
        receipts with respect to a class of items or services 
        (or providers of items or services) the tax is imposed 
        at a uniform rate for all items and services (or 
        providers of such items of services) in the class on 
        all the gross revenues or receipts, or net operating 
        revenues, relating to the provision of all such items 
        or services (or all such providers) in the State (or, 
        in the case of a tax imposed by a unit of local 
        government within the State, in the area over which the 
        unit has jurisdiction); or
            [(IV) in the case of any other tax, the State 
        establishes to the satisfaction of the Secretary that 
        the tax is imposed uniformly.
    [(ii) Subject to subparagraphs (D) and (E), a tax imposed 
with respect to a class of health care items and services is 
not considered to be imposed uniformly if the tax provides for 
any credits, exclusions, or deductions which have as their 
purpose or effect the return to providers of all or a portion 
of the tax paid in a manner that is inconsistent with 
subclauses (I) and (II) of subparagraph (E)(ii) or provides for 
a hold harmless provision described in paragraph (4).
    [(D) A tax imposed with respect to a class of health care 
items and services is considered to be imposed uniformly--
            [(i) notwithstanding that the tax is not imposed 
        with respect to items or services (or the providers 
        thereof) for which payment is made under a State plan 
        under this title or title XVIII, or
            [(ii) in the case of a tax described in 
        subparagraph (C)(i)(III), notwithstanding that the tax 
        provides for exclusion (in whole or in part) of 
        revenues or receipts from a State plan under this title 
        or title XVIII.
    [(E)(i) A State may submit an application to the Secretary 
requesting that the Secretary treat a tax as a broad-based 
health care related tax, notwithstanding that the tax does not 
apply to all health care items or services in class (or all 
providers of such items and services), provides for a credit, 
deduction, or exclusion, is not applied uniformly, or otherwise 
does not meet the requirements of subparagraph (B) or (C). 
Permissible waivers may include exemptions for rural or sole-
community providers.
    [(ii) The Secretary shall approve such an application if 
the State establishes to the satisfaction of the Secretary 
that--
            [(I) the net impact of the tax and associated 
        expenditures under this title as proposed by the State 
        is generally redistributive in nature, and
            [(II) the amount of the tax is not directly 
        correlated to payments under this title for items or 
        services with respect to which the tax is imposed.
The Secretary shall by regulation specify types of credits, 
exclusions, and deductions that will be considered to meet the 
requirements of this subparagraph.
    [(4) For purposes of paragraph (1)(A)(iii), there is in 
effect a hold harmless provision with respect to a broad-based 
health care related tax imposed with respect to a class of 
items or services if the Secretary determines that any of the 
following applies:
            [(A) The State or other unit of government imposing 
        the tax provides (directly or indirectly) for a payment 
        (other than under this title) to taxpayers and the 
        amount of such payment is positively correlated either 
        to the amount of such tax or to the difference between 
        the amount of the tax and the amount of payment under 
        the State plan.
            [(B) All or any portion of the payment made under 
        this title to the taxpayer varies based only upon the 
        amount of the total tax paid.
            [(C) The State or other unit of government imposing 
        the tax provides (directly or indirectly) for any 
        payment, offset, or waiver that guarantees to hold 
        taxpayers harmless for any portion of the costs of the 
        tax.
The provisions of this paragraph shall not prevent use of the 
tax to reimburse health care providers in a class for 
expenditures under this title nor preclude States from relying 
on such reimbursement to justify or explain the tax in the 
legislative process.
    [(5)(A) For purposes of this subsection, the limit under 
this subparagraph with respect to a State is an amount equal to 
25 percent (or, if greater, the State base percentage, as 
defined in subparagraph (B)) of the non-Federal share of the 
total amount expended under the State plan during a State 
fiscal year (or portion thereof), as it would be determined 
pursuant to paragraph (1)(A) without regard to paragraph 
(1)(A)(iv).
    [(B)(i) In subparagraph (A), the term ``State base 
percentage'' means, with respect to a State, an amount 
(expressed as a percentage) equal to--
            [(I) the total of the amount of health care related 
        taxes (whether or not broad-based) and the amount of 
        provider-related donations (whether or not bona fide) 
        projected to be collected (in accordance with clause 
        (ii)) during State fiscal year 1992, divided by
            [(II) the non-Federal share of the total amount 
        estimated to be expended under the State plan during 
        such State fiscal year.
    [(ii) For purposes of clause (i)(I), in the case of a tax 
that is not in effect throughout State fiscal year 1992 or the 
rate (or base) of which is increased during such fiscal year, 
the Secretary shall project the amount to be collected during 
such fiscal year as if the tax (or increase) were in effect 
during the entire State fiscal year.
    [(C)(i) The total amount of health care related taxes under 
subparagraph (B)(i)(I) shall be determined by the Secretary 
based on only those taxes (including the tax rate or base) 
which were in effect, or for which legislation or regulations 
imposing such taxes were enacted or adopted, as of November 22, 
1991.
    [(ii) The amount of provider-related donations under 
subparagraph (B)(i)(I) shall be determined by the Secretary 
based on programs in effect on September 30, 1991, and 
applicable to State fiscal year 1992, as demonstrated by State 
plan amendments, written agreements, State budget 
documentation, or other documentary evidence in existence on 
that date.
    [(iii) The amount of expenditures described in subparagraph 
(B)(i)(II) shall be determined by the Secretary based on the 
best data available as of the date of the enactment of this 
subsection.
    [(6)(A) Notwithstanding the provisions of this subsection, 
the Secretary may not restrict States' use of funds where such 
funds are derived from State or local taxes (or funds 
appropriated to State university teaching hospitals) 
transferred from or certified by units of government within a 
State as the non-Federal share of expenditures under this 
title, regardless of whether the unit of government is also a 
health care provider, except as provided in section 1902(a)(2), 
unless the transferred funds are derived by the unit of 
government from donations or taxes that would not otherwise be 
recognized as the non-Federal share under this section.
    [(B) For purposes of this subsection, funds the use of 
which the Secretary may not restrict under subparagraph (A) 
shall not be considered to be a provider-related donation or a 
health care related tax.
    [(7) For purposes of this subsection:
            [(A) Each of the following shall be considered a 
        separate class of health care items and services:
                    [(i) Inpatient hospital services.
                    [(ii) Outpatient hospital services.
                    [(iii) Nursing facility services (other 
                than services of intermediate care facilities 
                for the mentally retarded).
                    [(iv) Services of intermediate care 
                facilities for the mentally retarded.
                    [(v) Physicians' services.
                    [(vi) Home health care services.
                    [(vii) Outpatient prescription drugs.
                    [(viii) Services of health maintenance 
                organizations (and other organizations with 
                contracts under section 1903(m)).
                    [(ix) Such other classification of health 
                care items and services consistent with this 
                subparagraph as the Secretary may establish by 
                regulation.
            [(B) The term ``health care provider'' means an 
        individual or person that receives payments for the 
        provision of health care items or services.
            [(C) An entity is considered to be ``related'' to a 
        health care provider if the entity--
                    [(i) is an organization, association, 
                corporation or partnership formed by or on 
                behalf of health care providers;
                    [(ii) is a person with an ownership or 
                control interest (as defined in section 
                1124(a)(3)) in the provider;
                    [(iii) is the employee, spouse, parent, 
                child, or sibling of the provider (or of a 
                person described in clause (ii)); or
                    [(iv) has a similar, close relationship (as 
                defined in regulations) to the provider.
            [(D) The term ``State'' means only the 50 States 
        and the District of Columbia but does not include any 
        State whose entire program under this title is operated 
        under a waiver granted under section 1115.
            [(E) The ``State fiscal year'' means, with respect 
        to a specified year, a State fiscal year ending in that 
        specified year.
            [(F) The term ``tax'' includes any licensing fee, 
        assessment, or other mandatory payment, but does not 
        include payment of a criminal or civil fine or penalty 
        (other than a fine or penalty imposed in lieu of or 
        instead of a fee, assessment, or other mandatory 
        payment).
            [(G) The term ``unit of local government'' means, 
        with respect to a State, a city, county, special 
        purpose district, or other governmental unit in the 
        State.

                       [OPERATION OF STATE PLANS

    [Sec. 1904. If the Secretary, after reasonable notice and 
opportunity for hearing to the State agency administering or 
supervising the administration of the State plan approved under 
this title, finds--
            [(1) that the plan has been so changed that it no 
        longer complies with the provisions of section 1902; or
            [(2) that in the administration of the plan there 
        is a failure to comply substantially with any such 
        provision;
the Secretary shall notify such State agency that further 
payments will not be made to the State (or, in his discretion, 
that payments will be limited to categories under or parts of 
the State plan not affected by such failure), until the 
Secretary is satisfied that there will no longer be any such 
failure to comply. Until he is so satisfied he shall make no 
further payments to such State (or shall limit payments to 
categories under or parts of the State plan not affected by 
such failure).

                              [DEFINITIONS

    [Sec. 1905. For purposes of this title--
    [(a) The term ``medical assistance'' means payment of part 
or all of the cost of the following care and services (if 
provided in or after the third month before the month in which 
the recipient makes application for assistance or, in the case 
of medicare cost-sharing with respect to a qualified medicare 
beneficiary described in subsection (p)(1), if provided after 
the month in which the individual becomes such a beneficiary) 
for individuals, and, with respect to physicians' or dentists' 
services, at the option of the State, to individuals (other 
than individuals with respect to whom there is being paid, or 
who are eligible, or would be eligible if they were not in a 
medical institution, to have paid with respect to them a State 
supplementary payment and are eligible for medical assistance 
equal in amount, duration, and scope to the medical assistance 
made available to individuals described in section 
1902(a)(10)(A)) not receiving aid or assistance under any plan 
of the State approved under title I, X, XIV, or XVI, or part A 
of title IV, and with respect to whom supplemental security 
income benefits are not being paid under title XVI, who are--
            [(i) under the age of 21, or, at the option of the 
        State, under the age of 20, 19, or 18 as the State may 
        choose,
            [(ii) relatives specified in section 406(b)(1) with 
        whom a child is living if such child is (or would, if 
        needy, be) a dependent child under part A of title IV,
            [(iii) 65 years of age or older,
            [(iv) blind, with respect to States eligible to 
        participate in the State plan program established under 
        title XVI,
            [(v) 18 years of age or older and permanently and 
        totally disabled, with respect to States eligible to 
        participate in the State plan program established under 
        title XVI,
            [(vi) persons essential (as described in the second 
        sentence of this subsection) to individuals receiving 
        aid or assistance under State plans approved under 
        title I, X, XIV, or XVI,
            [(vii) blind or disabled as defined in section 
        1614, with respect to States not eligible to 
        participate in the State plan program established under 
        title XVI,
            [(viii) pregnant women,
            [(ix) individuals provided extended benefits under 
        section 1925,
            [(x) individuals described in section 1902(u)(1), 
        or
            [(xi) individuals described in section 1902(z)(1),
but whose income and resources are insufficient to meet all of 
such cost--
            [(1) inpatient hospital services (other than 
        services in an institution for mental diseases);
            [(2)(A) outpatient hospital services, (B) 
        consistent with State law permitting such services, 
        rural health clinic services (as defined in subsection 
        (l)(1)) and any other ambulatory services which are 
        offered by a rural health clinic (as defined in 
        subsection (l)(1)) and which are otherwise included in 
        the plan, and (C) Federally-qualified health center 
        services (as defined in subsection (l)(2)) and any 
        other ambulatory services offered by a Federally-
        qualified health center and which are otherwise 
        included in the plan;
            [(3) other laboratory and X-ray services;
            [(4)(A) nursing facility services (other than 
        services in an institution for mental diseases) for 
        individuals 21 years of age or older; (B) early and 
        periodic screening, diagnostic, and treatment services 
        (as defined in subsection (r)) for individuals who are 
        eligible under the plan and are under the age of 21; 
        and (C) family planning services and supplies furnished 
        (directly or under arrangements with others) to 
        individuals of child-bearing age (including minors who 
        can be considered to be sexually active) who are 
        eligible under the State plan and who desire such 
        services and supplies;
            [(5)(A) physicians' services furnished by a 
        physician (as defined in section 1861(r)(1)), whether 
        furnished in the office, the patient's home, a 
        hospital, or a nursing facility, or elsewhere, and (B) 
        medical and surgical services furnished by a dentist 
        (described in section 1861(r)(2)) to the extent such 
        services may be performed under State law either by a 
        doctor of medicine or by a doctor of dental surgery or 
        dental medicine and would be described in clause (A) if 
        furnished by a physician (as defined in section 
        1861(r)(1));
            [(6) medical care, or any other type of remedial 
        care recognized under State law, furnished by licensed 
        practitioners within the scope of their practice as 
        defined by State law;
            [(7) home health care services;
            [(8) private duty nursing services;
            [(9) clinic services furnished by or under the 
        direction of a physician, without regard to whether the 
        clinic itself is administered by a physician, including 
        such services furnished outside the clinic by clinic 
        personnel to an eligible individual who does not reside 
        in a permanent dwelling or does not have a fixed home 
        or mailing address;
            [(10) dental services;
            [(11) physical therapy and related services;
            [(12) prescribed drugs, dentures, and prosthetic 
        devices; and eyeglasses prescribed by a physician 
        skilled in diseases of the eye or by an optometrist, 
        whichever the individual may select;
            [(13) other diagnostic, screening, preventive, and 
        rehabilitative services, including any medical or 
        remedial services (provided in a facility, a home, or 
        other setting) recommended by a physician or other 
        licensed practitioner of the healing arts within the 
        scope of their practice under State law, for the 
        maximum reduction of physical or mental disability and 
        restoration of an individual to the best possible 
        functional level;
            [(14) inpatient hospital services and nursing 
        facility services for individuals 65 years of age or 
        over in an institution for mental diseases;
            [(15) services in an intermediate care facility for 
        the mentally retarded (other than in an institution for 
        mental diseases) for individuals who are determined, in 
        accordance with section 1902(a)(31)(A), to be in need 
        of such care;
            [(16) effective January 1, 1973, inpatient 
        psychiatric hospital services for individuals under age 
        21, as defined in subsection (h);
            [(17) services furnished by a nurse-midwife (as 
        defined in section 1861(gg)) which the nurse-midwife is 
        legally authorized to perform under State law (or the 
        State regulatory mechanism provided by State law), 
        whether or not the nurse-midwife is under the 
        supervision of, or associated with, a physician or 
        other health care provider, and without regard to 
        whether or not the services are performed in the area 
        of management of the care of mothers and babies 
        throughout the maternity cycle;
            [(18) hospice care (as defined in subsection (o));
            [(19) case management services (as defined in 
        section 1915(g)(2)) and TB-related services described 
        in section 1902(z)(2)(F);
            [(20) respiratory care services (as defined in 
        section 1902(e)(9)(C));
            [(21) services furnished by a certified pediatric 
        nurse practitioner or certified family nurse 
        practitioner (as defined by the Secretary) which the 
        certified pediatric nurse practitioner or certified 
        family nurse practitioner is legally authorized to 
        perform under State law (or the State regulatory 
        mechanism provided by State law), whether or not the 
        certified pediatric nurse practitioner or certified 
        family nurse practitioner is under the supervision of, 
        or associated with, a physician or other health care 
        provider;
            [(22) home and community care (to the extent 
        allowed and as defined in section 1929) for 
        functionally disabled elderly individuals;
            [(23) community supported living arrangements 
        services (to the extent allowed and as defined in 
        section 1930);
            [(24) personal care services furnished to an 
        individual who is not an inpatient or resident of a 
        hospital, nursing facility, intermediate care facility 
        for the mentally retarded, or institution for mental 
        disease that are (A) authorized for the individual by a 
        physician in accordance with a plan of treatment or (at 
        the option of the State) otherwise authorized for the 
        individual in accordance with a service plan approved 
        by the State, (B) provided by an individual who is 
        qualified to provide such services and who is not a 
        member of the individual's family, and (C) furnished in 
        a home or other location; and
            [(25) any other medical care, and any other type of 
        remedial care recognized under State law, specified by 
        the Secretary.
except as otherwise provided in paragraph (16), such term does 
not include--
            [(A) any such payments with respect to care or 
        services for any individual who is an inmate of a 
        public institution (except as a patient in a medical 
        institution); or
            [(B) any such payments with respect to care or 
        services for any individual who has not attained 65 
        years of age and who is a patient in an institution for 
        mental diseases.
For purposes of clause (vi) of the preceding sentence, a person 
shall be considered essential to another individual if such 
person is the spouse of and is living with such individual, the 
needs of such person are taken into account in determining the 
amount of aid or assistance furnished to such individual (under 
a State plan approved under title I, X, XIV, or XVI), and such 
person is determined, under such a State plan, to be essential 
to the well-being of such individual. The payment described in 
the first sentence may include expenditures for medicare cost-
sharing and for premiums under part B of title XVIII for 
individuals who are eligible for medical assistance under the 
plan and (A) are receiving aid or assistance under any plan of 
the State approved under title I, X, XIV, or XVI, or part A of 
title IV, or with respect to whom supplemental security income 
benefits are being paid under title XVI, or (B) with respect to 
whom there is being paid a State supplementary payment and are 
eligible for medical assistance equal in amount, duration, and 
scope to the medical assistance made available to individuals 
described in section 1902(a)(10)(A), and, except in the case of 
individuals 65 years of age or older and disabled individuals 
entitled to health insurance benefits under title XVIII who are 
not enrolled under part B of title XVIII, other insurance 
premiums for medical or any other type of remedial care or the 
cost thereof. No service (including counseling) shall be 
excluded from the definition of ``medical assistance'' solely 
because it is provided as a treatment service for alcoholism or 
drug dependency.
    [(b) The term ``Federal medical assistance percentage'' for 
any State shall be 100 per centum less the State percentage; 
and the State percentage shall be that percentage which bears 
the same ratio to 45 per centum as the square of the per capita 
income of such State bears to the square of the per capita 
income of the continental United States (including Alaska) and 
Hawaii; except that (1) the Federal medical assistance 
percentage shall in no case be less than 50 per centum or more 
than 83 per centum, and (2) the Federal medical assistance 
percentage for Puerto Rico, the Virgin Islands, Guam, the 
Northern Mariana Islands, and American Samoa shall be 50 per 
centum. The Federal medical assistance percentage for any State 
shall be determined and promulgated in accordance with the 
provisions of section 1101(a)(8)(B). Notwithstanding the first 
sentence of this section, the Federal medical assistance 
percentage shall be 100 per centum with respect to amounts 
expended as medical assistance for services which are received 
through an Indian Health Service facility whether operated by 
the Indian Health Service or by an Indian tribe or tribal 
organization (as defined in section 4 of the Indian Health Care 
Improvement Act.
    [(c) For definition of the term ``nursing facility'', see 
section 1919(a).
    [(d) The term ``intermediate care facility for the mentally 
retarded'' means an institution (or distinct part thereof) for 
the mentally retarded or persons with related conditions if--
            [(1) the primary purpose of such institution (or 
        distinct part thereof) is to provide health or 
        rehabilitative services for mentally retarded 
        individuals and the institution meets such standards as 
        may be prescribed by the Secretary;
            [(2) the mentally retarded individual with respect 
        to whom a request for payment is made under a plan 
        approved under this title is receiving active treatment 
        under such a program; and
            [(3) in the case of a public institution, the State 
        or political subdivision responsible for the operation 
        of such institution has agreed that the non-Federal 
        expenditures in any calendar quarter prior to January 
        1, 1975, with respect to services furnished to patients 
        in such institution (or distinct part thereof) in the 
        State will not, because of payments made under this 
        title, be reduced below the average amount expended for 
        such services in such institution in the four quarters 
        immediately preceding the quarter in which the State in 
        which such institution is located elected to make such 
        services available under its plan approved under this 
        title.
    [(e) In the case of any State the State plan of which (as 
approved under this title)--
            [(1) does not provide for the payment of services 
        (other than services covered under section 1902(a)(12)) 
        provided by an optometrist; but
            [(2) at a prior period did provide for the payment 
        of services referred to in paragraph (1);
the term ``physicians' services'' (as used in subsection 
(a)(5)) shall include services of the type which an optometrist 
is legally authorized to perform where the State plan 
specifically provides that the term ``physicians' services'', 
as employed in such plan, includes services of the type which 
an optometrist is legally authorized to perform, and shall be 
reimbursed whether furnished by a physician or an optometrist.
    [(f) For purposes of this title, the term ``nursing 
facility services'' means services which are or were required 
to be given an individual who needs or needed on a daily basis 
nursing care (provided directly by or requiring the supervision 
of nursing personnel) or other rehabilitation services which as 
a practical matter can only be provided in a nursing facility 
on an inpatient basis.
    [(g) If the State plan includes provision of chiropractors' 
services, such services include only--
            [(1) services provided by a chiropractor (A) who is 
        licensed as such by the State and (B) who meets uniform 
        minimum standards promulgated by the Secretary under 
        section 1861(r)(5); and
            [(2) services which consist of treatment by means 
        of manual manipulation of the spine which the 
        chiropractor is legally authorized to perform by the 
        State.
    [(h)(1) For purposes of paragraph (16) of subsection (a), 
the term ``inpatient psychiatric hospital services for 
individuals under age 21'' includes only--
            [(A) inpatient services which are provided in an 
        institution (or distinct part thereof) which is a 
        psychiatric hospital as defined in section 1861(f) or 
        in another inpatient setting that the Secretary has 
        specified in regulations;
            [(B) inpatient services which, in the case of any 
        individual (i) involve active treatment which meets 
        such standards as may be prescribed in regulations by 
        the Secretary, and (ii) a team, consisting of 
        physicians and other personnel qualified to make 
        determinations with respect to mental health conditions 
        and the treatment thereof, has determined are necessary 
        on an inpatient basis and can reasonably be expected to 
        improve the condition, by reason of which such services 
        are necessary, to the extent that eventually such 
        services will no longer be necessary; and
            [(C) inpatient services which, in the case of any 
        individual, are provided prior to (i) the date such 
        individual attains age 21, or (ii) in the case of an 
        individual who was receiving such services in the 
        period immediately preceding the date on which he 
        attained age 21, (I) the date such individual no longer 
        requires such services, or (II) if earlier, the date 
        such individual attains age 22;
    [(2) Such term does not include services provided during 
any calendar quarter under the State plan of any State if the 
total amount of the funds expended, during such quarter, by the 
State (and the political subdivisions thereof) from non-Federal 
funds for inpatient services included under paragraph (1), and 
for active psychiatric care and treatment provided on an 
outpatient basis for eligible mentally ill children, is less 
than the average quarterly amount of the funds expended, during 
the 4-quarter period ending December 31, 1971, by the State 
(and the political subdivisions thereof) from non-Federal funds 
for such services.
    [(i) The term ``institution for mental diseases'' means a 
hospital, nursing facility, or other institution of more than 
16 beds, that is primarily engaged in providing diagnosis, 
treatment, or care of persons with mental diseases, including 
medical attention, nursing care, and related services.
    [(j) The term ``State supplementary payment'' means any 
cash payment made by a State on a regular basis to an 
individual who is receiving supplemental security income 
benefits under title XVI or who would but for his income be 
eligible to receive such benefits, as assistance based on need 
in supplementation of such benefits (as determined by the 
Commissioner of Social Security), but only to the extent that 
such payments are made with respect to an individual with 
respect to whom supplemental security income benefits are 
payable under title XVI, or would but for his income be payable 
under that title.
    [(k) Increased supplemental security income benefits 
payable pursuant to section 211 of Public Law 93-66 shall not 
be considered supplemental security income benefits payable 
under title XVI.
    [(l)(1) The terms ``rural health clinic services'' and 
``rural health clinic'' have the meanings given such terms in 
section 1861(aa), except that (A) clause (ii) of section 
1861(aa)(2) shall not apply to such terms, and (B) the 
physician arrangement required under section 1861(aa)(2)(B) 
shall only apply with respect to rural health clinic services 
and, with respect to other ambulatory care services, the 
physician arrangement required shall be only such as may be 
required under the State plan for those services.
    [(2)(A) The term ``Federally-qualified health center 
services'' means services of the type described in 
subparagraphs (A) through (C) of section 1861(aa)(1) when 
furnished to an individual as an patient of a Federally-
qualified health center and, for this purpose, any reference to 
a rural health clinic or a physician described in section 
1861(aa)(2)(B) is deemed a reference to a Federally-qualified 
health center or a physician at the center, respectively.
    [(B) The term ``Federally-qualified health center'' means a 
entity which--
            [(i) is receiving a grant under section 329, 330, 
        340, or 340A of the Public Health Service Act,
            [(ii)(I) is receiving funding from such a grant 
        under a contract with the recipient of such a grant, 
        and
            [(II) meets the requirements to receive a grant 
        under section 329, 330, 340, or 340A of such Act,
            [(iii) based on the recommendation of the Health 
        Resources and Services Administration within the Public 
        Health Service, is determined by the Secretary to meet 
        the requirements for receiving such a grant, or
            [(iv) was treated by the Secretary, for purposes of 
        part B of title XVIII, as a comprehensive Federally 
        funded health center as of January 1, 1990;
and includes an outpatient health program or facility operated 
by a tribe or tribal organization under the Indian Self-
Determination Act (Public Law 93-638) or by an urban Indian 
organization receiving funds under title V of the Indian Health 
Care Improvement Act for the provision of primary health 
services. In applying clause (ii), the Secretary may waive any 
requirement referred to in such clause for up to 2 years for 
good cause shown.
    [(m)(1) Subject to paragraph (2), the term ``qualified 
family member'' means an individual (other than a qualified 
pregnant woman or child, as defined in subsection (n)) who is a 
member of a family that would be receiving aid under the State 
plan under part A of title IV pursuant to section 407 if the 
State had not exercised the option under section 
407(b)(2)(B)(i).
    [(2) No individual shall be a qualified family member for 
any period after September 30, 1998.
    [(n) The term ``qualified pregnant woman or child'' means--
            [(1) a pregnant woman who--
                    [(A) would be eligible for aid to families 
                with dependent children under part A of title 
                IV (or would be eligible for such aid if 
                coverage under the State plan under part A of 
                title IV included aid to families with 
                dependent children of unemployed parents 
                pursuant to section 407) if her child had been 
                born and was living with her in the month such 
                aid would be paid, and such pregnancy has been 
                medically verified;
                    [(B) is a member of a family which would be 
                eligible for aid under the State plan under 
                part A of title IV pursuant to section 407 if 
                the plan required the payment of aid pursuant 
                to such section; or
                    [(C) otherwise meets the income and 
                resources requirements of a State plan under 
                part A of title IV; and
            [(2) a child who has not attained the age of 19, 
        who was born after September 30, 1983 (or such earlier 
        date as the State may designate), and who meets the 
        income and resources requirements of the State plan 
        under part A of title IV.
    [(o)(1)(A) Subject to subparagraph (B), the term ``hospice 
care'' means the care described in section 1861(dd)(1) 
furnished by a hospice program (as defined in section 
1861(dd)(2)) to a terminally ill individual who has voluntarily 
elected (in accordance with paragraph (2)) to have payment made 
for hospice care instead of having payment made for certain 
benefits described in section 1812(d)(2)(A) and for which 
payment may otherwise be made under title XVIII and 
intermediate care facility services under the plan. For 
purposes of such election, hospice care may be provided to an 
individual while such individual is a resident of a skilled 
nursing facility or intermediate care facility, but the only 
payment made under the State plan shall be for the hospice 
care.
    [(B) For purposes of this title, with respect to the 
definition of hospice program under section 1861(dd)(2), the 
Secretary may allow an agency or organization to make the 
assurance under subparagraph (A)(iii) of such section without 
taking into account any individual who is afflicted with 
acquired immune deficiency syndrome (AIDS).
    [(2) An individual's voluntary election under this 
subsection --
            [(A) shall be made in accordance with procedures 
        that are established by the State and that are 
        consistent with the procedures established under 
        section 1812(d)(2);
            [(B) shall be for such a period or periods (which 
        need not be the same periods described in section 
        1812(d)(1)) as the State may establish; and
            [(C) may be revoked at any time without a showing 
        of cause and may be modified so as to change the 
        hospice program with respect to which a previous 
        election was made.
    [(3) In the case of an individual--
            [(A) who is residing in a nursing facility or 
        intermediate care facility for the mentally retarded 
        and is receiving medical assistance for services in 
        such facility under the plan,
            [(B) who is entitled to benefits under part A of 
        title XVIII and has elected, under section 1812(d), to 
        receive hospice care under such part, and
            [(C) with respect to whom the hospice program under 
        such title and the nursing facility or intermediate 
        care facility for the mentally retarded have entered 
        into a written agreement under which the program takes 
        full responsibility for the professional management of 
        the individual's hospice care and the facility agrees 
        to provide room and board to the individual,
instead of any payment otherwise made under the plan with 
respect to the facility's services, the State shall provide for 
payment to the hospice program of an amount equal to the 
additional amount described in section 1902(a)(13)(D) and, if 
the individual is an individual described in section 
1902(a)(10)(A), shall provide for payment of any coinsurance 
amounts imposed under section 1813(a)(4).
    [(p)(1) The term ``qualified medicare beneficiary'' means 
an individual--
            [(A) who is entitled to hospital insurance benefits 
        under part A of title XVIII (including an individual 
        entitled to such benefits pursuant to an enrollment 
        under section 1818, but not including an individual 
        entitled to such benefits only pursuant to an 
        enrollment under section 1818A),
            [(B) whose income (as determined under section 1612 
        for purposes of the supplemental security income 
        program, except as provided in paragraph (2)(D)) does 
        not exceed an income level established by the State 
        consistent with paragraph (2), and
            [(C) whose resources (as determined under section 
        1613 for purposes of the supplemental security income 
        program) do not exceed twice the maximum amount of 
        resources that an individual may have and obtain 
        benefits under that program.
    [(2)(A) The income level established under paragraph (1)(B) 
shall be at least the percent provided under subparagraph (B) 
(but not more than 100 percent) of the official poverty line 
(as defined by the Office of Management and Budget, and revised 
annually in accordance with section 673(2) of the Omnibus 
Budget Reconciliation Act of 1981) applicable to a family of 
the size involved.
    [(B) Except as provided in subparagraph (C), the percent 
provided under this clause, with respect to eligibility for 
medical assistance on or after--
            [(i) January 1, 1989, is 85 percent,
            [(ii) January 1, 1990, is 90 percent, and
            [(iii) January 1, 1991, is 100 percent.
    [(C) In the case of a State which has elected treatment 
under section 1902(f) and which, as of January 1, 1987, used an 
income standard for individuals age 65 or older which was more 
restrictive than the income standard established under the 
supplemental security income program under title XVI, the 
percent provided under subparagraph (B), with respect to 
eligibility for medical assistance on or after--
            [(i) January 1, 1989, is 80 percent,
            [(ii) January 1, 1990, is 85 percent,
            [(iii) January 1, 1991, is 95 percent, and
            [(iv) January 1, 1992, is 100 percent.
    [(D)(i) In determining under this subsection the income of 
an individual who is entitled to monthly insurance benefits 
under title II for a transition month (as defined in clause 
(ii)) in a year, such income shall not include any amounts 
attributable to an increase in the level of monthly insurance 
benefits payable under such title which have occurred pursuant 
to section 215(i) for benefits payable for months beginning 
with December of the previous year.
    [(ii) For purposes of clause (i), the term ``transition 
month'' means each month in a year through the month following 
the month in which the annual revision of the official poverty 
line, referred to in subparagraph (A), is published.
    [(3) The term ``medicare cost-sharing'' means the following 
costs incurred with respect to a qualified medicare 
beneficiary, without regard to whether the costs incurred were 
for items and services for which medical assistance is 
otherwise available under the plan:
            [(A)(i) premiums under section 1818 or 1818A, and
            [(ii) premiums under section 1839,
            [(B) Coinsurance under title XVIII (including 
        coinsurance described in section 1813).
            [(C) Deductibles established under title XVIII 
        (including those described in section 1813 and section 
        1833(b)).
            [(D) The difference between the amount that is paid 
        under section 1833(a) and the amount that would be paid 
        under such section if any reference to ``80 percent'' 
        therein were deemed a reference to ``100 percent''.
Such term also may include, at the option of a State, premiums 
for enrollment of a qualified medicare beneficiary with an 
eligible organization under section 1876.
    [(4) Notwithstanding any other provision of this title, in 
the case of a State (other than the 50 States and the District 
of Columbia)--
            [(A) the requirement stated in section 
        1902(a)(10)(E) shall be optional, and
            [(B) for purposes of paragraph (2), the State may 
        substitute for the percent provided under subparagraph 
        (B) of such paragraph or 1902(a)(10)(E)(iii) any 
        percent.
In the case of any State which is providing medical assistance 
to its residents under a waiver granted under section 1115, the 
Secretary shall require the State to meet the requirement of 
section 1902(a)(10)(E) in the same manner as the State would be 
required to meet such requirement if the State had in effect a 
plan approved under this title.
    [(q) The term ``qualified severely impaired individual'' 
means an individual under age 65--
            [(1) who for the month preceding the first month to 
        which this subsection applies to such individual--
                    [(A) received (i) a payment of supplemental 
                security income benefits under section 1611(b) 
                on the basis of blindness or disability, (ii) a 
                supplementary payment under section 1616 of 
                this Act or under section 212 of Public Law 93-
                66 on such basis, (iii) a payment of monthly 
                benefits under section 1619(a), or (iv) a 
                supplementary payment under section 1616(c)(3), 
                and
                    [(B) was eligible for medical assistance 
                under the State plan approved under this title; 
                and
            [(2) with respect to whom the Commissioner of 
        Social Security determines that--
                    [(A) the individual continues to be blind 
                or continues to have the disabling physical or 
                mental impairment on the basis of which he was 
                found to be under a disability and, except for 
                his earnings, continues to meet all non-
                disability-related requirements for eligibility 
                for benefits under title XVI,
                    [(B) the income of such individual would 
                not, except for his earnings, be equal to or in 
                excess of the amount which would cause him to 
                be ineligible for payments under section 
                1611(b) (if he were otherwise eligible for such 
                payments),
                    [(C) the lack of eligibility for benefits 
                under this title would seriously inhibit his 
                ability to continue or obtain employment, and
                    [(D) the individual's earnings are not 
                sufficient to allow him to provide for himself 
                a reasonable equivalent of the benefits under 
                title XVI (including any federally administered 
                State supplementary payments), this title, and 
                publicly funded attendant care services 
                (including personal care assistance) that would 
                be available to him in the absence of such 
                earnings.
        In the case of an individual who is eligible for 
        medical assistance pursuant to section 1619(b) in June, 
        1987, the individual shall be a qualified severely 
        impaired individual for so long as such individual 
        meets the requirements of paragraph (2).
    [(r) The term ``early and periodic screening, diagnostic, 
and treatment services'' means the following items and 
services:
            [(1) Screening services--
                    [(A) which are provided--
                            [(i) at intervals which meet 
                        reasonable standards of medical and 
                        dental practice, as determined by the 
                        State after consultation with 
                        recognized medical and dental 
                        organizations involved in child health 
                        care and, with respect to immunizations 
                        under subparagraph (B)(iii), in 
                        accordance with the schedule referred 
                        to in section 1928(c)(2)(B)(i) for 
                        pediatric vaccines, and
                            [(ii) at such other intervals, 
                        indicated as medically necessary, to 
                        determine the existence of certain 
                        physical or mental illnesses or 
                        conditions; and
                    [(B) which shall at a minimum include--
                            [(i) a comprehensive health and 
                        developmental history (including 
                        assessment of both physical and mental 
                        health development),
                            [(ii) a comprehensive unclothed 
                        physical exam,
                            [(iii) appropriate immunizations 
                        (according to the schedule referred to 
                        in section 1928(c)(2)(B)(i) for 
                        pediatric vaccines) according to age 
                        and health history,
                            [(iv) laboratory tests (including 
                        lead blood level assessment appropriate 
                        for age and risk factors), and
                            [(v) health education (including 
                        anticipatory guidance).
            [(2) Vision services--
                    [(A) which are provided--
                            [(i) at intervals which meet 
                        reasonable standards of medical 
                        practice, as determined by the State 
                        after consultation with recognized 
                        medical organizations involved in child 
                        health care, and
                            [(ii) at such other intervals, 
                        indicated as medically necessary, to 
                        determine the existence of a suspected 
                        illness or condition; and
                    [(B) which shall at a minimum include 
                diagnosis and treatment for defects in vision, 
                including eyeglasses.
            [(3) Dental services--
                    [(A) which are provided--
                            [(i) at intervals which meet 
                        reasonable standards of dental 
                        practice, as determined by the State 
                        after consultation with recognized 
                        dental organizations involved in child 
                        health care, and
                            [(ii) at such other intervals, 
                        indicated as medically necessary, to 
                        determine the existence of a suspected 
                        illness or condition; and
                    [(B) which shall at a minimum include 
                relief of pain and infections, restoration of 
                teeth, and maintenance of dental health.
            [(4) Hearing services--
                    [(A) which are provided--
                            [(i) at intervals which meet 
                        reasonable standards of medical 
                        practice, as determined by the State 
                        after consultation with recognized 
                        medical organizations involved in child 
                        health care, and
                            [(ii) at such other intervals, 
                        indicated as medically necessary, to 
                        determine the existence of a suspected 
                        illness or condition; and
                    [(B) which shall at a minimum include 
                diagnosis and treatment for defects in hearing, 
                including hearing aids.
            [(5) Such other necessary health care, diagnostic 
        services, treatment, and other measures described in 
        section 1905(a) to correct or ameliorate defects and 
        physical and mental illnesses and conditions discovered 
        by the screening services, whether or not such services 
        are covered under the State plan.
Nothing in this title shall be construed as limiting providers 
of early and periodic screening, diagnostic, and treatment 
services to providers who are qualified to provide all of the 
items and services described in the previous sentence or as 
preventing a provider that is qualified under the plan to 
furnish one or more (but not all) of such items or services 
from being qualified to provide such items and services as part 
of early and periodic screening, diagnostic, and treatment 
services. The Secretary shall, not later than July 1, 1990, and 
every 12 months thereafter, develop and set annual 
participation goals for each State for participation of 
individuals who are covered under the State plan under this 
title in early and periodic screening, diagnostic, and 
treatment services.
    [(s) The term ``qualified disabled and working individual'' 
means an individual--
            [(1) who is entitled to enroll for hospital 
        insurance benefits under part A of title XVIII under 
        section 1818A (as added by 6012 of the Omnibus Budget 
        Reconciliation Act of 1989);
            [(2) whose income (as determined under section 1612 
        for purposes of the supplemental security income 
        program) does not exceed 200 percent of the official 
        poverty line (as defined by the Office of Management 
        and Budget and revised annually in accordance with 
        section 673(2) of the Omnibus Budget Reconciliation Act 
        of 1981) applicable to a family of the size involved;
            [(3) whose resources (as determined under section 
        1613 for purposes of the supplemental security income 
        program) do not exceed twice the maximum amount of 
        resources that an individual or a couple (in the case 
        of an individual with a spouse) may have and obtain 
        benefits for supplemental security income benefits 
        under title XVI; and
            [(4) who is not otherwise eligible for medical 
        assistance under this title.

          [Enrollment of individuals under group health plans

    [Sec. 1906. (a) For purposes of section 1902(a)(25)(G) and 
subject to subsection (d), each State plan--
            [(1) shall implement guidelines established by the 
        Secretary, consistent with subsection (b), to identify 
        those cases in which enrollment of an individual 
        otherwise entitled to medical assistance under this 
        title in a group health plan (in which the individual 
        is otherwise eligible to be enrolled) is cost-effective 
        (as defined in subsection (e)(2));
            [(2) shall require, in case of an individual so 
        identified and as a condition of the individual being 
        or remaining eligible for medical assistance under this 
        title and subject to subsection (b)(2), notwithstanding 
        any other provision of this title, that the individual 
        (or in the case of a child, the child's parent) apply 
        for enrollment in the group health plan; and
            [(3) in the case of such enrollment (except as 
        provided in subsection (c)(1)(B)), shall provide for 
        payment of all enrollee premiums for such enrollment 
        and all deductibles, coinsurance, and other cost-
        sharing obligations for items and services otherwise 
        covered under the State plan under this title 
        (exceeding the amount otherwise permitted under section 
        1916), and shall treat coverage under the group health 
        plan as a third party liability (under section 
        1902(a)(25)).
    [(b)(1) In establishing guidelines under subsection (a)(1), 
the Secretary shall take into account that an individual may 
only be eligible to enroll in group health plans at limited 
times and only if other individuals (not entitled to medical 
assistance under the plan) are also enrolled in the plan 
simultaneously.
    [(2) If a parent of a child fails to enroll the child in a 
group health plan in accordance with subsection (a)(2), such 
failure shall not affect the child's eligibility for benefits 
under this title.
    [(c)(1)(A) In the case of payments of premiums, 
deductibles, coinsurance, and other cost-sharing obligations 
under this section shall be considered, for purposes of section 
1903(a), to be payments for medical assistance.
    [(B) If all members of a family are not eligible for 
medical assistance under this title and enrollment of the 
members so eligible in a group health plan is not possible 
without also enrolling members not so eligible--
            [(i) payment of premiums for enrollment of such 
        other members shall be treated as payments for medical 
        assistance for eligible individuals, if it would be 
        cost-effective (taking into account payment of all such 
        premiums), but
            [(ii) payment of deductibles, coinsurance, and 
        other cost-sharing obligations for such other members 
        shall not be treated as payments for medical assistance 
        for eligible individuals.
    [(2) The fact that an individual is enrolled in a group 
health plan under this section shall not change the 
individual's eligibility for benefits under the State plan, 
except insofar as section 1902(a)(25) provides that payment for 
such benefits shall first be made by such plan.
    [(d)(1) In the case of any State which is providing medical 
assistance to its residents under a waiver granted under 
section 1115, the Secretary shall require the State to meet the 
requirements of this section in the same manner as the State 
would be required to meet such requirement if the State had in 
effect a plan approved under this title.
    [(2) This section, and section 1902(a)(25)(G), shall only 
apply to a State that is one of the 50 States or the District 
of Columbia.
    [(e) In this section:
            [(1) The term ``group health plan'' has the meaning 
        given such term in section 5000(b)(1) of the Internal 
        Revenue Code of 1986, and includes the provision of 
        continuation coverage by such a plan pursuant to title 
        XXII of the Public Health Service Act, section 4980B of 
        the Internal Revenue Code of 1986, or title VI of the 
        Employee Retirement Income Security Act of 1974.
            [(2) The term ``cost-effective'' means, as 
        established by the Secretary, that the reduction in 
        expenditures under this title with respect to an 
        individual who is enrolled in a group health plan is 
        likely to be greater than the additional expenditures 
        for premiums and cost-sharing required under this 
        section with respect to such enrollment.

                    [OBSERVANCE OF RELIGIOUS BELIEFS

    [Sec. 1907. Nothing in this title shall be construed to 
require any State which has a plan approved under this title to 
compel any person to undergo any medical screening, 
examination, diagnosis, or treatment or to accept any other 
health care or services provided under such plan for any 
purpose (other than for the purpose of discovering and 
preventing the spread of infection or contagious disease or for 
the purpose of protecting environmental health), if such person 
objects (or, in case such person is a child, his parent or 
guardian objects) thereto on religious grounds.

    [STATE PROGRAMS FOR LICENSING OF ADMINISTRATORS OF NURSING HOMES

    [Sec. 1908. (a) For purposes of section 1902(a)(29), a 
``State program for the licensing of administrators of nursing 
homes'' is a program which provides that no nursing home within 
the State may operate except under the supervision of an 
administrator licensed in the manner provided in this section.
    [(b) Licensing of nursing home administrators shall be 
carried out by the agency of the State responsible for 
licensing under the healing arts licensing act of the State, 
or, in the absence of such act or such an agency, a board 
representative of the professions and institutions concerned 
with care of chronically ill and infirm aged patients and 
established to carry out the purposes of this section.
    [(c) It shall be the function and duty of such agency or 
board to--
            [(1) develop, impose, and enforce standards which 
        must be met by individuals in order to receive a 
        license as a nursing home administrator, which 
        standards shall be designed to insure that nursing home 
        administrators will be individuals who are of good 
        character and are otherwise suitable, and who, by 
        training or experience in the field of institutional 
        administration, are qualified to serve as nursing home 
        administrators;
            [(2) develop and apply appropriate techniques, 
        including examinations and investigations, for 
        determining whether an individual meets such standards;
            [(3) issue licenses to individuals determined, 
        after the application of such techniques, to meet such 
        standards, and revoke or suspend licenses previously 
        issued by the board in any case where the individual 
        holding any such license is determined substantially to 
        have failed to conform to the requirements of such 
        standards;
            [(4) establish and carry out procedures designed to 
        insure that individuals licensed as nursing home 
        administrators will, during any period that they serve 
        as such, comply with the requirements of such 
        standards;
            [(5) receive, investigate, and take appropriate 
        action with respect to, any charge or complaint filed 
        with the board to the effect that any individual 
        licensed as a nursing home administrator has failed to 
        comply with the requirements of such standards; and
            [(6) conduct a continuing study and investigation 
        of nursing homes and administrators of nursing homes 
        within the State with a view to the improvement of the 
        standards imposed for the licensing of such 
        administrators and of procedures and methods for the 
        enforcement of such standards with respect to 
        administrators of nursing homes who have been licensed 
        as such.
    [(d) No State shall be considered to have failed to comply 
with the provisions of section 1902(a)(29) because the agency 
or board of such State (established pursuant to subsection (b)) 
shall have granted any waiver, with respect to any individual 
who, during all of the three calendar years immediately 
preceding the calendar year in which the requirements 
prescribed in section 1902(a)(29) are first met by the State, 
has served as a nursing home administrator, of any of the 
standards developed, imposed, and enforced by such agency or 
board pursuant to subsection (c).
    [(e) As used in this section, the term--
            [(1) ``nursing home'' means any institution or 
        facility defined as such for licensing purposes under 
        State law, or, if State law does not employ the term 
        nursing home, the equivalent term or terms as 
        determined by the Secretary, but does not include a 
        Christian Science sanatorium operated, or listed and 
        certified, by the First Church of Christ, Scientist, 
        Boston, Massachusetts; and
            [(2) ``nursing home administrator'' means any 
        individual who is charged with the general 
        administration of a nursing home whether or not such 
        individual has an ownership interest in such home and 
        whether or not his functions and duties are shared with 
        one or more other individuals.

            [REQUIRED LAWS RELATING TO MEDICAL CHILD SUPPORT

    [Sec. 1908. (a) In General.--The laws relating to medical 
child support, which a State is required to have in effect 
under section 1902(a)(60), are as follows:
            [(1) A law that prohibits an insurer from denying 
        enrollment of a child under the health coverage of the 
        child's parent on the ground that--
                    [(A) the child was born out of wedlock,
                    [(B) the child is not claimed as a 
                dependent on the parent's Federal income tax 
                return, or
                    [(C) the child does not reside with the 
                parent or in the insurer's service area.
            [(2) In any case in which a parent is required by a 
        court or administrative order to provide health 
        coverage for a child and the parent is eligible for 
        family health coverage through an insurer, a law that 
        requires such insurer--
                    [(A) to permit such parent to enroll under 
                such family coverage any such child who is 
                otherwise eligible for such coverage (without 
                regard to any enrollment season restrictions);
                    [(B) if such a parent is enrolled but fails 
                to make application to obtain coverage of such 
                child, to enroll such child under such family 
                coverage upon application by the child's other 
                parent or by the State agency administering the 
                program under this title or part D of title IV; 
                and
                    [(C) not to disenroll (or eliminate 
                coverage of) such a child unless the insurer is 
                provided satisfactory written evidence that--
                            [(i) such court or administrative 
                        order is no longer in effect, or
                            [(ii) the child is or will be 
                        enrolled in comparable health coverage 
                        through another insurer which will take 
                        effect not later than the effective 
                        date of such disenrollment.
            [(3) In any case in which a parent is required by a 
        court or administrative order to provide health 
        coverage for a child and the parent is eligible for 
        family health coverage through an employer doing 
        business in the State, a law that requires such 
        employer--
                    [(A) to permit such parent to enroll under 
                such family coverage any such child who is 
                otherwise eligible for such coverage (without 
                regard to any enrollment season restrictions);
                    [(B) if such a parent is enrolled but fails 
                to make application to obtain coverage of such 
                child, to enroll such child under such family 
                coverage upon application by the child's other 
                parent or by the State agency administering the 
                program under this title or part D of title IV; 
                and
                    [(C) not to disenroll (or eliminate 
                coverage of) any such child unless--
                            [(i) the employer is provided 
                        satisfactory written evidence that--
                                    [(I) such court or 
                                administrative order is no 
                                longer in effect, or
                                    [(II) the child is or will 
                                be enrolled in comparable 
                                health coverage which will take 
                                effect not later than the 
                                effective date of such 
                                disenrollment, or
                            [(ii) the employer has eliminated 
                        family health coverage for all of its 
                        employees; and
                    [(D) to withhold from such employee's 
                compensation the employee's share (if any) of 
                premiums for health coverage (except that the 
                amount so withheld may not exceed the maximum 
                amount permitted to be withheld under section 
                303(b) of the Consumer Credit Protection Act), 
                and to pay such share of premiums to the 
                insurer, except that the Secretary may provide 
                by regulation for appropriate circumstances 
                under which an employer may withhold less than 
                such employee's share of such premiums.
            [(4) A law that prohibits an insurer from imposing 
        requirements on a State agency, which has been assigned 
        the rights of an individual eligible for medical 
        assistance under this title and covered for health 
        benefits from the insurer, that are different from 
        requirements applicable to an agent or assignee of any 
        other individual so covered.
            [(5) A law that requires an insurer, in any case in 
        which a child has health coverage through the insurer 
        of a noncustodial parent--
                    [(A) to provide such information to the 
                custodial parent as may be necessary for the 
                child to obtain benefits through such coverage;
                    [(B) to permit the custodial parent (or 
                provider, with the custodial parent's approval) 
                to submit claims for covered services without 
                the approval of the noncustodial parent; and
                    [(C) to make payment on claims submitted in 
                accordance with subparagraph (B) directly to 
                such custodial parent, the provider, or the 
                State agency.
            [(6) A law that permits the State agency under this 
        title to garnish the wages, salary, or other employment 
        income of, and requires withholding amounts from State 
        tax refunds to, any person who--
                    [(A) is required by court or administrative 
                order to provide coverage of the costs of 
                health services to a child who is eligible for 
                medical assistance under this title,
                    [(B) has received payment from a third 
                party for the costs of such services to such 
                child, but
                    [(C) has not used such payments to 
                reimburse, as appropriate, either the other 
                parent or guardian of such child or the 
                provider of such services,
        to the extent necessary to reimburse the State agency 
        for expenditures for such costs under its plan under 
        this title, but any claims for current or past-due 
        child support shall take priority over any such claims 
        for the costs of such services.
    [(b) Definition.--For purposes of this section, the term 
``insurer'' includes a group health plan, as defined in section 
607(1) of the Employee Retirement Income Security Act of 1974, 
a health maintenance organization, and an entity offering a 
service benefit plan.

[certification and approval of of rural health clinics and intermediate 
               care facilities for the mentally retarded

    [Sec. 1910. (a)(1) Whenever the Secretary certifies a 
facility in a State to be qualified as a rural health clinic 
under title XVIII, such facility shall be deemed to meet the 
standards for certification as a rural health clinic for 
purposes of providing rural health clinic services under this 
title.
    [(2) The Secretary shall notify the State agency 
administering the medical assistance plan of his approval or 
disapproval of any facility in that State which has applied for 
certification by him as a qualified rural health clinic.
    [(b)(1) The Secretary may cancel approval of any 
intermediate care facility for the mentally retarded at any 
time if he finds on the basis of a determination made by him as 
provided in section 1902(a)(33)(B) that a facility fails to 
meet the requirements contained in section 1902(a)(31) or 
section 1905(d), or if he finds grounds for termination of his 
agreement with the facility pursuant to section 1866(b). In 
that event the Secretary shall notify the State agency and the 
intermediate care facility for the mentally retarded that 
approval of eligibility of the facility to participate in the 
programs established by this title and title XVIII shall be 
terminated at a time specified by the Secretary. The approval 
of eligibility of any such facility to participate in such 
programs may not be reinstated unless the Secretary finds that 
the reason for termination has been removed and there is 
reasonable assurance that it will not recur.
    [(2) Any intermediate care facility for the mentally 
retarded which is dissatisfied with a determination by the 
Secretary that it no longer qualifies as a intermediate care 
facility for the mentally retarded for purposes of this title, 
shall be entitled to a hearing by the Secretary to the same 
extent as is provided in section 205(b) and to judicial review 
of the Secretary's final decision after such hearing as is 
provided in section 205(g), except that, in so applying such 
sections and in applying section 205(l) thereto, any reference 
therein to the Commissioner of Social Security or the Social 
Security Administration shall be considered a reference to the 
Secretary or the Department of Health and Human Services, 
respectively. Any agreement between such facility and the State 
agency shall remain in effect until the period for filing a 
request for a hearing has expired or, if a request has been 
filed, until a decision has been made by the Secretary; except 
that the agreement shall not be extended if the Secretary makes 
a written determination, specifying the reasons therefor, that 
the continuation of provider status constitutes an immediate 
and serious threat to the health and safety of patients, and 
the Secretary certifies that the facility has been notified of 
its deficiencies and has failed to correct them.

                   [INDIAN HEALTH SERVICE FACILITIES

    [Sec. 1911. (a) A facility of the Indian Health Service 
(including a hospital, nursing facility, or any other type of 
facility which provides services of a type otherwise covered 
under the State plan), whether operated by such Service or by 
an Indian tribe or tribal organization (as those terms are 
defined in section 4 of the Indian Health Care Improvement 
Act), shall be eligible for reimbursement for medical 
assistance provided under a State plan if and for so long as it 
meets all of the conditions and requirements which are 
applicable generally to such facilities under this title.
    [(b) Notwithstanding subsection (a), a facility of the 
Indian Health Service (including a hospital, nursing facility, 
or any other type of facility which provides services of a type 
otherwise covered under the State plan) which does not meet all 
of the conditions and requirements of this title which are 
applicable generally to such facility, but which submits to the 
Secretary within six months after the date of the enactment of 
this section an acceptable plan for achieving compliance with 
such conditions and requirements, shall be deemed to meet such 
conditions and requirements (and to be eligible for 
reimbursement under this title), without regard to the extent 
of its actual compliance with such conditions and requirements, 
during the first twelve months after the month in which such 
plan is submitted.
    [(c) The Secretary is authorized to enter into agreements 
with the State agency for the purpose of reimbursing such 
agency for health care and services provided in Indian Health 
Service facilities to Indians who are eligible for medical 
assistance under the State plan.

                    [ASSIGNMENT OF RIGHTS OF PAYMENT

    [Sec. 1912. (a) For the purpose of assisting in the 
collection of medical support payments and other payments for 
medical care owed to recipients of medical assistance under the 
State plan approved under this title, a State plan for medical 
assistance shall--
            [(1) provide that, as a condition of eligibility 
        for medical assistance under the State plan to an 
        individual who has the legal capacity to execute an 
        assignment for himself, the individual is required--
                    [(A) to assign the State any rights, of the 
                individual or of any other person who is 
                eligible for medical assistance under this 
                title and on whose behalf the individual has 
                the legal authority to execute an assignment of 
                such rights, to support (specified as support 
                for the purpose of medical care by a court or 
                administrative order) and to payment for 
                medical care from any third party;
                    [(B) to cooperate with the State (i) in 
                establishing the paternity of such person 
                (referred to in subparagraph (A)) if the person 
                is a child born out of wedlock, and (ii) in 
                obtaining support and payments (described in 
                subparagraph (A)) for himself and for such 
                person, unless (in either case) the individual 
                is described in section 1902(l)(1)(A) or the 
                individual is found to have good cause for 
                refusing to cooperate as determined by the 
                State agency in accordance with standards 
                prescribed by the Secretary, which standards 
                shall take into consideration the best 
                interests of the individuals involved; and
                    [(C) to cooperate with the State in 
                identifying, and providing information to 
                assist the State in pursuing, any third party 
                who may be liable to pay for care and services 
                available under the plan, unless such 
                individual has good cause for refusing to 
                cooperate as determined by the State agency in 
                accordance with standards prescribed by the 
                Secretary, which standards shall take into 
                consideration the best interests of the 
                individuals involved; and
            [(2) provide for entering into cooperative 
        arrangements (including financial arrangements), with 
        any appropriate agency of any State (including, with 
        respect to the enforcement and collection of rights of 
        payment for medical care by or through a parent, with a 
        State's agency established or designated under section 
        454(3)) and with appropriate courts and law enforcement 
        officials, to assist the agency or agencies 
        administering the State plan with respect to (A) the 
        enforcement and collection of rights to support or 
        payment assigned under this section and (B) any other 
        matters of common concern.
    [(b) Such part of any amount collected by the State under 
an assignment made under the provisions of this section shall 
be retained by the State as is necessary to reimburse it for 
medical assistance payments made on behalf of an individual 
with respect to whom such assignment was executed (with 
appropriate reimbursement of the Federal Government to the 
extent of its participation in the financing of such medical 
assistance), and the remainder of such amount collected shall 
be paid to such individual.

            [HOSPITAL PROVIDERS OF NURSING FACILITY SERVICES

    [Sec. 1913. (a) Notwithstanding any other provision of this 
title, payment may be made, in accordance with this section, 
under a State plan approved under this title for nursing 
facility services furnished by a hospital which has in effect 
an agreement under section 1883 and which, with respect to the 
provision of such services, meets the requirements of 
subsections (b) through (d) of section 1919.
    [(b)(1) Except as provided in paragraph (3), payment to any 
such hospital, for any nursing facility services furnished 
pursuant to subsection (a), shall be at a rate equal to the 
average rate per patient-day paid for routine services during 
the previous calendar year under the State plan to nursing 
facilities, respectively, located in the State in which the 
hospital is located. The reasonable cost of ancillary services 
shall be determined in the same manner as the reasonable cost 
of ancillary services provided for inpatient hospital services.
    [(2) With respect to any period for which a hospital has an 
agreement under section 1883, in order to allocate routine 
costs between hospital and long-term care services, the total 
reimbursement for routine services due from all classes of 
long-term care patients (including title XVIII, title XIX, and 
private pay patients) shall be subtracted from the hospital 
total routine costs before calculations are made to determine 
reimbursement for routine hospital services under the State 
plan.
    [(3) Payment to all such hospitals, for any nursing 
facility services furnished pursuant to subsection (a), may be 
made at a payment rate established by the State in accordance 
with the requirements of section 1902(a)(13)(A).

    [WITHHOLDING OF FEDERAL SHARE OF PAYMENTS FOR CERTAIN MEDICARE 
                               PROVIDERS

    [Sec. 1914. (a) The Secretary may adjust, in accordance 
with this section, the Federal matching payment to a State with 
respect to expenditures for medical assistance for care or 
services furnished in any quarter by--
            [(1) an institution (A) which has or previously had 
        in effect an agreement with the Secretary under section 
        1866; and (B)(i) from which the Secretary has been 
        unable to recover overpayments made under title XVIII, 
        or (ii) from which the Secretary has been unable to 
        collect the information necessary to enable him to 
        determine the amount (if any) of the overpayments made 
        to such institution under title XVIII; and
            [(2) any person (A) who (i) has previously accepted 
        payment on the basis of an assignment under section 
        1842(b)(3)(B)(ii), and (ii) during the annual period 
        immediately preceding such quarter submitted no claims 
        for payment under title XVIII, or submitted claims for 
        payment under title XVIII which aggregated less than 
        the amount of overpayments made to him, and (B)(i) from 
        whom the Secretary has been unable to recover 
        overpayments received in violation of the terms of such 
        assignment, or (ii) from whom the Secretary has been 
        unable to collect the information necessary to enable 
        him to determine the amount (if any) of the 
        overpayments made to such person under title XVIII.
    [(b) The Secretary may (subject to the remaining provisions 
of this section) reduce payment to a State under this title for 
any quarter by an amount equal to the lesser of the Federal 
matching share of payments to any institution or person 
specified in subsection (a), or the total overpayments to such 
institution or person under title XVIII, and may require the 
State to reduce its payment to such institution or person by 
such amount.
    [(c) The Secretary shall not make any adjustment in the 
payment to a State, nor require any adjustment in the payment 
to an institution or person, pursuant to subsection (b) until 
after he has provided adequate notice (which shall be not less 
than 60 days) to the State agency and the institution or 
person.
    [(d) The Secretary shall by regulation provide procedures 
for implementation of this section, which procedures shall (1) 
determine the amount of the Federal payment to which the 
institution or person would otherwise be entitled under this 
section which shall be treated as a setoff against overpayments 
under title XVIII, and (2) assure the restoration to the 
institution or person of amounts withheld under this section 
which are ultimately determined to be in excess of overpayments 
under title XVIII and to which the institution or person would 
otherwise be entitled under this title.
    [(e) The Secretary shall restore to the trust funds 
established under sections 1817 and 1841, as appropriate, 
amounts recovered under this section as setoffs against 
overpayments under title XVIII.
    [(f) Notwithstanding any other provision of this title, an 
institution or person shall not be entitled to recover from any 
State any amount in payment for medical care and services under 
this title which is withheld by the State agency pursuant to an 
order by the Secretary under subsection (b).

     [PROVISIONS RESPECTING INAPPLICABILITY AND WAIVER OF CERTAIN 
                       REQUIREMENTS OF THIS TITLE

    [Sec. 1915. (a) A State shall not be deemed to be out of 
compliance with the requirements of paragraphs (1), (10), or 
(23) of section 1902(a) solely by reason of the fact that the 
State (or any political subdivision thereof)--
            [(1) has entered into--
                    [(A) a contract with an organization which 
                has agreed to provide care and services in 
                addition to those offered under the State plan 
                to individuals eligible for medical assistance 
                who reside in the geographic area served by 
                such organization and who elect to obtain such 
                care and services from such organization, or by 
                reason of the fact that the plan provides for 
                payment for rural health clinic services only 
                if those services are provided by a rural 
                health clinic; or
                    [(B) arrangements through a competitive 
                bidding process or otherwise for the purchase 
                of laboratory services referred to in section 
                1905(a)(3) or medical devices if the Secretary 
                has found that--
                            [(i) adequate services or devices 
                        will be available under such 
                        arrangements, and
                            [(ii) any such laboratory services 
                        will be provided only through 
                        laboratories--
                                    [(I) which meet the 
                                applicable requirements of 
                                section 1861(e)(9) or 
                                paragraphs (15) and (16) of 
                                section 1861(s), and such 
                                additional requirements as the 
                                Secretary may require, and
                                    [(II) no more than 75 
                                percent of whose charges for 
                                such services are for services 
                                provided to individuals who are 
                                entitled to benefits under this 
                                title or under part A or part B 
                                of title XVIII; or
            [(2) restricts for a reasonable period of time the 
        provider or providers from which an individual 
        (eligible for medical assistance for items or services 
        under the State plan) can receive such items or 
        services, if--
                    [(A) the State has found, after notice and 
                opportunity for a hearing (in accordance with 
                procedures established by the State), that the 
                individual has utilized such items or services 
                at a frequency or amount not medically 
                necessary (as determined in accordance with 
                utilization guidelines established by the 
                State), and
                    [(B) under such restriction, individuals 
                eligible for medical assistance for such 
                services have reasonable access (taking into 
                account geographic location and reasonable 
                travel time) to such services of adequate 
                quality.
    [(b) The Secretary, to the extent he finds it to be cost-
effective and efficient and not inconsistent with the purposes 
of this title, may waive such requirements of section 1902 
(other than subsection (s)) (other than sections 1902(a)(13)(E) 
and 1902(a)(10)(A) insofar as it requires provision of the care 
and services described in section 1905(a)(2)(C)) as may be 
necessary for a State--
            [(1) to implement a primary care case-management 
        system or a specialty physician services arrangement 
        which restricts the provider from (or through) whom an 
        individual (eligible for medical assistance under this 
        title) can obtain medical care services (other than in 
        emergency circumstances), if such restriction does not 
        substantially impair access to such services of 
        adequate quality where medically necessary,
            [(2) to allow a locality to act as a central broker 
        in assisting individuals (eligible for medical 
        assistance under this title) in selecting among 
        competing health care plans, if such restriction does 
        not substantially impair access to services of adequate 
        quality where medically necessary,
            [(3) to share (through provision of additional 
        services) with recipients of medical assistance under 
        the State plan cost savings resulting from use by the 
        recipient of more cost-effective medical care, and
            [(4) to restrict the provider from (or through) 
        whom an individual (eligible for medical assistance 
        under this title) can obtain services (other than in 
        emergency circumstances) to providers or practitioners 
        who undertake to provide such services and who meet, 
        accept, and comply with the reimbursement, quality, and 
        utilization standards under the State plan, which 
        standards shall be consistent with the requirements of 
        section 1923 and are consistent with access, quality, 
        and efficient and economic provision of covered care 
        and services, if such restriction does not discriminate 
        among classes of providers on grounds unrelated to 
        their demonstrated effectiveness and efficiency in 
        providing those services and if providers under such 
        restriction are paid on a timely basis in the same 
        manner as health care practitioners must be paid under 
        section 1902(a)(37)(A).
No waiver under this subsection may restrict the choice of the 
individual in receiving services under section 1905(a)(4)(C).
    [(c)(1) The Secretary may by waiver provide that a State 
plan approved under this title may include as ``medical 
assistance'' under such plan payment for part or all of the 
cost of home or community-based services (other than room and 
board) approved by the Secretary which are provided pursuant to 
a written plan of care to individuals with respect to whom 
there has been a determination that but for the provision of 
such services the individuals would require the level of care 
provided in a hospital or a nursing facility or intermediate 
care facility for the mentally retarded the cost of which could 
be reimbursed under the State plan. For purposes of this 
subsection, the term ``room and board'' shall not include an 
amount established under a method determined by the State to 
reflect the portion of costs of rent and food attributable to 
an unrelated personal caregiver who is residing in the same 
household with an individual who, but for the assistance of 
such caregiver, would require admission to a hospital, nursing 
facility, or intermediate care facility for the mentally 
retarded.
    [(2) A waiver shall not be granted under this subsection 
unless the State provides assurances satisfactory to the 
Secretary that--
            [(A) necessary safeguards (including adequate 
        standards for provider participation) have been taken 
        to protect the health and welfare of individuals 
        provided services under the waiver and to assure 
        financial accountability for funds expended with 
        respect to such services;
            [(B) the State will provide, with respect to 
        individuals who--
                    [(i) are entitled to medical assistance for 
                inpatient hospital services, nursing facility 
                services, or services in an intermediate care 
                facility for the mentally retarded under the 
                State plan,
                    [(ii) may require such services, and
                    [(iii) may be eligible for such home or 
                community-based care under such waiver,
        for an evaluation of the need for inpatient hospital 
        services, nursing facility services, or services in an 
        intermediate care facility for the mentally retarded;
            [(C) such individuals who are determined to be 
        likely to require the level of care provided in a 
        hospital, nursing facility, or intermediate care 
        facility for the mentally retarded are informed of the 
        feasible alternatives, if available under the waiver, 
        at the choice of such individuals, to the provision of 
        inpatient hospital services, nursing facility services, 
        or services in an intermediate care facility for the 
        mentally retarded;
            [(D) under such waiver the average per capita 
        expenditure estimated by the State in any fiscal year 
        for medical assistance provided with respect to such 
        individuals does not exceed 100 percent of the average 
        per capita expenditure that the State reasonably 
        estimates would have been made in that fiscal year for 
        expenditures under the State plan for such individuals 
        if the waiver had not been granted; and
            [(E) the State will provide to the Secretary 
        annually, consistent with a data collection plan 
        designed by the Secretary, information on the impact of 
        the waiver granted under this subsection on the type 
        and amount of medical assistance provided under the 
        State plan and on the health and welfare of recipients.
    [(3) A waiver granted under this subsection may include a 
waiver of the requirements of section 1902(a)(1) (relating to 
statewideness), section 1902(a)(10)(B) (relating to 
comparability), and section 1902(a)(10)(C)(i)(III) (relating to 
income and resource rules applicable in the community). A 
waiver under this subsection shall be for an initial term of 
three years and, upon the request of a State, shall be extended 
for additional five-year periods unless the Secretary 
determines that for the previous waiver period the assurances 
provided under paragraph (2) have not been met. A waiver may 
provide, with respect to post-eligibility treatment of income 
of all individuals receiving services under that waiver, that 
the maximum amount of the individual's income which may be 
disregarded for any month for the maintenance needs of the 
individual may be an amount greater than the maximum allowed 
for that purpose under regulations in effect on July 1, 1985.
    [(4) A waiver granted under this subsection may, consistent 
with paragraph (2)--
            [(A) limit the individuals provided benefits under 
        such waiver to individuals with respect to whom the 
        State has determined that there is a reasonable 
        expectation that the amount of medical assistance 
        provided with respect to the individual under such 
        waiver will not exceed the amount of such medical 
        assistance provided for such individual if the waiver 
        did not apply, and
            [(B) provide medical assistance to individuals (to 
        the extent consistent with written plans of care, which 
        are subject to the approval of the State) for case 
        management services, homemaker/home health aide 
        services and personal care services, adult day health 
        services, habilitation services, respite care, and such 
        other services requested by the State as the Secretary 
        may approve and for day treatment or other partial 
        hospitalization services, psychosocial rehabilitation 
        services, and clinic services (whether or not furnished 
        in a facility) for individuals with chronic mental 
        illness.
Except as provided under paragraph (2)(D), the Secretary may 
not restrict the number of hours or days of respite care in any 
period which a State may provide under a waiver under this 
subsection.
    [(5) For purposes of paragraph (4)(B), the term 
``habilitation services'', with respect to individuals who 
receive such services after discharge from a nursing facility 
or intermediate care facility for the mentally retarded--
            [(A) means services designed to assist individuals 
        in acquiring, retaining, and improving the self-help, 
        socialization, and adaptive skills necessary to reside 
        successfully in home and community based settings; and
            [(B) includes (except as provided in subparagraph 
        (C)) prevocational, educational, and supported 
        employment services; but
            [(C) does not include--
                    [(i) special education and related services 
                (as defined in section 602(16) and (17) of the 
                Education of the Handicapped Act (20 U.S.C. 
                1401(16), (17)) which otherwise are available 
                to the individual through a local educational 
                agency; and
                    [(ii) vocational rehabilitation services 
                which otherwise are available to the individual 
                through a program funded under section 110 of 
                the Rehabilitation Act of 1973 (29 U.S.C. 730).
    [(6) The Secretary may not require, as a condition of 
approval of a waiver under this section under paragraph (2)(D), 
that the actual total expenditures for home and community-based 
services under the waiver (and a claim for Federal financial 
participation in expenditures for the services) cannot exceed 
the approved estimates for these services. The Secretary may 
not deny Federal financial payment with respect to services 
under such a waiver on the ground that, in order to comply with 
paragraph (2)(D), a State has failed to comply with such a 
requirement.
    [(7)(A) In making estimates under paragraph (2)(D) in the 
case of a waiver that applies only to individuals with a 
particular illness or condition who are inpatients in, or who 
would require the level of care provided in, hospitals, nursing 
facilities, or intermediate care facilities for the mentally 
retarded, the State may determine the average per capita 
expenditure that would have been made in a fiscal year for 
those individuals under the State plan separately from the 
expenditures for other individuals who are inpatients in, or 
who would require the level of care provided in, those 
respective facilities.
    [(B) In making estimates under paragraph (2)(D) in the case 
of a waiver that applies only to individuals with developmental 
disabilities who are inpatients in a nursing facility and whom 
the State has determined, on the basis of an evaluation under 
paragraph (2)(B), to need the level of services provided by an 
intermediate care facility for the mentally retarded, the State 
may determine the average per capita expenditures that would 
have been made in a fiscal year for those individuals under the 
State plan on the basis of the average per capita expenditures 
under the State plan for services to individuals who are 
inpatients in an intermediate care facility for the mentally 
retarded, without regard to the availability of beds for such 
inpatients.
    [(C) In making estimates under paragraph (2)(D) in the case 
of a waiver to the extent that it applies to individuals with 
mental retardation or a related condition who are resident in 
an intermediate care facility for the mentally retarded the 
participation of which under the State plan is terminated, the 
State may determine the average per capita expenditures that 
would have been made in a fiscal year for those individuals 
without regard to any such termination.
    [(8) The State agency administering the plan under this 
title may, whenever appropriate, enter into cooperative 
arrangements with the State agency responsible for 
administering the program for children with special health care 
needs under title V in order to assure improved access to 
coordinated services to meet the needs of such children.
    [(9) In the case of any waiver under this subsection which 
contains a limit on the number of individuals who shall receive 
home or community-based services, the State may substitute 
additional individuals to receive such services to replace any 
individuals who die or become ineligible for services under the 
State plan.
    [(10) The Secretary shall not limit to fewer than 200 the 
number of individuals in the State who may receive home and 
community-based services under a waiver under this subsection.
    [(d)(1) Subject to paragraph (2), the Secretary shall grant 
a waiver to provide that a State plan approved under this title 
shall include as ``medical assistance'' under such plan payment 
for part or all of the cost of home or community-based services 
(other than room and board) which are provided pursuant to a 
written plan of care to individuals 65 years of age or older 
with respect to whom there has been a determination that but 
for the provision of such services the individuals would be 
likely to require the level of care provided in a skilled 
nursing facility or intermediate care facility the cost of 
which could be reimbursed under the State plan. For purposes of 
this subsection, the term ``room and board'' shall not include 
an amount established under a method determined by the State to 
reflect the portion of costs of rent and food attributable to 
an unrelated personal caregiver who is residing in the same 
household with an individual who, but for the assistance of 
such caregiver, would require admission to a hospital, nursing 
facility, or intermediate care facility for the mentally 
retarded.
    [(2) A waiver shall not be granted under this subsection 
unless the State provides assurances satisfactory to the 
Secretary that--
            [(A) necessary safeguards (including adequate 
        standards for provider participation) have been taken 
        to protect the health and welfare of individuals 
        provided services under the waiver and to assure 
        financial accountability for funds expended with 
        respect to such services;
            [(B) with respect to individuals 65 years of age or 
        older who--
                    [(i) are entitled to medical assistance for 
                skilled nursing or intermediate care facility 
                services under the State plan,
                    [(ii) may require such services, and
                    [(iii) may be eligible for such home or 
                community-based services under such waiver,
        the State will provide for an evaluation of the need 
        for such skilled nursing facility or intermediate care 
        facility services; and
            [(C) such individuals who are determined to be 
        likely to require the level of care provided in a 
        skilled nursing facility or intermediate care facility 
        are informed of the feasible alternatives to the 
        provision of skilled nursing facility or intermediate 
        care facility services, which such individuals may 
        choose if available under the waiver.
Each State with a waiver under this subsection shall provide to 
the Secretary annually, consistent with a reasonable data 
collection plan designed by the Secretary, information on the 
impact of the waiver granted under this subsection on the type 
and amount of medical assistance provided under the State plan 
and on the health and welfare of recipients.
    [(3) A waiver granted under this subsection may include a 
waiver of the requirements of section 1902(a)(1) (relating to 
statewideness), section 1902(a)(10)(B) (relating to 
comparability), and section 1902(a)(10)(C)(i)(III) (relating to 
income and resource rules applicable in the community). Subject 
to a termination by the State (with notice to the Secretary) at 
any time, a waiver under this subsection shall be for an 
initial term of 3 years and, upon the request of a State, shall 
be extended for additional 5-year periods unless the Secretary 
determines that for the previous waiver period the assurances 
provided under paragraph (2) have not been met. A waiver may 
provide, with respect to post-eligibility treatment of income 
of all individuals receiving services under the waiver, that 
the maximum amount of the individual's income which may be 
disregarded for any month is equal to the amount that may be 
allowed for that purpose under a waiver under subsection (c).
    [(4) A waiver under this subsection may, consistent with 
paragraph (2), provide medical assistance to individuals for 
case management services, homemaker/home health aide services 
and personal care services, adult day health services, respite 
care, and other medical and social services that can contribute 
to the health and well-being of individuals and their ability 
to reside in a community-based care setting.
    [(5)(A) In the case of a State having a waiver approved 
under this subsection, notwithstanding any other provision of 
section 1903 to the contrary, the total amount expended by the 
State for medical assistance with respect to skilled nursing 
facility services, intermediate care facility services, and 
home and community-based services under the State plan for 
individuals 65 years of age or older during a waiver year under 
this subsection may not exceed the projected amount determined 
under subparagraph (B).
    [(B) For purposes of subparagraph (A), the projected amount 
under this subparagraph is the sum of the following:
            [(i) The aggregate amount of the State's medical 
        assistance under this title for skilled nursing 
        facility services and intermediate care facility 
        services furnished to individuals who have attained the 
        age of 65 for the base year increased by a percentage 
        which is equal to the lesser of 7 percent times the 
        number of years (rounded to the nearest quarter of a 
        year) beginning after the base year and ending at the 
        end of the waiver year involved or the sum of--
                    [(I) the percentage increase (based on an 
                appropriate market-basket index representing 
                the costs of elements of such services) between 
                the beginning of the base year and the 
                beginning of the waiver year involved, plus
                    [(II) the percentage increase between the 
                beginning of the base year and the beginning of 
                the waiver year involved in the number of 
                residents in the State who have attained the 
                age of 65, plus
                    [(III) 2 percent for each year (rounded to 
                the nearest quarter of a year) beginning after 
                the base year and ending at the end of the 
                waiver year.
            [(ii) The aggregate amount of the State's medical 
        assistance under this title for home and community-
        based services for individuals who have attained the 
        age of 65 for the base year increased by a percentage 
        which is equal to the lesser of 7 percent times the 
        number of years (rounded to the nearest quarter of a 
        year) beginning after the base year and ending at the 
        end of the waiver year involved or the sum of--
                    [(I) the percentage increase (based on an 
                appropriate market-basket index representing 
                the costs of elements of such services) between 
                the beginning of the base year and the 
                beginning of the waiver year involved, plus
                    [(II) the percentage increase between the 
                beginning of the base year and the beginning of 
                the waiver year involved in the number of 
                residents in the State who have attained the 
                age of 65, plus
                    [(III) 2 percent for each year (rounded to 
                the nearest quarter of a year) beginning after 
                the base year and ending at the end of the 
                waiver year.
    [(iii) The Secretary shall develop and promulgate by 
regulation (by not later than October 1, 1989)--
            [(I) a method, based on an index of appropriately 
        weighted indicators of changes in the wages and prices 
        of the mix of goods and services which comprise both 
        skilled nursing facility services and intermediate care 
        facility services (regardless of the source of payment 
        for such services), for projecting the percentage 
        increase for purposes of clause (i)(I);
            [(II) a method, based on an index of appropriately 
        weighted indicators of changes in the wages and prices 
        of the mix of goods and services which comprise home 
        and community-based services (regardless of the source 
        of payment for such services), for projecting the 
        percentage increase for purposes of clause (ii)(I); and
            [(III) a method for projecting, on a State specific 
        basis, the percentage increase in the number of 
        residents in each State who are over 65 years of age 
        for any period.
The Secretary shall develop (by not later than October 1, 1989) 
a method for projecting, on a State-specific basis, the 
percentage increase in the number of residents in each State 
who are over 75 years of age for any period. Effective on and 
after the date the Secretary promulgates the regulation under 
clause (iii), any reference in this subparagraph to the 
``lesser of 7 percent'' shall be deemed to be a reference to 
the ``greater of 7 percent''.
    [(iv) If there is enacted after December 22, 1987, an Act 
which amends this title whose provisions become effective on or 
after such date and which results in an increase in the 
aggregate amount of medical assistance under this title for 
nursing facility services and home and community-based services 
for individuals who have attained the age of 65 years, the 
Secretary, at the request of a State with a waiver under this 
subsection for a waiver year or years and in close consultation 
with the State, shall adjust the projected amount computed 
under this subparagraph for the waiver year or years to take 
into account such increase.
    [(C) In this paragraph:
            [(i) The term ``home and community-based services'' 
        includes services described in sections 1905(a)(7) and 
        1905(a)(8), services described in subsection (c)(4)(B), 
        services described in paragraph (4), and personal care 
        services.
            [(ii)(I) Subject to subclause (II), the term ``base 
        year'' means the most recent year (ending before the 
        date of the enactment of this subsection) for which 
        actual final expenditures under this title have been 
        reported to, and accepted by, the Secretary.
            [(II) For purposes of subparagraph (C), in the case 
        of a State that does not report expenditures on the 
        basis of the age categories described in such 
        subparagraph for a year ending before the date of the 
        enactment of this subsection, the term ``base year'' 
        means fiscal year 1989.
            [(iii) The term ``intermediate care facility 
        services'' does not include services furnished in an 
        institution certified in accordance with section 
        1905(d).
    [(6)(A) A determination by the Secretary to deny a request 
for a waiver (or extension of waiver) under this subsection 
shall be subject to review to the extent provided under section 
1116(b).
    [(B) Notwithstanding any other provision of this Act, if 
the Secretary denies a request of the State for an extension of 
a waiver under this subsection, any waiver under this 
subsection in effect on the date such request is made shall 
remain in effect for a period of not less than 90 days after 
the date on which the Secretary denies such request (or, if the 
State seeks review of such determination in accordance with 
subparagraph (A), the date on which a final determination is 
made with respect to such review).
    [(e)(1)(A) Subject to paragraph (2), the Secretary shall 
grant a waiver to provide that a State plan approved under this 
title shall include as ``medical assistance'' under such plan 
payment for part or all of the cost of nursing care, respite 
care, physicians' services, prescribed drugs, medical devices 
and supplies, transportation services, and such other services 
requested by the State as the Secretary may approve which are 
provided pursuant to a written plan of care to a child 
described in subparagraph (B) with respect to whom there has 
been a determination that but for the provision of such 
services the infants would be likely to require the level of 
care provided in a hospital or nursing facility the cost of 
which could be reimbursed under the State plan.
    [(B) Children described in this subparagraph are 
individuals under 5 years of age who--
            [(i) at the time of birth were infected with (or 
        tested positively for) the etiologic agent for acquired 
        immune deficiency syndrome (AIDS),
            [(ii) have such syndrome, or
            [(iii) at the time of birth were dependent on 
        heroin, cocaine, or phencyclidine,
and with respect to whom adoption or foster care assistance is 
(or will be) made available under part E of title IV.
    [(2) A waiver shall not be granted under this subsection 
unless the State provides assurances satisfactory to the 
Secretary that--
            [(A) necessary safeguards (including adequate 
        standards for provider participation) have been taken 
        to protect the health and welfare of individuals 
        provided services under the waiver and to assure 
        financial accountability for funds expended with 
        respect to such services;
            [(B) under such waiver the average per capita 
        expenditure estimated by the State in any fiscal year 
        for medical assistance provided with respect to such 
        individuals does not exceed 100 percent of the average 
        per capita expenditure that the State reasonably 
        estimates would have been made in that fiscal year for 
        expenditures under the State plan for such individuals 
        if the waiver had not been granted; and
            [(C) the State will provide to the Secretary 
        annually, consistent with a data collection plan 
        designed by the Secretary, information on the impact of 
        the waiver granted under this subsection on the type 
        and amount of medical assistance provided under the 
        State plan and on the health and welfare of recipients.
    [(3) A waiver granted under this subsection may include a 
waiver of the requirements of section 1902(a)(1) (relating to 
statewideness) and section 1902(a)(10)(B) (relating to 
comparability). A waiver under this subsection shall be for an 
initial term of 3 years and, upon the request of a State, shall 
be extended for additional five-year periods unless the 
Secretary determines that for the previous waiver period the 
assurances provided under paragraph (2) have not been met.
    [(4) The provisions of paragraph (6) of subsection (d) 
shall apply to this subsection in the same manner as it applies 
to subsection (d).
    [(f)(1) The Secretary shall monitor the implementation of 
waivers granted under this section to assure that the 
requirements for such waiver are being met and shall, after 
notice and opportunity for a hearing, terminate any such waiver 
where he finds noncompliance has occurred.
    [(2) A request to the Secretary from a State for approval 
of a proposed State plan or plan amendment or a waiver of a 
requirement of this title submitted by the State pursuant to a 
provision of this title shall be deemed granted unless the 
Secretary, within 90 days after the date of its submission to 
the Secretary, either denies such request in writing or informs 
the State agency in writing with respect to any additional 
information which is needed in order to make a final 
determination with respect to the request. After the date the 
Secretary receives such additional information, the request 
shall be deemed granted unless the Secretary, within 90 days of 
such date, denies such request.
    [(g)(1) A State may provide, as medical assistance, case 
management services under the plan without regard to the 
requirements of section 1902(a)(1) and section 1902(a)(10)(B). 
The provision of case management services under this subsection 
shall not restrict the choice of the individual to receive 
medical assistance in violation of section 1902(a)(23). A State 
may limit the provision of case management services under this 
subsection to individuals with acquired immune deficiency 
syndrome (AIDS), or with AIDS-related conditions, or with 
either, or to individuals described in section 1902(z)(1)(A) 
and a State may limit the provision of case management services 
under this subsection to individuals with chronic mental 
illness. The State may limit the case managers available with 
respect to case management services for eligible individuals 
with developmental disabilities or with chronic mental illness 
in order to ensure that the case managers for such individuals 
are capable of ensuring that such individuals receive needed 
services.
    [(2) For purposes of this subsection, the term ``case 
management services'' means services which will assist 
individuals eligible under the plan in gaining access to needed 
medical, social, educational, and other services.
    [(h) No waiver under this section (other than a waiver 
under subsection (c), (d), or (e)) may extend over a period of 
longer than two years unless the State requests continuation of 
such waiver, and such request shall be deemed granted unless 
the Secretary, within 90 days after the date of its submission 
to the Secretary, either denies such request in writing or 
informs the State agency in writing with respect to any 
additional information which is needed in order to make a final 
determination with respect to the request. After the date the 
Secretary receives such additional information, the request 
shall be deemed granted unless the Secretary, within 90 day of 
such date, denies such request.

   [use of enrollment fees, premiums, deductions, cost sharing, and 
                            similar charges

    [Sec. 1916. (a) The State plan shall provide that in the 
case of individuals described in subparagraph (A) or (E)(i) of 
section 1902(a)(10) who are eligible under the plan--
            [(1) no enrollment fee, premium, or similar charge 
        will be imposed under the plan (except for a premium 
        imposed under subsection (c));
            [(2) no deduction, cost sharing or similar charge 
        will be imposed under the plan with respect to--
                    [(A) services furnished to individuals 
                under 18 years of age (and, at the option of 
                the State, individuals under 21, 20, or 19 
                years of age, or any reasonable category of 
                individuals 18 years of age or over),
                    [(B) services furnished to pregnant women, 
                if such services relate to the pregnancy or to 
                any other medical condition which may 
                complicate the pregnancy (or, at the option of 
                the State, any services furnished to pregnant 
                women),
                    [(C) services furnished to any individual 
                who is an inpatient in a hospital, nursing 
                facility, intermediate care facility for the 
                mentally retarded, or other medical 
                institution, if such individual is required, as 
                a condition of receiving services in such 
                institution under the State plan, to spend for 
                costs of medical care all but a minimal amount 
                of his income required for personal needs,
                    [(D) emergency services (as defined by the 
                Secretary), family planning services and 
                supplies described in section 1905(a)(4)(C), or 
                services furnished to such an individual by a 
                health maintenance organization (as defined in 
                section 1903(m)) in which he is enrolled, or
                    [(E) services furnished to an individual 
                who is receiving hospice care (as defined in 
                section 1905(o)); and
            [(3) any deduction, cost sharing, or similar charge 
        imposed under the plan with respect to other such 
        individuals or other care and services will be nominal 
        in amount (as determined by the Secretary in 
        regulations which shall, if the definition of 
        ``nominal'' under the regulations in effect on July 1, 
        1982 is changed, take into account the level of cash 
        assistance provided in such State and such other 
        criteria as the Secretary determines to be 
        appropriate); except that a deduction, cost-sharing, or 
        similar charge of up to twice the nominal amount 
        established for outpatient services may be imposed by a 
        State under a waiver granted by the Secretary for 
        services received at a hospital emergency room if the 
        services are not emergency services (referred to in 
        paragraph (2)(D)) and the State has established to the 
        satisfaction of the Secretary that individuals eligible 
        for services under the plan have actually available and 
        accessible to them alternative sources of nonemergency, 
        outpatient services.
    [(b) The State plan shall provide that in the case of 
individuals other than those described in subparagraph (A) or 
(E) of section 1902(a)(10) who are eligible under the plan--
            [(1) there may be imposed an enrollment fee, 
        premium, or similar charge, which (as determined in 
        accordance with standards prescribed by the Secretary) 
        is related to the individual's income,
            [(2) no deduction, cost sharing, or similar charge 
        will be imposed under the plan with respect to--
                    [(A) services furnished to individuals 
                under 18 years of age (and, at the option of 
                the State, individuals under 21, 20, or 19 
                years of age, or any reasonable category of 
                individuals 18 years of age or over),
                    [(B) services furnished to pregnant women, 
                if such services relate to the pregnancy or to 
                any other medical condition which may 
                complicate the pregnancy (or, at the option of 
                the State, any services furnished to pregnant 
                women),
                    [(C) services furnished to any individual 
                who is an inpatient in a hospital, nursing 
                facility, intermediate care facility for the 
                mentally retarded, or other medical 
                institution, if such individual is required, as 
                a condition of receiving services in such 
                institution under the State plan, to spend for 
                costs of medical care all but a minimal amount 
                of his income required for personal needs,
                    [(D) emergency services (as defined by the 
                Secretary), family planning services and 
                supplies described in section 1905(a)(4)(C), or 
                (at the option of the State) services furnished 
                to such an individual by a health maintenance 
                organization (as defined in section 1903(m)) in 
                which he is enrolled, or
                    [(E) services furnished to an individual 
                who is receiving hospice care (as defined in 
                section 1905(o)); and
            [(3) any deduction, cost sharing, or similar charge 
        imposed under the plan with respect to other such 
        individuals or other care and services will be nominal 
        in amount (as determined by the Secretary in 
        regulations which shall, if the definition of 
        ``nominal'' under the regulations in effect on July 1, 
        1982 is changed, take into account the level of cash 
        assistance provided in such State and such other 
        criteria as the Secretary determines to be 
        appropriate); except that a deduction, cost-sharing, or 
        similar charge of up to twice the nominal amount 
        established for outpatient services may be imposed by a 
        State under a waiver granted by the Secretary for 
        services received at a hospital emergency room if the 
        services are not emergency services (referred to in 
        paragraph (2)(D)) and the State has established to the 
        satisfaction of the Secretary that individuals eligible 
        for services under the plan have actually available and 
        accessible to them alternative sources of nonemergency, 
        outpatient services.
    [(c)(1) The State plan of a State may at the option of the 
State provide for imposing a monthly premium (in an amount that 
does not exceed the limit established under paragraph (2)) with 
respect to an individual described in subparagraph (A) or (B) 
of section 1902(l)(1) who is receiving medical assistance on 
the basis of section 1902(a)(10)(A)(ii)(IX) and whose family 
income (as determined in accordance with the methodology 
specified in section 1902(l)(3)) equals or exceeds 150 percent 
of the income official poverty line (as defined by the Office 
of Management and Budget, and revised annually in accordance 
with section 673(2) of the Omnibus Budget Reconciliation Act of 
1981) applicable to a family of the size involved.
    [(2) In no case may the amount of any premium imposed under 
paragraph (1) exceed 10 percent of the amount by which the 
family income (less expenses for the care of a dependent child) 
of an individual exceeds 150 percent of the line described in 
paragraph (1).
    [(3) A State shall not require prepayment of a premium 
imposed pursuant to paragraph (1) and shall not terminate 
eligibility of an individual for medical assistance under this 
title on the basis of failure to pay any such premium until 
such failure continues for a period of not less than 60 days. 
The State may waive payment of any such premium in any case 
where the State determines that requiring such payment would 
create an undue hardship.
    [(4) A State may permit State or local funds available 
under other programs to be used for payment of a premium 
imposed under paragraph (1). Payment of a premium with such 
funds shall not be counted as income to the individual with 
respect to whom such payment is made.
    [(d) With respect to a qualified disabled and working 
individual described in section 1905(s) whose income (as 
determined under paragraph (3) of that section) exceeds 150 
percent of the official poverty line referred to in that 
paragraph, the State plan of a State may provide for the 
charging of a premium (expressed as a percentage of the 
medicare cost-sharing described in section 1905(p)(3)(A)(i) 
provided with respect to the individual) according to a sliding 
scale under which such percentage increases from 0 percent to 
100 percent, in reasonable increments (as determined by the 
Secretary), as the individual's income increases from 150 
percent of such poverty line to 200 percent of such poverty 
line.
    [(e) The State plan shall require that no provider 
participating under the State plan may deny care or services to 
an individual eligible for such care or services under the plan 
on account of such individual's inability to pay a deduction, 
cost sharing, or similar charge. The requirements of this 
subsection shall not extinguish the liability of the individual 
to whom the care or services were furnished for payment of the 
deduction, cost sharing, or similar charge.
    [(f) No deduction, cost sharing, or similar charge may be 
imposed under any waiver authority of the Secretary, except as 
provided in subsections (a)(3) and (b)(3), unless such waiver 
is for a demonstration project which the Secretary finds after 
public notice and opportunity for comment--
            [(1) will test a unique and previously untested use 
        of copayments,
            [(2) is limited to a period of not more than two 
        years,
            [(3) will provide benefits to recipients of medical 
        assistance which can reasonably be expected to be 
        equivalent to the risks to the recipients,
            [(4) is based on a reasonable hypothesis which the 
        demonstration is designed to test in a methodologically 
        sound manner, including the use of control groups of 
        similar recipients of medical assistance in the area, 
        and
            [(5) is voluntary, or makes provision for 
        assumption of liability for preventable damage to the 
        health of recipients of medical assistance resulting 
        from involuntary participation.

      [liens, adjustments and recoveries, and transfers of assets

    [Sec. 1917. (a)(1) No lien may be imposed against the 
property of any individual prior to his death on account of 
medical assistance paid or to be paid on his behalf under the 
State plan, except--
            [(A) pursuant to the judgment of a court on account 
        of benefits incorrectly paid on behalf of such 
        individual, or
            [(B) in the case of the real property of an 
        individual--
                    [(i) who is an inpatient in a nursing 
                facility, intermediate care facility for the 
                mentally retarded, or other medical 
                institution, if such individual is required, as 
                a condition of receiving services in such 
                institution under the State plan, to spend for 
                costs of medical care all but a minimal amount 
                of his income required for personal needs, and
                    [(ii) with respect to whom the State 
                determines, after notice and opportunity for a 
                hearing (in accordance with procedures 
                established by the State), that he cannot 
                reasonably be expected to be discharged from 
                the medical institution and to return home,
        except as provided in paragraph (2).
    [(2) No lien may be imposed under paragraph (1)(B) on such 
individual's home if--
            [(A) the spouse of such individual,
            [(B) such individual's child who is under age 21, 
        or (with respect to States eligible to participate in 
        the State program established under title XVI) is blind 
        or permanently and totally disabled, or (with respect 
        to States which are not eligible to participate in such 
        program) is blind or disabled as defined in section 
        1614, or
            [(C) a sibling of such individual (who has an 
        equity interest in such home and who was residing in 
        such individual's home for a period of at least one 
        year immediately before the date of the individual's 
        admission to the medical institution),
is lawfully residing in such home.
    [(3) Any lien imposed with respect to an individual 
pursuant to paragraph (1)(B) shall dissolve upon that 
individual's discharge from the medical institution and return 
home.
    [(b)(1) No adjustment or recovery of any medical assistance 
correctly paid on behalf of an individual under the State plan 
may be made, except that the State shall seek adjustment or 
recovery of any medical assistance correctly paid on behalf of 
an individual under the State plan in the case of the following 
individuals:
            [(A) In the case of an individual described in 
        subsection (a)(1)(B), the State shall seek adjustment 
        or recovery from the individual's estate or upon sale 
        of the property subject to a lien imposed on account of 
        medical assistance paid on behalf of the individual.
            [(B) In the case of an individual who was 55 years 
        of age or older when the individual received such 
        medical assistance, the State shall seek adjustment or 
        recovery from the individual's estate, but only for 
        medical assistance consisting of--
                    [(i) nursing facility services, home and 
                community-based services, and related hospital 
                and prescription drug services, or
                    [(ii) at the option of the State, any items 
                or services under the State plan.
            [(C)(i) In the case of an individual who has 
        received (or is entitled to receive) benefits under a 
        long-term care insurance policy in connection with 
        which assets or resources are disregarded in the manner 
        described in clause (ii), except as provided in such 
        clause, the State shall seek adjustment or recovery 
        from the individual's estate on account of medical 
        assistance paid on behalf of the individual for nursing 
        facility and other long-term care services.
            [(ii) Clause (i) shall not apply in the case of an 
        individual who received medical assistance under a 
        State plan of a State which had a State plan amendment 
        approved as of May 14, 1993, which provided for the 
        disregard of any assets or resources--
                    [(I) to the extent that payments are made 
                under a long-term care insurance policy; or
                    [(II) because an individual has received 
                (or is entitled to receive) benefits under a 
                long-term care insurance policy.
    [(2) Any adjustment or recovery under paragraph (1) may be 
made only after the death of the individual's surviving spouse, 
if any, and only at a time--
            [(A) when he has no surviving child who is under 
        age 21, or (with respect to States eligible to 
        participate in the State program established under 
        title XVI) is blind or permanently and totally 
        disabled, or (with respect to States which are not 
        eligible to participate in such program) is blind or 
        disabled as defined in section 1614; and
            [(B) in the case of a lien on an individual's home 
        under subsection (a)(1)(B), when--
                    [(i) no sibling of the individual (who was 
                residing in the individual's home for a period 
                of at least one year immediately before the 
                date of the individual's admission to the 
                medical institution), and
                    [(ii) no son or daughter of the individual 
                (who was residing in the individual's home for 
                a period of at least two years immediately 
                before the date of the individual's admission 
                to the medical institution, and who establishes 
                to the satisfaction of the State that he or she 
                provided care to such individual which 
                permitted such individual to reside at home 
                rather than in an institution),
        is lawfully residing in such home who has lawfully 
        resided in such home on a continuous basis since the 
        date of the individual's admission to the medical 
        institution.
    [(3) The State agency shall establish procedures (in 
accordance with standards specified by the Secretary) under 
which the agency shall waive the application of this subsection 
(other than paragraph (1)(C)) if such application would work an 
undue hardship as determined on the basis of criteria 
established by the Secretary.
    [(4) For purposes of this subsection, the term ``estate'', 
with respect to a deceased individual--
            [(A) shall include all real and personal property 
        and other assets included within the individual's 
        estate, as defined for purposes of State probate law; 
        and
            [(B) may include, at the option of the State (and 
        shall include, in the case of an individual to whom 
        paragraph (1)(C)(i) applies), any other real and 
        personal property and other assets in which the 
        individual had any legal title or interest at the time 
        of death (to the extent of such interest), including 
        such assets conveyed to a survivor, heir, or assign of 
        the deceased individual through joint tenancy, tenancy 
        in common, survivorship, life estate, living trust, or 
        other arrangement.
    [(c)(1)(A) In order to meet the requirements of this 
subsection for purposes of section 1902(a)(18), the State plan 
must provide that if an institutionalized individual or the 
spouse of such an individual (or, at the option of a State, a 
noninstitutionalized individual or the spouse of such an 
individual) disposes of assets for less than fair market value 
on or after the look-back date specified in subparagraph 
(B)(i), the individual is ineligible for medical assistance for 
services described in subparagraph (C)(i) (or, in the case of a 
noninstitutionalized individual, for the services described in 
subparagraph (C)(ii)) during the period beginning on the date 
specified in subparagraph (D) and equal to the number of months 
specified in subparagraph (E).
    [(B)(i) The look-back date specified in this subparagraph 
is a date that is 36 months (or, in the case of payments from a 
trust or portions of a trust that are treated as assets 
disposed of by the individual pursuant to paragraph (3)(A)(iii) 
or (3)(B)(ii) of subsection (d), 60 months) before the date 
specified in clause (ii).
    [(ii) The date specified in this clause, with respect to--
            [(I) an institutionalized individual is the first 
        date as of which the individual both is an 
        institutionalized individual and has applied for 
        medical assistance under the State plan, or
            [(II) a noninstitutionalized individual is the date 
        on which the individual applies for medical assistance 
        under the State plan or, if later, the date on which 
        the individual disposes of assets for less than fair 
        market value.
    [(C)(i) The services described in this subparagraph with 
respect to an institutionalized individual are the following:
            [(I) Nursing facility services.
            [(II) A level of care in any institution equivalent 
        to that of nursing facility services.
            [(III) Home or community-based services furnished 
        under a waiver granted under subsection (c) or (d) of 
        section 1915.
    [(ii) The services described in this subparagraph with 
respect to a noninstitutionalized individual are services (not 
including any services described in clause (i)) that are 
described in paragraph (7), (22), or (24) of section 1905(a), 
and, at the option of a State, other long-term care services 
for which medical assistance is otherwise available under the 
State plan to individuals requiring long-term care.
    [(D) The date specified in this subparagraph is the first 
day of the first month during or after which assets have been 
transferred for less than fair market value and which does not 
occur in any other periods of ineligibility under this 
subsection.
    [(E)(i) With respect to an institutionalized individual, 
the number of months of ineligibility under this subparagraph 
for an individual shall be equal to--
            [(I) the total, cumulative uncompensated value of 
        all assets transferred by the individual (or 
        individual's spouse) on or after the look-back date 
        specified in subparagraph (B)(i), divided by
            [(II) the average monthly cost to a private patient 
        of nursing facility services in the State (or, at the 
        option of the State, in the community in which the 
        individual is institutionalized) at the time of 
        application.
    [(ii) With respect to a noninstitutionalized individual, 
the number of months of ineligibility under this subparagraph 
for an individual shall not be greater than a number equal to--
            [(I) the total, cumulative uncompensated value of 
        all assets transferred by the individual (or 
        individual's spouse) on or after the look-back date 
        specified in subparagraph (B)(i), divided by
            [(II) the average monthly cost to a private patient 
        of nursing facility services in the State (or, at the 
        option of the State, in the community in which the 
        individual is institutionalized) at the time of 
        application.
    [(iii) The number of months of ineligibility otherwise 
determined under clause (i) or (ii) with respect to the 
disposal of an asset shall be reduced--
            [(I) in the case of periods of ineligibility 
        determined under clause (i), by the number of months of 
        ineligibility applicable to the individual under clause 
        (ii) as a result of such disposal, and
            [(II) in the case of periods of ineligibility 
        determined under clause (ii), by the number of months 
        of ineligibility applicable to the individual under 
        clause (i) as a result of such disposal.
    [(2) An individual shall not be ineligible for medical 
assistance by reason of paragraph (1) to the extent that--
            [(A) the assets transferred were a home and title 
        to the home was transferred to--
                    [(i) the spouse of such individual;
                    [(ii) a child of such individual who (I) is 
                under age 21, or (II) (with respect to States 
                eligible to participate in the State program 
                established under title XVI) is blind or 
                permanently and totally disabled, or (with 
                respect to States which are not eligible to 
                participate in such program) is blind or 
                disabled as defined in section 1614;
                    [(iii) a sibling of such individual who has 
                an equity interest in such home and who was 
                residing in such individual's home for a period 
                of at least one year immediately before the 
                date the individual becomes an 
                institutionalized individual; or
                    [(iv) a son or daughter of such individual 
                (other than a child described in clause (ii)) 
                who was residing in such individual's home for 
                a period of at least two years immediately 
                before the date the individual becomes an 
                institutionalized individual, and who (as 
                determined by the State) provided care to such 
                individual which permitted such individual to 
                reside at home rather than in such an 
                institution or facility;
            [(B) the assets--
                    [(i) were transferred to the individual's 
                spouse or to another for the sole benefit of 
                the individual's spouse,
                    [(ii) were transferred from the 
                individual's spouse to another for the sole 
                benefit of the individual's spouse,
                    [(iii) were transferred to, or to a trust 
                (including a trust described in subsection 
                (d)(4)) established solely for the benefit of, 
                the individual's child described in 
                subparagraph (A)(ii)(II), or
                    [(iv) were transferred to a trust 
                (including a trust described in subsection 
                (d)(4)) established solely for the benefit of 
                an individual under 65 years of age who is 
                disabled (as defined in section 1614(a)(3));
            [(C) a satisfactory showing is made to the State 
        (in accordance with regulations promulgated by the 
        Secretary) that (i) the individual intended to dispose 
        of the assets either at fair market value, or for other 
        valuable consideration, (ii) the assets were 
        transferred exclusively for a purpose other than to 
        qualify for medical assistance, or (iii) all assets 
        transferred for less than fair market value have been 
        returned to the individual; or
            [(D) the State determines, under procedures 
        established by the State (in accordance with standards 
        specified by the Secretary), that the denial of 
        eligibility would work an undue hardship as determined 
        on the basis of criteria established by the Secretary;
    [(3) For purposes of this subsection, in the case of an 
asset held by an individual in common with another person or 
persons in a joint tenancy, tenancy in common, or similar 
arrangement, the asset (or the affected portion of such asset) 
shall be considered to be transferred by such individual when 
any action is taken, either by such individual or by any other 
person, that reduces or eliminates such individual's ownership 
or control of such asset.
    [(4) A State (including a State which has elected treatment 
under section 1902(f)) may not provide for any period of 
ineligibility for an individual due to transfer of resources 
for less than fair market value except in accordance with this 
subsection. In the case of a transfer by the spouse of an 
individual which results in a period of ineligibility for 
medical assistance under a State plan for such individual, a 
State shall, using a reasonable methodology (as specified by 
the Secretary), apportion such period of ineligibility (or any 
portion of such period) among the individual and the 
individual's spouse if the spouse otherwise becomes eligible 
for medical assistance under the State plan.
    [(5) In this subsection, the term ``resources'' has the 
meaning given such term in section 1613, without regard to the 
exclusion described in subsection (a)(1) thereof.
    [(d)(1) For purposes of determining an individual's 
eligibility for, or amount of, benefits under a State plan 
under this title, subject to paragraph (4), the rules specified 
in paragraph (3) shall apply to a trust established by such 
individual.
    [(2)(A) For purposes of this subsection, an individual 
shall be considered to have established a trust if assets of 
the individual were used to form all or part of the corpus of 
the trust and if any of the following individuals established 
such trust other than by will:
            [(i) The individual.
            [(ii) The individual's spouse.
            [(iii) A person, including a court or 
        administrative body, with legal authority to act in 
        place of or on behalf of the individual or the 
        individual's spouse.
            [(iv) A person, including any court or 
        administrative body, acting at the direction or upon 
        the request of the individual or the individual's 
        spouse.
    [(B) In the case of a trust the corpus of which includes 
assets of an individual (as determined under subparagraph (A)) 
and assets of any other person or persons, the provisions of 
this subsection shall apply to the portion of the trust 
attributable to the assets of the individual.
    [(C) Subject to paragraph (4), this subsection shall apply 
without regard to--
            [(i) the purposes for which a trust is established,
            [(ii) whether the trustees have or exercise any 
        discretion under the trust,
            [(iii) any restrictions on when or whether 
        distributions may be made from the trust, or
            [(iv) any restrictions on the use of distributions 
        from the trust.
    [(3)(A) In the case of a revocable trust--
            [(i) the corpus of the trust shall be considered 
        resources available to the individual,
            [(ii) payments from the trust to or for the benefit 
        of the individual shall be considered income of the 
        individual, and
            [(iii) any other payments from the trust shall be 
        considered assets disposed of by the individual for 
        purposes of subsection (c).
    [(B) In the case of an irrevocable trust--
            [(i) if there are any circumstances under which 
        payment from the trust could be made to or for the 
        benefit of the individual, the portion of the corpus 
        from which, or the income on the corpus from which, 
        payment to the individual could be made shall be 
        considered resources available to the individual, and 
        payments from that portion of the corpus or income--
                    [(I) to or for the benefit of the 
                individual, shall be considered income of the 
                individual, and
                    [(II) for any other purpose, shall be 
                considered a transfer of assets by the 
                individual subject to subsection (c); and
            (ii) any portion of the trust from which, or any 
        income on the corpus from which, no payment could under 
        any circumstances be made to the individual shall be 
        considered, as of the date of establishment of the 
        trust (or, if later, the date on which payment to the 
        individual was foreclosed) to be assets disposed by the 
        individual for purposes of subsection (c), and the 
        value of the trust shall be determined for purposes of 
        such subsection by including the amount of any payments 
        made from such portion of the trust after such date.
    [(4) This subsection shall not apply to any of the 
following trusts:
            [(A) A trust containing the assets of an individual 
        under age 65 who is disabled (as defined in section 
        1614(a)(3)) and which is established for the benefit of 
        such individual by a parent, grandparent, legal 
        guardian of the individual, or a court if the State 
        will receive all amounts remaining in the trust upon 
        the death of such individual up to an amount equal to 
        the total medical assistance paid on behalf of the 
        individual under a State plan under this title.
            [(B) A trust established in a State for the benefit 
        of an individual if--
                    [(i) the trust is composed only of pension, 
                Social Security, and other income to the 
                individual (and accumulated income in the 
                trust),
                    [(ii) the State will receive all amounts 
                remaining in the trust upon the death of such 
                individual up to an amount equal to the total 
                medical assistance paid on behalf of the 
                individual under a State plan under this title, 
                and
                    [(iii) the State makes medical assistance 
                available to individuals described in section 
                1902(a)(10)(A)(ii)(V), but does not make such 
                assistance available to individuals for nursing 
                facility services under section 1902(a)(10)(C).
            [(C) A trust containing the assets of an individual 
        who is disabled (as defined in section 1614(a)(3)) that 
        meets the following conditions:
                    [(i) The trust is established and managed 
                by a nonprofit association.
                    [(ii) A separate account is maintained for 
                each beneficiary of the trust, but, for 
                purposes of investment and management of funds, 
                the trust pools these accounts.
                    [(iii) Accounts in the trust are 
                established solely for the benefit of 
                individuals who are disabled (as defined in 
                section 1614(a)(3)) by the parent, grandparent, 
                or legal guardian of such individuals, by such 
                individuals, or by a court.
                    [(iv) To the extent that amounts remaining 
                in the beneficiary's account upon the death of 
                the beneficiary are not retained by the trust, 
                the trust pays to the State from such remaining 
                amounts in the account an amount equal to the 
                total amount of medical assistance paid on 
                behalf of the beneficiary under the State plan 
                under this title.
    [(5) The State agency shall establish procedures (in 
accordance with standards specified by the Secretary) under 
which the agency waives the application of this subsection with 
respect to an individual if the individual establishes that 
such application would work an undue hardship on the individual 
as determined on the basis of criteria established by the 
Secretary.
    [(6) The term ``trust'' includes any legal instrument or 
device that is similar to a trust but includes an annuity only 
to such extent and in such manner as the Secretary specifies.
    [(e) In this section, the following definitions shall 
apply:
            [(1) The term ``assets'', with respect to an 
        individual, includes all income and resources of the 
        individual and of the individual's spouse, including 
        any income or resources which the individual or such 
        individual's spouse is entitled to but does not receive 
        because of action--
                    [(A) by the individual or such individual's 
                spouse,
                    [(B) by a person, including a court or 
                administrative body, with legal authority to 
                act in place of or on behalf of the individual 
                or such individual's spouse, or
                    [(C) by any person, including any court or 
                administrative body, acting at the direction or 
                upon the request of the individual or such 
                individual's spouse.
            [(2) The term ``income'' has the meaning given such 
        term in section 1612.
            [(3) The term ``institutionalized individual'' 
        means an individual who is an inpatient in a nursing 
        facility, who is an inpatient in a medical institution 
        and with respect to whom payment is made based on a 
        level of care provided in a nursing facility, or who is 
        described in section 1902(a)(10)(A)(ii)(VI).
            [(4) The term ``noninstitutionalized individual'' 
        means an individual receiving any of the services 
        specified in subsection (c)(1)(C)(ii).
            [(5) The term ``resources'' has the meaning given 
        such term in section 1613, without regard (in the case 
        of an institutionalized individual) to the exclusion 
        described in subsection (a)(1) of such section.

      [APPLICATION OF PROVISIONS OF TITLE II RELATING TO SUBPOENAS

    [Sec. 1918. The provisions of subsections (d) and (e) of 
section 205 of this Act shall apply with respect to this title 
to the same extent as they are applicable with respect to title 
II, except that, in so applying such subsections, and in 
applying section 205(l) thereto, with respect to this title, 
any reference therein to the Commissioner of Social Security or 
the Social Security Administration shall be considered a 
reference to the Secretary or the Department of Health and 
Human Services, respectively.

                  [REQUIREMENTS FOR NURSING FACILITIES

    [Sec. 1919. (a) Nursing Facility Defined.--In this title, 
the term ``nursing facility'' means an institution (or a 
distinct part of an institution) which--
            [(1) is primarily engaged in providing to 
        residents--
                    [(A) skilled nursing care and related 
                services for residents who require medical or 
                nursing care,
                    [(B) rehabilitation services for the 
                rehabilitation of injured, disabled, or sick 
                persons, or
                    [(C) on a regular basis, health-related 
                care and services to individuals who because of 
                their mental or physical condition require care 
                and services (above the level of room and 
                board) which can be made available to them only 
                through institutional facilities,
        and is not primarily for the care and treatment of 
        mental diseases;
            [(2) has in effect a transfer agreement (meeting 
        the requirements of section 1861(l)) with one or more 
        hospitals having agreements in effect under section 
        1866; and
            [(3) meets the requirements for a nursing facility 
        described in subsections (b), (c), and (d) of this 
        section.
Such term also includes any facility which is located in a 
State on an Indian reservation and is certified by the 
Secretary as meeting the requirements of paragraph (1) and 
subsections (b), (c), and (d).
    [(b) Requirements Relating to Provision of Services.--
            [(1) Quality of life.--
                    [(A) In general.--A nursing facility must 
                care for its residents in such a manner and in 
                such an environment as will promote maintenance 
                or enhancement of the quality of life of each 
                resident.
                    [(B) Quality assessment and assurance.--A 
                nursing facility must maintain a quality 
                assessment and assurance committee, consisting 
                of the director of nursing services, a 
                physician designated by the facility, and at 
                least 3 other members of the facility's staff, 
                which (i) meets at least quarterly to identify 
                issues with respect to which quality assessment 
                and assurance activities are necessary and (ii) 
                develops and implements appropriate plans of 
                action to correct identified quality 
                deficiencies. A State or the Secretary may not 
                require disclosure of the records of such 
                committee except insofar as such disclosure is 
                related to the compliance of such committee 
                with the requirements of this subparagraph.
            [(2) Scope of services and activities under plan of 
        care.--A nursing facility must provide services and 
        activities to attain or maintain the highest 
        practicable physical, mental, and psychosocial well-
        being of each resident in accordance with a written 
        plan of care which--
                    [(A) describes the medical, nursing, and 
                psychosocial needs of the resident and how such 
                needs will be met;
                    [(B) is initially prepared, with the 
                participation to the extent practicable of the 
                resident or the resident's family or legal 
                representative, by a team which includes the 
                resident's attending physician and a registered 
                professional nurse with responsibility for the 
                resident; and
                    [(C) is periodically reviewed and revised 
                by such team after each assessment under 
                paragraph (3).
            [(3) Residents' assessment.--
                    [(A) Requirement.--A nursing facility must 
                conduct a comprehensive, accurate, 
                standardized, reproducible assessment of each 
                resident's functional capacity, which 
                assessment--
                            [(i) describes the resident's 
                        capability to perform daily life 
                        functions and significant impairments 
                        in functional capacity;
                            [(ii) is based on a uniform minimum 
                        data set specified by the Secretary 
                        under subsection (f)(6)(A);
                            [(iii) uses an instrument which is 
                        specified by the State under subsection 
                        (e)(5); and
                            [(iv) includes the identification 
                        of medical problems.
                    [(B) Certification.--
                            [(i) In general.--Each such 
                        assessment must be conducted or 
                        coordinated (with the appropriate 
                        participation of health professionals) 
                        by a registered professional nurse who 
                        signs and certifies the completion of 
                        the assessment. Each individual who 
                        completes a portion of such an 
                        assessment shall sign and certify as to 
                        the accuracy of that portion of the 
                        assessment.
                            [(ii) Penalty for falsification.--
                                    [(I) An individual who 
                                willfully and knowingly 
                                certifies under clause (i) a 
                                material and false statement in 
                                a resident assessment is 
                                subject to a civil money 
                                penalty of not more than $1,000 
                                with respect to each 
                                assessment.
                                    [(II) An individual who 
                                willfully and knowingly causes 
                                another individual to certify 
                                under clause (i) a material and 
                                false statement in a resident 
                                assessment is subject to a 
                                civil money penalty of not more 
                                than $5,000 with respect to 
                                each assessment.
                                    [(III) The provisions of 
                                section 1128A (other than 
                                subsections (a) and (b)) shall 
                                apply to a civil money penalty 
                                under this clause in the same 
                                manner as such provisions apply 
                                to a penalty or proceeding 
                                under section 1128A(a).
                            [(iii) Use of independent 
                        assessors.--If a State determines, 
                        under a survey under subsection (g) or 
                        otherwise, that there has been a 
                        knowing and willful certification of 
                        false assessments under this paragraph, 
                        the State may require (for a period 
                        specified by the State) that resident 
                        assessments under this paragraph be 
                        conducted and certified by individuals 
                        who are independent of the facility and 
                        who are approved by the State.
                    [(C) Frequency.--
                            [(i) In general.--Such an 
                        assessment must be conducted--
                                    [(I) promptly upon (but no 
                                later than not later than 14 
                                days after the date of) 
                                admission for each individual 
                                admitted on or after October 1, 
                                1990, and by not later than 
                                October 1, 1991, for each 
                                resident of the facility on 
                                that date;
                                    [(II) promptly after a 
                                significant change in the 
                                resident's physical or mental 
                                condition; and
                                    [(III) in no case less 
                                often than once every 12 
                                months.
                            [(ii) Resident review.--The nursing 
                        facility must examine each resident no 
                        less frequently than once every 3 
                        months and, as appropriate, revise the 
                        resident's assessment to assure the 
                        continuing accuracy of the assessment.
                    [(D) Use.--The results of such an 
                assessment shall be used in developing, 
                reviewing, and revising the resident's plan of 
                care under paragraph (2).
                    [(E) Coordination.--Such assessments shall 
                be coordinated with any State-required 
                preadmission screening program to the maximum 
                extent practicable in order to avoid 
                duplicative testing and effort.
                    [(F) Requirements relating to preadmission 
                screening for mentally ill and mentally 
                retarded individuals.--Except as provided in 
                clauses (ii) and (iii) of subsection (e)(7)(A), 
                a nursing facility must not admit, on or after 
                January 1, 1989, any new resident who--
                            [(i) is mentally ill (as defined in 
                        subsection (e)(7)(G)(i)) unless the 
                        State mental health authority has 
                        determined (based on an independent 
                        physical and mental evaluation 
                        performed by a person or entity other 
                        than the State mental health authority) 
                        prior to admission that, because of the 
                        physical and mental condition of the 
                        individual, the individual requires the 
                        level of services provided by a nursing 
                        facility, and, if the individual 
                        requires such level of services, 
                        whether the individual requires 
                        specialized services for mental 
                        illness, or
                            [(ii) is mentally retarded (as 
                        defined in subsection (e)(7)(G)(ii)) 
                        unless the State mental retardation or 
                        developmental disability authority has 
                        determined prior to admission that, 
                        because of the physical and mental 
                        condition of the individual, the 
                        individual requires the level of 
                        services provided by a nursing 
                        facility, and, if the individual 
                        requires such level of services, 
                        whether the individual requires 
                        specialized services for mental 
                        retardation.
                A State mental health authority and a State 
                mental retardation or developmental disability 
                authority may not delegate (by subcontract or 
                otherwise) their responsibilities under this 
                subparagraph to a nursing facility (or to an 
                entity that has a direct or indirect 
                affiliation or relationship with such a 
                facility).
            [(4) Provision of services and activities.--
                    [(A) In general.--To the extent needed to 
                fulfill all plans of care described in 
                paragraph (2), a nursing facility must provide 
                (or arrange for the provision of)--
                            [(i) nursing and related services 
                        and specialized rehabilitative services 
                        to attain or maintain the highest 
                        practicable physical, mental, and 
                        psychosocial well-being of each 
                        resident;
                            [(ii) medically-related social 
                        services to attain or maintain the 
                        highest practicable physical, mental, 
                        and psychosocial well-being of each 
                        resident;
                            [(iii) pharmaceutical services 
                        (including procedures that assure the 
                        accurate acquiring, receiving, 
                        dispensing, and administering of all 
                        drugs and biologicals) to meet the 
                        needs of each resident;
                            [(iv) dietary services that assure 
                        that the meals meet the daily 
                        nutritional and special dietary needs 
                        of each resident;
                            [(v) an on-going program, directed 
                        by a qualified professional, of 
                        activities designed to meet the 
                        interests and the physical, mental, and 
                        psychosocial well-being of each 
                        resident;
                            [(vi) routine dental services (to 
                        the extent covered under the State 
                        plan) and emergency dental services to 
                        meet the needs of each resident; and
                            [(vii) treatment and services 
                        required by mentally ill and mentally 
                        retarded residents not otherwise 
                        provided or arranged for (or required 
                        to be provided or arranged for) by the 
                        State.
                The services provided or arranged by the 
                facility must meet professional standards of 
                quality.
                    [(B) Qualified persons providing 
                services.--Services described in clauses (i), 
                (ii), (iii), (iv), and (vi) of subparagraph (A) 
                must be provided by qualified persons in 
                accordance with each resident's written plan of 
                care.
                    [(C) Required nursing care; facility 
                waivers.--
                            [(i) General requirements.--With 
                        respect to nursing facility services 
                        provided on or after October 1, 1990, a 
                        nursing facility--
                                    [(I) except as provided in 
                                clause (ii), must provide 24-
                                hour licensed nursing services 
                                which are sufficient to meet 
                                the nursing needs of its 
                                residents, and
                                    [(II) except as provided in 
                                clause (ii), must use the 
                                services of a registered 
                                professional nurse for at least 
                                8 consecutive hours a day, 7 
                                days a week.
                            [(ii) Waiver by state.--To the 
                        extent that a facility is unable to 
                        meet the requirements of clause (i), a 
                        State may waive such requirements with 
                        respect to the facility if--
                                    [(I) the facility 
                                demonstrates to the 
                                satisfaction of the State that 
                                the facility has been unable, 
                                despite diligent efforts 
                                (including offering wages at 
                                the community prevailing rate 
                                for nursing facilities), to 
                                recruit appropriate personnel,
                                    [(II) the State determines 
                                that a waiver of the 
                                requirement will not endanger 
                                the health or safety of 
                                individuals staying in the 
                                facility,
                                    [(III) the State finds 
                                that, for any such periods in 
                                which licensed nursing services 
                                are not available, a registered 
                                professional nurse or a 
                                physician is obligated to 
                                respond immediately to 
                                telephone calls from the 
                                facility,
                                    [(IV) the State agency 
                                granting a waiver of such 
                                requirements provides notice of 
                                the waiver to the State long-
                                term care ombudsman 
                                (established under section 
                                307(a)(12) of the Older 
                                Americans Act of 1965) and the 
                                protection and advocacy system 
                                in the State for the mentally 
                                ill and the mentally retarded, 
                                and
                                    [(V) the nursing facility 
                                that is granted such a waiver 
                                by a State notifies residents 
                                of the facility (or, where 
                                appropriate, the guardians or 
                                legal representatives of such 
                                residents) and members of their 
                                immediate families of the 
                                waiver.
                        A waiver under this clause shall be 
                        subject to annual review and to the 
                        review of the Secretary and subject to 
                        clause (iii) shall be accepted by the 
                        Secretary for purposes of this title to 
                        the same extent as is the State's 
                        certification of the facility. In 
                        granting or renewing a waiver, a State 
                        may require the facility to use other 
                        qualified, licensed personnel.
                            [(iii) Assumption of waiver 
                        authority by secretary.--If the 
                        Secretary determines that a State has 
                        shown a clear pattern and practice of 
                        allowing waivers in the absence of 
                        diligent efforts by facilities to meet 
                        the staffing requirements, the 
                        Secretary shall assume and exercise the 
                        authority of the State to grant 
                        waivers.
            [(5) Required training of nurse aides.--
                    [(A) In general.--(i) Except as provided in 
                clause (ii), a nursing facility must not use on 
                a full-time basis any individual as a nurse 
                aide in the facility on or after October 1, 
                1990, for more than 4 months unless the 
                individual--
                            [(I) has completed a training and 
                        competency evaluation program, or a 
                        competency evaluation program, approved 
                        by the State under subsection 
                        (e)(1)(A), and
                            [(II) is competent to provide 
                        nursing or nursing-related services.
                    [(ii) A nursing facility must not use on a 
                temporary, per diem, leased, or on any other 
                basis other than as a permanent employee any 
                individual as a nurse aide in the facility on 
                or after January 1, 1991, unless the individual 
                meets the requirements described in clause (i).
                    [(B) Offering competency evaluation 
                programs for current employees.--A nursing 
                facility must provide, for individuals used as 
                a nurse aide by the facility as of January 1, 
                1990, for a competency evaluation program 
                approved by the State under subsection (e)(1) 
                and such preparation as may be necessary for 
                the individual to complete such a program by 
                0ctober 1, 1990.
                    [(C) Competency.--The nursing facility must 
                not permit an individual, other than in a 
                training and competency evaluation program 
                approved by the State, to serve as a nurse aide 
                or provide services of a type for which the 
                individual has not demonstrated competency and 
                must not use such an individual as a nurse aide 
                unless the facility has inquired of any State 
                registry established under subsection (e)(2)(A) 
                that the facility believes will include 
                information concerning the individual.
                    [(D) Re-training required.--For purposes of 
                subparagraph (A), if, since an individual's 
                most recent completion of a training and 
                competency evaluation program, there has been a 
                continuous period of 24 consecutive months 
                during none of which the individual performed 
                nursing or nursing-related services for 
                monetary compensation, such individual shall 
                complete a new training and competency 
                evaluation program, or a new competency 
                evaluation program.
                    [(E) Regular in-service education.--The 
                nursing facility must provide such regular 
                performance review and regular in-service 
                education as assures that individuals used as 
                nurse aides are competent to perform services 
                as nurse aides, including training for 
                individuals providing nursing and nursing-
                related services to residents with cognitive 
                impairments.
                    [(F) Nurse aide defined.--In this 
                paragraph, the term ``nurse aide'' means any 
                individual providing nursing or nursing-related 
                services to residents in a nursing facility, 
                but does not include an individual--
                            [(i) who is a licensed health 
                        professional (as defined in 
                        subparagraph (G)) or a registered 
                        dietician, or
                            [(ii) who volunteers to provide 
                        such services without monetary 
                        compensation.
                    [(G) Licensed health professional 
                defined.--In this paragraph, the term 
                ``licensed health professional'' means a 
                physician, physician assistant, nurse 
                practitioner, physical, speech, or occupational 
                therapist, physical or occupational therapy 
                assistant, registered professional nurse, 
                licensed practical nurse, or licensed or 
                certified social worker.
            [(6) Physician supervision and clinical records.--A 
        nursing facility must--
                    [(A) require that the health care of every 
                resident be provided under the supervision of a 
                physician (or, at the option of a State, under 
                the supervision of a nurse practitioner, 
                clinical nurse specialist, or physician 
                assistant who is not an employee of the 
                facility but who is working in collaboration 
                with a physician);
                    [(B) provide for having a physician 
                available to furnish necessary medical care in 
                case of emergency; and
                    [(C) maintain clinical records on all 
                residents, which records include the plans of 
                care (described in paragraph (2)) and the 
                residents' assessments (described in paragraph 
                (3)), as well as the results of any pre-
                admission screening conducted under subsection 
                (e)(7).
            [(7) Required social services.--In the case of a 
        nursing facility with more than 120 beds, the facility 
        must have at least one social worker (with at least a 
        bachelor's degree in social work or similar 
        professional qualifications) employed full-time to 
        provide or assure the provision of social services.
    [(c) Requirements Relating to Residents' Rights.--
            [(1) General rights.--
                    [(A) Specified rights.--A nursing facility 
                must protect and promote the rights of each 
                resident, including each of the following 
                rights:
                            [(i) Free choice.--The right to 
                        choose a personal attending physician, 
                        to be fully informed in advance about 
                        care and treatment, to be fully 
                        informed in advance of any changes in 
                        care or treatment that may affect the 
                        resident's well-being, and (except with 
                        respect to a resident adjudged 
                        incompetent) to participate in planning 
                        care and treatment or changes in care 
                        and treatment.
                            [(ii) Free from restraints.--The 
                        right to be free from physical or 
                        mental abuse, corporal punishment, 
                        involuntary seclusion, and any physical 
                        or chemical restraints imposed for 
                        purposes of discipline or convenience 
                        and not required to treat the 
                        resident's medical symptoms. Restraints 
                        may only be imposed--
                                    [(I) to ensure the physical 
                                safety of the resident or other 
                                residents, and
                                    [(II) only upon the written 
                                order of a physician that 
                                specifies the duration and 
                                circumstances under which the 
                                restraints are to be used 
                                (except in emergency 
                                circumstances specified by the 
                                Secretary until such an order 
                                could reasonably be obtained).
                            [(iii) Privacy.--The right to 
                        privacy with regard to accommodations, 
                        medical treatment, written and 
                        telephonic communications, visits, and 
                        meetings of family and of resident 
                        groups.
                            [(iv) Confidentiality.--The right 
                        to confidentiality of personal and 
                        clinical records and to access to 
                        current clinical records of the 
                        resident upon request by the resident 
                        or the resident's legal representative, 
                        within 24 hours (excluding hours 
                        occurring during a weekend or holiday) 
                        after making such a request.
                            [(v) Accommodation of needs.--The 
                        right--
                                    [(I) to reside and receive 
                                services with reasonable 
                                accommodation of individual 
                                needs and preferences, except 
                                where the health or safety of 
                                the individual or other 
                                residents would be endangered, 
                                and
                                    [(II) to receive notice 
                                before the room or roommate of 
                                the resident in the facility is 
                                changed.
                            [(vi) Grievances.--The right to 
                        voice grievances with respect to 
                        treatment or care that is (or fails to 
                        be) furnished, without discrimination 
                        or reprisal for voicing the grievances 
                        and the right to prompt efforts by the 
                        facility to resolve grievances the 
                        resident may have, including those with 
                        respect to the behavior of other 
                        residents.
                            [(vii) Participation in resident 
                        and family groups.--The right of the 
                        resident to organize and participate in 
                        resident groups in the facility and the 
                        right of the resident's family to meet 
                        in the facility with the families of 
                        other residents in the facility.
                            [(viii) Participation in other 
                        activities.--The right of the resident 
                        to participate in social, religious, 
                        and community activities that do not 
                        interfere with the rights of other 
                        residents in the facility.
                            [(ix) Examination of survey 
                        results.--The right to examine, upon 
                        reasonable request, the results of the 
                        most recent survey of the facility 
                        conducted by the Secretary or a State 
                        with respect to the facility and any 
                        plan of correction in effect with 
                        respect to the facility.
                            [(x) Refusal of certain 
                        transfers.--The right to refuse a 
                        transfer to another room within the 
                        facility, if a purposes of the transfer 
                        is to relocate the resident from a 
                        portion of the facility that is not a 
                        skilled nursing facility (for purposes 
                        of title XVIII) to a portion of the 
                        facility that is such a skilled nursing 
                        facility.
                            [(xi) Other rights.--Any other 
                        right established by the Secretary.
                Clause (iii) shall not be construed as 
                requiring the provision of a private room. A 
                resident's exercise of a right to refuse 
                transfer under clause (x) shall not affect the 
                resident's eligibility or entitlement to 
                medical assistance under this title or a 
                State's entitlement to Federal medical 
                assistance under this title with respect to 
                services furnished to such a resident.
                    [(B) Notice of rights.--A nursing facility 
                must--
                            [(i) inform each resident, orally 
                        and in writing at the time of admission 
                        to the facility, of the resident's 
                        legal rights during the stay at the 
                        facility and of the requirements and 
                        procedures for establishing eligibility 
                        for medical assistance under this 
                        title, including the right to request 
                        an assessment under section 
                        1924(c)(1)(B);
                            [(ii) make available to each 
                        resident, upon reasonable request, a 
                        written statement of such rights (which 
                        statement is updated upon changes in 
                        such rights) including the notice (if 
                        any) of the State developed under 
                        subsection (e)(6);
                            [(iii) inform each resident who is 
                        entitled to medical assistance under 
                        this title--
                                    [(I) at the time of 
                                admission to the facility or, 
                                if later, at the time the 
                                resident becomes eligible for 
                                such assistance, of the items 
                                and services (including those 
                                specified under section 
                                1902(a)(28)(B)) that are 
                                included in nursing facility 
                                services under the State plan 
                                and for which the resident may 
                                not be charged (except as 
                                permitted in section 1916), and 
                                of those other items and 
                                services that the facility 
                                offers and for which the 
                                resident may be charged and the 
                                amount of the charges for such 
                                items and services, and
                                    [(II) of changes in the 
                                items and services described in 
                                subclause (I) and of changes in 
                                the charges imposed for items 
                                and services described in that 
                                subclause; and
                            [(iv) inform each other resident, 
                        in writing before or at the time of 
                        admission and periodically during the 
                        resident's stay, of services available 
                        in the facility and of related charges 
                        for such services, including any 
                        charges for services not covered under 
                        title XVIII or by the facility's basic 
                        per diem charge.
                The written description of legal rights under 
                this subparagraph shall include a description 
                of the protection of personal funds under 
                paragraph (6) and a statement that a resident 
                may file a complaint with a State survey and 
                certification agency respecting resident abuse 
                and neglect and misappropriation of resident 
                property in the facility.
                    [(C) Rights of incompetent residents.--In 
                the case of a resident adjudged incompetent 
                under the laws of a State, the rights of the 
                resident under this title shall devolve upon, 
                and, to the extent judged necessary by a court 
                of competent jurisdiction, be exercised by, the 
                person appointed under State law to act on the 
                resident's behalf.
                    [(D) Use of psychopharmacologic drugs.--
                Psychopharmacologic drugs may be administered 
                only on the orders of a physician and only as 
                part of a plan (included in the written plan of 
                care described in paragraph (2)) designed to 
                eliminate or modify the symptoms for which the 
                drugs are prescribed and only if, at least 
                annually an independent, external consultant 
                reviews the appropriateness of the drug plan of 
                each resident receiving such drugs.
            [(2) Transfer and discharge rights.--
                    [(A) In general.--A nursing facility must 
                permit each resident to remain in the facility 
                and must not transfer or discharge the resident 
                from the facility unless--
                            [(i) the transfer or discharge is 
                        necessary to meet the resident's 
                        welfare and the resident's welfare 
                        cannot be met in the facility;
                            [(ii) the transfer or discharge is 
                        appropriate because the resident's 
                        health has improved sufficiently so the 
                        resident no longer needs the services 
                        provided by the facility;
                            [(iii) the safety of individuals in 
                        the facility is endangered;
                            [(iv) the health of individuals in 
                        the facility would otherwise be 
                        endangered;
                            [(v) the resident has failed, after 
                        reasonable and appropriate notice, to 
                        pay (or to have paid under this title 
                        or title XVIII on the resident's 
                        behalf) for a stay at the facility; or
                            [(vi) the facility ceases to 
                        operate.
                In each of the cases described in clauses (i) 
                through (iv), the basis for the transfer or 
                discharge must be documented in the resident's 
                clinical record. In the cases described in 
                clauses (i) and (ii), the documentation must be 
                made by the resident's physician, and in the 
                case described in clause (iv) the documentation 
                must be made by a physician. For purposes of 
                clause (v), in the case of a resident who 
                becomes eligible for assistance under this 
                title after admission to the facility, only 
                charges which may be imposed under this title 
                shall be considered to be allowable.
                    [(B) Pre-transfer and pre-discharge 
                notice.--
                            [(i) In general.--Before effecting 
                        a transfer or discharge of a resident, 
                        a nursing facility must--
                                    [(I) notify the resident 
                                (and, if known, an immediate 
                                family member of the resident 
                                or legal representative) of the 
                                transfer or discharge and the 
                                reasons therefor,
                                    [(II) record the reasons in 
                                the resident's clinical record 
                                (including any documentation 
                                required under subparagraph 
                                (A)), and
                                    [(III) include in the 
                                notice the items described in 
                                clause (iii).
                            [(ii) Timing of notice.--The notice 
                        under clause (i)(I) must be made at 
                        least 30 days in advance of the 
                        resident's transfer or discharge 
                        except--
                                    [(I) in a case described in 
                                clause (iii) or (iv) of 
                                subparagraph (A);
                                    [(II) in a case described 
                                in clause (ii) of subparagraph 
                                (A), where the resident's 
                                health improves sufficiently to 
                                allow a more immediate transfer 
                                or discharge;
                                    [(III) in a case described 
                                in clause (i) of subparagraph 
                                (A), where a more immediate 
                                transfer or discharge is 
                                necessitated by the resident's 
                                urgent medical needs; or
                                    [(IV) in a case where a 
                                resident has not resided in the 
                                facility for 30 days.
                        In the case of such exceptions, notice 
                        must be given as many days before the 
                        date of the transfer or discharge as is 
                        practicable.
                            [(iii) Items included in notice.--
                        Each notice under clause (i) must 
                        include--
                                    [(I) for transfers or 
                                discharges effected on or after 
                                October 1, 1989, notice of the 
                                resident's right to appeal the 
                                transfer or discharge under the 
                                State process established under 
                                subsection (e)(3);
                                    [(II) the name, mailing 
                                address, and telephone number 
                                of the State long-term care 
                                ombudsman (established under 
                                title III or VII of the Older 
                                Americans Act of 1965 in 
                                accordance with section 712 of 
                                the Act);
                                    [(III) in the case of 
                                residents with developmental 
                                disabilities, the mailing 
                                address and telephone number of 
                                the agency responsible for the 
                                protection and advocacy system 
                                for developmentally disabled 
                                individuals established under 
                                part C of the Developmental 
                                Disabilities Assistance and 
                                Bill of Rights Act; and
                                    [(IV) in the case of 
                                mentally ill residents (as 
                                defined in subsection 
                                (e)(7)(G)(i)), the mailing 
                                address and telephone number of 
                                the agency responsible for the 
                                protection and advocacy system 
                                for mentally ill individuals 
                                established under the 
                                Protection and Advocacy for 
                                Mentally Ill Individuals Act.
                    [(C) Orientation.--A nursing facility must 
                provide sufficient preparation and orientation 
                to residents to ensure safe and orderly 
                transfer or discharge from the facility.
                    [(D) Notice on bed-hold policy and 
                readmission.--
                            [(i) Notice before transfer.--
                        Before a resident of a nursing facility 
                        is transferred for hospitalization or 
                        therapeutic leave, a nursing facility 
                        must provide written information to the 
                        resident and an immediate family member 
                        or legal representative concerning--
                                    [(I) the provisions of the 
                                State plan under this title 
                                regarding the period (if any) 
                                during which the resident will 
                                be permitted under the State 
                                plan to return and resume 
                                residence in the facility, and
                                    [(II) the policies of the 
                                facility regarding such a 
                                period, which policies must be 
                                consistent with clause (iii).
                            [(ii) Notice upon transfer.--At the 
                        time of transfer of a resident to a 
                        hospital or for therapeutic leave, a 
                        nursing facility must provide written 
                        notice to the resident and an immediate 
                        family member or legal representative 
                        of the duration of any period described 
                        in clause (i).
                            [(iii) Permitting resident to 
                        return.--A nursing facility must 
                        establish and follow a written policy 
                        under which a resident--
                                    [(I) who is eligible for 
                                medical assistance for nursing 
                                facility services under a State 
                                plan,
                                    [(II) who is transferred 
                                from the facility for 
                                hospitalization or therapeutic 
                                leave, and
                                    [(III) whose 
                                hospitalization or therapeutic 
                                leave exceeds a period paid for 
                                under the State plan for the 
                                holding of a bed in the 
                                facility for the resident,
                        will be permitted to be readmitted to 
                        the facility immediately upon the first 
                        availability of a bed in a semiprivate 
                        room in the facility if, at the time of 
                        readmission, the resident requires the 
                        services provided by the facility.
                    [(E) Information respecting advance 
                directives.--A nursing facility must comply 
                with the requirement of section 1902(w) 
                (relating to maintaining written policies and 
                procedures respecting advance directives).
            [(3) Access and visitation rights.--A nursing 
        facility must--
                    [(A) permit immediate access to any 
                resident by any representative of the 
                Secretary, by any representative of the State, 
                by an ombudsman or agency described in 
                subclause (II), (III), or (IV) of paragraph 
                (2)(B)(iii), or by the resident's individual 
                physician;
                    [(B) permit immediate access to a resident, 
                subject to the resident's right to deny or 
                withdraw consent at any time, by immediate 
                family or other relatives of the resident;
                    [(C) permit immediate access to a resident, 
                subject to reasonable restrictions and the 
                resident's right to deny or withdraw consent at 
                any time, by others who are visiting with the 
                consent of the resident;
                    [(D) permit reasonable access to a resident 
                by any entity or individual that provides 
                health, social, legal, or other services to the 
                resident, subject to the resident's right to 
                deny or withdraw consent at any time; and
                    [(E) permit representatives of the State 
                ombudsman (described in paragraph 
                (2)(B)(iii)(II)), with the permission of the 
                resident (or the resident's legal 
                representative) and consistent with State law, 
                to examine a resident's clinical records.
            [(4) Equal access to quality care.--
                    [(A) In general.--A nursing facility must 
                establish and maintain identical policies and 
                practices regarding transfer, discharge, and 
                the provision of services required under the 
                State plan for all individuals regardless of 
                source of payment.
                    [(B) Construction.--
                            [(i) Nothing prohibiting any 
                        charges for non-medicaid patients.--
                        Subparagraph (A) shall not be construed 
                        as prohibiting a nursing facility from 
                        charging any amount for services 
                        furnished, consistent with the notice 
                        in paragraph (1)(B) describing such 
                        charges.
                            [(ii) No additional services 
                        required.--Subparagraph (A) shall not 
                        be construed as requiring a State to 
                        offer additional services on behalf of 
                        a resident than are otherwise provided 
                        under the State plan.
            [(5) Admissions Policy.--
                    [(A) Admissions.--With respect to 
                admissions practices, a nursing facility must--
                            [(i)(I) not require individuals 
                        applying to reside or residing in the 
                        facility to waive their rights to 
                        benefits under this title or title 
                        XVIII, (II) not require oral or written 
                        assurance that such individuals are not 
                        eligible for, or will not apply for, 
                        benefits under this title or title 
                        XVIII, and (III) prominently display in 
                        the facility written information, and 
                        provide to such individuals oral and 
                        written information, about how to apply 
                        for and use such benefits and how to 
                        receive refunds for previous payments 
                        covered by such benefits;
                            [(ii) not require a third party 
                        guarantee of payment to the facility as 
                        a condition of admission (or expedited 
                        admission) to, or continued stay in, 
                        the facility; and
                            [(iii) in the case of an individual 
                        who is entitled to medical assistance 
                        for nursing facility services, not 
                        charge, solicit, accept, or receive, in 
                        addition to any amount otherwise 
                        required to be paid under the State 
                        plan under this title, any gift, money, 
                        donation, or other consideration as a 
                        precondition of admitting (or 
                        expediting the admission of) the 
                        individual to the facility or as a 
                        requirement for the individual's 
                        continued stay in the facility.
                    [(B) Construction.--
                            [(i) No preemption of stricter 
                        standards.--Subparagraph (A) shall not 
                        be construed as preventing States or 
                        political subdivisions therein from 
                        prohibiting, under State or local law, 
                        the discrimination against individuals 
                        who are entitled to medical assistance 
                        under the State plan with respect to 
                        admissions practices of nursing 
                        facilities.
                            [(ii) Contracts with legal 
                        representatives.--Subparagraph (A)(ii) 
                        shall not be construed as preventing a 
                        facility from requiring an individual, 
                        who has legal access to a resident's 
                        income or resources available to pay 
                        for care in the facility, to sign a 
                        contract (without incurring personal 
                        financial liability) to provide payment 
                        from the resident's income or resources 
                        for such care.
                            [(iii) Charges for additional 
                        services requested.--Subparagraph 
                        (A)(iii) shall not be construed as 
                        preventing a facility from charging a 
                        resident, eligible for medical 
                        assistance under the State plan, for 
                        items or services the resident has 
                        requested and received and that are not 
                        specified in the State plan as included 
                        in the term ``nursing facility 
                        services''.
                            [(iv) Bona fide contributions.--
                        Subparagraph (A)(iii) shall not be 
                        construed as prohibiting a nursing 
                        facility from soliciting, accepting, or 
                        receiving a charitable, religious, or 
                        philanthropic contribution from an 
                        organization or from a person unrelated 
                        to the resident (or potential 
                        resident), but only to the extent that 
                        such contribution is not a condition of 
                        admission, expediting admission, or 
                        continued stay in the facility.
            [(6) Protection of resident funds.--
                    [(A) In general.--The nursing facility--
                            [(i) may not require residents to 
                        deposit their personal funds with the 
                        facility, and
                            [(ii) upon the written 
                        authorization of the resident, must 
                        hold, safeguard, and account for such 
                        personal funds under a system 
                        established and maintained by the 
                        facility in accordance with this 
                        paragraph.
                    [(B) Management of personal funds.--Upon 
                written authorization of a resident under 
                subparagraph (A)(ii), the facility must manage 
                and account for the personal funds of the 
                resident deposited with the facility as 
                follows:
                            [(i) Deposit.--The facility must 
                        deposit any amount of personal funds in 
                        excess of $50 with respect to a 
                        resident in an interest bearing account 
                        (or accounts) that is separate from any 
                        of the facility's operating accounts 
                        and credits all interest earned on such 
                        separate account to such account. With 
                        respect to any other personal funds, 
                        the facility must maintain such funds 
                        in a non-interest bearing account or 
                        petty cash fund.
                            [(ii) Accounting and records.--The 
                        facility must assure a full and 
                        complete separate accounting of each 
                        such resident's personal funds, 
                        maintain a written record of all 
                        financial transactions involving the 
                        personal funds of a resident deposited 
                        with the facility, and afford the 
                        resident (or a legal representative of 
                        the resident) reasonable access to such 
                        record.
                            [(iii) Notice of certain 
                        balances.--The facility must notify 
                        each resident receiving medical 
                        assistance under the State plan under 
                        title XIX when the amount in the 
                        resident's account reaches $200 less 
                        than the dollar amount determined under 
                        section 1611(a)(3)(B) and the fact that 
                        if the amount in the account (in 
                        addition to the value of the resident's 
                        other nonexempt resources) reaches the 
                        amount determined under such section 
                        the resident may lose eligibility for 
                        such medical assistance or for benefits 
                        under title XVI.
                            [(iv) Conveyance upon death.--Upon 
                        the death of a resident with such an 
                        account, the facility must convey 
                        promptly the resident's personal funds 
                        (and a final accounting of such funds) 
                        to the individual administering the 
                        resident's estate.
                    [(C) Assurance of financial security.--The 
                facility must purchase a surety bond, or 
                otherwise provide assurance satisfactory to the 
                Secretary, to assure the security of all 
                personal funds of residents deposited with the 
                facility.
                    [(D) Limitation on charges to personal 
                funds.--The facility may not impose a charge 
                against the personal funds of a resident for 
                any item or service for which payment is made 
                under this title or title XVIII.
            [(7) Limitation on charges in case of medicaid-
        eligible individuals.--
                    [(A) In general.--A nursing facility may 
                not impose charges, for certain medicaid-
                eligible individuals for nursing facility 
                services covered by the State under its plan 
                under this title, that exceed the payment 
                amounts established by the State for such 
                services under this title.
                    [(B) Certain medicaid individuals 
                defined.--In subparagraph (A), the term 
                ``certain medicaid-eligible individual'' means 
                an individual who is entitled to medical 
                assistance for nursing facility services in the 
                facility under this title but with respect to 
                whom such benefits are not being paid because, 
                in determining the amount of the individual's 
                income to be applied monthly to payment for the 
                costs of such services, the amount of such 
                income exceeds the payment amounts established 
                by the State for such services under this 
                title.
            [(8) Posting of survey results.--A nursing facility 
        must post in a place readily accessible to residents, 
        and family members and legal representatives of 
        residents, the results of the most recent survey of the 
        facility conducted under subsection (g).
    [(d) Requirements Relating to Administration and Other 
Matters.--
            [(1) Administration.--
                    [(A) In general.--A nursing facility must 
                be administered in a manner that enables it to 
                use its resources effectively and efficiently 
                to attain or maintain the highest practicable 
                physical, mental, and psychosocial well-being 
                of each resident (consistent with requirements 
                established under subsection (f)(5)).
                    [(B) Required notices.--If a change occurs 
                in--
                            [(i) the persons with an ownership 
                        or control interest (as defined in 
                        section 1124(a)(3)) in the facility,
                            [(ii) the persons who are officers, 
                        directors, agents, or managing 
                        employees (as defined in section 
                        1126(b)) of the facility,
                            [(iii) the corporation, 
                        association, or other company 
                        responsible for the management of the 
                        facility, or
                            [(iv) the individual who is the 
                        administrator or director of nursing of 
                        the facility,
                nursing facility must provide notice to the 
                State agency responsible for the licensing of 
                the facility, at the time of the change, of the 
                change and of the identity of each new person, 
                company, or individual described in the 
                respective clause.
                    [(C) Nursing facility administrator.--The 
                administrator of a nursing facility must meet 
                standards established by the Secretary under 
                subsection (f)(4).
            [(2) Licensing and life safety code.--
                    [(A) Licensing.--A nursing facility must be 
                licensed under applicable State and local law.
                    [(B) Life safety code.--A nursing facility 
                must meet such provisions of such edition (as 
                specified by the Secretary in regulation) of 
                the Life Safety Code of the National Fire 
                Protection Association as are applicable to 
                nursing homes; except that--
                            [(i) the Secretary may waive, for 
                        such periods as he deems appropriate, 
                        specific provisions of such Code which 
                        if rigidly applied would result in 
                        unreasonable hardship upon a facility, 
                        but only if such waiver would not 
                        adversely affect the health and safety 
                        of residents or personnel, and
                            [(ii) the provisions of such Code 
                        shall not apply in any State if the 
                        Secretary finds that in such State 
                        there is in effect a fire and safety 
                        code, imposed by State law, which 
                        adequately protects residents of and 
                        personnel in nursing facilities.
            [(3) Sanitary and infection control and physical 
        environment.--A nursing facility must--
                    [(A) establish and maintain an infection 
                control program designed to provide a safe, 
                sanitary, and comfortable environment in which 
                residents reside and to help prevent the 
                development and transmission of disease and 
                infection, and
                    [(B) be designed, constructed, equipped, 
                and maintained in a manner to protect the 
                health and safety of residents, personnel, and 
                the general public.
            [(4) Miscellaneous.--
                    [(A) Compliance with federal, state, and 
                local laws and professional standards.--A 
                nursing facility must operate and provide 
                services in compliance with all applicable 
                Federal, State, and local laws and regulations 
                (including the requirements of section 1124 and 
                with accepted professional standards and 
                principles which apply to professionals 
                providing services in such a facility.
                    [(B) Other.--A nursing facility must meet 
                such other requirements relating to the health 
                and safety of residents or relating to the 
                physical facilities thereof as the Secretary 
                may find necessary.
    [(e) State Requirements Relating to Nursing Facility 
Requirements.--As a condition of approval of its plan under 
this title, a State must provide for the following:
            [(1) Specification and review of nurse aide 
        training and competency evaluation programs and of 
        nurse aide competency evaluation programs.--The State 
        must--
                    [(A) by not later than January 1, 1989, 
                specify those training and competency 
                evaluation programs, and those competency 
                evaluation programs, that the State approves 
                for purposes of subsection (b)(5) and that meet 
                the requirements established under subsection 
                (f)(2), and
                    [(B) by not later than January 1, 1990, 
                provide for the review and reapproval of such 
                programs, at a frequency and using a 
                methodology consistent with the requirements 
                established under subsection (f)(2)(A)(iii).
        The failure of the Secretary to establish requirements 
        under subsection (f)(2) shall not relieve any State of 
        its responsibility under this paragraph.
            [(2) Nurse aide registry.--
                    [(A) In general.--By not later than January 
                1, 1989, the State shall establish and maintain 
                a registry of all individuals who have 
                satisfactorily completed a nurse aide training 
                and competency evaluation program, or a nurse 
                aide competency evaluation program, approved 
                under paragraph (1) in the State, or any 
                individual described in subsection 
                (f)(2)(B)(ii) or in subparagraph (B), (C), or 
                (D) of section 6901(b)(4) of the Omnibus Budget 
                Reconciliation Act of 1989.
                    [(B) Information in registry.--The registry 
                under subparagraph (A) shall provide (in 
                accordance with regulations of the Secretary) 
                for the inclusion of specific documented 
                findings by a State under subsection (g)(1)(C) 
                of resident neglect or abuse or 
                misappropriation of resident property involving 
                an individual listed in the registry, as well 
                as any brief statement of the individual 
                disputing the findings. The State shall make 
                available to the public information in the 
                registry. In the case of inquiries to the 
                registry concerning an individual listed in the 
                registry, any information disclosed concerning 
                such a finding shall also include disclosure of 
                any such statement in the registry relating to 
                the finding or a clear and accurate summary of 
                such a statement.
                    [(C) Prohibition against charges.--A State 
                may not impose any charges on a nurse aide 
                relating to the registry established and 
                maintained under subparagraph (A).
            [(3) State appeals process for transfers and 
        discharges.--The State, for transfers and discharges 
        from nursing facilities effected on or after October 1, 
        1989, must provide for a fair mechanism, meeting the 
        guidelines established under subsection (f)(3), for 
        hearing appeals on transfers and discharges of 
        residents of such facilities; but the failure of the 
        Secretary to establish such guidelines under such 
        subsection shall not relieve any State of its 
        responsibility under this paragraph.
            [(4) Nursing facility administrator standards.--By 
        not later than July 1, 1989, the State must have 
        implemented and enforced the nursing facility 
        administrator standards developed under subsection 
        (f)(4) respecting the qualification of administrators 
        of nursing facilities.
            [(5) Specification of resident assessment 
        instrument.--Effective July 1, 1990, the State shall 
        specify the instrument to be used by nursing facilities 
        in the State in complying with the requirement of 
        subsection (b)(3)(A)(iii). Such instrument shall be--
                    [(A) one of the instruments designated 
                under subsection (f)(6)(B), or
                    [(B) an instrument which the Secretary has 
                approved as being consistent with the minimum 
                data set of core elements, common definitions, 
                and utilization guidelines specified by the 
                Secretary under subsection (f)(6)(A).
            [(6) Notice of medicaid rights.--Each State, as a 
        condition of approval of its plan under this title, 
        effective April 1, 1988, must develop (and periodically 
        update) a written notice of the rights and obligations 
        of residents of nursing facilities (and spouses of such 
        residents) under this title.
            [(7) State requirements for preadmission screening 
        and resident review.--
                    [(A) Preadmission screening.--
                            [(i) In general.--Effective January 
                        1, 1989, the State must have in effect 
                        a preadmission screening program, for 
                        making determinations (using any 
                        criteria developed under subsection 
                        (f)(8)) described in subsection 
                        (b)(3)(F) for mentally ill and mentally 
                        retarded individuals (as defined in 
                        subparagraph (G)) who are admitted to 
                        nursing facilities on or after January 
                        1, 1989. The failure of the Secretary 
                        to develop minimum criteria under 
                        subsection (f)(8) shall not relieve any 
                        State of its responsibility to have a 
                        preadmission screening program under 
                        this subparagraph or to perform 
                        resident reviews under subparagraph 
                        (B).
                            [(ii) Clarification with respect to 
                        certain readmissions.--The preadmission 
                        screening program under clause (i) need 
                        not provide for determinations in the 
                        case of the readmission to a nursing 
                        facility of an individual who, after 
                        being admitted to the nursing facility, 
                        was transferred for care in a hospital.
                            [(iii) Exception for certain 
                        hospital discharges.--The preadmission 
                        screening program under clause (i) 
                        shall not apply to the admission to a 
                        nursing facility of an individual--
                                    [(I) who is admitted to the 
                                facility directly from a 
                                hospital after receiving acute 
                                inpatient care at the hospital,
                                    [(II) who requires nursing 
                                facility services for the 
                                condition for which the 
                                individual received care in the 
                                hospital, and
                                    [(III) whose attending 
                                physician has certified, before 
                                admission to the facility, that 
                                the individual is likely to 
                                require less than 30 days of 
                                nursing facility services.
                    [(B) State requirement for annual resident 
                review.--
                            [(i) For mentally ill residents.--
                        As of April 1, 1990, in the case of 
                        each resident of a nursing facility who 
                        is mentally ill, the State mental 
                        health authority must review and 
                        determine (using any criteria developed 
                        under subsection (f)(8) and based on an 
                        independent physical and mental 
                        evaluation performed by a person or 
                        entity other than the State mental 
                        health authority)--
                                    [(I) whether or not the 
                                resident, because of the 
                                resident's physical and mental 
                                condition, requires the level 
                                of services provided by a 
                                nursing facility or requires 
                                the level of services of an 
                                inpatient psychiatric hospital 
                                for individuals under age 21 
                                (as described in section 
                                1905(h)) or of an institution 
                                for mental diseases providing 
                                medical assistance to 
                                individuals 65 years of age or 
                                older; and
                                    [(II) whether or not the 
                                resident requires specialized 
                                services for mental illness.
                            [(ii) For mentally retarded 
                        residents.--As of April 1, 1990, in the 
                        case of each resident of a nursing 
                        facility who is mentally retarded, the 
                        State mental retardation or 
                        developmental disability authority must 
                        review and determine (using any 
                        criteria developed under subsection 
                        (f)(8))--
                                    [(I) whether or not the 
                                resident, because of the 
                                resident's physical and mental 
                                condition, requires the level 
                                of services provided by a 
                                nursing facility or requires 
                                the level of services of an 
                                intermediate care facility 
                                described under section 
                                1905(d); and
                                    [(II) whether or not the 
                                resident requires specialized 
                                services for mental 
                                retardation.
                            [(iii) Frequency of reviews.--
                                    [(I) Annual.--Except as 
                                provided in subclauses (II) and 
                                (III), the reviews and 
                                determinations under clauses 
                                (i) and (ii) must be conducted 
                                with respect to each mentally 
                                ill or mentally retarded 
                                resident not less often than 
                                annually.
                                    [(II) Preadmission review 
                                cases.--In the case of a 
                                resident subject to a 
                                preadmission review under 
                                subsection (b)(3)(F), the 
                                review and determination under 
                                clause (i) or (ii) need not be 
                                done until the resident has 
                                resided in the nursing facility 
                                for 1 year.
                                    [(III) Initial review.--The 
                                reviews and determinations 
                                under clauses (i) and (ii) must 
                                first 
                                be conducted (for each resident 
                                not subject to preadmission 
                                review under subsection 
                                (b)(3)(F)) by not later than 
                                April 1, 1990.
                            [(iv) Prohibition of delegation.--A 
                        State mental health authority, a State 
                        mental retardation or developmental 
                        disability authority, and a State may 
                        not delegate (by subcontract or 
                        otherwise) their responsibilities under 
                        this subparagraph to a nursing facility 
                        (or to an entity that has a direct or 
                        indirect affiliation or relationship 
                        with such a facility).
                    [(C) Response to preadmission screening and 
                resident review.--As of April 1, 1990, the 
                State must meet the following requirements:
                            [(i) Long-term residents not 
                        requiring nursing facility services, 
                        but requiring specialized services.--In 
                        the case of a resident who is 
                        determined, under subparagraph (B), not 
                        to require the level of services 
                        provided by a nursing facility, but to 
                        require specialized services for mental 
                        illness or mental retardation, and who 
                        has continuously resided in a nursing 
                        facility for at least 30 months before 
                        the date of the determination, the 
                        State must, in consultation with the 
                        resident's family or legal 
                        representative and care-givers--
                                    [(I) inform the resident of 
                                the institutional and 
                                noninstitutional alternatives 
                                covered under the State plan 
                                for the resident,
                                    [(II) offer the resident 
                                the choice of remaining in the 
                                facility or of receiving 
                                covered services in an 
                                alternative appropriate 
                                institutional or 
                                noninstitutional setting,
                                    [(III) clarify the effect 
                                on eligibility for services 
                                under the State plan if the 
                                resident chooses to leave the 
                                facility (including its effect 
                                on readmission to the 
                                facility), and
                                    [(IV) regardless of the 
                                resident's choice, provide for 
                                (or arrange for the provision 
                                of) such specialized services 
                                for the mental illness or 
                                mental retardation.
                        A State shall not be denied payment 
                        under this title for nursing facility 
                        services for a resident described in 
                        this clause because the resident does 
                        not require the level of services 
                        provided by such a facility, if the 
                        resident chooses to remain in such a 
                        facility.
                            [(ii) Other residents not requiring 
                        nursing facility services, but 
                        requiring specialized services.--In the 
                        case of a resident who is determined, 
                        under subparagraph (B), not to require 
                        the level of services provided by a 
                        nursing facility, but to require 
                        specialized services for mental illness 
                        or mental retardation, and who has not 
                        continuously resided in a nursing 
                        facility for at least 30 months before 
                        the date of the determination, the 
                        State must, in consultation with the 
                        resident's family or legal 
                        representative and care-givers--
                                    [(I) arrange for the safe 
                                and orderly discharge of the 
                                resident from the facility, 
                                consistent with the 
                                requirements of subsection 
                                (c)(2),
                                    [(II) prepare and orient 
                                the resident for such 
                                discharge, and
                                    [(III) provide for (or 
                                arrange for the provision of) 
                                such specialized services for 
                                the mental illness or mental 
                                retardation.
                            [(iii) Residents not requiring 
                        nursing facility services and not 
                        requiring specialized services.--In the 
                        case of a resident who is determined, 
                        under subparagraph (B), not to require 
                        the level of services provided by a 
                        nursing facility and not to require 
                        specialized services for mental illness 
                        or mental retardation, the State must--
                                    [(I) arrange for the safe 
                                and orderly discharge of the 
                                resident from the facility, 
                                consistent with the 
                                requirements of subsection 
                                (c)(2), and
                                    [(II) prepare and orient 
                                the resident for such 
                                discharge.
                            [(iv) Annual report.--Each State 
                        shall report to the Secretary annually 
                        concerning the number and disposition 
                        of residents described in each of 
                        clauses (ii) and (iii).
                    [(D) Denial of payment.--
                            [(i) For failure to conduct 
                        preadmission screening or annual 
                        review.--No payment may be made under 
                        section 1903(a) with respect to nursing 
                        facility services furnished to an 
                        individual for whom a determination is 
                        required under subsection (b)(3)(F) or 
                        subparagraph (B) but for whom the 
                        determination is not made.
                            [(ii) For certain residents not 
                        requiring nursing facility level of 
                        services.--No payment may be made under 
                        section 1903(a) with respect to nursing 
                        facility services furnished to an 
                        individual (other than an individual 
                        described in subparagraph (C)(i)) who 
                        does not require the level of services 
                        provided by a nursing facility.
                    [(E) Permitting alternative disposition 
                plans.--With respect to residents of a nursing 
                facility who are mentally retarded or mentally 
                ill and who are determined under subparagraph 
                (B) not to require the level of services of 
                such a facility, but who require specialized 
                services for mental illness or mental 
                retardation, a State and the nursing facility 
                shall be considered to be in compliance with 
                the requirements of subparagraphs (A) through 
                (C) of this paragraph if, before April 1, 1989, 
                the State and the Secretary have entered into 
                an agreement relating to the disposition of 
                such residents of the facility and the State is 
                in compliance with such agreement. Such an 
                agreement may provide for the disposition of 
                the residents after the date specified in 
                subparagraph (C). The State may revise such an 
                agreement, subject to the approval of the 
                Secretary, before October 1, 1991, but only if, 
                under the revised agreement, all residents 
                subject to the agreement who do not require the 
                level of services of such a facility are 
                discharged from the facility by not later than 
                April 1, 1994.
                    [(F) Appeals procedures.--Each State, as a 
                condition of approval of its plan under this 
                title, effective January 1, 1989, must have in 
                effect an appeals process for individuals 
                adversely affected by determinations under 
                subparagraph (A) or (B).
                    [(G) Definitions.--In this paragraph and in 
                subsection (b)(3)(F):
                            [(i) An individual is considered to 
                        be ``mentally ill'' if the individual 
                        has a serious mental illness (as 
                        defined by the Secretary in 
                        consultation with the National 
                        Institute of Mental Health) and does 
                        not have a primary diagnosis of 
                        dementia (including Alzheimer's disease 
                        or a related disorder) or a diagnosis 
                        (other than a primary diagnosis) of 
                        dementia and a primary diagnosis that 
                        is not a serious mental illness.
                            [(ii) An individual is considered 
                        to be ``mentally retarded'' if the 
                        individual is mentally retarded or a 
                        person with a related condition (as 
                        described in section 1905(d)).
                            [(iii) The term ``specialized 
                        services'' has the meaning given such 
                        term by the Secretary in regulations, 
                        but does not include, in the case of a 
                        resident of a nursing facility, 
                        services within the scope of services 
                        which the facility must provide or 
                        arrange for its residents under 
                        subsection (b)(4).
    [(f) Responsibilities of Secretary Relating to Nursing 
Facility Requirements.--
            [(1) General responsibility.--It is the duty and 
        responsibility of the Secretary to assure that 
        requirements which govern the provision of care in 
        nursing facilities under State plans approved under 
        this title, and the enforcement of such requirements, 
        are adequate to protect the health, safety, welfare, 
        and rights of residents and to promote the effective 
        and efficient use of public moneys.
            [(2) Requirements for nurse aide training and 
        competency evaluation programs and for nurse aide 
        competency evaluation programs.--
                    [(A) In general.--For purposes of 
                subsections (b)(5) and (e)(1)(A), the Secretary 
                shall establish, by not later than September 1, 
                1988--
                            [(i) requirements for the approval 
                        of nurse aide training and competency 
                        evaluation programs, including 
                        requirements relating to (I) the areas 
                        to be covered in such a program 
                        (including at least basic nursing 
                        skills, personal care skills, 
                        recognition of mental health and social 
                        service needs, care of cognitively 
                        impaired residents, basic restorative 
                        services, and residents' rights) and 
                        content of the curriculum, (II) minimum 
                        hours of initial and ongoing training 
                        and retraining (including not less than 
                        75 hours in the case of initial 
                        training), (III) qualifications of 
                        instructors, and (IV) procedures for 
                        determination of competency;
                            [(ii) requirements for the approval 
                        of nurse aide competency evaluation 
                        programs, including requirement 
                        relating to the areas to be covered in 
                        such a program, including at least 
                        basic nursing skills, personal care 
                        skills, recognition of mental health 
                        and social service needs, care of 
                        cognitively impaired residents, basic 
                        restorative services, and residents' 
                        rights, and procedures for 
                        determination of competency;
                            [(iii) requirements respecting the 
                        minimum frequency and methodology to be 
                        used by a State in reviewing such 
                        programs' compliance with the 
                        requirements for such programs; and
                            [(iv) requirements, under both such 
                        programs, that--
                                    [(I) provide procedures for 
                                determining competency that 
                                permit a nurse aide, at the 
                                nurse aide's option, to 
                                establish competency through 
                                procedures or methods other 
                                than the passing of a written 
                                examination and to have the 
                                competency evaluation conducted 
                                at the nursing facility at 
                                which the aide is (or will be) 
                                employed (unless the facility 
                                is described in subparagraph 
                                (B)(iii)(I)),
                                    [(II) prohibit the 
                                imposition on a nurse aide who 
                                is employed by (or who has 
                                received an offer of employment 
                                from) a facility on the date on 
                                which the aide begins either 
                                such program of any charges 
                                (including any charges for 
                                textbooks and other required 
                                course materials and any 
                                charges for the competency 
                                evaluation) for either such 
                                program, and
                                    [(III) in the case of a 
                                nurse aide not described in 
                                subclause (II) who is employed 
                                by (or who has received an 
                                offer of employment from) a 
                                facility not later than 12 
                                months after completing either 
                                such program, the State shall 
                                provide for the reimbursement 
                                of costs incurred in completing 
                                such program on a prorata basis 
                                during the period in which the 
                                nurse aide is so employed.
                    [(B) Approval of certain programs.--Such 
                requirements--
                            [(i) may permit approval of 
                        programs offered by or in facilities, 
                        as well as outside facilities 
                        (including employee organizations), and 
                        of programs in effect on the date of 
                        the enactment of this section;
                            [(ii) shall permit a State to find 
                        that an individual who has completed 
                        (before July 1, 1989) a nurse aide 
                        training and competency evaluation 
                        program shall be deemed to have 
                        completed such a program approved under 
                        subsection (b)(5) if the State 
                        determines that, at the time the 
                        program was offered, the program met 
                        the requirements for approval under 
                        such paragraph; and
                            [(iii) shall prohibit approval of 
                        such a program--
                                    [(I) offered by or in a 
                                nursing facility which, within 
                                the previous 2 years--
                                            [(a) has operated 
                                        under a waiver under 
                                        subsection 
                                        (b)(4)(C)(ii) that was 
                                        granted on the basis of 
                                        a demonstration that 
                                        the facility is unable 
                                        to provide the nursing 
                                        care required under 
                                        subsection (b)(4)(C)(i) 
                                        for a period in excess 
                                        of 48 hours during a 
                                        week;
                                            [(b) has been 
                                        subject to an extended 
                                        (or partial extended) 
                                        survey under section 
                                        1819(g)(2)(B)(i) or 
                                        subsection 
                                        (g)(2)(B)(i); or
                                            [(c) has been 
                                        assessed a civil money 
                                        penalty described in 
                                        section 
                                        1819(h)(2)(B)(ii) or 
                                        subsection 
                                        (h)(2)(A)(ii) of not 
                                        less than $5,000, or 
                                        has been subject to a 
                                        remedy described in 
                                        subsection 
                                        (h)(1)(B)(i), clauses 
                                        (i), (iii), or (iv) of 
                                        subsection (h)(2)(A), 
                                        clauses (i) or (iii) of 
                                        section 1819(h)(2)(B), 
                                        or section 1819(h)(4), 
                                        or
                                    [(II) offered by or in a 
                                nursing facility unless the 
                                State makes the determination, 
                                upon an individual's completion 
                                of the program, that the 
                                individual is competent to 
                                provide nursing and nursing-
                                related services in nursing 
                                facilities.
                        A State may not delegate (through 
                        subcontract or otherwise) its 
                        responsibility under clause (iii)(II) 
                        to the nursing facility.
            [(3) Federal guidelines for state appeals process 
        for transfers and discharges.--For purposes of 
        subsections (c)(2)(B)(iii) and (e)(3), by not later 
        than October 1, 1988, the Secretary shall establish 
        guidelines for minimum standards which State appeals 
        processes under subsection (e)(3) must meet to provide 
        a fair mechanism for hearing appeals on transfers and 
        discharges of residents from nursing facilities.
            [(4) Secretarial standards qualification of 
        administrators.--For purposes of subsections (d)(1)(C) 
        and (e)(4), the Secretary shall develop, by not later 
        than March 1, 1988, standards to be applied in assuring 
        the qualifications of administrators of nursing 
        facilities.
            [(5) Criteria for administration.--The Secretary 
        shall establish criteria for assessing a nursing 
        facility's compliance with the requirement of 
        subsection (d)(1) with respect to--
                    [(A) its governing body and management,
                    [(B) agreements with hospitals regarding 
                transfers of residents to and from the 
                hospitals and to and from other nursing 
                facilities,
                    [(C) disaster preparedness,
                    [(D) direction of medical care by a 
                physician,
                    [(E) laboratory and radiological services,
                    [(F) clinical records, and
                    [(G) resident and advocate participation.
            [(6) Specification of resident assessment data set 
        and instruments.--The Secretary shall--
                    [(A) not later than January 1, 1989, 
                specify a minimum data set of core elements and 
                common definitions for use by nursing 
                facilities in conducting the assessments 
                required under subsection (b)(3), and establish 
                guidelines for utilization of the data set; and
                    [(B) by not later than April 1, 1990, 
                designate one or more instruments which are 
                consistent with the specification made under 
                subparagraph (A) and which a State may specify 
                under subsection (e)(5)(A) for use by nursing 
                facilities in complying with the requirements 
                of subsection (b)(3)(A)(iii).
            [(7) List of items and services furnished in 
        nursing facilities not chargeable to the personal funds 
        of a resident.--
                    [(A) Regulations required.--Pursuant to the 
                requirement of section 21(b) of the Medicare-
                Medicaid Anti-Fraud and Abuse Amendments of 
                1977, the Secretary shall issue regulations, on 
                or before the first day of the seventh month to 
                begin after the date of enactment of this 
                section, that define those costs which may be 
                charged to the personal funds of residents in 
                nursing facilities who are individuals 
                receiving medical assistance with respect to 
                nursing facility services under this title and 
                those costs which are to be included in the 
                payment amount under this title for nursing 
                facility services.
                    [(B) Rule if failure to publish 
                regulations.--If the Secretary does not issue 
                the regulations under subparagraph (A) on or 
                before the date required in that subparagraph, 
                in the case of a resident of a nursing facility 
                who is eligible to receive benefits for nursing 
                facility services under this title, for 
                purposes of section 1902(a)(28)(B), the 
                Secretary shall be deemed to have promulgated 
                regulations under this paragraph which provide 
                that the costs which may not be charged to the 
                personal funds of such resident (and for which 
                payment is considered to be made under this 
                title) include, at a minimum, the costs for 
                routine personal hygiene items and services 
                furnished by the facility.
            [(8) Federal minimum criteria and monitoring for 
        preadmission screening and resident review.--
                    [(A) Minimum criteria.--The Secretary shall 
                develop, by not later than October 1, 1988, 
                minimum criteria for States to use in making 
                determinations under subsections (b)(3)(F) and 
                (e)(7)(B) and in permitting individuals 
                adversely affected to appeal such 
                determinations, and shall notify the States of 
                such criteria.
                    [(B) Monitoring compliance.--The Secretary 
                shall review, in a sufficient number of cases 
                to allow reasonable inferences, each State's 
                compliance with the requirements of subsection 
                (e)(7)(C)(ii) (relating to discharge and 
                placement for active treatment of certain 
                residents).
            [(9) Criteria for monitoring state waivers.--The 
        Secretary shall develop, by not later than October 1, 
        1988, criteria and procedures for monitoring State 
        performances in granting waivers pursuant to subsection 
        (b)(4)(C)(ii).
    [(g) Survey and Certification Process.--
            [(1) State and federal responsibility.--
                    [(A) In general.--Under each State plan 
                under this title, the State shall be 
                responsible for certifying, in accordance with 
                surveys conducted under paragraph (2), the 
                compliance of nursing facilities (other than 
                facilities of the State) with the requirements 
                of subsections (b), (c), and (d). The Secretary 
                shall be responsible for certifying, in 
                accordance with surveys conducted under 
                paragraph (2), the compliance of State nursing 
                facilities with the requirements of such 
                subsections.
                    [(B) Educational program.--Each State shall 
                conduct periodic educational programs for the 
                staff and residents (and their representatives) 
                of nursing facilities in order to present 
                current regulations, procedures, and policies 
                under this section.
                    [(C) Investigation of allegations of 
                resident neglect and abuse and misappropriation 
                of resident property.--The State shall provide, 
                through the agency responsible for surveys and 
                certification of nursing facilities under this 
                subsection, for a process for the receipt and 
                timely review and investigation of allegations 
                of neglect and abuse and misappropriation of 
                resident property by a nurse aide of a resident 
                in a nursing facility or by another individual 
                used by the facility in providing services to 
                such a resident. The State shall, after notice 
                to the individual involved and a reasonable 
                opportunity for a hearing for the individual to 
                rebut allegations, make a finding as to the 
                accuracy of the allegations. If the State finds 
                that a nurse aide has neglected or abused a 
                resident or misappropriated resident property 
                in a facility, the State shall notify the nurse 
                aide and the registry of such finding. If the 
                State finds that any other individual used by 
                the facility has neglected or abused a resident 
                or misappropriated resident property in a 
                facility, the State shall notify the 
                appropriate licensure authority. A State shall 
                not make a finding that an individual has 
                neglected a resident if the individual 
                demonstrates that such neglect was caused by 
                factors beyond the control of the individual.
                    [(D) Construction.--The failure of the 
                Secretary to issue regulations to carry out 
                this subsection shall not relieve a State of 
                its responsibility under this subsection.
            [(2) Surveys.--
                    [(A) Annual standard survey.--
                            [(i) In general.--Each nursing 
                        facility shall be subject to a standard 
                        survey, to be conducted without any 
                        prior notice to the facility. Any 
                        individual who notifies (or causes to 
                        be notified) a nursing facility of the 
                        time or date on which such a survey is 
                        scheduled to be conducted is subject to 
                        a civil money penalty of not to exceed 
                        $2,000. The provisions of section 1128A 
                        (other than subsections (a) and (b)) 
                        shall apply to a civil money penalty 
                        under the previous sentence in the same 
                        manner as such provisions apply to a 
                        penalty or proceeding under section 
                        1128A(a). The Secretary shall review 
                        each State's procedures for scheduling 
                        and conduct of standard surveys to 
                        assure that the State has taken all 
                        reasonable steps to avoid giving notice 
                        of such a survey through the scheduling 
                        procedures and the conduct of the 
                        surveys themselves.
                            [(ii) Contents.--Each standard 
                        survey shall include, for a case-mix 
                        stratified sample of residents--
                                    [(I) a survey of the 
                                quality of care furnished, as 
                                measured by indicators of 
                                medical, nursing, and 
                                rehabilitative care, dietary 
                                and nutrition services, 
                                activities and social 
                                participation, and sanitation, 
                                infection control, and the 
                                physical environment,
                                    [(II) written plans of care 
                                provided under subsection 
                                (b)(2) and an audit of the 
                                residents' assessments under 
                                subsection (b)(3) to determine 
                                the accuracy of such 
                                assessments and the adequacy of 
                                such plans of care, and
                                    [(III) a review of 
                                compliance with residents' 
                                rights under subsection (c).
                            [(iii) Frequency.--
                                    [(I) In general.--Each 
                                nursing facility shall be 
                                subject to a standard survey 
                                not later than 15 months after 
                                the date of the previous 
                                standard survey conducted under 
                                this subparagraph. The 
                                statewide average interval 
                                between standard surveys of a 
                                nursing facility shall not 
                                exceed 12 months.
                                    [(II) Special surveys.--If 
                                not otherwise conducted under 
                                subclause (I), a standard 
                                survey (or an abbreviated 
                                standard survey) may be 
                                conducted within 2 months of 
                                any change of ownership, 
                                administration, management of a 
                                nursing facility, or director 
                                of nursing in order to 
                                determine whether the change 
                                has resulted in any decline in 
                                the quality of care furnished 
                                in the facility.
                    [(B) Extended surveys.--
                            [(i) In general.--Each nursing 
                        facility which is found, under a 
                        standard survey, to have provided 
                        substandard quality of care shall be 
                        subject to an extended survey. Any 
                        other facility may, at the Secretary's 
                        or State's discretion, be subject to 
                        such an extended survey (or a partial 
                        extended survey).
                            [(ii) Timing.--The extended survey 
                        shall be conducted immediately after 
                        the standard survey (or, if not 
                        practicable, not later than 2 weeks 
                        after the date of completion of the 
                        standard survey).
                            [(iii) Contents.--In such an 
                        extended survey, the survey team shall 
                        review and identify the policies and 
                        procedures which produced such 
                        substandard quality of care and shall 
                        determine whether the facility has 
                        complied with all the requirements 
                        described in subsections (b), (c), and 
                        (d). Such review shall include an 
                        expansion of the size of the sample of 
                        residents' assessments reviewed and a 
                        review of the staffing, of in-service 
                        training, and, if appropriate, of 
                        contracts with consultants.
                            [(iv) Construction.--Nothing in 
                        this paragraph shall be construed as 
                        requiring an extended or partial 
                        extended survey as a prerequisite to 
                        imposing a sanction against a facility 
                        under subsection (h) on the basis of 
                        findings in a standard survey.
                    [(C) Survey protocol.--Standard and 
                extended surveys shall be conducted--
                            [(i) based upon a protocol which 
                        the Secretary has developed, tested, 
                        and validated by not later than January 
                        1, 1990, and
                            [(ii) by individuals, of a survey 
                        team, who meet such minimum 
                        qualifications as the Secretary 
                        establishes by not later than such 
                        date.
                The failure of the Secretary to develop, test, 
                or validate such protocols or to establish such 
                minimum qualifications shall not relieve any 
                State of its responsibility (or the Secretary 
                of the Secretary's responsibility) to conduct 
                surveys under this subsection.
                    [(D) Consistency of surveys.--Each State 
                shall implement programs to measure and reduce 
                inconsistency in the application of survey 
                results among surveyors.
                    [(E) Survey teams.--
                            [(i) In general.--Surveys under 
                        this subsection shall be conducted by a 
                        multidisciplinary team of professionals 
                        (including a registered professional 
                        nurse).
                            [(ii) Prohibition of conflicts of 
                        interest.--A State may not use as a 
                        member of a survey team under this 
                        subsection an individual who is serving 
                        (or has served within the previous 2 
                        years) as a member of the staff of, or 
                        as a consultant to, the facility 
                        surveyed respecting compliance with the 
                        requirements of subsections (b), (c), 
                        and (d), or who has a personal or 
                        familial financial interest in the 
                        facility being surveyed.
                            [(iii) Training.--The Secretary 
                        shall provide for the comprehensive 
                        training of State and Federal surveyors 
                        in the conduct of standard and extended 
                        surveys under this subsection, 
                        including the auditing of resident 
                        assessments and plans of care. No 
                        individual shall serve as a member of a 
                        survey team unless the individual has 
                        successfully completed a training and 
                        testing program in survey and 
                        certification techniques that has been 
                        approved by the Secretary.
            [(3) Validation surveys.--
                    [(A) In general.--The Secretary shall 
                conduct onsite surveys of a representative 
                sample of nursing facilities in each State, 
                within 2 months of the date of surveys 
                conducted under paragraph (2) by the State, in 
                a sufficient number to allow inferences about 
                the adequacies of each State's surveys 
                conducted under paragraph (2). In conducting 
                such surveys, the Secretary shall use the same 
                survey protocols as the State is required to 
                use under paragraph (2). If the State has 
                determined that an individual nursing facility 
                meets the requirements of subsections (b), (c), 
                and (d), but the Secretary determines that the 
                facility does not meet such requirements, the 
                Secretary's determination as to the facility's 
                noncompliance with such requirements is binding 
                and supersedes that of the State survey.
                    [(B) Scope.--With respect to each State, 
                the Secretary shall conduct surveys under 
                subparagraph (A) each year with respect to at 
                least 5 percent of the number of nursing 
                facilities surveyed by the State in the year, 
                but in no case less than 5 nursing facilities 
                in the State.
                    [(C) Reduction in administrative costs for 
                substandard performance.--If the Secretary 
                finds, on the basis of such surveys, that a 
                State has failed to perform surveys as required 
                under paragraph (2) or that a State's survey 
                and certification performance otherwise is not 
                adequate, the Secretary may provide for the 
                training of survey teams in the State and shall 
                provide for a reduction of the payment 
                otherwise made to the State under section 
                1903(a)(2)(D) with respect to a quarter equal 
                to 33 percent multiplied by a fraction, the 
                denominator of which is equal to the total 
                number of residents in nursing facilities 
                surveyed by the Secretary that quarter and the 
                numerator of which is equal to the total number 
                of residents in nursing facilities which were 
                found pursuant to such surveys to be not in 
                compliance with any of the requirements of 
                subsections (b), (c), and (d). A State that is 
                dissatisfied with the Secretary's findings 
                under this subparagraph may obtain 
                reconsideration and review of the findings 
                under section 1116 in the same manner as a 
                State may seek reconsideration and review under 
                that section of the Secretary's determination 
                under section 1116(a)(1).
                    [(D) Special surveys of compliance.--Where 
                the Secretary has reason to question the 
                compliance of a nursing facility with any of 
                the requirements of subsections (b), (c), and 
                (d), the Secretary may conduct a survey of the 
                facility and, on the basis of that survey, make 
                independent and binding determinations 
                concerning the extent to which the nursing 
                facility meets such requirements.
            [(4) Investigation of complaints and monitoring 
        nursing facility compliance.--Each State shall maintain 
        procedures and adequate staff to--
                    [(A) investigate complaints of violations 
                of requirements by nursing facilities, and
                    [(B) monitor, on-site, on a regular, as 
                needed basis, a nursing facility's compliance 
                with the requirements of subsections (b), (c), 
                and (d), if--
                            [(i) the facility has been found 
                        not to be in compliance with such 
                        requirements and is in the process of 
                        correcting deficiencies to achieve such 
                        compliance;
                            [(ii) the facility was previously 
                        found not to be in compliance with such 
                        requirements, has corrected 
                        deficiencies to achieve such 
                        compliance, and verification of 
                        continued compliance is indicated; or
                            [(iii) the State has reason to 
                        question the compliance of the facility 
                        with such requirements.
        A State may maintain and utilize a specialized team 
        (including an attorney, an auditor, and appropriate 
        health care professionals) for the purpose of 
        identifying, surveying, gathering and preserving 
        evidence, and carrying out appropriate enforcement 
        actions against substandard nursing facilities.
            [(5) Disclosure of results of inspections and 
        activities.--
                    [(A) Public information.--Each State, and 
                the Secretary, shall make available to the 
                public--
                            [(i) information respecting all 
                        surveys and certifications made 
                        respecting nursing facilities, 
                        including statements of deficiencies, 
                        within 14 calendar days after such 
                        information is made available to those 
                        facilities, and approved plans of 
                        correction,
                            [(ii) copies of cost reports of 
                        such facilities filed under this title 
                        or under title XVIII,
                            [(iii) copies of statements of 
                        ownership under section 1124, and
                            [(iv) information disclosed under 
                        section 1126.
                    [(B) Notice to ombudsman.--Each State shall 
                notify the State long-term care ombudsman 
                (established under title III or VII of the 
                Older Americans Act of 1965 in accordance with 
                section 712 of the Act) of the State's findings 
                of noncompliance with any of the requirements 
                of subsections (b), (c), and (d), or of any 
                adverse action taken against a nursing facility 
                under paragraphs (1), (2), or (3) of subsection 
                (h), with respect to a nursing facility in the 
                State.
                    [(C) Notice to physicians and nursing 
                facility administrator licensing board.--If a 
                State finds that a nursing facility has 
                provided substandard quality of care, the State 
                shall notify--
                            [(i) the attending physician of 
                        each resident with respect to which 
                        such finding is made, and
                            [(ii) any State board responsible 
                        for the licensing of the nursing 
                        facility administrator of the facility.
                    [(D) Access to fraud control units.--Each 
                State shall provide its State medicaid fraud 
                and abuse control unit (established under 
                section 1903(q)) with access to all information 
                of the State agency responsible for surveys and 
                certifications under this subsection.
    [(h) Enforcement Process.--
            [(1) In general.--If a State finds, on the basis of 
        a standard, extended, or partial extended survey under 
        subsection (g)(2) or otherwise, that a nursing facility 
        no longer meets a requirement of subsection (b), (c), 
        or (d), and further finds that the facility's 
        deficiencies--
                    [(A) immediately jeopardize the health or 
                safety of its residents, the State shall take 
                immediate action to remove the jeopardy and 
                correct the deficiencies through the remedy 
                specified in paragraph (2)(A)(iii), or 
                terminate the facility's participation under 
                the State plan and may provide, in addition, 
                for one or more of the other remedies described 
                in paragraph (2); or
                    [(B) do not immediately jeopardize the 
                health or safety of its residents, the State 
                may--
                            [(i) terminate the facility's 
                        participation under the State plan,
                            [(ii) provide for one or more of 
                        the remedies described in paragraph 
                        (2), or
                            [(iii) do both.
        Nothing in this paragraph shall be construed as 
        restricting the remedies available to a State to remedy 
        a nursing facility's deficiencies. If a State finds 
        that a nursing facility meets the requirements of 
        subsections (b), (c), and (d), but, as of a previous 
        period, did not meet such requirements, the State may 
        provide for a civil money penalty under paragraph 
        (2)(A)(ii) for the days in which it finds that the 
        facility was not in compliance with such requirements.
            [(2) Specified remedies.--
                    [(A) Listing.--Except as provided in 
                subparagraph (B)(ii), each State shall 
                establish by law (whether statute or 
                regulation) at least the following remedies:
                            [(i) Denial of payment under the 
                        State plan with respect to any 
                        individual admitted to the nursing 
                        facility involved after such notice to 
                        the public and to the facility as may 
                        be provided for by the State.
                            [(ii) A civil money penalty 
                        assessed and collected, with interest, 
                        for each day in which the facility is 
                        or was out of compliance with a 
                        requirement of subsection (b), (c), or 
                        (d). Funds collected by a State as a 
                        result of imposition of such a penalty 
                        (or as a result of the imposition by 
                        the State of a civil money penalty for 
                        activities described in subsections 
                        (b)(3)(B)(ii)(I), (b)(3)(B)(ii)(II), or 
                        (g)(2)(A)(i)) shall be applied to the 
                        protection of the health or property of 
                        residents of nursing facilities that 
                        the State or the Secretary finds 
                        deficient, including payment for the 
                        costs of relocation of residents to 
                        other facilities, maintenance of 
                        operation of a facility pending 
                        correction of deficiencies or closure, 
                        and reimbursement of residents for 
                        personal funds lost.
                            [(iii) The appointment of temporary 
                        management to oversee the operation of 
                        the facility and to assure the health 
                        and safety of the facility's residents, 
                        where there is a need for temporary 
                        management while--
                                    [(I) there is an orderly 
                                closure of the facility, or
                                    [(II) improvements are made 
                                in order to bring the facility 
                                into compliance with all the 
                                requirements of subsections 
                                (b), (c), and (d).
                        The temporary management under this 
                        clause shall not be terminated under 
                        subclause (II) until the State has 
                        determined that the facility has the 
                        management capability to ensure 
                        continued compliance with all the 
                        requirements of subsections (b), (c), 
                        and (d).
                            [(iv) The authority, in the case of 
                        an emergency, to close the facility, to 
                        transfer residents in that facility to 
                        other facilities, or both.
                The State also shall specify criteria, as to 
                when and how each of such remedies is to be 
                applied, the amounts of any fines, and the 
                severity of each of these remedies, to be used 
                in the imposition of such remedies. Such 
                criteria shall be designed so as to minimize 
                the time between the identification of 
                violations and final imposition of the remedies 
                and shall provide for the imposition of 
                incrementally more severe fines for repeated or 
                uncorrected deficiencies. In addition, the 
                State may provide for other specified remedies, 
                such as directed plans of correction.
                    [(B) Deadline and guidance.--(i) Except as 
                provided in clause (ii), as a condition for 
                approval of a State plan for calendar quarters 
                beginning on or after October 1, 1989, each 
                State shall establish the remedies described in 
                clauses (i) through (iv) of subparagraph (A) by 
                not later than October 1, 1989. The Secretary 
                shall provide, through regulations by not later 
                than October 1, 1988, guidance to States in 
                establishing such remedies; but the failure of 
                the Secretary to provide such guidance shall 
                not relieve a State of the responsibility for 
                establishing such remedies.
                    [(ii) A State may establish alternative 
                remedies (other than termination of 
                participation) other than those described in 
                clauses (i) through (iv) of subparagraph (A), 
                if the State demonstrates to the Secretary's 
                satisfaction that the alternative remedies are 
                as effective in deterring noncompliance and 
                correcting deficiencies as those described in 
                subparagraph (A).
                    [(C) Assuring prompt compliance.--If a 
                nursing facility has not complied with any of 
                the requirements of subsections (b), (c), and 
                (d), within 3 months after the date the 
                facility is found to be out of compliance with 
                such requirements, the State shall impose the 
                remedy described in subparagraph (A)(i) for all 
                individuals who are admitted to the facility 
                after such date.
                    [(D) Repeated noncompliance.--In the case 
                of a nursing facility which, on 3 consecutive 
                standard surveys conducted under subsection 
                (g)(2), has been found to have provided 
                substandard quality of care, the State shall 
                (regardless of what other remedies are 
                provided)--
                            [(i) impose the remedy described in 
                        subparagraph (A)(i), and
                            [(ii) monitor the facility under 
                        subsection (g)(4)(B),
                until the facility has demonstrated, to the 
                satisfaction of the State, that it is in 
                compliance with the requirements of subsections 
                (b), (c), and (d), and that it will remain in 
                compliance with such requirements.
                    [(E) Funding.--The reasonable expenditures 
                of a State to provide for temporary management 
                and other expenses associated with implementing 
                the remedies described in clauses (iii) and 
                (iv) of subparagraph (A) shall be considered, 
                for purposes of section 1903(a)(7), to be 
                necessary for the proper and efficient 
                administration of the State plan.
                    [(F) Incentives for high quality care.--In 
                addition to the remedies specified in this 
                paragraph, a State may establish a program to 
                reward, through public recognition, incentive 
                payments, or both, nursing facilities that 
                provide the highest quality care to residents 
                who are entitled to medical assistance under 
                this title. For purposes of section 1903(a)(7), 
                proper expenses incurred by a State in carrying 
                out such a program shall be considered to be 
                expenses necessary for the proper and efficient 
                administration of the State plan under this 
                title.
            [(3) Secretarial authority.--
                    [(A) For state nursing facilities.--With 
                respect to a State nursing facility, the 
                Secretary shall have the authority and duties 
                of a State under this subsection, including the 
                authority to impose remedies described in 
                clauses (i), (ii), and (iii) of paragraph 
                (2)(A).
                    [(B) Other nursing facilities.--With 
                respect to any other nursing facility in a 
                State, if the Secretary finds that a nursing 
                facility no longer meets a requirement of 
                subsection (b), (c), (d), or (e), and further 
                finds that the facility's deficiencies--
                            [(i) immediately jeopardize the 
                        health or safety of its residents, the 
                        Secretary shall take immediate action 
                        to remove the jeopardy and correct the 
                        deficiencies through the remedy 
                        specified in subparagraph (C)(iii), or 
                        terminate the facility's participation 
                        under the State plan and may provide, 
                        in addition, for one or more of the 
                        other remedies described in 
                        subparagraph (C); or
                            [(ii) do not immediately jeopardize 
                        the health or safety of its residents, 
                        the Secretary may impose any of the 
                        remedies described in subparagraph (C).
                Nothing in this subparagraph shall be construed 
                as restricting the remedies available to the 
                Secretary to remedy a nursing facility's 
                deficiencies. If the Secretary finds that a 
                nursing facility meets such requirements but, 
                as of a previous period, did not meet such 
                requirements, the Secretary may provide for a 
                civil money penalty under subparagraph (C)(ii) 
                for the days on which he finds that the 
                facility was not in compliance with such 
                requirements.
                    [(C) Specified remedies.--The Secretary may 
                take the following actions with respect to a 
                finding that a facility has not met an 
                applicable requirement:
                            [(i) Denial of payment.--The 
                        Secretary may deny any further payments 
                        to the State for medical assistance 
                        furnished by the facility to all 
                        individuals in the facility or to 
                        individuals admitted to the facility 
                        after the effective date of the 
                        finding.
                            [(ii) Authority with respect to 
                        civil money penalties.--The Secretary 
                        may impose a civil money penalty in an 
                        amount not to exceed $10,000 for each 
                        day of noncompliance. The provisions of 
                        section 1128A (other than subsections 
                        (a) and (b)) shall apply to a civil 
                        money penalty under the previous 
                        sentence in the same manner as such 
                        provisions apply to a penalty or 
                        proceeding under section 1128A(a).
                            [(iii) Appointment of temporary 
                        management.--In consultation with the 
                        State, the Secretary may appoint 
                        temporary management to oversee the 
                        operation of the facility and to assure 
                        the health and safety of the facility's 
                        residents, where there is a need for 
                        temporary management while--
                                    [(I) there is an orderly 
                                closure of the facility, or
                                    [(II) improvements are made 
                                in order to bring the facility 
                                into compliance with all the 
                                requirements of subsections 
                                (b), (c), and (d).
                        The temporary management under this 
                        clause shall not be terminated under 
                        subclause (II) until the Secretary has 
                        determined that the facility has the 
                        management capability to ensure 
                        continued compliance with all the 
                        requirements of subsections (b), (c), 
                        and (d).
                The Secretary shall specify criteria, as to 
                when and how each of such remedies is to be 
                applied, the amounts of any fines, and the 
                severity of each of these remedies, to be used 
                in the imposition of such remedies. Such 
                criteria shall be designed so as to minimize 
                the time between the identification of 
                violations and final imposition of the remedies 
                and shall provide for the imposition of 
                incrementally more severe fines for repeated or 
                uncorrected deficiencies. In addition, the 
                Secretary may provide for other specified 
                remedies, such as directed plans of correction.
                    [(D) Continuation of payments pending 
                remediation.--The Secretary may continue 
                payments, over a period of not longer than 6 
                months after the effective date of the 
                findings, under this title with respect to a 
                nursing facility not in compliance with a 
                requirement of subsection (b), (c), or (d), 
                if--
                            [(i) the State survey agency finds 
                        that it is more appropriate to take 
                        alternative action to assure compliance 
                        of the facility with the requirements 
                        than to terminate the certification of 
                        the facility,
                            [(ii) the State has submitted a 
                        plan and timetable for corrective 
                        action to the Secretary for approval 
                        and the Secretary approves the plan of 
                        corrective action, and
                            [(iii) the State agrees to repay to 
                        the Federal Government payments 
                        received under this subparagraph if the 
                        corrective action is not taken in 
                        accordance with the approved plan and 
                        timetable.
                The Secretary shall establish guidelines for 
                approval of corrective actions requested by 
                States under this subparagraph.
            [(4) Effective period of denial of payment.--A 
        finding to deny payment under this subsection shall 
        terminate when the State or Secretary (or both, as the 
        case may be) finds that the facility is in substantial 
        compliance with all the requirements of subsections 
        (b), (c), and (d).
            [(5) Immediate termination of participation for 
        facility where state or secretary finds noncompliance 
        and immediate jeopardy.--If either the State or the 
        Secretary finds that a nursing facility has not met a 
        requirement of subsection (b), (c), or (d), and finds 
        that the failure immediately jeopardizes the health or 
        safety of its residents, the State or the Secretary, 
        respectively shall notify the other of such finding, 
        and the State or the Secretary, respectively, shall 
        take immediate action to remove the jeopardy and 
        correct the deficiencies through the remedy specified 
        in paragraph (2)(A)(iii) or (3)(C)(iii), or terminate 
        the facility's participation under the State plan. If 
        the facility's participation in the State plan is 
        terminated by either the State or the Secretary, the 
        State shall provide for the safe and orderly transfer 
        of the residents eligible under the State plan 
        consistent with the requirements of subsection (c)(2).
            [(6) Special rules where state and secretary do not 
        agree on finding of noncompliance.--
                    [(A) State finding of noncompliance and no 
                secretarial finding of noncompliance.--If the 
                Secretary finds that a nursing facility has met 
                all the requirements of subsections (b), (c), 
                and (d), but a State finds that the facility 
                has not met such requirements and the failure 
                does not immediately jeopardize the health or 
                safety of its residents, the State's findings 
                shall control and the remedies imposed by the 
                State shall be applied.
                    [(B) Secretarial finding of noncompliance 
                and no state finding of noncompliance.--If the 
                Secretary finds that a nursing facility has not 
                met all the requirements of subsections (b), 
                (c), and (d), and that the failure does not 
                immediately jeopardize the health or safety of 
                its residents, but the State has not made such 
                a finding, the Secretary--
                            [(i) may impose any remedies 
                        specified in paragraph (3)(C) with 
                        respect to the facility, and
                            [(ii) shall (pending any 
                        termination by the Secretary) permit 
                        continuation of payments in accordance 
                        with paragraph (3)(D).
            [(7) Special rules for timing of termination of 
        participation where remedies overlap.--If both the 
        Secretary and the State find that a nursing facility 
        has not met all the requirements of subsections (b), 
        (c), and (d), and neither finds that the failure 
        immediately jeopardizes the health or safety of its 
        residents--
                    [(A)(i) if both find that the facility's 
                participation under the State plan should be 
                terminated, the State's timing of any 
                termination shall control so long as the 
                termination date does not occur later than 6 
                months after the date of the finding to 
                terminate;
                    [(ii) if the Secretary, but not the State, 
                finds that the facility's participation under 
                the State plan should be terminated, the 
                Secretary shall (pending any termination by the 
                Secretary) permit continuation of payments in 
                accordance with paragraph (3)(D); or
                    [(iii) if the State, but not the Secretary, 
                finds that the facility's participation under 
                the State plan should be terminated, the 
                State's decision to terminate, and timing of 
                such termination, shall control; and
                    [(B)(i) if the Secretary or the State, but 
                not both, establishes one or more remedies 
                which are additional or alternative to the 
                remedy of terminating the facility's 
                participation under the State plan, such 
                additional or alternative remedies shall also 
                be applied, or
                    [(ii) if both the Secretary and the State 
                establish one or more remedies which are 
                additional or alternative to the remedy of 
                terminating the facility's participation under 
                the State plan, only the additional or 
                alternative remedies of the Secretary shall 
                apply.
            [(8) Construction.--The remedies provided under 
        this subsection are in addition to those otherwise 
        available under State or Federal law and shall not be 
        construed as limiting such other remedies, including 
        any remedy available to an individual at common law. 
        The remedies described in clauses (i), (iii), and (iv) 
        of paragraph (2)(A) may be imposed during the pendency 
        of any hearing. The provisions of this subsection shall 
        apply to a nursing facility (or portion thereof) 
        notwithstanding that the facility (or portion thereof) 
        also is a skilled nursing facility for purposes of 
        title XVIII.
            [(9) Sharing of information.--Notwithstanding any 
        other provision of law, all information concerning 
        nursing facilities required by this section to be filed 
        with the Secretary or a State agency shall be made 
        available by such facilities to Federal or State 
        employees for purposes consistent with the effective 
        administration of programs established under this title 
        and title XVIII, including investigations by State 
        medicaid fraud control units.
    [(i) Construction.--Where requirements or obligations under 
this section are identical to those provided under section 1819 
of this Act, the fulfillment of those requirements or 
obligations under section 1819 shall be considered to be the 
fulfillment of the corresponding requirements or obligations 
under this section.

              [PRESUMPTIVE ELIGIBILITY FOR PREGNANT WOMEN

    [Sec. 1920. (a) A State plan approved under section 1902 
may provide for making ambulatory prenatal care available to a 
pregnant woman during a presumptive eligibility period.
    [(b) For purposes of this section--
            [(1) the term ``presumptive eligibility period'' 
        means, with respect to a pregnant woman, the period 
        that--
                    [(A) begins with the date on which a 
                qualified provider determines, on the basis of 
                preliminary information, that the family income 
                of the woman does not exceed the applicable 
                income level of eligibility under the State 
                plan, and
                    [(B) ends with (and includes) the earlier 
                of--
                            [(i) the day on which a 
                        determination is made with respect to 
                        the eligibility of the woman for 
                        medical assistance under the State 
                        plan, or
                            [(ii) in the case of a woman who 
                        does not file an application by the 
                        last day of the month following the 
                        month during which the provider makes 
                        the determination referred to in 
                        subparagraph (A), such last day; and
            [(2) the term ``qualified provider'' means any 
        provider that--
                    [(A) is eligible for payments under a State 
                plan approved under this title,
                    [(B) provides services of the type 
                described in subparagraph (A) or (B) of section 
                1905(a)(2) or in section 1905(a)(9),
                    [(C) is determined by the State agency to 
                be capable of making determinations of the type 
                described in paragraph (1)(A), and
                    [(D)(i) receives funds under--
                            [(I) section 329, 330, or 340 of 
                        the Public Health Service Act,
                            [(II) title V of this Act, or
                            [(III) title V of the Indian Health 
                        Care Improvement Act;
                    [(ii) participates in a program established 
                under--
                            [(I) section 17 of the Child 
                        Nutrition Act of 1966, or
                            [(II) section 4(a) of the 
                        Agriculture and Consumer Protection Act 
                        of 1973;
                    [(iii) participates in a State perinatal 
                program; or
                    [(iv) is the Indian Health Service or is a 
                health program or facility operated by a tribe 
                or tribal organization under the Indian Self-
                Determination Act (Public Law 93-638).
    [(c)(1) The State agency shall provide qualified providers 
with--
            [(A) such forms as are necessary for a pregnant 
        woman to make application for medical assistance under 
        the State plan, and
            [(B) information on how to assist such women in 
        completing and filing such forms.
    [(2) A qualified provider that determines under subsection 
(b)(1)(A) that a pregnant woman is presumptively eligible for 
medical assistance under a State plan shall--
            [(A) notify the State agency of the determination 
        within 5 working days after the date on which 
        determination is made, and
            [(B) inform the woman at the time the determination 
        is made that she is required to make application for 
        medical assistance under the State plan by not later 
        than the last day of the month following the month 
        during which the determination is made.
    [(3) A pregnant woman who is determined by a qualified 
provider to be presumptively eligible for medical assistance 
under a State plan shall make application for medical 
assistance under such plan by not later than the last day of 
the month following the month during which the determination is 
made, which application may be the application used for the 
receipt of medical assistance by individuals described in 
section 1902(l)(1)(A).
    [(d) Notwithstanding any other provision of this title, 
ambulatory prenatal care that--
            [(1) is furnished to a pregnant woman--
                    [(A) during a presumptive eligibility 
                period,
                    [(B) by a provider that is eligible for 
                payments under the State plan; and
            [(2) is included in the care and services covered 
        by a State plan;
shall be treated as medical assistance provided by such plan 
for purposes of section 1903.

[INFORMATION CONCERNING SANCTIONS TAKEN BY STATE LICENSING AUTHORITIES 
            AGAINST HEALTH CARE PRACTITIONERS AND PROVIDERS

    [Sec. 1921. (a) Information Reporting Requirement.--The 
requirement referred to in section 1902(a)(49) is that the 
State must provide for the following:
            [(1) Information reporting system.--The State must 
        have in effect a system of reporting the following 
        information with respect to formal proceedings (as 
        defined by the Secretary in regulations) concluded 
        against a health care practitioner or entity by any 
        authority of the State (or of a political subdivision 
        thereof) responsible for the licensing of health care 
        practitioners (or any peer review organization or 
        private accreditation entity reviewing the services 
        provided by health care practitioners) or entities:
                    [(A) Any adverse action taken by such 
                licensing authority as a result of the 
                proceeding, including any revocation or 
                suspension of a license (and the length of any 
                such suspension), reprimand, censure, or 
                probation.
                    [(B) Any dismissal or closure of the 
                proceedings by reason of the practitioner or 
                entity surrendering the license or leaving the 
                State or jurisdiction.
                    [(C) Any other loss of the license of the 
                practitioner or entity, whether by operation of 
                law, voluntary surrender, or otherwise.
                    [(D) Any negative action or finding by such 
                authority, organization, or entity regarding 
                the practitioner or entity.
            [(2) Access to documents.--The State must provide 
        the Secretary (or an entity designated by the 
        Secretary) with access to such documents of the 
        authority described in paragraph (1) as may be 
        necessary for the Secretary to determine the facts and 
        circumstances concerning the actions and determinations 
        described in such paragraph for the purpose of carrying 
        out this Act.
    [(b) Form of Information.--The information described in 
subsection (a)(1) shall be provided to the Secretary (or to an 
appropriate private or public agency, under suitable 
arrangements made by the Secretary with respect to receipt, 
storage, protection of confidentiality, and dissemination of 
information) in such a form and manner as the Secretary 
determines to be appropriate in order to provide for activities 
of the Secretary under this Act and in order to provide, 
directly or through suitable arrangements made by the 
Secretary, information--
            [(1) to agencies administering Federal health care 
        programs, including private entities administering such 
        programs under contract,
            [(2) to licensing authorities described in 
        subsection (a)(1),
            [(3) to State agencies administering or supervising 
        the administration of State health care programs (as 
        defined in section 1128(h)),
            [(4) to utilization and quality control peer review 
        organizations described in part B of title XI and to 
        appropriate entities with contracts under section 
        1154(a)(4)(C) with respect to eligible organizations 
        reviewed under the contracts,
            [(5) to State medicaid fraud control units (as 
        defined in section 1903(q)),
            [(6) to hospitals and other health care entities 
        (as defined in section 431 of the Health Care Quality 
        Improvement Act of 1986), with respect to physicians or 
        other licensed health care practitioners that have 
        entered (or may be entering) into an employment or 
        affiliation relationship with, or have applied for 
        clinical privileges or appointments to the medical 
        staff of, such hospitals or other health care entities 
        (and such information shall be deemed to be disclosed 
        pursuant to section 427 of, and be subject to the 
        provisions of, that Act),
            [(7) to the Attorney General and such other law 
        enforcement officials as the Secretary deems 
        appropriate, and
            [(8) upon request, to the Comptroller General,
        in order for such authorities to determine the fitness 
        of individuals to provide health care services, to 
        protect the health and safety of individuals receiving 
        health care through such programs, and to protect the 
        fiscal integrity of such programs.
    [(c) Confidentiality of Information Provided.--The 
Secretary shall provide for suitable safeguards for the 
confidentiality of the information furnished under subsection 
(a). Nothing in this subsection shall prevent the disclosure of 
such information by a party which is otherwise authorized, 
under applicable State law, to make such disclosure.
    [(d) Appropriate Coordination.--The Secretary shall provide 
for the maximum appropriate coordination in the implementation 
of subsection (a) of this section and section 422 of the Health 
Care Quality Improvement Act of 1986.

 [CORRECTION AND REDUCTION PLANS FOR INTERMEDIATE CARE FACILITIES FOR 
                         THE MENTALLY RETARDED

    [Sec. 1922. (a) If the Secretary finds that an intermediate 
care facility for the mentally retarded has substantial 
deficiencies which do not pose an immediate threat to the 
health and safety of residents (including failure to provide 
active treatment), the State may elect, subject to the 
limitations in this section, to--
            [(1) submit, within the number of days specified by 
        the Secretary in regulations which apply to submission 
        of compliance plans with respect to deficiencies of 
        such type, a written plan of correction which details 
        the extent of the facility's current compliance with 
        the standards promulgated by the Secretary, including 
        all deficiencies identified during a validation survey, 
        and which provides for a timetable for completion of 
        necessary steps to correct all staffing deficiencies 
        within 6 months, and a timetable for rectifying all 
        physical plant deficiencies within 6 months; or
            [(2) submit, within a time period consisting of the 
        number of days specified for submissions under 
        paragraph (1) plus 35 days, a written plan for 
        permanently reducing the number of certified beds, 
        within a maximum of 36 months, in order to permit any 
        noncomplying buildings (or distinct parts thereof) to 
        be vacated and any staffing deficiencies to be 
        corrected (hereinafter in this section referred to as a 
        ``reduction plan'').
    [(b) As conditions of approval of any reduction plan 
submitted pursuant to subsection (a)(2), the State must--
            [(1) provide for a hearing to be held at the 
        affected facility at least 35 days prior to submission 
        of the reduction plan, with reasonable notice thereof 
        to the staff and residents of the facility, responsible 
        members of the residents' families, and the general 
        public;
            [(2) demonstrate that the State has successfully 
        provided home and community services similar to the 
        services proposed to be provided under the reduction 
        plan for similar individuals eligible for medical 
        assistance; and
            [(3) provide assurances that the requirements of 
        subsection (c) shall be met with respect to the 
        reduction plan.
    [(c) The reduction plan must--
            [(1) identify the number and service needs of 
        existing facility residents to be provided home or 
        community services and the timetable for providing such 
        services, in 6 month intervals, within the 36-month 
        period;
            [(2) describe the methods to be used to select such 
        residents for home and community services and to 
        develop the alternative home and community services to 
        meet their needs effectively;
            [(3) describe the necessary safeguards that will be 
        applied to protect the health and welfare of the former 
        residents of the facility who are to receive home or 
        community services, including adequate standards for 
        consumer and provider participation and assurances that 
        applicable State licensure and applicable State and 
        Federal certification requirements will be met in 
        providing such home or community services;
            [(4) provide that residents of the affected 
        facility who are eligible for medical assistance while 
        in the facility shall, at their option, be placed in 
        another setting (or another part of the affected 
        facility) so as to retain their eligibility for medical 
        assistance;
            [(5) specify the actions which will be taken to 
        protect the health and safety of, and to provide active 
        treatment for, the residents who remain in the affected 
        facility while the reduction plan is in effect;
            [(6) provide that the ratio of qualified staff to 
        residents at the affected facility (or the part 
        thereof) which is subject to the reduction plan will be 
        the higher of--
                    [(A) the ratio which the Secretary 
                determines is necessary in order to assure the 
                health and safety of the residents of such 
                facility (or part thereof); or
                    [(B) the ratio which was in effect at the 
                time that the finding of substantial 
                deficiencies (referred to in subsection (a)) 
                was made; and
            [(7) provide for the protection of the interests of 
        employees affected by actions under the reduction plan, 
        including--
                    [(A) arrangements to preserve employee 
                rights and benefits;
                    [(B) training and retraining of such 
                employees where necessary;
                    [(C) redeployment of such employees to 
                community settings under the reduction plan; 
                and
                    [(D) making maximum efforts to guarantee 
                the employment of such employees (but this 
                requirement shall not be construed to guarantee 
                the employment of any employee).
    [(d)(1) The Secretary must provide for a period of not less 
than 30 days after the submission of a reduction plan by a 
State, during which comments on such reduction plan may be 
submitted to the Secretary, before the Secretary approves or 
disapproves such reduction plan.
    [(2) If the Secretary approves more than 15 reduction plans 
under this section in any fiscal year, any reduction plans 
approved in addition to the first 15 such plans approved, must 
be for a facility (or part thereof) for which the costs of 
correcting the substantial deficiencies (referred to in 
subsection (a)) are $2,000,000 or greater (as demonstrated by 
the State to the satisfaction of the Secretary).
    [(e)(1) If the Secretary, at the conclusion of the 6-month 
plan of correction described in subsection (a)(1), determines 
that the State has substantially failed to correct the 
deficiencies described in subsection (a), the Secretary may 
terminate the facility's provider agreement in accordance with 
the provisions of section 1910(b).
    [(2) In the case of a reduction plan described in 
subsection (a)(2), if the Secretary determines, at the 
conclusion of the initial 6-month period or any 6-month 
interval thereafter, that the State has substantially failed to 
meet the requirements of subsection (c), the Secretary shall--
            [(A) terminate the facility's provider agreement in 
        accordance with the provisions of section 1910(b); or
            [(B) if the State has failed to meet such 
        requirements despite good faith efforts, disallow, for 
        purposes of Federal financial participation, an amount 
        equal to 5 percent of the cost of care for all eligible 
        individuals in the facility for each month for which 
        the State fails to meet such requirements.
    [(f) The provisions of this section shall apply only to 
plans of correction and reduction plans approved by the 
Secretary by January 1, 1990.

  [ADJUSTMENT IN PAYMENT FOR INPATIENT HOSPITAL SERVICES FURNISHED BY 
                    DISPROPORTIONATE SHARE HOSPITALS

    [Sec. 1923. (a) Implementation of Requirement.--
            [(1) A State plan under this title shall not be 
        considered to meet the requirement of section 
        1902(a)(13)(A) (insofar as it requires payments to 
        hospitals to take into account the situation of 
        hospitals which serve a disproportionate number of low 
        income patients with special needs), as of July 1, 
        1988, unless the State has submitted to the Secretary, 
        by not later than such date, an amendment to such plan 
        that--
                    [(A) specifically defines the hospitals so 
                described (and includes in such definition any 
                disproportionate share hospital described in 
                subsection (b)(1) which meets the requirements 
                of subsection (d)), and
                    [(B) provides, effective for inpatient 
                hospital services provided not later than July 
                1, 1988, for an appropriate increase in the 
                rate or amount of payment for such services 
                provided by such hospitals, consistent with 
                subsection (c).
            [(2)(A) In order to be considered to have met such 
        requirement of section 1902(a)(13)(A) as of July 1, 
        1989, the State must submit to the Secretary by not 
        later than April 1, 1989, the State plan amendment 
        described in paragraph (1), consistent with subsection 
        (c), effective for inpatient hospital services provided 
        on or after July 1, 1989.
            [(B) In order to be considered to have met such 
        requirement of section 1902(a)(13)(A) as of July 1, 
        1990, the State must submit to the Secretary by not 
        later than April 1, 1990, the State plan amendment 
        described in paragraph (1), consistent with subsections 
        (c) and (f), effective for inpatient hospital services 
        provided on or after July 1, 1990.
            [(C) If a State plan under this title provides for 
        payments for inpatient hospital services on a 
        prospective basis (whether per diem, per case, or 
        otherwise), in order for the plan to be considered to 
        have met such requirement of section 1902(a)(13)(A) as 
        of July 1, 1989, the State must submit to the Secretary 
        by not later than April 1, 1989, a State plan amendment 
        that provides, in the case of hospitals defined by the 
        State as disproportionate share hospitals under 
        paragraph (1)(A), for an outlier adjustment in payment 
        amounts for medically necessary inpatient hospital 
        services provided on or after July 1, 1989, involving 
        exceptionally high costs or exceptionally long lengths 
        of stay for individuals under one year of age.
            [(3) The Secretary shall, not later than 90 days 
        after the date a State submits an amendment under this 
        subsection, review each such amendment for compliance 
        with such requirement and by such date shall approve or 
        disapprove each such amendment. If the Secretary 
        disapproves such an amendment, the State shall 
        immediately submit a revised amendment which meets such 
        requirement.
            [(4) The requirement of this subsection may not be 
        waived under section 1915(b)(4).
    [(b) Hospitals Deemed Disproportionate Share.--
            [(1) For purposes of subsection (a)(1), a hospital 
        which meets the requirements of subsection (d) is 
        deemed to be a disproportionate share hospital if--
                    [(A) the hospital's medicaid inpatient 
                utilization rate (as defined in paragraph (2)) 
                is at least one standard deviation above the 
                mean medicaid inpatient utilization rate for 
                hospitals receiving medicaid payments in the 
                State; or
                    [(B) the hospital's low-income utilization 
                rate (as defined in paragraph (3)) exceeds 25 
                percent.
            [(2) For purposes of paragraph (1)(A), the term 
        ``medicaid inpatient utilization rate'' means, for a 
        hospital, a fraction (expressed as a percentage), the 
        numerator of which is the hospital's number of 
        inpatient days attributable to patients who (for such 
        days) were eligible for medical assistance under a 
        State plan approved under this title in a period, and 
        the denominator of which is the total number of the 
        hospital's inpatient days in that period. In this 
        paragraph, the term ``inpatient day'' includes each day 
        in which an individual (including a newborn) is an 
        inpatient in the hospital, whether or not the 
        individual is in a specialized ward and whether or not 
        the individual remains in the hospital for lack of 
        suitable placement elsewhere.
            [(3) For purposes of paragraph (1)(B), the term 
        ``low-income utilization rate'' means, for a hospital, 
        the sum of--
                    [(A) the fraction (expressed as a 
                percentage)--
                            [(i) the numerator of which is the 
                        sum (for a period) of (I) the total 
                        revenues paid the hospital for patient 
                        services under a State plan under this 
                        title and (II) the amount of the cash 
                        subsidies for patient services received 
                        directly from State and local 
                        governments, and
                            [(ii) the denominator of which is 
                        the total amount of revenues of the 
                        hospital for patient services 
                        (including the amount of such cash 
                        subsidies) in the period; and
                    [(B) a fraction (expressed as a 
                percentage)--
                            [(i) the numerator of which is the 
                        total amount of the hospital's charges 
                        for inpatient hospital services which 
                        are attributable to charity care in a 
                        period, less the portion of any cash 
                        subsidies described in clause (i)(II) 
                        of subparagraph (A) in the period 
                        reasonably attributable to inpatient 
                        hospital services, and
                            [(ii) the denominator of which is 
                        the total amount of the hospital's 
                        charges for inpatient hospital services 
                        in the hospital in the period.
        The numerator under subparagraph (B)(i) shall not 
        include contractual allowances and discounts (other 
        than for indigent patients not eligible for medical 
        assistance under a State plan approved under this 
        title).
            [(4) The Secretary may not restrict a State's 
        authority to designate hospitals as disproportionate 
        share hospitals under this section. The previous 
        sentence shall not be construed to affect the authority 
        of the Secretary to reduce payments pursuant to section 
        1903(w)(1)(A)(iii) if the Secretary determines that, as 
        a result of such designations, there is in effect a 
        hold harmless provision described in section 
        1903(w)(4).
    [(c) Payment adjustment.--Subject to subsections (f) and 
(g), in order to be consistent with this subsection, a payment 
adjustment for a disproportionate share hospital must either--
            [(1) be in an amount equal to at least the product 
        of (A) the amount paid under the State plan to the 
        hospital for operating costs for inpatient hospital 
        services (of the kind described in section 1886(a)(4)), 
        and (B) the hospital's disproportionate share 
        adjustment percentage (established under section 
        1886(d)(5)(F)(iv));
            [(2) provide for a minimum specified additional 
        payment amount (or increased percentage payment) and 
        (without regard to whether the hospital is described in 
        subparagraph (A) or (B) of subsection (b)(1)) for an 
        increase in such a payment amount (or percentage 
        payment) in proportion to the percentage by which the 
        hospital's medicaid utilization rate (as defined in 
        subsection (b)(2)) exceeds one standard deviation above 
        the mean medicaid inpatient utilization rate for 
        hospitals receiving medicaid payments in the State or 
        the hospital's low-income utilization rate (as defined 
        in paragraph (b)(3)); or
            [(3) provide for a minimum specified additional 
        payment amount (or increased percentage payment) that 
        varies according to type of hospital under a 
        methodology that--
                    [(A) applies equally to all hospitals of 
                each type; and
                    [(B) results in an adjustment for each type 
                of hospital that is reasonably related to the 
                costs, volume, or proportion of services 
                provided to patients eligible for medical 
                assistance under a State plan approved under 
                this title or to low-income patients.
        except that, for purposes of paragraphs (1)(B) and 
        (2)(A) of subsection (a), the payment adjustment for a 
        disproportionate share hospital is consistent with this 
        subsection if the appropriate increase in the rate or 
        amount of payment is equal to at least one-third of the 
        increase otherwise applicable under this subsection (in 
        the case of such paragraph (1)(B)) and at least two-
        thirds of such increase (in the case of such paragraph 
        (2)(A)). In the case of a hospital described in 
        subsection (d)(2)(A)(i) (relating to children's 
        hospitals), in computing the hospital's 
        disproportionate share adjustment percentage for 
        purposes of paragraph (1)(B) of this subsection, the 
        disproportionate patient percentage (defined in section 
        1886(d)(5)(F)(vi)) shall be computed by substituting 
        for the fraction described in subclause (I) of such 
        section the fraction described in subclause (II) of 
        that section. If a State elects in a State plan 
        amendment under subsection (a) to provide the payment 
        adjustment described in paragraph (2), the State must 
        include in the amendment a detailed description of the 
        specific methodology to be used in determining the 
        specified additional payment amount (or increased 
        percentage payment) to be made to each hospital 
        qualifying for such a payment adjustment and must 
        publish at least annually the name of each hospital 
        qualifying for such a payment adjustment and the amount 
        of such payment adjustment made for each such hospital.
    [(d) Requirements To Qualify as Disproportionate Share 
Hospital.--
            [(1) Except as provided in paragraph (2), no 
        hospital may be defined or deemed as a disproportionate 
        share hospital under a State plan under this title or 
        under subsection (b) of this section unless the 
        hospital has at least 2 obstetricians who have staff 
        privileges at the hospital and who have agreed to 
        provide obstetric services to individuals who are 
        entitled to medical assistance for such services under 
        such State plan.
            [(2)(A) Paragraph (1) shall not apply to a 
        hospital--
                    [(i) the inpatients of which are 
                predominantly individuals under 18 years of 
                age; or
                    [(ii) which does not offer nonemergency 
                obstetric services to the general population as 
                of the date of the enactment of this Act.
            [(B) In the case of a hospital located in a rural 
        area (as defined for purposes of section 1886), in 
        paragraph (1) the term ``obstetrician'' includes any 
        physician with staff privileges at the hospital to 
        perform nonemergency obstetric procedures.
            [(3) No hospital may be defined or deemed as a 
        disproportionate share hospital under a State plan 
        under this title or under subsection (b) or (e) of this 
        section unless the hospital has a medicaid inpatient 
        utilization rate (as defined in subsection (b)(2)) of 
        not less than 1 percent.
    [(e) Special Rule.--(1) A State plan shall be considered to 
meet the requirement of section 1902(a)(13)(A) (insofar as it 
requires payments to hospitals to take into account the 
situation of hospitals which serve a disproportionate number of 
low income patients with special needs) without regard to the 
requirement of subsection (a) if (A)(i) the plan provided for 
payment adjustments based on a pooling arrangement involving a 
majority of the hospitals participating under the plan for 
disproportionate share hospitals as of January 1, 1984, or (ii) 
the plan as of January 1, 1987, provided for payment 
adjustments based on a statewide pooling arrangement involving 
all acute care hospitals and the arrangement provides for 
reimbursement of the total amount of uncompensated care 
provided by each participating hospital, (B) the aggregate 
amount of the payment adjustments under the plan for such 
hospitals is not less than the aggregate amount of such 
adjustments otherwise required to be made under such 
subsection, and (C) the plan meets the requirement of 
subsection (d)(3) and such payment adjustments are made 
consistent with the last sentence of subsection (c).
    [(2) In the case of a State that used a health insuring 
organization before January 1, 1986, to administer a portion of 
its plan on a state-wide basis, beginning on July 1, 1988--
            [(A) the requirements of subsections (b) and (c) 
        (other than the last sentence of subsection (c)) shall 
        not apply if the aggregate amount of the payment 
        adjustments under the plan for disproportionate share 
        hospitals (as defined under the State plan) is not less 
        than the aggregate amount of payment adjustments 
        otherwise required to be made if such subsections 
        applied,
            [(B) subsection (d)(2)(B) shall apply to hospitals 
        located in urban areas, as well as in rural areas,
            [(C) subsection (d)(3) shall apply, and
            [(D) subsection (g) shall apply.
    [(f) Denial of Federal Financial Participation for Payments 
in Excess of Certain Limits.--
            [(1) In General.--
                    [(A) Application of state-specific 
                limits.--Except as provided in subparagraph 
                (D), payment under section 1903(a) shall not be 
                made with respect to any payment adjustment 
                made under this section for hospitals in a 
                State (as defined in paragraph (4)(B)) for 
                quarters--
                            [(i) in fiscal year 1992 (beginning 
                        on or after January 1, 1992), unless--
                                    [(I) the payment 
                                adjustments are made--
                                            [(a) in accordance 
                                        with the State plan in 
                                        effect or amendments 
                                        submitted to the 
                                        Secretary by September 
                                        30, 1991,
                                            [(b) in accordance 
                                        with the State plan in 
                                        effect or amendments 
                                        submitted to the 
                                        Secretary by November 
                                        26, 1991, or 
                                        modification thereof, 
                                        if the amendment 
                                        designates only 
                                        disproportionate share 
                                        hospitals with a 
                                        medicaid or low-income 
                                        utilization percentage 
                                        at or above the 
                                        Statewide arithmetic 
                                        mean, or
                                            [(c) in accordance 
                                        with a payment 
                                        methodology which was 
                                        established and in 
                                        effect as of September 
                                        30, 1991, or in 
                                        accordance with 
                                        legislation or 
                                        regulations enacted or 
                                        adopted as of such 
                                        date; or
                                    [(II) the payment 
                                adjustments are the minimum 
                                adjustments required in order 
                                to meet the requirements of 
                                subsection (c)(1); or
                            [(ii) in a subsequent fiscal year, 
                        to the extent that the total of such 
                        payment adjustments exceeds the State 
                        disproportionate share hospital (in 
                        this subsection referred to as ``DSH'') 
                        allotment for the year (as specified in 
                        paragraph (2)).
                    [(B) National dsh payment limit.--The 
                national DSH payment limit for a fiscal year is 
                equal to 12 percent of the total amount of 
                expenditures under State plans under this title 
                for medical assistance during the fiscal year.
                    [(C) Publication of state dsh allotments 
                and national dsh payment limit.--Before the 
                beginning of each fiscal year (beginning with 
                fiscal year 1993), the Secretary shall, 
                consistent with section 1903(d), estimate and 
                publish--
                            [(i) the national DSH payment limit 
                        for the fiscal year, and
                            [(ii) the State DSH allotment for 
                        each State for the year .
                    [(D) Conditional exception for certain 
                states.--Subject to subparagraph (E), beginning 
                with payments for quarters beginning on or 
                after January 1, 1996, and at the option of a 
                State, subparagraph (A) shall not apply in the 
                case of a State which defines a hospital as a 
                disproportionate share hospital under 
                subsection (a)(1) only if the hospital meets 
                any of the following requirements:
                            [(i) The hospital's medicaid 
                        inpatient utilization rate (as defined 
                        in subsection (b)(2)) is at or above 
                        the mean medicaid inpatient utilization 
                        rate for all hospitals in the State.
                            [(ii) The hospital's low-income 
                        utilization rate (as defined in 
                        subsection (b)(3)) is at or above the 
                        mean low-income utilization rate for 
                        all hospitals in the State.
                            [(iii) The number of inpatient days 
                        of the hospital attributable to 
                        patients who (for such days) were 
                        eligible for medical assistance under 
                        the State plan is equal to at least 1 
                        percent of the total number of such 
                        days for all hospitals in the State.
                            [(iv) The hospital meets such 
                        alternative requirements as the 
                        Secretary may establish by regulation, 
                        taking into account the special 
                        circumstances of children's hospitals, 
                        hospitals located in rural areas, and 
                        sole community hospitals.
                    [(E) Condition for option.--The option 
                specified in subparagraph (D) shall not apply 
                for payments for a quarter beginning before the 
                date of enactment of legislation establishing a 
                limit on payment adjustments under this section 
                which would apply in the case of a state 
                exercising such option.
            [(2) Determination of state dsh allotments.--
                    [(A) In general.--Subject to subparagraph 
                (B), the State DSH allotment for a fiscal year 
                is equal to the State DSH allotment for the 
                previous fiscal year (or, for fiscal year 1993, 
                the State base allotment as defined in 
                paragraph (4)(C)), increased by--
                            [(i) the State growth factor (as 
                        defined in paragraph (4)(E)) for the 
                        fiscal year, and
                            [(ii) the State supplemental amount 
                        for the fiscal year (as determined 
                        under paragraph (3)).
                    [(B) Exceptions.--
                            [(i) Limit to 12 percent or base 
                        allotment.--A State DSH allotment under 
                        subparagraph (A) for a fiscal year 
                        shall not exceed 12 percent of the 
                        total amount of expenditures under the 
                        State plan for medical assistance 
                        during the fiscal year, except that, in 
                        the case of a high DSH State (as 
                        defined in paragraph (4)(A)), the State 
                        DSH allotment shall equal the State 
                        based allotment.
                            [(ii) Exception for minimum 
                        required adjustment.--No State DSH 
                        allotment shall be less than the 
                        minimum amount of payment adjustments 
                        the State is required to make in the 
                        fiscal year to meet the requirements of 
                        subsection (c)(1).
            [(3) State supplemental amounts.--The Secretary 
        shall determine a supplemental amount for each State 
        that is not a high DSH State for a fiscal year as 
        follows:
                    [(A) Determination of redistribution 
                pool.--The Secretary shall subtract from the 
                national DSH payment limit (specified in 
                paragraph (1)(B)) for the fiscal year the 
                following:
                            [(i) the total of the State base 
                        allotments for high DSH States;
                            [(ii) the total of State DSH 
                        allotments for the previous fiscal year 
                        (or, in the case of fiscal year 1993, 
                        the total of State base allotments) for 
                        all States other than high DSH States;
                            [(iii) the total of the State 
                        growth amounts for all States other 
                        than high DSH States for the fiscal 
                        year; and
                            [(iv) the total additions to State 
                        DSH allotments the Secretary estimates 
                        will be attributable to paragraph 
                        (2)(B)(ii).
                    [(B) Distribution of pool based on total 
                medicaid expenditures for medical assistance.--
                The supplemental amount for a State for a 
                fiscal year is equal to the lesser of--
                            [(i) the product of the amount 
                        determined under subparagraph (A) and 
                        the ratio of--
                                    [(I) the total amount of 
                                expenditures made under the 
                                State plan under this title for 
                                medical assistance during the 
                                fiscal year, to
                                    [(II) the total amount of 
                                expenditures made under the 
                                State plans under this title 
                                for medical assistance during 
                                the fiscal year for all States 
                                which are not high DSH States 
                                in the fiscal year, or
                            [(ii) the amount that would raise 
                        the State DSH allotment to the maximum 
                        permitted under paragraph (2)(B).
            [(4) Definitions.--In this subsection:
                    [(A) High dsh state.--The term ``high DSH 
                State'' means, for a fiscal year, a State for 
                which the State base allotment exceeds 12 
                percent of the total amount of expenditures 
                made under the State plan under this title for 
                medical assistance during the fiscal year;
                    [(B) State.--The term ``State'' means only 
                the 50 States and the District of Columbia but 
                does not include any State whose entire program 
                under this title is operated under a waiver 
                granted under section 1115.
                    [(C) State base allotment.--The term 
                ``State base allotment'' means, with respect to 
                a State, the greater of--
                            [(i) the total amount of payment 
                        adjustments made under subsection (c) 
                        under the State plan during fiscal year 
                        1992 (excluding any such payment 
                        adjustments for which a reduction may 
                        be made under paragraph (1)(A)(i)), or
                            [(ii) $1,000,000.
                The amount under clause (i) shall be determined 
                by the Secretary and shall include only payment 
                adjustments described in paragraph 
                (1)(A)(i)(I).
                    [(D) State growth amount.--The term ``State 
                growth amount'' means, with respect to a State 
                for a fiscal year, the lesser of--
                            [(i) the product of the State 
                        growth factor and the State DSH payment 
                        limit for the previous fiscal year, or
                            [(ii) the amount by which 12 
                        percent of the total amount of 
                        expenditures made under the State plan 
                        under this title for medical assistance 
                        during the fiscal year exceeds the 
                        State DSH allotment for the previous 
                        fiscal year.
                    [(E) State growth factor.--The term ``State 
                growth factor'' means, for a State for a fiscal 
                year, the percentage by which the expenditures 
                described in section 1903(a) in the State in 
                the fiscal year exceed such expenditures in the 
                previous fiscal year.
    [(g) Limit on Amount of Payment to Hospital.--
            [(1) Amount of adjustment subject to uncompensated 
        costs.--
                    [(A) In general.--A payment adjustment 
                during a fiscal year shall not be considered to 
                be consistent with subsection (c) with respect 
                to a hospital if the payment adjustment exceeds 
                the costs incurred during the year of 
                furnishing hospital services (as determined by 
                the Secretary and net of payments under this 
                title, other than under this section, and by 
                uninsured patients) by the hospital to 
                individuals who either are eligible for medical 
                assistance under the State plan or have no 
                health insurance (or other source of third 
                party coverage) for services provided during 
                the year. For purposes of the preceding 
                sentence, payments made to a hospital for 
                services provided to indigent patients made by 
                a State or a unit of local government within a 
                State shall not be considered to be a source of 
                third party payment.
                    [(B) Limit to public hospitals during 
                transition period.--With respect to payment 
                adjustments during a State fiscal year that 
                begins before January 1, 1995, subparagraph (A) 
                shall apply only to hospitals owned or operated 
                by a State (or by an instrumentality or a unit 
                of government within a State).
                    [(C) Modifications for private hospitals.--
                With respect to hospitals that are not owned or 
                operated by a State (or by an instrumentality 
                or a unit of government within a State), the 
                Secretary may make such modifications to the 
                manner in which the limitation on payment 
                adjustments is applied to such hospitals as the 
                Secretary considers appropriate.
            [(2) Additional amount during transition period for 
        certain hospitals with high disproportionate share.--
                    [(A) In general.--In the case of a hospital 
                with high disproportionate share (as defined in 
                subparagraph (B)), a payment adjustment during 
                a State fiscal year that begins before January 
                1, 1995, shall be considered consistent with 
                subsection (c) if the payment adjustment does 
                not exceed 200 percent of the costs of 
                furnishing hospital services described in 
                paragraph (1)(A) during the year, but only if 
                the Governor of the State certifies to the 
                satisfaction of the Secretary that the 
                hospital's applicable minimum amount is used 
                for health services during the year. In 
                determining the amount that is used for such 
                services during a year, there shall be excluded 
                any amounts received under the Public Health 
                Service Act, title V, title XVIII, or from 
                third party payors (not including the State 
                plan under this title) that are used for 
                providing such services during the year.
                    [(B) Hospitals with high disproportionate 
                share defined.--In subparagraph (A), a hospital 
                is a ``hospital with high disproportionate 
                share'' if--
                            [(i) the hospital is owned or 
                        operated by a State (or by an 
                        instrumentality or a unit of government 
                        within a State); and
                            [(ii) the hospital--
                                    [(I) meets the requirement 
                                described in subsection 
                                (b)(1)(A), or
                                    [(II) has the largest 
                                number of inpatient days 
                                attributable to individuals 
                                entitled to benefits under the 
                                State plan of any hospital in 
                                such State for the previous 
                                State fiscal year.
                    [(C) Applicable minimum amount defined.--In 
                subparagraph (A), the ``applicable minimum 
                amount'' for a hospital for a fiscal year is 
                equal to the difference between the amount of 
                the hospital's payment adjustment for the 
                fiscal year and the costs to the hospital of 
                furnishing hospital services described in 
                paragraph (1)(A) during the fiscal year.

   [TREATMENT OF INCOME AND RESOURCES FOR CERTAIN INSTITUTIONALIZED 
                                SPOUSES

    [Sec. 1924. (a) Special Treatment for Institutionalized 
Spouses.--
            [(1) Supersedes other provisions.--In determining 
        the eligibility for medical assistance of an 
        institutionalized spouse (as defined in subsection 
        (h)(1)), the provisions of this section supersede any 
        other provision of this title (including sections 
        1902(a)(17) and 1902(f)) which is inconsistent with 
        them.
            [(2) No comparable treatment required.--Any 
        different treatment provided under this section for 
        institutionalized spouses shall not, by reason of 
        paragraph (10) or (17) of section 1902(a), require such 
        treatment for other individuals.
            [(3) Does not affect certain determinations.--
        Except as this section specifically provides, this 
        section does not apply to--
                    [(A) the determination of what constitutes 
                income or resources, or
                    [(B) the methodology and standards for 
                determining and evaluating income and 
                resources.
            [(4) Application in certain states and 
        territories.--
                    [(A) Application in states operating under 
                demonstration projects.--In the case of any 
                State which is providing medical assistance to 
                its residents under a waiver granted under 
                section 1115, the Secretary shall require the 
                State to meet the requirements of this section 
                in the same manner as the State would be 
                required to meet such requirement if the State 
                had in effect a plan approved under this title.
                    [(B) No application in commonwealths and 
                territories.--This section shall only apply to 
                a State that is one of the 50 States or the 
                District of Columbia.
            [(5) Application to individuals receiving services 
        from organizations receiving certain waivers.--This 
        section applies to individuals receiving institutional 
        or noninstitutional services from any organization 
        receiving a frail elderly demonstration project waiver 
        under section 9412(b) of the Omnibus Budget 
        Reconciliation Act of 1986 or a waiver under section 
        603(c) of the Social Security Amendments of 1983.
    [(b) Rules for Treatment of Income.--
            [(1) Separate treatment of income.--During any 
        month in which an institutionalized spouse is in the 
        institution, except as provided in paragraph (2), no 
        income of the community spouse shall be deemed 
        available to the institutionalized spouse.
            [(2) Attribution of income.--In determining the 
        income of an institutionalized spouse or community 
        spouse for purposes of the post-eligibility income 
        determination described in subsection (d), except as 
        otherwise provided in this section and regardless of 
        any State laws relating to community property or the 
        division of marital property, the following rules 
        apply:
                    [(A) Non-trust property.--Subject to 
                subparagraphs (C) and (D), in the case of 
                income not from a trust, unless the instrument 
                providing the income otherwise specifically 
                provides--
                            [(i) if payment of income is made 
                        solely in the name of the 
                        institutionalized spouse or the 
                        community spouse, the income shall be 
                        considered available only to that 
                        respective spouse;
                            [(ii) if payment of income is made 
                        in the names of the institutionalized 
                        spouse and the community spouse, one-
                        half of the income shall be considered 
                        available to each of them; and
                            [(iii) if payment of income is made 
                        in the names of the institutionalized 
                        spouse or the community spouse, or 
                        both, and to another person or persons, 
                        the income shall be considered 
                        available to each spouse in proportion 
                        to the spouse's interest (or, if 
                        payment is made with respect to both 
                        spouses and no such interest is 
                        specified, one-half of the joint 
                        interest shall be considered available 
                        to each spouse).
                    [(B) Trust property.--In the case of a 
                trust--
                            [(i) except as provided in clause 
                        (ii), income shall be attributed in 
                        accordance with the provisions of this 
                        title (including sections 1902(a)(17) 
                        and 1917(d), and
                            [(ii) income shall be considered 
                        available to each spouse as provided in 
                        the trust, or, in the absence of a 
                        specific provision in the trust--
                                    [(I) if payment of income 
                                is made solely to the 
                                institutionalized spouse or the 
                                community spouse, the income 
                                shall be considered available 
                                only to that respective spouse;
                                    [(II) if payment of income 
                                is made to both the 
                                institutionalized spouse and 
                                the community spouse, one-half 
                                of the income shall be 
                                considered available to each of 
                                them; and
                                    [(III) if payment of income 
                                is made to the 
                                institutionalized spouse or the 
                                community spouse, or both, and 
                                to another person or persons, 
                                the income shall be considered 
                                available to each spouse in 
                                proportion to the spouse's 
                                interest (or, if payment is 
                                made with respect to both 
                                spouses and no such interest is 
                                specified, one-half of the 
                                joint interest shall be 
                                considered available to each 
                                spouse).
                    [(C) Property with no instrument.--In the 
                case of income not from a trust in which there 
                is no instrument establishing ownership, 
                subject to subparagraph (D), one-half of the 
                income shall be considered to be available to 
                the institutionalized spouse and one-half to 
                the community spouse.
                    [(D) Rebutting ownership.--The rules of 
                subparagraphs (A) and (C) are superseded to the 
                extent that an institutionalized spouse can 
                establish, by a preponderance of the evidence, 
                that the ownership interests in income are 
                other than as provided under such 
                subparagraphs.
    [(c) Rules for Treatment of Resources.--
            [(1) Computation of spousal share at time of 
        institutionalization.--
                    [(A) Total joint resources.--There shall be 
                computed (as of the beginning of the first 
                continuous period of institutionalization 
                (beginning on or after September 30, 1989) of 
                the institutionalized spouse)--
                            [(i) the total value of the 
                        resources to the extent either the 
                        institutionalized spouse or the 
                        community spouse has an ownership 
                        interest, and
                            [(ii) a spousal share which is 
                        equal to \1/2\ of such total value.
                    [(B) Assessment.--At the request of an 
                institutionalized spouse or community spouse, 
                at the beginning of the first continuous period 
                of institutionalization (beginning on or after 
                September 30, 1989) of the institutionalized 
                spouse and upon the receipt of relevant 
                documentation of resources, the State shall 
                promptly assess and document the total value 
                described in subparagraph (A)(i) and shall 
                provide a copy of such assessment and 
                documentation to each spouse and shall retain a 
                copy of the assessment for use under this 
                section. If the request is not part of an 
                application for medical assistance under this 
                title, the State may, at its option as a 
                condition of providing the assessment, require 
                payment of a fee not exceeding the reasonable 
                expenses of providing and documenting the 
                assessment. At the time of providing the copy 
                of the assessment, the State shall include a 
                notice indicating that the spouse will have a 
                right to a fair hearing under subsection 
                (e)(2).
            [(2) Attribution of resources at time of initial 
        eligibility determination.--In determining the 
        resources of an institutionalized spouse at the time of 
        application for benefits under this title, regardless 
        of any State laws relating to community property or the 
        division of marital property--
                    [(A) except as provided in subparagraph 
                (B), all the resources held by either the 
                institutionalized spouse, community spouse, or 
                both, shall be considered to be available to 
                the institutionalized spouse, and
                    [(B) resources shall be considered to be 
                available to an institutionalized spouse, but 
                only to the extent that the amount of such 
                resources exceeds the amount computed under 
                subsection (f)(2)(A) (as of the time of 
                application for benefits).
            [(3) Assignment of support rights.--The 
        institutionalized spouse shall not be ineligible by 
        reason of resources determined under paragraph (2) to 
        be available for the cost of care where--
                    [(A) the institutionalized spouse has 
                assigned to the State any rights to support 
                from the community spouse;
                    [(B) the institutionalized spouse lacks the 
                ability to execute an assignment due to 
                physical or mental impairment but the State has 
                the right to bring a support proceeding against 
                a community spouse without such assignment; or
                    [(C) the State determines that denial of 
                eligibility would work an undue hardship.
            [(4) Separate treatment of resources after 
        eligibility for benefits established.--During the 
        continuous period in which an institutionalized spouse 
        is in an institution and after the month in which an 
        institutionalized spouse is determined to be eligible 
        for benefits under this title, no resources of the 
        community spouse shall be deemed available to the 
        institutionalized spouse.
            [(5) Resources defined.--In this section, the term 
        ``resources'' does not include--
                    [(A) resources excluded under subsection 
                (a) or (d) of section 1613, and
                    [(B) resources that would be excluded under 
                section 1613(a)(2)(A) but for the limitation on 
                total value described in such section.
    [(d) Protecting Income for Community Spouse.--
            [(1) Allowances to be offset from income of 
        institutionalized spouse.--After an institutionalized 
        spouse is determined or redetermined to be eligible for 
        medical assistance, in determining the amount of the 
        spouse's income that is to be applied monthly to 
        payment for the costs of care in the institution, there 
        shall be deducted from the spouse's monthly income the 
        following amounts in the following order:
                    [(A) A personal needs allowance (described 
                in section 1902(q)(1)), in an amount not less 
                than the amount specified in section 
                1902(q)(2).
                    [(B) A community spouse monthly income 
                allowance (as defined in paragraph (2)), but 
                only to the extent income of the 
                institutionalized spouse is made available to 
                (or for the benefit of) the community spouse.
                    [(C) A family allowance, for each family 
                member, equal to at least \1/3\ of the amount 
                by which the amount described in paragraph 
                (3)(A)(i) exceeds the amount of the monthly 
                income of that family member.
                    [(D) Amounts for incurred expenses for 
                medical or remedial care for the 
                institutionalized spouse (as provided under 
                section 1902(r)).
        In subparagraph (C), the term ``family member'' only 
        includes minor or dependent children, dependent 
        parents, or dependent siblings of the institutionalized 
        or community spouse who are residing with the community 
        spouse.
            [(2) Community spouse monthly income allowance 
        defined.--In this section (except as provided in 
        paragraph (5)), the ``community spouse monthly income 
        allowance'' for a community spouse is an amount by 
        which--
                    [(A) except as provided in subsection (e), 
                the minimum monthly maintenance needs allowance 
                (established under and in accordance with 
                paragraph (3)) for the spouse, exceeds
                    [(B) the amount of monthly income otherwise 
                available to the community spouse (determined 
                without regard to such an allowance).
            [(3) Establishment of minimum monthly maintenance 
        needs allowance.--
                    [(A) In general.--Each State shall 
                establish a minimum monthly maintenance needs 
                allowance for each community spouse which, 
                subject to subparagraph (C), is equal to or 
                exceeds--
                            [(i) the applicable percent 
                        (described in subparagraph (B)) of \1/
                        12\ of the income official poverty line 
                        (defined by the Office of Management 
                        and Budget and revised annually in 
                        accordance with section 673(2)) for a 
                        family unit of 2 members; plus
                            [(ii) an excess shelter allowance 
                        (as defined in paragraph (4)).
                A revision of the official poverty line 
                referred to in clause (i) shall apply to 
                medical assistance furnished during and after 
                the second calendar quarter that begins after 
                the date of publication of the revision.
                    [(B) Applicable percent.--For purposes of 
                subparagraph (A)(i), the ``applicable percent'' 
                described in this paragraph, effective as of--
                            [(i) September 30, 1989, is 122 
                        percent,
                            [(ii) July 1, 1991, is 133 percent, 
                        and
                            [(iii) July 1, 1992, is 150 
                        percent.
                    [(C) Cap on minimum monthly maintenance 
                needs allowance.--The minimum monthly 
                maintenance needs allowance established under 
                subparagraph (A) may not exceed $1,500 (subject 
                to adjustment under subsections (e) and (g)).
            [(4) Excess shelter allowance defined.--In 
        paragraph (3)(A)(ii), the term ``excess shelter 
        allowance'' means, for a community spouse, the amount 
        by which the sum of--
                    [(A) the spouse's expenses for rent or 
                mortgage payment (including principal and 
                interest), taxes and insurance and, in the case 
                of a condominium or cooperative, required 
                maintenance charge, for the community spouse's 
                principal residence, and
                    [(B) the standard utility allowance (used 
                by the State under section 5(e) of the Food 
                Stamp Act of 1977) or, if the State does not 
                use such an allowance, the spouse's actual 
                utility expenses,
        exceeds 30 percent of the amount described in paragraph 
        (3)(A)(i), except that, in the case of a condominium or 
        cooperative, for which a maintenance charge is included 
        under subparagraph (A), any allowance under 
        subparagraph (B) shall be reduced to the extent the 
        maintenance charge includes utility expenses.
            [(5) Court ordered support.--If a court has entered 
        an order against an institutionalized spouse for 
        monthly income for the support of the community spouse, 
        the community spouse monthly income allowance for the 
        spouse shall be not less than the amount of the monthly 
        income so ordered.
    [(e) Notice and Fair Hearing.--
            [(1) Notice.--Upon--
                    [(A) a determination of eligibility for 
                medical assistance of an institutionalized 
                spouse, or
                    [(B) a request by either the 
                institutionalized spouse, or the community 
                spouse, or a representative acting on behalf of 
                either spouse,
        each State shall notify both spouses (in the case 
        described in subparagraph (A)) or the spouse making the 
        request (in the case described in subparagraph (B)) of 
        the amount of the community spouse monthly income 
        allowance (described in subsection (d)(1)(B)), of the 
        amount of any family allowances (described in 
        subsection (d)(1)(C)), of the method for computing the 
        amount of the community spouse resources allowance 
        permitted under subsection (f), and of the spouse's 
        right to a fair hearing under this subsection 
        respecting ownership or availability of income or 
        resources, and the determination of the community 
        spouse monthly income or resource allowance.
            [(2) Fair hearing.--
                    [(A) In general.--If either the 
                institutionalized spouse or the community 
                spouse is dissatisfied with a determination 
                of--
                            [(i) the community spouse monthly 
                        income allowance;
                            [(ii) the amount of monthly income 
                        otherwise available to the community 
                        spouse (as applied under subsection 
                        (d)(2)(B));
                            [(iii) the computation of the 
                        spousal share of resources under 
                        subsection (c)(1);
                            [(iv) the attribution of resources 
                        under subsection (c)(2); or
                            [(v) the determination of the 
                        community spouse resource allowance (as 
                        defined in subsection (f)(2));
                such spouse is entitled to a fair hearing 
                described in section 1902(a)(3) with respect to 
                such determination if an application for 
                benefits under this title has been made on 
                behalf of the institutionalized spouse. Any 
                such hearing respecting the determination of 
                the community spouse resource allowance shall 
                be held within 30 days of the date of the 
                request for the hearing.
                    [(B) Revision of minimum monthly 
                maintenance needs allowance.--If either such 
                spouse establishes that the community spouse 
                needs income, above the level otherwise 
                provided by the minimum monthly maintenance 
                needs allowance, due to exceptional 
                circumstances resulting in significant 
                financial duress, there shall be substituted, 
                for the minimum monthly maintenance needs 
                allowance in subsection (d)(2)(A), an amount 
                adequate to provide such additional income as 
                is necessary.
                    [(C) Revision of community spouse resource 
                allowance.--If either such spouse establishes 
                that the community spouse resource allowance 
                (in relation to the amount of income generated 
                by such an allowance) is inadequate to raise 
                the community spouse's income to the minimum 
                monthly maintenance needs allowance, there 
                shall be substituted, for the community spouse 
                resource allowance under subsection (f)(2), an 
                amount adequate to provide such a minimum 
                monthly maintenance needs allowance.
    [(f) Permitting Transfer of Resources to Community 
Spouse.--
            [(1) In general.--An institutionalized spouse may, 
        without regard to section 1917(c)(1), transfer an 
        amount equal to the community spouse resource allowance 
        (as defined in paragraph (2)), but only to the extent 
        the resources of the institutionalized spouse are 
        transferred to (or for the sole benefit of) the 
        community spouse. The transfer under the preceding 
        sentence shall be made as soon as practicable after the 
        date of the initial determination of eligibility, 
        taking into account such time as may be necessary to 
        obtain a court order under paragraph (3).
            [(2) Community spouse resource allowance defined.--
        In paragraph (1), the ``community spouse resource 
        allowance'' for a community spouse is an amount (if 
        any) by which--
                    [(A) the greatest of--
                            [(i) $12,000 (subject to adjustment 
                        under subsection (g)), or, if greater 
                        (but not to exceed the amount specified 
                        in clause (ii)(II)) an amount specified 
                        under the State plan,
                            [(ii) the lesser of (I) the spousal 
                        share computed under subsection (c)(1), 
                        or (II) $60,000 (subject to adjustment 
                        under subsection (g)),
                            [(iii) the amount established under 
                        subsection (e)(2); or
                            [(iv) the amount transferred under 
                        a court order under paragraph (3);
                exceeds
                    [(B) the amount of the resources otherwise 
                available to the community spouse (determined 
                without regard to such an allowance).
            [(3) Transfers under court orders.--If a court has 
        entered an order against an institutionalized spouse 
        for the support of the community spouse, section 1917 
        shall not apply to amounts of resources transferred 
        pursuant to such order for the support of the spouse or 
        a family member (as defined in subsection (d)(1)).
    [(g) Indexing Dollar Amounts.--For services furnished 
during a calendar year after 1989, the dollar amounts specified 
in subsections (d)(3)(C), (f)(2)(A)(i), and (f)(2)(A)(ii)(II) 
shall be increased by the same percentage as the percentage 
increase in the consumer price index for all urban consumers 
(all items; U.S. city average) between September 1988 and the 
September before the calendar year involved.
    [(h) Definitions.--In this section:
            [(1) The term ``institutionalized spouse'' means an 
        individual who--
                    [(A) is in a medical institution or nursing 
                facility or who (at the option of the State) is 
                described in section 1902(a)(10)(A)(ii)(VI), 
                and
                    [(B) is married to a spouse who is not in a 
                medical institution or nursing facility;
        but does not include any such individual who is not 
        likely to meet the requirements of subparagraph (A) for 
        at least 30 consecutive days.
            [(2) The term ``community spouse'' means the spouse 
        of an institutionalized spouse.

            [EXTENSION OF ELIGIBILITY FOR MEDICAL ASSISTANCE

    [Sec. 1925. (a) Initial 6-Month Extension.--
            [(1) Requirement.--Notwithstanding any other 
        provision of this title, each State plan approved under 
        this title must provide that each family which was 
        receiving aid pursuant to a plan of the State approved 
        under part A of title IV in at least 3 of the 6 months 
        immediately preceding the month in which such family 
        becomes ineligible for such aid, because of hours of, 
        or income from, employment of the caretaker relative 
        (as defined in subsection (e)) or because of section 
        402(a)(8)(B)(ii)(II) (providing for a time-limited 
        earned income disregard), shall, subject to paragraph 
        (3) and without any reapplication for benefits under 
        the plan, remain eligible for assistance under the plan 
        approved under this title during the immediately 
        succeeding 6-month period in accordance with this 
        subsection.
            [(2) Notice of benefits.--Each State, in the notice 
        of termination of aid under part A of title IV sent to 
        a family meeting the requirements of paragraph (1)--
                    [(A) shall notify the family of its right 
                to extended medical assistance under this 
                subsection and include in the notice a 
                description of the reporting requirement of 
                subsection (b)(2)(B)(i) and of the 
                circumstances (described in paragraph (3)) 
                under which such extension may be terminated; 
                and
                    [(B) shall include a card or other evidence 
                of the family's entitlement to assistance under 
                this title for the period provided in this 
                subsection.
            [(3) Termination of extension.--
                    [(A) No dependent child.--Subject to 
                subparagraphs (B) and (C), extension of 
                assistance during the 6-month period described 
                in paragraph (1) to a family shall terminate 
                (during such period) at the close of the first 
                month in which the family ceases to include a 
                child, whether or not the child is (or would if 
                needy be) a dependent child under part A of 
                title IV.
                    [(B) Notice before termination.--No 
                termination of assistance shall become 
                effective under subparagraph (A) until the 
                State has provided the family with notice of 
                the grounds for the termination.
                    [(C) Continuation in certain cases until 
                redetermination.--With respect to a child who 
                would cease to receive medical assistance 
                because of subparagraph (A) but who may be 
                eligible for assistance under the State plan 
                because the child is described in clause (i) of 
                section 1905(a) or clause (i)(IV), (i)(VI) 
                (i)(VII),, or (ii)(IX) of section 
                1902(a)(10)(A), the State may not discontinue 
                such assistance under such subparagraph until 
                the State has determined that the child is not 
                eligible for assistance under the plan.
            [(4) Scope of coverage.--
                    [(A) In general.--Subject to subparagraph 
                (B), during the 6-month extension period under 
                this subsection, the amount, duration, and 
                scope of medical assistance made available with 
                respect to a family shall be the same as if the 
                family were still receiving aid under the plan 
                approved under part A of title IV.
                    [(B) State medicaid ``wrap-around'' 
                option.--A State, at its option, may pay a 
                family's expenses for premiums, deductibles, 
                coinsurance, and similar costs for health 
                insurance or other health coverage offered by 
                an employer of the caretaker relative or by an 
                employer of the absent parent of a dependent 
                child. In the case of such coverage offered by 
                an employer of the caretaker relative--
                            [(i) the State may require the 
                        caretaker relative, as a condition of 
                        extension of coverage under this 
                        subsection for the caretaker and the 
                        caretaker's family, to make application 
                        for such employer coverage, but only 
                        if--
                                    [(I) the caretaker relative 
                                is not required to make 
                                financial contributions for 
                                such coverage (whether through 
                                payroll deduction, payment of 
                                deductibles, coinsurance, or 
                                similar costs, or otherwise), 
                                and
                                    [(II) the State provides, 
                                directly or otherwise, for 
                                payment of any of the premium 
                                amount, deductible, 
                                coinsurance, or similar expense 
                                that the employee is otherwise 
                                required to pay; and
                            [(ii) the State shall treat the 
                        coverage under such an employer plan as 
                        a third party liability (under section 
                        1902(a)(25)).
                Payments for premiums, deductibles, 
                coinsurance, and similar expenses under this 
                subparagraph shall be considered, for purposes 
                of section 1903(a), to be payments for medical 
                assistance.
    [(b) Additional 6-Month Extension.--
            [(1) Requirement.--Notwithstanding any other 
        provision of this title, each State plan approved under 
        this title shall provide that the State shall offer to 
        each family, which has received assistance during the 
        entire 6-month period under subsection (a) and which 
        meets the requirement of paragraph (2)(B)(i), in the 
        last month of the period the option of extending 
        coverage under this subsection for the succeeding 6-
        month period, subject to paragraph (3).
            [(2) Notice and reporting requirements.--
                    [(A) Notices.--
                            [(i) Notice during initial 
                        extension period of option and 
                        requirements.--Each State, during the 
                        3rd and 6th month of any extended 
                        assistance furnished to a family under 
                        subsection (a), shall notify the family 
                        of the family's option for additional 
                        extended assistance under this 
                        subsection. Each such notice shall 
                        include (I) in the 3rd month notice, a 
                        statement of the reporting requirement 
                        under subparagraph (B)(i), and, in the 
                        6th month notice, a statement of the 
                        reporting requirement under 
                        subparagraph (B)(ii), (II) a statement 
                        as to whether any premiums are required 
                        for such additional extended 
                        assistance, and (III) a description of 
                        other out-of-pocket expenses, benefits, 
                        reporting and payment procedures, and 
                        any pre-existing condition limitations, 
                        waiting periods, or other coverage 
                        limitations imposed under any 
                        alternative coverage options offered 
                        under paragraph (4)(D). The 6th month 
                        notice under this subparagraph shall 
                        describe the amount of any premium 
                        required of a particular family for 
                        each of the first 3 months of 
                        additional extended assistance under 
                        this subsection.
                            [(ii) Notice during additional 
                        extension period of reporting 
                        requirements and premiums.--Each State, 
                        during the 3rd month of any additional 
                        extended assistance furnished to a 
                        family under this subsection, shall 
                        notify the family of the reporting 
                        requirement under subparagraph (B)(ii) 
                        and a statement of the amount of any 
                        premium required for such extended 
                        assistance for the succeeding 3 months.
                    [(B) Reporting requirements.--
                            [(i) During initial extension 
                        period.--Each State shall require (as a 
                        condition for additional extended 
                        assistance under this subsection) that 
                        a family receiving extended assistance 
                        under subsection (a) report to the 
                        State, not later than the 21st day of 
                        the 4th month in the period of extended 
                        assistance under subsection (a), on the 
                        family's gross monthly earnings and on 
                        the family's costs for such child care 
                        as is necessary for the employment of 
                        the caretaker relative in each of the 
                        first 3 months of that period. A State 
                        may permit such additional extended 
                        assistance under this subsection 
                        notwithstanding a failure to report 
                        under this clause if the family has 
                        established, to the satisfaction of the 
                        State, good cause for the failure to 
                        report on a timely basis.
                            [(ii) During additional extension 
                        period.--Each State shall require that 
                        a family receiving extended assistance 
                        under this subsection report to the 
                        State, not later than the 21st day of 
                        the 1st month and of the 4th month in 
                        the period of additional extended 
                        assistance under this subsection, on 
                        the family's gross monthly earnings and 
                        on the family's costs for such child 
                        care as is necessary for the employment 
                        of the caretaker relative in each of 
                        the 3 preceding months.
                            [(iii) Clarification on frequency 
                        of reporting.--A State may not require 
                        that a family receiving extended 
                        assistance under this subsection or 
                        subsection (a) report more frequently 
                        than as required under clause (i) or 
                        (ii).
            [(3) Termination of extension.--
                    [(A) In general.--Subject to subparagraphs 
                (B) and (C), extension of assistance during the 
                6-month period described in paragraph (1) to a 
                family shall terminate (during the period) as 
                follows:
                            [(i) No dependent child.--The 
                        extension shall terminate at the close 
                        of the first month in which the family 
                        ceases to include a child, whether or 
                        not the child is (or would if needy be) 
                        a dependent child under part A of title 
                        IV.
                            [(ii) Failure to pay any premium.--
                        If the family fails to pay any premium 
                        for a month under paragraph (5) by the 
                        21st day of the following month, the 
                        extension shall terminate at the close 
                        of that following month, unless the 
                        family has established, to the 
                        satisfaction of the State, good cause 
                        for the failure to pay such premium on 
                        a timely basis.
                            [(iii) Quarterly income reporting 
                        and test.--The extension under this 
                        subsection shall terminate at the close 
                        of the 1st or 4th month of the 6-month 
                        period if--
                                    [(I) the family fails to 
                                report to the State, by the 
                                21st day of such month, the 
                                information required under 
                                paragraph (2)(B)(ii), unless 
                                the family has established, to 
                                the satisfaction of the State, 
                                good cause for the failure to 
                                report on a timely basis;
                                    [(II) the caretaker 
                                relative had no earnings in one 
                                or more of the previous 3 
                                months, unless such lack of any 
                                earnings was due to an 
                                involuntary loss of employment, 
                                illness, or other good cause, 
                                established to the satisfaction 
                                of the State; or
                                    [(III) the State determines 
                                that the family's average gross 
                                monthly earnings (less such 
                                costs for such child care as is 
                                necessary for the employment of 
                                the caretaker relative) during 
                                the immediately preceding 3-
                                month period exceed 185 percent 
                                of the official poverty line 
                                (as defined by the Office of 
                                Management and Budget, and 
                                revised annually in accordance 
                                with section 673(2) of the 
                                Omnibus Budget Reconciliation 
                                Act of 1981) applicable to a 
                                family of the size involved.
                Information described in clause (iii)(I) shall 
                be subject to the restrictions on use and 
                disclosure of information provided under 
                section 402(a)(9). Instead of terminating a 
                family's extension under clause (iii)(I), a 
                State, at its option, may provide for 
                suspension of the extension until the month 
                after the month in which the family reports 
                information required under paragraph 
                (2)(B)(ii), but only if the family's extension 
                has not otherwise been terminated under 
                subclause (II) or (III) of clause (iii). The 
                State shall make determinations under clause 
                (iii)(III) for a family each time a report 
                under paragraph (2)(B)(ii) for the family is 
                received.
                    [(B) Notice before termination.--No 
                termination of assistance shall become 
                effective under subparagraph (A) until the 
                State has provided the family with notice of 
                the grounds for the termination, which notice 
                shall include (in the case of termination under 
                subparagraph (A)(iii)(II), relating to no 
                continued earnings) a description of how the 
                family may reestablish eligibility for medical 
                assistance under the State plan. No such 
                termination shall be effective earlier than 10 
                days after the date of mailing of such notice.
                    [(C) Continuation in certain cases until 
                redetermination.--
                            [(i) Dependent children.--With 
                        respect to a child who would cease to 
                        receive medical assistance because of 
                        subparagraph (A)(i) but who may be 
                        eligible for assistance under the State 
                        plan because the child is described in 
                        clause (i) of section 1905(a) or clause 
                        (i)(IV) (i)(VI) (i)(VII),, or (ii)(IX) 
                        of section 1902(a)(10)(A), the State 
                        may not discontinue such assistance 
                        under such subparagraph until the State 
                        has determined that the child is not 
                        eligible for assistance under the plan.
                            [(ii) Medically needy.--With 
                        respect to an individual who would 
                        cease to receive medical assistance 
                        because of clause (ii) or (iii) of 
                        subparagraph (A) but who may be 
                        eligible for assistance under the State 
                        plan because the individual is within a 
                        category of person for which medical 
                        assistance under the State plan is 
                        available under section 1902(a)(10)(C) 
                        (relating to medically needy 
                        individuals), the State may not 
                        discontinue such assistance under such 
                        subparagraph until the State has 
                        determined that the individual is not 
                        eligible for assistance under the plan.
            [(4) Coverage.--
                    [(A) In general.--During the extension 
                period under this subsection--
                            [(i) the State plan shall offer to 
                        each family medical assistance which 
                        (subject to subparagraphs (B) and (C)) 
                        is the same amount, duration, and scope 
                        as would be made available to the 
                        family if it were still receiving aid 
                        under the plan approved under part A of 
                        title IV; and
                            [(ii) the State plan may offer 
                        alternative coverage described in 
                        subparagraph (D).
                    [(B) Elimination of most non-acute care 
                benefits.--At a State's option and 
                notwithstanding any other provision of this 
                title, a State may choose not to provide 
                medical assistance under this subsection with 
                respect to any (or all) of the items and 
                services described in paragraphs (4)(A), (6), 
                (7), (8), (11), (13), (14), (15), (16), (18), 
                (20), and (21) of section 1905(a).
                    [(C) State medicaid ``wrap-around'' 
                option.--At a State's option, the State may 
                elect to apply the option described in 
                subsection (a)(4)(B) (relating to ``wrap-
                around'' coverage) for families electing 
                medical assistance under this subsection in the 
                same manner as such option applies to families 
                provided extended eligibility for medical 
                assistance under subsection (a).
                    [(D) Alternative assistance.--At a State's 
                option, the State may offer families a choice 
                of health care coverage under one or more of 
                the following, instead of the medical 
                assistance otherwise made available under this 
                subsection:
                            [(i) Enrollment in family option of 
                        employer plan.--Enrollment of the 
                        caretaker relative and dependent 
                        children in a family option of the 
                        group health plan offered to the 
                        caretaker relative.
                            [(ii) Enrollment in family option 
                        of state employee plan.--Enrollment of 
                        the caretaker relative and dependent 
                        children in a family option within the 
                        options of the group health plan or 
                        plans offered by the State to State 
                        employees.
                            [(iii) Enrollment in state 
                        uninsured plan.--Enrollment of the 
                        caretaker relative and dependent 
                        children in a basic State health plan 
                        offered by the State to individuals in 
                        the State (or areas of the State) 
                        otherwise unable to obtain health 
                        insurance coverage.
                            [(iv) Enrollment in hmo.--
                        Enrollment of the caretaker relative 
                        and dependent children in a health 
                        maintenance organization (as defined in 
                        section 1903(m)(1)(A)) less than 50 
                        percent of the membership (enrolled on 
                        a prepaid basis) of which consists of 
                        individuals who are eligible to receive 
                        benefits under this title (other than 
                        because of the option offered under 
                        this clause). The option of enrollment 
                        under this clause is in addition to, 
                        and not in lieu of, any enrollment 
                        option that the State might offer under 
                        subparagraph (A)(i) with respect to 
                        receiving services through a health 
                        maintenance organization in accordance 
                        with section 1903(m).
                If a State elects to offer an option to enroll 
                a family under this subparagraph, the State 
                shall pay any premiums and other costs for such 
                enrollment imposed on the family and may pay 
                deductibles and coinsurance imposed on the 
                family. A State's payment of premiums for the 
                enrollment of families under this subparagraph 
                (not including any premiums otherwise payable 
                by an employer and less the amount of premiums 
                collected from such families under paragraph 
                (5)) and payment of any deductibles and 
                coinsurance shall be considered, for purposes 
                of section 1903(a)(1), to be payments for 
                medical assistance.
                    [(E) Prohibition on cost-sharing for 
                maternity and preventive pediatric care.--
                            [(i) In general.--If a State offers 
                        any alternative option under 
                        subparagraph (D) for families, under 
                        each such option the State must assure 
                        that care described in clause (ii) is 
                        available without charge to the 
                        families through--
                                    [(I) payment of any 
                                deductibles, coinsurance, and 
                                other cost-sharing respecting 
                                such care, or
                                    [(II) providing coverage 
                                under the State plan for such 
                                care without any cost-sharing,
                        or any combination of such mechanisms.
                            [(ii) Care described.--The care 
                        described in this clause consists of--
                                    [(I) services related to 
                                pregnancy (including prenatal, 
                                delivery, and post partum 
                                services), and
                                    [(II) ambulatory preventive 
                                pediatric care (including 
                                ambulatory early and periodic 
                                screening, diagnosis, and 
                                treatment services under 
                                section 1905(a)(4)(B)) for each 
                                child who meets the age and 
                                date of birth requirements to 
                                be a qualified child under 
                                section 1905(n)(2).
            [(5) Premium.--
                    [(A) Permitted.--Notwithstanding any other 
                provision of this title (including section 
                1916), a State may impose a premium for a 
                family for additional extended coverage under 
                this subsection for a premium payment period 
                (as defined in subparagraph (D)(i)), but only 
                if the family's average gross monthly earnings 
                (less the average monthly costs for such child 
                care as is necessary for the employment of the 
                caretaker relative) for the premium base period 
                exceed 100 percent of the official poverty line 
                (as defined by the Office of Management and 
                Budget, and revised annually in accordance with 
                section 673(2) of the Omnibus Budget 
                Reconciliation Act of 1981) applicable to a 
                family of the size involved.
                    [(B) Level may vary by option offered.--The 
                level of such premium may vary, for the same 
                family, for each option offered by a State 
                under paragraph (4)(D).
                    [(C) Limit on premium.--In no case may the 
                amount of any premium under this paragraph for 
                a family for a month in either of the premium 
                payment periods described in subparagraph 
                (D)(i) exceed 3 percent of the family's average 
                gross monthly earnings (less the average 
                monthly costs for such child care as is 
                necessary for the employment of the caretaker 
                relative) during the premium base period (as 
                defined in subparagraph (D)(ii)).
                    [(D) Definitions.--In this paragraph:
                            [(i) A ``premium payment period'' 
                        described in this clause is a 3-month 
                        period beginning with the 1st or 4th 
                        month of the 6-month additional 
                        extension period provided under this 
                        subsection.
                            [(ii) The term ``premium base 
                        period'' means, with respect to a 
                        particular premium payment period, the 
                        period of 3 consecutive months the last 
                        of which is 4 months before the 
                        beginning of that premium payment 
                        period.
    [(c) Applicability in States and Territories.--
            [(1) States operating under demonstration 
        projects.--In the case of any State which is providing 
        medical assistance to its residents under a waiver 
        granted under section 1115(a), the Secretary shall 
        require the State to meet the requirements of this 
        section in the same manner as the State would be 
        required to meet such requirement if the State had in 
        effect a plan approved under this title.
            [(2) Inapplicability in commonwealths and 
        territories.--The provisions of this section shall only 
        apply to the 50 States and the District of Columbia.
    [(d) General Disqualification for Fraud.--
            [(1) Ineligibility for aid.--This section shall not 
        apply to an individual who is a member of a family 
        which has received aid under part A of title IV if the 
        State makes a finding that, at any time during the last 
        6 months in which the family was receiving such aid 
        before otherwise being provided extended eligibility 
        under this section, the individual was ineligible for 
        such aid because of fraud.
            [(2) General disqualifications.--For additional 
        provisions relating to fraud and program abuse, see 
        sections 1128, 1128A, and 1128B.
    [(e) Caretaker Relative Defined.--In this section, the term 
``caretaker relative'' has the meaning of such term as used in 
part A of title IV.
    [(f) Sunset.--This section shall not apply with respect to 
families that cease to be eligible for aid under part A of 
title IV after September 30, 1998.

    [ASSURING ADEQUATE PAYMENT LEVELS FOR OBSTETRICAL AND PEDIATRIC 
                                SERVICES

    [Sec. 1926. (a)(1) A State plan under this title shall not 
be considered to meet the requirement of section 1902(a)(30)(A) 
with respect to obstetrical services (as defined in paragraph 
(4)(A)), as of July 1 of each year (beginning with 1990), 
unless, by not later than April 1 of such year, the State 
submits to the Secretary an amendment to the plan that 
specifies the payment rates to be used for such services under 
the plan in the succeeding period and includes in such 
submission such additional data as will assist the Secretary in 
evaluating the State's compliance with such requirement, 
including data relating to how rates established for payments 
to health maintenance organizations under section 1903(m) take 
into account such payment rates.
    [(2) A State plan under this title shall not be considered 
to meet the requirement of section 1902(a)(30)(A) with respect 
to pediatric services (as defined in paragraph (4)(B)), as of 
July 1 of each year (beginning with 1990), unless, by not later 
than April 1 of such year, the State submits to the Secretary 
an amendment to the plan that specifies, by pediatric 
procedure, the payment rates to be used for such services under 
the plan in the succeeding period and includes in such 
submission such additional data as will assist the Secretary in 
evaluating the State's compliance with such requirement, 
including data relating to how rates established for payments 
to health maintenance organizations under section 1903(m) take 
into account such payment rates.
    [(3) The Secretary, by not later than 90 days after the 
date of submission of a plan amendment under paragraph (1) or 
(2), shall--
            [(A) review each such amendment for compliance with 
        the requirement of section 1902(a)(30)(A), and
            [(B) approve or disapprove each such amendment.
        If the Secretary disapproves such an amendment, the 
        State shall immediately submit a revised amendment 
        which meets such requirement.
    [(4) In this section:
            [(A) The term ``obstetrical services'' means 
        services relating to pregnancy covered under the State 
        plan provided by an obstetrician, obstetrician-
        gynecologist, family practitioner, certified nurse 
        midwife, or certified family nurse practitioner and 
        does not include inpatient or outpatient hospital 
        services or other institutional services.
            [(B) The term ``pediatric services'' means services 
        covered under the State plan provided by a 
        pediatrician, family practitioner, or certified 
        pediatric nurse practitioner to children under 18 years 
        of age and does not include inpatient or outpatient 
        hospital services or other institutional services.
    [(b) For amendments submitted under subsection (a)(1) in 
1992 and thereafter, the data submitted under such subsection 
must include, for the second previous year, at least the 
statewide average payment rates under the State plan for 
obstetrical services furnished by obstetricians, obstetrician-
gynecologists, family practitioners, certified family nurse 
practitioners, and certified nurse midwives, by procedure. Such 
information shall be provided separately for providers located 
in each metropolitan statistical area (or similar area) in the 
State and in the remainder of the State.
    [(c) For amendments submitted under subsection (a)(2) in 
1992 and thereafter, the data submitted under such subsection 
must include, for the second previous year, at least the 
statewide average payment rates under the State plan for 
pediatric services furnished by pediatricians, family 
practitioners, and certified pediatric nurse practitioners by 
procedure. Such information shall be provided separately for 
providers located in each metropolitan statistical area (or 
similar area) in the State and in the remainder of the State
    [(d) Nothing in this title (including section 
1902(a)(30)(A)) shall be construed as preventing a State from 
establishing payment levels for obstetrical or pediatric 
services that are higher for those services furnished in rural 
areas than those furnished in metropolitan statistical areas.
    [Sec. 1927. (a) Requirement for Rebate Agreement.--
            [(1) In general.--In order for payment to be 
        available under section 1903(a) for covered outpatient 
        drugs of a manufacturer, the manufacturer must have 
        entered into and have in effect a rebate agreement 
        described in subsection (b) with the Secretary, on 
        behalf of States (except that, the Secretary may 
        authorize a State to enter directly into agreements 
        with a manufacturer), and must meet the requirements of 
        paragraph (5) (with respect to drugs purchased by a 
        covered entity on or after the first day of the first 
        month that begins after the date of the enactment of 
        title VI of the Veterans Health Care Act of 1992) and 
        paragraph (6). Any agreement between a State and a 
        manufacturer prior to April 1, 1991, shall be deemed to 
        have been entered into on January 1, 1991, and payment 
        to such manufacturer shall be retroactively calculated 
        as if the agreement between the manufacturer and the 
        State had been entered into on January 1, 1991. If a 
        manufacturer has not entered into such an agreement 
        before March 1, 1991, such an agreement, subsequently 
        entered into, shall not be effective until the first 
        day of the calendar quarter that begins more than 60 
        days after the date the agreement is entered into.
            [(2) Effective date.--Paragraph (1) shall first 
        apply to drugs dispensed under this title on or after 
        January 1, 1991.
            [(3) Authorizing payment for drugs not covered 
        under rebate agreements.--Paragraph (1), and section 
        1903(i)(10)(A), shall not apply to the dispensing of a 
        single source drug or innovator multiple source drug if 
        (A)(i) the State has made a determination that the 
        availability of the drug is essential to the health of 
        beneficiaries under the State plan for medical 
        assistance; (ii) such drug has been given a rating of 
        1-A by the Food and Drug Administration; and (iii)(I) 
        the physician has obtained approval for use of the drug 
        in advance of its dispensing in accordance with a prior 
        authorization program described in subsection (d), or 
        (II) the Secretary has reviewed and approved the 
        State's determination under subparagraph (A); or (B) 
        the Secretary determines that in the first calendar 
        quarter of 1991, there were extenuating circumstances.
            [(4) Effect on existing agreements.--In the case of 
        a rebate agreement in effect between a State and a 
        manufacturer on the date of the enactment of this 
        section, such agreement, for the initial agreement 
        period specified therein, shall be considered to be a 
        rebate agreement in compliance with this section with 
        respect to that State, if the State agrees to report to 
        the Secretary any rebates paid pursuant to the 
        agreement and such agreement provides for a minimum 
        aggregate rebate of 10 percent of the State's total 
        expenditures under the State plan for coverage of the 
        manufacturer's drugs under this title. If, after the 
        initial agreement period, the State establishes to the 
        satisfaction of the Secretary that an agreement in 
        effect on the date of the enactment of this section 
        provides for rebates that are at least as large as the 
        rebates otherwise required under this section, and the 
        State agrees to report any rebates under the agreement 
        to the Secretary, the agreement shall be considered to 
        be a rebate agreement in compliance with the section 
        for the renewal periods of such agreement.
            [(5) Limitation on prices of drugs purchased by 
        covered entities.--
                    [(A) Agreement with secretary.--A 
                manufacturer meets the requirements of this 
                paragraph if the manufacturer has entered into 
                an agreement with the Secretary that meets the 
                requirements of section 340B of the Public 
                Health Service Act with respect to covered 
                outpatient drugs purchased by a covered entity 
                on or after the first day of the first month 
                that begins after the date of the enactment of 
                this paragraph.
                    [(B) Covered entity defined.--In this 
                subsection, the term ``covered entity'' means 
                an entity described in section 340B(a)(4) of 
                the Public Health Service Act.
                    [(C) Establishment of alternative mechanism 
                to ensure against duplicate discounts or 
                rebates.--If the Secretary does not establish a 
                mechanism under section 340B(a)(5)(A) of the 
                Public Health Service Act within 12 months of 
                the date of the enactment of such section, the 
                following requirements shall apply:
                            [(i) Entities.--Each covered entity 
                        shall inform the single State agency 
                        under section 1902(a)(5) when it is 
                        seeking reimbursement from the State 
                        plan for medical assistance described 
                        in section 1905(a)(12) with respect to 
                        a unit of any covered outpatient drug 
                        which is subject to an agreement under 
                        section 340B(a) of such Act.
                            [(ii) State agency.--Each such 
                        single State agency shall provide a 
                        means by which a covered entity shall 
                        indicate on any drug reimbursement 
                        claims form (or format, where 
                        electronic claims management is used) 
                        that a unit of the drug that is the 
                        subject of the form is subject to an 
                        agreement under section 340B of such 
                        Act, and not submit to any manufacturer 
                        a claim for a rebate payment under 
                        subsection (b) with respect to such a 
                        drug.
                    [(D) Effect of subsequent amendments.--In 
                determining whether an agreement under 
                subparagraph (A) meets the requirements of 
                section 340B of the Public Health Service Act, 
                the Secretary shall not take into account any 
                amendments to such section that are enacted 
                after the enactment of title VI of the Veterans 
                Health Care Act of 1992.
                    [(E) Determination of compliance.--A 
                manufacturer is deemed to meet the requirements 
                of this paragraph if the manufacturer 
                establishes to the satisfaction of the 
                Secretary that the manufacturer would comply 
                (and has offered to comply) with the provisions 
                of section 340B of the Public Health Service 
                Act (as in effect immediately after the 
                enactment of this paragraph, and would have 
                entered into an agreement under such section 
                (as such section was in effect at such time), 
                but for a legislative change in such section 
                after the date of the enactment of this 
                paragraph.
                    [(6) Requirements relating to master 
                agreements for drugs procured by department of 
                veterans affairs and certain other federal 
                agencies.--
                            [(A) In general.--A manufacturer 
                        meets the requirements of this 
                        paragraph if the manufacturer complies 
                        with the provisions of section 8126 of 
                        title 38, United States Code, including 
                        the requirement of entering into a 
                        master agreement with the Secretary of 
                        Veterans Affairs under such section.
                            [(B) Effect of subsequent 
                        amendments.--In determining whether a 
                        master agreement described in 
                        subparagraph (A) meets the requirements 
                        of section 8126 of title 38, United 
                        States Code, the Secretary shall not 
                        take into account any amendments to 
                        such section that are enacted after the 
                        enactment of title VI of the Veterans 
                        Health Care Act of 1992.
                            [(C) Determination of compliance.--
                        A manufacturer is deemed to meet the 
                        requirements of this paragraph if the 
                        manufacturer establishes to the 
                        satisfaction of the Secretary that the 
                        manufacturer would comply (and has 
                        offered to comply) with the provisions 
                        of section 8126 of title 38, United 
                        States Code (as in effect immediately 
                        after the enactment of this paragraph) 
                        and would have entered into an 
                        agreement under such section (as such 
                        section was in effect at such time), 
                        but for a legislative change in such 
                        section after the date of the enactment 
                        of this paragraph.
    [(b) Terms of Rebate Agreement.--
            [(1) Periodic rebates.--
                    [(A) In general.--A rebate agreement under 
                this subsection shall require the manufacturer 
                to provide, to each State plan approved under 
                this title, a rebate for a rebate period in an 
                amount specified in subsection (c) for covered 
                outpatient drugs of the manufacturer dispensed 
                after December 31, 1990, for which payment was 
                made under the State plan for such period. Such 
                rebate shall be paid by the manufacturer not 
                later than 30 days after the date of receipt of 
                the information described in paragraph (2) for 
                the period involved.
                    [(B) Offset against medical assistance.--
                Amounts received by a State under this section 
                (or under an agreement authorized by the 
                Secretary under subsection (a)(1) or an 
                agreement described in subsection (a)(4)) in 
                any quarter shall be considered to be a 
                reduction in the amount expended under the 
                State plan in the quarter for medical 
                assistance for purposes of section 1903(a)(1).
            [(2) State provision of information.--
                    [(A) State responsibility.--Each State 
                agency under this title shall report to each 
                manufacturer not later than 60 days after the 
                end of each rebate period and in a form 
                consistent with a standard reporting format 
                established by the Secretary, information on 
                the total number of units of each dosage form 
                and strength and package size of each covered 
                outpatient drug dispensed after December 31, 
                1990, for which payment was made under the plan 
                during the period, and shall promptly transmit 
                a copy of such report to the Secretary.
                    [(B) Audits.--A manufacturer may audit the 
                information provided (or required to be 
                provided) under subparagraph (A). Adjustments 
                to rebates shall be made to the extent that 
                information indicates that utilization was 
                greater or less than the amount previously 
                specified.
            [(3) Manufacturer provision of price information.--
                    [(A) In general.--Each manufacturer with an 
                agreement in effect under this section shall 
                report to the Secretary--
                            [(i) not later than 30 days after 
                        the last day of each rebate period 
                        under the agreement (beginning on or 
                        after January 1, 1991), on the average 
                        manufacturer price (as defined in 
                        subsection (k)(1)) and, (for single 
                        source drugs and innovator multiple 
                        source drugs), the manufacturer's best 
                        price (as defined in subsection 
                        (c)(2)(B)) for covered outpatient drugs 
                        for the rebate period under the 
                        agreement, and
                            [(ii) not later than 30 days after 
                        the date of entering into an agreement 
                        under this section on the average 
                        manufacturer price (as defined in 
                        subsection (k)(1)) as of October 1, 
                        1990 for each of the manufacturer's 
                        covered outpatient drugs.
                    [(B) Verification surveys of average 
                manufacturer price.--The Secretary may survey 
                wholesalers and manufacturers that directly 
                distribute their covered outpatient drugs, when 
                necessary, to verify manufacturer prices 
                reported under subparagraph (A). The Secretary 
                may impose a civil monetary penalty in an 
                amount not to exceed $100,000 on a wholesaler, 
                manufacturer, or direct seller, if the 
                wholesaler, manufacturer, or direct seller of a 
                covered outpatient drug refuses a request for 
                information about charges or prices by the 
                Secretary in connection with a survey under 
                this subparagraph or knowingly provides false 
                information. The provisions of section 1128A 
                (other than subsections (a) (with respect to 
                amounts of penalties or additional assessments) 
                and (b)) shall apply to a civil money penalty 
                under this subparagraph in the same manner as 
                such provisions apply to a penalty or 
                proceeding under section 1128A(a).
                    [(C) Penalties.--
                            [(i) Failure to provide timely 
                        information.--In the case of a 
                        manufacturer with an agreement under 
                        this section that fails to provide 
                        information required under subparagraph 
                        (A) on a timely basis, the amount of 
                        the penalty shall be increased by 
                        $10,000 for each day in which such 
                        information has not been provided and 
                        such amount shall be paid to the 
                        Treasury, and, if such information is 
                        not reported within 90 days of the 
                        deadline imposed, the agreement shall 
                        be suspended for services furnished 
                        after the end of such 90-day period and 
                        until the date such information is 
                        reported (but in no case shall such 
                        suspension be for a period of less than 
                        30 days).
                            [(ii) False information.--Any 
                        manufacturer with an agreement under 
                        this section that knowingly provides 
                        false information is subject to a civil 
                        money penalty in an amount not to 
                        exceed $100,000 for each item of false 
                        information. Such civil money penalties 
                        are in addition to other penalties as 
                        may be prescribed by law. The 
                        provisions of section 1128A (other than 
                        subsections (a) and (b)) shall apply to 
                        a civil money penalty under this 
                        subparagraph in the same manner as such 
                        provisions apply to a penalty or 
                        proceeding under section 1128A(a).
                    [(D) Confidentiality of information.--
                Notwithstanding any other provision of law, 
                information disclosed by manufacturers or 
                wholesalers under this paragraph or under an 
                agreement with the Secretary of Veterans 
                Affairs described in subsection (a)(6)(A)(ii) 
                is confidential and shall not be disclosed by 
                the Secretary or the Secretary of Veterans 
                Affairs or a State agency (or contractor 
                therewith) in a form which discloses the 
                identity of a specific manufacturer or 
                wholesaler, prices charged for drugs by such 
                manufacturer or wholesaler, except--
                            [(i) as the Secretary determines to 
                        be necessary to carry out this section,
                            [(ii) to permit the Comptroller 
                        General to review the information 
                        provided, and
                            [(iii) to permit the Director of 
                        the Congressional Budget Office to 
                        review the information provided.
            [(4) Length of agreement.--
                    [(A) In general.--A rebate agreement shall 
                be effective for an initial period of not less 
                than 1 year and shall be automatically renewed 
                for a period of not less than one year unless 
                terminated under subparagraph (B).
                    [(B) Termination.--
                            [(i) By the secretary.--The 
                        Secretary may provide for termination 
                        of a rebate agreement for violation of 
                        the requirements of the agreement or 
                        other good cause shown. Such 
                        termination shall not be effective 
                        earlier than 60 days after the date of 
                        notice of such termination. The 
                        Secretary shall provide, upon request, 
                        a manufacturer with a hearing 
                        concerning such a termination, but such 
                        hearing shall not delay the effective 
                        date of the termination.
                            [(ii) By a manufacturer.--A 
                        manufacturer may terminate a rebate 
                        agreement under this section for any 
                        reason. Any such termination shall not 
                        be effective until the calendar quarter 
                        beginning at least 60 days after the 
                        date the manufacturer provides notice 
                        to the Secretary.
                            [(iii) Effectiveness of 
                        termination.--Any termination under 
                        this subparagraph shall not affect 
                        rebates due under the agreement before 
                        the effective date of its termination.
                            [(iv) Notice to states.--In the 
                        case of a termination under this 
                        subparagraph, the Secretary shall 
                        provide notice of such termination to 
                        the States within not less than 30 days 
                        before the effective date of such 
                        termination.
                            [(v) Application to terminations of 
                        other agreements.--The provisions of 
                        this subparagraph shall apply to the 
                        terminations of agreements described in 
                        section 340B(a)(1) of the Public Health 
                        Service Act and master agreements 
                        described in section 8126(a) of title 
                        38, United States Code.
                    [(C) Delay before reentry.--In the case of 
                any rebate agreement with a manufacturer under 
                this section which is terminated, another such 
                agreement with the manufacturer (or a successor 
                manufacturer) may not be entered into until a 
                period of 1 calendar quarter has elapsed since 
                the date of the termination, unless the 
                Secretary finds good cause for an earlier 
                reinstatement of such an agreement.
    [(c) Determination of Amount of Rebate.--
            [(1) Basic rebate for single source drugs and 
        innovator multiple source drugs.--
                    [(A) In general.--Except as provided in 
                paragraph (2), the amount of the rebate 
                specified in this subsection for a rebate 
                period (as defined in subsection (k)(8)) with 
                respect to each dosage form and strength of a 
                single source drug or an innovator multiple 
                source drug shall be equal to the product of--
                            [(i) the total number of units of 
                        each dosage form and strength paid for 
                        under the State plan in the rebate 
                        period (as reported by the State); and
                            [(ii) subject to subparagraph 
                        (B)(ii), the greater of--
                                    [(I) the difference between 
                                the average manufacturer price 
                                and the best price (as defined 
                                in subparagraph (C)) for the 
                                dosage form and strength of the 
                                drug, or
                                    [(II) the minimum rebate 
                                percentage (specified in 
                                subparagraph (B)(i)) of such 
                                average manufacturer price,
                        of or the rebate period.
                    [(B) Range of rebates required.--
                            [(i) Minimum rebate percentage.--
                        For purposes of subparagraph 
                        (A)(ii)(II), the ``minimum rebate 
                        percentage'' for rebate periods 
                        beginning--
                                    [(I) after December 31, 
                                1990, and before October 1, 
                                1992, is 12.5 percent;
                                    [(II) after September 30, 
                                1992, and before January 1, 
                                1994, is 15.7 percent;
                                    [(III) after December 31, 
                                1993, and before January 1, 
                                1995, is 15.4 percent;
                                    [(IV) after December 31, 
                                1994, and before January 1, 
                                1996, is 15.2 percent; and
                                    [(V) after December 31, 
                                1995, is 15.1 percent.
                            [(ii) Temporary limitation on 
                        maximum rebate amount.--In no case 
                        shall the amount applied under 
                        subparagraph (A)(ii) for a rebate 
                        period beginning--
                                    [(I) before January 1, 
                                1992, exceed 25 percent of the 
                                average manufacturer price; or
                                    [(II) after December 31, 
                                1991, and before January 1, 
                                1993, exceed 50 percent of the 
                                average manufacturer price.
                    [(C) Best price defined.--For purposes of 
                this section--
                            [(i) In general.--The term ``best 
                        price'' means, with respect to a single 
                        source drug or innovator multiple 
                        source drug of a manufacturer, the 
                        lowest price available from the 
                        manufacturer during the rebate period 
                        to any wholesaler, retailer, provider, 
                        health maintenance organization, 
                        nonprofit entity, or governmental 
                        entity within the United States, 
                        excluding--
                                    [(I) any prices charged on 
                                or after October 1, 1992, to 
                                the Indian Health Service, the 
                                Department of Veterans Affairs, 
                                a State home receiving funds 
                                under section 1741 of title 38, 
                                United States Code, the 
                                Department of Defense, the 
                                Public Health Service, or a 
                                covered entity described in 
                                subsection (a)(5)(B);
                                    [(II) any prices charged 
                                under the Federal Supply 
                                Schedule of the General 
                                Services Administration;
                                    [(III) any prices used 
                                under a State pharmaceutical 
                                assistance program; and
                                    [(IV) any depot prices and 
                                single award contract prices, 
                                as defined by the Secretary, of 
                                any agency of the Federal 
                                Government.
                            [(ii) Special rules.--The term 
                        ``best price''--
                                    [(I) shall be inclusive of 
                                cash discounts, free goods that 
                                are contingent on any purchase 
                                requirement, volume discounts, 
                                and rebates (other than rebates 
                                under this section);
                                    [(II) shall be determined 
                                without regard to special 
                                packaging, labeling, or 
                                identifiers on the dosage form 
                                or product or package; and
                                    [(III) shall not take into 
                                account prices that are merely 
                                nominal in amount.
            [(2) Additional rebate for single source and 
        innovator multiple source drugs.--
                    [(A) In general.--The amount of the rebate 
                specified in this subsection for a rebate 
                period, with respect to each dosage form and 
                strength of a single source drug or an 
                innovator multiple source drug, shall be 
                increased by an amount equal to the product 
                of--
                            [(i) the total number of units of 
                        such dosage form and strength dispensed 
                        after December 31, 1900, for which 
                        payment was made under the State plan 
                        for the rebate period; and
                            [(ii) the amount (if any) by 
                        which--
                                    [(I) the average 
                                manufacturer price for the 
                                dosage form and strength of the 
                                drug for the period, exceeds
                                    [(II) the average 
                                manufacturer price for such 
                                dosage form and strength for 
                                the calendar quarter beginning 
                                July 1, 1990 (without regard to 
                                whether or not the drug has 
                                been sold or transferred to an 
                                entity, including a division or 
                                subsidiary of the manufacturer, 
                                after the first day of such 
                                quarter), increased by the 
                                percentage by which the 
                                consumer price index for all 
                                urban consumers (United States 
                                city average) for the month 
                                before the month in which the 
                                rebate period begins exceeds 
                                such index for September 1990.
                    [(B) Treatment of subsequently approved 
                drugs.--In the case of a covered outpatient 
                drug approved by the Food and Drug 
                Administration after October 1, 1990, clause 
                (ii)(II) of subparagraph (A) shall be applied 
                by substituting ``the first full calendar 
                quarter after the day on which the drug was 
                first marketed'' for ``the calendar quarter 
                beginning July 1, 1990'' and ``the month prior 
                to the first month of the first full calendar 
                quarter after the day on which the drug was 
                first marketed'' for ``September 1990''.
            [(3) Rebate for other drugs.--
                    [(A) In general.--The amount of the rebate 
                paid to a State for a rebate period with 
                respect to each dosage form and strength of 
                covered outpatient drugs (other than single 
                source drugs and innovator multiple source 
                drugs) shall be equal to the product of--
                            [(i) the applicable percentage (as 
                        described in subparagraph (B)) of the 
                        average manufacturer price for the 
                        dosage form and strength for the rebate 
                        period, and
                            [(ii) the total number of units of 
                        such dosage form and strength dispensed 
                        after December 31, 1990, for which 
                        payment was made under the State plan 
                        for the rebate period.
                    [(B) Applicable percentage defined.--For 
                purposes of subparagraph (A)(i), the 
                ``applicable percentage'' for rebate periods 
                beginning--
                            [(i) before January 1, 1994, is 10 
                        percent, and
                            [(ii) after December 31, 1993, is 
                        11 percent.
    [(d) Limitations on Coverage of Drugs.--
            [(1) Permissible restrictions.--(A) A State may 
        subject to prior authorization any covered outpatient 
        drug. Any such prior authorization program shall comply 
        with the requirements of paragraph (5).
            [(B) A State may exclude or otherwise restrict 
        coverage of a covered outpatient drug if--
                    [(i) the prescribed use is not for a 
                medically accepted indication (as defined in 
                subsection (k)(6));
                    [(ii) the drug is contained in the list 
                referred to in paragraph (2);
                    [(iii) the drug is subject to such 
                restrictions pursuant to an agreement between a 
                manufacturer and a State authorized by the 
                Secretary under subsection (a)(1) or in effect 
                pursuant to subsection (a)(4); or
                    [(iv) the State has excluded coverage of 
                the drug from its formulary established in 
                accordance with paragraph (4).
            [(2) List of drugs subject to restriction.--The 
        following drugs or classes of drugs, or their medical 
        uses, may be excluded from coverage or otherwise 
        restricted:
                    [(A) Agents when used for anorexia, weight 
                loss, or weight gain.
                    [(B) Agents when used to promote fertility.
                    [(C) Agents when used for cosmetic purposes 
                or hair growth.
                    [(D) Agents when used for the symptomatic 
                relief of cough and colds.
                    [(E) Agents when used to promote smoking 
                cessation.
                    [(F) Prescription vitamins and mineral 
                products, except prenatal vitamins and fluoride 
                preparations.
                    [(G) Nonprescription drugs.
                    [(H) Covered outpatient drugs which the 
                manufacturer seeks to require as a condition of 
                sale that associated tests or monitoring 
                services be purchased exclusively from the 
                manufacturer or its designee.
                    [(I) Barbiturates.
                    [(J) Benzodiazepines.
            [(3) Update of drug listings.--The Secretary shall, 
        by regulation, periodically update the list of drugs or 
        classes of drugs described in paragraph (2) or their 
        medical uses, which the Secretary has determined, based 
        on data collected by surveillance and utilization 
        review programs of State medical assistance programs, 
        to be subject to clinical abuse or inappropriate use.
            [(4) Requirements for formularies.--A State may 
        establish a formulary if the formulary meets the 
        following requirements:
                    [(A) The formulary is developed by a 
                committee consisting of physicians, 
                pharmacists, and other appropriate individuals 
                appointed by the Governor of the State (or, at 
                the option of the State, the State's drug use 
                review board established under subsection 
                (g)(3)).
                    [(B) Except as provided in subparagraph 
                (C), the formulary includes the covered 
                outpatient drugs of any manufacturer which has 
                entered into and complies with an agreement 
                under subsection (a) (other than any drug 
                excluded from coverage or otherwise restricted 
                under paragraph (2)).
                    [(C) A covered outpatient drug may be 
                excluded with respect to the treatment of a 
                specific disease or condition for an identified 
                population (if any) only if, based on the 
                drug's labeling (or, in the case of a drug the 
                prescribed use of which is not approved under 
                the Federal Food, Drug, and Cosmetic Act but is 
                a medically accepted indication, based on 
                information from the appropriate compendia 
                described in subsection (k)(6)), the excluded 
                drug does not have a significant, clinically 
                meaningful therapeutic advantage in terms of 
                safety, effectiveness, or clinical outcome of 
                such treatment for such population over other 
                drugs included in the formulary and there is a 
                written explanation (available to the public) 
                of the basis for the exclusion.
                    [(D) The State plan permits coverage of a 
                drug excluded from the formulary (other than 
                any drug excluded from coverage or otherwise 
                restricted under paragraph (2)) pursuant to a 
                prior authorization program that is consistent 
                with paragraph (5).
                    [(E) The formulary meets such other 
                requirements as the Secretary may impose in 
                order to achieve program savings consistent 
                with protecting the health of program 
                beneficiaries.
        A prior authorization program established by a State 
        under paragraph (5) is not a formulary subject to the 
        requirements of this paragraph.
            [(5) Requirements of prior authorization 
        programs.--A State plan under this title may require, 
        as a condition of coverage or payment for a covered 
        outpatient drug for which Federal financial 
        participation is available in accordance with this 
        section, with respect to drugs dispensed on or after 
        July 1, 1991, the approval of the drug before its 
        dispensing for any medically accepted indication (as 
        defined in subsection (k)(6)) only if the system 
        providing for such approval--
                    [(A) provides response by telephone or 
                other telecommunication device within 24 hours 
                of a request for prior authorization; and
                    [(B) except with respect to the drugs on 
                the list referred to in paragraph (2), provides 
                for the dispensing of at least 72-hour supply 
                of a covered outpatient prescription drug in an 
                emergency situation (as defined by the 
                Secretary).
            [(6) Other permissible restrictions.--A State may 
        impose limitations, with respect to all such drugs in a 
        therapeutic class, on the minimum or maximum quantities 
        per prescription or on the number of refills, if such 
        limitations are necessary to discourage waste, and may 
        address instances of fraud or abuse by individuals in 
        any manner authorized under this Act.
    [(e) Treatment of Pharmacy Reimbursement Limits.--
            [(1) In general.--During the period beginning on 
        January 1, 1991, and ending on December 31, 1994--
                    [(A) a State may not reduce the payment 
                limits established by regulation under this 
                title or any limitation described in paragraph 
                (3) with respect to the ingredient cost of a 
                covered outpatient drug or the dispensing fee 
                for such a drug below the limits in effect as 
                of January 1, 1991, and
                    [(B) except as provided in paragraph (2), 
                the Secretary may not modify by regulation the 
                formula established under sections 447.331 
                through 447.334 of title 42, Code of Federal 
                Regulations, in effect on November 5, 1990, to 
                reduce the limits described in subparagraph 
                (A).
            [(2) Special rule.--If a State is not in compliance 
        with the regulations described in paragraph (1)(B), 
        paragraph (1)(A) shall not apply to such State until 
        such State is in compliance with such regulations.
            [(3) Effect on state maximum allowable cost 
        limitations.--This section shall not supersede or 
        affect provisions in effect prior to January 1, 1991, 
        or after December 31, 1994, relating to any maximum 
        allowable cost limitation established by a State for 
        payment by the State for covered outpatient drugs, and 
        rebates shall be made under this section without regard 
        to whether or not payment by the State for such drugs 
        is subject to such a limitation or the amount of such a 
        limitation.
            [(4) Establishment of upper payment Limits.--HCFA 
        shall establish a Federal upper reimbursement limit for 
        each multiple source drug for which the FDA has rated 
        three or more products therapeutically and 
        pharmaceutically equivalent, regardless of whether all 
        such additional formulations are rated as such and 
        shall use only such formulations when determining any 
        such upper limit.
    [(g) Drug Use Review.--
            [(1) In general.--
                    [(A) In order to meet the requirement of 
                section 1903(i)(10)(B), a State shall provide, 
                by not later than January 1, 1993, for a drug 
                use review program described in paragraph (2) 
                for covered outpatient drugs in order to assure 
                that prescriptions (i) are appropriate, (ii) 
                are medically necessary, and (iii) are not 
                likely to result in adverse medical results. 
                The program shall be designed to educate 
                physicians and pharmacists to identify and 
                reduce the frequency of patterns of fraud, 
                abuse, gross overuse, or inappropriate or 
                medically unnecessary care, among physicians, 
                pharmacists, and patients, or associated with 
                specific drugs or groups of drugs, as well as 
                potential and actual severe adverse reactions 
                to drugs including education on therapeutic 
                appropriateness, overutilization and 
                underutilization, appropriate use of generic 
                products, therapeutic duplication, drug-disease 
                contraindications, drug-drug interactions, 
                incorrect drug dosage or duration of drug 
                treatment, drug-allergy interactions, and 
                clinical abuse/misuse.
                    [(B) The program shall assess data on drug 
                use against predetermined standards, consistent 
                with the following:
                            [(i) compendia which shall consist 
                        of the following:
                                    [(I) American Hospital 
                                Formulary Service Drug 
                                Information;
                                    [(II) United States 
                                Pharmacopeia-Drug Information; 
                                and
                                    [(III) American Medical 
                                Association Drug Evaluations; 
                                and
                            [(ii) the peer-reviewed medical 
                        literature.
                    [(C) The Secretary, under the procedures 
                established in section 1903, shall pay to each 
                State an amount equal to 75 per centum of so 
                much of the sums expended by the State plan 
                during calendar years 1991 through 1993 as the 
                Secretary determines is attributable to the 
                statewide adoption of a drug use review program 
                which conforms to the requirements of this 
                subsection.
                    [(D) States shall not be required to 
                perform additional drug use reviews with 
                respect to drugs dispensed to residents of 
                nursing facilities which are in compliance with 
                the drug regimen review procedures prescribed 
                by the Secretary for such facilities in 
                regulations implementing section 1919, 
                currently at section 483.60 of title 42, Code 
                of Federal Regulations.
            [(2) Description of program.--Each drug use review 
        program shall meet the following requirements for 
        covered outpatient drugs:
                    [(A) Prospective drug review.--(i) The 
                State plan shall provide for a review of drug 
                therapy before each prescription is filled or 
                delivered to an individual receiving benefits 
                under this title, typically at the point-of-
                sale or point of distribution. The review shall 
                include screening for potential drug therapy 
                problems due to therapeutic duplication, drug-
                disease contraindications, drug-drug 
                interactions (including serious interactions 
                with nonprescription or over-the-counter 
                drugs), incorrect drug dosage or duration of 
                drug treatment, drug-allergy interactions, and 
                clinical abuse/misuse. Each State shall use the 
                compendia and literature referred to in 
                paragraph (1)(B) as its source of standards for 
                such review.
                    [(ii) As part of the State's prospective 
                drug use review program under this subparagraph 
                applicable State law shall establish standards 
                for counseling of individuals receiving 
                benefits under this title by pharmacists which 
                includes at least the following:
                            [(I) The pharmacist must offer to 
                        discuss with each individual receiving 
                        benefits under this title or caregiver 
                        of such individual (in person, whenever 
                        practicable, or through access to a 
                        telephone service which is toll-free 
                        for long-distance calls) who presents a 
                        prescription, matters which in the 
                        exercise of the pharmacist's 
                        professional judgment (consistent with 
                        State law respecting the provision of 
                        such information), the pharmacist deems 
                        significant including the following:
                                    [(aa) The name and 
                                description of the medication.
                                    [(bb) The route, dosage 
                                form, dosage, route of 
                                administration, and duration of 
                                drug therapy.
                                    [(cc) Special directions 
                                and precautions for 
                                preparation, administration and 
                                use by the patient.
                                    [(dd) Common severe side or 
                                adverse effects or interactions 
                                and therapeutic 
                                contraindications that may be 
                                encountered, including their 
                                avoidance, and the action 
                                required if they occur.
                                    [(ee) Techniques for self-
                                monitoring drug therapy.
                                    [(ff) Proper storage.
                                    [(gg) Prescription refill 
                                information.
                                    [(hh) Action to be taken in 
                                the event of a missed dose.
                            [(II) A reasonable effort must be 
                        made by the pharmacist to obtain, 
                        record, and maintain at least the 
                        following information regarding 
                        individuals receiving benefits under 
                        this title:
                                    [(aa) Name, address, 
                                telephone number, date of birth 
                                (or age) and gender.
                                    [(bb) Individual history 
                                where significant, including 
                                disease state or states, known 
                                allergies and drug reactions, 
                                and a comprehensive list of 
                                medications and relevant 
                                devices.
                                    [(cc) Pharmacist comments 
                                relevant to the individuals 
                                drug therapy.
                Nothing in this clause shall be construed as 
                requiring a pharmacist to provide consultation 
                when an individual receiving benefits under 
                this title or caregiver of such individual 
                refuses such consultation.
                    [(B) Retrospective drug use review.--The 
                program shall provide, through its mechanized 
                drug claims processing and information 
                retrieval systems (approved by the Secretary 
                under section 1903(r)) or otherwise, for the 
                ongoing periodic examination of claims data and 
                other records in order to identify patterns of 
                fraud, abuse, gross overuse, or inappropriate 
                or medically unnecessary care, among 
                physicians, pharmacists and individuals 
                receiving benefits under this title, or 
                associated with specific drugs or groups of 
                drugs.
                    [(C) Application of standards.--The program 
                shall, on an ongoing basis, assess data on drug 
                use against explicit predetermined standards 
                (using the compendia and literature referred to 
                in subsection (1)(B) as the source of standards 
                for such assessment) including but not limited 
                to monitoring for therapeutic appropriateness, 
                overutilization and underutilization, 
                appropriate use of generic products, 
                therapeutic duplication, drug-disease 
                contraindications, drug-drug interactions, 
                incorrect drug dosage or duration of drug 
                treatment, and clinical abuse/misuse and, as 
                necessary, introduce remedial strategies, in 
                order to improve the quality of care and to 
                conserve program funds or personal 
                expenditures.
                    [(D) Educational program.--The program 
                shall, through its State drug use review board 
                established under paragraph (3), either 
                directly or through contracts with accredited 
                health care educational institutions, State 
                medical societies or State pharmacists 
                associations/societies or other organizations 
                as specified by the State, and using data 
                provided by the State drug use review board on 
                common drug therapy problems, provide for 
                active and ongoing educational outreach 
                programs (including the activities described in 
                paragraph (3)(C)(iii) of this subsection) to 
                educate practitioners on common drug therapy 
                problems with the aim of improving prescribing 
                or dispensing practices.
            [(3) State drug use review board.--
                    [(A) Establishment.--Each State shall 
                provide for the establishment of a drug use 
                review board (hereinafter referred to as the 
                ``DUR Board'') either directly or through a 
                contract with a private organization.
                    [(B) Membership.--The membership of the DUR 
                Board shall include health care professionals 
                who have recognized knowledge and expertise in 
                one or more of the following:
                            [(i) The clinically appropriate 
                        prescribing of covered outpatient 
                        drugs.
                            [(ii) The clinically appropriate 
                        dispensing and monitoring of covered 
                        outpatient drugs.
                            [(iii) Drug use review, evaluation, 
                        and intervention.
                            [(iv) Medical quality assurance.
                The membership of the DUR Board shall be made 
                up at least \1/3\ but no more than 51 percent 
                licensed and actively practicing physicians and 
                at least \1/3\ licensed and actively practicing 
                pharmacists.
                    [(C) Activities.--The activities of the DUR 
                Board shall include but not be limited to the 
                following:
                            [(i) Retrospective DUR as defined 
                        in section (2)(B).
                            [(ii) Application of standards as 
                        defined in section (2)(C).
                            [(iii) Ongoing interventions for 
                        physicians and pharmacists, targeted 
                        toward therapy problems or individuals 
                        identified in the course of 
                        retrospective drug use reviews 
                        performed under this subsection. 
                        Intervention programs shall include, in 
                        appropriate instances, at least:
                                    [(I) information 
                                dissemination sufficient to 
                                ensure the ready availability 
                                to physicians and pharmacists 
                                in the State of information 
                                concerning its duties, powers, 
                                and basis for its standards;
                                    [(II) written, oral, or 
                                electronic reminders containing 
                                patient-specific or drug-
                                specific (or both) information 
                                and suggested changes in 
                                prescribing or dispensing 
                                practices, communicated in a 
                                manner designed to ensure the 
                                privacy of patient-related 
                                information;
                                    [(III) use of face-to-face 
                                discussions between health care 
                                professionals who are experts 
                                in rational drug therapy and 
                                selected prescribers and 
                                pharmacists who have been 
                                targeted for educational 
                                intervention, including 
                                discussion of optimal 
                                prescribing, dispensing, or 
                                pharmacy care practices, and 
                                follow-up face-to-face 
                                discussions; and
                                    [(IV) intensified review or 
                                monitoring of selected 
                                prescribers or dispensers.
                The Board shall re-evaluate interventions after 
                an appropriate period of time to determine if 
                the intervention improved the quality of drug 
                therapy, to evaluate the success of the 
                interventions and make modifications as 
                necessary.
                    [(D) Annual report.--Each State shall 
                require the DUR Board to prepare a report on an 
                annual basis. The State shall submit a report 
                on an annual basis to the Secretary which shall 
                include a description of the activities of the 
                Board, including the nature and scope of the 
                prospective and retrospective drug use review 
                programs, a summary of the interventions used, 
                an assessment of the impact of these 
                educational interventions on quality of care, 
                and an estimate of the cost savings generated 
                as a result of such program. The Secretary 
                shall utilize such report in evaluating the 
                effectiveness of each State's drug use review 
                program.
    [(h) Electronic Claims Management.--
            [(1) In general.--In accordance with chapter 35 of 
        title 44, United States Code (relating to coordination 
        of Federal information policy), the Secretary shall 
        encourage each State agency to establish, as its 
        principal means of processing claims for covered 
        outpatient drugs under this title, a point-of-sale 
        electronic claims management system, for the purpose of 
        performing on-line, real time eligibility 
        verifications, claims data capture, adjudication of 
        claims, and assisting pharmacists (and other authorized 
        persons) in applying for and receiving payment.
            [(2) Encouragement.--In order to carry out 
        paragraph (1)--
                    [(A) for calendar quarters during fiscal 
                years 1991 and 1992, expenditures under the 
                State plan attributable to development of a 
                system described in paragraph (1) shall receive 
                Federal financial participation under section 
                1903(a)(3)(A)(i) (at a matching rate of 90 
                percent) if the State acquires, through 
                applicable competitive procurement process in 
                the State, the most cost-effective 
                telecommunications network and automatic data 
                processing services and equipment; and
                    [(B) the Secretary may permit, in the 
                procurement described in subparagraph (A) in 
                the application of part 433 of title 42, Code 
                of Federal Regulations, and parts 95, 205, and 
                307 of title 45, Code of Federal Regulations, 
                the substitution of the State's request for 
                proposal in competitive procurement for advance 
                planning and implementation documents otherwise 
                required.
    [(i) Annual Report.--
            [(1) In general.--Not later than May 1 of each year 
        the Secretary shall transmit to the Committee on 
        Finance of the Senate, the Committee on Energy and 
        Commerce of the House of Representatives, and the 
        Committees on Aging of the Senate and the House of 
        Representatives a report on the the operation of this 
        section in the preceding fiscal year.
            [(2) Details.--Each report shall include 
        information on--
                    [(A) ingredient costs paid under this title 
                for single source drugs, multiple source drugs, 
                and nonprescription covered outpatient drugs;
                    [(B) the total value of rebates received 
                and number of manufacturers providing such 
                rebates;
                    [(C) how the size of such rebates compare 
                with the size or rebates offered to other 
                purchasers of covered outpatient drugs;
                    [(D) the effect of inflation on the value 
                of rebates required under this section;
                    [(E) trends in prices paid under this title 
                for covered outpatient drugs; and
                    [(F) Federal and State administrative costs 
                associated with compliance with the provisions 
                of this title.
    [(j) Exemption of Organized Health Care Settings.--(1) 
Covered outpatient drugs dispensed by Health Maintenance 
Organizations, including those organizations that contract 
under section 1903(m), are not subject to the requirements of 
this section.
    [(2) The State plan shall provide that a hospital 
(providing medical assistance under such plan) that dispenses 
covered outpatient drugs using drug formulary systems, and 
bills the plan no more than the hospital's purchasing costs for 
covered outpatient drugs (as determined under the State plan) 
shall not be subject to the requirements of this section.
    [(3) Nothing in this subsection shall be construed as 
providing that amounts for covered outpatient drugs paid by the 
institutions described in this subsection should not be taken 
into account for purposes of determining the best price as 
described in subsection (c).
    [(k) Definitions.--In the section--
            [(1) Average manufacturer price.--The term 
        ``average manufacturer price'' means, with respect to a 
        covered outpatient drug of a manufacturer for a rebate 
        period, the average price paid to the manufacturer for 
        the drug in the United States by wholesalers for drugs 
        distributed to the retail pharmacy class of trade, 
        after deducting customary prompt pay discounts.
            [(2) Covered outpatient drug.--Subject to the 
        exceptions in paragraph (3), the term ``covered 
        outpatient drug'' means--
                    [(A) of those drugs which are treated as 
                prescribed drugs for purposes of section 
                1905(a)(12), a drug which may be dispensed only 
                upon prescription (except as provided in 
                paragraph (5)), and--
                            [(i) which is approved for safety 
                        and effectiveness as a prescription 
                        drug under section 505 or 507 of the 
                        Federal Food, Drug, and Cosmetic Act or 
                        which is approved under section 505(j) 
                        of such Act;
                            [(ii)(I) which was commercially 
                        used or sold in the United States 
                        before the date of the enactment of the 
                        Drug Amendments of 1962 or which is 
                        identical, similar, or related (within 
                        the meaning of section 310.6(b)(1) of 
                        title 21 of the Code of Federal 
                        Regulations) to such a drug, and (II) 
                        which has not been the subject of a 
                        final determination by the Secretary 
                        that it is a ``new drug'' (within the 
                        meaning of section 201(p) of the 
                        Federal Food, Drug, and Cosmetic Act) 
                        or an action brought by the Secretary 
                        under section 301, 302(a), or 304(a) of 
                        such Act to enforce section 502(f) or 
                        505(a) of such Act; or
                            [(iii)(I) which is described in 
                        section 107(c)(3) of the Drug 
                        Amendments of 1962 and for which the 
                        Secretary has determined there is a 
                        compelling justification for its 
                        medical need, or is identical, similar, 
                        or related (within the meaning of 
                        section 310.6(b)(1) of title 21 of the 
                        Code of Federal Regulations) to such a 
                        drug, and (II) for which the Secretary 
                        has not issued a notice of an 
                        opportunity for a hearing under section 
                        505(e) of the Federal Food, Drug, and 
                        Cosmetic Act on a proposed order of the 
                        Secretary to withdraw approval of an 
                        application for such drug under such 
                        section because the Secretary has 
                        determined that the drug is less than 
                        effective for some or all conditions of 
                        use prescribed, recommended, or 
                        suggested in its labeling; and
                    [(B) a biological product, other than a 
                vaccine which--
                            [(i) may only be dispensed upon 
                        prescription,
                            [(ii) is licensed under section 351 
                        of the Public Health Service Act, and
                            [(iii) is produced at an 
                        establishment licensed under such 
                        section to produce such product; and
                    [(C) insulin certified under section 506 of 
                the Federal Food, Drug, and Cosmetic Act.
            [(3) Limiting definition.--The term ``covered 
        outpatient drug'' does not include any drug, biological 
        product, or insulin provided as part of, or as incident 
        to and in the same setting as, any of the following 
        (and for which payment may be made under this title as 
        part of payment for the following and not as direct 
        reimbursement for the drug):
                    [(A) Inpatient hospital services.
                    [(B) Hospice services.
                    [(C) Dental services, except that drugs for 
                which the State plan authorizes direct 
                reimbursement to the dispensing dentist are 
                covered outpatient drugs.
                    [(D) Physicians' services.
                    [(E) Outpatient hospital services.
                    [(F) Nursing facility services and services 
                provided by an intermediate care facility for 
                the mentally retarded.
                    [(G) Other laboratory and x-ray services.
                    [(H) Renal dialysis.
        Such term also does not include any such drug or 
        product for which a National Drug Code number is not 
        required by the Food and Drug Administration or a drug 
        or biological used for a medical indication which is 
        not a medically accepted indication. Any drug, 
        biological product, or insulin excluded from the 
        definition of such term as a result of this paragraph 
        shall be treated as a covered outpatient drug for 
        purposes of determining the best price (as defined in 
        subsection (c)(1)(C)) for such drug, biological 
        product, or insulin.
            [(4) Nonprescription drugs.--If a State plan for 
        medical assistance under this title includes coverage 
        of prescribed drugs as described in section 1905(a)(12) 
        and permits coverage of drugs which may be sold without 
        a prescription (commonly referred to as ``over-the-
        counter'' drugs), if they are prescribed by a physician 
        (or other person authorized to prescribe under State 
        law), such a drug shall be regarded as a covered 
        outpatient drug.
            [(5) Manufacturer.--The term ``manufacturer'' means 
        any entity which is engaged in--
                    [(A) the production, preparation, 
                propagation, compounding, conversion, or 
                processing of prescription drug products, 
                either directly or indirectly by extraction 
                from substances of natural origin, or 
                independently by means of chemical synthesis, 
                or by a combination of extraction and chemical 
                synthesis, or
                    [(B) in the packaging, repackaging, 
                labeling, relabeling, or distribution of 
                prescription drug products.
        Such term does not include a wholesale distributor of 
        drugs or a retail pharmacy licensed under State law.
            [(6) Medically accepted indication.--The term 
        ``medically accepted indication'' means any use for a 
        covered outpatient drug which is approved under the 
        Federal Food, Drug, and Cosmetic Act, or the use of 
        which is supported by one or more citations included or 
        approved for inclusion in any of the compendia 
        described in subsection (g)(1)(B)(i).
            [(7) Multiple source drug; innovator multiple 
        source drug; noninnovator multiple source drug; single 
        source drug.--
                    [(A) Defined.--
                            [(i) Multiple source drug.--The 
                        term ``multiple source drug'' means, 
                        with respect to a rebate period, a 
                        covered outpatient drug (not including 
                        any drug described in paragraph (5)) 
                        for which there are 2 or more drug 
                        products which--
                                    [(I) are rated as 
                                therapeutically equivalent 
                                (under the Food and Drug 
                                Administration's most recent 
                                publication of ``Approved Drug 
                                Products with Therapeutic 
                                Equivalence Evaluations''),
                                    [(II) except as provided in 
                                subparagraph (B), are 
                                pharmaceutically equivalent and 
                                bioequivalent, as defined in 
                                subparagraph (C) and as 
                                determined by the Food and Drug 
                                Administration, and
                                    [(III) are sold or marketed 
                                in the State during the period.
                            [(ii) Innovator multiple source 
                        drug.--The term ``innovator multiple 
                        source drug'' means a multiple source 
                        drug that was originally marketed under 
                        an original new drug application 
                        approved by the Food and Drug 
                        Administration.
                            [(iii) Noninnovator multiple source 
                        drug.--The term ``noninnovator multiple 
                        source drug'' means a multiple source 
                        drug that is not an innovator multiple 
                        source drug.
                            [(iv) Single source drug.--The term 
                        ``single source drug'' means a covered 
                        outpatient drug which is produced or 
                        distributed under an original new drug 
                        application approved by the Food and 
                        Drug Administration, including a drug 
                        product marketed by any cross-licensed 
                        producers or distributers operating 
                        under the new drug application.
                    [(B) Exception.--Subparagraph (A)(i)(II) 
                shall not apply if the Food and Drug 
                Administration changes by regulation the 
                requirement that, for purposes of the 
                publication described in subparagraph 
                (A)(i)(I), in order for drug products to be 
                rated as therapeutically equivalent, they must 
                be pharmaceutically equivalent and 
                bioequivalent, as defined in subparagraph (C).
                    [(C) Definitions.--For purposes of this 
                paragraph--
                            [(i) drug products are 
                        pharmaceuutically equivalent if the 
                        products contain identical amounts of 
                        the same active drug ingredient in the 
                        same dosage form and meet compendial or 
                        other applicable standards of strength, 
                        quality, purity, and identity;
                            [(ii) drugs are bioequivalent if 
                        they do not present a known or 
                        potential bioequivalence problem, or, 
                        if they do present such a problem, they 
                        are shown to meet an appropriate 
                        standard of bioequivalence; and
                            [(iii) a drug product is considered 
                        to be sold or marketed in a State if it 
                        appears in a published national listing 
                        of average wholesale prices selected by 
                        the Secretary, provided that the listed 
                        product is generally available to the 
                        public through retail pharmacies in 
                        that State.
            [(8) Rebate period.--The term ``rebate period'' 
        means, with respect to an agreement under subsection 
        (a), a calendar quarter or other period specified by 
        the Secretary with respect to the payment of rebates 
        under such agreement.
            [(9) State agency.--The term ``State agency'' means 
        the agency designated under section 1902(a)(5) to 
        administer or supervise the administration of the State 
        plan for medical assistance.

            [PROGRAM FOR DISTRIBUTION OF PEDIATRIC VACCINES

    [Sec. 1928. (a) Establishment of Program.--
            [(1) In general.--In order to meet the requirement 
        of section 1902(a)(62), each State shall establish a 
        pediatric vaccine distribution program (which may be 
        administered by the State department of health), 
        consistent with the requirements of this section, under 
        which--
                    [(A) each vaccine-eligible child (as 
                defined in subsection (b)), in receiving an 
                immunization with a qualified pediatric vaccine 
                (as defined in subsection (h)(8)) from a 
                program-registered provider (as defined in 
                subsection (c)) on or after October 1, 1994, is 
                entitled to receive the immunization without 
                charge for the cost of such vaccine; and
                    [(B)(i) each program-registered provider 
                who administers such a pediatric vaccine to a 
                vaccine-eligible child on or after such date is 
                entitled to receive such vaccine under the 
                program without charge either for the vaccine 
                or its delivery to the provider, and (ii) no 
                vaccine is distributed under the program to a 
                provider unless the provider is a program-
                registered provider.
            [(2) Delivery of sufficient quantities of pediatric 
        vaccines to immunize federally vaccine-eligible 
        children.--
                    [(A) In general.--The Secretary shall 
                provide under subsection (d) for the purchase 
                and delivery on behalf of each State meeting 
                the requirement of section 1902(a)(62) (or, 
                with respect to vaccines administered by an 
                Indian tribe or tribal organization to Indian 
                children, directly to the tribe or 
                organization), without charge to the State, of 
                such quantities of qualified pediatric vaccines 
                as may be necessary for the administration of 
                such vaccines to all federally vaccine-eligible 
                children in the State on or after October 1, 
                1994. This paragraph constitutes budget 
                authority in advance of appropriations Acts, 
                and represents the obligation of the Federal 
                Government to provide for the purchase and 
                delivery to States of the vaccines (or payment 
                under subparagraph (C)) in accordance with this 
                paragraph.
                    [(B) Special rules where vaccine is 
                unavailable.--To the extent that a sufficient 
                quantity of a vaccine is not available for 
                purchase or delivery under subsection (d), the 
                Secretary shall provide for the purchase and 
                delivery of the available vaccine in accordance 
                with priorities established by the Secretary, 
                with priority given to federally vaccine-
                eligible children unless the Secretary finds 
                there are other public health considerations.
                    [(C) Special rules where state is a 
                manufacturer.--
                            [(i) Payments in lieu of 
                        vaccines.--In the case of a State that 
                        manufactures a pediatric vaccine the 
                        Secretary, instead of providing the 
                        vaccine on behalf of a State under 
                        subparagraph (A), shall provide to the 
                        State an amount equal to the value of 
                        the quantity of such vaccine that 
                        otherwise would have been delivered on 
                        behalf of the State under such 
                        subparagraph but only if the State 
                        agrees that such payments will only be 
                        used for purposes relating to pediatric 
                        immunizations.
                            [(ii) Determination of value.--In 
                        determining the amount to pay a State 
                        under clause (i) with respect to a 
                        pediatric vaccine, the value of the 
                        quantity of vaccine shall be determined 
                        on the basis of the price in effect for 
                        the qualified pediatric vaccine under 
                        contracts under subsection (d). If more 
                        than 1 such contract is in effect, the 
                        Secretary shall determine such value on 
                        the basis of the average of the prices 
                        under the contracts, after weighting 
                        each such price in relation to the 
                        quantity of vaccine under the contract 
                        involved.
    [(b) Vaccine-Eligible Children.--For purposes of this 
section:
            [(1) In general.--The term ``vaccine-eligible 
        child'' means a child who is a federally vaccine-
        eligible child (as defined in paragraph (2)) or a State 
        vaccine-eligible child (as defined in paragraph (3)).
            [(2) Federally vaccine-eligible child.--
                    [(A) In general.--The term ``federally 
                vaccine-eligible child'' means any of the 
                following children:
                            [(i) A medicaid-eligible child.
                            [(ii) A child who is not insured.
                            [(iii) A child who (I) is 
                        administered a qualified pediatric 
                        vaccine by a federally-qualified health 
                        center (as defined in section 
                        1905(l)(2)(B)) or a rural health clinic 
                        (as defined in section 1905(l)(1)), and 
                        (II) is not insured with respect to the 
                        vaccine.
                            [(iv) A child who is an Indian (as 
                        defined in subsection (h)(3)).
                    [(B) Definitions.--In subparagraph (A):
                            [(i) The term ``medicaid-eligible'' 
                        means, with respect to a child, a child 
                        who is entitled to medical assistance 
                        under a state plan approved under this 
                        title.
                            [(ii) The term ``insured'' means, 
                        with respect to a child--
                                    [(I) for purposes of 
                                subparagraph (A)(ii), that the 
                                child is enrolled under, and 
                                entitled to benefits under, a 
                                health insurance policy or 
                                plan, including a group health 
                                plan, a prepaid health plan, or 
                                an employee welfare benefit 
                                plan under the Employee 
                                Retirement Income Security Act 
                                of 1974; and
                                    [(II) for purposes of 
                                subparagraph (A)(iii)(II) with 
                                respect to a pediatric vaccine, 
                                that the child is entitled to 
                                benefits under such a health 
                                insurance policy or plan, but 
                                such benefits are not available 
                                with respect to the cost of the 
                                pediatric vaccine.
            [(3) State vaccine-eligible child.--The term 
        ``State vaccine-eligible child'' means, with respect to 
        a State and a qualified pediatric vaccine, a child who 
        is within a class of children for which the State is 
        purchasing the vaccine pursuant to subsection 
        (d)(4)(B).
    [(c) Program-Registered Providers.--
            [(1) Defined.--In this section, except as otherwise 
        provided, the term ``program-registered provider'' 
        means, with respect to a State, any health care 
        provider that--
                    [(A) is licensed or otherwise authorized 
                for administration of pediatric vaccines under 
                the law of the State in which the 
                administration occurs (subject to section 
                333(e) of the Public Health Service Act), 
                without regard to whether or not the provider 
                participates in the plan under this title;
                    [(B) submits to the State an executed 
                provider agreement described in paragraph (2); 
                and
                    [(C) has not been found, by the Secretary 
                or the State, to have violated such agreement 
                or other applicable requirements established by 
                the Secretary or the State consistent with this 
                section.
            [(2) Provider agreement.--A provider agreement for 
        a provider under this paragraph is an agreement (in 
        such form and manner as the Secretary may require) that 
        the provider agrees as follows:
                    [(A)(i) Before administering a qualified 
                pediatric vaccine to a child, the provider will 
                ask a parent of the child such questions as are 
                necessary to determine whether the child is a 
                vaccine-eligible child, but the provider need 
                not independently verify the answers to such 
                questions.
                    [(ii) The provider will, for a period of 
                time specified by the Secretary, maintain 
                records of responses made to the questions.
                    [(iii) The provider will, upon request, 
                make such records available to the State and to 
                the Secretary, subject to section 1902(a)(7).
                    [(B)(i) Subject to clause (ii), the 
                provider will comply with the schedule, 
                regarding the appropriate periodicity, dosage, 
                and contraindications applicable to pediatric 
                vaccines, that is established and periodically 
                reviewed and, as appropriate, revised by the 
                advisory committee referred to in subsection 
                (e), except in such cases as, in the provider's 
                medical judgment subject to accepted medical 
                practice, such compliance is medically 
                inappropriate.
                    [(ii) The provider will provide pediatric 
                vaccines in compliance with applicable State 
                law, including any such law relating to any 
                religious or other exemption.
                    [(C)(i) In administering a qualified 
                pediatric vaccine to a vaccine-eligible child, 
                the provider will not impose a charge for the 
                cost of the vaccine. A program-registered 
                provider is not required under this section to 
                administer such a vaccine to each child for 
                whom an immunization with the vaccine is sought 
                from the provider.
                    [(ii) The provider may impose a fee for the 
                administration of a qualified pediatric vaccine 
                so long as the fee in the case of a federally 
                vaccine-eligible child does not exceed the 
                costs of such administration (as determined by 
                the Secretary based on actual regional costs 
                for such administration).
                    [(iii) The provider will not deny 
                administration of a qualified pediatric vaccine 
                to a vaccine-eligible child due to the 
                inability of the child's parent to pay an 
                administration fee.
            [(3) Encouraging involvement of providers.--Each 
        program under this section shall provide, in accordance 
        with criteria established by the Secretary--
                    [(A) for encouraging the following to 
                become program-registered providers: private 
                health care providers, the Indian Health 
                Service, health care providers that receive 
                funds under title V of the Indian Health Care 
                Improvement Act, and health programs or 
                facilities operated by Indian tribes or tribal 
                organizations; and
                    [(B) for identifying, with respect to any 
                population of vaccine-eligible children a 
                substantial portion of whose parents have a 
                limited ability to speak the English language, 
                those program-registered providers who are able 
                to communicate with the population involved in 
                the language and cultural context that is most 
                appropriate.
            [(4) State requirements.--Except as the Secretary 
        may permit in order to prevent fraud and abuse and for 
        related purposes, a State may not impose additional 
        qualifications or conditions, in addition to the 
        requirements of paragraph (1), in order that a provider 
        qualify as a program-registered provider under this 
        section. This subsection does not limit the exercise of 
        State authority under section 1915(b).
    [(d) Negotiation of Contracts with Manufacturers.--
            [(1) In general.--For the purpose of meeting 
        obligations under this section, the Secretary shall 
        negotiate and enter into contracts with manufacturers 
        of pediatric vaccines consistent with the requirements 
        of this subsection and, to the maximum extent 
        practicable, consolidate such contracting with any 
        other contracting activities conducted by the Secretary 
        to purchase vaccines. The Secretary may enter into such 
        contracts under which the Federal Government is 
        obligated to make outlays, the budget authority for 
        which is not provided for in advance in appropriations 
        Acts, for the purchase and delivery of pediatric 
        vaccines under subsection (a)(2)(A).
            [(2) Authority to decline contracts.--The Secretary 
        may decline to enter into such contracts and may modify 
        or extend such contracts.
            [(3) Contract price.--
                    [(A) In general.--The Secretary, in 
                negotiating the prices at which pediatric 
                vaccines will be purchased and delivered from a 
                manufacturer under this subsection, shall take 
                into account quantities of vaccines to be 
                purchased by States under the option under 
                paragraph (4)(B).
                    [(B) Negotiation of discounted price for 
                current vaccines.--With respect to contracts 
                entered into under this subsection for a 
                pediatric vaccine for which the Centers for 
                Disease Control and Prevention has a contract 
                in effect under section 317(j)(1) of the Public 
                Health Service Act as of May 1, 1993, no price 
                for the purchase of such vaccine for vaccine-
                eligible children shall be agreed to by the 
                Secretary under this subsection if the price 
                per dose of such vaccine (including delivery 
                costs and any applicable excise tax established 
                under section 4131 of the Internal Revenue Code 
                of 1986) exceeds the price per dose for the 
                vaccine in effect under such a contract as of 
                such date increased by the percentage increase 
                in the consumer price index for all urban 
                consumers (all items; United States city 
                average) from May 1993 to the month before the 
                month in which such contract is entered into.
                    [(C) Negotiation of discounted price for 
                new vaccines.--With respect to contracts 
                entered into for a pediatric vaccine not 
                described in subparagraph (B), the price for 
                the purchase of such vaccine shall be a 
                discounted price negotiated by the Secretary 
                that may be established without regard to such 
                subparagraph.
            [(4) Quantities and terms of delivery.--Under such 
        contracts--
                    [(A) the Secretary shall provide, 
                consistent with paragraph (6), for the purchase 
                and delivery on behalf of States (and tribes 
                and tribal organizations) of quantities of 
                pediatric vaccines for federally vaccine-
                eligible children; and
                    [(B) each State, at the option of the 
                State, shall be permitted to obtain additional 
                quantities of pediatric vaccines (subject to 
                amounts specified to the Secretary by the State 
                in advance of negotiations) through purchasing 
                the vaccines from the manufacturers at the 
                applicable price negotiated by the Secretary 
                consistent with paragraph (3), if (i) the State 
                agrees that the vaccines will be used to 
                provide immunizations only for children who are 
                not federally vaccine-eligible children and 
                (ii) the State provides to the Secretary such 
                information (at a time and manner specified by 
                the Secretary, including in advance of 
                negotiations under paragraph (1)) as the 
                Secretary determines to be necessary, to 
                provide for quantities of pediatric vaccines 
                for the State to purchase pursuant to this 
                subsection and to determine annually the 
                percentage of the vaccine market that is 
                purchased pursuant to this section and this 
                subparagraph.
        The Secretary shall enter into the initial negotiations 
        under the preceding sentence not later than 180 days 
        after the date of the enactment of the Omnibus Budget 
        Reconciliation Act of 1993.
            [(5) Charges for shipping and handling.--The 
        Secretary may enter into a contract referred to in 
        paragraph (1) only if the manufacturer involved agrees 
        to submit to the Secretary such reports as the 
        Secretary determines to be appropriate to assure 
        compliance with the contract and if, with respect to a 
        State program under this section that does not provide 
        for the direct delivery of qualified pediatric 
        vaccines, the manufacturer involved agrees that the 
        manufacturer will provide for the delivery of the 
        vaccines on behalf of the State in accordance with such 
        program and will not impose any charges for the costs 
        of such delivery (except to the extent such costs are 
        provided for in the price established under paragraph 
        (3)).
            [(6) Assuring adequate supply of vaccines.--The 
        Secretary, in negotiations under paragraph (1), shall 
        negotiate for quantities of pediatric vaccines such 
        that an adequate supply of such vaccines will be 
        maintained to meet unanticipated needs for the 
        vaccines. For purposes of the preceding sentence, the 
        Secretary shall negotiate for a 6-month supply of 
        vaccines in addition to the quantity that the Secretary 
        otherwise would provide for in such negotiations. In 
        carrying out this paragraph, the Secretary shall 
        consider the potential for outbreaks of the diseases 
        with respect to which the vaccines have been developed.
            [(7) Multiple suppliers.--In the case of the 
        pediatric vaccine involved, the Secretary shall, as 
        appropriate, enter into a contract referred to in 
        paragraph (1) with each manufacturer of the vaccine 
        that meets the terms and conditions of the Secretary 
        for an award of such a contract (including terms and 
        conditions regarding safety and quality). With respect 
        to multiple contracts entered into pursuant to this 
        paragraph, the Secretary may have in effect different 
        prices under each of such contracts and, with respect 
        to a purchase by States pursuant to paragraph (4)(B), 
        the Secretary shall determine which of such contracts 
        will be applicable to the purchase.
    [(e) Use of Pediatric Vaccines List.--The Secretary shall 
use, for the purpose of the purchase, delivery, and 
administration of pediatric vaccines under this section, the 
list established (and periodically reviewed and as appropriate 
revised) by the Advisory Committee on Immunization Practices 
(an advisory committee established by the Secretary, acting 
through the Director of the Centers for Disease Control and 
Prevention).
    [(f) Requirement of State Maintenance of Immunization 
Laws.--In the case of a State that had in effect as of May 1, 
1993, a law that requires some or all health insurance policies 
or plans to provide some coverage with respect to a pediatric 
vaccine, a State program under this section does not comply 
with the requirements of this section unless the State 
certifies to the Secretary that the State has not modified or 
repealed such law in a manner that reduces the amount of 
coverage so required.
    [(g) Termination.--This section, and the requirement of 
section 1902(a)(62), shall cease to be in effect beginning on 
such date as may be prescribed in Federal law providing for 
immunization services for all children as part of a broad-based 
reform of the national health care system.
    [(h) Definitions.--For purposes of this section:
            [(1) The term ``child'' means an individual 18 
        years of age or younger.
            [(2) The term ``immunization'' means an 
        immunization against a vaccine-preventable disease.
            [(3) The terms ``Indian'', ``Indian tribe'' and 
        ``tribal organization'' have the meanings given such 
        terms in section 4 of the Indian Health Care 
        Improvement Act.
            [(4) The term ``manufacturer'' means any 
        corporation, organization, or institution, whether 
        public or private (including Federal, State, and local 
        departments, agencies, and instrumentalities), which 
        manufactures, imports, processes, or distributes under 
        its label any pediatric vaccine. The term 
        ``manufacture'' means to manufacture, import, process, 
        or distribute a vaccine.
            [(5) The term ``parent'' includes, with respect to 
        a child, an individual who qualifies as a legal 
        guardian under State law.
            [(6) The term ``pediatric vaccine'' means a vaccine 
        included on the list under subsection (e).
            [(7) The term ``program-registered provider'' has 
        the meaning given such term in subsection (c).
            [(8) The term ``qualified pediatric vaccine'' means 
        a pediatric vaccine with respect to which a contract is 
        in effect under subsection (d).
            [(9) The terms ``vaccine-eligible child'', 
        ``federally vaccine-eligible child'', and ``State 
        vaccine-eligible child'' have the meaning given such 
        terms in subsection (b).

 [Home and Community Care for Functionally Disabled Elderly Individuals

    [Sec. 1929. (a) Home and Community Care Defined.--In this 
title, the term ``home and community care'' means one or more 
of the following services furnished to an individual who has 
been determined, after an assessment under subsection (c), to 
be a functionally disabled elderly individual, furnished in 
accordance with an individual community care plan (established 
and periodically reviewed and revised by a qualified community 
care case manager under subsection (d)):
            [(1) Homemaker/home health aide services.
            [(2) Chore services.
            [(3) Personal care services.
            [(4) Nursing care services provided by, or under 
        the supervision of, a registered nurse.
            [(5) Respite care.
            [(6) Training for family members in managing the 
        individual.
            [(7) Adult day care.
            [(8) In the case of an individual with chronic 
        mental illness, day treatment or other partial 
        hospitalization, psychosocial rehabilitation services, 
        and clinic services (whether or not furnished in a 
        facility).
            [(9) Such other home and community-based services 
        (other than room and board) as the Secretary may 
        approve.
    [(b) Functionally Disabled Elderly Individual Defined.--
            [(1) In general.--In this title, the term 
        ``functionally disabled elderly individual'' means an 
        individual who--
                    [(A) is 65 years of age or older,
                    [(B) is determined to be a functionally 
                disabled individual under subsection (c), and
                    [(C) subject to section 1902(f) (as applied 
                consistent with section 1902(r)(2)), is 
                receiving supplemental security income benefits 
                under title XVI (or under a State plan approved 
                under title XVI) or, at the option of the 
                State, is described in section 1902(a)(10)(C).
            [(2) Treatment of certain individuals previously 
        covered under a waiver.--(A) In the case of a State 
        which--
                    [(i) at the time of its election to provide 
                coverage for home and community care under this 
                section has a waiver approved under section 
                1915(c) or 1915(d) with respect to individuals 
                65 years of age or older, and
                    [(ii) subsequently discontinues such 
                waiver, individuals who were eligible for 
                benefits under the waiver as of the date of its 
                discontinuance and who would, but for income or 
                resources, be eligible for medical assistance 
                for home and community care under the plan 
                shall, notwithstanding any other provision of 
                this title, be deemed a functionally disabled 
                elderly individual for so long as the 
                individual would have remained eligible for 
                medical assistance under such waiver.
            [(B) In the case of a State which used a health 
        insuring organization before January 1, 1986, and 
        which, as of December 31, 1990, had in effect a waiver 
        under section 1115 that provides under the State plan 
        under this title for personal care services for 
        functionally disabled individuals, the term 
        ``functionally disabled elderly individual'' may 
        include, at the option of the State, an individual 
        who--
                    [(i) is 65 years of age or older or is 
                disabled (as determined under the supplemental 
                security income program under title XVI);
                    [(ii) is determined to meet the test of 
                functional disability applied under the waiver 
                as of such date; and
                    [(iii) meets the resource requirement and 
                income standard that apply in the State to 
                individuals described in section 
                1902(a)(10)(A)(ii)(V).
            [(3) Use of projected income.--In applying section 
        1903(f)(1) in determining the eligibility of an 
        individual (described in section 1902(a)(10)(C)) for 
        medical assistance for home and community care, a State 
        may, at its option, provide for the determination of 
        the individual's anticipated medical expenses (to be 
        deducted from income) over a period of up to 6 months.
    [(c) Determinations of Functional Disability.--
            [(1) In general.--In this section, an individual is 
        ``functionally disabled'' if the individual--
                    [(A) is unable to perform without 
                substantial assistance from another individual 
                at least 2 of the following 3 activities of 
                daily living: toileting, transferring, and 
                eating; or
                    [(B) has a primary or secondary diagnosis 
                of Alzheimer's disease and is (i) unable to 
                perform without substantial human assistance 
                (including verbal reminding or physical cueing) 
                or supervision at least 2 of the following 5 
                activities of daily living: bathing, dressing, 
                toileting, transferring, and eating; or (ii) 
                cognitively impaired so as to require 
                substantial supervision from another individual 
                because he or she engages in inappropriate 
                behaviors that pose serious health or safety 
                hazards to himself or herself or others.
            [(2) Assessments of functional disability.--
                    [(A) Requests for assessments.--If a State 
                has elected to provide home and community care 
                under this section, upon the request of an 
                individual who is 65 years of age or older and 
                who meets the requirements of subsection 
                (b)(1)(C) (or another person on such 
                individual's behalf), the State shall provide 
                for a comprehensive functional assessment under 
                this subparagraph which--
                            [(i) is used to determine whether 
                        or not the individual is functionally 
                        disabled,
                            [(ii) is based on a uniform minimum 
                        data set specified by the Secretary 
                        under subparagraph (C)(i), and
                            [(iii) uses an instrument which has 
                        been specified by the State under 
                        subparagraph (B).
                No fee may be charged for such an assessment.
                    [(B) Specification of assessment 
                instrument.--The State shall specify the 
                instrument to be used in the State in complying 
                with the requirement of subparagraph (A)(iii) 
                which instrument shall be--
                            [(i) one of the instruments 
                        designated under subparagraph (C)(ii); 
                        or
                            [(ii) an instrument which the 
                        Secretary has approved as being 
                        consistent with the minimum data set of 
                        core elements, common definitions, and 
                        utilization guidelines specified by the 
                        Secretary in subparagraph (C)(i).
                    [(C) Specification of assessment data set 
                and instruments.--The Secretary shall--
                            [(i) not later than July 1, 1991--
                                    [(I) specify a minimum data 
                                set of core elements and common 
                                definitions for use in 
                                conducting the assessments 
                                required under subparagraph 
                                (A); and
                                    [(II) establish guidelines 
                                for use of the data set; and
                            [(ii) by not later than July 1, 
                        1991, designate one or more instruments 
                        which are consistent with the 
                        specification made under subparagraph 
                        (A) and which a State may specify under 
                        subparagraph (B) for use in complying 
                        with the requirements of subparagraph 
                        (A).
                    [(D) Periodic review.--Each individual who 
                qualifies as a functionally disabled elderly 
                individual shall have the individual's 
                assessment periodically reviewed and revised 
                not less often than once every 12 months.
                    [(E) Conduct of assessment by 
                interdisciplinary teams.--An assessment under 
                subparagraph (A) and a review under 
                subparagraph (D) must be conducted by an 
                interdisciplinary team designated by the State. 
                The Secretary shall permit a State to provide 
                for assessments and reviews through teams under 
                contracts--
                                    [(i) with public 
                                organizations; or
                                    [(ii) \1\ with nonpublic 
                                organizations which do not 
                                provide home and community care 
                                or nursing facility services 
                                and do not have a direct or 
                                indirect ownership or control 
                                interest in, or direct or 
                                indirect affiliation or 
                                relationship with, an entity 
                                that provides, community care 
                                or nursing facility services.
                    [(F) Contents of assessment.--The 
                interdisciplinary team must--
                            [(i) identify in each such 
                        assessment or review each individual's 
                        functional disabilities and need for 
                        home and community care, including 
                        information about the individual's 
                        health status, home and community 
                        environment, and informal support 
                        system; and
                            [(ii) based on such assessment or 
                        review, determine whether the 
                        individual is (or continues to be) 
                        functionally disabled.
        The results of such an assessment or review shall be 
        used in establishing, reviewing, and revising the 
        individual's ICCP under subsection (d)(1).
                    [(G) Appeal procedures.--Each State which 
                elects to provide home and community care under 
                this section must have in effect an appeals 
                process for individuals adversely affected by 
                determinations under subparagraph (F).
    [(d) Individual Community Care Plan (ICCP).--
            [(1) Individual community care plan defined.--In 
        this section, the terms ``individual community care 
        plan'' and ``ICCP'' mean, with respect to a 
        functionally disabled elderly individual, a written 
        plan which--
                    [(A) is established, and is periodically 
                reviewed and revised, by a qualified case 
                manager after a face-to-face interview with the 
                individual or primary caregiver and based upon 
                the most recent comprehensive functional 
                assessment of such individual conducted under 
                subsection (c)(2);
                    [(B) specifies, within any amount, 
                duration, and scope limitations imposed on home 
                and community care provided under the State 
                plan, the home and community care to be 
                provided to such individual under the plan, and 
                indicates the individual's preferences for the 
                types and providers of services; and
                    [(C) may specify other services required by 
                such individual.
        An ICCP may also designate the specific providers 
        (qualified to provide home and community care under the 
        State plan) which will provide the home and community 
        care described in subparagraph (B). Nothing in this 
        section shall be construed as authorizing an ICCP or 
        the State to restrict the specific persons or 
        individuals (who are competent to provide home and 
        community care under the State plan) who will provide 
        the home and community care described in subparagraph 
        (B).
            [(2) Qualified community care case manager 
        defined.--In this section, the term ``qualified 
        community care case manager'' means a nonprofit or 
        public agency or organization which--
                    [(A) has experience or has been trained in 
                establishing, and in periodically reviewing and 
                revising, individual community care plans and 
                in the provision of case management services to 
                the elderly;
                    [(B) is responsible for (i) assuring that 
                home and community care covered under the State 
                plan and specified in the ICCP is being 
                provided, (ii) visiting each individual's home 
                or community setting where care is being 
                provided not less often than once every 90 
                days, and (iii) informing the elderly 
                individual or primary caregiver on how to 
                contact the case manager if service providers 
                fail to properly provide services or other 
                similar problems occur;
                    [(C) in the case of a nonpublic agency, 
                does not provide home and community care or 
                nursing facility services and does not have a 
                direct or indirect ownership or control 
                interest in, or direct or indirect affiliation 
                or relationship with, an entity that provides, 
                home and community care or nursing facility 
                services;
                    [(D) has procedures for assuring the 
                quality of case management services that 
                includes a peer review process;
                    [(E) completes the ICCP in a timely manner 
                and reviews and discusses new and revised ICCPs 
                with elderly individuals or primary caregivers; 
                and
                    [(F) meets such other standards, 
                established by the Secretary, as to assure 
                that--
                            [(i) such a manager is competent to 
                        perform case management functions;
                            [(ii) individuals whose home and 
                        community care they manage are not at 
                        risk of financial exploitation due to 
                        such a manager; and
                            [(iii) meets such other standards 
                        as the State may establish.
        The Secretary may waive the requirement of subparagraph 
        (C) in the case of a nonprofit agency located in a 
        rural area.
            [(3) Appeals process.--Each State which elects to 
        provide home and community care under this section must 
        have in effect an appeals process for individuals who 
        disagree with the ICCP established.
    [(e) Ceiling on Payment Amounts and Maintenance of 
Effort.--
            [(1) Ceiling on payment amounts.--Payments may not 
        be made under section 1903(a) to a State for home and 
        community care provided under this section in a quarter 
        to the extent that the medical assistance for such care 
        in the quarter exceeds 50 percent of the product of--
                    [(A) the average number of individuals in 
                the quarter receiving such care under this 
                section;
                    [(B) the average per diem rate of payment 
                which the Secretary has determined (before the 
                beginning of the quarter) will be payable under 
                title XVIII (without regard to coinsurance) for 
                extended care services to be provided in the 
                State during such quarter; and
                    [(C) the number of days in such quarter.
            [(2) Maintenance of effort.--
                    [(A) Annual reports.--As a condition for 
                the receipt of payment under section 1903(a) 
                with respect to medical assistance provided by 
                a State for home and community care (other than 
                a waiver under section 1915(c) and other than 
                home health care services described in section 
                1905(a)(7) and personal care services specified 
                under regulations under section 1905(a)(23)), 
                the State shall report to the Secretary, with 
                respect to each Federal fiscal year (beginning 
                with fiscal year 1990) and in a format 
                developed or approved by the Secretary, the 
                amount of funds obligated by the State with 
                respect to the provision of home and community 
                care to the functionally disabled elderly in 
                that fiscal year.
                    [(B) Reduction in payment if failure to 
                maintain effort.--If the amount reported under 
                subparagraph (A) by a State with respect to a 
                fiscal year is less than the amount reported 
                under subparagraph (A) with respect to fiscal 
                year 1989, the Secretary shall provide for a 
                reduction in payments to the State under 
                section 1903(a) in an amount equal to the 
                difference between the amounts so reported.
    [(f) Minimum Requirements for Home and Community Care.--
            [(1) Requirements.--Home and Community care 
        provided under this section must meet such requirements 
        for individuals' rights and quality as are published or 
        developed by the Secretary under subsection (k). Such 
        requirements shall include--
                    [(A) the requirement that individuals 
                providing care are competent to provide such 
                care; and
                    [(B) the rights specified in paragraph (2).
            [(2) Specified rights.--The rights specified in 
        this paragraph are as follows:
                    [(A) The right to be fully informed in 
                advance, orally and in writing, of the care to 
                be provided, to be fully informed in advance of 
                any changes in care to be provided, and (except 
                with respect to an individual determined 
                incompetent) to participate in planning care or 
                changes in care.
                    [(B) The right to voice grievances with 
                respect to services that are (or fail to be) 
                furnished without discrimination or reprisal 
                for voicing grievances, and to be told how to 
                complain to State and local authorities.
                    [(C) The right to confidentiality of 
                personal and clinical records.
                    [(D) The right to privacy and to have one's 
                property treated with respect.
                    [(E) The right to refuse all or part of any 
                care and to be informed of the likely 
                consequences of such refusal.
                    [(F) The right to education or training for 
                oneself and for members of one's family or 
                household on the management of care.
                    [(G) The right to be free from physical or 
                mental abuse, corporal punishment, and any 
                physical or chemical restraints imposed for 
                purposes of discipline or convenience and not 
                included in an individual's ICCP.
                    [(H) The right to be fully informed orally 
                and in writing of the individual's rights.
                    [(I) Guidelines for such minimum 
                compensation for individuals providing such 
                care as will assure the availability and 
                continuity of competent individuals to provide 
                such care for functionally disabled individuals 
                who have functional disabilities of varying 
                levels of severity.
                    [(J) Any other rights established by the 
                Secretary.
    [(g) Minimum Requirements for Small Community Care 
Settings.--
            [(1) Small community care settings defined.--In 
        this section, the term ``small community care setting'' 
        means--
                    [(A) a nonresidential setting that serves 
                more than 2 and less than 8 individuals; or
                    [(B) a residential setting in which more 
                than 2 and less than 8 unrelated adults reside 
                and in which personal services (other than 
                merely board) are provided in conjunction with 
                residing in the setting.
            [(2) Minimum requirements.--A small community care 
        setting in which community care is provided under this 
        section must--
                    [(A) meet such requirements as are 
                published or developed by the Secretary under 
                subsection (k);
                    [(B) meet the requirements of paragraphs 
                (1)(A), (1)(C), (1)(D), (3), and (6) of section 
                1919(c), to the extent applicable to such a 
                setting;
                    [(C) inform each individual receiving 
                community care under this section in the 
                setting, orally and in writing at the time the 
                individual first receives community care in the 
                setting, of the individual's legal rights with 
                respect to such a setting and the care provided 
                in the setting;
                    [(D) meet any applicable State or local 
                requirements regarding certification or 
                licensure;
                    [(E) meet any applicable State and local 
                zoning, building, and housing codes, and State 
                and local fire and safety regulations; and
                    [(F) be designed, constructed, equipped, 
                and maintained in a manner to protect the 
                health and safety of residents.
    [(h) Minimum Requirements for Large Community Care 
Settings.--
            [(1) Large community care setting defined.--In this 
        section, the term ``large community care setting'' 
        means--
                    [(A) a nonresidential setting in which more 
                than 8 individuals are served; or
                    [(B) a residential setting in which more 
                than 8 unrelated adults reside and in which 
                personal services are provided in conjunction 
                with residing in the setting in which home and 
                community care under this section is provided.
            [(2) Minimum requirements.--A large community care 
        setting in which community care is provided under this 
        section must--
                    [(A) meet such requirements as are 
                published or developed by the Secretary under 
                subsection (k);
                    [(B) meet the requirements of paragraphs 
                (1)(A), (1)(C), (1)(D), (3), and (6) of section 
                1919(c), to the extent applicable to such a 
                setting;
                    [(C) inform each individual receiving 
                community care under this section in the 
                setting, orally and in writing at the time the 
                individual first receives home and community 
                care in the setting, of the individual's legal 
                rights with respect to such a setting and the 
                care provided in the setting; and
                    [(D) meet the requirements of paragraphs 
                (2) and (3) of section 1919(d) (relating to 
                administration and other matters) in the same 
                manner as such requirements apply to nursing 
                facilities under such section; except that, in 
                applying the requirement of section 1919(d)(2) 
                (relating to life safety code), the Secretary 
                shall provide for the application of such life 
                safety requirements (if any) that are 
                appropriate to the setting.
            [(3) Disclosure of ownership and control interests 
        and exclusion of repeated violators.--A community care 
        setting--
                    [(A) must disclose persons with an 
                ownership or control interest (including such 
                persons as defined in section 1124(a)(3)) in 
                the setting; and
                    [(B) may not have, as a person with an 
                ownership or control interest in the setting, 
                any individual or person who has been excluded 
                from participation in the program under this 
                title or who has had such an ownership or 
                control interest in one or more community care 
                settings which have been found repeatedly to be 
                substandard or to have failed to meet the 
                requirements of paragraph (2).
    [(i) Survey and Certification Process.--
            [(1) Certifications.--
                    [(A) Responsibilities of the state.--Under 
                each State plan under this title, the State 
                shall be responsible for certifying the 
                compliance of providers of home and community 
                care and community care settings with the 
                applicable requirements of subsections (f), (g) 
                and (h). The failure of the Secretary to issue 
                regulations to carry out this subsection shall 
                not relieve a State of its responsibility under 
                this subsection.
                    [(B) Responsibilities of the secretary.--
                The Secretary shall be responsible for 
                certifying the compliance of State providers of 
                home and community care, and of State community 
                care settings in which such care is provided, 
                with the requirements of subsections (f), (g) 
                and (h).
                    [(C) Frequency of certifications.--
                Certification of providers and settings under 
                this subsection shall occur no less frequently 
                than once every 12 months.
            [(2) Reviews of providers.--
                    [(A) In general.--The certification under 
                this subsection with respect to a provider of 
                home or community care must be based on a 
                periodic review of the provider's performance 
                in providing the care required under ICCP's in 
                accordance with the requirements of subsection 
                (f).
                    [(B) Special reviews of compliance.--Where 
                the Secretary has reason to question the 
                compliance of a provider of home or community 
                care with any of the requirements of subsection 
                (f), the Secretary may conduct a review of the 
                provider and, on the basis of that review, make 
                independent and binding determinations 
                concerning the extent to which the provider 
                meets such requirements.
            [(3) Surveys of community care settings.--
                    [(A) In general.--The certification under 
                this subsection with respect to community care 
                settings must be based on a survey. Such survey 
                for such a setting must be conducted without 
                prior notice to the setting. Any individual who 
                notifies (or causes to be notified) a community 
                care setting of the time or date on which such 
                a survey is scheduled to be conducted is 
                subject to a civil money penalty of not to 
                exceed $2,000. The provisions of section 1128A 
                (other than subsections (a) and (b)) shall 
                apply to a civil money penalty under the 
                previous sentence in the same manner as such 
                provisions apply to a penalty or proceeding 
                under section 1128A(a). The Secretary shall 
                review each State's procedures for scheduling 
                and conducting such surveys to assure that the 
                State has taken all reasonable steps to avoid 
                giving notice of such a survey through the 
                scheduling procedures and the conduct of the 
                surveys themselves.
                    [(B) Survey protocol.--Surveys under this 
                paragraph shall be conducted based upon a 
                protocol which the Secretary has provider for 
                under subsection (k).
                    [(C) Prohibition of conflict of interest in 
                survey team membership.--A State and the 
                Secretary may not use as a member of a survey 
                team under this paragraph an individual who is 
                serving (or has served within the previous 2 
                years) as a member of the staff of, or as a 
                consultant to, the community care setting being 
                surveyed (or the person responsible for such 
                setting) respecting compliance with the 
                requirements of subsection (g) or (h) or who 
                has a personal or familial financial interest 
                in the setting being surveyed.
                    [(D) Validation surveys of community care 
                settings.--The Secretary shall conduct onsite 
                surveys of a representative sample of community 
                care settings in each State, within 2 months of 
                the date of surveys conducted under 
                subparagraph (A) by the State, in a sufficient 
                number to allow inferences about the adequacies 
                of each State's surveys conducted under 
                subparagraph (A). In conducting such surveys, 
                the Secretary shall use the same survey 
                protocols as the State is required to use under 
                subparagraph (B). If the State has determined 
                that an individual setting meets the 
                requirements of subsection (g), but the 
                Secretary determines that the setting does not 
                meet such requirements, the Secretary's 
                determination as to the setting's noncompliance 
                with such requirements is binding and 
                supersedes that of the State survey.
                    [(E) Special surveys of compliance.--Where 
                the Secretary has reason to question the 
                compliance of a community care setting with any 
                of the requirements of subsection (g) or (h), 
                the Secretary may conduct a survey of the 
                setting and, on the basis of that survey, make 
                independent and binding determinations 
                concerning the extent to which the setting 
                meets such requirements.
            [(4) Investigation of complaints and monitoring of 
        providers and settings.--Each State and the Secretary 
        shall maintain procedures and adequate staff to 
        investigate complaints of violations of applicable 
        requirements imposed on providers of community care or 
        on community care settings under subsections (f), (g) 
        and (h).
            [(5) Investigation of allegations of individual 
        neglect and abuse and misappropriation of individual 
        property.--The State shall provide, through the agency 
        responsible for surveys and certification of providers 
        of home or community care and community care settings 
        under this subsection, for a process for the receipt, 
        review, and investigation of allegations of individual 
        neglect and abuse (including injuries of unknown 
        source) by individuals providing such care or in such 
        setting and of misappropriation of individual property 
        by such individuals. The State shall, after notice to 
        the individual involved and a reasonable opportunity 
        for hearing for the individual to rebut allegations, 
        make a finding as to the accuracy of the allegations. 
        If the State finds that an individual has neglected or 
        abused an individual receiving community care or 
        misappropriated such individual's property, the State 
        shall notify the individual against whom the finding is 
        made. A State shall not make a finding that a person 
        has neglected an individual receiving community care if 
        the person demonstrates that such neglect was caused by 
        factors beyond the control of the person. The State 
        shall provide for public disclosure of findings under 
        this paragraph upon request and for inclusion, in any 
        such disclosure of such findings, of any brief 
        statement (or of a clear and accurate summary thereof) 
        of the individual disputing such findings.
            [(6) Disclosure of results of inspections and 
        activities.--
                    [(A) Public information.--Each State, and 
                the Secretary, shall make available to the 
                public--
                            [(i) information respecting all 
                        surveys, reviews, and certifications 
                        made under this subsection respecting 
                        providers of home or community care and 
                        community care settings, including 
                        statements of deficiencies,
                            [(ii) copies of cost reports (if 
                        any) of such providers and settings 
                        filed under this title,
                            [(iii) copies of statements of 
                        ownership under section 1124, and
                            [(iv) information disclosed under 
                        section 1126.
                    [(B) Notices of substandard care.--If a 
                State finds that--
                            [(i) a provider of home or 
                        community care has provided care of 
                        substandard quality with respect to an 
                        individual, the State shall make a 
                        reasonable effort to notify promptly 
                        (I) an immediate family member of each 
                        such individual and (II) individuals 
                        receiving home or community care from 
                        that provider under this title, or
                            [(ii) a community care setting is 
                        substandard, the State shall make a 
                        reasonable effort to notify promptly 
                        (I) individuals receiving community 
                        care in that setting, and (II) 
                        immediate family members of such 
                        individuals.
                    [(C) Access to fraud control units.--Each 
                State shall provide its State medicaid fraud 
                and abuse control unit (established under 
                section 1903(q)) with access to all information 
                of the State agency responsible for surveys, 
                reviews, and certifications under this 
                subsection.
    [(j) Enforcement Process for Providers of Community Care.--
            [(1) State authority.--
                    [(A) In general.--If a State finds, on the 
                basis of a review under subsection (i)(2) or 
                otherwise, that a provider of home or community 
                care no longer meets the requirements of this 
                section, the State may terminate the provider's 
                participation under the State plan and may 
                provide in addition for a civil money penalty. 
                Nothing in this subparagraph shall be construed 
                as restricting the remedies available to a 
                State to remedy a provider's deficiencies. If 
                the State finds that a provider meets such 
                requirements but, as of a previous period, did 
                not meet such requirements, the State may 
                provide for a civil money penalty under 
                paragraph (2)(A) for the period during which it 
                finds that the provider was not in compliance 
                with such requirements.
                    [(B) Civil money penalty.--
                            [(i) In general.--Each State shall 
                        establish by law (whether statute or 
                        regulation) at least the following 
                        remedy: A civil money penalty assessed 
                        and collected, with interest, for each 
                        day in which the provider is or was out 
                        of compliance with a requirement of 
                        this section. Funds collected by a 
                        State as a result of imposition of such 
                        a penalty (or as a result of the 
                        imposition by the State of a civil 
                        money penalty under subsection 
                        (i)(3)(A)) may be applied to 
                        reimbursement of individuals for 
                        personal funds lost due to a failure of 
                        home or community care providers to 
                        meet the requirements of this section. 
                        The State also shall specify criteria, 
                        as to when and how this remedy is to be 
                        applied and the amounts of any 
                        penalties. Such criteria shall be 
                        designed so as to minimize the time 
                        between the identification of 
                        violations and final imposition of the 
                        penalties and shall provide for the 
                        imposition of incrementally more severe 
                        penalties for repeated or uncorrected 
                        deficiencies.
                            [(ii) Deadline and guidance.--Each 
                        State which elects to provide home and 
                        community care under this section must 
                        establish the civil money penalty 
                        remedy described in clause (i) 
                        applicable to all providers of 
                        community care covered under this 
                        section. The Secretary shall provide, 
                        through regulations or otherwise by not 
                        later than July 1, 1990, guidance to 
                        States in establishing such remedy; but 
                        the failure of the Secretary to provide 
                        such guidance shall not relieve a State 
                        of the responsibility for establishing 
                        such remedy.
            [(2) Secretarial authority.--
                    [(A) For state providers.--With respect to 
                a State provider of home or community care, the 
                Secretary shall have the authority and duties 
                of a State under this subsection, except that 
                the civil money penalty remedy described in 
                subparagraph (C) shall be substituted for the 
                civil money remedy described in paragraph 
                (1)(B)(i).
                    [(B) Other providers.--With respect to any 
                other provider of home or community care in a 
                State, if the Secretary finds that a provider 
                no longer meets a requirement of this section, 
                the Secretary may terminate the provider's 
                participation under the State plan and may 
                provide, in addition, for a civil money penalty 
                under subparagraph (C). If the Secretary finds 
                that a provider meets such requirements but, as 
                of a previous period, did not meet such 
                requirements, the Secretary may provide for a 
                civil money penalty under subparagraph (C) for 
                the period during which the Secretary finds 
                that the provider was not in compliance with 
                such requirements.
                    [(C) Civil money penalty.--If the Secretary 
                finds on the basis of a review under subsection 
                (i)(2) or otherwise that a home or community 
                care provider no longer meets the requirements 
                of this section, the Secretary shall impose a 
                civil money penalty in an amount not to exceed 
                $10,000 for each day of noncompliance. The 
                provisions of section 1128A (other than 
                subsections (a) and (b)) shall apply to a civil 
                money penalty under the previous sentence in 
                the same manner as such provisions apply to a 
                penalty or proceeding under section 1128A(a). 
                The Secretary shall specify criteria, as to 
                when and how this remedy is to be applied and 
                the amounts of any penalties. Such criteria 
                shall be designed so as to minimize the time 
                between the identification of violations and 
                final imposition of the penalties and shall 
                provide for the imposition of incrementally 
                more severe penalties for repeated or 
                uncorrected deficiencies.
    [(k) Secretarial Responsibilities.--
            [(1) Publication of interim requirements.--
                    [(A) In general.--The Secretary shall 
                publish, by December 1, 1991, a proposed 
                regulation that sets forth interim 
                requirements, consistent with subparagraph (B), 
                for the provision of home and community care 
                and for community care settings, including--
                            [(i) the requirements of subsection 
                        (c)(2) (relating to comprehensive 
                        functional assessments, including the 
                        use of assessment instruments), of 
                        subsection (d)(2)(E) (relating to 
                        qualifications for qualified case 
                        managers), of subsection (f) (relating 
                        to minimum requirements for home and 
                        community care), of subsection (g) 
                        (relating to minimum requirements for 
                        small community care settings), and of 
                        subsection (h) (relating to minimum 
                        requirements for large community care 
                        settings, and
                            [(ii) survey protocols (for use 
                        under subsection (i)(3)(A)) which 
                        relate to such requirements.
                    [(B) Minimum protections.--Interim 
                requirements under subparagraph (A) and final 
                requirements under paragraph (2) shall assure, 
                through methods other than reliance on State 
                licensure processes, that individuals receiving 
                home and community care are protected from 
                neglect, physical and sexual abuse, financial 
                exploitation, inappropriate involuntary 
                restraint, and the provision of health care 
                services by unqualified personnel in community 
                care settings.
            [(2) Development of final requirements.--The 
        Secretary shall develop, by not later than October 1, 
        1992--
                    [(A) final requirements, consistent with 
                paragraph (1)(B), respecting the provision of 
                appropriate, quality home and community care 
                and respecting community care settings under 
                this section, and including at least the 
                requirements referred to in paragraph 
                (1)(A)(i), and
                    [(B) survey protocols and methods for 
                evaluating and assuring the quality of 
                community care settings.
        The Secretary may, from time to time, revise such 
        requirements, protocols, and methods.
            [(3) No delegation to states.--The Secretary's 
        authority under this subsection shall not be delegated 
        to States.
            [(4) No prevention of more stringent requirements 
        by states.--Nothing in this section shall be construed 
        as preventing States from imposing requirements that 
        are more stringent than the requirements published or 
        developed by the Secretary under this subsection.
    [(l) Waiver of Statewideness.--States may waive the 
requirement of section 1902(a)(1) (related to State wideness 
for a program of home and community care under this section.
    [(m) Limitation on Amount of Expenditures as Medical 
Assistance.--
            [(1) Limitation on Amount.--The amount of funds 
        that may be expended as medical assistance to carry out 
        the purposes of this section shall be for fiscal year 
        1991, $40,000,000, for fiscal year 1992, $70,000,000, 
        for fiscal year 1993, $130,000,000, for fiscal year 
        1994, $160,000,000, and for fiscal year 1995, 
        $180,000,000.
            [(2) Assurance of entitlement to service.--A State 
        which receives Federal medical assistance for 
        expenditures for home and community care under this 
        section must provide home and community care specified 
        under the Individual Community Care Plan under 
        subsection (d) to individuals described in subsection 
        (b) for the duration of the election period, without 
        regard to the amount of funds available to the State 
        under paragraph (1). For purposes of this paragraph, an 
        election period is the period of 4 or more calendar 
        quarters elected by the State, and approved by the 
        Secretary, for the provision of home and community care 
        under this section.
            [(3) Limitation on eligibility.--The State may 
        limit eligibility for home and community care under 
        this section during an election period under paragraph 
        (2) to reasonable classifications (based on age, degree 
        of functional disability, and need for services).
            [(4) Allocation of medical assistance.--The 
        Secretary shall establish a limitation on the amount of 
        Federal medical assistance available to any State 
        during the State's election period under paragraph (2). 
        The limitation under this paragraph shall take into 
        account the limitation under paragraph (1) and the 
        number of elderly individuals age 65 or over residing 
        in such State in relation to the number of such elderly 
        individuals in the United States during 1990. For 
        purposes of the previous sentence, elderly individuals 
        shall, to the maximum extent practicable, be low-income 
        elderly individuals.

           [Community supported living arrangements services

    [Sec. 1930. (a) Community Supported Living Arrangements 
Services.--In this title, the term ``community supported living 
arrangements services'' means one or more of the following 
services meeting the requirements of subsection (h) provided in 
a State eligible to provide services under this section (as 
defined in subsection (d)) to assist a developmentally disabled 
individual (as defined in subsection (b)) in activities of 
daily living necessary to permit such individual to live in the 
individual's own home, apartment, family home, or rental unit 
furnished in a community supported living arrangement setting:
            [(1) Personal assistance.
            [(2) Training and habilitation services (necessary 
        to assist the individual in achieving increased 
        integration, independence and productivity).
            [(3) 24-hour emergency assistance (as defined by 
        the Secretary).
            [(4) Assistive technology.
            [(5) Adaptive equipment.
            [(6) Other services (as approved by the Secretary, 
        except those services described in subsection (g)).
            [(7) Support services necessary to aid an 
        individual to participate in community activities.
    [(b) Developmentally Disabled Individual Defined.--In this 
title the term, ``developmentally disabled individual'' means 
an individual who as defined by the Secretary is described 
within the term ``mental retardation and related conditions'' 
as defined in regulations as in effect on July 1, 1990, and who 
is residing with the individual's family or legal guardian in 
such individual's own home in which no more than 3 other 
recipients of services under this section are residing and 
without regard to whether or not such individual is at risk of 
institutionalization (as defined by the Secretary).
    [(c) Criteria for Selection of Participating States.--The 
Secretary shall develop criteria to review the applications of 
States submitted under this section to provide community 
supported living arrangement services. The Secretary shall 
provide in such criteria that during the first 5 years of the 
provision of services under this section that no less than 2 
and no more than 8 States shall be allowed to receive Federal 
financial participation for providing the services described in 
this section.
    [(d) Quality Assurance.--A State selected by the Secretary 
to provide services under this section shall in order to 
continue to receive Federal financial participation for 
providing services under this section be required to establish 
and maintain a quality assurance program, that provides that--
            [(1) the State will certify and survey providers of 
        services under this section (such surveys to be 
        unannounced and average at least 1 a year);
            [(2) the State will adopt standards for survey and 
        certification that include--
                    [(A) minimum qualifications and training 
                requirements for provider staff;
                    [(B) financial operating standards; and
                    [(C) a consumer grievance process;
            [(3) the State will provide a system that allows 
        for monitoring boards consisting of providers, family 
        members, consumers, and neighbors;
            [(4) the State will establish reporting procedures 
        to make available information to the public;
            [(5) the State will provide ongoing monitoring of 
        the health and well-being of each recipient;
            [(6) the State will provide the services defined in 
        subsection (a) in accordance with an individual support 
        plan (as defined by the Secretary in regulations); and
            [(7) the State plan amendment under this section 
        shall be reviewed by the State Planning Council 
        established under section 124 of the Developmental 
        Disabilities Assistance and Bill of Rights Act, and the 
        Protection and Advocacy System established under 
        section 142 of such Act.
        The Secretary shall not approve a quality assurance 
        plan under this subsection and allow a State to 
        continue to receive Federal financial participation 
        under this section unless the State provides for public 
        hearings on the plan prior to adoption and 
        implementation of its plan under this subsection.
    [(e) Maintenance of Effort.--States selected by the 
Secretary to receive Federal financial participation to provide 
services under this section shall maintain current levels of 
spending for such services in order to be eligible to continue 
to receive Federal financial participation for the provision of 
such services under this section.
    [(f) Excluded Services.--No Federal financial participation 
shall be allowed for the provision of the following services 
under this section:
            [(1) Room and board.
            [(2) Cost of prevocational, vocational and 
        supported employment.
    [(g) Waiver of Requirements.--The Secretary may waive such 
provisions of this title as necessary to carry out the 
provisions of this section including the following requirements 
of this title--
            [(1) comparability of amount, duration, and scope 
        of services; and
            [(2) statewideness.
    [(h) Minimum Protections.--
            [(1) Publication of interim and final 
        requirements.--
                    [(A) In general.--The Secretary shall 
                publish, by July 1, 1991, a regulation (that 
                shall be effective on an interim basis pending 
                the promulgation of final regulations), and by 
                October 1, 1992, a final regulation, that sets 
                forth interim and final requirements, 
                respectively, consistent with subparagraph (B), 
                to protect the health, safety, and welfare of 
                individuals receiving community supported 
                living arrangements services.
                    [(B) Minimum protections.--Interim and 
                final requirements under subparagraph (A) shall 
                assure, through methods other than reliance on 
                State licensure processes or the State quality 
                assurance programs under subsection (d), that--
                            [(i) individuals receiving 
                        community supported living arrangements 
                        services are protected from neglect, 
                        physical and sexual abuse, and 
                        financial exploitation;
                            [(ii) a provider of community 
                        supported living arrangements services 
                        may not use individuals who have been 
                        convicted of child or client abuse, 
                        neglect, or mistreatment or of a felony 
                        involving physical harm to an 
                        individual and shall take all 
                        reasonable steps to determine whether 
                        applicants for employment by the 
                        provider have histories indicating 
                        involvement in child or client abuse, 
                        neglect, or mistreatment or a criminal 
                        record involving physical harm to an 
                        individual;
                            [(iii) individuals or entities 
                        delivering such services are not 
                        unjustly enriched as a result of 
                        abusive financial arrangements (such as 
                        owner lease-backs); and
                            [(iv) individuals or entities 
                        delivering such services to clients, or 
                        relatives of such individuals, are 
                        prohibited from being named 
                        beneficiaries of life insurance 
                        policies purchased by (or on behalf of) 
                        such clients.
            [(2) Specified remedies.--If the Secretary finds 
        that a provider has not met an applicable requirement 
        under subsection (h), the Secretary shall impose a 
        civil money penalty in an amount not to exceed $10,000 
        for each day of noncompliance. The provisions of 
        section 1128A (other than subsections (a) and (b)) 
        shall apply to a civil money penalty under the previous 
        sentence in the same manner as such provisions apply to 
        a penalty or proceeding under section 1128A(a).
    [(i) Treatment of funds.--Any funds expended under this 
section for medical assistance shall be in addition to funds 
expended for any existing services covered under the State 
plan, including any waiver services for which an individual 
receiving services under this program is already eligible.
    [(j) Limitation on Amounts of Expenditures as Medical 
Assistance.--The amount of funds that may be expended as 
medical assistance to carry out the purposes of this section 
shall be for fiscal year 1991, $5,000,000, for fiscal year 
1992, $10,000,000, for fiscal year 1993, $20,000,000 for fiscal 
year 1994, $30,000,000, for fiscal year 1995, $35,000,000, and 
for fiscal years thereafter such sums as provided by Congress.

        [REFERENCES TO LAWS DIRECTLY AFFECTING MEDICAID PROGRAM

    [Sec. 1931. (a) Authority or Requirements to Cover 
Additional Individuals.--For provisions of law which make 
additional individuals eligible for medical assistance under 
this title, see the following:
            [(1) AFDC.--(A) Section 402(a)(32) of this Act 
        (relating to individuals who are deemed recipients of 
        aid but for whom a payment is not made).
                    [(B) Section 402(a)(37) of this Act 
                (relating to individuals who lose AFDC 
                eligibility due to increased earnings).
                    [(C) Section 406(h) of this Act (relating 
                to individuals who lose AFDC eligibility due to 
                increased collection of child or spousal 
                support).
                    [(D) Section 482(e)(6) of this Act 
                (relating to certain individuals participating 
                in work supplementation programs).
            [(2) SSI.--(A) Section 1611(e) of this Act 
        (relating to treatment of couples sharing an 
        accommodation in a facility).
                    [(B) Section 1619 of this Act (relating to 
                benefits for individuals who perform 
                substantial gainful activity despite severe 
                medical impairment).
                    [(C) Section 1634(b) of this Act (relating 
                to preservation of benefit status for disabled 
                widows and widowers who lost SSI benefits 
                because of 1983 changes in actuarial reduction 
                formula).
                    [(D) Section 1634(c) of this Act (relating 
                to individuals who lose eligibility for SSI 
                benefits due to entitlement to child's 
                insurance benefits under section 202(d) of this 
                Act).
                    [(E) Section 1634(d) of this Act (relating 
                to individuals who lose eligibility for SSI 
                benefits due to entitlement to early widow's or 
                widower's insurance benefits under section 
                202(e) or (f) of this Act).
            [(3) Foster care and adoption assistance.--Sections 
        472(h) and 473(b) of this Act (relating to medical 
        assistance for children in foster care and for adopted 
        children).
            [(4) Refugee assistance.--Section 412(e)(5) of the 
        Immigration and Nationality Act (relating to medical 
        assistance for certain refugees).
            [(5) Miscellaneous.--(A) Section 230 of Public Law 
        93-66 (relating to deeming eligible for medical 
        assistance certain essential persons).
                    [(B) Section 231 of Public Law 93-66 
                (relating to deeming eligible for medical 
                assistance certain persons in medical 
                institutions).
                    [(C) Section 232 of Public Law 93-66 
                (relating to deeming eligible for medical 
                assistance certain blind and disabled medically 
                indigent persons).
                    [(D) Section 13(c) of Public Law 93-233 
                (relating to deeming eligible for medical 
                assistance certain individuals receiving 
                mandatory State supplementary payments).
                    [(E) Section 503 of Public Law 94-566 
                (relating to deeming eligible for medical 
                assistance certain individuals who would be 
                eligible for supplemental security income 
                benefits but for cost-of-living increases in 
                social security benefits).
                    [(F) Section 310(b)(1) of Public Law 96-272 
                (relating to continuing medicaid eligibility 
                for certain recipients of Department of 
                Veterans Affairs pensions).
    [(b) Additional State Plan Requirements.--For other 
provisions of law that establish additional requirements for 
State plans to be approved under this title, see the following:
            [(1) Section 1618 of this Act (relating to 
        requirement for operation of certain State 
        supplementation programs).
            [(2) Section 212(a) of Public Law 93-66 (relating 
        to requiring mandatory minimum State supplementation of 
        SSI benefits program).]
          * * * * * * *
                              ----------                              


     SECTION 6408 OF THE OMNIBUS BUDGET RECONCILIATION ACT OF 1989

SEC. 6408. OTHER MEDICAID PROVISIONS.

    (a) Institutions for Mental Diseases.--
            (1) * * *
          * * * * * * *
            (3) Moratorium on treatment of certain 
        facilities.--Any determination by the Secretary that 
        Kent Community Hospital Complex in Michigan or Saginaw 
        Community Hospital in Michigan is an institution for 
        mental diseases, for purposes of title XIX of the 
        Social Security Act shall not take effect until 
        [December 31, 1995] October 1, 1997.
          * * * * * * *
                              ----------                              


                 SECTION 2 OF THE ACT OF APRIL 28, 1992

AN ACT To direct the Secretary of Health and Human Services to grant a 
 waiver of the requirement limiting the maximum number of individuals 
      enrolled with a health maintenance organization who may be 
   beneficiaries under the medicare or medicaid programs in order to 
   enable the Dayton Area Health Plan, Inc., to continue to provide 
  services through January 1994 to individuals residing in Montgomery 
     County, Ohio, who are enrolled under a State plan for medical 
         assistance under title XIX of the Social Security Act.

SEC. 2. PERIOD OF APPLICABILITY.

    The period referred to in subsections (a) and (b)(1) of 
section 1 is the period that begins on May 1, 1992, and ends on 
[December 31, 1995] October 1, 1997.
                              ----------                              


      SECTION 2605 OF THE LOW-INCOME ENERGY ASSISTANCE ACT OF 1981

                     applications and requirements

    Sec. 2605. (a) * * *
          * * * * * * *
    (f)[(1)] Notwithstanding any other provision of law unless 
enacted in express limitation of this paragraph, the amount of 
any home energy assistance payments or allowances provided 
directly to, or indirectly for the benefit of, an eligible 
household under this title shall not be considered income or 
resources of such household (or any member thereof) for any 
purpose under any Federal or State law, including any law 
relating to taxation, food stamps, public assistance, or 
welfare programs.
    [(2) For purposes of paragraph (1) of this subsection and 
for purposes of determining any excess shelter expense 
deduction under section 5(e) of the Food Stamp Act of 1977 (7 
U.S.C. 2014(e))--
            [(A) the full amount of such payments or allowances 
        shall be deemed to be expended by such household for 
        heating or cooling expenses, without regard to whether 
        such payments or allowances are provided directly to, 
        or indirectly for the benefit of, such household; and
            [(B) no distinction may be made among households on 
        the basis of whether such payments or allowances are 
        provided directly to, or indirectly for the benefit of, 
        any of such households.]
          * * * * * * *

                           Technical Appendix

         EXPLANATION OF MEDICAID COMPUTATION OF STATE PAYMENTS

    The Medicaid Restructuring Act of 1996 would limit Federal 
matching payments to each State to a fixed allotment. The first 
section of this appendix explains how the State allotments are 
computed. Subject to allotments, payments to the State out of 
those allotments are based on a new Federal medical assistance 
percentage (New FMAP) which is explained in the second section 
of this appendix.

                    ALLOTMENT OF FUNDS AMONG STATES

Overview

    This section presents a step-by-step description of the 
computation of allotments of funds. The allotment is based on 
the States sharing a fixed pool of funds. In fiscal year 1996, 
the State allocations are specified in the legislation. 
Beginning in fiscal year 1997, a needs-based State allotment 
formula is used. The needs-based formula is intended to provide 
a measure of the relative needs of States for Medicaid 
expenditures. The needs-based allotment is then subject to 
``floors'' and ``ceilings'' which are transition rules intended 
to ensure that no State would be subject to sudden large shifts 
in payments from year-to-year and that no State would lose 
funds. Finally, the formula computation uses proportional 
scaling to ensure that the combination of the needs-based 
formula together with floors and ceilings produces State 
allotments that sum exactly to the overall funding level for 
the program in each fiscal year.

Pool of funds

    The pool available to be allotted would be $96.6 billion 
for fiscal year 1996, $103.4 billion for fiscal year 1997, 
$108.4 billion for fiscal year 1998, $113.7 billion for fiscal 
year 1999, $119.1 billion for fiscal year 2000, $124.9 billion 
for fiscal year 2001, and $130.9 billion for fiscal year 2002. 
For later years, the pool amount would be the previous year's 
amount increased by the lesser of 4 percent or the growth in 
the Consumer Price Index for all urban consumers (CPI-U) for 
the 12-month period ending in June before the start of the year 
in question. Pool amounts to be allocated among the 50 States 
and the District of Columbia would be reduced by the amount of 
allotments to Commonwealths and Territories. The percentage 
growth in the pool amount over the pool amount in the preceding 
year would be designated the ``national medicaid growth 
percentage'' (NMGP). This percentage is used in floors and 
ceilings described below.

Fiscal year 1996 allotment

    For fiscal year 1996, the State grant amount is specified 
in the legislation.

Commonwealths and territories

    Beginning with fiscal year 1997, the Commonwealths and 
Territories will have percentage increases equal to the 
national medicaid growth percentage (NMGP) defined above under 
``Pool of Funds.'' Because comparable data are unavailable, the 
needs-based formula described below could not be applied to the 
Commonwealths and Territories. Unless otherwise specified, 
``State'' in this Appendix refers to the 50 States and the 
District of Columbia.

Description of the needs-based allotment formula

            Needs-based amount
    The needs-based amount for a State is the Federal share of 
the State's aggregate expenditure need (defined below) after 
application of the floors and ceilings described in section 
1511(c)(3) and after these amounts have been proportionally 
adjusted to ensure that State grant amounts equal the amount 
available for distribution to the States. The Federal share of 
a State's aggregate expenditure need is calculated by 
multiplying the State's aggregate expenditure need by its 
``old'' Federal medical assistance percentage (FMAP), as 
defined in section 1512(d). The floors and ceilings are applied 
and amounts adjusted by the scaling factor.
    Each State's needs-based amount is computed using the 
following formula:


            State aggregate expenditure need
    A State's aggregate need is an amount which represents the 
total dollar outlay a State would have make to finance the U.S. 
average spending per person in poverty in the year prior to 
enactment after adjusting for inflation since the base year. 
Aggregate need is the product of four factors: program need 
(defined below), a health care cost index, the national average 
spending per person in poverty in the year, and the projected 
inflation from the base year to the current year.


            Program need
    The total number of individuals-in-need in a State is 
disaggregated into five categories: (1) elderly between 60 and 
85; (2) elderly over 85; (3) disabled; (4) children; and (5) 
all other eligibles. The number of needy in each eligibility 
category is calculated by multiplying the total number of 
people in poverty in each State by the percentage of recipients 
in each eligibility category in that State.
    The weight for each eligibility category is to be 
calculated annually by the Health Care Financing Administration 
(HCFA) based on the U.S. average spending per recipient in each 
category compared to the U.S. average spending per recipient in 
all categories. Program need is calculated using the following 
formula: 


            Constraint on program need
    The value for program need may not exceed 115 percent and 
may not fall below 90 percent of the State's program need 
computed on U.S. averages. The State's program computed on U.S. 
or national averages is calculated similarly to program need 
for each State except that the percentage of recipients in each 
eligibility category in that State is replaced by the 
percentage of recipients in each eligibility category for the 
entire United States. This calculation is performed for each of 
the five eligibility categories, and the results are then 
summed. The summed value is referred to as the State's program 
need computed on U.S. averages. If the value for the State's 
program need falls below 90 percent of the State's value 
computed on U.S. averages, then the State's program need value 
in the Medicaid formula is set to 90 percent of the State's 
program computed on U.S. averages. Analogously, if the value 
for the State's program need exceeds 115 percent of the State's 
program computed on U.S. averages, then the State's program 
need value in the Medicaid formula is set to 115 percent of the 
State's program computed on U.S. averages.
            Health care cost index
    The health care cost index, or the input cost index, is a 
factor representing the cost of labor and other inputs used to 
provide health care services. Data is obtained from HCFA 
representing wages paid and hours worked in hospitals 
participating in the Medicare prospective payment system. Based 
on the total wages paid and hours worked as reported by each 
participating hospital in a State, an average annual wage per 
hour is calculated for the State. This average wage rate for 
each State is then divided by the U.S. average annual wage rate 
to produce an index for each State.
    The index described in the preceding paragraph is computed 
for each State in each of the 3 most recent years for which the 
data are available, and for each State an average of those 
three indexes is computed. The input cost index used in the 
formula for State aggregate need is based on multiplying the 3-
year average wage index by 85 percent and adding to that 15 
percent of one (1.00) to reflect costs of inputs that are 
uniform nationwide, such as the cost of prescription drugs.
            U.S. spending per person in poverty
    U.S. spending represents total Federal and State Medicaid 
spending, based on line 11 of the HCFA Form 64 reports from 
each State and the District of Columbia for the most recent 
year prior to enactment, for which data is available from HCFA. 
This amount is divided by the U.S. average number of persons in 
poverty for the 3 most recent years data available prior to 
enactment.
            Projected inflation rate
    The projected inflation rate is the percent increase in 
inflation since the year prior to enactment derived from CBO 
baseline projections of inflation for the year for which grant 
amounts are being calculated.
            Old Federal medical assistance percentage
    A State's Old Federal medical assistance percentage (Old 
FMAP) is the Federal share of total Medicaid spending as 
calculated by HCFA under current law.1 (This is not the 
use of historical FMAP values; the Old FMAP formula would 
continue to be computed as more current data become available). 
Old FMAP equals 1 minus the product of .45 multiplied by the 
square of the ratio of State per capita personal income (PCI) 
to the U.S. average PCI. This formula is expressed as:
---------------------------------------------------------------------------
    \1\ Note that old FMAP is used to compute State aggregate needs and 
thus the State allotment, but New FMAP is used to compute payments out 
of that State allotment.


    Also as provided in current law, the Old FMAP for any State 
shall not be less than 50 percent or greater than 83 percent.

Description of the floor and ceilings

    The needs-based formula allotment of each State is 
constrained by floors and ceilings that are collectively 
intended to moderate year-to-year changes and, in particular, 
to ensure that no State loses funds compared to the previous 
year.
    Growth Caps. For fiscal year 1997, no State's growth in 
Federal funding may exceed 9 percent. In succeeding years, the 
growth cap for the 10 States with lowest Federal funding per 
person in poverty may not exceed 150 percent of the U.S. 
average growth in appropriations. For all other States, the 
growth ceiling may not exceed 133 percent of the U.S. average 
growth in appropriations.
    Growth Floors. All States are guaranteed at least 3.5 
percent growth for fiscal year 1997, 3.0 percent in fiscal year 
1998, and 2.5 percent in fiscal year 1999 and 2.0 percent in 
succeeding years.
    Out-year Hold harmless. States whose growth in Federal 
funding for fiscal year 1997 is above 6.8 percent may never 
fall below 90 percent of the U.S. average growth in 
appropriations beginning in fiscal year 1998.
    Small State Minimum. Beginning in fiscal year 1998, no 
State may receive less than 0.24 percent of total Federal 
funding, subject to the limitations of the growth caps.

Ensuring that the formula allotments also comply with budget targets

    The allotment process is designed to guarantee that three 
fundamental conditions are met:
          1. The amounts allotted any two States are 
        proportional to their relative needs-based formula 
        amounts (except States subject to a floor or ceiling);
          2. In any instance where the needs-based formula 
        amount would otherwise fall below a floor or exceed a 
        ceiling, the grant allotment is set to the amount of 
        the applicable growth floor or ceiling; and
          3. The sum of all the individual State allotment 
        amounts must exactly equal the pool amount available 
        for the fiscal year.
    These three conditions are satisfied by computing a unique, 
constant multiplier (called the ``adjustment factor'' or 
``scalar factor'') which increases or decreases every needs-
based formula allotment in equal proportions as necessary to 
ensure that the State grants sum to the target amount. The 
differences among States' allotments remain in proportion to 
differences in their aggregate needs with the only exceptions 
being the allotments for those States which are determined 
according to the applicable floors and ceilings.
    The adjustment factor is used to compute needs-based 
formula amounts that sum exactly to the pool amount only when 
subjected to the rules for floors and ceilings. The application 
of growth ceilings decreases allotments from the needs-based 
amounts while the growth floors increase allotments over the 
needs-based formula amount. It is highly unlikely the opposing 
effects of the ceilings and floors on the allotments will 
exactly balance. In effect, the adjustment factor balances the 
aggregate effects of the ceilings and floors by proportionally 
adjusting all the needs-based formula amounts.
    The adjustment factor is determined using a computer model 
programmed to subject the needs-based formula amounts to the 
ceilings and floors. The adjustment factor produces a set of 
needs-based formula amounts such that, after any applicable 
growth ceiling amounts and floor amounts are substituted for 
any needs-based formula amounts, the State allotments will then 
total exactly to the dollar amount available. The resulting 
distribution among States thereby satisfies all three 
fundamental conditions above.

Election of alternative growth formula

    The bill allows a State to choose to defer a portion of its 
State allotment in any 1 year and then apply those funds to 1 
or more subsequent fiscal years. This does not in any way 
reduce or change amounts allotted to any other State.
---------------------------------------------------------------------------
    \2\ In the case of the District of Columbia, the TTR share is 
replaced by a personal income share which is the quotient of the 
District's most recent 3-year average of personal income divided by the 
sum of the personal income of the States.
---------------------------------------------------------------------------

              FMAP COMPUTATIONS FOR PAYMENTS TO THE STATES

    Payments to the States under the Medicaid program would 
become closed-ended which means that the State expenditures 
would be matched up to the amount of the State's allotment in 
that year. (However, carryover of allotment is allowed so that 
any State allotment that is unused in a fiscal year is 
available for matching in a subsequent year or years.) Federal 
payments to a State would equal the State's spending multiplied 
by the new Federal medical assistance percentage (New FMAP) 
computed for that State. New FMAP is the greater of the Old 
FMAP, as computed under current law, or a New FMAP formula 
amount. The New FMAP formula amount is 100 percent minus the 
product of .39 multiplied by the ratio of the State's total 
taxable resources (TTR) share to the State aggregate 
expenditure needs share. The TTR is a measure of State revenue 
raising capacity (it includes per capita personal income as 
does the Old FMAP, but it is more comprehensive measure of a 
State's economy) produced by the U.S. Department of the 
Treasury. A State's TTR share is equal to the most recent 3-
year average of TTR of the State divided by the sum of the 3-
year average TTR's of all States. 2 The State aggregate 
expenditure needs share is the ratio of the State aggregate 
expenditure needs as defined earlier to the sum of all States' 
aggregate expenditure needs. New FMAP can be expressed as:



    The New FMAP formula amount is also subject to constraints 
that limit its range, and prevent decreases and limit increases 
when compared to the Old FMAP. The New FMAP cannot be less than 
40 percent, nor more than 83 percent; and the New FMAP cannot 
be less than Old FMAP, nor exceed Old FMAP plus 10 percentage 
points.
                         APPENDIX A TO TITLE II
                              ----------                              


                         Restructuring Medicaid

                                Preamble

    For most of the last decade, health care expenditures in 
the United States have far exceeded overall growth in the U.S. 
economy. And while medical inflation is declining, public and 
privately funded health care costs continue to limit the long 
term economic growth of the Nation. For States, the primary 
impact of health care costs on State budgets has been in the 
Medicaid program. Annual Medicaid growth over the last decade 
has been well in excess of 10 percent, and in half of those 
years annual growth approached 20 percent. Determining the 
causes of such unbridled growth is difficult. However, major 
contributing factors include: congressional expansions in the 
program, court decisions limiting the States in their ability 
to control costs, policy decisions by States maximizing Federal 
financing of previously State-funded health care programs, and 
changing demographics.
    Restricting the growth of Medicaid is no easy task. 
Medicaid is the primary source of health care for low income 
pregnant women and children, persons with disabilities, and the 
elderly. This year, States and the Federal Government combined 
will spend more than $140 billion in this program providing 
care to more than 28 million people. The challenge for the 
Nation, and Governors as the stewards of this program, is to 
redesign Medicaid so that health care costs are more 
effectively contained and those that truly need health care 
coverage continue to gain access to that care while giving 
States the needed flexibility to maximize the use of these 
limited health care dollars to most effectively meet the needs 
of low income individuals.

                            The New Program

    Within the balanced budget debate, a number of alternatives 
to the existing Medicaid program have been proposed. The 
following outlines the Nation's Governors proposal that blends 
the best aspects of the current program with congressional and 
administration alternatives toward achieving a streamlined and 
State-flexible health care system that guarantees health care 
to our most needy citizens.
Program goals
    The program is guided by four primary goals:
          1. The basic health care needs of the Nation's most 
        vulnerable populations must be guaranteed.
          2. The growth in health care expenditures must be 
        brought under control.
          3. States must have maximum flexibility in the design 
        and implementation of cost-effective systems of care.
          4. States must be protected from unanticipated 
        program costs resulting from economic fluctuations in 
        the business cycle, changing demographics, and natural 
        disasters.

Eligibility

    Coverage remains guaranteed for:
          Pregnant women to 133 percent of poverty.
          Children to age 6 to 133 percent of poverty.
          Children age 6 through 12 to 100 percent of poverty.
          The elderly who meet SSI income and resource 
        standards.
    Persons with disabilities as defined by the State in their 
State plan. States will have a funds set-aside requirement 
equal to 90 percent of the percentage of total medical 
assistance funds paid in fiscal year 1995 for persons with 
disabilities.
    Medicare cost sharing for Qualified Medicare Beneficiaries.
    Either:
          Individuals or families who meet current AFDC income 
        and resource standards (States with income standards 
        higher than the national average may lower those 
        standards to the national average); or
          States can run a single eligibility system for 
        individuals who are eligible for a new welfare program 
        as defined by the State.
    Consistent with the statute, adequacy of the State plan 
will be determined by the Secretary of HHS. The Secretary 
should have a time certain to act.
    Coverage remains optional for:
          All other optional groups in the current Medicaid 
        program.
          Other individuals or families as defined by the State 
        but below 275 percent of poverty.

                                benefits

    The following benefits remain guaranteed for the guaranteed 
populations only: Inpatient and outpatient hospital services, 
physician services, prenatal care, nursing facility services, 
home health care, family planning services and supplies, 
laboratory and x-ray services, pediatric and family nurse 
practitioner services, nurse midwife services, and Early and 
Periodic Screening, Diagnosis and Treatment Services. (The 
``T'' in EPSDT is redefined so that a State need not cover all 
Medicaid optional services for children.)
    At a minimum, all other benefits defined as optional under 
the current Medicaid program would remain optional and long 
term care options significantly broadened.
    States have complete flexibility in defining amount, 
duration, and scope of services.

                        private right of action

    The following are the only rights of action for individuals 
or classes for eligibility. All of these features will be 
designed to prevent States from having to defend against an 
individual's suit on benefits in Federal court.
          Before taking action in the State courts, the 
        individual must follow a State administrative appeals 
        process.
          States must offer individuals or classes a private 
        right of action in the State courts as a condition of 
        participation in the program.
          Following action in the State courts, an individual 
        or class could petition the U.S. Supreme Court.
          Independent of any State judicial remedy, the 
        Secretary of HHS could bring action in the Federal 
        courts on behalf of individuals or classes but not for 
        providers or health plans.
    There should be no private right of action for providers or 
health plans.

                            service delivery

    States must be able to use all available health care 
delivery systems for these populations without any special 
permission from the Federal Government.
    States must not have federally imposed limits on the number 
of beneficiaries who may be enrolled in any network.

                 provider standards and reimbursements

    States must have complete authority to set all health plan 
and provider reimbursement rates without interference from the 
Federal Government or threat of legal action of the provider or 
plan.
    The Boren amendment and other Boren-like statutory 
provisions must be repealed.
    ``One hundred percent reasonable cost reimbursement'' must 
be phased out over a 2-year period for federally qualified 
health centers and rural health clinics.
    States must be able to set their own health plan and 
provider qualifications standards and be unburdened from any 
Federal minimum qualification standards such as those currently 
set for obstetricians and pediatricians.
    For the purpose of the Qualified Medicare Beneficiaries 
program, the States may pay the Medicaid rate in lieu of the 
Medicare rate.

                          nursing home reforms

    States will abide by the OBRA '87 standards for nursing 
homes.
    States will have the flexibility to determine enforcement 
strategies for nursing home standards and will include them in 
their State plan.

                          plan administration

    States must be unburdened from the heavy hand of oversight 
by the Health Care Financing Administration.
    The plan and plan amendment process must be streamlined to 
remove HCFA micromanagement of State programs.
    Oversight of State activities by the Secretary must be 
streamlined to assure that Federal intervention occurs only 
when a State fails to comply substantially with Federal 
statutes or use own plan.
    HCFA can only impose disallowances that are commensurate 
with the size of the violation.
    This program should be written under a new title of the 
Social Security Act.

                      provider taxes and donations

    Current provider tax and donation restrictions in Federal 
statutes would be repealed.
    Current and pending State disputes with HHS over provider 
taxes would be discontinued.

Financing

    Each State will have a maximum Federal allocation that 
provides the State with the financial capacity to cover 
Medicaid enrollees. The allocation is available only if the 
State puts up a matching percentage (methodology to be 
defined). The allocation is the sum of four factors: base 
allocation, growth, special grants (special grants have no 
State matching requirement) and an insurance umbrella, 
described as follows:

    1. Base. In determining base expenditures, a State may 
choose from the following--1993 expenditures, 1994 
expenditures, or 1995 expenditures. Some States may require 
special provisions to correct for anomalies in their base year 
expenditures.

    2. Growth. This is a formula that accounts for estimated 
changes in the State's caseload (both overall growth and case 
mix) and an inflation factor. The details of this formula are 
to be determined. This formula is calculated each year for the 
following year based on the best available data.

    3. Special Grants. Special grant funds will be made 
available for certain States to cover illegal aliens and for 
certain States to assist Indian Health Service and related 
facilities in the provision of health care to Native Americans. 
States will have no matching requirement to gain access to 
these Federal funds.

    4. The Insurance Umbrella. This insurance umbrella is 
designed to ensure that States will get access to additional 
funds for certain populations if, because of unanticipated 
consequences, the growth factor fails to accurately estimate 
the growth in the population. Funds are guaranteed on a per-
beneficiary basis for those described below who were not 
included in the estimates of the base and the growth. These 
funds are an entitlement to States and not subject to annual 
appropriations.
    Populations and Benefits: Access to the insurance umbrella 
is available to cover the cost of care for both guaranteed and 
optional benefits. The umbrella covers all guaranteed 
populations and the optional portion of two groups--persons 
with disabilities and the elderly.
    Access to the Insurance Umbrella: The insurance umbrella is 
available to a State only after the following conditions are 
met.
          1. States must have used up other available base and 
        growth funds that had not been used because the 
        estimated population in the growth and base was greater 
        than the actual population served.
          2. Appropriate provisions will be established to 
        ensure that States do not have access to the umbrella 
        funds unless there is a demonstrable need.

    5. Matching Percentage. With the exception of the special 
grants, States must share in the cost of the program. A State's 
matching contribution in the program will not exceed 40 
percent.

    6. Disproportionate Share Hospital Program. Current 
disproportionate share hospital spending will be included in 
the base. DSH funds must be spent on health care for low income 
people. A State will not receive growth on DSH if these funds 
constitute more than 12 percent of total program expenditures.

    Provision for Territories: The National Governors' 
Association strongly encourages Congress to work with the 
Governors of Puerto Rico, Guam, and other territories towards 
allocating equitable Federal funding for their medical 
assistance programs.
                         APPENDIX B TO TITLE II
                              ----------                              


  SIDE-BY-SIDE ANALYSIS OF THE NGA ``RESTRUCTURING MEDICAID'' AGREEMENT 
             AND ``THE MEDICAID RESTRUCTURING ACT OF 1996''             
------------------------------------------------------------------------
   NGA ``Restructuring Medicaid''      Section reference from H.R. 3507,
              provision                           Division B            
------------------------------------------------------------------------
ELIGIBILITY:                                                            
    Pregnant women to 133 percent of  Section 1501(a)(1)(A)             
     the Federal poverty line.                                          
    Children to age 6 to 133 percent  Section 1501(a)(1)(B)             
     of the Federal poverty line.                                       
    Children age 6 through 12 to 100  Section 1501(a)(1)(C)             
     percent FPL.                                                       
    Elderly who meet SSI standards..  Section 1501(a)(1)(E)             
    Disabled persons who meet         Section 1501(a)(1)(D)             
     specified standards.                                               
        State definition............  Section 1501(a)(3)                
            Funding set-aside for     Section 1502(c)                   
             the disabled.                                              
        SSI definition..............  Section 1501(a)(1)(D)(ii)         
    QMBs, SLMBs, and QWDIs..........  Section 1501(b)                   
    Public assistance recipients      Section 1501(a)(1)(G)             
     AFDC standards.                                                    
    Public assistance recipients:     Section 1501(a)(6)                
     new program standards.                                             
    Optional populations to 275       Section 1571(b)                   
     percent of the Federal poverty                                     
     line.                                                              
    Determination of adequacy of      Section 1529(b)                   
     State plan by Secretary.                                           
BENEFITS:                                                               
    Impatient and outpatient          Section 1501(a)(2)(A)             
     hospital services.                                                 
    Physicians' surgical and medical  Section 1501(a)(2)(B)             
     services.                                                          
    Laboratory and x-ray services...  Section 1501(a)(2)(C)             
    Immunizations for children......  Section 1501(a)(2)(G)             
    Prenatal care services..........  Section 1501(a)(2)(I)             
    Nurse midwife services..........  Section 1501(a)(2)(J)             
    Pediatric and family nurse        Section 1501(a)(2)(J)             
     practitioner services.                                             
    Nursing facility services.......  Section 1501(a)(2)(C)             
    Home health care services.......  Section 1501(a)(2)(D)             
    Services provided by FQHCs and    Section 1501(a)(2)(F)             
     RHCs.                                                              
    Family planning services and      Section 1501(a)(2)(H)             
     supplies.                                                          
    Early periodic screening and      Section 1501(a)(2)(K)             
     diagnosic services.                                                
    EPSDT redefinition..............  Section 1571(e)                   
    Amount, duration and scope......  Section 1502(b)(1)(B)             
PRIVATE RIGHT OF ACTION:                                                
    State administrative appeals      Section 1508(b)(1)(A)             
     process.                                                           
    Judicial review in the State      Section 1508(b)(1)(B)             
     court system.                                                      
    Writ of certiorari to the U.S.    Section 1508(b)(2)                
     Supreme Court.                                                     
    Secretarial action against a      Section 1508(c)(1)                
     State in Federal court.                                            
SERVICE DELIVERY:                                                       
    State flexibility to use all      Section 1507                      
     available health care delivery                                     
     systems and expand coverage to                                     
     new enrollee.                                                      
PROVIDER STANDARDS AND                                                  
 REIMBURSEMENTS:                                                        
    Flexibility in setting provider   Section 1502(b)(1)(D)             
     reimbursement rates.                                               
    Repeal of the Boren Amendment     Section 2004(a)(1)                
     and similar provisions.                                            
    100 percent cost-based            Section 1502(d)                   
     reimbursement for FQHCs and                                        
     RHCs.                                                              
    State flexibility re provider     Section 1507                      
     qualifications and standards.                                      
    Medicaid rate for QMBs instead    Section 1501(b)(2)(B)             
     of Medicare rate.                                                  
NURSING HOME STANDARDS AND RELATED                                      
 PROTECTIONS:                                                           
    Retention of current law (OBRA    Section 1557                      
     `87 standards).                                                    
    Spousal Impoverishment..........  Section 1505                      
    Family Impoverishment...........  Section 1506                      
PLAN ADMINISTRATION:                                                    
    Relief from excessive HCFA        Sections 1521-1530                
     oversight.                                                         
    Plan submission and amendment     Sections 1526. 1527               
     process.                                                           
    Authority of Secretary to         Sections 1529, 1530               
     initiate Federal intervention.                                     
    Disallowance commensurate with    Section 1529(g)                   
     violation.                                                         
    New title of the Social Security  New Title XV                      
     Act.                                                               
PROVIDER TAXES AND DONATIONS:                                           
    Repeal current provider taxes     Title XIX repealed                
     and donations.                                                     
    Discontinue current HHS provider  Section 2004(b)                   
     tax disputes.                                                      
FINANCING:                                                              
    Base Allotment and Growth.......  Section 1511(a)-(e)               
    Special Grant for Illegal Aliens  Section 1511(f)                   
    Special Grant for Native          Section 1511(h)                   
     Americans.                                                         
    Insurance Umbrella Fund.........  Section 1511(g)                   
        Coverage of Guaranteed        Section 1511(g)(2)                
         Populations.                                                   
        Coverage of Optional          Section 1501(a), 1511(g)(2)       
         Populations.                                                   
    Matching Percentage (FMAP)......  Section 1512(c)                   
    Disproportionate Share Hospitals  Section 1502(b)(1)(G)             
TREATMENT OF TERRITORIES:                                               
    Allocation of equitable funding.  Section 1511(c)(5)                
    Secretarial waiver authority....  Section 1572                      
------------------------------------------------------------------------

                         APPENDIX C TO TITLE II
                              ----------                              

                    Congressional Research Service,
                                       Library of Congress,
                                     Washington, DC, June 11, 1996.
To: Honorable Thomas Bliley, Jr. Attention: Howard Cohen.
From: Jennifer O'Sullivan, Specialist in Social Legislation, Education 
        and Public Welfare Division.
Subject: Qualified Medicare Beneficiary Program.
    The following information is in response to your inquiry 
concerning current and proposed payment policies under the 
Qualified Medicare Beneficiary (QMB) program.
Current law
    The Medicare program offers protection for aged and certain 
disabled persons against the costs associated with acute health 
care services. Medicare beneficiaries are required to pay a 
portion of the cost of these services themselves in the form of 
cost-sharing charges. Such charges could pose a potential 
hardship for some persons, especially those who do not have 
supplementary protection either through an individually 
purchased ``Medigap'' policy or employer-based coverage. In 
response to this concern, legislation was enacted in 1988 
establishing the QMB program. Under this program, certain low-
income Medicare beneficiaries are entitled to have their 
Medicare cost-sharing charges paid by the federal-State 
Medicaid program.\1\
---------------------------------------------------------------------------
    \1\ More limited Medicaid coverage is offered for two other 
population groups: (1) persons who meet the QMB criteria except that 
their income is slightly in excess of the poverty line (the Specified 
Low-Income Medicare Beneficiary (SLMB) population); and (2) qualified 
disabled and working individuals (QDWIs). Medicaid protection for the 
SLMB population not otherwise eligible for Medicaid is limited to 
payment of the monthly Part B premium. Medicaid protection for the QDWI 
population is limited to payment of the Part A premium.
---------------------------------------------------------------------------
    Persons meeting the QMB qualifications for coverage, but 
not otherwise eligible for Medicaid, are not entitled to the 
regular Medicaid benefit package. Instead, they are entitled to 
have Medicaid make specified payments in their behalf.
    Definition. State Medicaid programs are required to make 
Medicare cost-sharing assistance available to QMB. A QMB is an 
aged or disabled Medicare beneficiary who has: (1) income at or 
below the Federal poverty line; and (2) resources below 200 
percent of the limit set for the Supplemental Security Income 
(SSI) program (the cash assistance program for low income aged 
and disabled persons). Medicaid is required to pay Medicare 
premiums and cost-sharing charges for these persons. Medicaid 
coverage is limited to payment of these charges unless the 
beneficiary is otherwise eligible for Medicaid.
    Persons meeting the QMB definition must be entitled to 
Medicare Part A Hospital Insurance coverage. Included is the 
relatively small group of aged persons who are not 
automatically entitled to Part A coverage, but who have bought 
Part A protection by paying a monthly premium. Not included are 
working disabled persons who have exhausted Medicare Part A 
entitlement but who have extended their coverage by payment of 
a monthly premium.
    To be eligible as a QMB, an individual must have income at 
or below 100 percent of the Federal poverty line for a family 
of the same size.\2\ In 1996, the Federal poverty level is 
$7,740 for a single and $10,360 for a couple.\3\
---------------------------------------------------------------------------
    \2\ The determination of income is made in the same manner as is 
made for SSI. Individuals with income above the threshold are not 
permitted to spenddown to meet the eligibility criteria.
    \3\ The Federal poverty level is published annually (usually in 
mid-February) in the Federal Register. By law, cost-of-living increases 
(COLAs) in social security benefits are disregarded in determining QMB 
eligibility through the month following the month in which the annual 
update is published. Thus, in most years COLAs are disregarded through 
March. For QMBs without social security income, the poverty levels are 
effective as of the date of publication.
---------------------------------------------------------------------------
    A QMB must also meet specified resources standards, namely 
resources cannot exceed 200 percent of that allowed under SSI. 
For the QMB program, the limits are $4,000 for an individual 
and $6,000 for a couple. Certain items such as an individual's 
home and household goods are always excluded from the 
calculation.
    QMB Benefits. Medicaid law requires States to pay Medicare 
premiums and cost-sharing charges for QMBs, as follows:
          Medicare Part B monthly premiums ($42.50 in 1996). 
        Medicare Part B pays for physicians' services and other 
        medical services. Almost all persons entitled to 
        Medicare Part A are also enrolled in Medicare Part B.
          Medicare Part A monthly premium paid by the limited 
        number of aged not automatically entitled to Part A 
        protection. The premium is $289 in 1996.\4\
---------------------------------------------------------------------------
    \4\ Part A coverage is available at a reduced premium to persons 
who do not have coverage as social security or railroad retirement 
beneficiaries but who have at least 30 quarters of social security or 
railroad retirement coverage. The premium for these persons is $188 in 
1996.
---------------------------------------------------------------------------
          Coinsurance and deductibles under Medicare Part A and 
        Part B. This includes the Medicare hospital deductible 
        ($736 in 1996), the Part B deductible ($100) and the 
        Part B coinsurance (20 percent of Medicare's approved 
        payment.)
          Coinsurance and deductibles that health maintenance 
        organizations (HMOs) and competitive medical plans 
        (CMPs) charge their enrollees. These are in lieu of the 
        Medicare coinsurance and deductibles which would be 
        paid if the individuals were not enrollees of these 
        plans. States, at their option may also pay the HMO and 
        CMP enrollment premiums.
    A person entitled to regular Medicaid benefits as well as 
QMB assistance is entitled to Medicaid payment for Medicare 
premiums and cost-sharing charges as well as to the full range 
of Medicaid services otherwise available to them.
    Payment of QMB Benefits. Medicaid law requires States to 
pay Part A and Part B premiums in full for the QMB population. 
They are also required to pay the requisite deductibles and 
coinsurance, though the actual amount of required payment has 
been the subject of some controversy.
    State Medicaid programs frequently have lower payment rates 
for services than those applicable under Medicare. Federal 
program guidelines implementing the QMB provision permit States 
to either (1) pay the full Medicare deductible and coinsurance 
amounts; or (2) only pay those amounts to the extent that the 
Medicare provider or supplier has not received the full 
Medicaid rate for the service. For example, assume Medicare's 
recognized payment amount for a service is $100 and Medicaid's 
recognized amount is $75. Medicare actually pays $80 (assuming 
the beneficiary has met the deductible) leaving $20 in 
coinsurance charges. Under the guidelines, Medicaid could pay 
nothing (since the provider had received more than the full 
Medicaid rate) or any amount up to $20 (the full Medicare 
coinsurance amount).
    If the Medicare service is not covered under the State 
Medicaid program, the State may either pay the full Medicare 
deductible and coinsurance amounts or alternatively provide for 
reasonable payments (subject to approval by DHHS).
    The Health Care Financing Administration (HCFA) surveyed 
the States in March 1995, and reported that 29 States were 
using payment rates below those applicable under Medicare.\5\ 
However, in July 1995, HCFA informed us that the United States 
Court of Appeals for four judicial circuits had issued 
decisions which required States in their jurisdictions to pay 
the full Medicare cost-sharing expenses for QMBs.\6\ As a 
result, 8 of the 29 States were required to change their 
policies.\7\
---------------------------------------------------------------------------
    \5\ Alabama, Arizona, California, Colorado, District of Columbia, 
Florida, Kansas, Maine, Maryland, Massachusetts, Michigan, Minnesota, 
Montana, Nevada, New Hampshire, New Jersey, Oklahoma, Oregon, 
Pennsylvania, Rhode Island, Tennessee, Texas, Utah, Vermont, Virginia, 
Washington, West Virginia, Wisconsin.
    \6\ The following rulings affect States in the 2d, 3d, 4th, and 
11th Judicial Circuits: (1) New York City Health and Hospitals 
Corporation v. Perales, 954 F.2d 854 (2nd Cir. 1992); (2) Pennsylvania 
Medical Society v. Snider, et al., 29 F.3d 886 (3rd Cir. 1994) No. 93-
775; (3) Haynes Ambulance Service, Inc. v. State of Alabama, et al., 36 
F.3d 1074 (11th Cir. 1994); and (4) Rehabilitation Association of 
Virginia, Inc. v. Kozlowski and Shalala, 42 F.3d 1444 (4th Cir. 1994).
    \7\ Alabama, Florida, Maryland, New Jersey, Pennsylvania, Vermont, 
Virginia, and West Virginia.
---------------------------------------------------------------------------
    According to a telephone conversation with a HCFA official 
in June 1996, the March 1995 survey is not expected to be 
updated because HCFA's central office no longer maintains 
detailed information on State plans. However, the official 
stated that there have been no subsequent court decisions 
affecting any additional circuits.

Proposed legislation--H.R. 3507

    The Personal Responsibility and Work Opportunity Act of 
1996 (H.R. 3507) includes QMB provisions in the Medicaid 
Restructuring division. Section 1501(b), ``Guaranteed coverage 
of Medicare premiums and cost-sharing for certain Medicare 
beneficiaries'' mandates States to provide coverage for 
Medicare cost-sharing assistance to the QMB population.\8\ The 
bill contains language comparable to current law language 
defining the eligible QMB population and required Medicare 
cost-sharing.
---------------------------------------------------------------------------
    \8\ Current requirements for the SLMB and QDWI populations are also 
retained.
---------------------------------------------------------------------------
    H.R. 3507 also defines State obligations for cost-sharing 
assistance for Medicare's coinsurance and deductibles. It 
specifically defines State liability both in cases where 
Medicaid payments exceed Medicare payments (which rarely 
occurs) and where Medicaid payments are less than Medicare 
payments. The bill provides that nothing in the requirement 
could be construed as preventing a State from limiting its 
assistance to the amount (if any) by which the payment amount 
for the service under its Medicaid plan for non-Medicare 
beneficiaries exceeded the Medicare payment amount. Further, if 
Medicare's payment amount exceeded the State's general Medicaid 
payment amount, the State would have no further obligation. 
This language is similar to current HCFA policy, though as 
noted above, State implementation of HCFA policy has been 
effectively barred in certain judicial circuits.
                         APPENDIX D TO TITLE II
                              ----------                              

                     Congress of the United States,
                                  House of Representatives,
                                    Washington, DC, April 19, 1996.
Hon. William J. Clinton,
President, The White House,
Washington, DC.
    Dear Mr. President: We write concerning the ongoing efforts 
to reform Medicaid and our concern over the Federal medical 
assistance percentage (FMAP).
    As you know, FMAP refers to the Federal share of each 
State's payments for Medicaid items and services. The FMAP is 
set annually according to a statutory formula designed to pay a 
higher percentage to a State with low per capita income 
relative to the national average for per capita income. No 
State may have a FMAP lower than 50 percent or higher than 83 
percent.
    New York has long received only the minimum FMAP which we 
believe does not adequately account for the actual burden which 
New York bears in caring for its less fortunate citizens. For 
example, the current FMAP formula takes into account only per 
capita income which can be skewed by a few extremely high or 
low incomes and does not adequately measure a State's fiscal 
capacity.
    In addition, the current formula does not take into account 
a State's needs. The FMAP formula is based mostly on measures 
of a State's ability to pay, with less wealthy States currently 
receiving a greater Federal share. However, ability to pay does 
not adequately reflect a State's needs. While wealthier States 
may have more income, they may also have more poverty and/or 
health care needs. Unfortunately, poverty is also often an 
accurate indicator of disease because there are a number of 
diseases stemming from poor nutrition, or unsafe living 
conditions.
    Lastly, the current formula ignores the relative cost of 
providing health care services by assuming that a dollar buys 
the same amount of health care in New York as in a poorer 
State. The FMAP only tangentially measures health needs through 
the inclusion of transfer payments (e.g. Medicare, Medicaid, 
and income maintenance); the formula presumes that States with 
higher needs would have larger transfer payments, but under the 
current formula they would also have higher per capita income 
payments and elevated State shares.
    We believe that the minimum FMAP should be raised from 50 
percent to 60 percent of Medicaid program costs. This change 
would benefit 24 States including New York.
    Reducing New York's required contribution would 
substantially diminish or eliminate the gross disparity imposed 
on New York taxpayers compared to the taxpayers of almost 40 
other States. Each year New York sends far more tax dollars to 
Washington, DC than we receive back in grants or services. 
There is no reason why New York taxpayers should be forced to 
spend disproportionately more than most other States in order 
to qualify for Federal Medicaid assistance. Indeed, some States 
receive as much as 4 Federal dollars for every State dollar 
expenditure. Reforming the FMAP formula would correct this 
inequity.
    Thank you in advance for your consideration in this matter.
            Sincerely,
                                   Nita Lowey.
                                   Major R. Owens.
                                   Maurice D. Hinchey.
                                   Eliot L. Engel.
                                   Jose E. Serrano.
                                   Thomas J. Manton.
                                   Gary L. Ackerman.
                                   Charles Schumer.
                                   Carolyn B. Maloney.
                                   Nydia M. Velazquez.
                                   Sherwood Boehlert.
                         APPENDIX E TO TITLE II
                              ----------                              

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, June 10, 1996.
Hon. Thomas J. Bliley, Jr.,
Chairman, Committee on Commerce,
House of Representatives, Washington, DC
    Dear Mr. Chairman: At your request, CBO has examined the 
President's proposal for a per capita cap on Federal Medicaid 
spending to determine whether the proposal contains an 
intergovernmental mandate. After a preliminary review, CBO has 
determined that the proposal does not contain a mandate as 
defined in the Unfunded Mandates Reform Act of 1995 (Public Law 
104-4).
    The main purpose of this proposal is to cap the Federal 
Government's financial responsibility. However, this limit 
would not constitute a mandate because States would have the 
flexibility to offset the loss of Federal funds by reducing 
their own financial or programmatic responsibilities.
    Public Law 104-4 defines a Federal intergovernmental 
mandate, in part, as: ``any provision in legislation, statute, 
or regulation that relates to a then-existing Federal program 
under which $500,000,000 or more is provided annually to State, 
local, and tribal governments under entitlement authority, if 
the provision--
          ``(i)(I) would increase the stringency of conditions 
        of assistance to State, local, or tribal governments 
        under the program; or
          ``(II) would place caps upon, or otherwise decrease, 
        the Federal Government's responsibility to provide 
        funding to State, local, or tribal governments under 
        the program; and
          ``(ii) the State, local, or tribal governments that 
        participate in the Federal program lack authority under 
        that program to amend their financial or programmatic 
        responsibilities to continue providing required 
        services that are affected by the legislation, statute, 
        or regulation.''
    If a cap on Federal Medicaid spending was so restrictive 
that Federal spending was insufficient to cover the Federal 
Government's matching share of mandatory Medicaid spending, 
then the cap would create a mandate. In the case of the per 
capita cap in the President's proposal, however, CBO believes 
that this situation would not arise in the first 5 years after 
enactment, because States would have significant flexibility to 
offset reductions in Federal funding with reductions in 
optional services and beneficiaries. (Public Law 104-4 requires 
CBO to evaluate proposals for mandates for the first 5 years 
that they would be in effect.) Courses of action available to 
States include eliminating or reducing some optional services, 
such as prescription drugs or dental services, and not serving 
some optional beneficiaries, such as the medically needy or 
pregnant women and children whose family income is between 133 
percent and 185 percent of poverty. These options provide 
substantial flexibility to States. A frequently cited figure is 
that 60 percent of Medicaid spending is optional. Even though 
this flexibility varies dramatically between States, all States 
have significant flexibility.
    In addition to the flexibility provided in current law, the 
President's proposal would grant States additional flexibility. 
For example, it would repeal the Boren Amendment and allow 
States to adopt managed care without a Federal waiver.
    If you wish further details on this estimate, we will be 
pleased to provide them. The staff contact is John Patterson.
            Sincerely,
                                         June E. O'Neill, Director.
                         APPENDIX F TO TITLE II
                              ----------                              

                                 General Accounting Office,
                                     Washington, DC, June 10, 1996.
Hon. Thomas J. Bliley, Jr.,
Chairman, Committee on Commerce,
House of Representatives.
    Dear Mr. Chairman: Medicaid is the largest Federal program 
providing financial assistance to State governments. States 
received over $80 billion in fiscal year 1995, and the 
Congressional Budget Office estimates that they will receive 
$898.4 billion in Federal funds between fiscal year 1996 and 
fiscal year 2002. The Congress is now considering alternatives 
that would slow the growth in Federal Medicaid spending by 
giving States more flexibility in the administration of the 
program and by changing the mechanism for allocating Federal 
assistance among States.
    This letter responds to your request for an explanation of 
the relationship between Federal funding and State funding 
needs under the current open-ended entitlement program and how 
it would change under H.R. 3507, being considered by your 
committee. Under the open-ended entitlement the level of 
assistance provided to the poor varies from State to State 
depending on how many people are made eligible under State law 
and how extensive are the services the State provides. In 
contrast, under H.R. 3507 the distribution of Federal 
assistance to States would be much less related to State 
spending patterns and become more closely related to measures 
of State funding needs, such as the number of poor, elderly, 
and disabled.
Federal funding not based on State funding needs
    The amount of Federal aid that a State receives under 
Medicaid is not closely linked to measures of its potential 
funding needs. In many instances, States with larger numbers of 
poor and disabled individuals receive less Federal assistance 
than States with both larger numbers of those in need and 
weaker tax bases. New York, for example, has fewer poor people 
than California yet it received $12.5 billion in Federal 
assistance in fiscal year 1995 while California, with more 
people in need, received less than $9.2 billion that year. When 
expressed in terms of funding per person in poverty, New York 
received 60 percent more than California; more than $4,350 per 
person compared with less than $1,725 per person in California.
    Because the Federal Government matches whatever States 
spend on eligible services, States with the most generous 
eligibility requirements, that offer more extensive services, 
and that provide higher provider reimbursement rates receive 
more Federal funding. Consequently, States with greater numbers 
of needy individuals can receive less Federal aid because of 
their more restrictive eligibility rules and because they 
provide fewer services.

Most Federal programs provide funding based on State needs

    The current linkage between State needs and the amount of 
Federal assistance a State receives under Medicaid does not 
reflect how most Federal grant programs are designed. Aside 
from the major entitlement programs (Medicaid, Aid to Families 
With Dependent Children, and Foster Care), most other Federal 
grant programs distribute Federal assistance on the basis of 
need measures (for example, high risk population groups such as 
the poor, children, or the elderly) rather than on the basis of 
State spending patterns.
    A recent example of needs-based targeting is the Ryan White 
Comprehensive AIDS Resources Emergency (CARE) Act reauthorized 
by Congress earlier this year. The Senate Labor and Human 
Resources Committee and your committee revised the formula used 
to distribute CARE Act funds to States and metropolitan areas 
to improve the needs-based targeting of that program. The new 
system would strengthen the relationship between Federal 
funding and people in need by more closely linking the amount 
of Federal aid a State or metropolitan area receives with the 
number of people with acquired immunodeficiency syndrome 
(AIDS).
    Other examples of need-based targeting include the Chapter 
1 program for the Educationally Disadvantaged and the Maternal 
and Child Health program, which target Federal funding based on 
the number of children in poverty. Similarly, the Airport 
Improvement program provides funding based on the number of 
passengers using an airport and the Older Americans Act 
allocates Federal funding based on the number of elderly. Based 
on work currently underway, it appears that over 90 percent of 
Federal formula grant programs target funding based on measures 
of State need.

The Medicaid restructuring plan would gradually shift Federal funding 
        to a needs-based system

    A restructured Medicaid program under provisions in H.R. 
3507 would gradually realign Federal funding over a number of 
years so that it will be more closely related to State needs 
rather than State spending patterns. This would be accomplished 
by linking Federal allocations to the number of people in 
poverty and giving greater weight to the number of elderly and 
disabled for whom care is more expensive. Additional 
adjustments would be made to account for cross-state 
differences in the cost of health care, and low-income States' 
matching rates would continue to be higher.
    Shifting to a needs-based funding system will be 
accomplished by allowing funding for States like California, 
whose Federal funding is low in relation to the number of 
people in need, to grow at above average rates. Conversely, 
funding for States like New York would grow at slower rates 
until funding for all States is brought into line with State 
needs.
    If you have any questions regarding this letter or if we 
can be of further assistance, please call Jerry Fastrup, 
Assistant Director, or me.
            Sincerely yours,
                                        William J. Scanlon,
                                   Director, Health Systems Issues.
                         APPENDIX G TO TITLE II
                              ----------                              

                            National Governors Association,
                                                    Washington, DC.

                    C-27. Short-Term Medicaid Policy

                              27.1 preface

    The Nation's Governors recognize that rapidly escalating 
health care costs in the face of the increasing need for health 
care access is the essence of the health care costs that 
confronts our Nation. The Governors are aware of the varied and 
complex factors that must be dealt with if we are to achieve a 
solution to this crises.
    Currently, 31 States are struggling with budget shortfalls. 
A significant part of the fiscal pressure on States is coming 
from increased costs in the Medicaid program. In 1980, Medicaid 
spending accounted for 9 percent of States budgets; in 1990, it 
accounted for nearly 14 percent of all State spending.
    The increased costs of Medicaid not only represent the 
generally inflated cost of health care experienced by all 
purchasers, but are exacerbated by 4 years of Medicaid 
mandates.
States must have some immediate relief from the real and 
pressing problems presented by the Medicaid program if they are 
to move forward on long-term solutions. Therefore, the 
Governors call on Congress and the administration to work with 
us to immediately make the following changes to the Medicaid 
program.
    Congress should delay the mandated implementation of the 
1990 Medicaid mandates for 2 years. This will give Federal and 
State governments time to assess the depth of the recession and 
the opportunity to develop long-term solutions for the 
restructuring of the Medicaid program. Accountability based 
upon results is a better test of State performance than strict 
compliance with mandated procedures. In return for flexibility, 
the Governors seek to work with the administration and Congress 
to develop State-specific mutually acceptable agreements to 
measure accountability.
    States must not be expected to implement any Medicaid 
program changes until the Health Care Financing Administration 
(HCFA) has published final regulations to guide program 
administration.
    States must be allowed to maintain their complete authority 
to raise funds to match Federal Medicaid dollars without 
restriction from the Federal Government.
    To promote cost control and efficiency, States should be 
encouraged to continue innovations in provider payment methods. 
Though Medicare and most private payers have moved away from 
cost based reimbursement, Federal legislation has mandated that 
certain Medicaid providers be paid on the basis of costs. In 
operating out Medicaid programs, States should not be denied 
costs control options available to the Federal Government in 
operating the Medicare program.
    In addition, with respect to three particularly troublesome 
mandates over the last 4 years, the Governors call upon 
Congress and the administration to make the following specific 
program-matic changes.

             27.2 qualified medicare beneficiaries (omb's)

    Congress should assume full financial responsibility for 
all low-income Medicare beneficiaries who are not otherwise 
Medicaid-eligible. Since the passage of the Medicare 
Catastrophic legislation in 1988, the Federal Government has 
increasingly passed on to the States the responsibility to 
protect low-income Medicare beneficiaries.

                        27.3 nursing home reform

    States should be considered in compliance with the law if a 
comparable quality assurance program is in place or developed. 
In the Omnibus Reconciliation Act of 1987, Congress mandated 
extensive new quality assurance measures for the Medicaid 
nursing home program. The statutory language permits limited 
State flexibility and puts Congress in the position of micro-
managing the program.

    27.4 early periodic screening, diagnosis, and treatment (epsdt)

    In ``technical'' amendments to the EPSDT program legislated 
in 1989, Congress added major costs to this program. Therefore, 
the Governors propose two technical amendments to the 1989 law 
to:
          With regard to screening services, clarify that 
        States have the authority to specify qualified 
        screening providers and that States are permitted to 
        insist that such a provider can be required to provide 
        all screening services.
          Give States the authority to provide only those 
        services identified in a screen that are currently in a 
        State's Medicaid program.
    While these changes clearly will not resolve the Nation's 
long-term struggle to restructure the Medicaid program, they 
will provide immediate and sensible relief in dire economic 
times. These changes also would mark the beginning of a new and 
real partnership between the Federal Government and State 
governments over the design and implementation of the Medicaid 
program.
     TITLE III--COMMITTEE ON ECONOMIC AND EDUCATIONAL OPPORTUNITIES

SEC. 3001. SHORT TITLE.

    This title may be cited as the ``Personal Responsibility 
and Work Opportunity Act of 1996''.

SEC. 3002. TABLE OF CONTENTS.

    The table of contents of this title is as follows:

     TITLE III--COMMITTEE ON ECONOMIC AND EDUCATIONAL OPPORTUNITIES

Sec. 3001. Short title.
Sec. 3002. Table of contents.

                      Subtitle A--Work Requirements

Sec. 3101. Replacement of the JOBS program with mandatory work 
          requirements.

            Subtitle B--Child and Family Services Block Grant

Sec. 3201. Child and Family Services Block Grant.
Sec. 3202. Reauthorizations.
Sec. 3203. Repeals.

                         Subtitle C--Child Care

Sec. 3301. Short title and references.
Sec. 3302. Goals.
Sec. 3303. Authorization of appropriations and entitlement authority.
Sec. 3304. Lead agency.
Sec. 3305. Application and plan.
Sec. 3306. Limitation on State allotments.
Sec. 3307. Activities to improve the quality of child care.
Sec. 3308. Repeal of early childhood development and before- and after-
          school care requirement.
Sec. 3309. Administration and enforcement.
Sec. 3310. Payments.
Sec. 3311. Annual report and audits.
Sec. 3312. Report by the Secretary.
Sec. 3313. Allotments.
Sec. 3314. Definitions.
Sec. 3315. Repeals.
Sec. 3316. Effective date.

                  Subtitle D--Child Nutrition Programs

                  Chapter 1--National School Lunch Act

Sec. 3401. State disbursement to schools.
Sec. 3402. Nutritional and other program requirements.
Sec. 3403. Free and reduced price policy statement.
Sec. 3404. Special assistance.
Sec. 3405. Miscellaneous provisions and definitions.
Sec. 3406. Summer food service program for children.
Sec. 3407. Commodity distribution.
Sec. 3408. Child care food program.
Sec. 3409. Pilot projects.
Sec. 3410. Reduction of paperwork.
Sec. 3411. Information on income eligibility.
Sec. 3412. Nutrition guidance for child nutrition programs.
Sec. 3413. Information clearinghouse.

                 Chapter 2--Child Nutrition Act of 1966

Sec. 3421. Special milk program.
Sec. 3422. Free and reduced price policy statement.
Sec. 3423. School breakfast program authorization.
Sec. 3424. State administrative expenses.
Sec. 3425. Regulations.
Sec. 3426. Prohibitions.
Sec. 3427. Miscellaneous provisions and definitions.
Sec. 3428. Accounts and records.
Sec. 3429. Special supplemental nutrition program for women, infants, 
          and children.
Sec. 3430. Cash grants for nutrition education.
Sec. 3431. Nutrition education and training.

                   Chapter 3--Miscellaneous Provisions

Sec. 3441. Coordination of school lunch, school breakfast, and summer 
          food service programs.

                     Subtitle E--Related Provisions

Sec. 3501. Requirement that data relating to the incidence of poverty in 
          the united states be published at least every 2 years.
Sec. 3502. Sense of the Congress.
Sec. 3503. Legislative accountability.

                     Subtitle A--Work Requirements

SEC. 3101. REPLACEMENT OF THE JOBS PROGRAM WITH MANDATORY WORK 
                    REQUIREMENTS.

    (a) In General.--Part F of title IV of the Social Security 
Act (42 U.S.C. 681-687) is amended to read as follows:

                 ``PART F--MANDATORY WORK REQUIREMENTS

``SEC. 481. MANDATORY WORK REQUIREMENTS.

    ``(a) Participation Rate Requirements.--
            ``(1) All families.--A State that is operating a 
        program under part A for a fiscal year shall achieve 
        the minimum participation rate specified in the 
        following table for the fiscal year with respect to all 
        families receiving assistance under the State program 
        operated under part A:

                                                             The minimum
                                                           participation
            ``If the fiscal year is:                            rate is:
              1996......................................           20   
              1997......................................           25   
              1998......................................           30   
              1999......................................           35   
              2000......................................           40   
              2001......................................           45   
              2002 or thereafter........................           50.  

            ``(2) 2-parent families.--A State that is operating 
        a program under part A for a fiscal year shall achieve 
        the minimum participation rate specified in the 
        following table for the fiscal year with respect to 2-
        parent families receiving assistance under the State 
        program operated under part A:

                                                             The minimum
                                                           participation
            ``If the fiscal year is:                            rate is:
              1996......................................           50   
              1997......................................           75   
              1998......................................           75   
              1999 or thereafter........................           90.  

    ``(b) Calculation of Participation Rates.--
            ``(1) All families.--
                    ``(A) Average monthly rate.--For purposes 
                of subsection (a)(1), the participation rate 
                for all families of a State for a fiscal year 
                is the average of the participation rates for 
                all families of the State for each month in the 
                fiscal year.
                    ``(B) Monthly participation rates.--The 
                participation rate of a State for all families 
                of the State for a month, expressed as a 
                percentage, is--
                            ``(i) the number of families 
                        receiving assistance under the State 
                        program operated under part A that 
                        include an adult who is engaged in work 
                        for the month; divided by
                            ``(ii) the amount by which--
                                    ``(I) the number of 
                                families receiving such 
                                assistance during the month 
                                that include an adult receiving 
                                such assistance; exceeds
                                    ``(II) the number of 
                                families receiving such 
                                assistance that are subject in 
                                such month to a penalty 
                                described in subsection (e)(1) 
                                but have not been subject to 
                                such penalty for more than 3 
                                months within the preceding 12-
                                month period (whether or not 
                                consecutive).
            ``(2) 2-parent families.--
                    ``(A) Average monthly rate.--For purposes 
                of subsection (a)(2), the participation rate 
                for 2-parent families of a State for a fiscal 
                year is the average of the participation rates 
                for 2-parent families of the State for each 
                month in the fiscal year.
                    ``(B) Monthly participation rates.--The 
                participation rate of a State for 2-parent 
                families of the State for a month shall be 
                calculated by use of the formula set forth in 
                paragraph (1)(B), except that in the formula 
                the term `number of 2-parent families' shall be 
                substituted for the term `number of families' 
                each place such latter term appears.
            ``(3) Pro rata reduction of participation rate due 
        to caseload reductions not required by federal law.--
        The Secretary shall prescribe regulations for reducing 
        the minimum participation rate otherwise required by 
        this section for a fiscal year by the number of 
        percentage points equal to the number of percentage 
        points (if any) by which--
                    ``(A) the number of families receiving 
                assistance during the fiscal year under the 
                State plan approved under part A is less than
                    ``(B) the number of families that received 
                aid under the State plan approved under part A 
                during fiscal year 1995.
                The minimum participation rate shall not be 
                reduced to the extent that the Secretary 
                determines that the reduction in the number of 
                families receiving such assistance is required 
                by Federal law.
            ``(4) State option for participation requirement 
        exemptions.--For any fiscal year, a State may, at its 
        option, not require an individual who is a single 
        custodial parent caring for a child who has not 
        attained 12 months of age to engage in work and may 
        disregard such an individual in determining the 
        participation rates under subsection (a).
    ``(c) Engaged in Work.--
            ``(1) All families.--For purposes of subsection 
        (b)(1)(B)(i), a recipient is engaged in work for a 
        month in a fiscal year if the recipient is 
        participating in work activities for at least the 
        minimum average number of hours per week specified in 
        the following table during the month, not fewer than 20 
        hours per week of which are attributable to an activity 
        described in paragraph (1), (2), (3), (4), (5), (6), 
        (7), or (8) of subsection (d):

                                                             The minimum
          ``If the month is                            average number of
            in fiscal year:                           hours per week is:
              1996......................................           20   
              1997......................................           20   
              1998......................................           20   
              1999......................................           25   
              2000......................................           30   
              2001......................................           30   
              2002......................................           35   
              2003 or thereafter........................           35.  

            ``(2) 2-parent families.--For purposes of 
        subsection (b)(2)(B)(i), an adult is engaged in work 
        for a month in a fiscal year if the adult is making 
        progress in work activities for at least 35 hours per 
        week during the month, not fewer than 30 hours per week 
        of which are attributable to an activity described in 
        paragraph (1), (2), (3), (4), (5), (6), (7), or (8) of 
        subsection (d).
            ``(3) Limitation on number of weeks for which job 
        search counts as work.--Notwithstanding paragraphs (1) 
        and (2), an individual shall not be considered to be 
        engaged in work by virtue of participation in an 
        activity described in subsection (d)(6), after the 
        individual has participated in such an activity for 4 
        weeks (except if the unemployment rate is above the 
        national average, 12 weeks) in a fiscal year. An 
        individual shall be considered to be participating in 
        such an activity for a week if the individual 
        participates in such an activity at any time during the 
        week.
            ``(4) Limitation on vocational education activities 
        counted as work.--For purposes of determining monthly 
        participation rates under paragraphs (1)(B)(i) and 
        (2)(B)(i) of subsection (b), not more than 20 percent 
        of adults in all families and in 2-parent families 
        determined to be engaged in work in the State for a 
        month may meet the work activity requirement through 
        participation in vocational educational training.
            ``(5) Single parent with child under age 6 deemed 
        to be meeting work participation requirements if parent 
        is engaged in work for 20 hours per week.--For purposes 
        of determining monthly participation rates under 
        subsection (b)(1)(B)(i), a recipient in a 1-parent 
        family who is the parent of a child who has not 
        attained 6 years of age is deemed to be engaged in work 
        for a month if the recipient is engaged in work for an 
        average of at least 20 hours per week during the month.
            ``(6) Teen head of household who maintains 
        satisfactory school attendance deemed to be meeting 
        work participation requirements.--For purposes of 
        determining monthly participation rates under 
        subsection (b)(1)(B)(i), a recipient who is a single 
        head of household and has not attained 20 years of age 
        is deemed to be engaged in work for a month in a fiscal 
        year if the recipient--
                    ``(A) maintains satisfactory attendance at 
                secondary school or the equivalent during the 
                month; or
                    ``(B) participates in education directly 
                related to employment for at least the minimum 
                average number of hours per week specified in 
                the table set forth in paragraph (1).
    ``(d) Work Activities Defined.--As used in this section, 
the term `work activities' means--
            ``(1) unsubsidized employment;
            ``(2) subsidized private sector employment;
            ``(3) subsidized public sector employment;
            ``(4) work experience (including work associated 
        with the refurbishing of publicly assisted housing) if 
        sufficient private sector employment is not available;
            ``(5) on-the-job training;
            ``(6) job search and job readiness assistance;
            ``(7) community service programs;
            ``(8) vocational educational training (not to 
        exceed 12 months with respect to any individual);
            ``(9) job skills training directly related to 
        employment;
            ``(10) education directly related to employment, in 
        the case of a recipient who has not received a high 
        school diploma or a certificate of high school 
        equivalency; and
            ``(11) satisfactory attendance at secondary school 
        or high school equivalency program, in the case of a 
        recipient who has not completed secondary school.
    ``(e) Supplemental Grant for Operation of Work Program.--
            ``(1) Application requirements.--An eligible State 
        may submit to the Secretary an application for 
        additional funds to meet the requirements of this 
        section with respect to a fiscal year if the Secretary 
        determines that--
                    ``(A) the total expenditures of the State 
                to meet such requirements for the fiscal year 
                exceed the total expenditures of the State 
                during fiscal year 1994 to carry out part F (as 
                in effect on September 30, 1994);
                    ``(B) the work programs of the State under 
                this section are coordinated with the job 
                training programs established by title II of 
                the Job Training Partnership Act, or (if such 
                title is repealed by the Consolidated and 
                Reformed Education, Employment, and 
                Rehabilitation Systems Act) the Consolidated 
                and Reformed Education, Employment, and 
                Rehabilitation Systems Act; and
                    ``(C) the State needs additional funds to 
                meet such requirements or certifies that it 
                intends to exceed such requirements.
            ``(2) Grants.--The Secretary may make a grant to 
        any eligible State which submits an application in 
        accordance with paragraph (1) for a fiscal year in an 
        amount equal to the Federal medical assistance 
        percentage of the amount (if any) by which the total 
        expenditures of the State to meet or exceed the 
        requirements of this section for the fiscal year 
        exceeds the total expenditures of the State during 
        fiscal year 1994 to carry out part F (as in effect on 
        September 30, 1994).
            ``(3) Regulations.--The Secretary shall issue 
        regulations providing for the equitable distribution of 
        funds under this subsection.
            ``(4) Authorization of appropriations.--
                    ``(A) In general.--There are authorized to 
                be appropriated for grants under this 
                subsection $3,000,000,000 for fiscal year 1999.
                    ``(B) Availability.--Amounts appropriated 
                pursuant to subparagraph (A) are authorized to 
                remain available until expended.
    ``(f) Penalties.--
            ``(1) Against individuals.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), if an adult in a family 
                receiving assistance under the State program 
                operated under part A refuses to engage in work 
                required in accordance with this section, the 
                State shall--
                            ``(i) reduce the amount of 
                        assistance otherwise payable to the 
                        family pro rata (or more, at the option 
                        of the State) with respect to any 
                        period during a month in which the 
                        adult so refuses; or
                            ``(ii) terminate such assistance,
        subject to such good cause and other exceptions as the 
        State may establish.
                    ``(B) Exception.--Notwithstanding 
                subparagraph (A), a State may not reduce or 
                terminate assistance under the State program 
                operated under part A based on a refusal of an 
                adult to work if the adult is a single 
                custodial parent caring for a child who has not 
                attained 11 years of age, and the adult proves 
                that the adult has a demonstrated inability (as 
                determined by the State) to obtain needed child 
                care, for 1 or more of the following reasons:
                            ``(i) Unavailability of appropriate 
                        child care within a reasonable distance 
                        from the individual's home or work 
                        site.
                            ``(ii) Unavailability or 
                        unsuitability of informal child care by 
                        a relative or under other arrangements.
                            ``(iii) Unavailability of 
                        appropriate and affordable formal child 
                        care arrangements.
            ``(2) Against states.--
                    ``(A) In general.--If the Secretary 
                determines that a State that is operating a 
                program under part A for a fiscal year has 
                failed to comply with this section for the 
                fiscal year, the Secretary shall reduce the 
                total amount otherwise payable to the State 
                under section 403 for the immediately 
                succeeding fiscal year by an amount equal to 
                not more than 5 percent of such otherwise 
                payable amount.
                    ``(B) Penalty based on severity of 
                failure.--The Secretary shall impose reductions 
                under subparagraph (A) based on the degree of 
                noncompliance.
    ``(g) Nondisplacement in Work Activities.--
            ``(1) In general.--Subject to paragraph (2), an 
        adult in a family receiving assistance under a State 
        program operated under part A attributable to funds 
        provided by the Federal Government may fill a vacant 
        employment position in order to engage in a work 
        activity described in subsection (d).
            ``(2) No filling of certain vacancies.--No adult in 
        a work activity described in subsection (d) which is 
        funded, in whole or in part, by funds provided by the 
        Federal Government shall be employed or assigned--
                    ``(A) when any other individual is on 
                layoff from the same or any substantially 
                equivalent job; or
                    ``(B) if the employer has terminated the 
                employment of any regular employee or otherwise 
                caused an involuntary reduction of its 
                workforce in order to fill the vacancy so 
                created with an adult described in paragraph 
                (1).
            ``(3) No preemption.--Nothing in this subsection 
        shall preempt or supersede any provision of State or 
        local law that provides greater protection for 
        employees from displacement.
    ``(h) Sense of the Congress.--It is the sense of the 
Congress that in complying with this section, each State that 
operates a program under part A is encouraged to assign the 
highest priority to requiring adults in 2-parent families and 
adults in single-parent families that include older preschool 
or school-age children to be engaged in work activities.
    ``(i) Sense of the Congress That States Should Impose 
Certain Requirements on Noncustodial, Nonsupporting Minor 
Parents.--It is the sense of the Congress that the States 
should require noncustodial, nonsupporting parents who have not 
attained 18 years of age to fulfill community work obligations 
and attend appropriate parenting or money management classes 
after school.

``SEC. 482. INDIVIDUAL RESPONSIBILITY PLANS.

    ``(a) Assessment.--The State agency responsible for 
administering the State program funded under part A shall make 
an initial assessment of the skills, prior work experience, and 
employability of each recipient of assistance under the program 
who--
            ``(1) has attained 18 years of age; or
            ``(2) has not completed high school or obtained a 
        certificate of high school equivalency, and is not 
        attending secondary school.
    ``(b) Contents of Plans.--
            ``(1) In general.--On the basis of the assessment 
        made under subsection (a) with respect to an 
        individual, the State agency, in consultation with the 
        individual, shall develop an individual responsibility 
        plan for the individual, which--
                    ``(A) shall provide that participation by 
                the individual in job search activities shall 
                be a condition of eligibility for assistance 
                under the State program funded under part A, 
                except during any period for which the 
                individual is employed full-time in an 
                unsubsidized job in the private sector;
                    ``(B) sets forth an employment goal for the 
                individual and a plan for moving the individual 
                immediately into private sector employment;
                    ``(C) sets forth the obligations of the 
                individual, which may include a requirement 
                that the individual attend school, maintain 
                certain grades and attendance, keep school age 
                children of the individual in school, immunize 
                children, attend parenting and money management 
                classes, or do other things that will help the 
                individual become and remain employed in the 
                private sector;
                    ``(D) to the greatest extent possible shall 
                be designed to move the individual into 
                whatever private sector employment the 
                individual is capable of handling as quickly as 
                possible, and to increase the responsibility 
                and amount of work the individual is to handle 
                over time;
                    ``(E) shall describe the services the State 
                will provide the individual so that the 
                individual will be able to obtain and keep 
                employment in the private sector, and describe 
                the job counseling and other services that will 
                be provided by the State; and
                    ``(F) at the option of the State, may 
                require the individual to undergo appropriate 
                substance abuse treatment.
            ``(2) Timing.--The State agency shall comply with 
        paragraph (1) with respect to an individual--
                    ``(A) within 90 days (or, at the option of 
                the State, 180 days) after the effective date 
                of this part, in the case of an individual who, 
                as of such effective date, is a recipient of 
                aid under the State plan approved under part A 
                (as in effect immediately before such effective 
                date); or
                    ``(B) within 30 days (or, at the option of 
                the State, 90 days) after the individual is 
                determined to be eligible for such assistance, 
                in the case of any other individual.
    ``(c) Provision of Program and Employment Information.--The 
State shall inform all applicants for and recipients of 
assistance under the State program funded under part A of all 
available services under the program for which they are 
eligible.
    ``(d) Penalty for Noncompliance by Individual.--
            ``(1) In general.--Except as provided in paragraph 
        (2), the State shall reduce, by such amount as the 
        State considers appropriate, the amount of assistance 
        otherwise payable under the State program funded under 
        part A to a family that includes an individual who 
        fails without good cause to comply with an individual 
        responsibility plan signed by the individual.
            ``(2) Exception.--A State may not terminate the 
        provision of assistance to an individual under the 
        State program funded under part A, or reduce the amount 
        of assistance to be provided to an individual under the 
        program, if the State has failed to provide to the 
        individual the services referred to in subsection 
        (b)(1)(E) that are described in the individual 
        responsibility plan for the individual.
    ``(e) The exercise of the authority of this section shall 
be withing the sole discretion of the State.''.
    (b) Conforming Amendments.--
            (1) Section 402(a)(9)(A) of the Social Security Act 
        (42 U.S.C. 602(a)(9)(A)) is amended by striking 
        ``(including activities under part F)''.
            (2) Section 402(a) of such Act (42 U.S.C. 602(a)) 
        is amended by striking paragraph (19).
            (3) Section 402(a)(44)(A) of such Act (42 U.S.C. 
        602(a)(44)(A)) is amended by striking ``, part D, and 
        part F'' and inserting ``and part D''.
            (4) Section 403 of such Act (42 U.S.C. 603) is 
        amended by striking subsections (k) and (l), except 
        that subparagraph (A) of such section 403(l)(3) shall 
        remain in effect for purposes of applying any reduction 
        in payment rates required by such subparagraph for any 
        of the fiscal years specified in such subparagraph.
            (5) Section 407(b)(1)(B) of such Act (42 U.S.C. 
        607(b)(1)(B)) is amended--
                    (A) by striking clauses (i) and (v) and 
                redesignating clauses (ii), (iii), and (iv) as 
                clauses (i), (ii), and (iii), respectively;
                    (B) by adding ``and'' at the end of clause 
                (ii) (as so redesignated); and
                    (C) by striking ``; and'' at the end of 
                clause (iii) (as so redesignated) and inserting 
                a period.
            (6) Section 407(b)(2)(B)(ii)(I) of such Act (42 
        U.S.C. 607(b)(2)(B)(ii)(I)) is amended by striking 
        ``(including any activity authorized under section 
        402(a)(19) or under part F)''.
            (7) Section 407(b)(2) of such Act (42 U.S.C. 
        607(b)(2)) is amended by striking subparagraph (C).
            (8) Section 407(c) of such Act (42 U.S.C. 607(c)) 
        is amended--
                    (A) by striking ``(A) where'' and inserting 
                ``where''; and
                    (B) by striking ``, and (B)'' and all that 
                follows through ``part F''.
            (9) Section 407(d)(1)(A) of such Act (42 U.S.C. 
        607(d)(1)(A)) is amended by striking ``, or in which 
        such individual participated in a program under part 
        F''.
            (10) Section 407(e) of such Act (42 U.S.C. 607(e)) 
        is amended--
                    (A) in paragraph (1)--
                            (i) by striking ``in participating 
                        in a program under part F and''; and
                            (ii) by striking ``participate in 
                        or''; and
                    (B) in paragraph (2), by striking ``both 
                part F and''.
            (11) Section 417 of such Act (42 U.S.C. 617) is 
        amended by striking ``, part D, and part F'' and 
        inserting ``and part D''.
            (12) Section 471(a)(8)(A) of such Act (42 U.S.C. 
        671(a)(8)(A)) is amended by striking ``(including 
        activities under part F)''.
            (13) Section 1108 of such Act (42 U.S.C. 1308) is 
        amended--
                    (A) in subsection (a), by striking ``or, in 
                the case of part A of title IV, section 
                403(k)''; and
                    (B) in subsection (d), by striking 
                ``(exclusive of any amounts on account of 
                services and items to which, in the case of 
                part A of such title, section 403(k) 
                applies)''.
            (14) Section 1115(b)(2)(A) of such Act (42 U.S.C. 
        1315(b)(2)(A)) is amended by striking ``, and 
        402(a)(19) (relating to the work incentive program)''.
            (15) Section 1902(a)(10)(A)(i)(I) of such Act (42 
        U.S.C. 1396a(a)(19)(A)(i)(I)) is amended by striking 
        ``, or considered by the State to be receiving such aid 
        as authorized under section 482(e)(6)''.
            (16) Section 51(c)(2) of the Internal Revenue Code 
        of 1986 is amended by striking subparagraph (B).

           Subtitle B--Child and Family Services Block Grant

SEC. 3201. CHILD AND FAMILY SERVICES BLOCK GRANT.

    The Child Abuse Prevention and Treatment Act (42 U.S.C. 
5101 et seq.) is amended to read as follows:

``SECTION 1. SHORT TITLE.

    ``This Act may be cited as the `Child and Family Services 
Block Grant Act of 1996'.

``SEC. 2. FINDINGS.

    ``The Congress finds the following:
            ``(1) Each year, close to 1,000,000 American 
        children are victims of abuse and neglect.
            ``(2) Many of these children and their families 
        fail to receive adequate protection or treatment.
            ``(3) The problem of child abuse and neglect 
        requires a comprehensive approach that--
                    ``(A) integrates the work of social 
                service, legal, health, mental health, 
                education, and substance abuse agencies and 
                organizations;
                    ``(B) strengthens coordination among all 
                levels of government, and with private 
                agencies, civic, religious, and professional 
                organizations, and individual volunteers;
                    ``(C) emphasizes the need for abuse and 
                neglect prevention, assessment, investigation, 
                and treatment at the neighborhood level;
                    ``(D) ensures properly trained and support 
                staff with specialized knowledge, to carry out 
                their child protection duties; and
                    ``(E) is sensitive to ethnic and cultural 
                diversity.
            ``(4) The child protection system should be 
        comprehensive, child-centered, family-focused, and 
        community-based, should incorporate all appropriate 
        measures to prevent the occurrence or recurrence of 
        child abuse and neglect, and should promote physical 
        and psychological recovery and social reintegration in 
        an environment that fosters the health, safety, self-
        respect, and dignity of the child.
            ``(5) The Federal Government should provide 
        leadership and assist communities in their child and 
        family protection efforts by--
                    ``(A) generating and sharing knowledge 
                relevant to child and family protection, 
                including the development of models for service 
                delivery;
                    ``(B) strengthening the capacity of States 
                to assist communities;
                    ``(C) helping communities to carry out 
                their child and family protection plans by 
                promoting the competence of professional, 
                paraprofessional, and volunteer resources; and
                    ``(D) providing leadership to end the abuse 
                and neglect of the Nation's children and youth.

``SEC. 3. PURPOSES.

    ``The purposes of this Act are the following:
            ``(1) To assist each State in improving the child 
        protective service systems of such State by--
                    ``(A) improving risk and safety assessment 
                tools and protocols;
                    ``(B) developing, strengthening, and 
                facilitating training opportunities for 
                individuals who are mandated to report child 
                abuse or neglect or otherwise overseeing, 
                investigating, prosecuting, or providing 
                services to children and families who are at 
                risk of abusing or neglecting their children; 
                and
                    ``(C) developing, implementing, or 
                operating information, education, training, or 
                other programs designed to assist and provide 
                services for families of disabled infants with 
                life-threatening conditions.
            ``(2) To support State efforts to develop, operate, 
        expand and enhance a network of community-based, 
        prevention-focused, family resource and support 
        programs that are culturally competent and that 
        coordinate resources among existing education, 
        vocational rehabilitation, disability, respite, health, 
        mental health, job readiness, self-sufficiency, child 
        and family development, community action, Head Start, 
        child care, child abuse and neglect prevention, 
        juvenile justice, domestic violence prevention and 
        intervention, housing, and other human service 
        organizations within the State.
            ``(3) To facilitate the elimination of barriers to 
        adoption and to provide permanent and loving home 
        environments for children who would benefit from 
        adoption, particularly children with special needs, 
        including disabled infants with life-threatening 
        conditions, by--
                    ``(A) promoting model adoption legislation 
                and procedures in the States and territories of 
                the United States in order to eliminate 
                jurisdictional and legal obstacles to adoption;
                    ``(B) providing a mechanism for the 
                Department of Health and Human Services to--
                            ``(i) promote quality standards for 
                        adoption services, preplacement, post-
                        placement, and post-legal adoption 
                        counseling, and standards to protect 
                        the rights of children in need of 
                        adoption;
                            ``(ii) maintain a national adoption 
                        information exchange system to bring 
                        together children who would benefit 
                        from adoption and qualified prospective 
                        adoptive parents who are seeking such 
                        children, and conduct national 
                        recruitment efforts in order to reach 
                        prospective parents for children 
                        awaiting adoption; and
                            ``(iii) demonstrate expeditious 
                        ways to free children for adoption for 
                        whom it has been determined that 
                        adoption is the appropriate plan; and
                    ``(C) facilitating the identification and 
                recruitment of foster and adoptive families 
                that can meet children's needs.
            ``(4) To respond to the needs of children, in 
        particular those who are drug exposed or afflicted with 
        Acquired Immune Deficiency Syndrome (AIDS), by 
        supporting activities aimed at preventing the 
        abandonment of children, providing support to children 
        and their families, and facilitating the recruitment 
        and training of health and social service personnel.
            ``(5) To carry out any other activities as the 
        Secretary determines are consistent with this Act.

``SEC. 4. DEFINITIONS.

    ``As used in this Act:
            ``(1) Child.--The term `child' means a person who 
        has not attained the lesser of--
                    ``(A) the age of 18; or
                    ``(B) except in the case of sexual abuse, 
                the age specified by the child protection law 
                of the State in which the child resides.
            ``(2) Child abuse and neglect.--The term `child 
        abuse and neglect' means, at a minimum, any recent act 
        or failure to act on the part of a parent or caretaker, 
        which results in death, serious physical or emotional 
        harm, sexual abuse or exploitation, or an act or 
        failure to act which presents an imminent risk of 
        serious harm.
            ``(3) Family resource and support programs.--The 
        term `family resource and support program' means a 
        community-based, prevention-focused entity that--
                    ``(A) provides, through direct service, the 
                core services required under this Act, 
                including--
                            ``(i) parent education, support and 
                        leadership services, together with 
                        services characterized by relationships 
                        between parents and professionals that 
                        are based on equality and respect, and 
                        designed to assist parents in acquiring 
                        parenting skills, learning about child 
                        development, and responding 
                        appropriately to the behavior of their 
                        children;
                            ``(ii) services to facilitate the 
                        ability of parents to serve as 
                        resources to one another (such as 
                        through mutual support and parent self-
                        help groups);
                            ``(iii) early developmental 
                        screening of children to assess any 
                        needs of children, and to identify 
                        types of support that may be provided;
                            ``(iv) outreach services provided 
                        through voluntary home visits and other 
                        methods to assist parents in becoming 
                        aware of and able to participate in 
                        family resources and support program 
                        activities;
                            ``(v) community and social services 
                        to assist families in obtaining 
                        community resources; and
                            ``(vi) followup services;
                    ``(B) provides, or arranges for the 
                provision of, other core services through 
                contracts or agreements with other local 
                agencies; and
                    ``(C) provides access to optional services, 
                directly or by contract, purchase of service, 
                or interagency agreement, including--
                            ``(i) child care, early childhood 
                        development and early intervention 
                        services;
                            ``(ii) self-sufficiency and life 
                        management skills training;
                            ``(iii) education services, such as 
                        scholastic tutoring, literacy training, 
                        and General Educational Degree 
                        services;
                            ``(iv) job readiness skills;
                            ``(v) child abuse and neglect 
                        prevention activities;
                            ``(vi) services that families with 
                        children with disabilities or special 
                        needs may require;
                            ``(vii) community and social 
                        service referral;
                            ``(viii) peer counseling;
                            ``(ix) referral for substance abuse 
                        counseling and treatment; and
                            ``(x) help line services.
            ``(4) Indian tribe and tribal organization.--The 
        terms `Indian tribe' and `tribal organization' shall 
        have the same meanings given such terms in subsections 
        (e) and (l), respectively, of section 4 of the Indian 
        Self-Determination and Education Assistance Act (25 
        U.S.C. 450b(e) and (l)).
            ``(5) Respite services.--The term `respite 
        services' means short-term care services provided in 
        the temporary absence of the regular caregiver (parent, 
        other relative, foster parent, adoptive parent, or 
        guardian) to children who--
                    ``(A) are in danger of abuse or neglect;
                    ``(B) have experienced abuse or neglect; or
                    ``(C) have disabilities, chronic, or 
                terminal illnesses.
        Such services shall be provided within or outside the 
        home of the child, be short-term care (ranging from a 
        few hours to a few weeks of time, per year), and be 
        intended to enable the family to stay together and to 
        keep the child living in the home and community of the 
        child.
            ``(6) Secretary.--The term `Secretary' means the 
        Secretary of Health and Human Services.
            ``(7) Sexual abuse.--The term `sexual abuse' 
        includes--
                    ``(A) the employment, use, persuasion, 
                inducement, enticement, or coercion of any 
                child to engage in, or assist any other person 
                to engage in, any sexually explicit conduct or 
                simulation of such conduct for the purpose of 
                producing a visual depiction of such conduct; 
                or
                    ``(B) the rape, molestation, prostitution, 
                or other form of sexual exploitation of 
                children, or incest with children.
            ``(8) State.--The term `State' means each of the 
        several States, the District of Columbia, the 
        Commonwealth of Puerto Rico, the Virgin Islands, Guam, 
        American Samoa, the Commonwealth of the Northern 
        Mariana Islands, and the Trust Territory of the Pacific 
        Islands.
            ``(9) Withholding of medically indicated 
        treatment.--The term `withholding of medically 
        indicated treatment' means the failure to respond to 
        the infant's life-threatening conditions by providing 
        treatment (including appropriate nutrition, hydration, 
        and medication) which, in the treating physician's or 
        physicians' reasonable medical judgment, will be most 
        likely to be effective in ameliorating or correcting 
        all such conditions, except that the term does not 
        include the failure to provide treatment (other than 
        appropriate nutrition, hydration, or medication) to an 
        infant when, in the treating physician's or physicians' 
        reasonable medical judgment--
                    ``(A) the infant is chronically and 
                irreversibly comatose;
                    ``(B) the provision of such treatment 
                would--
                            ``(i) merely prolong dying;
                            ``(ii) not be effective in 
                        ameliorating or correcting all of the 
                        infant's life-threatening conditions; 
                        or
                            ``(iii) otherwise be futile in 
                        terms of the survival of the infant; or
                    ``(C) the provision of such treatment would 
                be virtually futile in terms of the survival of 
                the infant and the treatment itself under such 
                circumstances would be inhumane.

                     ``TITLE I--GENERAL BLOCK GRANT

``SEC. 101. CHILD AND FAMILY SERVICES BLOCK GRANTS.

    ``(a) Eligibility.--The Secretary shall award grants to 
eligible States that file a State plan that is approved under 
section 102 and that otherwise meet the eligibility 
requirements for grants under this title.
    ``(b) Amount of Grant.--The amount of a grant made to each 
State under subsection (a) for a fiscal year shall be based on 
the population of children under the age of 18 residing in each 
State that applies for a grant under this section.
    ``(c) Use of Amounts.--Amounts received by a State under a 
grant awarded under subsection (a) shall be used to carry out 
the purposes described in section 3.

``SEC. 102. ELIGIBLE STATES.

    ``(a) In General.--As used in this title, the term 
`eligible State' means a State that has submitted to the 
Secretary, not later than October 1, 1996, and every 3 years 
thereafter, a plan which has been signed by the chief executive 
officer of the State and that includes the following:
            ``(1) Outline of child protection program.--A 
        written document that outlines the activities the State 
        intends to conduct to achieve the purpose of this 
        title, including the procedures to be used for--
                    ``(A) receiving and assessing reports of 
                child abuse or neglect;
                    ``(B) investigating such reports;
                    ``(C) with respect to families in which 
                abuse or neglect has been confirmed, providing 
                services or referral for services for families 
                and children where the State makes a 
                determination that the child may safely remain 
                with the family;
                    ``(D) protecting children by removing them 
                from dangerous settings and ensuring their 
                placement in a safe environment;
                    ``(E) providing training for individuals 
                mandated to report suspected cases of child 
                abuse or neglect;
                    ``(F) protecting children in foster care;
                    ``(G) promoting timely adoptions;
                    ``(H) protecting the rights of families, 
                using adult relatives as the preferred 
                placement for children separated from their 
                parents where such relatives meet the relevant 
                State child protection standards; and
                    ``(I) providing services to individuals, 
                families, or communities, either directly or 
                through referral, that are aimed at preventing 
                the occurrence of child abuse and neglect.
            ``(2) Certification of state law requiring the 
        reporting of child abuse and neglect.--A certification 
        that the State has in effect laws that require public 
        officials and other professionals to report, in good 
        faith, actual or suspected instances of child abuse or 
        neglect.
            ``(3) Certification of procedures for screening, 
        safety assessment, and prompt investigation.--A 
        certification that the State has in effect procedures 
        for receiving and responding to reports of child abuse 
        or neglect, including the reports described in 
        paragraph (2), and for the immediate screening, safety 
        assessment, and prompt investigation of such reports.
            ``(4) Certification of state procedures for removal 
        and placement of abused or neglected children.--A 
        certification that the State has in effect procedures 
        for the removal from families and placement of abused 
        or neglected children and of any other child in the 
        same household who may also be in danger of abuse or 
        neglect.
            ``(5) Certification of provisions for appointment 
        of guardian ad litem.--A certification that the State 
        has in effect laws and procedures requiring the 
        appointment of a guardian ad litem in every case 
        involving an abused or neglected child which results in 
        a judicial proceeding.
            ``(6) Certification of provisions for immunity from 
        prosecution.--A certification that the State has in 
        effect laws requiring immunity from prosecution under 
        State and local laws and regulations for individuals 
        making good faith reports of suspected or known 
        instances of child abuse or neglect.
            ``(7) Certification of provisions and procedures 
        for expungement of certain records.--A certification 
        that the State has in effect laws and procedures 
        requiring the facilitation of the prompt expungement of 
        any records that are accessible to the general public 
        or are used for purposes of employment or other 
        background checks in cases determined to be 
        unsubstantiated or false.
            ``(8) Certification of state procedures for 
        developing and reviewing written plans for permanent 
        placement of removed children.--A certification that 
        the State has in effect procedures for ensuring that a 
        written plan is prepared for children who have been 
        removed from their families. Such plan shall specify 
        the goals for achieving a permanent placement for the 
        child in a timely fashion, for ensuring that the 
        written plan is reviewed every 6 months (until such 
        placement is achieved), and for ensuring that 
        information about such children is collected regularly 
        and recorded in case records, and include a description 
        of such procedures.
            ``(9) Certification of state program to provide 
        independent living services.--A certification that the 
        State has in effect a program to provide independent 
        living services, for assistance in making the 
        transition to self-sufficient adulthood, to individuals 
        in the child protection program of the State who are 
        16, but who are not 20 (or, at the option of the State, 
        22), years of age, and who do not have a family to 
        which to be returned.
            ``(10) Certification of state procedures to respond 
        to reporting of medical neglect of disabled infants.--A 
        certification that the State has in place for the 
        purpose of responding to the reporting of medical 
        neglect of infants (including instances of withholding 
        of medically indicated treatment from disabled infants 
        with life-threatening conditions), procedures or 
        programs, or both (within the State child protective 
        services system), to provide for--
                    ``(A) coordination and consultation with 
                individuals designated by and within 
                appropriate health-care facilities;
                    ``(B) prompt notification by individuals 
                designated by and within appropriate health-
                care facilities of cases of suspected medical 
                neglect (including instances of withholding of 
                medically indicated treatment from disabled 
                infants with life-threatening conditions); and
                    ``(C) authority, under State law, for the 
                State child protective service to pursue any 
                legal remedies, including the authority to 
                initiate legal proceedings in a court of 
                competent jurisdiction, as may be necessary to 
                prevent the withholding of medically indicated 
                treatment from disabled infants with life-
                threatening conditions.
            ``(11) Identification of child protection goals.--
        The quantitative goals of the State child protection 
        program.
            ``(12) Certification of child protection 
        standards.--With respect to fiscal years beginning on 
        or after April 1, 1996, a certification that the 
        State--
                    ``(A) has completed an inventory of all 
                children who, before the inventory, had been in 
                foster care under the responsibility of the 
                State for 6 months or more, which determined--
                            ``(i) the appropriateness of, and 
                        necessity for, the foster care 
                        placement;
                            ``(ii) whether the child could or 
                        should be returned to the parents of 
                        the child or should be freed for 
                        adoption or other permanent placement; 
                        and
                            ``(iii) the services necessary to 
                        facilitate the return of the child or 
                        the placement of the child for adoption 
                        or legal guardianship;
                    ``(B) is operating, to the satisfaction of 
                the Secretary--
                            ``(i) a statewide information 
                        system from which can be readily 
                        determined the status, demographic 
                        characteristics, location, and goals 
                        for the placement of every child who is 
                        (or, within the immediately preceding 
                        12 months, has been) in foster care;
                            ``(ii) a case review system for 
                        each child receiving foster care under 
                        the supervision of the State;
                            ``(iii) a service program designed 
                        to help children--
                                    ``(I) where appropriate, 
                                return to families from which 
                                they have been removed; or
                                    ``(II) be placed for 
                                adoption, with a legal 
                                guardian, or if adoption or 
                                legal guardianship is 
                                determined not to be 
                                appropriate for a child, in 
                                some other planned, permanent 
                                living arrangement; and
                            ``(iv) a preplacement preventive 
                        services program designed to help 
                        children at risk for foster care 
                        placement remain with their families; 
                        and
                    ``(C)(i) has reviewed (or not later than 
                October 1, 1997, will review) State policies 
                and administrative and judicial procedures in 
                effect for children abandoned at or shortly 
                after birth (including policies and procedures 
                providing for legal representation of such 
                children); and
                    ``(ii) is implementing (or not later than 
                October 1, 1997, will implement) such policies 
                and procedures as the State determines, on the 
                basis of the review described in clause (i), to 
                be necessary to enable permanent decisions to 
                be made expeditiously with respect to the 
                placement of such children.
            ``(13) Certification of reasonable efforts before 
        placement of children in foster care.--A certification 
        that the State in each case will--
                    ``(A) make reasonable efforts prior to the 
                placement of a child in foster care, to prevent 
                or eliminate the need for removal of the child 
                from the child's home, and to make it possible 
                for the child to return home; and
                    ``(B) with respect to families in which 
                abuse or neglect has been confirmed, provide 
                services or referral for services for families 
                and children where the State makes a 
                determination that the child may safely remain 
                with the family.
            ``(14) Certification of confidentiality and 
        requirements for information disclosure.--
                    ``(A) In general.--A certification that the 
                State has in effect and operational--
                            ``(i) requirements ensuring that 
                        reports and records made and maintained 
                        pursuant to the purposes of this part 
                        shall only be made available to--
                                    ``(I) individuals who are 
                                the subject of the report;
                                    ``(II) Federal, State, or 
                                local government entities, or 
                                any agent of such entities, 
                                having a need for such 
                                information in order to carry 
                                out their responsibilities 
                                under law to protect children 
                                from abuse and neglect;
                                    ``(III) child abuse citizen 
                                review panels;
                                    ``(IV) child fatality 
                                review panels;
                                    ``(V) a grand jury or 
                                court, upon a finding that 
                                information in the record is 
                                necessary for the determination 
                                of an issue before the court or 
                                grand jury; and
                                    ``(VI) other entities or 
                                classes of individuals 
                                statutorily authorized by the 
                                State to receive such 
                                information pursuant to a 
                                legitimate State purpose; and
                            ``(ii) provisions that allow for 
                        public disclosure of the findings or 
                        information about cases of child abuse 
                        or neglect that have resulted in a 
                        child fatality or near fatality.
                    ``(B) Limitation.--Disclosures made 
                pursuant to clause (i) or (ii) shall not 
                include the identifying information concerning 
                the individual initiating a report or complaint 
                alleging suspected instances of child abuse or 
                neglect.
                    ``(C) Definition.--For purposes of this 
                paragraph, the term `near fatality' means an 
                act that, as certified by a physician, places 
                the child in serious or critical condition.
    ``(b) Determinations.--The Secretary shall determine 
whether a plan submitted pursuant to subsection (a) contains 
the material required by subsection (a). The Secretary may not 
require a State to include in such a plan any material not 
described in subsection (a).

``SEC. 103. DATA COLLECTION AND REPORTING.

    ``(a) National Child Abuse and Neglect Data System.--The 
Secretary shall establish a national data collection and 
analysis program--
            ``(1) which, to the extent practicable, coordinates 
        existing State child abuse and neglect reports and 
        which shall include--
                    ``(A) standardized data on substantiated, 
                as well as false, unfounded, or unsubstantiated 
                reports; and
                    ``(B) information on the number of deaths 
                due to child abuse and neglect; and
            ``(2) which shall collect, compile, analyze, and 
        make available State child abuse and neglect reporting 
        information which, to the extent practical, is 
        universal and case-specific and integrated with other 
        case-based foster care and adoption data collected by 
        the Secretary.
    ``(b) Adoption and Foster Care and Analysis and Reporting 
Systems.--The Secretary shall implement a system for the 
collection of data relating to adoption and foster care in the 
United States. Such data collection system shall--
            ``(1) avoid unnecessary diversion of resources from 
        agencies responsible for adoption and foster care;
            ``(2) assure that any data that is collected is 
        reliable and consistent over time and among 
        jurisdictions through the use of uniform definitions 
        and methodologies;
            ``(3) provide comprehensive national information 
        with respect to--
                    ``(A) the demographic characteristics of 
                adoptive and foster children and their 
                biological and adoptive or foster parents;
                    ``(B) the status of the foster care 
                population (including the number of children in 
                foster care, length of placement, type of 
                placement, availability for adoption, and goals 
                for ending or continuing foster care);
                    ``(C) the number and characteristics of--
                            ``(i) children placed in or removed 
                        from foster care;
                            ``(ii) children adopted or with 
                        respect to whom adoptions have been 
                        terminated; and
                            ``(iii) children placed in foster 
                        care outside the State which has 
                        placement and care responsibility; and
                    ``(D) the extent and nature of assistance 
                provided by Federal, State, and local adoption 
                and foster care programs and the 
                characteristics of the children with respect to 
                whom such assistance is provided; and
            ``(4) utilize appropriate requirements and 
        incentives to ensure that the system functions reliably 
        throughout the United States.
    ``(c) Additional Information.--The Secretary may require 
the provision of additional information under the data 
collection system established under subsection (b) if the 
addition of such information is agreed to by a majority of the 
States.
    ``(d) Annual Report by the Secretary.--Within 6 months 
after the end of each fiscal year, the Secretary shall prepare 
a report based on information provided by the States for the 
fiscal year pursuant to this section, and shall make the report 
and such information available to the Congress and the public.

     ``TITLE II--RESEARCH, DEMONSTRATIONS, TRAINING, AND TECHNICAL 
                               ASSISTANCE

``SEC. 201. RESEARCH GRANTS.

    ``(a) In General.--The Secretary, in consultation with 
appropriate Federal officials and recognized experts in the 
field, shall award grants or contracts for the conduct of 
research in accordance with subsection (b).
    ``(b) Research.--Research projects to be conducted using 
amounts received under this section--
            ``(1) shall be designed to provide information to 
        better protect children from abuse or neglect and to 
        improve the well-being of abused or neglected children, 
        with at least a portion of any such research conducted 
        under a project being field initiated;
            ``(2) shall at a minimum, focus on--
                    ``(A) the nature and scope of child abuse 
                and neglect;
                    ``(B) the causes, prevention, assessment, 
                identification, treatment, cultural and 
                socioeconomic distinctions, and the 
                consequences of child abuse and neglect;
                    ``(C) appropriate, effective and culturally 
                sensitive investigative, administrative, and 
                judicial procedures with respect to cases of 
                child abuse; and
                    ``(D) the national incidence of child abuse 
                and neglect, including--
                            ``(i) the extent to which incidents 
                        of child abuse are increasing or 
                        decreasing in number and severity;
                            ``(ii) the incidence of 
                        substantiated and unsubstantiated 
                        reported child abuse cases;
                            ``(iii) the number of substantiated 
                        cases that result in a judicial finding 
                        of child abuse or neglect or related 
                        criminal court convictions;
                            ``(iv) the extent to which the 
                        number of unsubstantiated, unfounded 
                        and false reported cases of child abuse 
                        or neglect have contributed to the 
                        inability of a State to respond 
                        effectively to serious cases of child 
                        abuse or neglect;
                            ``(v) the extent to which the lack 
                        of adequate resources and the lack of 
                        adequate training of reporters have 
                        contributed to the inability of a State 
                        to respond effectively to serious cases 
                        of child abuse and neglect;
                            ``(vi) the number of 
                        unsubstantiated, false, or unfounded 
                        reports that have resulted in a child 
                        being placed in substitute care, and 
                        the duration of such placement;
                            ``(vii) the extent to which 
                        unsubstantiated reports return as more 
                        serious cases of child abuse or 
                        neglect;
                            ``(viii) the incidence and 
                        prevalence of physical, sexual, and 
                        emotional abuse and physical and 
                        emotional neglect in substitute care;
                            ``(ix) the incidence and outcomes 
                        of abuse allegations reported within 
                        the context of divorce, custody, or 
                        other family court proceedings, and the 
                        interaction between this venue and the 
                        child protective services system; and
                            ``(x) the cases of children 
                        reunited with their families or 
                        receiving family preservation services 
                        that result in subsequent substantiated 
                        reports of child abuse and neglect, 
                        including the death of the child; and
            ``(3) may include the appointment of an advisory 
        board to--
                    ``(A) provide recommendations on 
                coordinating Federal, State, and local child 
                abuse and neglect activities at the State level 
                with similar activities at the State and local 
                level pertaining to family violence prevention;
                    ``(B) consider specific modifications 
                needed in State laws and programs to reduce the 
                number of unfounded or unsubstantiated reports 
                of child abuse or neglect while enhancing the 
                ability to identify and substantiate legitimate 
                cases of abuse or neglect which place a child 
                in danger; and
                    ``(C) provide recommendations for 
                modifications needed to facilitate coordinated 
                national and Statewide data collection with 
                respect to child protection and child welfare.

``SEC. 202. NATIONAL CLEARINGHOUSE FOR INFORMATION RELATING TO CHILD 
                    ABUSE.

    ``(a) Establishment.--The Secretary shall, through the 
Department of Health and Human Services, or by one or more 
contracts of not less than 3 years duration provided through a 
competition, establish a national clearinghouse for information 
relating to child abuse.
    ``(b) Functions.--The Secretary shall, through the 
clearinghouse established by subsection (a)--
            ``(1) maintain, coordinate, and disseminate 
        information on all programs, including private 
        programs, that show promise of success with respect to 
        the prevention, assessment, identification, and 
        treatment of child abuse and neglect;
            ``(2) maintain and disseminate information relating 
        to--
                    ``(A) the incidence of cases of child abuse 
                and neglect in the United States;
                    ``(B) the incidence of such cases in 
                populations determined by the Secretary under 
                section 105(a)(1) of the Child Abuse 
                Prevention, Adoption, and Family Services Act 
                of 1988 (as such section was in effect on the 
                day before the date of enactment of this Act); 
                and
                    ``(C) the incidence of any such cases 
                related to alcohol or drug abuse;
            ``(3) disseminate information related to data 
        collected and reported by States pursuant to section 
        103;
            ``(4) compile, analyze, and publish a summary of 
        the research conducted under section 201; and
            ``(5) solicit public comment on the components of 
        such clearinghouse.

``SEC. 203. GRANTS FOR DEMONSTRATION PROJECTS.

    ``(a) Awarding of General Grants.--The Secretary may make 
grants to, and enter into contracts with, public and nonprofit 
private agencies or organizations (or combinations of such 
agencies or organizations) for the purpose of developing, 
implementing, and operating time limited, demonstration 
programs and projects for the following purposes:
            ``(1) Innovative programs and projects.--The 
        Secretary may award grants to public agencies that 
        demonstrate innovation in responding to reports of 
        child abuse and neglect including programs of 
        collaborative partnerships between the State child 
        protective service agency, community social service 
        agencies and family support programs, schools, churches 
        and synagogues, and other community agencies to allow 
        for the establishment of a triage system that--
                    ``(A) accepts, screens and assesses reports 
                received to determine which such reports 
                require an intensive intervention and which 
                require voluntary referral to another agency, 
                program or project;
                    ``(B) provides, either directly or through 
                referral, a variety of community-linked 
                services to assist families in preventing child 
                abuse and neglect; and
                    ``(C) provides further investigation and 
                intensive intervention where the child's safety 
                is in jeopardy.
            ``(2) Kinship care programs and projects.--The 
        Secretary may award grants to public entities to assist 
        such entities in developing or implementing procedures 
        using adult relatives as the preferred placement for 
        children removed from their home, where such relatives 
        are determined to be capable of providing a safe 
        nurturing environment for the child and where, to the 
        maximum extent practicable, such relatives comply with 
        relevant State child protection standards.
            ``(3) Adoption opportunities.--The Secretary may 
        award grants to public entities to assist such entities 
        in developing or implementing programs to expand 
        opportunities for the adoption of children with special 
        needs.
            ``(4) Family resource centers.--The Secretary may 
        award grants to public or nonprofit private entities to 
        provide for the establishment of family resource 
        programs and support services that--
                    ``(A) develop, expand, and enhance 
                statewide networks of community-based, 
                prevention-focused centers, programs, or 
                services that provide comprehensive support for 
                families;
                    ``(B) promote the development of parental 
                competencies and capacities in order to 
                increase family stability;
                    ``(C) support the additional needs of 
                families with children with disabilities;
                    ``(D) foster the development of a continuum 
                of preventive services for children and 
                families through State and community-based 
                collaborations and partnerships (both public 
                and private); and
                    ``(E) maximize funding for the financing, 
                planning, community mobilization, 
                collaboration, assessment, information and 
                referral, startup, training and technical 
                assistance, information management, reporting, 
                and evaluation costs for establishing, 
                operating, or expanding a statewide network of 
                community-based, prevention-focused family 
                resource and support services.
            ``(5) Other innovative programs.--The Secretary may 
        award grants to public or private nonprofit 
        organizations to assist such entities in developing or 
        implementing innovative programs and projects that show 
        promise of preventing and treating cases of child abuse 
        and neglect (such as Parents Anonymous).
    ``(b) Grants for Abandoned Infant Programs.--The Secretary 
may award grants to public and nonprofit private entities to 
assist such entities in developing or implementing procedures--
            ``(1) to prevent the abandonment of infants and 
        young children, including the provision of services to 
        members of the natural family for any condition that 
        increases the probability of abandonment of an infant 
        or young child;
            ``(2) to identify and address the needs of 
        abandoned infants and young children;
            ``(3) to assist abandoned infants and young 
        children to reside with their natural families or in 
        foster care, as appropriate;
            ``(4) to recruit, train, and retain foster families 
        for abandoned infants and young children;
            ``(5) to carry out residential care programs for 
        abandoned infants and young children who are unable to 
        reside with their families or to be placed in foster 
        care;
            ``(6) to carry out programs of respite care for 
        families and foster families of infants and young 
        children; and
            ``(7) to recruit and train health and social 
        services personnel to work with families, foster care 
        families, and residential care programs for abandoned 
        infants and young children.
    ``(c) Evaluation.--In making grants for demonstration 
projects under this section, the Secretary shall require all 
such projects to be evaluated for their effectiveness. Funding 
for such evaluations shall be provided either as a stated 
percentage of a demonstration grant or as a separate grant 
entered into by the Secretary for the purpose of evaluating a 
particular demonstration project or group of projects.

``SEC. 204. TECHNICAL ASSISTANCE.

    ``(a) Child Abuse and Neglect.--
            ``(1) In general.--The Secretary shall provide 
        technical assistance under this title to States to 
        assist such States in planning, improving, developing, 
        and carrying out programs and activities relating to 
        the prevention, assessment identification, and 
        treatment of child abuse and neglect.
            ``(2) Evaluation.--Technical assistance provided 
        under paragraph (1) may include an evaluation or 
        identification of--
                    ``(A) various methods and procedures for 
                the investigation, assessment, and prosecution 
                of child physical and sexual abuse cases;
                    ``(B) ways to mitigate psychological trauma 
                to the child victim; and
                    ``(C) effective programs carried out by the 
                States under this Act.
    ``(b) Adoption Opportunities.--The Secretary shall provide, 
directly or by grant to or contract with public or private 
nonprofit agencies or organizations--
            ``(1) technical assistance and resource and 
        referral information to assist State or local 
        governments with termination of parental rights issues, 
        in recruiting and retaining adoptive families, in the 
        successful placement of children with special needs, 
        and in the provision of pre- and post-placement 
        services, including post-legal adoption services; and
            ``(2) other assistance to help State and local 
        governments replicate successful adoption-related 
        projects from other areas in the United States.

``SEC. 205. TRAINING RESOURCES.

    ``(a) Training Programs.--The Secretary may award grants to 
public or private nonprofit organizations--
            ``(1) for the training of professional and 
        paraprofessional personnel in the fields of medicine, 
        law, education, law enforcement, social work, and other 
        relevant fields who are engaged in, or intend to work 
        in, the field of prevention, identification, and 
        treatment of child abuse and neglect, including the 
        links between domestic violence and child abuse;
            ``(2) to provide culturally specific instruction in 
        methods of protecting children from child abuse and 
        neglect to children and to persons responsible for the 
        welfare of children, including parents of and persons 
        who work with children with disabilities; and
            ``(3) to improve the recruitment, selection, and 
        training of volunteers serving in private and public 
        nonprofit children, youth and family service 
        organizations in order to prevent child abuse and 
        neglect through collaborative analysis of current 
        recruitment, selection, and training programs and 
        development of model programs for dissemination and 
        replication nationally.
    ``(b) Dissemination of Information.--The Secretary may 
provide for and disseminate information relating to various 
training resources available at the State and local level to--
            ``(1) individuals who are engaged, or who intend to 
        engage, in the prevention, identification, assessment, 
        and treatment of child abuse and neglect; and
            ``(2) appropriate State and local officials, 
        including prosecutors, to assist in training law 
        enforcement, legal, judicial, medical, mental health, 
        education, and child welfare personnel in appropriate 
        methods of interacting during investigative, 
        administrative, and judicial proceedings with children 
        who have been subjected to abuse.

``SEC. 206. APPLICATIONS AND AMOUNTS OF GRANTS.

    ``(a) Requirement of Application.--The Secretary may not 
make a grant to a State or other entity under this title 
unless--
            ``(1) an application for the grant is submitted to 
        the Secretary;
            ``(2) with respect to carrying out the purpose for 
        which the grant is to be made, the application provides 
        assurances of compliance satisfactory to the Secretary; 
        and
            ``(3) the application otherwise is in such form, is 
        made in such manner, and contains such agreements, 
        assurances, and information as the Secretary determines 
        to be necessary to carry out this title.
    ``(b) Amount of Grant.--The Secretary shall determine the 
amount of a grant to be awarded under this title.

``SEC. 207. PEER REVIEW FOR GRANTS.

    ``(a) Establishment of Peer Review Process.--
            ``(1) In general.--The Secretary shall, in 
        consultation with experts in the field and other 
        Federal agencies, establish a formal, rigorous, and 
        meritorious peer review process for purposes of 
        evaluating and reviewing applications for grants under 
        this title and determining the relative merits of the 
        projects for which such assistance is requested. The 
        purpose of this process is to enhance the quality and 
        usefulness of research in the field of child abuse and 
        neglect.
            ``(2) Requirements for members.--In establishing 
        the process required by paragraph (1), the Secretary 
        shall appoint to the peer review panels only members 
        who are experts in the field of child abuse and neglect 
        or related disciplines, with appropriate expertise in 
        the application to be reviewed, and who are not 
        individuals who are officers or employees of the 
        Administration for Children and Families. The panels 
        shall meet as often as is necessary to facilitate the 
        expeditious review of applications for grants and 
        contracts under this title, but may not meet less than 
        once a year. The Secretary shall ensure that the peer 
        review panel utilizes scientifically valid review 
        criteria and scoring guidelines for review committees.
    ``(b) Review of Applications for Assistance.--Each peer 
review panel established under subsection (a)(1) that reviews 
any application for a grant shall--
            ``(1) determine and evaluate the merit of each 
        project described in such application;
            ``(2) rank such application with respect to all 
        other applications it reviews in the same priority area 
        for the fiscal year involved, according to the relative 
        merit of all of the projects that are described in such 
        application and for which financial assistance is 
        requested; and
            ``(3) make recommendations to the Secretary 
        concerning whether the application for the project 
        shall be approved.
The Secretary shall award grants under this title on the basis 
of competitive review.
    ``(c) Notice of Approval.--
            ``(1) In general.--The Secretary shall provide 
        grants under this title from among the projects which 
        the peer review panels established under subsection 
        (a)(1) have determined to have merit.
            ``(2) Requirement of explanation.--In the instance 
        in which the Secretary approves an application for a 
        program under this title without having approved all 
        applications ranked above such application, the 
        Secretary shall append to the approved application a 
        detailed explanation of the reasons relied on for 
        approving the application and for failing to approve 
        each pending application that is superior in merit.

``SEC. 208. NATIONAL RANDOM SAMPLE STUDY OF CHILD WELFARE.

    ``(a) In General.--The Secretary shall conduct a national 
study based on random samples of children who are at risk of 
child abuse or neglect, or are determined by States to have 
been abused or neglected, and such other research as may be 
necessary.
    ``(b) Requirements.--The study required by subsection (a) 
shall--
            ``(1) have a longitudinal component; and
            ``(2) yield data reliable at the State level for as 
        many States as the Secretary determines is feasible.
    ``(c) Preferred Contents.--In conducting the study required 
by subsection (a), the Secretary should--
            ``(1) collect data on the child protection programs 
        of different small States (or different groups of such 
        States) in different years to yield an occasional 
        picture of the child protection programs of such 
        States;
            ``(2) carefully consider selecting the sample from 
        cases of confirmed abuse or neglect; and
            ``(3) follow each case for several years while 
        obtaining information on, among other things--
                    ``(A) the type of abuse or neglect 
                involved;
                    ``(B) the frequency of contact with State 
                or local agencies;
                    ``(C) whether the child involved has been 
                separated from the family, and, if so, under 
                what circumstances;
                    ``(D) the number, type, and characteristics 
                of out-of-home placements of the child; and
                    ``(E) the average duration of each 
                placement.
    ``(d) Reports.--
            ``(1) In general.--From time to time, the Secretary 
        shall prepare reports summarizing the results of the 
        study required by subsection (a).
            ``(2) Availability.--The Secretary shall make 
        available to the public any report prepared under 
        paragraph (1), in writing or in the form of an 
        electronic data tape.
            ``(3) Authority to charge fee.--The Secretary may 
        charge and collect a fee for the furnishing of reports 
        under paragraph (2).
            ``(4) Funding.--The Secretary shall carry out this 
        section using amounts made available under section 425 
        of the Social Security Act.

                    ``TITLE III--GENERAL PROVISIONS

``SEC. 301. AUTHORIZATION OF APPROPRIATIONS.

    ``(a) Title I.--There are authorized to be appropriated to 
carry out title I, $230,000,000 for fiscal year 1996, and such 
sums as may be necessary for each of the fiscal years 1997 
through 2002.
    ``(b) Title II.--
            ``(1) In general.--Of the amount appropriated under 
        subsection (a) for a fiscal year, the Secretary shall 
        make available 12 percent of such amount to carry out 
        title II (except for sections 203 and 208).
            ``(2) Grants for demonstration projects.--Of the 
        amount made available under paragraph (1) for a fiscal 
        year, the Secretary shall make available not less than 
        40 percent of such amount to carry out section 203.
    ``(c) Indian Tribes.--Of the amount appropriated under 
subsection (a) for a fiscal year, the Secretary shall make 
available 1 percent of such amount to provide grants and 
contracts to Indian tribes and Tribal Organizations.
    ``(d) Availability of Appropriations.--Amounts appropriated 
under subsection (a) shall remain available until expended.

``SEC. 302. GRANTS TO STATES FOR PROGRAMS RELATING TO THE INVESTIGATION 
                    AND PROSECUTION OF CHILD ABUSE AND NEGLECT CASES.

    ``(a) Grants to States.--The Secretary, in consultation 
with the Attorney General, is authorized to make grants to the 
States for the purpose of assisting States in developing, 
establishing, and operating programs designed to improve--
            ``(1) the handling of child abuse and neglect 
        cases, particularly cases of child sexual abuse and 
        exploitation, in a manner which limits additional 
        trauma to the child victim;
            ``(2) the handling of cases of suspected child 
        abuse or neglect related fatalities; and
            ``(3) the investigation and prosecution of cases of 
        child abuse and neglect, particularly child sexual 
        abuse and exploitation.
    ``(b) Eligibility Requirements.--In order for a State to 
qualify for assistance under this section, such State shall--
            ``(1) be an eligible State under section 102;
            ``(2) establish a task force as provided in 
        subsection (c);
            ``(3) fulfill the requirements of subsection (d);
            ``(4) submit annually an application to the 
        Secretary at such time and containing such information 
        and assurances as the Secretary considers necessary, 
        including an assurance that the State will--
                    ``(A) make such reports to the Secretary as 
                may reasonably be required; and
                    ``(B) maintain and provide access to 
                records relating to activities under subsection 
                (a); and
            ``(5) submit annually to the Secretary a report on 
        the manner in which assistance received under this 
        program was expended throughout the State, with 
        particular attention focused on the areas described in 
        paragraphs (1) through (3) of subsection (a).
    ``(c) State Task Forces.--
            ``(1) General rule.--Except as provided in 
        paragraph (2), a State requesting assistance under this 
        section shall establish or designate, and maintain, a 
        State multidisciplinary task force on children's 
        justice (hereafter in this section referred to as 
        `State task force') composed of professionals with 
        knowledge and experience relating to the criminal 
        justice system and issues of child physical abuse, 
        child neglect, child sexual abuse and exploitation, and 
        child maltreatment related fatalities. The State task 
        force shall include--
                    ``(A) individuals representing the law 
                enforcement community;
                    ``(B) judges and attorneys involved in both 
                civil and criminal court proceedings related to 
                child abuse and neglect (including individuals 
                involved with the defense as well as the 
                prosecution of such cases);
                    ``(C) child advocates, including both 
                attorneys for children and, where such programs 
                are in operation, court appointed special 
                advocates;
                    ``(D) health and mental health 
                professionals;
                    ``(E) individuals representing child 
                protective service agencies;
                    ``(F) individuals experienced in working 
                with children with disabilities;
                    ``(G) parents; and
                    ``(H) representatives of parents' groups.
            ``(2) Existing task force.--As determined by the 
        Secretary, a State commission or task force established 
        after January 1, 1983, with substantially comparable 
        membership and functions, may be considered the State 
        task force for purposes of this subsection.
    ``(d) State Task Force Study.--Before a State receives 
assistance under this section, and at 3-year intervals 
thereafter, the State task force shall comprehensively--
            ``(1) review and evaluate State investigative, 
        administrative and both civil and criminal judicial 
        handling of cases of child abuse and neglect, 
        particularly child sexual abuse and exploitation, as 
        well as cases involving suspected child maltreatment 
        related fatalities and cases involving a potential 
        combination of jurisdictions, such as interstate, 
        Federal-State, and State-Tribal; and
            ``(2) make policy and training recommendations in 
        each of the categories described in subsection (e).
The task force may make such other comments and recommendations 
as are considered relevant and useful.
    ``(e) Adoption of State Task Force Recommendations.--
            ``(1) General rule.--Subject to the provisions of 
        paragraph (2), before a State receives assistance under 
        this section, a State shall adopt recommendations of 
        the State task force in each of the following 
        categories--
                    ``(A) investigative, administrative, and 
                judicial handling of cases of child abuse and 
                neglect, particularly child sexual abuse and 
                exploitation, as well as cases involving 
                suspected child maltreatment related fatalities 
                and cases involving a potential combination of 
                jurisdictions, such as interstate, Federal-
                State, and State-Tribal, in a manner which 
                reduces the additional trauma to the child 
                victim and the victim's family and which also 
                ensures procedural fairness to the accused;
                    ``(B) experimental, model and demonstration 
                programs for testing innovative approaches and 
                techniques which may improve the prompt and 
                successful resolution of civil and criminal 
                court proceedings or enhance the effectiveness 
                of judicial and administrative action in child 
                abuse and neglect cases, particularly child 
                sexual abuse and exploitation cases, including 
                the enhancement of performance of court-
                appointed attorneys and guardians ad litem for 
                children; and
                    ``(C) reform of State laws, ordinances, 
                regulations, protocols and procedures to 
                provide comprehensive protection for children 
                from abuse, particularly child sexual abuse and 
                exploitation, while ensuring fairness to all 
                affected persons.
            ``(2) Exemption.--As determined by the Secretary, a 
        State shall be considered to be in fulfillment of the 
        requirements of this subsection if--
                    ``(A) the State adopts an alternative to 
                the recommendations of the State task force, 
                which carries out the purpose of this section, 
                in each of the categories under paragraph (1) 
                for which the State task force's 
                recommendations are not adopted; or
                    ``(B) the State is making substantial 
                progress toward adopting recommendations of the 
                State task force or a comparable alternative to 
                such recommendations.
    ``(f) Funds Available.--For grants under this section, the 
Secretary shall use the amount authorized by section 1404A of 
the Victims of Crime Act of 1984.

``SEC. 303. TRANSITIONAL PROVISION.

    ``A State or other entity that has a grant, contract, or 
cooperative agreement in effect, on the date of enactment of 
this Act, under the Family Resource and Support Program, the 
Community-Based Family Resource Program, the Family Support 
Center Program, the Emergency Child Abuse Prevention Grant 
Program, the Abandoned Infants Assistance Act of 1988, or the 
Temporary Child Care for Children with Disabilities and Crisis 
Nurseries Programs shall continue to receive funds under such 
grant, contract, or cooperative agreement, subject to the 
original terms under which such funds were provided, through 
the end of the applicable grant, contract, or agreement cycle.

``SEC. 304. RULE OF CONSTRUCTION.

    ``(a) In General.--Nothing in this Act, or in part B or E 
of title IV of the Social Security Act, shall be construed--
            ``(1) as establishing a Federal requirement that a 
        parent or legal guardian provide a child any medical 
        service or treatment against the religious beliefs of 
        the parent or legal guardian; and
            ``(2) to require that a State find, or to prohibit 
        a State from finding, abuse or neglect in cases in 
        which a parent or legal guardian relies solely or 
        partially upon spiritual means rather than medical 
        treatment, in accordance with the religious beliefs of 
        the parent or legal guardian.
    ``(b) State Requirement.--Notwithstanding subsection (a), a 
State shall have in place authority under State law to permit 
the child protective service system of the State to pursue any 
legal remedies, including the authority to initiate legal 
proceedings in a court of competent jurisdiction, to provide 
medical care or treatment for a child when such care or 
treatment is necessary to prevent or remedy serious harm to the 
child, or to prevent the withholding of medically indicated 
treatment from children with life threatening conditions. 
Except with respect to the withholding of medically indicated 
treatments from disabled infants with life threatening 
conditions, case by case determinations concerning the exercise 
of the authority of this subsection shall be within the sole 
discretion of the State.''.

SEC. 3202. REAUTHORIZATIONS.

    (a) Missing Children's Assistance Act.--Section 408 of the 
Missing Children's Assistance Act (42 U.S.C. 5777) is amended--
            (1) by striking ``To'' and inserting ``(a) In 
        General.--To''
            (2) by striking ``and 1996'' and inserting ``1996, 
        and 1997''; and
            (3) by adding at the end thereof the following new 
        subsection:
    ``(b) Evaluation.--The Administrator shall use not more 
than 5 percent of the amount appropriated for a fiscal year 
under subsection (a) to conduct an evaluation of the 
effectiveness of the programs and activities established and 
operated under this title.''.
    (b) Victims of Child Abuse Act of 1990.--Section 214B of 
the Victims of Child Abuse Act of 1990 (42 U.S.C. 13004) is 
amended--
            (1) in subsection (a)(2), by striking ``and 1996'' 
        and inserting ``1996, and 1997''; and
            (2) in subsection (b)(2), by striking ``and 1996'' 
        and inserting ``1996 and 1997''.

SEC. 3203. REPEALS.

    (a) In General.--The following provisions of law are 
repealed:
            (1) Title II of the Child Abuse Prevention and 
        Treatment and Adoption Reform Act of 1978 (42 U.S.C. 
        5111 et seq.).
            (2) The Abandoned Infants Assistance Act of 1988 
        (42 U.S.C. 670 note).
            (3) The Temporary Child Care for Children with 
        Disabilities and Crisis Nurseries Act of 1986 (42 
        U.S.C. 5117 et seq.).
            (4) Subtitle F of title VII of the Stewart B. 
        McKinney Homeless Assistance Act (42 U.S.C. 11481 et 
        seq.).
    (b) Conforming Amendments.--
            (1) Recommended legislation.--After consultation 
        with the appropriate committees of the Congress and the 
        Director of the Office of Management and Budget, the 
        Secretary of Health and Human Services shall prepare 
        and submit to the Congress a legislative proposal in 
        the form of an implementing bill containing technical 
        and conforming amendments to reflect the repeals made 
        by this section.
            (2) Submission to congress.--Not later than 6 
        months after the date of enactment of this chapter, the 
        Secretary of Health and Human Services shall submit the 
        implementing bill referred to under paragraph (1).

                         Subtitle C--Child Care

SEC. 3301. SHORT TITLE AND REFERENCES.

    (a) Short Title.--This subtitle may be cited as the ``Child 
Care and Development Block Grant Amendments of 1996''.
    (b) References.--Except as otherwise expressly provided, 
whenever in this subtitle an amendment or repeal is expressed 
in terms of an amendment to, or repeal of, a section or other 
provision, the reference shall be considered to be made to a 
section or other provision of the Child Care and Development 
Block Grant Act of 1990 (42 U.S.C. 9858 et seq.).

SEC. 3302. GOALS.

    Section 658A (42 U.S.C. 9801 note) is amended--
            (1) in the section heading by inserting ``and 
        goals'' after ``title'';
            (2) by inserting ``(a) Short Title.--'' before 
        ``This''; and
            (3) by adding at the end the following:
    ``(b) Goals.--The goals of this subchapter are--
            ``(1) to allow each State maximum flexibility in 
        developing child care programs and policies that best 
        suit the needs of children and parents within such 
        State;
            ``(2) to promote parental choice to empower working 
        parents to make their own decisions on the child care 
        that best suits their family's needs;
            ``(3) to encourage States to provide consumer 
        education information to help parents make informed 
        choices about child care;
            ``(4) to assist States to provide child care to 
        parents trying to achieve independence from public 
        assistance; and
            ``(5) to assist States in implementing the health, 
        safety, licensing, and registration standards 
        established in State regulations.''.

SEC. 3303. AUTHORIZATION OF APPROPRIATIONS AND ENTITLEMENT AUTHORITY.

    (a) In General.--Section 658B (42 U.S.C. 9858) is amended 
to read as follows:

``SEC. 658B. AUTHORIZATION OF APPROPRIATIONS.

    ``There is authorized to be appropriated to carry out this 
subchapter $1,000,000,000 for each of the fiscal years 1996 
through 2002.''.
    (b) Social Security Act.--Part A of title IV of the Social 
Security Act (42 U.S.C. 601-617) is amended by adding at the 
end the following new section:

``SEC. 418. FUNDING FOR CHILD CARE.

    ``(a) General Child Care Entitlement.--
            ``(1) General entitlement.--Subject to the amount 
        appropriated under paragraph (3), each State shall, for 
        the purpose of providing child care assistance, be 
        entitled to payments under a grant under this 
        subsection for a fiscal year in an amount equal to--
                    ``(A) the sum of the total amount required 
                to be paid to the State under section 403 for 
                fiscal year 1994 or 1995 (whichever is greater) 
                with respect to amounts expended for child care 
                under section--
                            ``(i) 402(g) of this Act (as such 
                        section was in effect before October 1, 
                        1995); and
                            ``(ii) 402(i) of this Act (as so in 
                        effect); or
                    ``(B) the average of the total amounts 
                required to be paid to the State for fiscal 
                years 1992 through 1994 under the sections 
                referred to in subparagraph (A);
        whichever is greater.
            ``(2) Remainder.--
                    ``(A) Grants.--The Secretary shall use any 
                amounts appropriated for a fiscal year under 
                paragraph (3), and remaining after the 
                reservation described in paragraph (4) and 
                after grants are awarded under paragraph (1), 
                to make grants to States under this paragraph.
                    ``(B) Amount.--Subject to subparagraph (C), 
                the amount of a grant awarded to a State for a 
                fiscal year under this paragraph shall be based 
                on the formula used for determining the amount 
                of Federal payments to the State under section 
                403(n) (as such section was in effect before 
                October 1, 1995).
                    ``(C) Matching requirement.--The Secretary 
                shall pay to each eligible State in a fiscal 
                year an amount, under a grant under 
                subparagraph (A), equal to the Federal medical 
                assistance percentage for such State for fiscal 
                year 1995 (as defined in section 1905(b)) of so 
                much of the expenditures by the State for child 
                care in such year as exceed the State set-aside 
                for such State under paragraph (1)(A) for such 
                year and the amount of State expenditures in 
                fiscal year 1994 or 1995 (whichever is greater) 
                that equal the non-Federal share for the 
                programs described in subparagraph (A) of 
                paragraph (1).
                    ``(D) Redistribution.--
                            ``(i) In general.--With respect to 
                        any fiscal year, if the Secretary 
                        determines (in accordance with clause 
                        (ii)) that amounts under any grant 
                        awarded to a State under this paragraph 
                        for such fiscal year will not be used 
                        by such State during such fiscal year 
                        for carrying out the purpose for which 
                        the grant is made, the Secretary shall 
                        make such amounts available in the 
                        subsequent fiscal year for carrying out 
                        such purpose to 1 or more States which 
                        apply for such funds to the extent the 
                        Secretary determines that such States 
                        will be able to use such additional 
                        amounts for carrying out such purpose. 
                        Such available amounts shall be 
                        redistributed to a State pursuant to 
                        section 402(i) (as such section was in 
                        effect before October 1, 1995) by 
                        substituting `the number of children 
                        residing in all States applying for 
                        such funds' for `the number of children 
                        residing in the United States in the 
                        second preceding fiscal year'.
                            ``(ii) Time of determination and 
                        distribution.--The determination of the 
                        Secretary under clause (i) for a fiscal 
                        year shall be made not later than the 
                        end of the first quarter of the 
                        subsequent fiscal year. The 
                        redistribution of amounts under clause 
                        (i) shall be made as close as 
                        practicable to the date on which such 
                        determination is made. Any amount made 
                        available to a State from an 
                        appropriation for a fiscal year in 
                        accordance with this subparagraph 
                        shall, for purposes of this part, be 
                        regarded as part of such State's 
                        payment (as determined under this 
                        subsection) for the fiscal year in 
                        which the redistribution is made.
            ``(3) Appropriation.--For grants under this 
        section, there are appropriated--
                    ``(A) $1,967,000,000 for fiscal year 1997;
                    ``(B) $2,067,000,000 for fiscal year 1998;
                    ``(C) $2,167,000,000 for fiscal year 1999;
                    ``(D) $2,367,000,000 for fiscal year 2000;
                    ``(E) $2,567,000,000 for fiscal year 2001; 
                and
                    ``(F) $2,717,000,000 for fiscal year 2002.
            ``(4) Indian tribes.--The Secretary shall reserve 
        not more than 1 percent of the aggregate amount 
        appropriated to carry out this section in each fiscal 
        year for payments to Indian tribes and tribal 
        organizations.
    ``(b) Use of Funds.--
            ``(1) In general.--Amounts received by a State 
        under this section shall only be used to provide child 
        care assistance. Amounts received by a State under a 
        grant under subsection (a)(1) shall be available for 
        use by the State without fiscal year limitation.
            ``(2) Use for certain populations.--A State shall 
        ensure that not less than 70 percent of the total 
        amount of funds received by the State in a fiscal year 
        under this section are used to provide child care 
        assistance to families who are receiving assistance 
        under a State program under this part, families who are 
        attempting through work activities to transition off of 
        such assistance program, and families who are at risk 
        of becoming dependent on such assistance program.
    ``(c) Application of Child Care and Development Block Grant 
Act of 1990.--Notwithstanding any other provision of law, 
amounts provided to a State under this section shall be 
transferred to the lead agency under the Child Care and 
Development Block Grant Act of 1990, integrated by the State 
into the programs established by the State under such Act, and 
be subject to requirements and limitations of such Act.
    ``(d) Definition.--As used in this section, the term 
`State' means each of the 50 States or the District of 
Columbia.''.

SEC. 3304. LEAD AGENCY.

    Section 658D(b) (42 U.S.C. 9858b(b)) is amended--
            (1) in paragraph (1)--
                    (A) in subparagraph (A), by striking 
                ``State'' the first place that such appears and 
                inserting ``governmental or nongovernmental''; 
                and
                    (B) in subparagraph (C), by inserting 
                ``with sufficient time and Statewide 
                distribution of the notice of such hearing,'' 
                after ``hearing in the State''; and
            (2) in paragraph (2), by striking the second 
        sentence.

SEC. 3305. APPLICATION AND PLAN.

    Section 658E (42 U.S.C. 9858c) is amended--
            (1) in subsection (b)--
                    (A) by striking ``implemented--'' and all 
                that follows through ``(2)'' and inserting 
                ``implemented''; and
                    (B) by striking ``for subsequent State 
                plans'';
            (2) in subsection (c)--
                    (A) in paragraph (2)--
                            (i) in subparagraph (A)--
                                    (I) in clause (i) by 
                                striking ``, other than through 
                                assistance provided under 
                                paragraph (3)(C),''; and
                                    (II) by striking ``except'' 
                                and all that follows through 
                                ``1992'', and inserting ``and 
                                provide a detailed description 
                                of the procedures the State 
                                will implement to carry out the 
                                requirements of this 
                                subparagraph'';
                            (ii) in subparagraph (B)--
                                    (I) by striking ``Provide 
                                assurances'' and inserting 
                                ``Certify''; and
                                    (II) by inserting before 
                                the period at the end ``and 
                                provide a detailed description 
                                of such procedures'';
                            (iii) in subparagraph (C)--
                                    (I) by striking ``Provide 
                                assurances'' and inserting 
                                ``Certify''; and
                                    (II) by inserting before 
                                the period at the end ``and 
                                provide a detailed description 
                                of how such record is 
                                maintained and is made 
                                available'';
                            (iv) by amending subparagraph (D) 
                        to read as follows:
                    ``(D) Consumer education information.--
                Certify that the State will collect and 
                disseminate to parents of eligible children and 
                the general public, consumer education 
                information that will promote informed child 
                care choices.'';
                            (v) in subparagraph (E), to read as 
                        follows:
                    ``(E) Compliance with state licensing 
                requirements.--
                            ``(i) In general.--Certify that the 
                        State has in effect licensing 
                        requirements applicable to child care 
                        services provided within the State, and 
                        provide a detailed description of such 
                        requirements and of how such 
                        requirements are effectively enforced. 
                        Nothing in the preceding sentence shall 
                        be construed to require that licensing 
                        requirements be applied to specific 
                        types of providers of child care 
                        services.
                            ``(ii) Indian tribes and tribal 
                        organizations.--In lieu of any 
                        licensing and regulatory requirements 
                        applicable under State and local law, 
                        the Secretary, in consultation with 
                        Indian tribes and tribal organizations, 
                        shall develop minimum child care 
                        standards (that appropriately reflect 
                        tribal needs and available resources) 
                        that shall be applicable to Indian 
                        tribes and tribal organization 
                        receiving assistance under this 
                        subchapter.'';
                            (vi) in subparagraph (G) by 
                        striking ``Provide assurances'' and 
                        inserting ``Certify''; and
                            (vii) by striking subparagraphs 
                        (H), (I), and (J) and inserting the 
                        following:
                    ``(H) Meeting the needs of certain 
                populations.--Demonstrate the manner in which 
                the State will meet the specific child care 
                needs of families who are receiving assistance 
                under a State program under part A of title IV 
                of the Social Security Act, families who are 
                attempting through work activities to 
                transition off of such assistance program, and 
                families that are at risk of becoming dependent 
                on such assistance program.'';
                    (B) in paragraph (3)--
                            (i) in subparagraph (A), by 
                        striking ``(B) and (C)'' and inserting 
                        ``(B) through (D)'';
                            (ii) in subparagraph (B)--
                                    (I) by striking ``.--
                                Subject to the reservation 
                                contained in subparagraph (C), 
                                the'' and inserting ``and 
                                related activities.--The'';
                                    (II) in clause (i) by 
                                striking ``; and'' at the end 
                                and inserting a period;
                                    (III) by striking ``for--'' 
                                and all that follows through 
                                ``section 658E(c)(2)(A)'' and 
                                inserting ``for child care 
                                services on sliding fee scale 
                                basis, activities that improve 
                                the quality or availability of 
                                such services, and any other 
                                activity that the State deems 
                                appropriate to realize any of 
                                the goals specified in 
                                paragraphs (2) through (5) of 
                                section 658A(b)''; and
                                    (IV) by striking clause 
                                (ii);
                            (iii) by amending subparagraph (C) 
                        to read as follows:
                    ``(C) Limitation on administrative costs.--
                Not more than 5 percent of the aggregate amount 
                of funds available to the State to carry out 
                this subchapter by a State in each fiscal year 
                may be expended for administrative costs 
                incurred by such State to carry out all of its 
                functions and duties under this subchapter. As 
                used in the preceding sentence, the term 
                `administrative costs' shall not include the 
                costs of providing direct services.''; and
                            (iv) by adding at the end thereof 
                        the following:
                    ``(D) Assistance for certain families.--A 
                State shall ensure that a substantial portion 
                of the amounts available (after the State has 
                complied with the requirement of section 
                418(b)(2) of the Social Security Act with 
                respect to each of the fiscal years 1997 
                through 2002) to the State to carry out 
                activities under this subchapter in each fiscal 
                year is used to provide assistance to low-
                income working families other than families 
                described in paragraph (2)(H).''; and
                    (C) in paragraph (4)(A)--
                            (i) by striking ``provide 
                        assurances'' and inserting ``certify'';
                            (ii) in the first sentence by 
                        inserting ``and shall provide a summary 
                        of the facts relied on by the State to 
                        determine that such rates are 
                        sufficient to ensure such access'' 
                        before the period; and
                            (iii) by striking the last 
                        sentence.

SEC. 3306. LIMITATION ON STATE ALLOTMENTS.

    Section 658F(b)(1) (42 U.S.C. 9858d(b)(1)) is amended by 
striking ``No'' and inserting ``Except as provided for in 
section 658O(c)(6), no''.

SEC. 3307. ACTIVITIES TO IMPROVE THE QUALITY OF CHILD CARE.

    Section 658G (42 U.S.C. 9858e) is amended to read as 
follows:

``SEC. 658G. ACTIVITIES TO IMPROVE THE QUALITY OF CHILD CARE.

    ``A State that receives funds to carry out this subchapter 
for a fiscal year, shall use not less than 4 percent of the 
amount of such funds for activities that are designed to 
provide comprehensive consumer education to parents and the 
public, activities that increase parental choice, and 
activities designed to improve the quality and availability of 
child care (such as resource and referral services).''.

SEC. 3308. REPEAL OF EARLY CHILDHOOD DEVELOPMENT AND BEFORE- AND AFTER-
                    SCHOOL CARE REQUIREMENT.

    Section 658H (42 U.S.C. 9858f) is repealed.

SEC. 3309. ADMINISTRATION AND ENFORCEMENT.

    Section 658I(b) (42 U.S.C. 9858g(b)) is amended--
            (1) in paragraph (1), by striking ``, and shall 
        have'' and all that follows through ``(2)''; and
            (2) in the matter following clause (ii) of 
        paragraph (2)(A), by striking ``finding and that'' and 
        all that follows through the period and inserting 
        ``finding and shall require that the State reimburse 
        the Secretary for any funds that were improperly 
        expended for purposes prohibited or not authorized by 
        this subchapter, that the Secretary deduct from the 
        administrative portion of the State allotment for the 
        following fiscal year an amount that is less than or 
        equal to any improperly expended funds, or a 
        combination of such options.''.

SEC. 3310. PAYMENTS.

    Section 658J(c) (42 U.S.C. 9858h(c)) is amended by striking 
``expended'' and inserting ``obligated''.

SEC. 3311. ANNUAL REPORT AND AUDITS.

    Section 658K (42 U.S.C. 9858i) is amended--
            (1) in the section heading by striking ``annual 
        report'' and inserting ``reports'';
            (2) in subsection (a), to read as follows:
    ``(a) Reports.--
            ``(1) Collection of information by states.--
                    ``(A) In general.--A State that receives 
                funds to carry out this subchapter shall 
                collect the information described in 
                subparagraph (B) on a monthly basis.
                    ``(B) Required information.--The 
                information required under this subparagraph 
                shall include, with respect to a family unit 
                receiving assistance under this subchapter 
                information concerning--
                            ``(i) family income;
                            ``(ii) county of residence;
                            ``(iii) the gender, race, and age 
                        of children receiving such assistance;
                            ``(iv) whether the family includes 
                        only 1 parent;
                            ``(v) the sources of family income, 
                        including the amount obtained from (and 
                        separately identified)--
                                    ``(I) employment, including 
                                self-employment;
                                    ``(II) cash or other 
                                assistance under part A of 
                                title IV of the Social Security 
                                Act;
                                    ``(III) housing assistance;
                                    ``(IV) assistance under the 
                                Food Stamp Act of 1977; and
                                    ``(V) other assistance 
                                programs;
                            ``(vi) the number of months the 
                        family has received benefits;
                            ``(vii) the type of child care in 
                        which the child was enrolled (such as 
                        family child care, home care, or 
                        center-based child care);
                            ``(viii) whether the child care 
                        provider involved was a relative;
                            ``(ix) the cost of child care for 
                        such families; and
                            ``(x) the average hours per week of 
                        such care;
                during the period for which such information is 
                required to be submitted.
                    ``(C) Submission to secretary.--A State 
                described in subparagraph (A) shall, on a 
                quarterly basis, submit the information 
                required to be collected under subparagraph (B) 
                to the Secretary.
                    ``(D) Sampling.--The Secretary may 
                disapprove the information collected by a State 
                under this paragraph if the State uses sampling 
                methods to collect such information.
            ``(2) Biannual reports.--Not later than December 
        31, 1997, and every 6 months thereafter, a State 
        described in paragraph (1)(A) shall prepare and submit 
        to the Secretary a report that includes aggregate data 
        concerning--
                    ``(A) the number of child care providers 
                that received funding under this subchapter as 
                separately identified based on the types of 
                providers listed in section 658P(5);
                    ``(B) the monthly cost of child care 
                services, and the portion of such cost that is 
                paid for with assistance provided under this 
                subchapter, listed by the type of child care 
                services provided;
                    ``(C) the number of payments made by the 
                State through vouchers, contracts, cash, and 
                disregards under public benefit programs, 
                listed by the type of child care services 
                provided;
                    ``(D) the manner in which consumer 
                education information was provided to parents 
                and the number of parents to whom such 
                information was provided; and
                    ``(E) the total number (without 
                duplication) of children and families served 
                under this subchapter;
        during the period for which such report is required to 
        be submitted.''; and
            (2) in subsection (b)--
                    (A) in paragraph (1) by striking ``a 
                application'' and inserting ``an application'';
                    (B) in paragraph (2) by striking ``any 
                agency administering activities that receive'' 
                and inserting ``the State that receives''; and
                    (C) in paragraph (4) by striking 
                ``entitles'' and inserting ``entitled''.

SEC. 3312. REPORT BY THE SECRETARY.

    Section 658L (42 U.S.C. 9858j) is amended--
            (1) by striking ``1993'' and inserting ``1997'';
            (2) by striking ``annually'' and inserting 
        ``biennially''; and
            (3) by striking ``Education and Labor'' and 
        inserting ``Economic and Educational Opportunities''.

SEC. 3313. ALLOTMENTS.

    Section 658O (42 U.S.C. 9858m) is amended--
            (1) in subsection (a)--
                    (A) in paragraph (1)
                            (i) by striking ``Possessions'' and 
                        inserting ``possessions'';
                            (ii) by inserting ``and'' after 
                        ``States,''; and
                            (iii) by striking ``, and the Trust 
                        Territory of the Pacific Islands''; and
                    (B) in paragraph (2), by striking ``3 
                percent'' and inserting ``1 percent'';
            (2) in subsection (c)--
                    (A) in paragraph (5) by striking ``our'' 
                and inserting ``out''; and
                    (B) by adding at the end thereof the 
                following new paragraph:
            ``(6) Construction or renovation of facilities.--
                    ``(A) Request for use of funds.--An Indian 
                tribe or tribal organization may submit to the 
                Secretary a request to use amounts provided 
                under this subsection for construction or 
                renovation purposes.
                    ``(B) Determination.--With respect to a 
                request submitted under subparagraph (A), and 
                except as provided in subparagraph (C), upon a 
                determination by the Secretary that adequate 
                facilities are not otherwise available to an 
                Indian tribe or tribal organization to enable 
                such tribe or organization to carry out child 
                care programs in accordance with this 
                subchapter, and that the lack of such 
                facilities will inhibit the operation of such 
                programs in the future, the Secretary may 
                permit the tribe or organization to use 
                assistance provided under this subsection to 
                make payments for the construction or 
                renovation of facilities that will be used to 
                carry out such programs.
                    ``(C) Limitation.--The Secretary may not 
                permit an Indian tribe or tribal organization 
                to use amounts provided under this subsection 
                for construction or renovation if such use will 
                result in a decrease in the level of child care 
                services provided by the tribe or organization 
                as compared to the level of such services 
                provided by the tribe or organization in the 
                fiscal year preceding the year for which the 
                determination under subparagraph (A) is being 
                made.
                    ``(D) Uniform procedures.--The Secretary 
                shall develop and implement uniform procedures 
                for the solicitation and consideration of 
                requests under this paragraph.''; and
            (3) in subsection (e), by adding at the end thereof 
        the following new paragraph:
            ``(4) Indian tribes or tribal organizations.--Any 
        portion of a grant or contract made to an Indian tribe 
        or tribal organization under subsection (c) that the 
        Secretary determines is not being used in a manner 
        consistent with the provision of this subchapter in the 
        period for which the grant or contract is made 
        available, shall be allotted by the Secretary to other 
        tribes or organizations that have submitted 
        applications under subsection (c) in accordance with 
        their respective needs.''.

SEC. 3314. DEFINITIONS.

    Section 658P (42 U.S.C. 9858n) is amended--
            (1) in paragraph (2), in the first sentence by 
        inserting ``or as a deposit for child care services if 
        such a deposit is required of other children being 
        cared for by the provider'' after ``child care 
        services''; and
            (2) by striking paragraph (3);
            (3) in paragraph (4)(B), by striking ``75 percent'' 
        and inserting ``85 percent'';
            (4) in paragraph (5)(B)--
                    (A) by inserting ``great grandchild, 
                sibling (if such provider lives in a separate 
                residence),'' after ``grandchild,'';
                    (B) by striking ``is registered and''; and
                    (C) by striking ``State'' and inserting 
                ``applicable''.
            (5) by striking paragraph (10);
            (6) in paragraph (13)--
                    (A) by inserting ``or'' after ``Samoa,''; 
                and
                    (B) by striking ``, and the Trust Territory 
                of the Pacific Islands'';
            (7) in paragraph (14)--
                    (A) by striking ``The term'' and inserting 
                the following:
                    ``(A) In general.--The term''; and
                    (B) by adding at the end thereof the 
                following new subparagraph:
                    ``(B) Other organizations.--Such term 
                includes a Native Hawaiian Organization, as 
                defined in section 4009(4) of the Augustus F. 
                Hawkins-Robert T. Stafford Elementary and 
                Secondary School Improvement Amendments of 1988 
                (20 U.S.C. 4909(4)) and a private nonprofit 
                organization established for the purpose of 
                serving youth who are Indians or Native 
                Hawaiians.''.

SEC. 3315. REPEALS.

    (a) Child Development Associate Scholarship Assistance Act 
of 1985.--Title VI of the Human Services Reauthorization Act of 
1986 (42 U.S.C. 10901-10905) is repealed.
    (b) State Dependent Care Development Grants Act.--
Subchapter E of chapter 8 of subtitle A of title VI of the 
Omnibus Budget Reconciliation Act of 1981 (42 U.S.C. 9871-9877) 
is repealed.
    (c) Programs of National Significance.--Title X of the 
Elementary and Secondary Education Act of 1965, as amended by 
Public Law 103-382 (108 Stat. 3809 et seq.), is amended--
            (1) in section 10413(a) by striking paragraph (4),
            (2) in section 10963(b)(2) by striking subparagraph 
        (G), and
            (3) in section 10974(a)(6) by striking subparagraph 
        (G).
    (d) Native Hawaiian Family-Based Education Centers.--
Section 9205 of the Native Hawaiian Education Act (Public Law 
103-382; 108 Stat. 3794) is repealed.
    (e) Certain Child Care Programs Under the Social Security 
Act.--
            (1) AFDC and transitional child care programs.--
        Section 402 of the Social Security Act (42 U.S.C. 602) 
        is amended by striking subsection (g).
            (2) At-risk child care program.--
                    (A) Authorization.--Section 402 of the 
                Social Security Act (42 U.S.C. 602) is amended 
                by striking subsection (i).
                    (B) Funding provisions.--Section 403 of the 
                Social Security Act (42 U.S.C. 603) is amended 
                by striking subsection (n).

SEC. 3316. EFFECTIVE DATE.

    (a) In General.--Except as provided in subsection (b), this 
subtitle and the amendments made by this subtitle shall take 
effect on October 1, 1996.
    (b) Exception.--The amendment made by section 3303(a) shall 
take effect on the date of enactment of this Act.

                  Subtitle D--Child Nutrition Programs

                  CHAPTER 1--NATIONAL SCHOOL LUNCH ACT

SEC. 3401. STATE DISBURSEMENT TO SCHOOLS.

    (a) In General.--Section 8 of the National School Lunch Act 
(42 U.S.C. 1757) is amended--
            (1) in the third sentence, by striking ``Nothing'' 
        and all that follows through ``educational agency to'' 
        and inserting ``The State educational agency may'';
            (2) by striking the fourth and fifth sentences;
            (3) by redesignating the first through sixth 
        sentences, as amended by paragraph (1), as subsections 
        (a) through (f), respectively;
            (4) in subsection (b), as redesignated by paragraph 
        (3), by striking ``the preceding sentence'' and 
        inserting ``subsection (a)''; and
            (5) in subsection (d), as redesignated by paragraph 
        (3), by striking ``Such food costs'' and inserting 
        ``Use of funds paid to States''.
    (b) Definition of Child.--Section 12(d) of the Act (42 
U.S.C. 1760(d)) is amended by adding at the end the following:
            ``(9) `child' includes an individual, regardless of 
        age, who--
                    ``(A) is determined by a State educational 
                agency, in accordance with regulations 
                prescribed by the Secretary, to have 1 or more 
                mental or physical disabilities; and
                    ``(B) is attending any institution, as 
                defined in section 17(a), or any nonresidential 
                public or nonprofit private school of high 
                school grade or under, for the purpose of 
                participating in a school program established 
                for individuals with mental or physical 
                disabilities.
        No institution that is not otherwise eligible to 
        participate in the program under section 17 shall be 
        considered eligible because of this paragraph.''.

SEC. 3402. NUTRITIONAL AND OTHER PROGRAM REQUIREMENTS.

    (a) Nutritional Standards.--Section 9(a) of the National 
School Lunch Act (42 U.S.C. 1758(a)) is amended--
            (1) in paragraph (2)--
                    (A) by striking ``(2)(A) Lunches'' and 
                inserting ``(2) Lunches'';
                    (B) by striking subparagraph (B); and
                    (C) by redesignating clauses (i) and (ii) 
                as subparagraphs (A) and (B), respectively;
            (2) by striking paragraph (3); and
            (3) by redesignating paragraph (4) as paragraph 
        (3).
    (b) Eligibility Guidelines.--Section 9(b) of the Act is 
amended--
            (1) in paragraph (2)--
                    (A) by striking subparagraph (A); and
                    (B) by redesignating subparagraphs (B) and 
                (C) as subparagraphs (A) and (B), respectively;
            (2) in paragraph (5), by striking the third 
        sentence; and
            (3) in paragraph (6), by striking ``paragraph 
        (2)(C)'' and inserting ``paragraph (2)(B)''.
    (c) Utilization of Agricultural Commodities.--Section 9(c) 
of the Act is amended by striking the second, fourth, and sixth 
sentences.
    (d) Conforming Amendment.--The last sentence of section 
9(d)(1) of the Act is amended by striking ``subsection 
(b)(2)(C)'' and inserting ``subsection (b)(2)(B)''.
    (e) Nutritional Information.--Section 9(f) of the Act is 
amended--
            (1) by striking paragraph (1);
            (2) by striking ``(2)'';
            (3) by redesignating subparagraphs (A) through (D) 
        as paragraphs (1) through (4), respectively;
            (4) by striking paragraph (1), as redesignated by 
        paragraph (3), and inserting the following:
            ``(1) Nutritional requirements.--Except as provided 
        in paragraph (2), not later than the first day of the 
        1996-1997 school year, schools that are participating 
        in the school lunch or school breakfast program shall 
        serve lunches and breakfasts under the program that--
                    ``(A) are consistent with the goals of the 
                most recent Dietary Guidelines for Americans 
                published under section 301 of the National 
                Nutrition Monitoring and Related Research Act 
                of 1990 (7 U.S.C. 5341); and
                    ``(B) provide, on the average over each 
                week, at least--
                            ``(i) with respect to school 
                        lunches, \1/3\ of the daily recommended 
                        dietary allowance established by the 
                        Food and Nutrition Board of the 
                        National Research Council of the 
                        National Academy of Sciences; and
                            ``(ii) with respect to school 
                        breakfasts, \1/4\ of the daily 
                        recommended dietary allowance 
                        established by the Food and Nutrition 
                        Board of the National Research Council 
                        of the National Academy of Sciences.'';
            (5) in paragraph (3), as redesignated by paragraph 
        (3)--
                    (A) by redesignating clauses (i) and (ii) 
                as subparagraphs (A) and (B), respectively; and
                    (B) in subparagraph (A), as so 
                redesignated, by redesignating subclauses (I) 
                and (II) as clauses (i) and (ii), respectively; 
                and
            (6) in paragraph (4), as redesignated by paragraph 
        (3)--
                    (A) by redesignating clauses (i) and (ii) 
                as subparagraphs (A) and (B), respectively;
                    (B) in subparagraph (A) (as redesignated by 
                subparagraph (A)), by redesignating subclauses 
                (I) and (II) as clauses (i) and (ii), 
                respectively; and
                    (C) in subparagraph (A)(ii) (as 
                redesignated by subparagraph (B)), by striking 
                ``subparagraph (C)'' and inserting ``paragraph 
                (3)''.
    (f) Use of Resources.--Section 9 of the Act is amended by 
striking subsection (h).

SEC. 3403. FREE AND REDUCED PRICE POLICY STATEMENT.

    Section 9(b)(2) of the National School Lunch Act (42 U.S.C. 
1758(b)(2)), as amended by section 3402(b)(1), is further 
amended by adding at the end the following:
                    ``(C) Free and reduced price policy 
                statement.--After the initial submission, a 
                school shall not be required to submit a free 
                and reduced price policy statement to a State 
                educational agency under this Act unless there 
                is a substantive change in the free and reduced 
                price policy of the school. A routine change in 
                the policy of a school, such as an annual 
                adjustment of the income eligibility guidelines 
                for free and reduced price meals, shall not be 
                sufficient cause for requiring the school to 
                submit a policy statement.''.

SEC. 3404. SPECIAL ASSISTANCE.

    (a) Extension of Payment Period.--Section 11(a)(1)(D)(i) of 
the National School Lunch Act (42 U.S.C. 1759a(a)(1)(D)(i)) is 
amended by striking ``, on the date of enactment of this 
subparagraph,''.
    (b) Applicability of Other Provisions.--Section 11 of the 
Act is amended--
            (1) by striking subsection (d);
            (2) in subsection (e)(2)--
                    (A) by striking ``The'' and inserting ``On 
                request of the Secretary, the''; and
                    (B) by striking ``each month''; and
            (3) by redesignating subsections (e) and (f), as so 
        amended, as subsections (d) and (e), respectively.

SEC. 3405. MISCELLANEOUS PROVISIONS AND DEFINITIONS.

    (a) Accounts and Records.--Section 12(a) of the National 
School Lunch Act (42 U.S.C. 1760(a)) is amended by striking 
``at all times be available'' and inserting ``be available at 
any reasonable time''.
    (b) Restriction on Requirements.--Section 12(c) of the Act 
is amended by striking ``neither the Secretary nor the State 
shall'' and inserting ``the Secretary shall not''.
    (c) Definitions.--Section 12(d) of the Act, as amended by 
section 3401(b), is further amended--
            (1) in paragraph (1), by striking ``the Trust 
        Territory of the Pacific Islands'' and inserting ``the 
        Commonwealth of the Northern Mariana Islands'';
            (2) by striking paragraphs (3) and (4); and
            (3) by redesignating paragraphs (1), (2), and (5) 
        through (9) as paragraphs (6), (7), (3), (4), (2), (5), 
        and (1), respectively, and rearranging the paragraphs 
        so as to appear in numerical order.
    (d) Adjustments to National Average Payment Rates.--Section 
12(f) of the Act is amended by striking ``the Trust Territory 
of the Pacific Islands,''.
    (e) Expedited Rulemaking.--Section 12(k) of the Act is 
amended--
            (1) by striking paragraphs (1), (2), and (5); and
            (2) by redesignating paragraphs (3) and (4) as 
        paragraphs (1) and (2), respectively.
    (f) Waiver.--Section 12(l) of the Act is amended--
            (1) in paragraph (2)(A)--
                    (A) in clause (iii), by adding ``and'' at 
                the end;
                    (B) in clause (iv), by striking the 
                semicolon at the end and inserting a period; 
                and
                    (C) by striking clauses (v) through (vii);
            (2) in paragraph (3)--
                    (A) by striking ``(A)''; and
                    (B) by striking subparagraphs (B) through 
                (D);
            (3) in paragraph (4)--
                    (A) in the matter preceding subparagraph 
                (A), by striking ``of any requirement 
                relating'' and inserting ``that increases 
                Federal costs or that relates'';
                    (B) by striking subparagraph (D);
                    (C) by redesignating subparagraphs (E) 
                through (N) as subparagraphs (D) through (M), 
                respectively; and
                    (D) in subparagraph (L), as redesignated by 
                subparagraph (C), by striking ``and'' at the 
                end and inserting ``or''; and
            (4) in paragraph (6)--
                    (A) by striking ``(A)(i)'' and all that 
                follows through ``(B)''; and
                    (B) by redesignating clauses (i) through 
                (iv) as subparagraphs (A) through (D), 
                respectively.
    (g) Food and Nutrition Projects.--Section 12 of the Act is 
amended by striking subsection (m).

SEC. 3406. SUMMER FOOD SERVICE PROGRAM FOR CHILDREN.

    (a) Establishment of Program.--Section 13(a) of the 
National School Lunch Act (42 U.S.C. 1761(a)) is amended--
            (1) in paragraph (1)--
                    (A) in the first sentence, by striking 
                ``initiate, maintain, and expand'' and 
                inserting ``initiate and maintain''; and
                    (B) in subparagraph (E) of the second 
                sentence, by striking ``the Trust Territory of 
                the Pacific Islands,''; and
            (2) in paragraph (7)(A), by striking ``Except as 
        provided in subparagraph (C), private'' and inserting 
        ``Private''.
    (b) Service Institutions.--Section 13(b) of the Act is 
amended by striking ``(b)(1)'' and all that follows through the 
end of paragraph (1) and inserting the following:
    ``(b) Service Institutions.--
            ``(1) Payments.--
                    ``(A) In general.--Except as otherwise 
                provided in this paragraph, payments to service 
                institutions shall equal the full cost of food 
                service operations (which cost shall include 
                the costs of obtaining, preparing, and serving 
                food, but shall not include administrative 
                costs).
                    ``(B) Maximum amounts.--Subject to 
                subparagraph (C), payments to any institution 
                under subparagraph (A) shall not exceed--
                            ``(i) $1.82 for each lunch and 
                        supper served;
                            ``(ii) $1.13 for each breakfast 
                        served; and
                            ``(iii) 46 cents for each meal 
                        supplement served.
                    ``(C) Adjustments.--Amounts specified in 
                subparagraph (B) shall be adjusted on January 
                1, 1997, and each January 1 thereafter, to the 
                nearest lower cent increment in accordance with 
                the changes for the 12-month period ending the 
                preceding November 30 in the series for food 
                away from home of the Consumer Price Index for 
                All Urban Consumers published by the Bureau of 
                Labor Statistics of the Department of Labor. 
                Each adjustment shall be based on the unrounded 
                adjustment for the prior 12-month period.''.
    (c) Administration of Service Institutions.--Section 
13(b)(2) of the Act is amended--
            (1) in the first sentence, by striking ``four 
        meals'' and inserting ``3 meals, or 2 meals and 1 
        supplement,''; and
            (2) by striking the second sentence.
    (d) Reimbursements.--Section 13(c)(2) of the Act is 
amended--
            (1) by striking subparagraph (A);
            (2) in subparagraph (B)--
                    (A) in the first sentence--
                            (i) by striking ``, and such higher 
                        education institutions,''; and
                            (ii) by striking ``without 
                        application'' and inserting ``upon 
                        showing residence in areas in which 
                        poor economic conditions exist or on 
                        the basis of income eligibility 
                        statements for children enrolled in the 
                        program''; and
                    (B) by adding at the end the following: 
                ``The higher education institutions referred to 
                in the preceding sentence shall be eligible to 
                participate in the program under this paragraph 
                without application.'';
            (3) in subparagraph (C)(ii), by striking ``severe 
        need''; and
            (4) by redesignating subparagraphs (B) through (E), 
        as so amended, as subparagraphs (A) through (D), 
        respectively.
    (e) Advance Program Payments.--Section 13(e)(1) of the Act 
is amended--
            (1) by striking ``institution: Provided, That (A) 
        the'' and inserting ``institution. The'';
            (2) by inserting ``(excluding a school)'' after 
        ``any service institution''; and
            (3) by striking ``responsibilities, and (B) no'' 
        and inserting ``responsibilities. No''.
    (f) Food Requirements.--Section 13(f) of the Act is 
amended--
            (1) by redesignating the first through seventh 
        sentences as paragraphs (1) through (7), respectively;
            (2) by striking paragraph (3), as redesignated by 
        paragraph (1);
            (3) in paragraph (4), as redesignated by paragraph 
        (1), by striking ``the first sentence'' and inserting 
        ``paragraph (1)'';
            (4) in paragraph (6), as redesignated by paragraph 
        (1), by striking ``that bacteria levels'' and all that 
        follows through the period at the end and inserting 
        ``conformance with standards set by local health 
        authorities.''; and
            (5) by redesignating paragraphs (4) through (7), as 
        redesignated by paragraph (1), as paragraphs (3) 
        through (6), respectively.
    (g) Permitting Offer Versus Serve.--Section 13(f) of the 
Act, as amended by subsection (f), is further amended by adding 
at the end the following:
            ``(7) Offer versus serve.--A school food authority 
        participating as a service institution may permit a 
        child attending a site on school premises operated 
        directly by the authority to refuse not more than 1 
        item of a meal that the child does not intend to 
        consume. A refusal of an offered food item shall not 
        affect the amount of payments made under this section 
        to a school for the meal.''.
    (h) Food Service Management Companies.--Section 13(l) of 
the Act is amended--
            (1) by striking paragraph (4);
            (2) in paragraph (5), by striking the first 
        sentence; and
            (3) by redesignating paragraph (5), as so amended, 
        as paragraph (4).
    (i) Records.--The second sentence of section 13(m) of the 
Act is amended by striking ``at all times be available'' and 
inserting ``be available at any reasonable time''.
    (j) Removing Mandatory Notice to Institutions.--Section 
13(n)(2) of the Act is amended by striking ``, and its plans 
and schedule for informing service institutions of the 
availability of the program''.
    (k) Plan.--Section 13(n) of the Act is amended--
            (1) in paragraph (2), by striking ``, including the 
        State's methods of assessing need'';
            (2) by striking paragraph (3);
            (3) in paragraph (4), by striking ``and schedule''; 
        and
            (4) by redesignating paragraphs (4) through (7), as 
        so amended, as paragraphs (3) through (6), 
        respectively.
    (l) Monitoring and Training.--Section 13(q) of the Act is 
amended--
            (1) by striking paragraphs (2) and (4);
            (2) in paragraph (3), by striking ``paragraphs (1) 
        and (2) of this subsection'' and inserting ``paragraph 
        (1)''; and
            (3) by redesignating paragraph (3), as so amended, 
        as paragraph (2).
    (m) Expired Program.--Section 13 of the Act is amended--
            (1) by striking subsection (p); and
            (2) by redesignating subsections (q) and (r), as so 
        amended, as subsections (p) and (q), respectively.
    (n) Effective Date.--The amendments made by subsection (b) 
shall become effective on January 1, 1997.

SEC. 3407. COMMODITY DISTRIBUTION.

    (a) Cereal and Shortening in Commodity Donations.--Section 
14(b) of the National School Lunch Act (42 U.S.C. 1762a(b)) is 
amended--
            (1) by striking paragraph (1); and
            (2) by redesignating paragraphs (2) and (3) as 
        paragraphs (1) and (2), respectively.
    (b) Impact Study and Purchasing Procedures.--Section 14(d) 
of the Act is amended by striking the second and third 
sentences.
    (c) Cash Compensation for Pilot Project Schools.--Section 
14(g) of the Act is amended by striking paragraph (3).
    (d) State Advisory Council.--Section 14 is amended--
            (1) by striking subsection (e); and
            (2) by redesignating subsections (f) and (g), as so 
        amended, as subsections (e) and (f), respectively.

SEC. 3408. CHILD CARE FOOD PROGRAM.

    (a) Establishment of Program.--Section 17 of the National 
School Lunch Act (42 U.S.C. 1766) is amended--
            (1) in the section heading, by striking ``and 
        adult''; and
            (2) in the first sentence of subsection (a), by 
        striking ``initiate, maintain, and expand'' and 
        inserting ``initiate and maintain''.
    (b) Payments to Sponsor Employees.--Paragraph (2) of the 
last sentence of section 17(a) of the Act (42 U.S.C. 1766(a)) 
is amended--
            (1) by striking ``and'' at the end of subparagraph 
        (B);
            (2) by striking the period at the end of 
        subparagraph (C) and inserting ``; and''; and
            (3) by adding at the end the following:
                    ``(D) in the case of a family or group day 
                care home sponsoring organization that employs 
                more than 1 employee, the organization does not 
                base payments to an employee of the 
                organization on the number of family or group 
                day care homes recruited.''.
    (c) Technical Assistance.--The last sentence of section 
17(d)(1) of the Act is amended by striking ``, and shall 
provide technical assistance'' and all that follows through 
``its application''.
    (d) Reimbursement of Child Care Institutions.--Section 
17(f)(2)(B) of the Act (42 U.S.C. 1766(f)(2)(B)) is amended by 
striking ``two meals and two supplements or three meals and one 
supplement'' and inserting ``two meals and one supplement''.
    (e) Improved Targeting of Day Care Home Reimbursements.--
            (1) Restructured day care home reimbursements.--
        Section 17(f)(3) of the Act is amended by striking 
        ``(3)(A) Institutions'' and all that follows through 
        the end of subparagraph (A) and inserting the 
        following:
            ``(3) Reimbursement of family or group day care 
        home sponsoring organizations.--
                    ``(A) Reimbursement factor.--
                            ``(i) In general.--An institution 
                        that participates in the program under 
                        this section as a family or group day 
                        care home sponsoring organization shall 
                        be provided, for payment to a home 
                        sponsored by the organization, 
                        reimbursement factors in accordance 
                        with this subparagraph for the cost of 
                        obtaining and preparing food and 
                        prescribed labor costs involved in 
                        providing meals under this section.
                            ``(ii) Tier i family or group day 
                        care homes.--
                                    ``(I) Definition.--In this 
                                paragraph, the term `tier I 
                                family or group day care home' 
                                means--
                                            ``(aa) a family or 
                                        group day care home 
                                        that is located in a 
                                        geographic area, as 
                                        defined by the 
                                        Secretary based on 
                                        census data, in which 
                                        at least 50 percent of 
                                        the children residing 
                                        in the area are members 
                                        of households whose 
                                        incomes meet the income 
                                        eligibility guidelines 
                                        for free or reduced 
                                        price meals under 
                                        section 9;
                                            ``(bb) a family or 
                                        group day care home 
                                        that is located in an 
                                        area served by a school 
                                        enrolling elementary 
                                        students in which at 
                                        least 50 percent of the 
                                        total number of 
                                        children enrolled are 
                                        certified eligible to 
                                        receive free or reduced 
                                        price school meals 
                                        under this Act or the 
                                        Child Nutrition Act of 
                                        1966 (42 U.S.C. 1771 et 
                                        seq.); or
                                            ``(cc) a family or 
                                        group day care home 
                                        that is operated by a 
                                        provider whose 
                                        household meets the 
                                        income eligibility 
                                        guidelines for free or 
                                        reduced price meals 
                                        under section 9 and 
                                        whose income is 
                                        verified by the 
                                        sponsoring or 
                                        organization of the 
                                        home under regulations 
                                        established by the 
                                        Secretary.
                                    ``(II) Reimbursement.--
                                Except as provided in subclause 
                                (III), a tier I family or group 
                                day care home shall be provided 
                                reimbursement factors under 
                                this clause without a 
                                requirement for documentation 
                                of the costs described in 
                                clause (i), except that 
                                reimbursement shall not be 
                                provided under this subclause 
                                for meals or supplements served 
                                to the children of a person 
                                acting as a family or group day 
                                care home provider unless the 
                                children meet the income 
                                eligibility guidelines for free 
                                or reduced price meals under 
                                section 9.
                                    ``(III) Factors.--Except as 
                                provided in subclause (IV), the 
                                reimbursement factors applied 
                                to a home referred to in 
                                subclause (II) shall be the 
                                factors in effect on July 1, 
                                1996.
                                    ``(IV) Adjustments.--The 
                                reimbursement factors under 
                                this subparagraph shall be 
                                adjusted on July 1, 1997, and 
                                each July 1 thereafter, to 
                                reflect changes in the Consumer 
                                Price Index for food at home 
                                for the most recent 12-month 
                                period for which the data are 
                                available. The reimbursement 
                                factors under this subparagraph 
                                shall be rounded to the nearest 
                                lower cent increment and based 
                                on the unrounded adjustment in 
                                effect on June 30 of the 
                                preceding school year.
                            ``(iii) Tier ii family or group day 
                        care homes.--
                                    ``(I) In general.--
                                            ``(aa) Factors.--
                                        Except as provided in 
                                        subclause (II), with 
                                        respect to meals or 
                                        supplements served 
                                        under this clause by a 
                                        family or group day 
                                        care home that does not 
                                        meet the criteria set 
                                        forth in clause 
                                        (ii)(I), the 
                                        reimbursement factors 
                                        shall be 90 cents for 
                                        lunches and suppers, 25 
                                        cents for breakfasts, 
                                        and 10 cents for 
                                        supplements.
                                            ``(bb) 
                                        Adjustments.--The 
                                        factors shall be 
                                        adjusted on July 1, 
                                        1997, and each July 1 
                                        thereafter, to reflect 
                                        changes in the Consumer 
                                        Price Index for food at 
                                        home for the most 
                                        recent 12-month period 
                                        for which the data are 
                                        available. The 
                                        reimbursement factors 
                                        under this item shall 
                                        be rounded down to the 
                                        nearest lower cent 
                                        increment and based on 
                                        the unrounded 
                                        adjustment for the 
                                        preceding 12-month 
                                        period.
                                            ``(cc) 
                                        Reimbursement.--A 
                                        family or group day 
                                        care home shall be 
                                        provided reimbursement 
                                        factors under this 
                                        subclause without a 
                                        requirement for 
                                        documentation of the 
                                        costs described in 
                                        clause (i), except that 
                                        reimbursement shall not 
                                        be provided under this 
                                        subclause for meals or 
                                        supplements served to 
                                        the children of a 
                                        person acting as a 
                                        family or group day 
                                        care home provider 
                                        unless the children 
                                        meet the income 
                                        eligibility guidelines 
                                        for free or reduced 
                                        price meals under 
                                        section 9.
                                    ``(II) Other factors.--A 
                                family or group day care home 
                                that does not meet the criteria 
                                set forth in clause (ii)(I) may 
                                elect to be provided 
                                reimbursement factors 
                                determined in accordance with 
                                the following requirements:
                                            ``(aa) Children 
                                        eligible for free or 
                                        reduced price meals.--
                                        In the case of meals or 
                                        supplements served 
                                        under this subsection 
                                        to children who are 
                                        members of households 
                                        whose incomes meet the 
                                        income eligibility 
                                        guidelines for free or 
                                        reduced price meals 
                                        under section 9, the 
                                        family or group day 
                                        care home shall be 
                                        provided reimbursement 
                                        factors set by the 
                                        Secretary in accordance 
                                        with clause (ii)(III).
                                            ``(bb) Ineligible 
                                        children.--In the case 
                                        of meals or supplements 
                                        served under this 
                                        subsection to children 
                                        who are members of 
                                        households whose 
                                        incomes do not meet the 
                                        income eligibility 
                                        guidelines, the family 
                                        or group day care home 
                                        shall be provided 
                                        reimbursement factors 
                                        in accordance with 
                                        subclause (I).
                                    ``(III) Information and 
                                determinations.--
                                            ``(aa) In 
                                        general.--If a family 
                                        or group day care home 
                                        elects to claim the 
                                        factors described in 
                                        subclause (II), the 
                                        family or group day 
                                        care home sponsoring 
                                        organization serving 
                                        the home shall collect 
                                        the necessary income 
                                        information, as 
                                        determined by the 
                                        Secretary, from any 
                                        parent or other 
                                        caretaker to make the 
                                        determinations 
                                        specified in subclause 
                                        (II) and shall make the 
                                        determinations in 
                                        accordance with rules 
                                        prescribed by the 
                                        Secretary.
                                            ``(bb) Categorical 
                                        eligibility.--In making 
                                        a determination under 
                                        item (aa), a family or 
                                        group day care home 
                                        sponsoring organization 
                                        may consider a child 
                                        participating in or 
                                        subsidized under, or a 
                                        child with a parent 
                                        participating in or 
                                        subsidized under, a 
                                        federally or State 
                                        supported child care or 
                                        other benefit program 
                                        with an income 
                                        eligibility limit that 
                                        does not exceed the 
                                        eligibility standard 
                                        for free or reduced 
                                        price meals under 
                                        section 9 to be a child 
                                        who is a member of a 
                                        household whose income 
                                        meets the income 
                                        eligibility guidelines 
                                        under section 9.
                                            ``(cc) Factors for 
                                        children only.--A 
                                        family or group day 
                                        care home may elect to 
                                        receive the 
                                        reimbursement factors 
                                        prescribed under clause 
                                        (ii)(III) solely for 
                                        the children 
                                        participating in a 
                                        program referred to in 
                                        item (bb) if the home 
                                        elects not to have 
                                        income statements 
                                        collected from parents 
                                        or other caretakers.
                                    ``(IV) Simplified meal 
                                counting and reporting 
                                procedures.--The Secretary 
                                shall prescribe simplified meal 
                                counting and reporting 
                                procedures for use by a family 
                                or group day care home that 
                                elects to claim the factors 
                                under subclause (II) and by a 
                                family or group day care home 
                                sponsoring organization that 
                                sponsors the home. The 
                                procedures the Secretary 
                                prescribes may include 1 or 
                                more of the following:
                                            ``(aa) Setting an 
                                        annual percentage for 
                                        each home of the number 
                                        of meals served that 
                                        are to be reimbursed in 
                                        accordance with the 
                                        reimbursement factors 
                                        prescribed under clause 
                                        (ii)(III) and an annual 
                                        percentage of the 
                                        number of meals served 
                                        that are to be 
                                        reimbursed in 
                                        accordance with the 
                                        reimbursement factors 
                                        prescribed under 
                                        subclause (I), based on 
                                        the family income of 
                                        children enrolled in 
                                        the home in a specified 
                                        month or other period.
                                            ``(bb) Placing a 
                                        home into 1 of 2 or 
                                        more reimbursement 
                                        categories annually 
                                        based on the percentage 
                                        of children in the home 
                                        whose households have 
                                        incomes that meet the 
                                        income eligibility 
                                        guidelines under 
                                        section 9, with each 
                                        such reimbursement 
                                        category carrying a set 
                                        of reimbursement 
                                        factors such as the 
                                        factors prescribed 
                                        under clause (ii)(III) 
                                        or subclause (I) or 
                                        factors established 
                                        within the range of 
                                        factors prescribed 
                                        under clause (ii)(III) 
                                        and subclause (I).
                                            ``(cc) Such other 
                                        simplified procedures 
                                        as the Secretary may 
                                        prescribe.
                                    ``(V) Minimum verification 
                                requirements.--The Secretary 
                                may establish any necessary 
                                minimum verification 
                                requirements.''.
            (2) Grants to states to provide assistance to 
        family or group day care homes.--Section 17(f)(3) of 
        the Act is amended by adding at the end the following:
                    ``(D) Grants to states to provide 
                assistance to family or group day care homes.--
                            ``(i) In general.--
                                    ``(I) Reservation.--From 
                                amounts made available to carry 
                                out this section, the Secretary 
                                shall reserve $5,000,000 of the 
                                amount made available for 
                                fiscal year 1997.
                                    ``(II) Purpose.--The 
                                Secretary shall use the funds 
                                made available under subclause 
                                (I) to provide grants to States 
                                for the purpose of providing--
                                            ``(aa) assistance, 
                                        including grants, to 
                                        family and day care 
                                        home sponsoring 
                                        organizations and other 
                                        appropriate 
                                        organizations, in 
                                        securing and providing 
                                        training, materials, 
                                        automated data 
                                        processing assistance, 
                                        and other assistance 
                                        for the staff of the 
                                        sponsoring 
                                        organizations; and
                                            ``(bb) training and 
                                        other assistance to 
                                        family and group day 
                                        care homes in the 
                                        implementation of the 
                                        amendment to 
                                        subparagraph (A) made 
                                        by section 3408(e)(1) 
                                        of the Personal 
                                        Responsibility and Work 
                                        Opportunity Act of 
                                        1996.
                            ``(ii) Allocation.--The Secretary 
                        shall allocate from the funds reserved 
                        under clause (i)(I)--
                                    ``(I) $30,000 in base 
                                funding to each State; and
                                    ``(II) any remaining amount 
                                among the States, based on the 
                                number of family day care homes 
                                participating in the program in 
                                a State during fiscal year 1995 
                                as a percentage of the number 
                                of all family day care homes 
                                participating in the program 
                                during fiscal year 1995.
                            ``(iii) Retention of funds.--Of the 
                        amount of funds made available to a 
                        State for fiscal year 1997 under clause 
                        (i), the State may retain not to exceed 
                        30 percent of the amount to carry out 
                        this subparagraph.
                            ``(iv) Additional payments.--Any 
                        payments received under this 
                        subparagraph shall be in addition to 
                        payments that a State receives under 
                        subparagraph (A).''.
            (3) Provision of data.--Section 17(f)(3) of the 
        Act, as amended by paragraph (2), is further amended by 
        adding at the end the following:
                    ``(E) Provision of data to family or group 
                day care home sponsoring organizations.--
                            ``(i) Census data.--The Secretary 
                        shall provide to each State agency 
                        administering a child care food program 
                        under this section data from the most 
                        recent decennial census survey or other 
                        appropriate census survey for which the 
                        data are available showing which areas 
                        in the State meet the requirements of 
                        subparagraph (A)(ii)(I)(aa). The State 
                        agency shall provide the data to family 
                        or group day care home sponsoring 
                        organizations located in the State.
                            ``(ii) School data.--
                                    ``(I) In general.--A State 
                                agency administering the school 
                                lunch program under this Act or 
                                the school breakfast program 
                                under the Child Nutrition Act 
                                of 1966 (42 U.S.C. 1771 et 
                                seq.) shall provide to approved 
                                family or group day care home 
                                sponsoring organizations a list 
                                of schools serving elementary 
                                school children in the State in 
                                which not less than \1/2\ of 
                                the children enrolled are 
                                certified to receive free or 
                                reduced price meals. The State 
                                agency shall collect the data 
                                necessary to create the list 
                                annually and provide the list 
                                on a timely basis to any 
                                approved family or group day 
                                care home sponsoring 
                                organization that requests the 
                                list.
                                    ``(II) Use of data from 
                                preceding school year.--In 
                                determining for a fiscal year 
                                or other annual period whether 
                                a home qualifies as a tier I 
                                family or group day care home 
                                under subparagraph (A)(ii)(I), 
                                the State agency administering 
                                the program under this section, 
                                and a family or group day care 
                                home sponsoring organization, 
                                shall use the most current 
                                available data at the time of 
                                the determination.
                            ``(iii) Duration of 
                        determination.--For purposes of this 
                        section, a determination that a family 
                        or group day care home is located in an 
                        area that qualifies the home as a tier 
                        I family or group day care home (as the 
                        term is defined in subparagraph 
                        (A)(ii)(I)), shall be in effect for 3 
                        years (unless the determination is made 
                        on the basis of census data, in which 
                        case the determination shall remain in 
                        effect until more recent census data 
                        are available) unless the State agency 
                        determines that the area in which the 
                        home is located no longer qualifies the 
                        home as a tier I family or group day 
                        care home.''.
            (4) Conforming amendments.--Section 17(c) of the 
        Act is amended by inserting ``except as provided in 
        subsection (f)(3),'' after ``For purposes of this 
        section,'' each place it appears in paragraphs (1), 
        (2), and (3).
    (f) Reimbursement.--Section 17(f) of the Act is amended--
            (1) in paragraph (3)--
                    (A) in subparagraph (B), by striking the 
                third and fourth sentences; and
                    (B) in subparagraph (C)--
                            (i) by striking ``(i)'' and
                            (ii) by striking clause (ii); and
            (2) in paragraph (4), by striking ``shall'' and 
        inserting ``may'' in the first sentence.
    (g) Nutritional Requirements.--Section 17(g)(1) of the Act 
is amended--
            (1) in subparagraph (A), by striking the second 
        sentence; and
            (2) in subparagraph (B), by striking the second 
        sentence.
    (h) Elimination of State Paperwork and Outreach Burden.--
Section 17 of the Act is amended by striking subsection (k) and 
inserting the following:
    ``(k) Training and Technical Assistance.--A State 
participating in the program established under this section 
shall provide sufficient training, technical assistance, and 
monitoring to facilitate effective operation of the program. 
The Secretary shall assist the State in developing plans to 
fulfill the requirements of this subsection.''.
    (i) Records.--The second sentence of section 17(m) of the 
Act is amended by striking ``at all times'' and inserting ``at 
any reasonable time''.
    (j) Modification of Adult Care Food Program.--Section 17(o) 
of the Act is amended--
            (1) in the first sentence of paragraph (1)--
                    (A) by striking ``adult day care centers'' 
                and inserting ``day care centers for 
                chronically impaired disabled persons''; and
                    (B) by striking ``to persons 60 years of 
                age or older or''; and
            (2) in paragraph (2)--
                    (A) in subparagraph (A)--
                            (i) by striking ``adult day care 
                        center'' and inserting ``day care 
                        center for chronically impaired 
                        disabled persons''; and
                            (ii) in clause (i)--
                                    (I) by striking ``adult'';
                                    (II) by striking ``adults'' 
                                and inserting ``persons''; and
                                    (III) by striking ``or 
                                persons 60 years of age or 
                                older''; and
                    (B) in subparagraph (B), by striking 
                ``adult day care services'' and inserting ``day 
                care services for chronically impaired disabled 
                persons''.
    (k) Unneeded Provision.--Section 17 of the Act is amended 
by striking subsection (q).
    (l) Conforming Amendments.--
            (1) Section 17B(f) of the Act (42 U.S.C. 1766b(f)) 
        is amended--
                    (A) in the subsection heading, by striking 
                ``and Adult''; and
                    (B) in paragraph (1), by striking ``and 
                adult''.
            (2) Section 18(e)(3)(B) of the Act (42 U.S.C. 
        1769(e)(3)(B)) is amended by striking ``and adult''.
            (3) Section 25(b)(1)(C) of the Act (42 U.S.C. 
        1769f(b)(1)(C)) is amended by striking ``and adult''.
            (4) Section 3(1) of the Healthy Meals for Healthy 
        Americans Act of 1994 (Public Law 103-448) is amended 
        by striking ``and adult''.
    (m) Effective Date.--
            (1) In general.--Except as provided in paragraph 
        (2), the amendments made by this section shall become 
        effective on the date of enactment of this Act.
            (2) Improved targeting of day care home 
        reimbursements.--The amendments made by paragraphs (1) 
        and (4) of subsection (e) shall become effective on 
        July 1, 1997.
            (3) Regulations.--
                    (A) Interim regulations.--Not later than 
                January 1, 1997, the Secretary shall issue 
                interim regulations to implement--
                            (i) the amendments made by 
                        paragraphs (1), (3), and (4) of 
                        subsection (e); and
                            (ii) section 17(f)(3)(C) of the 
                        National School Lunch Act (42 U.S.C. 
                        1766(f)(3)(C)).
                    (B) Final regulations.--Not later than July 
                1, 1997, the Secretary shall issue final 
                regulations to implement the provisions of law 
                referred to in subparagraph (A).
    (n) Study of Impact of Amendments on Program Participation 
and Family Day Care Licensing.--
            (1) In general.--The Secretary of Agriculture, in 
        conjunction with the Secretary of Health and Human 
        Services, shall study the impact of the amendments made 
        by this section on--
                    (A) the number of family day care homes 
                participating in the child care food program 
                established under section 17 of the National 
                School Lunch Act (42 U.S.C. 1766);
                    (B) the number of day care home sponsoring 
                organizations participating in the program;
                    (C) the number of day care homes that are 
                licensed, certified, registered, or approved by 
                each State in accordance with regulations 
                issued by the Secretary;
                    (D) the rate of growth of the numbers 
                referred to in subparagraphs (A) through (C);
                    (E) the nutritional adequacy and quality of 
                meals served in family day care homes that--
                            (i) received reimbursement under 
                        the program prior to the amendments 
                        made by this section but do not receive 
                        reimbursement after the amendments made 
                        by this section; or
                            (ii) received full reimbursement 
                        under the program prior to the 
                        amendments made by this section but do 
                        not receive full reimbursement after 
                        the amendments made by this section; 
                        and
                    (F) the proportion of low-income children 
                participating in the program prior to the 
                amendments made by this section and the 
                proportion of low-income children participating 
                in the program after the amendments made by 
                this section.
            (2) Required data.--Each State agency participating 
        in the child care food program under section 17 of the 
        National School Lunch Act (42 U.S.C. 1766) shall submit 
        to the Secretary data on--
                    (A) the number of family day care homes 
                participating in the program on June 30, 1997, 
                and June 30, 1998;
                    (B) the number of family day care homes 
                licensed, certified, registered, or approved 
                for service on June 30, 1997, and June 30, 
                1998; and
                    (C) such other data as the Secretary may 
                require to carry out this subsection.
            (3) Submission of report.--Not later than 2 years 
        after the effective date of this section, the Secretary 
        shall submit the study required under this subsection 
        to the Committee on Economic and Educational 
        Opportunities of the House of Representatives and the 
        Committee on Agriculture, Nutrition, and Forestry of 
        the Senate.

SEC. 3409. PILOT PROJECTS.

    (a) Universal Free Pilot.--Section 18(d) of the National 
School Lunch Act (42 U.S.C. 1769(d)) is amended--
            (1) by striking paragraph (3); and
            (2) by redesignating paragraphs (4) and (5) as 
        paragraphs (3) and (4), respectively.
    (b) Demo Project Outside School Hours.--Section 18(e) of 
the Act is amended--
            (1) in paragraph (1)--
                    (A) in subparagraph (A)--
                            (i) by striking ``(A)''; and
                            (ii) by striking ``shall'' and 
                        inserting ``may''; and
                    (B) by striking subparagraph (B); and
            (2) by striking paragraph (5) and inserting the 
        following:
            ``(5) Authorization of appropriations.--There are 
        authorized to be appropriated to carry out this 
        subsection such sums as are necessary for each of 
        fiscal years 1997 and 1998.''.
    (c) Eliminating Projects.--Section 18 of the Act is 
amended--
            (1) by striking subsections (a) and (g) through 
        (i); and
            (2) by redesignating subsections (b) through (f), 
        as so amended, as subsections (a) through (e), 
        respectively.
    (d) Conforming Amendment.--Section 17B(d)(1)(A) of the Act 
(42 U.S.C. 1766b(d)(1)(A)) is amended by striking ``18(c)'' and 
inserting ``18(b)''.

SEC. 3410. REDUCTION OF PAPERWORK.

    Section 19 of the National School Lunch Act (42 U.S.C. 
1769a) is repealed.

SEC. 3411. INFORMATION ON INCOME ELIGIBILITY.

    Section 23 of the National School Lunch Act (42 U.S.C. 
1769d) is repealed.

SEC. 3412. NUTRITION GUIDANCE FOR CHILD NUTRITION PROGRAMS.

    Section 24 of the National School Lunch Act (42 U.S.C. 
1769e) is repealed.

SEC. 3413. INFORMATION CLEARINGHOUSE.

    Section 26 of the National School Lunch Act (42 U.S.C. 
1769g) is repealed.

                 CHAPTER 2--CHILD NUTRITION ACT OF 1966

SEC. 3421. SPECIAL MILK PROGRAM.

    Section 3(a)(3) of the Child Nutrition Act of 1966 (42 
U.S.C. 1772(a)(3)) is amended by striking ``the Trust Territory 
of the Pacific Islands'' and inserting ``the Commonwealth of 
the Northern Mariana Islands''.

SEC. 3422. FREE AND REDUCED PRICE POLICY STATEMENT.

    Section 4(b)(1) of the Child Nutrition Act of 1966 (42 
U.S.C. 1773(b)(1)) is amended by adding at the end the 
following:
                    ``(E) Free and reduced price policy 
                statement.--After the initial submission, a 
                school shall not be required to submit a free 
                and reduced price policy statement to a State 
                educational agency under this Act unless there 
                is a substantive change in the free and reduced 
                price policy of the school. A routine change in 
                the policy of a school, such as an annual 
                adjustment of the income eligibility guidelines 
                for free and reduced price meals, shall not be 
                sufficient cause for requiring the school to 
                submit a policy statement.''.

SEC. 3423. SCHOOL BREAKFAST PROGRAM AUTHORIZATION.

    (a) Training and Technical Assistance in Food 
Preparation.--Section 4(e)(1) of the Child Nutrition Act of 
1966 (42 U.S.C. 1773(e)(1)) is amended--
            (1) in subparagraph (A), by striking ``(A)''; and
            (2) by striking subparagraph (B).
    (b) Expansion of Program; Startup and Expansion Costs.--
            (1) In general.--Section 4 of the Act is amended by 
        striking subsections (f) and (g).
            (2) Effective date.--The amendments made by 
        paragraph (1) shall become effective on October 1, 
        1996.

SEC. 3424. STATE ADMINISTRATIVE EXPENSES.

    (a) Use of Funds for Commodity Distribution Administration; 
Studies.--Section 7 of the Child Nutrition Act of 1966 (42 
U.S.C. 1776) is amended--
            (1) by striking subsections (e) and (h); and
            (2) by redesignating subsections (f), (g), and (i) 
        as subsections (e), (f), and (g), respectively.
    (b) Approval of Changes.--Section 7(e) of the Act, as so 
redesignated, is amended--
            (1) by striking ``each year an annual plan'' and 
        inserting ``the initial fiscal year a plan''; and
            (2) by adding at the end the following: ``After 
        submitting the initial plan, a State shall only be 
        required to submit to the Secretary for approval a 
        substantive change in the plan.''.

SEC. 3425. REGULATIONS.

    Section 10(b) of the Child Nutrition Act of 1966 (42 U.S.C. 
1779(b)) is amended--
            (1) in paragraph (1), by striking ``(1)''; and
            (2) by striking paragraphs (2) through (4).

SEC. 3426. PROHIBITIONS.

    Section 11(a) of the Child Nutrition Act of 1966 (42 U.S.C. 
1780(a)) is amended by striking ``neither the Secretary nor the 
State shall'' and inserting ``the Secretary shall not''.

SEC. 3427. MISCELLANEOUS PROVISIONS AND DEFINITIONS.

    Section 15 of the Child Nutrition Act of 1966 (42 U.S.C. 
1784) is amended--
            (1) in paragraph (1), by striking ``the Trust 
        Territory of the Pacific Islands'' and inserting ``the 
        Commonwealth of the Northern Mariana Islands''; and
            (2) in the first sentence of paragraph (3)--
                    (A) in subparagraph (A), by inserting 
                ``and'' at the end; and
                    (B) by striking ``, and (C)'' and all that 
                follows through ``Governor of Puerto Rico''.

SEC. 3428. ACCOUNTS AND RECORDS.

    The second sentence of section 16(a) of the Child Nutrition 
Act of 1966 (42 U.S.C. 1785(a)) is amended by striking ``at all 
times be available'' and inserting ``be available at any 
reasonable time''.

SEC. 3429. SPECIAL SUPPLEMENTAL NUTRITION PROGRAM FOR WOMEN, INFANTS, 
                    AND CHILDREN.

    (a) Definitions.--Section 17(b) of the Child Nutrition Act 
of 1966 (42 U.S.C. 1786(b)) is amended--
            (1) in paragraph (15)(B)(iii), by inserting ``of 
        not more than 365 days'' after ``accommodation''; and
            (2) in paragraph (16)--
                    (A) in subparagraph (A), by adding ``and'' 
                at the end; and
                    (B) in subparagraph (B), by striking ``; 
                and'' and inserting a period; and
                    (C) by striking subparagraph (C).
    (b) Secretary's Promotion of WIC.--Section 17(c) of the Act 
is amended by striking paragraph (5).
    (c) Eligible Participants.--Section 17(d) of the Act is 
amended by striking paragraph (4).
    (d) Nutrition Education and Drug Abuse Education.--Section 
17(e) of the Act is amended--
            (1) in the first sentence of paragraph (1), by 
        striking ``shall ensure'' and all that follows through 
        ``is provided'' and inserting ``shall provide nutrition 
        education and may provide drug abuse education'';
            (2) in paragraph (2), by striking the third 
        sentence;
            (3) in paragraph (4)--
                    (A) in the matter preceding subparagraph 
                (A), by striking ``shall'';
                    (B) by striking subparagraph (A);
                    (C) by redesignating subparagraphs (B) and 
                (C) as subparagraphs (A) and (B), respectively;
                    (D) in subparagraphs (A) and (B) (as 
                redesignated), by inserting ``shall'' before 
                ``provide'' each place it appears;
                    (E) in subparagraph (A) (as redesignated), 
                by striking ``and'' at the end;
                    (F) in subparagraph (B) (as redesignated), 
                by striking the period and inserting ``; and''; 
                and
                    (G) by adding at the end the following:
            ``(C) may provide a local agency with materials 
        describing other programs for which participants in the 
        program may be eligible.'';
            (4) in paragraph (5), by striking ``The State'' and 
        all that follows through ``local agency shall'' and 
        inserting ``Each local agency shall''; and
            (5) by striking paragraph (6).
    (e) State Plan.--Section 17(f) of the Act is amended--
            (1) in paragraph (1)--
                    (A) in subparagraph (A)--
                            (i) by striking ``annually to the 
                        Secretary, by a date specified by the 
                        Secretary, a'' and inserting ``to the 
                        Secretary, by a date specified by the 
                        Secretary, an initial''; and
                            (ii) by adding at the end the 
                        following: ``After submitting the 
                        initial plan, a State shall only be 
                        required to submit to the Secretary for 
                        approval a substantive change in the 
                        plan.'';
                    (B) in subparagraph (C)--
                            (i) by striking clause (iii) and 
                        inserting the following:
            ``(iii) a plan to coordinate operations under the 
        program with other services or programs that may 
        benefit participants in, and applicants for, the 
        program;'';
                            (ii) in clause (vi), by inserting 
                        after ``in the State'' the following: 
                        ``(including a plan to improve access 
                        to the program for participants and 
                        prospective applicants who are 
                        employed, or who reside in rural 
                        areas)'';
                            (iii) in clause (vii), by striking 
                        ``to provide program benefits'' and all 
                        that follows through ``emphasis on'' 
                        and inserting ``for'';
                            (iv) by striking clauses (ix), (x), 
                        and (xii);
                            (v) in clause (xiii), by striking 
                        ``may require'' and inserting ``may 
                        reasonably require''; and
                            (vi) by redesignating clauses (xi) 
                        and (xiii), as so amended, as clauses 
                        (ix) and (x), respectively;
                    (C) by striking subparagraph (D); and
                    (D) by redesignating subparagraph (E) as 
                subparagraph (D);
            (2) by striking paragraphs (2), (6), (8), and (22);
            (3) in the second sentence of paragraph (5), by 
        striking ``at all times be available'' and inserting 
        ``be available at any reasonable time'';
            (4) in paragraph (9)(B), by striking the second 
        sentence;
            (5) in the first sentence of paragraph (11), by 
        striking ``, including standards that will ensure 
        sufficient State agency staff'';
            (6) in paragraph (12), by striking the third 
        sentence;
            (7) in paragraph (14), by striking ``shall'' and 
        inserting ``may'';
            (8) in paragraph (17), by striking ``and to 
        accommodate'' and all that follows through 
        ``facilities'';
            (9) in paragraph (19), by striking ``shall'' and 
        inserting ``may''; and
            (10) by redesignating paragraphs (3), (4), (5), 
        (7), (9) through (19), (20), (21), (23), and (24), as 
        so amended, as paragraphs (2), (3), (4), (5), (6) 
        through (16), (17), (18), (19), and (20), respectively.
    (f) Information.--Section 17(g) of the Act is amended--
            (1) in paragraph (5), by striking ``the report 
        required under subsection (d)(4)'' and inserting 
        ``reports on program participant characteristics''; and
            (2) by striking paragraph (6).
    (g) Procurement of Infant Formula.--
            (1) In general.--Section 17(h) of the Act is 
        amended--
                    (A) in paragraph (4)(E), by striking ``and, 
                on'' and all that follows through ``(d)(4)'';
                    (B) in paragraph (8)--
                            (i) by striking subparagraphs (A), 
                        (C), and (M);
                            (ii) in subparagraph (G)--
                                    (I) in clause (i), by 
                                striking ``(i)''; and
                                    (II) by striking clauses 
                                (ii) through (ix);
                            (iii) in subparagraph (I), by 
                        striking ``Secretary--'' and all that 
                        follows through ``(v) may'' and 
                        inserting ``Secretary may'';
                            (iv) by redesignating subparagraphs 
                        (B) and (D) through (L) as 
                        subparagraphs (A) and (B) through (J), 
                        respectively;
                            (v) in subparagraph (A)(i), as so 
                        redesignated, by striking 
                        ``subparagraphs (C), (D), and (E)(iii), 
                        in carrying out subparagraph (A),'' and 
                        inserting ``subparagraphs (B) and 
                        (C)(iii),'';
                            (vi) in subparagraph (B)(i), as so 
                        redesignated, by striking 
                        ``subparagraph (B)'' each place it 
                        appears and inserting ``subparagraph 
                        (A)''; and
                            (vii) in subparagraph (C)(iii), as 
                        so redesignated, by striking 
                        ``subparagraph (B)'' and inserting 
                        ``subparagraph (A)''; and
                    (C) in paragraph (10)(B)--
                            (i) in clause (i), by striking the 
                        semicolon and inserting ``; and'';
                            (ii) in clause (ii), by striking 
                        ``; and'' and inserting a period; and
                            (iii) by striking clause (iii).
            (2) Application.--The amendments made by paragraph 
        (1) shall not apply to a contract for the procurement 
        of infant formula under section 17(h)(8) of the Act 
        that is in effect on the effective date of this 
        subsection.
    (h) National Advisory Council on Maternal, Infant, and 
Fetal Nutrition.--Section 17(k)(3) of the Act is amended by 
striking ``Secretary shall designate'' and inserting ``Council 
shall elect''.
    (i) Completed Study; Community College Demonstration; 
Grants for Information and Data System.--Section 17 of the Act 
is amended by striking subsections (n), (o), and (p).
    (j) Disqualification of Vendors Who Are Disqualified Under 
the Food Stamp Program.--Section 17 of the Act, as so amended, 
is further amended by adding at the end the following:
    ``(n) Disqualification of Vendors Who Are Disqualified 
Under the Food Stamp Program.--
            ``(1) In general.--The Secretary shall issue 
        regulations providing criteria for the disqualification 
        under this section of an approved vendor that is 
        disqualified from accepting benefits under the food 
        stamp program established under the Food Stamp Act of 
        1977 (7 U.S.C. 2011 et seq.).
            ``(2) Terms.--A disqualification under paragraph 
        (1)--
                    ``(A) shall be for the same period as the 
                disqualification from the program referred to 
                in paragraph (1);
                    ``(B) may begin at a later date than the 
                disqualification from the program referred to 
                in paragraph (1); and
                    ``(C) shall not be subject to judicial or 
                administrative review.''.

SEC. 3430. CASH GRANTS FOR NUTRITION EDUCATION.

    Section 18 of the Child Nutrition Act of 1966 (42 U.S.C. 
1787) is repealed.

SEC. 3431. NUTRITION EDUCATION AND TRAINING.

    (a) Findings.--Section 19 of the Child Nutrition Act of 
1966 (42 U.S.C. 1788) is amended--
            (1) in subsection (a), by striking ``that--'' and 
        all that follows through the period at the end and 
        inserting ``that effective dissemination of 
        scientifically valid information to children 
        participating or eligible to participate in the school 
        lunch and related child nutrition programs should be 
        encouraged.''; and
            (2) in subsection (b), by striking ``encourage'' 
        and all that follows through ``establishing'' and 
        inserting ``establish''.
    (b) Use of Funds.--Section 19(f) of the Act is amended--
            (1) in paragraph (1)--
                    (A) by striking subparagraph (B); and
                    (B) in subparagraph (A)--
                            (i) by striking ``(A)'';
                            (ii) by striking clauses (ix) 
                        through (xix);
                            (iii) by redesignating clauses (i) 
                        through (viii) and (xx) as 
                        subparagraphs (A) through (H) and (I), 
                        respectively;
                            (iv) in subparagraph (I), as so 
                        redesignated, by striking the period at 
                        the end and inserting ``; and''; and
                    (v) by adding at the end the following:
            ``(J) other appropriate related activities, as 
        determined by the State.'';
            (2) by striking paragraphs (2) and (4); and
            (3) by redesignating paragraph (3) as paragraph 
        (2).
    (c) Accounts, Records, and Reports.--The second sentence of 
section 19(g)(1) of the Act is amended by striking ``at all 
times be available'' and inserting ``be available at any 
reasonable time''.
    (d) State Coordinators for Nutrition; State Plan.--Section 
19(h) of the Act is amended--
            (1) in the second sentence of paragraph (1)--
                    (A) by striking ``as provided in paragraph 
                (2) of this subsection''; and
                    (B) by striking ``as provided in paragraph 
                (3) of this subsection'';
            (2) in paragraph (2), by striking the second and 
        third sentences; and
            (3) by striking paragraph (3).
    (e) Authorization of Appropriations.--Section 19(i) of the 
Act is amended--
            (1) in the first sentence of paragraph (2)(A), by 
        striking ``and each succeeding fiscal year'';
            (2) by redesignating paragraphs (3) and (4) as 
        paragraphs (4) and (5), respectively; and
            (3) by inserting after paragraph (2) the following:
            ``(3) Fiscal years 1997 through 2002.--
                    ``(A) In general.--There are authorized to 
                be appropriated to carry out this section 
                $10,000,000 for each of fiscal years 1997 
                through 2002.
                    ``(B) Grants.--
                            ``(i) In general.--Grants to each 
                        State from the amounts made available 
                        under subparagraph (A) shall be based 
                        on a rate of 50 cents for each child 
                        enrolled in schools or institutions 
                        within the State, except that no State 
                        shall receive an amount less than 
                        $75,000 per fiscal year.
                            ``(ii) Insufficient funds.--If the 
                        amount made available for any fiscal 
                        year is insufficient to pay the amount 
                        to which each State is entitled under 
                        clause (i), the amount of each grant 
                        shall be ratably reduced.''.
    (f) Assessment.--Section 19 of the Act is amended by 
striking subsection (j).
    (g) Effective Date.--The amendments made by subsection (e) 
shall become effective on October 1, 1996.

                  CHAPTER 3--MISCELLANEOUS PROVISIONS

SEC. 3441. COORDINATION OF SCHOOL LUNCH, SCHOOL BREAKFAST, AND SUMMER 
                    FOOD SERVICE PROGRAMS.

    (a) Coordination.--
            (1) In general.--The Secretary of Agriculture shall 
        develop proposed changes to the regulations under the 
        school lunch program under the National School Lunch 
        Act, the summer food service program under section 13 
        of that Act, and the school breakfast program under 
        section 4 of the Child Nutrition Act of 1966, for the 
        purpose of simplifying and coordinating those programs 
        into a comprehensive meal program.
            (2) Consultation.--In developing proposed changes 
        to the regulations under paragraph (1), the Secretary 
        of Agriculture shall consult with local, State, and 
        regional administrators of the programs described in 
        such paragraph.
    (b) Report.--Not later than November 1, 1997, the Secretary 
of Agriculture shall submit to the Committee on Agriculture, 
Nutrition, and Forestry of the Senate and the Committee on 
Economic and Educational Opportunities of the House of 
Representatives a report containing the proposed changes 
developed under subsection (a).

                     Subtitle E--Related Provisions

Sec. 3501. REQUIREMENT THAT DATA RELATING TO THE INCIDENCE OF POVERTY 
                    IN THE UNITED STATES BE PUBLISHED AT LEAST EVERY 2 
                    YEARS.

    (a) In General.--The Secretary shall, to the extent 
feasible, produce and publish for each State, county, and local 
unit of general purpose government for which data have been 
compiled in the then most recent census of population under 
section 141(a) of title 13, United States Code, and for each 
school district, data relating to the incidence of poverty. 
Such data may be produced by means of sampling, estimation, or 
any other method that the Secretary determines will produce 
current, comprehensive, and reliable data.
    (b) Content; Frequency.--Data under this section--
            (1) shall include--
                    (A) for each school district, the number of 
                children age 5 to 17, inclusive, in families 
                below the poverty level; and
                    (B) for each State and county referred to 
                in subsection (a), the number of individuals 
                age 65 or older below the poverty level; and
            (2) shall be published--
                    (A) for each State, county, and local unit 
                of general purpose government referred to in 
                subsection (a), in 1997 and at least every 
                second year thereafter; and
                    (B) for each school district, in 1999 and 
                at least every second year thereafter.
    (c) Authority to Aggregate.--
            (1) In general.--If reliable data could not 
        otherwise be produced, the Secretary may, for purposes 
        of subsection (b)(1)(A), aggregate school districts, 
        but only to the extent necessary to achieve 
        reliability.
            (2) Information relating to use of authority.--Any 
        data produced under this subsection shall be 
        appropriately identified and shall be accompanied by a 
        detailed explanation as to how and why aggregation was 
        used (including the measures taken to minimize any such 
        aggregation).
    (d) Report to be Submitted Whenever Data Is Not Timely 
Published.--If the Secretary is unable to produce and publish 
the data required under this section for any State, county, 
local unit of general purpose government, or school district in 
any year specified in subsection (b)(2), a report shall be 
submitted by the Secretary to the President of the Senate and 
the Speaker of the House of Representatives, not later than 90 
days before the start of the following year, enumerating each 
government or school district excluded and giving the reasons 
for the exclusion.
    (e) Criteria Relating to Poverty.--In carrying out this 
section, the Secretary shall use the same criteria relating to 
poverty as were used in the then most recent census of 
population under section 141(a) of title 13, United States Code 
(subject to such periodic adjustments as may be necessary to 
compensate for inflation and other similar factors).
    (f) Consultation.--The Secretary shall consult with the 
Secretary of Education in carrying out the requirements of this 
section relating to school districts.
    (g) Definition.--For the purpose of this section, the term 
``Secretary'' means the Secretary of Health and Human Services.
    (h) Authorization of Appropriations.--There are authorized 
to be appropriated to carry out this section $1,500,000 for 
each of fiscal years 1997 through 2000.

SEC. 3502. SENSE OF THE CONGRESS.

    It is the sense of the Congress that this title, and the 
amendments made by this title, should not result in an increase 
in the number of children who are hungry, homeless, poor, or 
medically uninsured.

SEC. 3503. LEGISLATIVE ACCOUNTABILITY.

    In the event that this title, or the amendments made by 
this title, results in an increase in the number of children in 
the United States who are hungry, homeless, poor, or medically 
uninsured by the end of the fiscal year 1997, the Congress--
            (1) shall revisit the provisions of this title, or 
        the amendments made by this title, which caused such 
        increase; and
            (2) shall, as soon as practicable thereafter, pass 
        legislation that stops the continuation of such 
        increase.
     TITLE III--COMMITTEE ON ECONOMIC AND EDUCATIONAL OPPORTUNITIES

                      House of Representatives,    
                          Committee on Economic and
                                 Educational Opportunities,
                                     Washington, DC, June 13, 1996.
Hon. John R. Kasich,
Chairman, Committee on the Budget,
Washington, DC.
    Dear Chairman Kasich. Pursuant to the reconciliation 
directives contained in the Conference Report on House 
Concurrent Resolution 178, the budget resolution for fiscal 
year 1997, I am pleased to transmit reconciliation 
recommendations for programs within the jurisdiction of the 
Committee on Economic and Educational Opportunities. The 
recommendations contained in this formal transmission were 
approved by the full committee on June 13, 1996 by a vote of 23 
to 11. A copy of the legislation, and report, including the 
Committee Views together with Summary, Section by Section 
Analysis and other items necessary to comply with House Rules 
are enclosed. Pursuant to your letter of June 12, 1996, the 
cost estimate, Ramseyer, and minority views will be 
forthcoming, but in no event later than Monday, June 17, 1996.
    I realize that the instructions given to the committee 
under H.Con.Res. 178 were derived from H.R. 3507, the Personal 
Responsibility and Work Opportunities Act of 1996. I know you 
understand that this committee was not directed to include 
provisions from Title IV, Restricting Welfare and Public 
Benefits for Aliens and, hence, we did not include any 
provisions from that title; however, section 424, the 
cosignature of alien student loans provision amends the Higher 
Education Act of 1965 and I respectfully request that you 
delete that provision as it has negligible savings and needs 
further review.
    I hope these proposals will be of assistance to your 
committee in meeting the budget reconciliation targets. If you 
have questions or comments, please do not hesitate to call me.
            Sincerely,
                                           Bill Goodling, Chairman.

                                CONTENTS

                                                                   Page
Purpose..........................................................   816
Explanation of Amendments........................................   816
Committee Action.................................................   816
Summary..........................................................   820
Committee Views..................................................   821
Section-by-Section Analysis of the Legislation...................   847
Statement of Oversight Findings and Recommendations of the 
  Committee......................................................   865
Inflationary Impact Statement....................................   865
Government Reform and Oversight..................................   865
Committee Estimate...............................................   865
Application of Law to Legislative Branch.........................   865
Unfunded Mandate Statement.......................................   865
Budget Authority and Congressional Budget Office Cost Estimate...   866
Rollcall Votes...................................................   866
Changes in Existing Law..........................................   877

COMMITTEE ON ECONOMIC AND EDUCATIONAL OPPORTUNITIES RECOMMENDATIONS ON 
                      THE BUDGET, FISCAL YEAR 1997

                                Purpose

    The purpose of the Committee Recommendations is to 
establish work requirements for persons receiving cash public 
assistance, provide increases in funding for child care, 
increase in funding for protecting children from abuse, and 
streamline nutrition assistance programs in order to reduce 
administrative burdens.

                       Explanation of Amendments

    The amendments adopted in committee are explained in this 
report.

                            Committee Action

    Over the past 2 years, the committee has spent a great deal 
of time on welfare reform and the issues surrounding it within 
the committee's jurisdiction. Following is a list of the 
committee's hearings and legislative actions on welfare reform.
    On August 2, 1994, the Committee on Education and Labor 
conducted a hearing on overall issues surrounding welfare 
reform. Witnesses testifying were: the Honorable Robert E. 
Andrews, a Representative in Congress from the State of New 
Jersey; the Honorable Tom DeLay, a Representative in Congress 
from the State of Texas; the Honorable Jill Long, a 
Representative in Congress from the State of Indiana; the 
Honorable Dave McCurdy, a Representative from the State of 
Oklahoma; the Honorable Patsy Mink, a Representative in 
Congress from the State of Hawaii, the Honorable Rick Santorum, 
a Representative in Congress from the State of Pennsylvania; 
Secretary Donna Shalala, U.S. Department of Health and Human 
Services; and the Honorable Lynn C. Woolsey, Representative in 
Congress from the State of California.
    On January 18, 1995, the Committee on Economic and 
Educational Opportunities conducted a hearing to consider the 
Contract With America: Welfare Reform. Witnesses were: Dr. 
Gerald Miller, Director, Michigan Department of Social 
Services; Mr. Doug Stites, Chief Operating Officer, Michigan 
Jobs Commission; Mr. Robert Rector, Policy Analyst, Heritage 
Foundation; Mr. Carlos Bonilla, Chief Economist, Employment 
Policies Institute; Mr. Mark Greenberg, Senior Staff Attorney, 
Center for Law and Social Policy; and Ms. Cheri Honkala, a 
welfare recipient.
    The committee conducted several hearings relating to 
welfare reform and child care.
    On September 20, 1994, the Committee on Education and 
Labor, Subcommittee on Human Resources, conducted a hearing to 
consider the ``Impact of Welfare Reform on Child Care Providers 
and the Working Poor.'' Witnesses were: Ms. Jane L. Ross, 
Associate Director of Income Security Issues, General 
Accounting Office; Ms. Nancy Ebb, Children's Defense Fund; Mr. 
Ronald H. Field, Senior Vice President for Public Policy, 
Family Service America; Mr. Bruce Herschfield, Program 
Director, Child Day Care, Child Welfare League of America; Mr. 
Ed Cooney, Food Research and Action Center.
    The Subcommittee on Early Childhood, Youth, and Families 
held a hearing on January 31, 1995 and a joint hearing with the 
Ways and Means Subcommittee on Human Resources on February 3, 
1995 to consider consolidation of child care programs within 
the context of welfare reform.
    The January 31, 1995 hearing in Washington, D.C. received 
comments from recipients of child care assistance, day care 
administrators, and child care experts. Testimony was received 
from: Ms. Rebecca ``Missie'' Kinnard, parent and child care 
assistance recipient, York, Pennsylvania; Mr. Bob Hollis, Day 
Care Administrator, Crispus Attucks Association, Inc., York, 
Pennsylvania; Ms. Jane Ross, Director, Income Security Issues, 
General Accounting Office, Washington, DC; and Ms. Patty 
Siegel, Executive Director, California Child Care and Resource 
and Referral Network, San Francisco, California.
    The February 3, 1995 joint hearing in Washington, D.C. was 
held to receive comments from the administration, a parent 
receiving a child care subsidy, a Director of Family Resources, 
an Acting Director of a State Department of Human Services, and 
two policy experts. Testifying before the committee were: The 
Honorable Mary Jo Bane, Assistant Secretary for Children and 
Families, U.S. Department of Health and Human Services, 
Washington, D.C.; Ms. Tina Davis, student at Montgomery College 
and parent receiving a child care subsidy, Takoma Park, 
Maryland; Ms. Debbie Shepard, Director, WPA, Department of 
Family Resources, Montgomery County, Rockville, Maryland; Ms. 
Karen Highsmith, Acting Director, Division of Family 
Development, New Jersey Department of Human Services, Trenton, 
New Jersey; Mr. Douglas J. Besharov, Resident Scholar, American 
Enterprise Institute for Public Policy Research, Washington, 
D.C.; and Ms. Helen Blank, Director of Child Care, Children's 
Defense Fund, Washington, D.C.
    On February 1, 1995, the full Committee on Economic and 
Educational Opportunities held a hearing on Title V of H.R. 4, 
the Personal Responsibility Act. Title V of H.R. 4 provided for 
changes to child nutrition programs, including establishment of 
block grants for school-based and other nutrition programs, 
along with guaranteed annual increases in funding for those 
programs.
    Witnesses at the February 1, 1995 hearing were Marilyn 
Hurt, Food Service Supervisor, School District of LaCrosse, 
Wisconsin, Mr. Patrick F.E. Temple-West, Director, Nutrition 
Development Services, Archdiocese of Philadelphia, Ms. Joan 
Taylor, Executive Director of the DuPage Senior Citizens 
Council, Illinois, Mr. Boyd W. Boehlje, President, Pella, Iowa 
School Board, Pella School District, Dr. James L. Lukefahr, 
Medical Director, Driscoll Children's Hospital WIC Program, and 
Mr. Robert J. Fersh, President, Food Research and Action 
Center.
    Three hearings were held relating to replacement of the 
JOBS Program with Mandatory Work Requirements. On April 19, 
1994, the Committee on Education and Labor, Subcommittee on 
Human Resources, conducted a hearing on the JOBS program: Views 
From Participants and State Administrators. Testifying at the 
hearing were the Honorable Mary Jo Bane, Assistant Secretary 
for Children and Families, Department of Health and Human 
Services; Ms. Jennifer Vasiloff, Executive Director, Coalition 
on Human Needs; Mr. Mark Greenberg, Senior Staff Attorney, 
Center for Law and Social Policy; Mr. Ray Scheppach, Executive 
Director, National Governor's Association; Mr. Larry D. 
Jackson, Commissioner, Virginia Department of Social Services, 
American Public Welfare Association; and Ms. Teresa Johnson, 
Ms. Gloria Cummings, Ms. Tracy Doram, Ms. Donna Sepczynski 
(JOBS participants).
    On October 28, 1994, the Committee on Education and Labor, 
Subcommittee on Human Resources conducted a field hearing in 
Alhambra, California on the California JOBS program, known as 
Greater Avenues to Independence (GAIN). Witnesses testifying 
were: Ms. Nancy Berlin, Los Angeles; Ms. Irma Alvarado, Los 
Angeles GAIN program; Ms. Katherine McGrath, graduate of GAIN 
program, San Bernardino; Odessa Johnson, Human Services Worker, 
San Bernardino; Ms. Gloria Clark, Executive Director, City of 
Los Angeles Human Services Division; Nivia Bermudez, Director, 
AFDC Organization Project Los Angeles Homeless Coalition; and 
Ms. Lori Karny, Director, Women Helping Women Services, Council 
of Jewish Women.
    On January 19, 1995, the Committee on Economic and 
Educational Opportunities, Subcommittee on Postsecondary 
Education, Training and Life-Long Learning, conducted an 
oversight hearing on the JOBS program. Testifying before the 
committee were William Waldman, Commissioner, New Jersey 
Department of Human Services; Michael Genest, Deputy Director, 
Welfare Programs Division, California Department of Health and 
Human Services; Jean Rogers, Administrator, Division of 
Economic Support, Wisconsin Department of Health and Human 
Services; and Judith Gueron, President, Manpower Development 
and Research Corporation.
    Two hearings were held relating to establishment of a Child 
Protection Block Grant. The first hearing was conducted by the 
Subcommittee on Early Childhood, Youth and Families on January 
31, 1995, and a second joint hearing was held with the Ways and 
Means Subcommittee on Human Resources on February 3, 1995.
    The January 31, 1995 hearing devoted two panels to child 
welfare issues and one to child care issues. The hearing was 
held to receive comments from a Member of Congress, a parent, a 
citizen who had served as a Deputy Foreman for a Grand Jury 
investigation, and two policy experts. Testimony was received 
from: The Honorable Tim Hutchinson, Member of Congress, 3rd 
District, Arkansas; Ms. Cari B. Clark, parent, Springfield, 
Virginia; Ms. Carol Lamb Hopkins, Deputy Foreman, 1991-92 San 
Diego Grand Jury, San Diego, California; Mr. David Wagner, 
Director of Legal Policy, Family Research Council, Washington, 
DC; Ms. Anne Cohn Donnelly, Executive Director, National 
Committee to Prevent Child Abuse, Chicago, Illinois.
    The February 3, 1995 joint hearing featured one panel on 
child care issues and one on child welfare issues as well as 
the administration commenting on both. Testifying before the 
committee on child welfare issues were: The Honorable Mary Jo 
Bane, Assistant Secretary for Children and Families, U.S. 
Department of Health and Human Services; Mr. Patrick Murphy, 
Public Guardian, Cook County, Illinois; Mr. Wade Horn, 
Director, National Fatherhood Initiative; Carol Statuo Bevan, 
Vice President for Research and Public Policy, National Council 
for Adoption; and Ruth Massinga, Chief Executive, the Casey 
Family Program, Seattle, Washington.

Legislative action

    On January 3, 1995, Representatives Shaw, Talent and 
LaTourette introduced the Personal Responsibility Act, H.R. 4, 
which was part of the Republican Contract with America. H.R. 4 
included provisions relating to work requirements, child care, 
child protection, child nutrition and other provisions related 
to welfare reform within the jurisdiction of the committee.
    On February 21, 1995, Committee on Economic and Educational 
Opportunities Chairman William Goodling introduced H.R. 999, 
the Welfare Reform Consolidation Act of 1995. H.R. 999 
consisted of the committee's initiatives and program reforms 
relating to welfare reform, consistent with overall welfare 
reforms contained in the Personal Responsibility Act, H.R. 4.
    On February 22 and 23, 1995, the Committee on Economic and 
Educational Opportunities considered H.R. 999. The committee 
adopted an amendment in the nature of a substitute, agreed to 
additional amendments, and reported the legislation favorably, 
on a recorded vote.
    H.R. 999 was combined with proposals from other committees 
in H.R. 1214 was introduced by Representatives Archer, 
Goodling, and Roberts on March 13, 1995, and considered (upon 
substituting the text of H.R. 1214 into H.R. 4) by the House of 
Representatives on March 21-24, 1995. H.R. 4 was approved by 
the House of Representatives on a vote of 234-199. The Senate 
approved H.R. 4 on September 19, 1995. The text of H.R. 4 as 
approved by the House was also included in H.R. 2491, the 
Balanced Budget Act of 1995, which was approved by the House of 
Representatives on October 26, 1995.
    Conference reports on H.R. 2491, the Balance Budget Act of 
1995, and H.R. 4, the Personal Responsibility Act, were 
approved by the House of Representatives on November 17, 1995 
and December 20, 1995 respectively. President Clinton vetoed 
both H.R. 2491, the Balanced Budget Act on December 6, 1995 and 
H.R. 4, the Personal Responsibility Act on January 9, 1996.
    On May 22, 1996 Representative Archer introduced H.R. 3507. 
H.R. 3507, contains welfare reforms from H.R. 4 together with 
certain changes reflected changes to H.R. 4 requested by the 
Nation's Governors, as well as reforms to the Medicaid program. 
The Budget Resolution for fiscal year 1997 includes 
instructions to the respective committees of jurisdiction to 
report savings consistent with adoption of H.R. 3507 to the 
Budget Committee by June 13, 1996. On June 12, 1996, the 
Committee on Economic and Educational Opportunities considered 
its report to the Budget Committee consistent with the 
instructions described above.

                                Summary

                     subtitle a--work requirements

    This subtitle, as reported by this committee, replaces the 
Job Opportunities and Basic Skills (JOBS) program with new 
mandatory work requirements. Under these provisions, States 
will be required to move an increasing percentage of their 
welfare caseload into real work activities for a minimum number 
of hours per week.

           subtitle b--child and family services block grant

    This subtitle, as reported by this committee, consolidates 
six existing child protection programs into a new block--``The 
Child and Family Services Block Grant.'' The purpose of this 
block grant is to allow States to have one pool of Federal 
funds from which to access funds in order to implement programs 
which best meet the needs of children and families in their 
State. By simplifying the administrative burden currently 
placed on States because of the fragmentation of child welfare 
programs, there will be less paperwork, allowing professionals 
to focus on providing needed services to children and families.
    This block grant is part of a larger reform along with 
other child welfare programs which primarily fall within the 
jurisdiction of the Ways and Means Committee. Combined, these 
reforms will retain the open-ended entitlement funding for 
foster care maintenance payments, training, and administration; 
the open-ended entitlement stream for adoption assistance 
payments, administration and training and the existing capped 
entitlement for Independent Living services. In addition, the 
child protection standards found in current law would be 
retained. Taken together, the reforms consolidate 11 existing 
child protection programs into block grants that require only 
one State application, one State plan, and one State report. 
Combined across these provisions, States will have $32.2 
billion available in entitlement funds--about $200 million more 
than current law--to protect abused and neglected children.

                         subtitle c--child care

    This subtitle consolidates seven Federal child care 
programs into the Child Care and Development Block Grant 
(CCDBG) to create a single consolidated program to assist low-
income parents in paying for child care. The consolidation of 
these programs eliminates conflicting income requirements, time 
limits, and work requirements between the programs so Federal 
child care funds may ``follow the parent'' as they move from 
welfare to work. The block grant also gives States much greater 
flexibility in targeting child care assistance, and ensures 
that States set effective policies on health, safety, and 
licensing standards.
    Merged programs include: Child Development Associate 
Scholarship Assistance, State Dependent Care Planning Grant, 
Child Care activities under Title X of the Elementary and 
Secondary Education Act, native Hawaiian Family Centers, At 
Risk Child Care, Transitional Child Care, and Aid to Families 
with Dependent Children.
    Child Care funds made available through the block grant 
total $22 billion over 7 years as follows: (1) $15 billion in 
mandatory funds (rising from $1.97 billion in 1997 to $2.72 
billion in 2002); and (2) $1 billion in each of 7 years (fiscal 
year 1996-fiscal year 2002) in discretionary funds. According 
to the Congressional Budget Office, the total of $22 billion is 
$4.5 billion above funding provided under current law for the 
same period.

                  Subtitle D--Child Nutrition Programs

    This subtitle contains numerous provisions designed to 
streamline and simplify the operation of child nutrition 
programs and give State and localities greater flexibility to 
operate their programs efficiently and effectively and control 
program growth and Federal costs. Program savings totaling $3.0 
billion from 1997-2002 are achieved by the following measures: 
the implementation of a two-tiered reimbursement program for 
family day care homes under the Child and Adult Care Food 
Program, the elimination of startup grants for the School 
Breakfast and Summer Food Programs, modifications to the 
reimbursement rates for the Summer Food Program, and a 
provision which converts the Nutrition Education and Training 
program from an ``entitlement'' program to a ``discretionary 
program.'' The bill also eliminates numerous obsolete and 
conflicting provisions in laws that have been amended more than 
25 times over the past 25 years.

                     subtitle e--related provisions

    Under Subtitle E, the Secretary of Health and Human 
Services (in consultation with the Secretary of Education) is 
required to publish updated poverty estimates every 2 years. 
These updates must begin in 1997 for State, county, and city 
poverty estimates, and in 1999 for school district poverty 
estimates. This section authorizes the appropriation of $1.5 
million per year to carry out these provisions. In addition 
this title expresses the sense of Congress that the welfare 
reform legislation should not result in an increase number of 
children in poverty or who lack food, homes, or medical care.

                            Committee Views

Background and need for the legislation

    As the foregoing history shows, the Committee on Economic 
and Educational Opportunities, along with many others in 
Congress, have given considerable time and effort in the 104th 
Congress to attempting to reform our Nation's welfare system.
    The need for major welfare reform is obvious to almost 
everyone. According to a public opinion poll conducted in 
January, 1994, 71 percent of the American public said the 
current welfare system does ``more harm than good.'' The 
current welfare system, though intended to show society's 
compassion for those of limited means, in far too many cases 
actually creates more dependence on government, and rewards 
behaviors destructive to individuals, families, and society. As 
a witness before the committee put it, ``in welfare, as in most 
other things in life, you get what you pay for. The current 
system pays for nonwork and nonmarriage, and has achieved 
dramatic increase in both.''
    During the most of the past thirty years, the answer to 
every problem and the means to every ``reform'' has been to 
create another Federal program. Of course, each new Federal 
program required separate regulations, separate applications, 
separate eligibility rules, separate reports. Each of these in 
turn requires additional personnel to administer the program, 
to check the paperwork, to write the regulations. Much of the 
good intentions behind all of these programs was lost in a maze 
of red tape and regulations. In the end, the programs seemed 
more designed to meet the needs of those who administer them 
than those who were the intended beneficiaries.
    The welfare reform proposal in H.R. 4 and in the welfare 
reform legislation of which this bill is a part, move in a new 
direction. States are given more flexibility in their use of 
Federal funds, but with accountability for results in reducing 
welfare dependence. Although President Clinton vetoed two bills 
very similar to this legislation, the committee believes 
strongly that welfare reform legislation is needed and that the 
approach to welfare reform outlined in H.R. 4 and in this 
legislation will lead to a more effective system for assisting 
those in need. The current legislation provides additional 
guaranteed funding for child care (over both current law and 
the President's own proposal) and maintains funding for school 
lunch approximately $400 million higher than that proposed by 
the President. In addition, the legislation maintains strong 
work requirements and consolidates several child care and child 
welfare programs.

                     subtitle a--work requirements

    Efforts by this committee and its predecessor, the 
Committee on Education and Labor, to place a stronger emphasis 
on work requirements in welfare extend back to 1964, with the 
passage of the Economic Opportunity Act. Title V of that Act 
authorized the Work Experience Program for heads of households 
who could not support their families. Although this program did 
not include mandatory work requirements, it was one of the 
first major attempts to assist individuals to move off welfare 
and into work.
    The Work Experience Program was eventually replaced by the 
Work Incentive Program which was specifically placed under the 
Education and Labor Committee's sole jurisdiction in 1975 under 
the Rules of the House of Representatives. Although well 
intentioned, the law failed to effectively move welfare 
recipients into employment due largely to its lack of mandated 
work requirements--even after reforms in 1981 which expanded 
options for States to include mandatory work in the programs.
    By 1986 most States began experimenting with a variety of 
welfare-to-work programs. However, these programs also failed 
to stress mandatory work requirements and instead continued to 
focus upon education and training activities. Nevertheless, 
these State initiatives were the impetus for bolder attempts by 
this committee to enact legislation making work a requirement 
in exchange for cash welfare assistance.
    In 1987, the Education and Labor Committee approved the 
Family Welfare Reform Act of 1987, which included the proposed 
establishment of the Fair Work Opportunities Program. This 
program, (which under the final legislation, the Family Support 
Act of 1988, renamed Job Opportunities and Basic Skills 
(JOBS)), had as a principal objective to move welfare 
recipients into work. Towards that objective, the legislation 
included three fundamental concepts which were unique to 
Federal welfare programs up to that time. First, certain 
recipients were required to participate in work activities at 
the risk of reduced benefits. Second, it required those 
participants in work activities to do so for a minimum number 
of hours. Third, it held States accountable for moving 
recipients into work activities through the implementation of 
``minimum participation rates.''
    Although an ambitious attempt at emphasizing work, the JOBS 
program has in fact not met expectations for moving recipients 
into real jobs, and off welfare.
    The work requirements included in this welfare reform 
legislation reflect the work provisions included in H.R. 999, 
along with several changes stemming from negotiations during 
the conference committee of H.R. 4 as well as negotiations with 
the Nation's Governors since the veto of H.R. 4. These work 
requirements build upon the lessons learned from previous 
attempts at Federal welfare-to-work programs and represent a 
significant step forward in focusing on actual job placement 
and employment opportunities as opposed to stand-alone 
education and training programs.

Need for legislation

    There is overwhelming public support for the idea that any 
able-bodied adult receiving public assistance should work. 
(see, e.g. ``What To Do About Welfare,'' The Public 
Perspective, Feb./March, 1995, pp. 39-46, citing December, 1994 
survey showing 84 percent support strict work requirements.) 
However, the current JOBS program under AFDC fails to 
adequately move in this direction for several reasons. First, 
it does not emphasize work as the first goal. Second, it fails 
to provide adequate State flexibility to carry out the types of 
work programs States feel would be successful. Finally, the 
current JOBS program lacks adequate accountability.
    Under the legislation passed out of this committee, these 
shortfalls are addressed by replacing the current JOBS program 
with strong, mandatory work requirements designed to move 
towards a ``work-first'' system of welfare reform and providing 
States the flexibility necessary to implement successful 
welfare-to-work programs--while holding all States accountable 
for placing a minimum percentage of welfare recipients in work.

JOBS Program lacks employment as goal

    Under the JOBS program, the emphasis is not on work and job 
placement, but instead on education and training activities 
which too often are designed with little relevance to the 
realities of the working world. This view has been supported in 
testimony given before this committee as well as in several 
recent reports, including reports from the General Accounting 
Office, which recently issued a study specifically related to 
the lack of emphasis on work in the JOBS program:

          ``[the JOBS] programs are generally not well focused 
        on recipients' employment as the ultimate goal. Our 
        recent nationwide survey of local programs 
        administrators revealed that JOBS programs have 
        generally not forged the strong links with local 
        employers that may be important to helping AFDC 
        recipients gain work experience and find jobs.'' (US 
        General Accounting Office, ``Current AFDC Program Not 
        Sufficiently Focused on Employment'' December 1994)

    More recent findings by the GAO also found that about one-
half of the county JOBS administrators nationwide stated that 
they do not work enough with employers to find jobs for 
participants. (US General Accounting Office, ``Most AFDC 
Training Programs Not Emphasizing Job Placement,'' May 1995)
    The view that work activities are not a priority under JOBS 
was highlighted by Mark Greenberg, Senior Staff Attorney, 
Center for Law and Social Policy. Mr. Greenberg testified 
before this committee that:

          While the JOBS program has demonstrated a strong 
        commitment to education, its progress has been much 
        less in those areas which involve direct employer 
        linkages; job placement and development activities, 
        work supplementation, and on-the-job training. The lack 
        of stronger employment linkages is of concern for 
        several reasons: First, in many instances, individuals 
        do not wish to participate in education; they want to 
        enter employment as rapidly as possible. In those 
        cases, a more comprehensive program could increase 
        their employment opportunities. Second, the impact of 
        education and training efforts may be diminished when a 
        program lacks the ability to readily translate 
        education gains into employment opportunities in the 
        local community.

    His testimony is supported by data from the U.S. Department 
of Health and Human Services (JOBS Program Information 
Memorandum, No. ACFIM 94-8, September 29, 1994) which indicates 
that for the most recent program year, almost 58 percent of 
JOBS participants engaged in education and training related 
activities, as compared to just 12.8 percent who were placed 
into work-directed activities including job search assistance 
(8 percent), community work experience (4.3 percent), on-the-
job training (0.2 percent), and work supplementation (0.3 
percent).
    Additional evidence that the lack of priority on work in 
the JOBS program is the wrong approach in reducing welfare 
dependency was provided by Michael Genest, Deputy Director, 
Welfare Programs Division, California Department of Health and 
Human Services, who testified before the committee on this 
point, stating:

          ``(What we have found), thanks to Ms. Gueron's 
        evaluation in the Manpower Demonstration Research 
        Corporation (MDRC) report of our four California 
        counties that were extensively studied, is that the 
        GAIN Program, and I believe the other State's jobs 
        programs, can only be successful when it is strongly 
        focused on employment. I would cite Riverside County as 
        evidence for that, and the MDRC report goes into some 
        detail as to what caused that in Riverside County, but 
        basically I think the main thing that sets Riverside 
        apart and makes it the most effective welfare-to-work 
        program ever rigorously studied in this country is the 
        management, the staff, the providers of service, and 
        the participants, all keep their attention focused on 
        that one goal of getting a job. I think that job focus 
        is, more than anything, responsible for why Riverside 
        County returned $2.84 of savings for every taxpayer 
        dollar of cost. The flip side of that, the other lesson 
        that I think we have learned, is that stressing long-
        term education and long-term training as opposed to 
        stressing immediate job placement does not work. I 
        would cite our Alameda County, which was also part of 
        the MDRC report, as evidence of that. In Alameda County 
        they truly did focus on long-term educational 
        involvement to the exclusion of an emphasis on an 
        immediate job, and that is why their program failed, 
        and that is why it returned only 45 cents in savings 
        for every dollar of taxpayer investment, not an 
        acceptable return on investment.

    Taking this, and other similar testimony into account, the 
committee's legislation replaces the concept of the JOBS 
program with the idea of ``work first,'' in which work mandated 
recipients, current and new, would be required to enter into 
private sector employment, subsidized employment, community 
work, on-the-job training or job search assistance. Unlike the 
current JOBS program, education and training is not permitted 
until a recipient has participated in work or the education and 
training is conducted in conjunction with work. The legislation 
replaces the JOBS concept of ``education and training first--
maybe work later,'' with ``work first.''

State flexibility

    The existing statutory restrictions under the current JOBS 
program limit the flexibility for States to readily design and 
implement welfare-to-work programs which meet their needs. Ms. 
J. Jean Rogers, Administrator, Division of Economic Support, 
Wisconsin Department of Health and Human Services, provided 
testimony on what Wisconsin would be able to do without these 
restrictions.

          ``We would help people who come to us find employment 
        or alternatives to cash assistance before their 
        application is approved and they begin down the path of 
        welfare dependency. We have discovered in our early 
        county pilots that many individuals can be helped to 
        maintain their economic independence in this way, and 
        we would like to make cooperation in such efforts at 
        self-sufficiency a requirement of eligibility for 
        welfare in the first place. However, under current law, 
        this sensible approach requires a Federal waiver.''

    Ms. Rogers continued:

          ``We would also like to make participation in JOBS 
        more like a real job. Employers say that a positive 
        attitude and good work habits are the characteristics 
        that they most seek when making hiring decisions. 
        Therefore, we would pay cash assistance only for hours 
        of successful completion of program activities, making 
        participation in JOBS move like a wage. This is 
        currently allowed only for two-parent families, except 
        with another Federal waiver. We would also like to 
        continue to encourage greater use of active private 
        employment as preparation to fully unsubsidized 
        employment. Our experience shows that diverting some 
        welfare funds to temporarily help cover the wage and 
        other costs with a private employer is far more 
        effective than placing the same individual in a 
        Government education or training program alone. In 
        fact, we are more than twice as successful at placing 
        individuals in employment with a private company than 
        we are in placing individuals who have participated in 
        any of our educational components, and yet the current 
        wage subsidy provision of the AFDC law called work 
        supplementation is extraordinarily complex, leading to 
        a low response rate by businesses. For instance, the 
        law says an employer cannot accept a subsidized 
        employee in an existing position. Instead, the employer 
        has to create an entirely new position. This is 
        unreasonable. Also, we might like to use a simple 
        procedure giving clients vouchers for wage subsidies. 
        Instead, there is a very complicated process for a 
        business to claim wage subsidies under the current 
        law.''

    The committee's decision to repeal the JOBS program and 
replace it with a highly flexible, mandatory work provision, 
will allow States to move forward with these types of 
innovations outlined by Ms. Rogers.

Accountability

    State flexibility is key to the reform of our welfare 
system, but the public also wants the assurance that States are 
held accountable for placing able-bodied welfare recipients 
into work. Under Subtitle A, States will be required to meet 
``participation rates regarding the proportion of their entire 
welfare caseload in work activities. The committee believes 
that setting such ``performance standards'' for work without 
prescribing in detail how States must implement their programs, 
best combines flexibility and accountability and help reach the 
overall goal of moving welfare recipients from dependency to 
employment and self-sufficiency.

Description of legislation

    Participation rates. Subtitle A requires States to meet 
certain requirements regarding the percentage of their caseload 
in work activities. Under an amendment adopted by the 
committee, the participation rate (calculated for each month) 
for 1996 through 2002 is as follows:

Year:                                                 Participation Rate
    1996..........................................................    20
    1997..........................................................    25
    1998..........................................................    30
    1999..........................................................    35
    2000..........................................................    40
    2001..........................................................    45
    2002..........................................................    50

    Thus by the year 2003, 50 percent of the adult welfare case 
load will be required to participate in work activities. Higher 
rates (from 50 to 90 percent) apply to two-parent families.
    It should be noted that States are given flexibility in 
determining who will be required to participate in work 
activities in order to meet these percentages. Subtitle A also 
allows, but does not require, States to exempt single custodial 
parents of children under the age of 1 from work requirements 
and from the calculation of participation rates.

    Credit for caseload reductions. Title I allows States to 
receive credit for welfare caseload reduction for the purposes 
of meeting the participation requirements. States are able to 
count net reductions in the caseload below the 1995 baseline as 
participation. This provision, in effect, provides States with 
the ability, and in fact the incentive, to do away with the 
concept of measuring participation rates, (which is by and 
large a ``process'' measurement), and move toward having their 
performance based on a true outcome--a reduction in welfare 
dependency, a goal in which no one can argue. However, it is 
not the intention of this committee that States be able to 
count reductions in caseloads to the extent such reductions are 
determined by the Secretary to be required by Federal law.

    Two-parent families. Subtitle A imposes strict work 
requirements for two-parent families receiving AFDC. The 
committee feels that there is strong evidence to suggest that 
strict work requirements greatly reduces welfare dependency for 
this population. As such, these provisions require that States 
ensure that in a minimum of 50 percent (moving to 90 percent in 
1999) of two-parent families, one parent is participating in 
unsubsidized employment, subsidized private sector employment, 
or subsidized public sector employment or work experience if 
sufficient private sector employment is not available.

    Allowable work activities. The allowable work activities in 
Subtitle A are those which may be counted by the State towards 
meeting the participation requirements. Of course, States may 
use either the specified activities or other work not counted 
towards meeting the participation rate requirements.
    It is the committee's strong belief that every adult on 
welfare, or applying for welfare, should first be directed 
towards placement into unsubsidized employment through job 
search assistance. In the event that unsubsidized employment 
can not be found, attempts should be made to find subsidized 
private sector employment. Only when these options have failed 
should attempts be made for placement into subsidized public 
sector employment or work experience be made.
    Subtitle A allows States to count education and training as 
allowable work activities, but with several restrictions. 
First, recipients should not be placed into such programs until 
they have first participated or are participating in one or 
more of the work activities described above. Secondly, any 
education or training should be directly related to employment. 
The committee believes that this model of work-first has the 
most promise in truly changing the nature of this Nation's 
current welfare-to-work initiatives.
    However, the committee recognizes the need to allow States 
to continue with successful programs involving vocational 
education as a way in which to assist individuals off welfare. 
For this reason, the committee language allows for States to 
count up to 20 percent of their working caseload to meet the 
work requirement through participation in vocational education.
    The committee recognizes the fact that a vast number of 
individuals who end up as long-term welfare recipients are 
those who have not obtained a high school diploma. Therefore, 
the committee gives States the ability to count ``satisfactory 
attendance at secondary school'' as a work activity for those 
individuals who have not completed secondary school and who 
meet the minimum hours per week specified in the bill. It 
further allows States to deem as engaged in work, single teen 
heads of households who are maintaining satisfactory attendance 
in high school and who participate in such education for the 
minimum number of hours required under this section.
    An amendment adopted by the committee specifies that job 
search and job readiness assistance may only be counted as work 
activities for 4 weeks except that, if the State's unemployment 
rate exceeds the national average, such job search and job 
readiness assistance may be counted for 12 weeks.

    Penalties. Under this legislation, if an adult recipient 
refuses to engage in required work, the State is required to 
reduce the amount of assistance to the family pro rata (or more 
at State option) with respect to the period of work refusal, or 
is required to discontinue aid subject to good cause and other 
exceptions that the State may establish. A State may not 
penalize a single parent caring for a child under age 11 for 
refusal to work if the parent proves that there is a 
demonstrated inability to obtain needed child care for specific 
reasons.
    These changes reflect one of the major goals of this 
committee that families on welfare must work for benefits just 
as other families must work for their paychecks. In keeping 
with this principle, families that refuse to engage in work are 
subject to penalties reducing their benefits accordingly, with 
the exception of single parents with young children, at State 
option.
    The committee believes that States should also be held 
accountable for meeting the participation rates set forth under 
this proposal. The committee language establishes penalties for 
States failing to meeting the required participation rates 
equal to not more than 5 percent of the amount of the (AFDC) 
grant otherwise payable to the State in the following year. 
(This penalty is designed in coordination with the Ways and 
Means provisions of this welfare reform, which will replace 
individual entitlements to welfare with a single block grant to 
States, referred to as Temporary Assistance for Needy Families 
(TANF)). This section also requires that the Secretary impose 
the penalties upon States based on the degree of noncompliance.

    Supplemental grants. The committee bill includes 
authorization of supplemental grants to assist the States in 
achieving the work participation requirements in the bill. A 
grant may be made to a State if the State's own expenditures in 
that fixed year for these purposes exceed the State's 
expenditures in 1994 and if the State's work programs are 
coordinated with job training programs established under Title 
II of the Job Training Partnership Act or its successor. The 
bill authorizes $3 billion in fiscal year 1999 for this 
purpose, and provides that funds appropriated would remain 
available until expended.

    Nondisplacement in work activities. The committee feels 
that no adult in a work activity under this part should be 
employed or assigned when another person is on layoff from the 
same or a substantially equivalent job or when the employer has 
terminated the employment of a regular worker or otherwise 
caused an involuntary reduction of its workforce in order to 
fill the vacancy thus created with a subsidized worker. This 
provision does not preempt or supersede any State or local law 
providing greater protection from displacement.

    Sense of Congress that State should place a priority on 
placing certain parents in work. The committee feels strongly 
that in complying with the mandatory work requirements, States 
should assign the highest priority to requiring families that 
include older preschool or school age children to be engaged in 
work activities.

    Individual responsibility plan. The committee adopted an 
amendment which requires States to develop an Individual 
Responsibility Plan for each recipient of cash welfare 
assistance. The Individual Responsibility Plan would include a 
plan for moving the individual into private sector employment 
as quickly as possible, and would also describe the services to 
be provided by the State to assist the individual in obtaining 
and keeping employment. The plan may also provide, at the 
option of the State, requiring the individual to undergo 
substance abuse treatment.
    The amendment requires that the State consult with the 
individual recipient in developing the Individual 
Responsibility Plan. The amendment also provides the State 
shall reduce assistance to the individual if he or she fails, 
without good cause, to comply with the plan. The amendment 
provides an exception to the previous sentence if the State has 
failed to provide services described in the plan. This 
exception is stated as an exception to the mandatory penalty 
for noncompliance with the Individual Responsibility Plan and 
does not apply or limit any penalties, withdrawal of benefits, 
or reduction of benefits provided for elsewhere in the bill or 
elsewhere in law. The amendment also states that the exercise 
of the authority of this section shall be within the sole 
discretion of the State.

           SUBTITLE B--CHILD AND FAMILY SERVICES BLOCK GRANT

Child protection system in crisis

    As an estimated 1 million children fall victim to child 
abuse or neglect on an annual basis, the average length a child 
stays in foster care has risen to over 2 years, and the number 
of adoptions have steadily decreased, mostcitizens and 
advocates agree that the child protection system is seriously 
flawed.
    The 1991 Report of the U.S. Advisory Board on Child Abuse 
and Neglect concluded that ``The system the Nation has devised 
to respond to child abuse and neglect is failing.'' The Report 
states, ``No matter which element of the system that it (the 
Advisory Board) examined--prevention, investigation, treatment, 
training, or research--it found a system in disarray, a 
societal response ill-suited in form or scope to respond to the 
profound problems facing it. It was forced to conclude that the 
child protection system is so inadequate and so poorly planned 
that the safety of the Nation's children cannot be assured.''
    In conducting research on the child protection system, the 
committee has been presented with evidence that the system has 
failed in two ways. It unnecessarily intrudes in the family 
life of millions of Americans who are wrongfully accused of 
child abuse or neglect, and the system too often fails to 
protect children who are truly at risk.
    The stresses on the child protection system have 
dramatically increased in the last several years. During the 
1980's, two crises greatly challenged the capacity of the child 
welfare system to protect children. First, beginning in the 
mid-1980's, the crack cocaine epidemic dramatically changed the 
type of client being served by the child welfare system. 
Whereas the typical foster care placement in the 1970's and 
early 1980's involved neglect or highly episodic, and stress 
related, abuse, the new crack cocaine cases frequently involved 
much more severe and chronic abuse resulting in longer and 
repeated stays in foster care.
    Second, the 1980's saw an acceleration of the trend toward 
fatherless households. Given evidence that abuse is up to forty 
times more likely to occur when the biological father is not 
living in the home, the trend toward increasing father absence 
greatly increased the number of children interacting with the 
child protection system.
    In addition, a philosophical change within the child 
welfare system began to move programs toward an orientation of 
family unification and family preservation. This philosophy of 
treatment took the view that all families have some strengths 
upon which to build, and that with appropriate early 
intervention and services, abuse could be prevented. In 
addition, the philosophy held that, even when abuse had 
occurred, through appropriate crisis intervention, families 
could be strengthened and restored.
    Despite the prominence that this approach has gained, there 
are experts who dispute the validity of the approach, at least 
in its more extreme applications.
    In testimony before the Subcommittee on Early Childhood, 
Youth and Families and the Ways and Means Subcommittee on Human 
Resources, Dr. Wade Horn, child psychologist and former 
Commissioner for Children, Youth and Families in the Department 
of Health and Human Services said,

          Although some advocates of family preservation 
        services claim that out-of-home placement is prevented 
        for as many as 90 percent of children served, the few 
        experimental evaluations of family preservation 
        services to date have not shown substantially lower 
        rates of placement in foster care months after the 
        termination of family preservation services.
          In addition, according to Toshio Tatara of the 
        American Public Welfare Association, the dramatic 
        increase in children in foster care placements is not 
        due to an increase in the rate at which children are 
        entering foster case, but rather to a significant 
        decline in the rate at which children are exiting 
        foster care. (Tatara, T. U.S. Child Care Flow Data For 
        fiscal year 1992 and Current Trends in the State Child 
        Substitute Care Populations, VCIS Research Notes, no. 9 
        (August, 1993))
          Despite the absence of empirical evidence attesting 
        to its effectiveness, advocates for family preservation 
        services were successful in persuading Congress to 
        legislate a new funding stream which can be utilized 
        only for family preservation and support services. 
        Consequently, whether or not such services are 
        effective or best meet the needs of a particular 
        community, States are now required to use a substantial 
        portion of Federal funds to provide family preservation 
        services.

    In his testimony before the Early Childhood, Youth and 
Families Subcommittee on January 31, 1995, Congressman Tim 
Hutchinson (AR) also raised concerns about the implications of 
a rigidly implemented family preservation philosophy. ``There 
is another side to this problem and it is the one that I would 
like to focus on today. That is the problem of too little 
intervention. The reality is that while child welfare divisions 
are chasing down false accusations or even dealing with minor 
cases of neglect, there are children who are being beaten and 
killed.''
    Hutchinson recounted the story of Kendall Shea Moore, who 
in the first 5 months of his life had virtually every bone in 
his body broken and his skull cracked. Authorities in Arkansas 
arrested the child's father and, as an accomplice, the baby's 
mother. Hutchinson described how the baby's father was 
sentenced to 28 years in prison, and a 5-year sentence for the 
mother was downgraded to a 3-year suspended sentence. 
Hutchinson further described how, on January 18, 1995, just 
over 9 months from the time Kendall was admitted to the 
intensive care unit, he was permanently returned to his 
mother's custody.
    Carol Bevan Statuto, of the National Council for Adoption, 
told the subcommittee, ``It is time to put to rest the myth 
that all foster care is bad for children and to expose the myth 
that biological ties are the only real `ties that bind'.''
    In summary, Dr. Horn said, ``The child welfare system is 
not only in crisis, it is also at a crossroads. We must decide 
whether the solution to today's child welfare crisis is to 
continue down the road we are on toward more Federal oversight, 
more Federal regulation, and more Federal micro-management of 
the child welfare system, or to change directions and allow 
greater State flexibility and experimentation. I am here to 
argue that one of the most important reasons why the current 
system is in crisis is because of too much Federal micro-
management of the States and too little flexibility at the 
State and local level.''
    The committee shares this view, and believes that 
fragmentation of programs at the Federal level has hindered 
States from focusing appropriate resources on solving problems 
with child welfare.
    Subtitle B accomplishes these improvements by consolidating 
various grant programs, as well as providing a unified basis 
for research, and demonstration projects. With regard to the 
letter, the 1991 report of the U.S. Advisory Board on Child 
Abuse and Neglect noted that, ``within the social services 
component of Department of Health and Human Services, NCCAN 
(National Center on Child Abuse and Neglect) has had remarkably 
little impact on the huge Title IV-B, Title IV-E and Title XX 
programs which provide the largest Federal share of State and 
local CPS (child protective services) funding.''
    The report continued, ``the approach which the Federal 
Government has pursued in child protection--vesting a small 
agency with authority for Federal leadership--has led to the 
inadequate involvement in child protection efforts by public 
health, mental health, substance abuse, developmental 
disabilities, justice, education, and community development 
agencies. No one agency can be expected to deal adequately with 
a problem as complex as child abuse and neglect, even if it is 
labeled as `national'.''
    According to the Advisory Board, ``over the last decade, 
most NCCAN demonstration projects have not had a scientifically 
sound evaluation component. Nor has NCCAN created a mechanism 
for assuring that the results of those few demonstrations that 
have had an evaluation component are translated into 
practice.''
    The committee is confident that the new Child and Family 
Services Block Grant, with significant resources and a unified 
Federal focus, will ensure that significant attention is given 
to child abuse and neglect at both the Federal and the State 
levels.

Increasing reports of abuse and neglect

    In order to be eligible for a State grant under CAPTA, 
States must meet certain requirements such as having mandatory 
reporting systems and providing for the confidentiality of 
victims and their families.
    All States now have laws that mandate designated 
professionals to report specific types of child maltreatment. 
Under threat of civil and criminal penalties, these laws 
require most professionals who serve children to report 
suspected child abuse and neglect. About 20 States required all 
citizens to report, and in all States, any citizen is permitted 
to report.
    In 1993, about 3 million reports of suspected abuse or 
neglect were made. This is a 20-fold increase since 1963, when 
about 150,000 reports were made to the authorities.
    The public and professional definition of child 
maltreatment seems to have expanded to include more cases of 
``moderate'' harm to children.
    The committee is concerned that only \1/3\ of reports of 
abuse and neglect are substantiated. Based on this figure, in 
1986 anywhere from 1.9 to 3.8 million Americans were 
investigated by State child protective services for abuse that 
could not be substantiated. True, some unsubstantiated reports 
may have been actual cases of abuse or neglect, but for which 
the abuse could not be proven. But there is obviously a serious 
problem when such a preponderance of alleged abuse and neglect 
is unsubstantiated. The Child and Family Services Block Grant 
maintains a general requirement that States have laws requiring 
reporting by officials and professionals. However, the content 
of such laws will not be subject to micro-management by NCCAN 
officials. The committee believes that the Child and Family 
Services Block Grant will give States greater flexibility in 
targeting investigations and services toward the more serious 
allegations of abuse, and not force States to give the same 
weight of resources to more minor allegations of abuse that are 
often unsubstantiated.

Spiritual treatment of children

    The Child and Family Services Block Grant includes language 
to address the issue of spiritual treatment of children. The 
section does not require a parent or legal guardian to provide 
a child with medical service or treatment, against his or her 
religious beliefs, nor does it require a State to find, or 
prohibit a State from finding, abuse or neglect in cases where 
the parent or guardian relied solely or partially on spiritual 
means rather than medical treatment, in accordance with their 
religious beliefs. The section requires a State to have in 
place authority under State law to pursue any legal remedies 
necessary to provide medical care or treatment when such care 
or treatment is necessary to prevent or remedy serious harm to 
the child, or to prevent the withholding of medically indicated 
treatment from children with life-threatening conditions. In 
general, each State has sole discretion over its case-by-case 
determinations relating to the exercise of authority of the 
subsection and is not foreclosed from considering treatment by 
nonmedical or spiritual means. However, in light of special 
concerns about enforcement of Federal law protecting disabled 
infants from medical neglect (see e.g., U.S. Commission on 
Civil Rights, Medical Disabilities), the legislation retains 
existing language concerning the Federal oversight with 
references to cases involving the withholding of medically 
indicated treatment from disabled infants with life-threatening 
conditions.

                         SUBTITLE C--CHILD CARE

    The history of Federal support for child care has been 
marked, and marred, by the repeated creation of new and 
distinct child care programs, each with separate program 
requirements. The multiple programs has lead to what is 
sometimes described as the ``public day care maze.'' What's 
lost in this maze are the families and children whom these 
programs are supposed to help. Of the current major Federal 
child care programs, four are relatively new and account for 
most of the Federal expenditures. These include child care for 
families receiving Aid to Families with Dependent Children 
(AFDC) and Transitional Child Care for families leaving AFDC, 
which were created as part of a welfare reform initiative in 
1988, and two programs for low-income working families, the 
Child Care and Development Block Grant (CCDBG) and At-Risk 
Child Care, which were created in 1990. Estimated Federal 
spending for these four programs combined in fiscal year 1994 
is $1.9 billion.
    Since 1990, concern has developed that too many Federal 
child care programs now exist, with inconsistent and 
uncoordinated eligibility rules and other requirements that 
interfere with service delivery and cause children and families 
to experience disruptions in their day care arrangement.
    According to a May 1994 General Accounting Office study:

          Despite State progress in developing seamless systems 
        of providing child care, gaps in services remain 
        because of different program requirements. These 
        program requirements differ in specifying (1) the 
        categories of clients who can be served, (2) the 
        activities clients are permitted to pursue while 
        remaining eligible for child care, (3) the ceiling on 
        the amount of income that may be earned while retaining 
        program eligibility, and (4) the length of time the 
        child care subsidy is allowed to be paid. States told 
        us that these conflicting requirements and resulting 
        gaps can have negative consequences when they need it 
        to remain in the labor force.

    ``Child Care: Working Poor and Welfare Recipients Face 
Service Gaps,'' United States General Accounting Office, May 
1994, GAO/HEHS 94-87.
    This concern about service gaps and inconsistencies in the 
current mix of Federal child care programs was echoed in the 
following policy statement adopted by the Nation's Governors at 
the Winter 1995 National Governors Association meeting:

          The Governors urge Congress to move toward a more 
        seamless system incorporating all of the Federal child 
        care programs. In general, the Governors are of the 
        belief that CCDBG should be the foundation for that 
        seamless system and that other Federal child care 
        programs, such as the Title IV A [AFDC and 
        Transitional] and At-Risk Child Care programs, should 
        be consolidated with the Child Care and Development 
        Block Grant to form a single child care system operated 
        by the States.

    The committee is committed to assisting States develop the 
most efficient and effective use of Federal funds provided for 
child care assistance for low income families. In addition, as 
Congress undertakes efforts to significantly reform the welfare 
system by consolidating cash assistance and job training 
programs for welfare recipients, it must also simplify the 
delivery and administration of Federal assistance for child 
care services.
    By providing a single source of Federal child care funding 
to the States with much greater flexibility for administration, 
States will be able to decide how best to use the funds, target 
funds toward low income families in a rational fashion, and 
allow subsidies to ``follow the parent'' in a seamless system 
that will help welfare recipients move from welfare to long-
term employment and independence.
    In reforming the Child Care and Development Block Grant, 
the committee on Economic and Educational Opportunities intends 
to create a system that: allows more Federal dollars to be made 
available for direct child care services than under current 
authorities; provides flexibility for States to develop more 
efficient systems for helping parents avoid welfare or move 
from welfare to work; and, provides more choice for parents to 
select quality child care settings for their children.
    Subtitle C consolidates seven separate Federal child care 
programs into the existing Child Care and Development Block 
Grant (CCDBG), a single consolidated block grant to assist low-
income parents in paying for child care. This consolidation 
eliminates conflicting income requirements, time limits, and 
work requirements between the programs. These conflicting 
requirements have caused service gaps, unnecessary paperwork, 
and disincentives for parents to break free from dependence on 
cash assistance.
    Under the new system, Federal funds ``follow the parent'' 
as they move from welfare to work. States will have much 
greater flexibility in targeting child care assistance and in 
merging Federal child care assistance with sources of State 
child care assistance. In addition, this title continues to 
ensure that States set specific requirements for child care 
providers on health and safety standards.
    The reformed block grant also contains a key provision that 
gives parents the authority to decide where to send their child 
for day care services, creating a ``parent-driven'' system. 
This will allow market forces and the competition for child 
care funds to help bring improvements to the quality of child 
care available within a State.

Funding

    The reformed block grant significantly increases funding 
for child care. Child Care funds made available through the 
block grant total $22 billion over 7 years as follows: (1) $15 
billion in mandatory funds (rising from $1.97 billion in 1997 
to $2.72 billion in 2002); and (2) $1 billion in each of 7 
years (fiscal year 1996-fiscal year 2002) in discretionary 
funds. According to the Congressional Budget Office, the total 
of $22 billion is $4.5 billion above funding provided under 
current law for the same period.
    The bill establishes a single child care block grant and 
State administrative system by adding mandatory funds to the 
existing Child Care and Development Block Grant (CCDBG). 
Specifically, one discretionary and two mandatory streams of 
funding will be consolidated into a revamped CCDBG.
    First, $1 billion will be authorized annually in 
discretionary funds for the CCDBG. Allocation to States of 
these funds continues under the existing allocation formula of 
the CCDBG.
    From the mandatory amounts provided, each State will 
receive the amount of funds it received for child care under 
all of the entitlement programs currently under Title IV of the 
Social Security Act (AFDC Child Care, Transitional Child Care, 
At Risk Child Care) in fiscal year 1994, in fiscal year 1995 or 
the average amount in fiscal years 1992 through 1994, whichever 
is greater. This source of funds will provide States with 
approximately $1.2 billion for child care each year between 
1997 and 2002.
    The mandatory funds remaining after the allocation to 
Indians (1 percent of the total) and the State allocations 
based on child care allotments from previous years will be 
distributed among the States based on the formula currently 
used in the Title IV A At Risk Child Care grant. Specifically, 
funds will be distributed based on the proportion of the number 
of children under age 13 residing in the State to the number of 
all the Nation's children under age 13. States must provide 
matching funds at the fiscal year 1995 Medicaid rate to receive 
these funds and must maintain spending at their fiscal year 
1994 or 1995 level, whichever is higher under the Title IV A 
child care programs. The money available to States through this 
source of funds for fiscal years 1997 through 2002, 
respectively will be: $0.76 billion, $0.86 billion, $0.96 
billion, $1.16 billion, $1.36 billion, and $1.51 billion.

Program goals

    The committee believes that establishing goals for the 
States, with proper assessments and accountability for results 
in relationship to these goals, rather than the current 
fragmented and highly regulatory Federal system of support for 
child care, will provide more efficient and effective use of 
the Federal funds.
    Following is an explanation of each goal:

    (1) Provide States maximum flexibility in developing child 
care programs that best suit the needs of their residents. In 
providing Federal support for child care, Congress has not 
previously made a serious attempt to develop systems that can 
be well coordinated at the State level. States and local 
providers spend an inordinate amount of effort and energy 
trying to integrate Federal and State funding sources so they 
can provide a set of seamless services to parents. Generally, 
States and local providers have integrated programs in such a 
way that parents are unaware of the many different sources of 
funding paying for their child's care. However, enormous 
resources are directed at these administrative issues rather 
than allowing a greater focus on services to families and 
improving the quality of these services.
    Douglas J. Besharov, resident scholar at the American 
Enterprise Institute for Public Policy Research, said in 
testimony before the Subcommittee on Early Childhood, Youth and 
Families and the Ways and Means Subcommittee on Human 
Resources,

          Annoying as it is for families, the morass of 
        programs is a nightmare to administer. ``Child care 
        providers spend more time trying to coordinate programs 
        than operate them,'' protests one agency executive. 
        Fitting the various pieces of funding together is like 
        trying to complete a huge jigsaw puzzle. Needless to 
        say, Federal funds don't simply flow in: Each comes 
        with its own complicated application and approval 
        process that forces many programs to employ at least 
        one full-time staff person to coordinate funding and 
        document eligibility resources that would be better 
        spent on the children.

    (2) Promote parental choice to empower working parents to 
make their own decisions on the child care that best suits 
their family's needs. There are numerous arrangements that 
parents may make for child care, including parent care, 
relative care, in-home care, family day care, and center-based 
care. According to the National Child Care Survey of 1990, for 
children under age 5, a total of 48 percent of children were 
cared for by a parent, 22 percent by a relative, 2 percent by a 
nonrelative in the home, 8 percent in family day care, 15 
percent in centers, and 6 percent in other arrangements.
    For children age 5-12, a total of 48 percent of children 
were cared for by a parent, 20 percent by a relative, 4 percent 
by a nonrelative in the home, 4 percent in family day care, 6 
percent in centers, and 19 percent in other arrangements.
    As there are numerous arrangements for child care available 
to parents, there are also many perspectives on what is 
important in choosing day care, and what constitutes 
``quality.''
    As Larner and Phillips state,

          Parents care about child care quality, but they 
        define quality in relation to the needs of their own 
        children. In contrast to professionals, parents want 
        assurances that their individual child's experiences 
        will be safe, pleasant and developmentally sound. The 
        critical difference between parent and professional 
        perspectives on child care is that parents are seeking 
        a child care arrangement that will meet the needs of 
        their own child and family; they bear no broader 
        responsibility for the child care field. They need only 
        find one arrangement, but their stake in the quality of 
        that arrangement is immense

    ``Defining and Valuing Quality As a Parent,'' Mary Larner 
and Deborah Phillips. Valuing Quality in Early Childhood 
Services, 1994, Paul Chapman Publishing, Ltd., London, England.
    The committee believes that, for welfare reform to be truly 
effective, parents must fully assume the responsibilities of 
parenthood. Among these responsibilities is the need to ensure 
that one's child is cared for in a safe and positive 
environment. Ensuring parental choice is a vital component to 
helping parents carry out their role.

    (3) Encourage States to provide consumer education 
information to help parents make informed choices about child 
care. Subtitle C encourages States to provide consumer 
information to parents on child care so that they may make 
informed choices. The committee believes that providing 
information to consumers about sources of child care and 
elements that may indicate quality of care is an important 
determinant of the quality of care that children receive. Under 
the block grant, not only will parents exercise control over 
where their child receives care, they will have available to 
them a greater breadth of knowledge to inform their choice.

    (4) Assist States to provide child care to parents trying 
to achieve independence from public assistance. This goal 
recognizes that securing affordable, consistent child care 
services can eliminate a major barrier to a parent, 
particularly a single parent, entering the work force and 
transitioning away from dependence on public assistance. In 
this context, subsidies for child care are appropriate, not 
only for the welfare recipient getting training or beginning 
employment, but also for low-income working poor parents that 
may have never been on welfare.
    The committee also recognizes that, as States work to move 
recipients off public assistance, they may rightfully choose to 
target welfare recipients who are the most employable, such as 
two-parent families, individuals with higher educational 
achievement, or individuals with school-age children. This type 
of flexibility in targeting individuals for transition off 
welfare can help a State avoid a sudden increase of demand for 
the most expensive types of child care.

    (5) Assist States in implementing State health, safety, 
licensing and registration standards. Subtitle C achieves this 
goal in two fashions. First, it relieves the State of the 
burden of developing and implementing four individual sets of 
requirements for health, safety and licensing from the four 
major separate Federal programs. It provides States flexibility 
in establishing these standards, and also, through a more 
flexible funding structure, allows States to merge Federal and 
State funds to improve child care programs.
    The committee expects that States will utilize this 
flexibility and opportunity for a more efficient system, and 
not apply different criteria or rules to child care provided 
through Federal funds than apply to comparable child care not 
subsidized by Federal funds.

Lead entity

    Subtitle C requires States to identify a lead agency to 
administer all the child care funds received under the Act, 
including funds received through other ``governmental or 
nongovernmental'' agencies (instead of other ``State'' 
agencies). States must ensure that ``sufficient time and 
statewide distribution of the notice'' be given for the public 
hearing on the development of the State plan.

Application and plan

    The bill requires the State plan to cover a 2-year period. 
States must provide a detailed description of procedures to be 
used to assure parental choice of providers. Instead of 
``providing assurances,'' States must ``certify'' that 
procedures are in effect within the State to ensure unlimited 
parental access to the families providing care to children and 
to ensure parental choice of child care providers; the bill 
also requires that the State plan provide a detailed 
description of such procedures. A State must ``certify'' that 
it maintains a record of parental complaints, and requires the 
State to provide a detailed description of how such a record is 
maintained and made available. The bill changes the consumer 
education part of the State plan to require assurances that the 
State will collect and disseminate consumer education 
information. States must certify that they have in effect child 
care licensing requirements and provide a detailed description 
of how they are enforced. This provision does not require that 
licensing requirements be applied to specific types of child 
care providers. The Secretary is required to develop minimum 
standards for Indian tribes and tribal organizations receiving 
assistance.
    The committee believes that the information collected and 
disseminated by the State should directly support the goal of 
helping parents make informed child care choices rather than 
being focused solely on bureaucratic requirements. The 
committee also notes that consumer information should not only 
include sources for subsidized care, but should make a 
concerted effort to provide information on other sources of 
affordable care, such as family and relative care.
    Additionally, States may spend no more than 5 percent on 
administrative costs. The committee does not view the following 
as administrative costs: eligibility determination, resource 
and referral, automation and data collection.

Assistance for certain families

    States must comply with a requirement that at least 70 
percent of mandatory funds must be used for welfare or at risk 
families. States must demonstrate how they will meet the child 
care needs of welfare and at risk families. States must spend a 
substantial portion of the amounts available to provide child 
care to low income working families who are not working their 
way off welfare or are at risk of becoming welfare dependent.

Activities to improve the quality of child care

    The committee firmly believes in providing all families 
with access to quality child care services and therefore has 
dramatically increased the quality improvement funding above 
the set aside amounts in the current CCDBG.
    A State that receives child care funds shall use not less 
than 4 percent for activities designed to provide comprehensive 
consumer education to parents and the public, activities that 
increase parental choice, and activities designed to improve 
the quality and availability of child care.
    The 4-percent set-aside is of the total funding amounts 
(both mandatory and discretionary) and is a significant 
increase over the current law quality set aside in CCDBG.
    The committee recognizes the role of before- and after-
school care programs in providing an important source of child 
care services for the older children. The bill in no way 
impedes States from using grant funds for such purposes.
    Under the committee proposal, States are given more money 
to pay for child care while also being given more flexibility 
and increased funds to improve the quality of care.

Administration and enforcement

    This changes the current law requirement that the Secretary 
withhold further payments to a State in case of a finding of 
noncompliance until it is corrected. The Secretary is 
authorized to require that the State reimburse the Secretary 
for any improperly spent funds, or the Secretary may deduct an 
amount equal or less from the administrative portion of the 
State's subsequent allotment.

Annual report and data

    States must collect on a monthly basis and report to HHS on 
a quarterly basis the following information for each family 
receiving assistance: family income; county of residence; the 
gender, race, age of children receiving benefits; whether the 
family includes only one parent; the sources of family income, 
including the amount obtained from employment, including self 
employment; cash assistance or other assistance under IV-A of 
the Social Security Act; housing assistance; food stamps; and 
other public assistance; the number of months the family has 
received benefits; the type of care in which the child was 
enrolled; whether the provider was a relative; the cost of 
care; and the average hours per week of care.
    Twice each year, the State must submit the following 
aggregate data to HHS: the number of providers separately 
identified in accord with each type of provider; the monthly 
cost of child care services and the portion of such cost paid 
with assistance from this Act by type of care; the number of 
payments by the State in vouchers, contracts, cash and 
disregards from public benefit programs by type of care; the 
manner in which consumer education information was provided and 
the number of parents who received it; and the total number of 
children and families served.
    The Secretary must prepare and submit biennial reports 
rather than annual reports summarizing and analyzing 
information provided by the States.

Allotments

    The bill maintains the current law set asides for the 
Territories and Indian tribes and tribal organizations except 
that the Trust Territory of the Pacific Islands is deleted; the 
set aside for Indian tribes and tribal organizations and Native 
Hawaiian Organizations is 1 percent of the total funds for 
child care made available under this Act. Indian tribes are 
provided with a 1 percent set aside of all funds, both 
entitlement and appropriated, authorized by this section each 
year.

Definitions

    Child care deposits are added as an allowable use of child 
care certificates. The definition of eligible child is revised 
to one whose family income does not exceed 85 percent of the 
State median, instead of 75 percent. The definition of relative 
child care provider is expanded.

Repeals

    The bill repeals the following programs: Child Development 
Associate Scholarship Assistance; State Dependent Care 
Development Grants; Programs of national Significance under 
Title X of the Elementary and Secondary Education Assistance 
Act of 1965 and Native Hawaiian Family Based Education Centers; 
AFDC Child Care; Transitional Child Care; and At Risk Child 
Care.

                  SUBTITLE D--CHILD NUTRITION PROGRAMS

    The Federal Government currently provides cash and 
commodity support to child nutrition programs serving over 30 
million children and 1.5 million mothers. These programs 
provide Federal cash and commodities to States to distribute to 
institutions serving meals (or milk) to children in schools, in 
residential and nonresidential child care facilities and summer 
camps. They also provide aid to State health departments for 
supplemental nutrition programs for low-income women, infants 
and young children at nutritional risk. Additional Federal 
support is also provided for the State administrative costs of 
operating programs, nutrition education and training, studies, 
research and evaluations, dietary guidance, Federal review, and 
the operation of a Food Service Management Institute. Child 
nutrition programs include the school lunch, school breakfast, 
child care food, summer food service, special milk, nutrition 
education and training (NET), State administrative expenses, 
commodity distribution programs, and special supplemental 
nutrition program for women, infants and children.
    Over the years, as the number of Federal nutrition programs 
has grown, so too have the number of Federal, regulations and 
administrative and operating requirements for them. There are 
now some 30 different reimbursement rates for lunches and/or 
suppers, breakfasts, meal supplements (snacks) served to 
children in schools and child care facilities, summer programs, 
universities participating in athletic programs for lower 
income children, and homeless shelters. New reporting 
requirements have been added without old ones being deleted. 
The result is that far too much time and money is spent on 
serving paperwork requirements rather than serving food.
    The committee has heard testimony concerning the detailed 
and burdensome regulations which currently govern the various 
child nutrition programs Marilyn Hurt, Food Service Supervisor, 
School District of LaCrosse, Wisconsin testified:

         The first thing that seems to me that needs to be 
        addressed is the whole process of collecting, 
        reviewing, sorting, and tracking the income of the 
        families who apply for the meal benefits. Surely there 
        are other agencies who are gathering and tracking the 
        very same data. You know, I have one 10-month employee 
        in my office that is there just to keep track of this 
        information and see that it is all in order for an 
        audit. It used to be that at the beginning of the 
        school year for the first 2 months all of us in the 
        office really concentrated on the information with 
        income and collecting that data. But now we must 
        continually update that information, so it is become a 
        full-time position.
          Secondly, we need to have one program, and you heard 
        it mentioned here this morning already, to use a 
        popular word in our business, a seamless program.
          I brought with me the file that we have to turn in 
        order to have the summer food service program in nine 
        sites in LaCrosse for a five-week program. This is what 
        we send into the State of Wisconsin in order to have 
        that program. As you can see, it takes a great deal of 
        time to fill out all of those forms. We need one 
        contract for all programs with one set of rules. We 
        also need to eliminate some of the burdensome rules 
        that are not friendly to children. For example, 
        checking their plates at the end of the line to see 
        that they have at least three items on their plate. 
        That is no way to teach children how to eat. They glare 
        at us when we tell them, you need to go back for one 
        more item, then they go get that item and later when 
        they go to dump their tray, they throw it away.
          We would much rather be teaching children how to make 
        the right choices, and then they are much more likely, 
        we have learned from our experience, to take all the 
        items and to consume them.

    The committee believes that States and local providers 
shall be given relief from the myriad of Federal requirements 
and restrictions that currently often force States and local 
agencies to spend nearly as much time on paperwork and 
administration as they spend on feeding hungry children. The 
committee has previously proposed substantial reforms to 
address these problems. The current legislation begins to 
address them by eliminating duplicative requirements, outdated 
provisions, and excessive paperwork requirements, and easing 
certain State and local operating requirements which restrict 
local flexibility in serving the needs of program participants.

Easing administrative and paperwork burdens

    The bill reduces administrative tasks by: removing a range 
of requirements as to State obligations to provide training, 
technical assistance, and ``outreach'' information; making 
clear that all program records need only be available for 
inspection at ``reasonable'' times; dropping a requirement for 
annual announcements of eligibility standards; reducing the 
number and scope of State plan requirements for the Summer Food 
Service program; eliminating specific requirements on how 
States process applications for the Child Care Food program; 
and removing numerous detailed requirements for how State 
nutrition education coordinators carry out their job.
    The bill lessens paperwork burdens with amendments that: 
permit schools to file revisions to their free and reduced 
price ``policy statements'' only when there is a substantial 
change in policy, not annually; allow States to submit only 
substantive changes in their plans for using State 
administrative expense funds, not annual State plans; and drops 
requirement for monthly State reports on school lunch program 
participation.

Giving States and schools more control over program operations

    The bill facilitates the process of receiving waivers from 
Federal rules, reduces restrictions on what types of rules can 
be waived, allows schools to use the ``offer versus serve'' 
option in the Summer Food Service program; deletes permission 
for the Secretary to deny funding for State administrative 
expenses simply because a State does not agree to participate 
in a Federal study or survey; and eliminates Federal mandates 
on how schools use commodity assistance.

Removing unnecessary and out-of-date provisions of law

    The bill eliminates numerous unneeded provisions, such as 
directives that the Secretary and the States carry out the 
Summer Food Service and Child Care Food programs so as to 
``expand'' them, funding for a food assistance ``information 
clearinghouse,'' unnecessarily detailed provisions governing 
the use of Nutrition Education and Training funds, and a 
requirement that cereal and shortening and oil products be 
among commodities given to schools. In addition, it eliminates 
out-of-date provisions of law, provisions that simply repeat 
policies laid out elsewhere in child nutrition laws, and 
authority for six pilot projects and grant programs that have 
not been implemented.

Tightening program rules

    The bill makes three changes in law that will improve the 
integrity of the Child Care Food program and the Summer Food 
Service program. It prohibits payments to sponsors of family 
day care homes in the Child Care Food program if they base 
payments to employees on the number of homes they recruit. It 
eliminates a current requirement for advance monthly payments 
of Federal subsidies to service institutions in the Child Care 
Food program, leaving it to States to judge if these payments 
are appropriate. Third, changes Summer Food Service program 
rules for National Youth Sports program sponsors to limit their 
Federal reimbursements to operations during the summer months, 
reduce the especially high subsidies they receive, and require 
that participating children be from low-income areas or meet an 
income test.
    In addition, the committee has been instructed to report 
legislation to the Budget Committee reducing anticipated 
expenditures by $3.0 billion between 1997 and 2002. The 
committee proposes the following changes to achieve those 
savings:

Focusing the child care food program on those in greater need

    The committee believes that, as Congress attempts to bring 
the Federal budget under control, we should insure that 
programs designed to serve the needy are in fact targeted to 
those families in need. As a step in this direction, Subtitle D 
implements a two-tiered reimbursement structure for the Child 
and Adult Care Food Programs for programs operated in family 
day care homes and group homes. The Congressional Budget Office 
has estimated that three-fourths of the families that receive 
food assistance in family day care homes do not qualify as low 
income. Unlike assistance provided to children in day care 
centers who participate in this program, benefits in family day 
care homes are not means tested and providers receive the same 
benefits for children from middle and upper income families as 
they do for low income, needy children. The family day care 
food program is the only Federal nutrition program not 
currently means tested.
    The committee has, therefore, provided a two-tier structure 
which provides lower reimbursements for meals served to 
children in family day care homes operated in middle and upper 
income areas. Federal subsidies for family day care homes would 
be restructured by lowering subsidies for homes in middle and 
higher income. Currently family day care homes receive a flat 
reimbursement rate for meals and snacks. They receive $1.50 for 
lunch; $.82 for breakfast and $.4475 cents per snack. Under 
H.R. 3507, there would be a two-tier reimbursement program. 
Tier I (homes with one half of children in an area from 
families with income below 185 percent of poverty or an area 
served by a school where 50 percent of students are eligible 
for free and reduced price meals or operated by a provider 
whose income is below 185 percent of poverty) would receive 
current reimbursements. Tier II (all other homes) would receive 
reimbursement of $.90 for lunch, $.25 for breakfast and $.10 
for supplements. However, in order to insure that higher 
reimbursements are available for low income children who may be 
cared for in homes in higher income areas, the committee 
permits such providers to file individual applications for such 
children in order to receive higher reimbursements.

Nutrition education and training program

    The committee recognizes the importance of the activities 
carried out under the Nutrition Education and Training Program. 
The committee believes, however, that this program should be 
discretionary spending rather than mandatory, so that the 
option exists to reduce spending for activities carried out 
under this program rather than making additional changes to 
programs providing actual nutrition assistance to children. The 
committee does believe it is important for children to receive 
information as to the types of foods they need to eat in order 
to stay healthy and active. This modification in no way 
indicates a lack of support for funding this program should the 
funds be available to continue to carry out such activities.

Start-up and expansion grants

    Subtitle D eliminates funding for school breakfast and 
summer food service start-up grants. The breakfast start-up 
program was instituted on a discretionary basis in 1989 to 
provide an incentive for schools to participate in the school 
breakfast program. Since that time, most States have enacted 
laws requiring schools with significant percentages of low-
income students to participate in the school breakfast program. 
Approximately two-thirds of the schools participating in the 
school lunch program now also participate in the breakfast 
program. This program has served its purpose.

Modifying reimbursement rates in the summer food service program

    Reimbursement rates for meals served under the Summer Food 
Service Program are substantially higher than the reimbursement 
rates for free meals served in schools and child care centers. 
In addition, service institutions participating in the Summer 
Food Service Program receive a per-meal administrative 
reimbursement while schools and centers do not. This change 
will reduce the disparity in meal reimbursements among these 
programs.

WIC-related provisions

    The amendments in the committee's bill related to the 
Special Supplemental Nutritional Program for Women, Infants and 
Children (the WIC program) reduce current prescriptive 
administrative requirements on State and local agencies, 
freeing them to devote resources to accomplishing their primary 
goal--providing assistance to participating women, infants and 
children at nutritional risk. They also eliminate a number of 
unneeded or out-of-date provisions of the law and include an 
important change that will improve the integrity of the WIC 
program--WIC vendors that have been disqualified for 
participation in the Food Stamp Program will be disqualified 
for WIC participation.

Reducing prescriptive requirements on State and local WIC agencies

    The bill eases State plan requirements by limiting the 
Secretary's authority to add plan requirements beyond those in 
law (requiring that he justify any additions as ``reasonable'') 
and by allowing States to submit only substantive changes in 
their plans for approval.
    The bill lessens Federal administrative requirements on 
States: ending a mandate for annual evaluations of nutrition 
education and breastfeeding promotion/support activities; 
eliminating Federal rules for staffing; providing that States 
(and local agencies) only be required to make WIC records 
available at ``reasonable'' times; and removing a requirement 
that States applying to convert WIC food funds to 
administration estimate the increased participation that will 
result and how they did the estimate.
    The bill removes requirements for, or makes optional, a 
number of activities that can divert State and local resources 
from direct provision of WIC benefits: Specific requirements, 
other than Medicaid, on how to provide information about, refer 
people to, or coordinate with other programs; directives for 
drug abuse education; and requirements for services and 
materials in languages other than English. The bill allows 
State and local health agencies to judge what resources they 
have (and how much need there is) for these activities.
    Finally, the bill eliminates several sets of overly 
specific mandates that micromanage how States are to carry out 
Federal requirements: those for enrolling those who are 
working, living in rural areas, or eligible, but not, 
participating; those for processing local agency applications 
for participation; those calling for public dissemination 
information about the WIC program; and those governing the 
content of WIC notices of suspension or termination.

Eliminating unneeded and out-of-date provisions

    The Child Nutrition Act contains numerous, unnecessary and 
out-of-date provisions related to the WIC program. The bill 
removes requirements that the Secretary promote the WIC program 
(since the program is already serving almost all the total 
estimated eligible population) and promotes cost containment 
procedures and promotes joint purchases of State infant 
formula, a well established procedure; it eliminates specific 
Secretarial requirements proscribing bidding procedures on 
infant formula; and it repeals eight unused or out-of-date 
provisions of current law.

                     subtitle e--related provisions

    The committee adopted two amendments which are included on 
Subtitle E. The first deals with the collection of data on 
poverty for use in various programs of the committee. The 
second expresses the sense of Congress that welfare reform 
should not increase child poverty.

Background on poverty data provision

    Poverty data are used to allocate more than $20 billion in 
Federal funds to State and local governments each year. 
Currently, the only reliable source of this data below the 
national level is the decennial census.
    The Bureau of the Census, U.S. Department of Commerce does 
produce annual estimates of the number of people in poverty for 
the Nation as a whole. The Census bureau also reports State 
level poverty estimates each year, but does not consider those 
estimates to be sufficiently reliable for programmatic 
purposes.
    Because intercensal small area poverty estimates are not 
currently available, Congress and the administration are forced 
to rely on small area poverty data which may be up to 13 years 
old. This presents enormous problems for the formulation of 
sound and coherent policy at the Federal level, and often 
results in large shifts of funding to State and local 
governments every 10 to 13 years. These shifts often have a 
destabilizing effect on program operations. Clearly, there is a 
need for more up to date estimates on poverty at the State and 
local level. Subtitle E will provide a much needed tool.

Explanation

    Poverty data are used to allocate more than $20 billion in 
Federal funds to State and local governments every year. 
Currently, the only reliable source of this data below the 
national level is the decennial census.
    The Bureau of the Census, U.S. Department of Commerce does 
produce annual estimates of the number of people in poverty for 
the Nation as a whole. The Census Bureau also reports State 
level poverty estimates each year, but does not consider those 
estimates to be sufficiently reliable for programmatic 
purposes.
    Because current intercensal small area poverty data is not 
available, Congress and the administration must rely on data 
which may be up to 13 years old. This presents enormous 
problems for the formulation of sound and coherent policy at 
the Federal level, and often results in large shifts of funding 
to State and local governments every 10 to 13 years. These 
shifts often have a destabilizing effect on program operations.
    Clearly, there is a need for more up to date estimates on 
poverty at the State and local level. Subtitle E will give us 
this much needed tool.
    The committee believes that accurate statistical 
information measuring the social, economic, and demographic 
characteristics of program recipients over time will be 
important to its ability to assess the effects of changes in 
the law. Of particular value would be aggregate measures of the 
depth, duration, and disparity of poverty, including statistics 
on: the level and duration of participation in assistance 
programs, as well as the causes and consequences of any changes 
in these indicators; the economic circumstances and the family 
structure of recipient households, the timing of poverty in the 
cycle of family development, and changes in these 
characteristics; and demographic data such as race, ethnicity, 
age, and educational attainment of beneficiaries.
    The committee notes that Title I of HR 3507, as considered 
by the House Committee on Ways and Means, requires the 
collection of data describing the demographic characteristics 
of program recipients. To maximize the usefulness of such data, 
it must be compiled in a useful form. The committee therefore 
urges that data collected under this legislation include the 
aggregation of data for the purposes of program evaluation and 
future policy development.

                      Section-by-Section Analysis

    Section 3001 includes the Short Title of this title.
    Section 3002 includes the Table of Contents of this title.

                     subtitle a--work requirements

    Section 3101(a) strikes Part F of Title IV the Social 
Security Act (the JOBS program) and inserts a new part F--
Mandatory Work requirements.
    ``Section 481(a)(1) declares that the work requirements are 
applicable to all families receiving cash assistance under Part 
A of the Social Security Act and sets forth the requirement 
that States meet minimum participation rates in work programs 
with respect to all families receiving assistance under the 
State program funded under Part A of the Social Security Act. 
These rates are as follows: 1996--20 percent; 1997--25 percent; 
1998--30 percent; 1999--35 percent; 2000--40 percent; 2001--45 
percent; 2002 or thereafter--50 percent.
    ``Section 481(a)(2) sets additional mandatory work 
requirements for at least one parent in a two-parent family. 
These rates are as follows: 1996--50 percent; 1997--75 percent; 
1998--75 percent; 1999 or thereafter--90 percent.
    ``Section 481(b)(1) defines how States shall calculate 
their monthly work participation rate for all families 
receiving cash assistance.
    ``Section 481(b)(2) defines how States shall calculate 
their monthly work participation rate for two-parent families.
    ``Section 481(b)(3) requires the Secretary of HHS to 
prescribe regulations to allow States to receive credit for 
welfare caseload reduction for the purposes of meeting the 
participation requirements. States are allowed to count net 
reductions in the caseload below the 1995 baseline as 
participation, but are not allowed to the extent the Secretary 
determines that the reduction in the number of families 
receiving such assistance is required by Federal law.
    ``Section 481(b)(4) provides States the option of not 
requiring a recipient who is a single custodial parent caring 
for a child under age 1 from engaging in work and allows States 
to disregard such individuals for purposes of calculating State 
participation rates.
    ``Section 481(c)(1) defines what constitutes `engaged' in 
work'' for the purposes of counting towards a States 
participation rate. Specifically, a recipient must be 
participating, and making progress in work activities (as 
defined), for a minimum average number of hours for any given 
year. For 1996 through 1998, the minimum is 20 hours; the years 
after that it rises accordingly: 1999--25; 2000--30; 2001--30; 
2002--35 hours per week. In those years where the minimum 
number of hours exceeds 20, the additional required hours for 
single-parents may be attributable to an education or work-
related training activity.
    ``Section 481(c)(2) An adult in a 2-parent family must make 
progress in work activities for at least 35 hours per week, not 
fewer than 30 hours must be attributable to work activities, 
the remaining hours may be attributable to education or job 
training activities.
    ``Section 481(c)(3) limits the number of weeks for which 
job search counts towards an individual's work requirement to 4 
weeks, except for those States where the unemployment rate is 
higher than the national average, in which case the State may 
allow up to 12 weeks of job search.
    ``Section 481(c)(4) limits the extent to which States may 
count participants engaged in vocational education towards 
their work participation rate. Not more than 20 percent of 
adults in all families and in 2-parent families (combined) 
determined to be engaged in work in the State for a month may 
meet the work activity requirement through participation in 
vocational education training.
    ``Section 481(c)(5) allows recipients in single parent 
families with a child under 6 to be considered meeting the work 
participation requirements if such recipient works an average 
of 20 hours per week.
     ``Section 481(c)(6) deems a teen head of household to be 
meeting the work participation requirement if such individual 
maintains satisfactory school attendance or participates in 
education directly related to employment for the minimum 
required number of hours.
    ``Section 481(d) defines `work activities' for purposes of 
constituting participation. Specifically, work activities are 
defined as: unsubsidized employment; subsidized private sector 
employment; subsidized public sector employment or work 
experience (if sufficient private sector employment is not 
available); on-the-job training; community service programs and 
with limitations as previously noted: job search and job 
readiness assistance; and vocational education training (not to 
exceed 12 months with respect to any individual). In addition, 
the following activities are permissible (to the extent 
previously noted)--job skills training directly related to 
employment; education directly related to employment, in the 
case of a recipient who has not received a high school diploma 
or its equivalent; and satisfactory attendance at secondary 
school, in the case of a recipient who has not completed 
secondary school.
    ``Section 481(e) authorizes the Secretary to award 
supplemental grants to States in meeting work requirements.
    ``Section 481(e)(1) includes application requirements for 
States to be eligible for a supplemental grant.
    ``Section 481(e)(2) directs the Secretary to make grants to 
eligible States.
    ``Section 481(e)(3) allows for the Secretary to issue 
regulations providing for the equitable distribution of grant 
funds.
    ``Section 481(e)(4) provides a one-year authorization of $3 
billion for fiscal year 1999.
    ``Section 481(f) sets forth penalties for States and 
individuals not meeting the requirements of this part.
    ``Section 481(g) includes language related to 
nondisplacement of current workers by recipients engaged in 
work under this section.
    ``Section 481(h) is a sense of the Congress, that in 
complying with the mandatory work requirements, States should 
assign the highest priority to requiring families that include 
older preschool or school age children to be engaged in work 
activities.
    ``Section 481(i) is a sense of the Congress that States 
should require noncustodial, nonsupporting minor parents under 
the age of 18, to fulfill community work obligations and attend 
appropriate parenting or money management classes after school.
    ``Section 482(a) requires States to make an initial skill 
and employability assessment of each recipient.
    ``Section 482(b) specifies the required contents of each 
individual responsibility plans.
    ``Section 482(c) requires the State to inform all 
applicants and recipients of assistance to all available 
services for which such individual is eligible.
    ``Section 482(d) sets forth penalties for individuals who 
fail, with good cause, to comply with a signed individual plan.
    ``Section 482(e) states that the exercise of authority of 
this section shall be within the sole discretion of the 
State.''
    Section 3101(b) includes conforming amendments.

           Subtitle B--CHILD AND FAMILY SERVICES BLOCK GRANT

    Section 3201 includes amendments to the Child Abuse 
Prevention and Treatment Act.
    ``Section 1 includes a short title `Child and Family 
Services Block Grant Act of 1996'.
    ``Section 2 includes findings related to child abuse and 
neglect.
    ``Section 3 includes purposes related to the Child and 
Family Services Block Grant Act of 1996.
    ``Section 4 includes definitions.
    ``Section 101 establishes the general block grant `Child 
and Family Services Block Grant'.
    ``Section 102 sets out the requirements for States to be 
eligible for receipt of funds. Requirements include 
certification of the following: outline of child protection 
program, State law requiring the reporting of child abuse and 
neglect procedures for screening, safety assessments and prompt 
investigation; State procedures for removal and placement of 
abused or neglected children, provisions for immunity from 
prosecution, provisions for appointment of guardian ad litem, 
provisions and procedures for expungement of certain records, 
written plans for permanent placement of removed children, 
independent living services, State procedures to respond to 
reporting of medical neglect of disabled infants, child 
protection goals, child protection standards, reasonable 
efforts before placement of children in foster care and 
confidentiality and requirements for information disclosure.
    ``Section 103(a) grants the Secretary authority to 
establish a National Child Abuse and Neglect Data System.
    ``Section 103(b) grants the Secretary authority to 
establish an Adoption and Foster Care and Analysis and 
Reporting systems.
    ``Section 103(c) grants the Secretary authority to require 
additional information under subsection (b) if the addition of 
such information is agreed to by a majority of the States.
    ``Section 103(d) requires the Secretary to prepare a report 
based on information provided by the States, within 6 months 
after the end of each fiscal year.
    ``Section 201(a) grants the Secretary authority of award 
grants for Research, Demonstrations, Training, and Technical 
Assistance.
    ``Section 201(b) sets forth the requirements and guidelines 
in order for research projects to receive Federal grants under 
this section.
    ``Section 202(a) authorizes the Secretary to establish a 
National Clearinghouse for Information Relating to Child Abuse.
    ``Section 202(b) sets forth the functions of the National 
Clearinghouse, which include the coordination and dissemination 
of information on all successful and promising programs with 
respect to prevention, identification and treatment of child 
abuse and neglect. Further functions of the Clearinghouse 
include maintaining and disseminating statistical information 
on child abuse and neglect. The Clearinghouse is also required 
to publish a summary of their findings.
    ``Section 203(a) authorizes the Secretary to award 
demonstration grants for innovative programs and projects on 
child abuse and neglect, kinship care programs, adoption 
opportunities and family resource centers.
    ``Section 203(b) authorizes the Secretary to award grants 
for abandoned infant programs.
    ``Section 203(c) requires the Secretary to evaluate 
grantees' programs and projects.
    ``Section 204(a) allows the Secretary to provide technical 
assistance to child abuse and neglect programs.
    ``Section 204(b) allows the Secretary to provide technical 
assistance for adoption services.
    ``Section 205(a) authorizes the Secretary to award grants 
to public and private nonprofit organizations for the purposes 
of training personnel in relevant fields with regard to child 
abuse.
    ``Section 205(b) permits the Secretary to disseminate 
information on training resources available at the State and 
local level.
    ``Section 206(a) sets forth the requirements for grant 
applications.
    ``Section 206(b) gives the Secretary authority to determine 
the amount of grants to be awarded under this title.
    ``Section 207(a) gives the Secretary authority to establish 
peer review process for the purposes of evaluating and 
reviewing grant applications.
    ``Section 207(b) sets forth guidelines for the peer reviews 
panel to follow.
    ``Section 207(c) grants the Secretary the authority to 
issue notices of approval.
    ``Section 208(a) requires the Secretary to conduct a 
national study on children who are at risk of or are victims of 
child abuse and neglect.
    ``Section 208(b) sets forth the requirements of the study.
    ``Section 208(c) sets forth specific data requirements and 
guidelines for the study.
    ``Section 208(d) allows the Secretary to issue reports, 
from time to time, on the results of the study.
    ``Section 301(a) authorizes appropriations for title I, in 
the amounts of $230,000,000 for fiscal year 1996 and such sums 
as necessary for fiscal years 1997 through 2002.
    ``Section 301(b) authorizes the Secretary to use 12 percent 
of title I appropriations for Title II. Of which, not less than 
40 percent can be used to carry out grants for demonstration 
projects.
    ``Section 301(c) requires that 1 percent of title I funds 
are to be reserved for Indian tribes.
    ``Section 301(d) states that amounts appropriated under 
subsection (a) shall remain available until expended.
    ``Section 302(a) authorizes the Secretary to make grants to 
States for programs relating to the investigation and 
prosecution of child abuse and neglect cases.
    ``Section 302(b) sets forth eligibility requirements for a 
State to qualify for such grants.
    ``Section 302(c) requires that States who receive grants 
under this section, shall establish a State task force on 
children's justice. Furthermore, this section sets forth 
requirements on who should serve on the task force.
    ``Section 302(d) requires State task forces, in 3 year 
intervals to review the State's handling of child abuse and 
neglect cases, before a State receives funding under this 
section.
    ``Section 302(e) requires that a State also adopt 
recommendations of State task force, in order for the State to 
receive funds under this section.
    ``Section 303 contains a transitional provision that allows 
States, to continue to receive funds under other Federal child 
abuse grants (specifically, the Family Resource and Support 
Program, the Community-Based Family Resource Program, the 
Family Support Center Program, the Emergency Child Abuse 
Prevention Program, the Abandoned Infants Assistance Act, the 
Temporary Child Care for Children with Disabilities and Crisis 
Nurseries Programs, through the end of applicable grant.
    ``Section 304 includes a Rule of Construction.''
    Section 3202 reauthorizes the Missing Children's Assistance 
Act and the Victims of Child Abuse Act.
    Sec. 3202(a) reauthorizes the Missing Children's Assistance 
Act for 1997, up to 5 percent of the authorization may be used 
to evaluate this effectiveness of the Act.
    Sec. 3202(b) reauthorizes the Victims of Child Abuse act 
for 1997.
    Section 3203 contains repeallers.
    Section 3203(a) repeals Title II of the Child Abuse 
Prevention and Treatment and Adoption Reform Act of 1978; the 
Abandoned Infants Assistance Act of 1988; the Temporary Child 
Care for Children with Disabilities and Crisis Nurseries Act of 
1986; and Subtitle F of Title VII of the Stewart B. McKinney 
Act Homeless Assistance Act.
    Section 3203(b) contains conforming amendments.

                         Subtitle C--Child Care

    Section 3301(a) contains the short title of the bill, the 
``Child Care and Development Block Grant Amendments of 1996.''
    Section 3301(b) clarifies wherever in Subtitle C there is 
an amendment or repeal of a section or other provision, such 
amendment or repeal refers to the Child Care and Development 
Block Grant, (CCDBG), unless otherwise noted.
    Section 3302 contains the goals of Subtitle C.
    Section 3303(a) Amends the Section 658B of the Act, 
Authorization of Appropriations and Entitlement Authority, to 
authorize $1,000,000,000 in discretionary funds for each of the 
fiscal years from 1996 through 2002.
    Section 3303(b) Amends Part A of the Title IV of the Social 
Security Act by adding Section 418 for the mandatory funding 
for the General Child Care Entitlement. This section authorizes 
and appropriates the amounts of $1,967,000,000 for fiscal year 
1997, $2,067,000,000 for fiscal year 1998, $2,167,000,000 for 
fiscal year 1999, $2,367,000,000 for fiscal year 2000, 
$2,567,000,000 for fiscal year 2001 and $2,717,000,000 for 
fiscal year 2002. In addition, section 3303(b) states that the 
use of funds, provided under this section, shall be subject to 
the same requirements and limitations of CCDBG and sent to the 
lead State agency, as defined under CCDBG.
    Section 3304 amends Section 658D(b) of the Act, designating 
the Lead Agency, by changing the term ``State'' the first place 
it appears to ``governmental or nongovernmental'' and inserting 
in subparagraph (C) ``with sufficient time and Statewide 
distribution of the notice of such hearing'' after ``hearing in 
the State'' and striking the second sentence of paragraph (2).
    Section 3305 amends Section 658E of the Act, prescribing 
Federal requirements for the State application and plan.
    Section 3306 amends Section 658F, designating the 
limitation on State allotments.
    Section 3307 amends Section 658G, Activities to Improve the 
Quality of Child Care, to allow States to spend no less than 4 
percent, of their total annual funds to carry out the purposes 
of the Act, on activities designed to provide for comprehensive 
consumer education and to increase parental choice and to 
improve the quality and availability of child care.
    Section 3308 repeals Section 658H, the Early Childhood 
Development and Before- and After-School care requirement.
    Section 3309 amends Section 658I(b), Administration and 
Enforcement, by striking ``and shall have'' in paragraph (1) 
and all that follows through paragraph (2). In addition, 
Section 3309 states that if a State misuses funds provided 
under this Title, the Secretary is authorized to deduct up to 
the full amount of misused funds from the State's 
administrative portion of the total allotment, in the following 
fiscal year.
    Section 3310 amends Section 658J(c), designating payments, 
by striking ``expended'' and inserting ``obligated.''
    Section 3311 amends Section 658K, Annual Reports and 
Audits, by striking ``Annual Reports'' and inserting 
``Reports.'' In addition, Section 311 instituted new reporting 
requirements and requires that such information be collected on 
a monthly basis and be submitted to the Secretary on a 
quarterly basis. Starting no later than December 31, 1997, 
States will be required to submit biannual reports to the 
Secretary on selected data.
    Section 3312 amends Section 658L, the requirement for the 
Report by the Secretary, by striking ``1993'' and inserting 
``1997'' and changing the report requirement to biennially, 
from annually.
    Section 3313 amends 658O, designating Allowable Allotments, 
to reserve 1 percent, of funds for the Territories. Section 
3313 also permits Indian tribes, on the approval of the 
Secretary, to use funds provided under this Subtitle for the 
purposes of construction or renovation of facilities.
    Section 3314 amends Section 658P, by inserting additional 
Definitions to the Section.
    Section 3315(a) repeals the Child Development Associate 
Scholarships Assistance Act of 1985.
    Section 3315(b) repeals the State Dependent Care 
Development Grants Act.
    Section 3315(c) repeals the Programs of National 
Significance.
    Section 3315(d) repeals the Native Hawaiian Family-Based 
Education Centers
    Section 3315(e) repeals the AFDC, Transitional Child Care 
and At-Risk Child Care programs, under the Social Security Act.
    Section 3316 established the effective date for this 
Subtitle, as October 1, 1996, with the exception that the 
amendment made by section 3303(a), the authorization of 
appropriations and entitlement authority (discretionary and 
mandatory spending), shall take effect on the date of 
enactment.

                  Subtitle D--CHILD NUTRITION PROGRAMS

                  Chapter 1--National School Lunch Act

    Section 3401 amends sec. 8 of the NSLA to clarify State 
educational agencies' authority to terminate or suspend 
agreements with participating schools.
    Section 3402(a) amends sec. 9(a) of the NSLA:
          To delete a requirement that the Secretary purchase 
        specific amounts of low-fat cheese for the School Lunch 
        program; and
          To delete a requirement that the Secretary establish 
        administrative procedures to diminish ``plate waste;''
    Section 3402(b) amends sec. 9(b) of the NSLA to delete 
specific requirements that State education agencies and local 
school food authorities annually announce income eligibility 
guidelines for free and reduced-price lunches.
    Section 3402(c) amends sec. 9(c) of the NSLA:
          To delete a requirement that schools use, to the 
        maximum extent practicable, commodities designated as 
        ``being in abundance;'' and
          To delete authority for the Secretary to prescribe 
        the terms and conditions under which commodities will 
        be used in schools and other participating 
        institutions.
    Section 3402(d) makes a conforming amendment to sec. 9(d) 
of the NSLA.
    Section 3402(e) amends sec. 9(f) of the NSLA:
          To delete provisions for the Secretary, State 
        educational agencies, schools, and school food 
        authorities to inform students (and parents and 
        guardians) of the nutrition content of lunches and 
        breakfasts served and their consistency with the 
        Dietary Guidelines for Americans not latter than the 
        beginning of the 1996-1997 school year; and
          To require that, not later than the beginning of the 
        1996-1997 school year, schools serve lunches and 
        breakfasts that (a) are consistent with the Dietary 
        Guidelines for Americans and (b) provide (on average 
        over each week) at least one-third (lunches) or one-
        fourth (breakfasts) of the daily recommended dietary 
        allowances established by the National Academy of 
        Sciences.
    Section 3402(f) deletes sec. 9(h) of the NSLA, thereby 
deleting authority (provided elsewhere, in the CNA) to use 
Nutrition Education and Training program resources for training 
aimed at improving school meals.
    Section 3403 amends sec. 9(b) of the NSLA by adding a 
provision stipulating that a School Lunch program school not be 
required to submit a free and reduced price ``policy 
statement'' to the State after initial submission, unless there 
is a substantive change in school policy.
    Section 3404 amends sec. 11 of the NSLA:
          To allow schools operation under provision 2 to 
        extend their 3-year program by 2 years.
          To remove a requirement that States report monthly on 
        the average number of children receiving free or 
        reduced-price lunches (compared to the preceding month) 
        and replace it with a duty to report this information 
        on request of the Secretary.
    Section 3405(a) amends sec. 12(a) of the NSLA to revise a 
requirement that States and schools keep accounts and records 
available at all times to a requirement that the accounts and 
records be available at ``any reasonable time.''
    Section 3405(b) amends sec. 12(c) of the NSLA to remove a 
prohibition on States imposing curriculum or certain other 
requirements on school in carrying out the provisions of the 
Act.
    Section 3405(c) and (d) amend sec. 12(d) of the NSLA to 
update or remove definitions of various terms that are out-of-
date.
    Section 3405(e) amends sec. 12(k) of the NSLA to delete 
out-of-date (1994-1995) provisions regarding rulemaking 
associated with implementing compliance with the Dietary 
Guidelines for Americans.
    Section 3405(f) amends sec. 12(l) of the NSLA:
          To delete requirements that applications for waivers 
        by States and service providers describe ``management 
        goals'' to be achieved, provide an implementation 
        timetable, and describe the process to be used in 
        monitoring progress in implementing the waiver;
          To delete requirements that (a) the Secretary state 
        in writing the expected outcome of any approved waiver, 
        (b) the result of any waiver decision be disseminated 
        through ``normal means of communication,'' and (c) 
        waivers not exceed 3 years (unless extended by the 
        Secretary);
          To delete prohibitions on waivers relating to ``offer 
        versus serve'' provisions.
          To delete requirements for detailed annual reports on 
        waivers from recipients of waivers, States, and the 
        Secretary.
    Section 3405(g) deletes sec. 12(m) of the NSLA, thereby 
deleting authority to annually award grants to private 
nonprofit organizations or education institutions for food and 
nutrition projects that are fully integrated with elementary 
school curricula.

Summer Food Service Program

    Section 3406(a) amends sec. 13(a) of the NSLA to remove a 
directive that the Secretary carry out the Summer Food Service 
program so as to ``expand'' it.
    Section 3406(b) amends sec. 13(b) of the NSLA to lower 
subsidies for meals and snacks served in the Summer Food 
Service Program. This section requires that, when subsidies 
under this program are indexed for inflation, the result be 
rounded down to the nearest whole cent.
    Section 3406(c) amends sec. 13(b) of the NSLA to delete 
authority for reimbursements for up to four meals a day in the 
case of summer camps and service institutions for migrant 
children.
    Section 3406(d) amends sec. 13(c) of the NSLA:
          To delete authority for reimbursements under the 
        Summer Food Service program for National Youth Sports 
        program operations in months other than May through 
        September;
          To require children in National Youth Sports programs 
        be eligible for Summer Food Service program 
        participation on showing residence in low-income areas 
        or on the basis of an income eligibility statement 
        (replacing the current rule allowing their 
        participation without application); and
          To delete the requirement that breakfasts and 
        supplements served under by National Youth Sports 
        program sponsors be subsidized at the School Breakfast 
        program ``severe need'' rates.
    Section 3406(e) amends sec. 13(e) of the NSLA to limit to 
nonschool providers the prohibition against advance payment of 
Summer Food Service program reimbursements where the provider 
has not certified that training sessions have been held.
    Section 3406(f) amends sec. 13(f) of the NSLA:
          To delete the requirement that the Secretary provide 
        additional technical assistance to those Summer Food 
        Service providers having difficulty in maintaining 
        compliance with nutrition requirements; and
          To make clear that contracts with food service 
        management companies under the Summer Food Service 
        program require conformance with local health authority 
        standards.
    Section 3406(g) amends sec. 13(f) of the NSLA to add 
authority for schools participating in the Summer Food Service 
program to permit children attending sites on school premises 
operated by the school to refuse 1 item of a meal without 
affecting the reimbursement for the meal.
    Section 3406(h) amends sec. 13(k) of the NSLA:
          To delete a requirement that Summer Food Service 
        program institutions make ``positive efforts'' to use 
        small businesses and minority-owned businesses as 
        sources of supplies and services; and
          To delete a requirement that each State establish a 
        standard form of contract to be used by service 
        institutions and food service management companies in 
        the Summer Food Service program.
    Section 3406(i) amends sec. 13(m) of the NSLA to revise a 
requirement that States and service institutions in the Summer 
Food Service program keep accounts and records available at all 
times to a requirement that the accounts and records be 
available at ``any reasonable time.''
    Section 3406(j) amends sec. 13(n) of the NSLA to delete a 
Summer Food Service program requirement that State plans 
include plans and schedules for informing institutions of the 
availability of the program.
    Section 3406(k) amends sec. 13(n) of the NSLA to delete 
Summer Food Service program requirements that State plans 
include (a) their method of ``assessing need,'' (b) their best 
estimate of service institutions and sites to be approved and 
meals to be served (including a description of estimating 
methods), and (c) their schedule for providing technical 
assistance to service institutions.
    Section 3406(l) amends sec. 13(q) of the NSLA to delete 
Summer Food Service program requirements that States have an 
ongoing training and technical assistance program for private 
nonprofit organizations.
    Section 3406(m) deletes sec. 13(p) of the NSLA, thereby 
deleting an out-of-date (1991) requirement to disseminate 
information about amendments relating to the Summer Food 
Service program eligibility of private nonprofit organizations.
    Section 3406(n) establishes the effective date for 
amendments related to the Summer Food Service program as 
January 1, 1997.

Commodity distribution

    Section 3407(a) amends sec. 14(b) of the NSLA to delete a 
requirement that cereal and shortening and oil products be 
among foods donated for the School Lunch program.
    Section 3407(b) amends sec. 14(d) of the NSLA:
          To delete an out-of-date (1977) requirement for a 
        report on commodity procurement matters; and
          To delete a requirement for procedures to ensure that 
        contracts for commodity purchases are not entered into 
        without taking into account the contracting party's 
        compliance with meat inspection laws and other 
        standards relating to food wholesomeness.
    Section 3407(c) amends sec. 14(g) of the NSLA to delete an 
out-of-date (1989) requirement for compensation to certain 
schools participating in a study.
    Section 3407(d) deletes sec. 14(e) of the NSLA, thereby 
deleting a requirement for State advisory councils on the 
selection and distribution of commodity assistance.

Child and Adult Care Food Program (CACFP)

    Section 3408(a) amends sec. 17(a) of the NSLA to delete a 
directive that the Secretary operate a program to assist States 
to ``expand'' food service programs for children in child care 
institutions.
    Section 3408(b) amends sec. 17(a) of the NSLA to add a 
prohibition against payments under the CACFP to day care home 
sponsors that base payments to employees on the number of homes 
recruited.
    Section 3408(c) amends sec. 17(d) of the NSLA to delete 
specific processing and technical assistance requirements on 
States where an institution submits an incomplete application 
for the CACFP.
    Section 3408(d) amends sec. 17(f) of the NSLA to delete 
authority for reimbursements for up to four meals/supplements 
for children in the care of day care centers for 8 hours or 
more a day.
    Section 3408(e) amends sec. 17(f) of the NSLA to create a 
new two-tiered system of reimbursements for family day care 
homes. It provides reduced subsidies for day care homes in 
middle and upper income areas of 90 cents for lunches, 25 cents 
for breakfasts and 10 cents for snacks and retains higher 
reimbursements for family day care homes in low-income areas.
    Section 3408(f) amends sec. 17(f) of the NSLA:
          To delete an out-of-date (1981) requirement to reduce 
        administrative payments to CACFP sponsors;
          To make optional the requirement for monthly advance 
        payments to CACFP institutions.
    Section 3408(g) amends sec. 17(g) of the NSLA to delete a 
requirement that the Secretary provide additional technical 
assistance to CACFP institutions and sponsors that are having 
difficulty maintaining compliance with nutrition requirements.
    Section 3408(h) deletes sec. 17(k) of the NSLA containing 
specific requirements as to (a) States providing training, 
technical assistance, and monitoring under the CACFP, (b) 
States taking affirmative action to expand the availability of 
CACFP benefits, (c) the Secretary conducting demonstration 
projects to remove barriers to CACFP participation among day 
care homes in low-income areas, (d) the Secretary and States 
providing training and technical assistance to day care home 
sponsors in reaching low-income children, and (e) States, 
through day care home sponsors, providing information and 
training about child health and development.
    Replaces the current specific requirements in sec. 17(k) 
with a general requirement that States provide sufficient 
training, technical assistance, and monitoring to facilitate 
effective operation of the CACFP and that the Secretary assist 
States in developing plans to fulfill this obligation.
    Section 3408(i) amends sec. 17(m) of the NSLA to revise a 
requirement that States and CACFP institutions keep accounts 
and records available at all times to a requirement that the 
accounts and records be available at ``any reasonable time.''
    Section 3408(j) amend sec. 17(o) of the NSLA to delete 
authority for CACFP reimbursements for meals to those in adult 
day care centers who are not chronically impaired disabled 
persons. [Note: An amendment in Section 3408(a) drops the 
reference to ``Adult'' in the title of the program.]
    Section 3408(k) deletes sec. 17(q) of the NSLA, thereby 
deleting requirements for the Secretary to provide information 
about the WIC program to State CACFP agencies, requirements for 
State agencies to provide (and update) information about the 
WIC program to child care institutions in the CACFP, and 
requirements that these child care institutions annually 
provide WIC information to parents.
    Section 3408(l) includes conforming amendments.
    Section 3408(m) establishes effective dates for amendments 
affecting the CACFP. In general, they are effective on 
enactment, but amendments restructuring day care home 
reimbursement rates are effective July 1, 1997. This subsection 
also requires that the Secretary issue interim regulations 
related to restructuring day care home reimbursement rates and 
CACFP expansion funds not later than January 1, 1997, and final 
regulations on these items not later than July 1, 1997.
    Section 3408(n) requires the Secretaries of Agriculture and 
Health and Human Services to undertake a study of the effects 
of amendments restructuring day care home reimbursement rates--
due 2 years after enactment.

Pilot projects

    Section 3409 amends sec. 18 of the NSLA:
          To delete a requirement for a ``universal free school 
        lunch'' pilot project similar to the ``provision two'' 
        option allowed under sec. 11(a)(1)(C) of the NSLA;
          To make optional a demonstration project for grants 
        to provide meals/supplements to adolescents in programs 
        outside school hours, to delete references to the 
        specific amount of each grant, and to replace the 
        specific sums required to be spent on this project with 
        an authorization of appropriations (``such sums as are 
        necessary'') for fiscal years 1997 and 1998;
          To delete authority for pilot projects evaluating the 
        effects of contracting with private for-profit and 
        nonprofit organizations to act as a State agency in 
        cases where the Secretary is currently administering a 
        child nutrition program in place of a State;
          To delete authority for a pilot project that assists 
        schools in offering students additional choices of 
        fruits, vegetables, legumes, cereals, and grain-based 
        products (including organically produced commodities);
          To delete authority for a pilot project that assists 
        schools in offering students additional choices of 
        dairy products, lean meat, and poultry products 
        (including organically produced commodities); and
          To delete authority for pilot projects to reduce 
        paperwork and application and meal counting 
        requirements and make program changes that will 
        increase participation in school meal programs--while 
        receiving a total Federal reimbursement equal to the 
        prior year total adjusted for inflation and enrollment 
        changes.

Repealed authorities

    Section 3410 repeals sec. 19 of the NSLA, thereby deleting 
an out-of-date (1989) requirement for a report on paperwork 
reduction.
    Section 3411 repeals sec. 23 of the NSLA, thereby deleting 
out-of-date (1989) requirements to provide States with income 
eligibility information and simplify applications.
    Section 3412 repeals sec. 24 of the NSLA, thereby deleting 
out-of-date (1989) requirements for developing and distributing 
a ``nutrition guidance'' for child nutrition programs and 
revising menu planning guides.
    Section 3413 repeals sec. 26 of the NSLA, thereby deleting 
a requirement that the Secretary contract with a 
nongovernmental organization to establish and maintain a 
clearinghouse for information on food assistance and self-help 
initiatives (funded at $200,000 in fiscal year 1996, $150,000 
in 1997, and $100,000 in 1998).

                 Chapter 2--Child Nutrition Act of 1966

Special Milk Program

    Section 3421 makes a technical change in Special Milk 
program provisions (sec. 3 of the CNA) replacing a reference to 
the Trust Territory of the Pacific Islands with a reference to 
the Commonwealth of the Northern Mariana Islands. [Note: A 
similar change is made throughout the bill.]

School Breakfast Program

    Section 3422 amends sec. 4(b) of the CNA by adding a 
provision stipulating that a School Breakfast program school 
not be required to submit a free and reduced price ``policy 
statement'' to the State after initial submission, unless there 
is a substantive change in school policy.
    Section 3423(a) amends sec. 4(e) of the CNA to delete a 
requirement that the Secretary provide, through State education 
agencies, technical assistance and training to School Breakfast 
program schools to assist them in complying with nutrition 
requirements, as well as additional technical assistance to 
schools having difficulty in maintaining compliance with the 
requirements.
    Section 3423(b) amends sec. 4 (f) and (g) of the CNA 
deleting requirements for start-up and expansion grants in the 
School Breakfast and Summer Food Service programs.

State administrative expenses

    Section 3424 amends sec. 7 of the CNA:
          To delete permission for the Secretary to deny State 
        administrative expense funds to a State if it does not 
        agree to participate in any authorized study or survey 
        conducted by the Secretary; and
          To remove a requirement for submitting annual State 
        plans for State administrative expense funds and 
        replace it with a requirement to submit substantive 
        plan changes.

General and Miscellaneous Child Nutrition Act provisions

    Section 3425 amends sec. 10 of the CNA:
          To delete an out-of-date (1994) requirement for model 
        language on competitive food sales; and
    Section 3426 amends sec. 11 of the CNA to remove a 
prohibition on States imposing curriculum or certain other 
requirements on schools in carrying out the Special Milk and 
School Breakfast programs.
    Section 3427 amends sec. 15 of the CNA to make technical 
and conforming changes in the Act's definitions of ``State'' 
and ``School.''
    Section 3428 amends sec. 16 of the CNA to revise a 
requirement that States, schools, and other entities keep 
accounts and records available at all times to a requirement 
that the accounts and records be available at ``any reasonable 
time.''

WIC provisions

    Section 3429(a) amends sec. 17(b)(15) of the CNA to make 
clear that, after 365 days in ``a temporary accommodation,'' 
persons will not be deemed homeless for purposes of the WIC 
program.
    Section 3429(b) amends sec. 17(c) of the CNA to delete a 
requirement that the Secretary ``promote'' the WIC program 
through materials and public service announcements in English 
and other appropriate languages.
    Section 3429(c) amends sec. 17(d) of the CNA to delete a 
requirement that the Secretary report biennially to Congress 
and the National Advisory Council on Maternal, Infant, and 
Fetal Nutrition on the characteristics of WIC participants, 
participation by migrant farmworker families, and other 
appropriate matters.
    Section 3429(d) amends sec. 17(e) of the CNA:
          To allow, rather than require, State agencies to 
        provide drug abuse education to WIC participants and 
        caretakers;
          To delete the requirement for annual State-agency 
        evaluations of nutrition education and breastfeeding 
        promotion/support activities, including participants' 
        views.
          To remove specific requirements that State agencies 
        (a) ensure information about food stamps, the AFDC 
        program, and child support enforcement programs is 
        provided to WIC recipients, adds a general requirement 
        that State agencies may provide local agencies with 
        materials about other programs for which WIC recipients 
        may be eligible;
          To remove a requirement that State agencies ensure 
        that local WIC agencies maintain and make available a 
        list of local resources for substance abuse and 
        counseling and replace it with an option for local 
        agencies to do so; and
          To delete specific authority for local WIC agencies 
        to use a ``master file'' to document and monitor the 
        provision of nutrition education services to those 
        required to be included in group nutrition education 
        classes.
    Section 3429(e) amends section 17(f) of the CNA:
          To revise the State plan submission requirement to 
        stipulate that, instead of annually submitting a State 
        plan for the WIC program, States only be required to 
        submit substantive changes in their initial plan for 
        the Secretary's approval;
          To remove a requirement that State WIC plans include 
        plans to coordinate with a specific list of other 
        programs replace it with a general requirement that 
        State plans include plans to coordinate WIC operations 
        with other services or programs that may benefit WIC 
        applicants or participants;
          To add a requirement that State WIC plans for 
        unserved and undeserved areas specifically include 
        plans to improve program access for those who are 
        employed or who reside in rural areas;
          Replaces a requirement that State WIC plans include 
        plans to provide benefits to those most in need and to 
        provide eligible persons not participating in the WIC 
        program with information on the program and how to with 
        a requirement to focus on women in early months of 
        pregnancy, including migrants.
          Replaces a requirement that States opting to provide 
        WIC benefits to incarcerated persons include in their 
        State WIC plans specific provisions for doing so;
          To delete specific requirements as to State WIC plans 
        provisions to improve access to those who are employed 
        or who reside in rural areas (see above for more 
        general replacement language);
          To delete a requirement that States opting to request 
        ``funds conversion authority'' (using food money for 
        administration) include in their State WIC plan an 
        estimate of the increased participation that will 
        result and how the estimate was developed;
          To revise authority for the Secretary to require in 
        State WIC plans ``such other information as the 
        Secretary may require'' to a stipulation that the plans 
        must include such other information as the Secretary 
        may ``reasonably'' require;
          To delete a requirement that State agencies establish 
        procedures for public comment on development of the 
        State's WIC plan;
          To delete specific processing requirements (including 
        time frames) on State agencies when approving local 
        agencies applying for the WIC program;
          To delete specific requirements on State agencies and 
        local WIC agencies as to public announcement and 
        distribution of information about the WIC program 
        (including requirements as to distribution of 
        information to and eligibility certification of women 
        in the early months of pregnancy and those in the care 
        of hospitals);
          To delete an out-of-date (1994) requirement on State 
        agencies to report on procedures to reduce purchases of 
        low-iron infant formula;
          To revise a requirement that State and local WIC 
        agencies keep accounts and records available at all 
        times to a requirement that the accounts and records be 
        available at ``any reasonable time;''
          To delete a requirement that WIC suspension or 
        termination notices specifically contain information on 
        the categories of participants whose benefits are being 
        suspended or terminated because of a shortage of funds;
          To delete a requirement that the Secretary establish 
        standards that will ensure sufficient State agency 
        staff;
          To delete a provision that stipulates that products 
        specifically designed for pregnant, postpartum, or 
        breastfeeding women, or infants, may be available under 
        the WIC if they are commercially available or are 
        approved by the Secretary based on clinical tests;
          To make optional current requirements that State 
        agencies (a) provide nutrition education, breastfeeding 
        promotion, and drug abuse education in languages other 
        than English and (b) use appropriate foreign language 
        materials in areas where a substantial number of low-
        income households speak a language other than English;
          To delete specific authority for State agencies to 
        adopt methods of delivering WIC benefits to accommodate 
        the special needs of those who are incarcerated; and
          To make optional a current requirement that State 
        agencies provide information about other sources of 
        food assistance to WIC applicants who cannot be served.
    Section 3429(f) amends sec. 17(g) of the CNA to delete an 
out-of-date report on those income-eligible for the WIC program 
based on the 1990 Census.
    Section 3429(g) amends sec. 17(h) of the CNA:
          To delete out-of-date (1989) requirements relating to 
        cost containment measures;
          To delete a requirement for a pilot project on using 
        ``universal product codes'' to aid vendors in providing 
        the correct infant formula to WIC participants;
          To delete a number of specific requirements as to how 
        the Secretary is to carry out a requirement (which is 
        retained) to offer to solicit cost-containment bids on 
        behalf of State agencies;
          To delete requirements that the Secretary promote 
        joint State purchases of infant formula and other 
        supplemental foods, encourage the use of cost 
        containment procedures for other supplemental foods, 
        and inform State agencies of the benefits of cost 
        containment and provide technical assistance in using 
        cost containment procedures; and
          To modify optional a current requirement for the 
        Secretary to use up to $10 million a year in carryover 
        funds for WIC infrastructure development, special 
        projects of regional or national significance, and 
        special breastfeeding promotion and support projects to 
        eliminate special breastfeeding and support projects.
    Section 3429(h) amends sec. 17(k) of the CNA to provide 
that the National Advisory Council on Maternal, Infant, and 
Fetal Nutrition elect its chairman and vice chairman, rather 
than having them designated by the Secretary.
    Section 3429(i) strikes sec. 17 (n), (o), and (p) of the 
CNA, thereby:
          Deleting (a) an out-of-date (1989) study on drug 
        abuse education, (b) a requirement for preparing and 
        distributing drug abuse education materials, (c) 
        authorization of funding (``such sums'') for 
        distributing drug abuse education materials and making 
        referrals under drug abuse education programs, and (d) 
        a requirement that State agencies provide drug abuse 
        education to WIC participants;
          Deleting an out-of-date (1992) pilot for WIC clinics 
        in community colleges offering nursing education 
        programs; and
          Deleting out-of-date (1994) authority for grants to 
        State agencies to improve WIC information and data 
        systems.
    Section 3429(j) amends sec. 17 of the CNA by adding 
provisions that require regulations disqualifying WIC vendors 
that have been disqualified for participation in the Food Stamp 
Program. The WIC disqualification would be for the same period 
as in food stamps and would not be subject to separate 
administrative or judicial review.

Nutrition Education and Training Program

    Section 3430 repeals sec. 18 of the CNA, thereby deleting 
out-of-date authority to make grants for nutrition education 
(authorized elsewhere).
    Section 3431(a) amends sec. 19 of the CNA to replace the 
current statements of ``findings'' and ``purpose'' for the 
Nutrition Education and Training program with (a) a finding 
that effective dissemination of scientifically valid 
information to children in school meal programs should be 
encouraged and (b) a statement that the program's purpose is to 
establish a system of grants to State education agencies for 
comprehensive nutrition education and training.
    Section 3431(b) amends sec. 19(f) of the CNA:
          To delete references to specific activities that 
        States may use Nutrition Education and Training program 
        funding for: (a) funding a nutrition component in 
        consumer, homemaking and health education programs, (b) 
        instructing teachers and school staff on how to promote 
        better nutritional health and motivate children from a 
        variety of linguistic and cultural backgrounds to 
        practice sound eating habits, (c) developing means of 
        providing nutrition education in ``language 
        appropriate'' materials through after-school programs, 
        (d) training related to healthy and nutritious meals, 
        (e) creating instructional programming on the ``Food 
        Guide Pyramid'' (including ``language appropriate'' 
        materials) for teachers, food service staff, and 
        parents, (f) funding aspects of the Secretary's 
        ``Strategic Plan for Nutrition and Education,'' (g) 
        encouraging public service advertisements to promote 
        healthy eating habits for children, including 
        ``language appropriate'' materials and advertisements, 
        (h) coordinating and promoting nutrition education and 
        training activities in local school districts, (i) 
        contracting with public and private nonprofit education 
        institutions to conduct nutrition education and 
        training, (j) increasing public awareness of the 
        importance of breakfasts, and (k) coordinating and 
        promoting nutrition education and training activities 
        (including those under the summer and child care 
        programs) and adding a provision allowing funds to be 
        used for other appropriate related activities as 
        determined by the State.
          To delete authority for planning and assessment 
        grants to States desiring to receive Nutrition 
        Education and Training program funds; and
          To delete a provision stating that nothing in the 
        Nutrition Education and Training program authorizing 
        language prohibits activities involving adults.
    Section 3431(c) amends sec. 19(g) of the CNA to revise a 
requirement that State education agencies keep Nutrition 
Education and Training program accounts and records available 
at all times to a requirement that the accounts and records be 
available at ``any reasonable time.''
    Section 3431(d) amends sec. 19(h) of the CNA:
          To delete specific requirements as to the content of 
        each State's nutrition education coordinator's required 
        assessment of the State's nutrition education needs; 
        and
          To delete specific requirements as to the content and 
        use of each State's required comprehensive nutrition 
        education plan.
    Section 3431(e) amends sec. 19 of the CNA to convert the 
Nutrition Education and Training program from and 
``entitlement'' program to a ``discretionary'' program.
    Section 3431(f) amends sec. 19 of the CNA to delete an out-
of-date (1990) requirement for an assessment of nutrition 
education needs.
    Section 3431(g) establishes the effective date for 
amendments affecting the Nutrition Education and Training 
program as October 1, 1996.

                  Chapter 3--Miscellaneous Provisions

    Section 3441 requires the Secretary, in consultation with 
local, State, and regional administrators of school lunch, 
school breakfast and summer food programs, to develop proposed 
changes to the regulations for such programs for the purpose of 
simplifying and coordinating those programs into a 
comprehensive meal program.

                     Subtitle E--related provisions

    Section 3501(a) requires the Secretary of Health and Human 
Services to produce and publish poverty estimates for each 
State, county, place (defined as local units of government for 
which data is produced in the decennial census), and school 
district. The data may be produced using any reliable method.
    Section 3501(b) requires tabulations of poverty by the 
number of children aged 5 to 17 for each school district. The 
first data under this section for States, counties, and local 
units of general government would be published in 1997, and at 
least every 2 years thereafter. The first data for school 
districts would be published in 1999, and at least every 2 
years thereafter.
    Section 3501(c) allows the Secretary of Health and Human 
Services to aggregate school districts to the extent necessary 
to achieve reliable data. The section requires that aggregated 
data be appropriately identified and accompanied by a detailed 
explanation of the methodology used.
    Section 3501(d) requires the Secretary of Health and Human 
Services to notify Congress if the Secretary is unable to 
produce the required data for any geographic area specified in 
subsection (a), and to give the reasons for any such exclusion.
    Section 3501(e) directs the Secretary of Health and Human 
Services to use the same criteria relating to poverty, 
including periodic adjustments for inflation, that is currently 
used.
    Section 3501(f) requires the Secretary of Health and Human 
Services to consult with the Secretary of Education in 
producing poverty data for school districts.
    Section 3501(g) defines the term Secretary for purposes of 
this section to mean the Secretary of Health and Human 
Services.
    Section 3501(h) authorizes $1.5 million for each of fiscal 
years 1997, 1998, 1999, and 2000, to carry out the provisions 
of this section.
    Section 3502 States the sense of the Congress that this 
Title should not increase the number of hungry, homeless, poor, 
or medically uninsured children.
    Section 3503 provides that in the event that this Title 
does increase the number of hungry, homeless, poor, or 
medically uninsured children the end of Fiscal Year 1997 that 
Congress shall act to prevent any further increase.

  Statement of Oversight Findings and Recommendations of the Committee
    In compliance with clause 2(l)(3)(A) of rule XI of the 
Rules of the House of Representatives and clause 2(b)(1) of 
rule X of the Rules of the House of Representatives, the 
committee's oversight findings and recommendations are 
reflected in the body of this report.
                     Inflationary Impact Statement
    In compliance with clause 2(l)(4) of rule XI of the Rules 
of the House of Representatives, the committee estimates that 
the enactment into law of the committee recommendations will 
have no significant inflationary impact on prices and costs in 
the operation of the national economy. It is the judgment of 
the committee that the inflationary impact of this legislation 
as a component of the Federal budget is negligible.
                    Government Reform and Oversight
    With respect to the requirement of clause 2(l)(3)(D) of 
rule XI of the Rules of the House of Representatives, the 
committee has received no report of oversight findings and 
recommendations from the Committee on Government Reform and 
Oversight on the subject of the committee recommendations.
                           Committee Estimate
    Clause 7 of rule XIII of the Rules of the House of 
Representatives requires an estimate and a comparison by the 
committee of the costs which would be incurred in carrying out 
the committee recommendations. However, clause 7(d) of that 
rule provides that this requirement does not apply when the 
committee has included in its report a timely submitted cost 
estimate of the bill prepared by the Director of the 
Congressional Budget Office under section 403 of the 
Congressional Budget Act of 1974.
                Application of Law to Legislative Branch
    Section 102(b)(3) of Public Law 104-1 requires a 
description of the application of this bill to the legislative 
branch. The bill establishes work requirements for persons 
receiving cash public assistance, provides increases in funding 
for child care, increases in funding for protecting children 
from abuse, and streamlines nutrition assistance programs in 
order to reduce administrative burdens. This bill does not 
otherwise prohibit legislative branch employees from receiving 
the benefits of this legislation.
                       Unfunded Mandate Statement
    Section 423 of the Congressional Budget and Impoundment 
Control Act requires a statement of whether the provisions of 
the reported bill include unfunded mandates. The committee 
received a letter regarding unfunded mandates from the Director 
of the Congressional Budget Office. [See Committee on the 
Budget Unfunded Mandate Statement on page 2014 and consolidated 
Congressional Budget Office Estimate on page 1940.]

     Budget Authority and Congressional Budget Office Cost Estimate

    With respect to the requirement of clause 2(l)(3)(B) of 
rule XI of the House of Representatives and section 308(a) of 
the Congressional Budget Act of 1974 and with respect to 
requirements of clause 2(l)(3)(C) of rule XI of the House of 
Representatives and section 403 of the Congressional Budget Act 
of 1974, the committee has received a cost estimate for the 
committee recommendations from the Director of the 
Congressional Budget Office. [See consolidated Congressional 
Budget Office Cost Estimate on page 1940.]

                             Rollcall Votes

          COMMITTEE ON ECONOMIC AND EDUCATIONAL OPPORTUNITIES

    Roll call No. 1, Bill: Welfare Reform, Date: June 12, 1996, 
Amendment number 2, Passed: 23-14.
    Sponsor/Amendment: Mr. Talent, Mr. Hutchinson. An amendment 
to increase minimum hours of work for purposes of meeting work 
participation requirements, to 20 in 1996-98, 25 in 1999, 30 in 
2000 and 2001, and 35 thereafter.

----------------------------------------------------------------------------------------------------------------
                             Member                                   Aye         No        Present   Not voting
----------------------------------------------------------------------------------------------------------------
Chairman Goodling...............................................          X   ..........  ..........  ..........
Mr. Petri.......................................................          X   ..........  ..........  ..........
Mrs. Roukema....................................................          X   ..........  ..........  ..........
Mr. Gunderson...................................................          X   ..........  ..........  ..........
Mr. Fawell......................................................          X   ..........  ..........  ..........
Mr. Ballenger...................................................          X   ..........  ..........  ..........
Mr. Barrett.....................................................          X   ..........  ..........  ..........
Mr. Cunningham..................................................          X   ..........  ..........  ..........
Mr. Hoekstra....................................................          X   ..........  ..........  ..........
Mr. McKeon......................................................          X   ..........  ..........  ..........
Mr. Castle......................................................  ..........          X   ..........  ..........
Mrs. Meyers.....................................................          X   ..........  ..........  ..........
Mr. Johnson.....................................................          X   ..........  ..........  ..........
Mr. Talent......................................................          X   ..........  ..........  ..........
Mr. Greenwood...................................................          X   ..........  ..........  ..........
Mr. Hutchinson..................................................          X   ..........  ..........  ..........
Mr. Knollenberg.................................................          X   ..........  ..........  ..........
Mr. Riggs.......................................................  ..........  ..........  ..........          X 
Mr. Graham......................................................  ..........  ..........  ..........          X 
Mr. Weldon......................................................  ..........  ..........  ..........          X 
Mr. Funderburk..................................................  ..........  ..........  ..........          X 
Mr. Souder......................................................          X   ..........  ..........  ..........
Mr. McIntosh....................................................          X   ..........  ..........  ..........
Mr. Norwood.....................................................          X   ..........  ..........  ..........
Mr. Clay........................................................  ..........  ..........  ..........          X 
Mr. Miller......................................................          X   ..........  ..........  ..........
Mr. Kildee......................................................  ..........          X   ..........  ..........
Mr. WIlliams....................................................  ..........          X   ..........  ..........
Mr. Martinez....................................................  ..........          X   ..........  ..........
Mr. Owens.......................................................  ..........          X   ..........  ..........
Mr. Sawyer......................................................  ..........          X   ..........  ..........
Mr. Payne.......................................................  ..........  ..........  ..........          X 
Mrs. Mink.......................................................  ..........          X   ..........  ..........
Mr. Andrews.....................................................  ..........          X   ..........  ..........
Mr. Reed........................................................          X   ..........  ..........  ..........
Mr. Roemer......................................................  ..........          X   ..........  ..........
Mr. Becerra.....................................................  ..........          X   ..........  ..........
Mr. Scott.......................................................  ..........          X   ..........  ..........
Mr. Green.......................................................          X   ..........  ..........  ..........
Ms. Woolsey.....................................................  ..........          X   ..........  ..........
Mr. Romero-Barcelo..............................................  ..........          X   ..........  ..........
Mr. Fattah......................................................  ..........          X   ..........  ..........
Mr. Blumenauer..................................................          X   ..........  ..........  ..........
----------------------------------------------------------------------------------------------------------------

          COMMITTEE ON ECONOMIC AND EDUCATIONAL OPPORTUNITIES

    Roll call No. 2, Bill: Welfare Reform, Date: June 12, 1996.
    Appeal the ruling of the Chair--Sustained 16-15.
    Sponsor/Amendment: Mr. Reed appeals the ruling of the chair 
in regard to offering his amendment that was ruled, ``not 
germane.'' Vote was to sustain the ruling of the Chair.

----------------------------------------------------------------------------------------------------------------
                             Member                                   Aye         No        Present   Not voting
----------------------------------------------------------------------------------------------------------------
Chairman Goodling...............................................          X   ..........  ..........  ..........
Mr. Petri.......................................................  ..........  ..........  ..........          X 
Mrs. Roukema....................................................          X   ..........  ..........  ..........
Mr. Gunderson...................................................          X   ..........  ..........  ..........
Mr. Fawell......................................................          X   ..........  ..........  ..........
Mr. Ballenger...................................................          X   ..........  ..........  ..........
Mr. Barrett.....................................................          X   ..........  ..........  ..........
Mr. Cunningham..................................................          X   ..........  ..........  ..........
Mr. Hoekstra....................................................          X   ..........  ..........  ..........
Mr. McKeon......................................................  ..........  ..........  ..........          x 
Mr. Castle......................................................  ..........  ..........  ..........          X 
Mrs. Meyers.....................................................          X   ..........  ..........  ..........
Mr. Johnson.....................................................  ..........  ..........  ..........          X 
Mr. Talent......................................................          X   ..........  ..........  ..........
Mr. Greenwood...................................................          X   ..........  ..........  ..........
Mr. Hutchinson..................................................          X   ..........  ..........  ..........
Mr. Knollenberg.................................................          X   ..........  ..........  ..........
Mr. Riggs.......................................................  ..........  ..........  ..........          X 
Mr. Graham......................................................          X   ..........  ..........  ..........
Mr. Weldon......................................................  ..........  ..........  ..........          X 
Mr. Funderburk..................................................  ..........  ..........  ..........          X 
Mr. Souder......................................................          X   ..........  ..........  ..........
Mr. McIntosh....................................................          X   ..........  ..........  ..........
Mr. Norwood.....................................................  ..........  ..........  ..........          X 
Mr. Clay........................................................  ..........          X   ..........  ..........
Mr. Miller......................................................  ..........  ..........  ..........          X 
Mr. Kildee......................................................  ..........          X   ..........  ..........
Mr. WIlliams....................................................  ..........  ..........  ..........          X 
Mr. Martinez....................................................  ..........          X   ..........  ..........
Mr. Owens.......................................................  ..........          X   ..........  ..........
Mr. Sawyer......................................................  ..........  ..........  ..........          X 
Mr. Payne.......................................................  ..........          X   ..........  ..........
Mrs. Mink.......................................................  ..........          X   ..........  ..........
Mr. Andrews.....................................................  ..........          X   ..........  ..........
Mr. Reed........................................................  ..........          X   ..........  ..........
Mr. Roemer......................................................  ..........          X   ..........  ..........
Mr. Becerra.....................................................  ..........  ..........  ..........          X 
Mr. Scott.......................................................  ..........          X   ..........  ..........
Mr. Green.......................................................  ..........          X   ..........  ..........
Ms. Woolsey.....................................................  ..........          X   ..........  ..........
Mr. Romero-Barcelo..............................................  ..........          X   ..........  ..........
Mr. Fattah......................................................  ..........          X   ..........  ..........
Mr. Blumenauer..................................................  ..........          X   ..........  ..........
----------------------------------------------------------------------------------------------------------------

          COMMITTEE ON ECONOMIC AND EDUCATIONAL OPPORTUNITIES

    Roll call No. 3, Bill: Welfare Reform, Date: June 12, 1996, 
Amendment number 4A, Passed: 17-16.
    Sponsor/Amendment: Mr. Martinez amendment to the Talent/
Hutchinson amendment regarding job search category.

----------------------------------------------------------------------------------------------------------------
                             Member                                   Aye         No        Present   Not voting
----------------------------------------------------------------------------------------------------------------
Chairman Goodling...............................................  ..........          X   ..........  ..........
Mr. Petri.......................................................  ..........  ..........  ..........          X 
Mrs. Roukema....................................................  ..........  ..........  ..........          X 
Mr. Gunderson...................................................          X   ..........  ..........  ..........
Mr. Fawell......................................................  ..........          X   ..........  ..........
Mr. Ballenger...................................................  ..........          X   ..........  ..........
Mr. Barrett.....................................................  ..........          X   ..........  ..........
Mr. Cunningham..................................................  ..........          X   ..........  ..........
Mr. Hoekstra....................................................  ..........          X   ..........  ..........
Mr. McKeon......................................................  ..........          X   ..........  ..........
Mr. Castle......................................................          X   ..........  ..........  ..........
Mrs. Meyers.....................................................  ..........          X   ..........  ..........
Mr. Johnson.....................................................  ..........          X   ..........  ..........
Mr. Talent......................................................  ..........          X   ..........  ..........
Mr. Greenwood...................................................  ..........          X   ..........  ..........
Mr. Hutchinson..................................................  ..........          X   ..........  ..........
Mr. Knollenberg.................................................  ..........          X   ..........  ..........
Mr. Riggs.......................................................  ..........  ..........  ..........          X 
Mr. Graham......................................................  ..........          X   ..........  ..........
Mr. Weldon......................................................  ..........  ..........  ..........          X 
Mr. Funderburk..................................................  ..........          X   ..........  ..........
Mr. Souder......................................................  ..........          X   ..........  ..........
Mr. McIntosh....................................................  ..........  ..........  ..........          X 
Mr. Norwood.....................................................  ..........  ..........  ..........          X 
Mr. Clay........................................................          X   ..........  ..........  ..........
Mr. Miller......................................................          X   ..........  ..........  ..........
Mr. Kildee......................................................          X   ..........  ..........  ..........
Mr. WIlliams....................................................  ..........  ..........  ..........          X 
Mr. Martinez....................................................          X   ..........  ..........  ..........
Mr. Owens.......................................................          X   ..........  ..........  ..........
Mr. Sawyer......................................................          X   ..........  ..........  ..........
Mr. Payne.......................................................          X   ..........  ..........  ..........
Mrs. Mink.......................................................          X   ..........  ..........  ..........
Mr. Andrews.....................................................          X   ..........  ..........  ..........
Mr. Reed........................................................          X   ..........  ..........  ..........
Mr. Roemer......................................................          X   ..........  ..........  ..........
Mr. Becerra.....................................................  ..........  ..........  ..........          X 
Mr. Scott.......................................................          X   ..........  ..........  ..........
Mr. Green.......................................................  ..........  ..........  ..........          X 
Ms. Woolsey.....................................................          X   ..........  ..........  ..........
Mr. Romero-Barcelo..............................................  ..........  ..........  ..........          X 
Mr. Fattah......................................................          X   ..........  ..........  ..........
Mr. Blumenauer..................................................          X   ..........  ..........  ..........
----------------------------------------------------------------------------------------------------------------

          COMMITTEE ON ECONOMIC AND EDUCATIONAL OPPORTUNITIES

    Roll call No. 4, Bill: Welfare Reform, Date: June 12, 1996, 
Amendment number 5, Passed (as amended): 23-10.
    Sponsor/Amendment: Mr. Roemer amendment that requires 
States to develop Individual Responsibility Plan for welfare 
recipients in work activities. This amendment was amended by 
the Gunderson amendment.

----------------------------------------------------------------------------------------------------------------
                             Member                                   Aye         No        Present   Not voting
----------------------------------------------------------------------------------------------------------------
Chairman Goodling...............................................          X   ..........  ..........  ..........
Mr. Petri.......................................................          X   ..........  ..........  ..........
Mrs. Roukema....................................................          X   ..........  ..........  ..........
Mr. Gunderson...................................................          X   ..........  ..........  ..........
Mr. Fawell......................................................          X   ..........  ..........  ..........
Mr. Ballenger...................................................          X   ..........  ..........  ..........
Mr. Barrett.....................................................          X   ..........  ..........  ..........
Mr. Cunningham..................................................          X   ..........  ..........  ..........
Mr. Hoekstra....................................................  ..........          X   ..........  ..........
Mr. McKeon......................................................  ..........          X   ..........  ..........
Mr. Castle......................................................  ..........  ..........  ..........          X 
Mrs. Meyers.....................................................  ..........          X   ..........  ..........
Mr. Johnson.....................................................  ..........  ..........  ..........          X 
Mr. Talent......................................................  ..........          X   ..........  ..........
Mr. Greenwood...................................................          X   ..........  ..........  ..........
Mr. Hutchinson..................................................  ..........          X   ..........  ..........
Mr. Knollenberg.................................................          X   ..........  ..........  ..........
Mr. Riggs.......................................................  ..........          X   ..........  ..........
Mr. Graham......................................................  ..........          X   ..........  ..........
Mr. Weldon......................................................  ..........          X   ..........  ..........
Mr. Funderburk..................................................  ..........  ..........  ..........          X 
Mr. Souder......................................................  ..........          X   ..........  ..........
Mr. McIntosh....................................................  ..........  ..........  ..........          X 
Mr. Norwood.....................................................  ..........          X   ..........  ..........
Mr. Clay........................................................          X   ..........  ..........  ..........
Mr. Miller......................................................          X   ..........  ..........  ..........
Mr. Kildee......................................................          X   ..........  ..........  ..........
Mr. WIlliams....................................................  ..........  ..........  ..........          X 
Mr. Martinez....................................................          X   ..........  ..........  ..........
Mr. Owens.......................................................          X   ..........  ..........  ..........
Mr. Sawyer......................................................          X   ..........  ..........  ..........
Mr. Payne.......................................................  ..........  ..........  ..........          X 
Mrs. Mink.......................................................          X   ..........  ..........  ..........
Mr. Andrews.....................................................          X   ..........  ..........  ..........
Mr. Reed........................................................          X   ..........  ..........  ..........
Mr. Roemer......................................................          X   ..........  ..........  ..........
Mr. Becerra.....................................................  ..........  ..........  ..........          X 
Mr. Scott.......................................................          X   ..........  ..........  ..........
Mr. Green.......................................................  ..........  ..........  ..........          X 
Ms. Woolsey.....................................................          X   ..........  ..........  ..........
Mr. Romero-Barcelo..............................................  ..........  ..........  ..........          X 
Mr. Fattah......................................................          X   ..........  ..........  ..........
Mr. Blumenauer..................................................  ..........  ..........  ..........  ..........
----------------------------------------------------------------------------------------------------------------

          COMMITTEE ON ECONOMIC AND EDUCATIONAL OPPORTUNITIES

    Roll call No. 5, Bill: Welfare Reform, Date: June 12, 1996, 
Amendment number 6, Defeated: 12-21.
    Sponsor/Amendment: Mrs. Mink amendment to change State 
option to exempt single parents of a child under age 1 from 
work requirements to requirement that States exempt such 
parents.

----------------------------------------------------------------------------------------------------------------
                             Member                                   Aye         No        Present   Not voting
----------------------------------------------------------------------------------------------------------------
Chairman Goodling...............................................  ..........          X   ..........  ..........
Mr. Petri.......................................................  ..........          X   ..........  ..........
Mrs. Roukema....................................................  ..........          X   ..........  ..........
Mr. Gunderson...................................................  ..........          X   ..........  ..........
Mr. Fawell......................................................  ..........          X   ..........  ..........
Mr. Ballenger...................................................  ..........          X   ..........  ..........
Mr. Barrett.....................................................  ..........          X   ..........  ..........
Mr. Cunningham..................................................  ..........          X   ..........  ..........
Mr. Hoekstra....................................................  ..........          X   ..........  ..........
Mr. McKeon......................................................  ..........          X   ..........  ..........
Mr. Castle......................................................  ..........          X   ..........  ..........
Mrs. Meyers.....................................................  ..........          X   ..........  ..........
Mr. Johnson.....................................................  ..........  ..........  ..........          X 
Mr. Talent......................................................  ..........          X   ..........  ..........
Mr. Greenwood...................................................  ..........  ..........  ..........          X 
Mr. Hutchinson..................................................  ..........  ..........  ..........          X 
Mr. Knollenberg.................................................  ..........          X   ..........  ..........
Mr. Riggs.......................................................  ..........  ..........  ..........          X 
Mr. Graham......................................................  ..........          X   ..........  ..........
Mr. Weldon......................................................  ..........          X   ..........  ..........
Mr. Funderburk..................................................  ..........  ..........  ..........          X 
Mr. Souder......................................................  ..........          X   ..........  ..........
Mr. McIntosh....................................................  ..........  ..........  ..........          X 
Mr. Norwood.....................................................  ..........          X   ..........  ..........
Mr. Clay........................................................          X   ..........  ..........  ..........
Mr. Miller......................................................  ..........  ..........  ..........          X 
Mr. Kildee......................................................  ..........  ..........  ..........          X 
Mr. WIlliams....................................................          X   ..........  ..........  ..........
Mr. Martinez....................................................          X   ..........  ..........  ..........
Mr. Owens.......................................................          X   ..........  ..........  ..........
Mr. Sawyer......................................................          X   ..........  ..........  ..........
Mr. Payne.......................................................          X   ..........  ..........  ..........
Mrs. Mink.......................................................          X   ..........  ..........  ..........
Mr. Andrews.....................................................  ..........          X   ..........  ..........
Mr. Reed........................................................  ..........          X   ..........  ..........
Mr. Roemer......................................................  ..........          X   ..........  ..........
Mr. Becerra.....................................................          X   ..........  ..........  ..........
Mr. Scott.......................................................          X   ..........  ..........  ..........
Mr. Green.......................................................          X   ..........  ..........  ..........
Ms. Woolsey.....................................................          X   ..........  ..........  ..........
Mr. Romero-Barcelo..............................................  ..........  ..........  ..........          X 
Mr. Fattah......................................................  ..........  ..........  ..........          X 
Mr. Blumenauer..................................................          X   ..........  ..........  ..........
----------------------------------------------------------------------------------------------------------------

          COMMITTEE ON ECONOMIC AND EDUCATIONAL OPPORTUNITIES

    Roll call No. 6, Bill: Welfare Reform, Date: June 12, 1996, 
Amendment number 7, Defeated: 15-21.
    Sponsor/Amendment: Mrs. Mink amendment to require that all 
participants in work activities be provided medical insurance 
guaranteed by the State.

----------------------------------------------------------------------------------------------------------------
                             Member                                   Aye         No        Present   Not voting
----------------------------------------------------------------------------------------------------------------
Chairman Goodling...............................................  ..........          X   ..........  ..........
Mr. Petri.......................................................  ..........          X   ..........  ..........
Mrs. Roukema....................................................  ..........          X   ..........  ..........
Mr. Gunderson...................................................  ..........          X   ..........  ..........
Mr. Fawell......................................................  ..........          X   ..........  ..........
Mr. Ballenger...................................................  ..........          X   ..........  ..........
Mr. Barrett.....................................................  ..........          X   ..........  ..........
Mr. Cunningham..................................................  ..........          X   ..........  ..........
Mr. Hoekstra....................................................  ..........          X   ..........  ..........
Mr. McKeon......................................................  ..........          X   ..........  ..........
Mr. Castle......................................................  ..........          X   ..........  ..........
Mrs. Meyers.....................................................  ..........          X   ..........  ..........
Mr. Johnson.....................................................  ..........          X   ..........  ..........
Mr. Talent......................................................  ..........          X   ..........  ..........
Mr. Greenwood...................................................  ..........  ..........  ..........          X 
Mr. Hutchinson..................................................  ..........  ..........  ..........          X 
Mr. Knollenberg.................................................  ..........          X   ..........  ..........
Mr. Riggs.......................................................  ..........          X   ..........  ..........
Mr. Graham......................................................  ..........          X   ..........  ..........
Mr. Weldon......................................................  ..........          X   ..........  ..........
Mr. Funderburk..................................................  ..........  ..........  ..........          X 
Mr. Souder......................................................  ..........          X   ..........  ..........
Mr. McIntosh....................................................  ..........  ..........  ..........          X 
Mr. Norwood.....................................................  ..........          X   ..........  ..........
Mr. Clay........................................................          X   ..........  ..........  ..........
Mr. Miller......................................................          X   ..........  ..........  ..........
Mr. Kildee......................................................  ..........  ..........  ..........          X 
Mr. WIlliams....................................................  ..........  ..........  ..........          X 
Mr. Martinez....................................................          X   ..........  ..........  ..........
Mr. Owens.......................................................          X   ..........  ..........  ..........
Mr. Sawyer......................................................          X   ..........  ..........  ..........
Mr. Payne.......................................................          X   ..........  ..........  ..........
Mrs. Mink.......................................................          X   ..........  ..........  ..........
Mr. Andrews.....................................................          X   ..........  ..........  ..........
Mr. Reed........................................................          X   ..........  ..........  ..........
Mr. Roemer......................................................  ..........          X   ..........  ..........
Mr. Becerra.....................................................          X   ..........  ..........  ..........
Mr. Scott.......................................................          X   ..........  ..........  ..........
Mr. Green.......................................................          X   ..........  ..........  ..........
Ms. Woolsey.....................................................          X   ..........  ..........  ..........
Mr. Romero-Barcelo..............................................  ..........  ..........  ..........          X 
Mr. Fattah......................................................          X   ..........  ..........  ..........
Mr. Blumenauer..................................................          X   ..........  ..........  ..........
----------------------------------------------------------------------------------------------------------------

          COMMITTEE ON ECONOMIC AND EDUCATIONAL OPPORTUNITIES

    Rollcall No. 7, Bill: Welfare Reform, Date: June 12, 1996, 
Amendment number 8, Defeated: 13-25.
    Sponsor/Amendment: Mrs. Mink amendment to provide that no 
participant can be terminated/penalized if no job is available.

----------------------------------------------------------------------------------------------------------------
                             Member                                   Aye         No        Present   Not voting
----------------------------------------------------------------------------------------------------------------
Chairman Goodling...............................................  ..........          X   ..........  ..........
Mr. Petri.......................................................  ..........          X   ..........  ..........
Mrs. Roukema....................................................  ..........          X   ..........  ..........
Mr. Gunderson...................................................  ..........          X   ..........  ..........
Mr. Fawell......................................................  ..........          X   ..........  ..........
Mr. Ballenger...................................................  ..........          X   ..........  ..........
Mr. Barrett.....................................................  ..........          X   ..........  ..........
Mr. Cunningham..................................................  ..........          X   ..........  ..........
Mr. Hoekstra....................................................  ..........          X   ..........  ..........
Mr. McKeon......................................................  ..........          X   ..........  ..........
Mr. Castle......................................................  ..........          X   ..........  ..........
Mrs. Meyers.....................................................  ..........          X   ..........  ..........
Mr. Johnson.....................................................  ..........          X   ..........  ..........
Mr. Talent......................................................  ..........          X   ..........  ..........
Mr. Greenwood...................................................  ..........          X   ..........  ..........
Mr. Hutchinson..................................................  ..........  ..........  ..........          X 
Mr. Knollenberg.................................................  ..........          X   ..........  ..........
Mr. Riggs.......................................................  ..........          X   ..........  ..........
Mr. Graham......................................................  ..........          X   ..........  ..........
Mr. Weldon......................................................  ..........          X   ..........  ..........
Mr. Funderburk..................................................  ..........          X   ..........  ..........
Mr. Souder......................................................  ..........          X   ..........  ..........
Mr. McIntosh....................................................  ..........  ..........  ..........          X 
Mr. Norwood.....................................................  ..........          X   ..........  ..........
Mr. Clay........................................................          X   ..........  ..........  ..........
Mr. Miller......................................................          X   ..........  ..........  ..........
Mr. Kildee......................................................  ..........  ..........  ..........          X 
Mr. Williams....................................................  ..........  ..........  ..........          X 
Mr. Martinez....................................................          X   ..........  ..........  ..........
Mr. Owens.......................................................          X   ..........  ..........  ..........
Mr. Sawyer......................................................          X   ..........  ..........  ..........
Mr. Payne.......................................................          X   ..........  ..........  ..........
Mrs. Mink.......................................................          X   ..........  ..........  ..........
Mr. Andrews.....................................................  ..........          X   ..........  ..........
Mr. Reed........................................................  ..........          X   ..........  ..........
Mr. Roemer......................................................  ..........          X   ..........  ..........
Mr. Becerra.....................................................          X   ..........  ..........  ..........
Mr. Scott.......................................................          X   ..........  ..........  ..........
Mr. Green.......................................................          X   ..........  ..........  ..........
Ms. Woolsey.....................................................          X   ..........  ..........  ..........
Mr. Romero-Barcelo..............................................  ..........  ..........  ..........          X 
Mr. Fattah......................................................          X   ..........  ..........  ..........
Mr. Blumenauer..................................................          X   ..........  ..........  ..........
----------------------------------------------------------------------------------------------------------------

          COMMITTEE ON ECONOMIC AND EDUCATIONAL OPPORTUNITIES

    Rollcall No. 8, Bill: Welfare Reform, Date: June 12, 1996, 
Amendment number 9, Defeated: 16-20.
    Sponsor/Amendment: Mr. Scott amendment to define 
postsecondary education as an allowable ``work activity'' for 
the State to meet the mandatory work requirements.

----------------------------------------------------------------------------------------------------------------
                             Member                                   Aye         No        Present   Not voting
----------------------------------------------------------------------------------------------------------------
Chairman Goodling...............................................  ..........          X   ..........  ..........
Mr. Petri.......................................................  ..........          X   ..........  ..........
Mrs. Roukema....................................................  ..........          X   ..........  ..........
Mr. Gunderson...................................................  ..........          X   ..........  ..........
Mr. Fawell......................................................  ..........          X   ..........  ..........
Mr. Ballenger...................................................  ..........          X   ..........  ..........
Mr. Barrett.....................................................  ..........          X   ..........  ..........
Mr. Cunningham..................................................  ..........          X   ..........  ..........
Mr. Hoekstra....................................................  ..........          X   ..........  ..........
Mr. McKeon......................................................  ..........          X   ..........  ..........
Mr. Castle......................................................  ..........  ..........          X   ..........
Mrs. Meyers.....................................................  ..........          X   ..........  ..........
Mr. Johnson.....................................................  ..........  ..........  ..........          X 
Mr. Talent......................................................  ..........          X   ..........  ..........
Mr. Greenwood...................................................  ..........          X   ..........  ..........
Mr. Hutchinson..................................................  ..........          X   ..........  ..........
Mr. Knollenberg.................................................  ..........          X   ..........  ..........
Mr. Riggs.......................................................  ..........  ..........  ..........          X 
Mr. Graham......................................................  ..........          X   ..........  ..........
Mr. Weldon......................................................  ..........          X   ..........  ..........
Mr. Funderburk..................................................  ..........  ..........  ..........          X 
Mr. Souder......................................................  ..........          X   ..........  ..........
Mr. McIntosh....................................................  ..........          X   ..........  ..........
Mr. Norwood.....................................................  ..........          X   ..........  ..........
Mr. Clay........................................................          X   ..........  ..........  ..........
Mr. Miller......................................................          X   ..........  ..........  ..........
Mr. Kildee......................................................          X   ..........  ..........  ..........
Mr. Williams....................................................  ..........  ..........  ..........          X 
Mr. Martinez....................................................          X   ..........  ..........  ..........
Mr. Owens.......................................................  ..........  ..........  ..........          X 
Mr. Sawyer......................................................          X   ..........  ..........  ..........
Mr. Payne.......................................................          X   ..........  ..........  ..........
Mrs. Mink.......................................................          X   ..........  ..........  ..........
Mr. Andrews.....................................................          X   ..........  ..........  ..........
Mr. Reed........................................................          X   ..........  ..........  ..........
Mr. Roemer......................................................          X   ..........  ..........  ..........
Mr. Becerra.....................................................          X   ..........  ..........  ..........
Mr. Scott.......................................................          X   ..........  ..........  ..........
Mr. Green.......................................................          X   ..........  ..........  ..........
Ms. Woolsey.....................................................          X   ..........  ..........  ..........
Mr. Romero-Barcelo..............................................  ..........  ..........  ..........          X 
Mr. Fattah......................................................          X   ..........  ..........  ..........
Mr. Blumenauer..................................................          X   ..........  ..........  ..........
----------------------------------------------------------------------------------------------------------------

          COMMITTEE ON ECONOMIC AND EDUCATIONAL OPPORTUNITIES

    Rollcall No. 9, Bill: Welfare Reform, Date: June 12, 1996, 
Amendment number 13, Defeated: 18-20 (as amended).
    Sponsor/Amendment: Mr. Scott amendment to add postsecondary 
education as a ``working activity.'' Amended by Mr. Goodling 
amendment to change 2 years to 3 semesters.

----------------------------------------------------------------------------------------------------------------
                             Member                                   Aye         No        Present   Not voting
----------------------------------------------------------------------------------------------------------------
Chairman Goodling...............................................          X   ..........  ..........  ..........
Mr. Petri.......................................................  ..........  ..........  ..........          X 
Mrs. Roukema....................................................  ..........  ..........  ..........          X 
Mr. Gunderson...................................................  ..........          X   ..........  ..........
Mr. Fawell......................................................  ..........          X   ..........  ..........
Mr. Ballenger...................................................  ..........          X   ..........  ..........
Mr. Barrett.....................................................  ..........          X   ..........  ..........
Mr. Cunningham..................................................  ..........          X   ..........  ..........
Mr. Hoekstra....................................................  ..........          X   ..........  ..........
Mr. McKeon......................................................  ..........          X   ..........  ..........
Mr. Castle......................................................          X   ..........  ..........  ..........
Mrs. Meyers.....................................................  ..........          X   ..........  ..........
Mr. Johnson.....................................................  ..........          X   ..........  ..........
Mr. Talent......................................................  ..........          X   ..........  ..........
Mr. Greenwood...................................................  ..........          X   ..........  ..........
Mr. Hutchinson..................................................  ..........          X   ..........  ..........
Mr. Knollenberg.................................................  ..........          X   ..........  ..........
Mr. Riggs.......................................................  ..........          X   ..........  ..........
Mr. Graham......................................................  ..........          X   ..........  ..........
Mr. Weldon......................................................  ..........          X   ..........  ..........
Mr. Funderburk..................................................  ..........          X   ..........  ..........
Mr. Souder......................................................  ..........          X   ..........  ..........
Mr. McIntosh....................................................  ..........  ..........  ..........          X 
Mr. Norwood.....................................................  ..........          X   ..........  ..........
Mr. Clay........................................................          X   ..........  ..........  ..........
Mr. Miller......................................................  ..........  ..........  ..........          X 
Mr. Kildee......................................................          X   ..........  ..........  ..........
Mr. Williams....................................................          X   ..........  ..........  ..........
Mr. Martinez....................................................          X   ..........  ..........  ..........
Mr. Owens.......................................................          X   ..........  ..........  ..........
Mr. Sawyer......................................................          X   ..........  ..........  ..........
Mr. Payne.......................................................          X   ..........  ..........  ..........
Mrs. Mink.......................................................          X   ..........  ..........  ..........
Mr. Andrews.....................................................          X   ..........  ..........  ..........
Mr. Reed........................................................          X   ..........  ..........  ..........
Mr. Roemer......................................................  ..........          X   ..........  ..........
Mr. Becerra.....................................................          X   ..........  ..........  ..........
Mr. Scott.......................................................          X   ..........  ..........  ..........
Mr. Green.......................................................          X   ..........  ..........  ..........
Ms. Woolsey.....................................................          X   ..........  ..........  ..........
Mr. Romero-Barcelo..............................................  ..........  ..........  ..........          X 
Mr. Fattah......................................................          X   ..........  ..........  ..........
Mr. Blumenauer..................................................          X   ..........  ..........  ..........
----------------------------------------------------------------------------------------------------------------

          COMMITTEE ON ECONOMIC AND EDUCATIONAL OPPORTUNITIES

    Rollcall No. 10, Bill: Welfare Reform, Date: June 12, 1996, 
Amendment number 15, Defeated: 17-22.
    Sponsor/Amendment: Mr. Reed amendment to strike Title I and 
replace with a Work First Program and Workfare Program.

----------------------------------------------------------------------------------------------------------------
                             Member                                   Aye         No        Present   Not voting
----------------------------------------------------------------------------------------------------------------
Chairman Goodling...............................................  ..........          X   ..........  ..........
Mr. Petri.......................................................  ..........  ..........  ..........          X 
Mrs. Roukema....................................................  ..........          X   ..........  ..........
Mr. Gunderson...................................................  ..........          X   ..........  ..........
Mr. Fawell......................................................  ..........          X   ..........  ..........
Mr. Ballenger...................................................  ..........          X   ..........  ..........
Mr. Barrett.....................................................  ..........          X   ..........  ..........
Mr. Cunningham..................................................  ..........          X   ..........  ..........
Mr. Hoekstra....................................................  ..........          X   ..........  ..........
Mr. McKeon......................................................  ..........          X   ..........  ..........
Mr. Castle......................................................  ..........          X   ..........  ..........
Mrs. Meyers.....................................................  ..........          X   ..........  ..........
Mr. Johnson.....................................................  ..........          X   ..........  ..........
Mr. Talent......................................................  ..........          X   ..........  ..........
Mr. Greenwood...................................................  ..........          X   ..........  ..........
Mr. Hutchinson..................................................  ..........          X   ..........  ..........
Mr. Knollenberg.................................................  ..........          X   ..........  ..........
Mr. Riggs.......................................................  ..........          X   ..........  ..........
Mr. Graham......................................................  ..........          X   ..........  ..........
Mr. Weldon......................................................  ..........          X   ..........  ..........
Mr. Funderburk..................................................  ..........          X   ..........  ..........
Mr. Souder......................................................  ..........          X   ..........  ..........
Mr. McIntosh....................................................  ..........  ..........  ..........          X 
Mr. Norwood.....................................................  ..........          X   ..........  ..........
Mr. Clay........................................................  ..........  ..........  ..........          X 
Mr. Miller......................................................  ..........  ..........  ..........          X 
Mr. Kildee......................................................          X   ..........  ..........  ..........
Mr. Williams....................................................          X   ..........  ..........  ..........
Mr. Martinez....................................................          X   ..........  ..........  ..........
Mr. Owens.......................................................          X   ..........  ..........  ..........
Mr. Sawyer......................................................          X   ..........  ..........  ..........
Mr. Payne.......................................................          X   ..........  ..........  ..........
Mrs. Mink.......................................................          X   ..........  ..........  ..........
Mr. Andrews.....................................................          X   ..........  ..........  ..........
Mr. Reed........................................................          X   ..........  ..........  ..........
Mr. Roemer......................................................          X   ..........  ..........  ..........
Mr. Becerra.....................................................          X   ..........  ..........  ..........
Mr. Scott.......................................................          X   ..........  ..........  ..........
Mr. Green.......................................................          X   ..........  ..........  ..........
Ms. Woolsey.....................................................          X   ..........  ..........  ..........
Mr. Romero-Barcelo..............................................  ..........  ..........  ..........          X 
Mr. Fattah......................................................          X   ..........  ..........  ..........
Mr. Blumenauer..................................................          X   ..........  ..........  ..........
----------------------------------------------------------------------------------------------------------------

          COMMITTEE ON ECONOMIC AND EDUCATIONAL OPPORTUNITIES

    Rollcall No. 11, Bill: Welfare Reform, Date: June 12, 1996, 
Amendment number 16, Defeated: 18-22.
    Sponsor/Amendment: Mr. Becerra amendment regarding minimum 
wage requirement.

----------------------------------------------------------------------------------------------------------------
                             Member                                   Aye         No        Present   Not voting
----------------------------------------------------------------------------------------------------------------
Chairman Goodling...............................................  ..........          X   ..........  ..........
Mr. Petri.......................................................  ..........  ..........  ..........          X 
Mrs. Roukema....................................................  ..........          X   ..........  ..........
Mr. Gunderson...................................................  ..........          X   ..........  ..........
Mr. Fawell......................................................  ..........          X   ..........  ..........
Mr. Ballenger...................................................  ..........          X   ..........  ..........
Mr. Barrett.....................................................  ..........          X   ..........  ..........
Mr. Cunningham..................................................  ..........          X   ..........  ..........
Mr. Hoekstra....................................................  ..........          X   ..........  ..........
Mr. McKeon......................................................  ..........          X   ..........  ..........
Mr. Castle......................................................  ..........          X   ..........  ..........
Mrs. Meyers.....................................................  ..........          X   ..........  ..........
Mr. Johnson.....................................................  ..........          X   ..........  ..........
Mr. Talent......................................................  ..........          X   ..........  ..........
Mr. Greenwood...................................................  ..........          X   ..........  ..........
Mr. Hutchinson..................................................  ..........          X   ..........  ..........
Mr. Knollenberg.................................................  ..........          X   ..........  ..........
Mr. Riggs.......................................................  ..........          X   ..........  ..........
Mr. Graham......................................................  ..........          X   ..........  ..........
Mr. Weldon......................................................  ..........          X   ..........  ..........
Mr. Funderburk..................................................  ..........          X   ..........  ..........
Mr. Souder......................................................  ..........          X   ..........  ..........
Mr. McIntosh....................................................  ..........  ..........  ..........          X 
Mr. Norwood.....................................................  ..........          X   ..........  ..........
Mr. Clay........................................................          X   ..........  ..........  ..........
Mr. Miller......................................................          X   ..........  ..........  ..........
Mr. Kildee......................................................          X   ..........  ..........  ..........
Mr. Williams....................................................          X   ..........  ..........  ..........
Mr. Martinez....................................................          X   ..........  ..........  ..........
Mr. Owens.......................................................          X   ..........  ..........  ..........
Mr. Sawyer......................................................          X   ..........  ..........  ..........
Mr. Payne.......................................................          X   ..........  ..........  ..........
Mrs. Mink.......................................................          X   ..........  ..........  ..........
Mr. Andrews.....................................................          X   ..........  ..........  ..........
Mr. Reed........................................................          X   ..........  ..........  ..........
Mr. Roemer......................................................          X   ..........  ..........  ..........
Mr. Becerra.....................................................          X   ..........  ..........  ..........
Mr. Scott.......................................................          X   ..........  ..........  ..........
Mr. Green.......................................................          X   ..........  ..........  ..........
Ms. Woolsey.....................................................          X   ..........  ..........  ..........
Mr. Romero-Barcelo..............................................  ..........  ..........  ..........          X 
Mr. Fattah......................................................          X   ..........  ..........  ..........
Mr. Blumenauer..................................................          X   ..........  ..........  ..........
----------------------------------------------------------------------------------------------------------------

          COMMITTEE ON ECONOMIC AND EDUCATIONAL OPPORTUNITIES

    Rollcall No. 12, Bill: Welfare Reform, Date: June 12, 1996, 
Amendment number 18, Defeated: 16-18.
    Sponsor/Amendment: Mr. Payne amendment to strike the repeal 
of the Abandoned Infants Act.

----------------------------------------------------------------------------------------------------------------
                             Member                                   Aye         No        Present   Not voting
----------------------------------------------------------------------------------------------------------------
Chairman Goodling...............................................  ..........          X   ..........  ..........
Mr. Petri.......................................................  ..........  ..........  ..........          X 
Mrs. Roukema....................................................  ..........  ..........  ..........          X 
Mr. Gunderson...................................................  ..........          X   ..........  ..........
Mr. Fawell......................................................  ..........          X   ..........  ..........
Mr. Ballenger...................................................  ..........          X   ..........  ..........
Mr. Barrett.....................................................  ..........          X   ..........  ..........
Mr. Cunningham..................................................  ..........          X   ..........  ..........
Mr. Hoekstra....................................................  ..........          X   ..........  ..........
Mr. McKeon......................................................  ..........          X   ..........  ..........
Mr. Castle......................................................  ..........          X   ..........  ..........
Mrs. Meyers.....................................................  ..........  ..........  ..........          X 
Mr. Johnson.....................................................  ..........          X   ..........  ..........
Mr. Talent......................................................  ..........          X   ..........  ..........
Mr. Greenwood...................................................  ..........          X   ..........  ..........
Mr. Hutchinson..................................................  ..........          X   ..........  ..........
Mr. Knollenberg.................................................  ..........          X   ..........  ..........
Mr. Riggs.......................................................  ..........          X   ..........  ..........
Mr. Graham......................................................  ..........          X   ..........  ..........
Mr. Weldon......................................................  ..........          X   ..........  ..........
Mr. Funderburk..................................................  ..........  ..........  ..........          X 
Mr. Souder......................................................  ..........  ..........  ..........          X 
Mr. McIntosh....................................................  ..........          X   ..........  ..........
Mr. Norwood.....................................................  ..........  ..........  ..........          X 
Mr. Clay........................................................          X   ..........  ..........  ..........
Mr. Miller......................................................          X   ..........  ..........  ..........
Mr. Kildee......................................................          X   ..........  ..........  ..........
Mr. Williams....................................................          X   ..........  ..........  ..........
Mr. Martinez....................................................          X   ..........  ..........  ..........
Mr. Owens.......................................................  ..........  ..........  ..........          X 
Mr. Sawyer......................................................          X   ..........  ..........  ..........
Mr. Payne.......................................................          X   ..........  ..........  ..........
Mrs. Mink.......................................................          X   ..........  ..........  ..........
Mr. Andrews.....................................................          X   ..........  ..........  ..........
Mr. Reed........................................................          X   ..........  ..........  ..........
Mr. Roemer......................................................          X   ..........  ..........  ..........
Mr. Becerra.....................................................          X   ..........  ..........  ..........
Mr. Scott.......................................................          X   ..........  ..........  ..........
Mr. Green.......................................................          X   ..........  ..........  ..........
Ms. Woolsey.....................................................          X   ..........  ..........  ..........
Mr. Romero-Barcelo..............................................  ..........  ..........  ..........          X 
Mr. Fattah......................................................          X   ..........  ..........  ..........
Mr. Blumenauer..................................................  ..........  ..........  ..........          X 
----------------------------------------------------------------------------------------------------------------

          COMMITTEE ON ECONOMIC AND EDUCATIONAL OPPORTUNITIES

    Rollcall No. 13, Bill: Welfare Reform, Date: June 12, 1996, 
Amendment number 28, Defeated: 16-17 with 1 voting present.
    Sponsor/Amendment: Mr. Becerra amendment to mandate that 
nutritional educational materials be provided in foreign 
languages.

----------------------------------------------------------------------------------------------------------------
                             Member                                   Aye         No        Present   Not voting
----------------------------------------------------------------------------------------------------------------
Chairman Goodling...............................................  ..........          X   ..........  ..........
Mr. Petri.......................................................  ..........  ..........  ..........          X 
Mrs. Roukema....................................................  ..........  ..........  ..........          X 
Mr. Gunderson...................................................  ..........  ..........          X   ..........
Mr. Fawell......................................................  ..........          X   ..........  ..........
Mr. Ballenger...................................................  ..........          X   ..........  ..........
Mr. Barrett.....................................................  ..........          X   ..........  ..........
Mr. Cunningham..................................................  ..........          X   ..........  ..........
Mr. Hoekstra....................................................  ..........          X   ..........  ..........
Mr. McKeon......................................................  ..........          X   ..........  ..........
Mr. Castle......................................................  ..........          X   ..........  ..........
Mrs. Meyers.....................................................  ..........  ..........  ..........          X 
Mr. Johnson.....................................................  ..........          X   ..........  ..........
Mr. Talent......................................................  ..........          X   ..........  ..........
Mr. Greenwood...................................................  ..........          X   ..........  ..........
Mr. Hutchinson..................................................  ..........          X   ..........  ..........
Mr. Knollenberg.................................................  ..........          X   ..........  ..........
Mr. Riggs.......................................................  ..........          X   ..........  ..........
Mr. Graham......................................................  ..........          X   ..........  ..........
Mr. Weldon......................................................  ..........          X   ..........  ..........
Mr. Funderburk..................................................  ..........  ..........  ..........          X 
Mr. Souder......................................................  ..........  ..........  ..........          X 
Mr. McIntosh....................................................  ..........          X   ..........  ..........
Mr. Norwood.....................................................  ..........  ..........  ..........          X 
Mr. Clay........................................................          X   ..........  ..........  ..........
Mr. Miller......................................................          X   ..........  ..........  ..........
Mr. Kildee......................................................          X   ..........  ..........  ..........
Mr. Williams....................................................          X   ..........  ..........  ..........
Mr. Martinez....................................................          X   ..........  ..........  ..........
Mr. Owens.......................................................  ..........  ..........  ..........          X 
Mr. Sawyer......................................................          X   ..........  ..........  ..........
Mr. Payne.......................................................          X   ..........  ..........  ..........
Mrs. Mink.......................................................          X   ..........  ..........  ..........
Mr. Andrews.....................................................          X   ..........  ..........  ..........
Mr. Reed........................................................          X   ..........  ..........  ..........
Mr. Roemer......................................................          X   ..........  ..........  ..........
Mr. Becerra.....................................................          X   ..........  ..........  ..........
Mr. Scott.......................................................          X   ..........  ..........  ..........
Mr. Green.......................................................          X   ..........  ..........  ..........
Ms. Woolsey.....................................................          X   ..........  ..........  ..........
Mr. Romero-Barcelo..............................................  ..........  ..........  ..........          X 
Mr. Fattah......................................................          X   ..........  ..........  ..........
Mr. Blumenauer..................................................  ..........  ..........  ..........          X 
----------------------------------------------------------------------------------------------------------------

          COMMITTEE ON ECONOMIC AND EDUCATIONAL OPPORTUNITIES

    Rollcall No. 14, Bill: Welfare Reform, Date: June 12, 1996, 
Passed: 23-11.
    Motion to transmit committee print to the Committee on the 
Budget as this committee's recommendations for Budget 
Reconciliation upon adoption by the House and Senate of the 
Reconciliation Instructions for fiscal year 1997.

----------------------------------------------------------------------------------------------------------------
                             Member                                   Aye         No        Present   Not voting
----------------------------------------------------------------------------------------------------------------
Chairman Goodling...............................................          X   ..........  ..........  ..........
Mr. Petri.......................................................  ..........  ..........  ..........          X 
Mrs. Roukema....................................................  ..........  ..........  ..........          X 
Mr. Gunderson...................................................          X   ..........  ..........  ..........
Mr. Fawell......................................................          X   ..........  ..........  ..........
Mr. Ballenger...................................................          X   ..........  ..........  ..........
Mr. Barrett.....................................................          X   ..........  ..........  ..........
Mr. Cunningham..................................................          X   ..........  ..........  ..........
Mr. Hoekstra....................................................          X   ..........  ..........  ..........
Mr. McKeon......................................................          X   ..........  ..........  ..........
Mr. Castle......................................................          X   ..........  ..........  ..........
Mrs. Meyers.....................................................  ..........  ..........  ..........          X 
Mr. Johnson.....................................................          X   ..........  ..........  ..........
Mr. Talent......................................................          X   ..........  ..........  ..........
Mr. Greenwood...................................................          X   ..........  ..........  ..........
Mr. Hutchinson..................................................          X   ..........  ..........  ..........
Mr. Knollenberg.................................................          X   ..........  ..........  ..........
Mr. Riggs.......................................................          X   ..........  ..........  ..........
Mr. Graham......................................................          X   ..........  ..........  ..........
Mr. Weldon......................................................          X   ..........  ..........  ..........
Mr. Funderburk..................................................  ..........  ..........  ..........          X 
Mr. Souder......................................................  ..........  ..........  ..........          X 
Mr. McIntosh....................................................          X   ..........  ..........  ..........
Mr. Norwood.....................................................  ..........  ..........  ..........          X 
Mr. Clay........................................................  ..........          X   ..........  ..........
Mr. Miller......................................................  ..........          X   ..........  ..........
Mr. Kildee......................................................  ..........          X   ..........  ..........
Mr. Williams....................................................          X   ..........  ..........  ..........
Mr. Martinez....................................................  ..........          X   ..........  ..........
Mr. Owens.......................................................  ..........  ..........  ..........          X 
Mr. Sawyer......................................................          X   ..........  ..........  ..........
Mr. Payne.......................................................  ..........          X   ..........  ..........
Mrs. Mink.......................................................  ..........          X   ..........  ..........
Mr. Andrews.....................................................  ..........          X   ..........  ..........
Mr. Reed........................................................          X   ..........  ..........  ..........
Mr. Roemer......................................................          X   ..........  ..........  ..........
Mr. Becerra.....................................................  ..........          X   ..........  ..........
Mr. Scott.......................................................  ..........          X   ..........  ..........
Mr. Green.......................................................          X   ..........  ..........  ..........
Ms. Woolsey.....................................................  ..........          X   ..........  ..........
Mr. Romero-Barcelo..............................................  ..........  ..........  ..........          X 
Mr. Fattah......................................................  ..........          X   ..........  ..........
Mr. Blumenauer..................................................  ..........  ..........  ..........          X 
----------------------------------------------------------------------------------------------------------------

   Changes in Existing Law Made by Title III of the Bill, as Reported

    In compliance with clause 3 of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italics, existing law in which no change 
is proposed is shown in roman):

                          SOCIAL SECURITY ACT

          * * * * * * *

            Part A--Aid to Families With Dependent Children

          * * * * * * *

    STATE PLANS FOR AID AND SERVICES TO NEEDY FAMILIES WITH CHILDREN

    Sec. 402. (a) A State plan for aid and services to needy 
families with children must--
            (1)  * * *
          * * * * * * *
        (9) provide safeguards which restrict the use or 
        disclosure of information concerning applicants or 
        recipients to purposes directly connected with (A) the 
        administration of the plan of the State approved under 
        this part [(including activities under part F)], the 
        plan or program of the State under part B, D, or E of 
        this title or under title I, X, XIV, XVI, XIX, or XX, 
        or the supplemental security income program established 
        by title XVI, (B) any investigation, prosecution, or 
        criminal or civil proceeding, conducted in connection 
        with the administration of any such plan or program, 
        (C) the administration of any other Federal or 
        federally assisted program which provides assistance, 
        in cash or in kind, or services, directly to 
        individuals on the basis of need, (D) any audit or 
        similar activity conducted in connection with the 
        administration of any such plan or program by any 
        governmental entity which is authorized by law to 
        conduct such audit or activity, and (E) reporting and 
        providing information pursuant to paragraph (16) to 
        appropriate authorities with respect to known or 
        suspected child abuse or neglect; and the safeguards so 
        provided shall prohibit disclosure, to any committee or 
        legislative body (other than an entity referred to in 
        clause (D) with respect to an activity referred to in 
        such clause), of any information which identifies by 
        name or address any such applicant or recipient; but 
        such safeguards shall not prevent the State agency or 
        the local agency responsible for the administration of 
        the State plan in the locality (whether or not the 
        State has enacted legislation allowing public access to 
        Federal welfare records) from furnishing a State or 
        local law enforcement officer, upon his request, with 
        the current address of any recipient if the officer 
        furnishes the agency with such recipient's name and 
        social security account number and satisfactorily 
        demonstrates that such recipient is a fugitive felon, 
        that the location or apprehension of such felon is 
        within the officer's official duties, and that the 
        request is made in the proper exercise of those duties;
          * * * * * * *
            [(19) provide--
                    [(A) that the State has in effect and 
                operation a job opportunities and basic skills 
                training program which meets the requirements 
                of part F;
                    [(B) that--
                            [(i) the State will (except as 
                        otherwise provided in this paragraph or 
                        part F), to the extent that the program 
                        is available in the political 
                        subdivision involved and State 
                        resources otherwise permit--
                                    [(I) require all recipients 
                                of aid to families with 
                                dependent children in such 
                                subdivision with respect to 
                                whom the State guarantees child 
                                care in accordance with section 
                                402(g) to participate in the 
                                program; and
                                    [(II) allow applicants for 
                                and recipients of aid to 
                                families with dependent 
                                children (and individuals who 
                                would be recipients of such aid 
                                if the State had not exercised 
                                the option under section 
                                407(b)(2)(B)(i)) who are not 
                                required under subclause (I) to 
                                participate in the program to 
                                do so on a voluntary basis;
                            [(ii) in determining the priority 
                        of participation by individuals from 
                        among those groups described in clauses 
                        (i), (ii), (iii), and (iv) of section 
                        403(l)(2)(B), the State will give first 
                        consideration to applicants for or 
                        recipients of aid to families with 
                        dependent children within any such 
                        group who volunteer to participate in 
                        the program;
                            [(iii) if an exempt participant 
                        drops out of the program without good 
                        cause after having commenced 
                        participation in the program, he or she 
                        shall thereafter not be given priority 
                        so long as other individuals are 
                        actively seeking to participate; and
                            [(iv) the State need not require or 
                        allow participation of an individual in 
                        the program if as a result of such 
                        participation the amount payable to the 
                        State for quarters in a fiscal year 
                        with respect to the program would be 
                        reduced pursuant to section 403(l)(2);
                    [(C) that an individual may not be required 
                to participate in the program if such 
                individual--
                            [(i) is ill, incapacitated, or of 
                        advanced age;
                            [(ii) is needed in the home because 
                        of the illness or incapacity of another 
                        member of the household;
                            [(iii) subject to subparagraph 
                        (D)--
                                    [(I) is the parent or other 
                                relative of a child under 3 
                                years of age (or, if so 
                                provided in the State plan, 
                                under any age that is less than 
                                3 years but not less than one 
                                year) who is personally 
                                providing care for the child, 
                                or
                                    [(II) is the parent or 
                                other relative personally 
                                providing care for a child 
                                under 6 years of age, unless 
                                the State assures that child 
                                care in accordance with section 
                                402(g) will be guaranteed and 
                                that participation in the 
                                program by the parent or 
                                relative will not be required 
                                for more than 20 hours a week;
                            [(iv) works 30 or more hours a 
                        week;
                            [(v) is a child who is under age 16 
                        or attends, full-time, an elementary, 
                        secondary, or vocational (or technical) 
                        school;
                            [(vi) is pregnant if it has been 
                        medically verified that the child is 
                        expected to be born in the month in 
                        which such participation would 
                        otherwise be required or within the 6-
                        month period immediately following such 
                        month; or
                            [vii) resides in an area of the 
                        State where the program is not 
                        available;
                    [(D) that, in the case of a family eligible 
                for aid to families with dependent children by 
                reason of the unemployment of the parent who is 
                the principal earner, subparagraph (C)(iii) 
                shall apply only to one parent, except that, in 
                the case of such a family, the State may at its 
                option make such subparagraph inapplicable to 
                both of the parents (and require their 
                participation in the program) if child care in 
                accordance with section 402(g) is guaranteed 
                with respect to the family;
                    [(E) that--
                            [(i) to the extent that the program 
                        is available in the political 
                        subdivision involved and State 
                        resources otherwise permit, in the case 
                        of a custodial parent who has not 
                        attained 20 years of age, has not 
                        successfully completed a high-school 
                        education (or its equivalent), and is 
                        required to participate in the program 
                        (including an individual who would 
                        otherwise be exempt from participation 
                        in the program solely by reason of 
                        subparagraph (C)(iii)), the State 
                        agency (subject to clause (ii)) will 
                        require such parent to participate in 
                        an educational activity; and
                            [(ii) the State agency may--
                                    [(I) require a parent 
                                described in clause (i) 
                                (notwithstanding the part-time 
                                requirement in subparagraph 
                                (C)(iii)(II)) to participate in 
                                educational activities directed 
                                toward the attainment of a high 
                                school diploma or its 
                                equivalent on a full-time (as 
                                defined by the educational 
                                provider) basis,
                                    [(II) establish criteria in 
                                accordance with regulations of 
                                the Secretary under which 
                                custodial parents described in 
                                clause (i) who have not 
                                attained 18 years of age may be 
                                exempted from the school 
                                attendance requirement under 
                                such clause, or
                                    [(III) require a parent 
                                described in clause (i) who is 
                                age 18 or 19 to participate in 
                                training or work activities (in 
                                lieu of the educational 
                                activities under such clause) 
                                if such parent fails to make 
                                good progress in successfully 
                                completing such educational 
                                activities or if it is 
                                determined (prior to any 
                                assignment of the individual to 
                                such educational activities) 
                                pursuant to an educational 
                                assessment that participation 
                                in such educational activities 
                                is inappropriate for such 
                                parent;
                    [(F) that--
                            [(i) if the parent or other 
                        caretaker relative or any dependent 
                        child in the family is attending (in 
                        good standing) an institution of higher 
                        education (as defined in section 481(a) 
                        of the Higher Education Act of 1965), 
                        or a school or course of vocational or 
                        technical training (not less than half 
                        time) consistent with the individual's 
                        employment goals, and is making 
                        satisfactory progress in such 
                        institution, school, or course, at the 
                        time he or she would otherwise commence 
                        participation in the program under this 
                        section, such attendance may constitute 
                        satisfactory participation in the 
                        program (by that caretaker or child) so 
                        long as it continues and is consistent 
                        with such goals;
                            [(ii) any other activities in which 
                        an individual described in clause (i) 
                        participates may not be permitted to 
                        interfere with the school or training 
                        described in that clause;
                            [(iii) the costs of such school or 
                        training shall not constitute federally 
                        reimbursable expenses for purposes of 
                        section 403; and
                            [(iv) the costs of day care, 
                        transportation, and other services 
                        which are necessary (as determined by 
                        the State agency) for such attendance 
                        in accordance with section 402(g) are 
                        eligible for Federal reimbursement;
                    [(G) that--
                            [(i) if an individual who is 
                        required by the provisions of this 
                        paragraph to participate in the program 
                        or who is so required by reason of the 
                        State's having exercised the option 
                        under subparagraph (D) fails without 
                        good cause to participate in the 
                        program or refuses without good cause 
                        to accept employment 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--
                                    [(I) the needs of such 
                                individual (whether or not 
                                section 407 applies) shall not 
                                be taken into account in making 
                                the determination with respect 
                                to his or her family under 
                                paragraph (7) of this 
                                subsection, and if such 
                                individual is a parent or other 
                                caretaker relative, 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 a case shall be without 
                                regard to clauses (A) through 
                                (D) thereof) will be made 
                                unless the State agency, after 
                                making reasonable efforts, is 
                                unable to locate an appropriate 
                                individual to whom such 
                                payments can be made; and
                                    [(II) if such individual is 
                                a member of a family which is 
                                eligible for aid to families 
                                with dependent children by 
                                reason of section 407, and his 
                                or her spouse is not 
                                participating in the program, 
                                the needs of such spouse shall 
                                also not be taken into account 
                                in making such determination;
                            [(ii) any sanction described in 
                        clause (i) shall continue--
                                    [(I) in the case of the 
                                individual's first failure to 
                                comply, until the failure to 
                                comply ceases;
                                    [(II) in the case of the 
                                individual's second failure to 
                                comply, until the failure to 
                                comply ceases or 3 months 
                                (whichever is longer); and
                                    [(III) in the case of any 
                                subsequent failure to comply, 
                                until the failure to comply 
                                ceases or 6 months (whichever 
                                is longer);
                            [(iii) the State will promptly 
                        remind any individual whose failure to 
                        comply has continued for 3 months, in 
                        writing, of the individual's option to 
                        end the sanction by terminating such 
                        failure; and
                            [(iv) no sanction shall be imposed 
                        under this subparagraph--
                                    [(I) on the basis of the 
                                refusal of an individual 
                                described in subparagraph 
                                (C)(iii)(II) to accept 
                                employment, if the employment 
                                would require such individual 
                                to work more than 20 hours a 
                                week, or
                                    [(II) on the basis of the 
                                refusal of an individual to 
                                participate in the program or 
                                accept employment, if child 
                                care (or day care for any 
                                incapacitated individual living 
                                in the same home as a dependent 
                                child) is necessary for an 
                                individual to participate in 
                                the program or accept 
                                employment, such care is not 
                                available, and the State agency 
                                fails to provide such care; and
                    [(H) the State agency may require a 
                participant in the program to accept a job only 
                if such agency assures that the family of such 
                participant will experience no net loss of cash 
                income resulting from acceptance of the job; 
                and any costs incurred by the State agency as a 
                result of this subparagraph shall be treated as 
                expenditures with respect to which section 
                403(a)(1) or 403(a)(2) applies;]
          * * * * * * *
            (44) provide that the State agency shall--
                    (A) be responsible for assuring that the 
                benefits and services under the programs under 
                this part[, part D, and part F] and part D are 
                furnished in an integrated manner, and
          * * * * * * *
    [(g)(1)(A)(i) Each State agency must guarantee child care 
in accordance with subparagraph (B)--
            [(I) for each family with a dependent child 
        requiring such care, to the extent that such care is 
        determined by the State agency to be necessary for an 
        individual in the family to accept employment or remain 
        employed; and
            [(II) for each individual participating in an 
        education and training activity (including 
        participation in a program that meets the requirements 
        of subsection (a)(19) and part F) if the State agency 
        approves the activity and determines that the 
        individual is satisfactorily participating in the 
        activity.
    [(ii) Each State agency must guarantee child care, subject 
to the limitations described in this section, to the extent 
that such care is determined by the State agency to be 
necessary for an individual's employment in any case where a 
family has ceased to receive aid to families with dependent 
children as a result of increased hours of, or increased income 
from, such employment or by reason of subsection 
(a)(8)(B)(ii)(II).
    [(iii) A family shall only be eligible for child care 
provided under clause (ii) for a period of 12 months after the 
last month for which the family received aid to families with 
dependent children under this part.
    [(iv) A family shall not be eligible for child care 
provided under clause (ii) unless the family received aid to 
families with dependent children in at least 3 of the 6 months 
immediately preceding the month in which the family became 
ineligible for such aid.
    [(v) A family shall not be eligible for child care provided 
under clause (ii) unless the family includes a child who is 
(or, if needy, would be) a dependent child.
    [(vi) A family shall not be eligible for child care 
provided under clause (ii) for any month beginning after the 
caretaker relative who is a member of the family has--
            [(I) without good cause, terminated his or her 
        employment; or
            [(II) refused to cooperate with the State in 
        establishing and enforcing his or her child support 
        obligations, without good cause as determined by the 
        State agency in accordance with standards prescribed by 
        the Secretary which shall take into consideration the 
        best interests of the child for whom child care is to 
        be provided.
    [(vii) A family shall contribute to child care provided 
under clause (ii) in accordance with a sliding scale formula 
which shall be established by the State agency based on the 
family's ability to pay.
    [(B) The State agency may guarantee child care by--
            [(i) providing such care directly;
            [(ii) arranging the care through providers by use 
        of purchase of service contracts, or vouchers;
            [(iii) providing cash or vouchers in advance to the 
        caretaker relative in the family;
            [(iv) reimbursing the caretaker relative in the 
        family; or(v) adopting such other arrangements as the 
        agency deems appropriate.
When the State agency arranges for child care, the agency shall 
take into account the individual needs of the child.
    [(C)(i) Subject to clause (ii), the State agency shall make 
payment for the cost of child care provided with respect to a 
family in an amount that is the lesser of--
            [(I) the actual cost of such care; and
            [(II) the dollar amount of the child care disregard 
        for which the family is otherwise eligible under 
        subsection (a)(8)(A)(iii), or (if higher) an amount 
        established by the State.
    [(ii) The State agency may not reimburse the cost of child 
care provided with respect to a family in an amount that is 
greater than the applicable local market rate (as determined by 
the State in accordance with regulations issued by the 
Secretary).
    [(D) The State may not make any change in its method of 
reimbursing child care costs which has the effect of 
disadvantaging families receiving aid under the State plan on 
the date of the enactment of this section by reducing their 
income or otherwise.
    [(E) The value of any child care provided or arranged (or 
any amount received as payment for such care or reimbursement 
for costs incurred for the care) under this paragraph--
            [(i) shall not be treated as income for purposes of 
        any other Federal or federally-assisted program that 
        bases eligibility for or the amount of benefits upon 
        need, and
            [(ii) may not be claimed as an employment-related 
        expense for purposes of the credit under section 21 of 
        the Internal Revenue Code of 1986.
    [(2) In the case of any individual participating in the 
program under part F, each State agency (in addition to 
guaranteeing child care under paragraph (1)) shall provide 
payment or reimbursement for such transportation and other 
work-related expenses (including other work-related supportive 
services), as the State determines are necessary to enable such 
individual to participate in such program.
    [(3)(A)(i) In the case of amounts expended for child care 
pursuant to paragraph (1)(A) by any State to which section 1108 
does not apply, the applicable rate for purposes of section 
403(a) shall be the Federal medical assistance percentage (as 
defined in section 1905(b)).
    [(ii) In the case of amounts expended for child care 
pursuant to paragraph (1)(A)(ii) (relating to the provision of 
child care for certain families which cease to receive aid 
under this part) by any State to which section 1108 applies, 
the applicable rate for purposes of section 403(a) shall be the 
Federal medical assistance percentage (as defined in section 
1118).
    [(B) In the case of any amounts expended by the State 
agency for child care under this subsection, only such amounts 
as are within such limits as the State may prescribe (subject 
to the limitations of paragraph (1)(C)) shall be treated as 
amounts for which payment may be made to a State under this 
part and they may be so treated only to the extent that--
            [(i) such amounts do not exceed the applicable 
        local market rate (as determined by the State in 
        accordance with regulations issued by the Secretary);
            [(ii) the child care involved meets applicable 
        standards of State and local law; and(iii) in the case 
        of child care, the entity providing such care allows 
        parental access.
    [(4) The State must establish procedures to ensure that 
center-based child care will be subject to State and local 
requirements designed to ensure basic health and safety, 
including fire safety, protections. The State must also 
endeavor to develop guidelines for family day care. The State 
must provide the Secretary with a description of such State and 
local requirements and guidelines.
    [(5) By October 1, 1992, the Secretary shall report to the 
Congress on the nature and content of State and local standards 
for health and safety.
    [(6)(A) The Secretary shall make grants to States to 
improve their child care licensing and registration 
requirements and procedures, to enforce standards with respect 
to child care provided to children under this part, and to 
provide for the training of child care providers.
    [(B) Subject to subparagraph (C), the Secretary shall make 
grants to each State under subparagraph (A) in proportion to 
the number of children in the State receiving aid under the 
State plan approved under subsection (a).
    [(C) The Secretary may not make grants to a State under 
subparagraph (A) unless the State provides matching funds in an 
amount that is not less than 10 percent of the amount of the 
grant.
    [(D) For grants under this paragraph, there is authorized 
to be appropriated to the Secretary $13,000,000 for each of the 
fiscal years 1990 and 1991, and $50,000,000 for each of fiscal 
years 1992, 1993, and 1994.
    [(E) Each State to which the Secretary makes a grant under 
this paragraph shall expend not less than 50 percent of the 
amount of the grant to provide for the training of child care 
providers.
    [(7) Activities under this subsection and subsection (i) 
shall be coordinated in each State with existing early 
childhood education programs in that State, including Head 
Start programs, preschool programs funded under chapter 1 of 
the Education Consolidation and Improvement Act of 1981, and 
school and nonprofit child care programs (including community-
based organizations receiving funds designated for preschool 
programs for handicapped children).]
          * * * * * * *
    [(i)(1) Each State agency may, to the extent that it 
determines that resources are available, provide child care in 
accordance with paragraph (2) to any low income family that the 
State determines--
            [(A) is not receiving aid under the State plan 
        approved under this part;
            [(B) needs such care in order to work; and
            [(C) would be at risk of becoming eligible for aid 
        under the State plan approved under this part if such 
        care were not provided.
    [(2) The State agency may provide child care pursuant to 
paragraph (1) by--
            [(A) providing such care directly;
            [(B) arranging such care through providers by use 
        of purchase of service contracts or vouchers;
            [(C) providing cash or vouchers in advance to the 
        family;
            [(D) reimbursing the family; or(E) adopting such 
        other arrangements as the agency deems appropriate.
    [(3)(A) A family provided with child care under paragraph 
(1) shall contribute to such care in accordance with a sliding 
scale formula established by the State agency based on the 
family's ability to pay.
    [(B) The State agency shall make payment for the cost of 
child care provided under paragraph (1) with respect to a 
family in an amount that is the lesser of--
            [(i) the actual cost of such care; and
            [(ii) the applicable local market rate (as 
        determined by the State in accordance with regulations 
        issued by the Secretary).
    [(4) The value of any child care provided or arranged (or 
any amount received as payment for such care or reimbursement 
for costs incurred for the care) under this subsection--
            [(A) shall not be treated as income or as a 
        deductible expense for purposes of any other Federal or 
        federally assisted program that bases eligibility for 
        or amount of benefits upon need; and
            [(B) may not be claimed as an employment-related 
        expense for purposes of the credit under section 21 of 
        the Internal Revenue Code of 1986.
    [(5) Amounts expended by the State agency for child care 
under paragraph (1) shall be treated as amounts for which 
payment may be made to a State under section 403(n) only to the 
extent that--
            [(A) such amounts are paid in accordance with 
        paragraph (3)(B);
            [(B) the care involved meets applicable standards 
        of State and local law;
            [(C) the provider of the care--
                    [(i) in the case of a provider who is not 
                an individual that provides such care solely to 
                members of the family of the individual, is 
                licensed, regulated, or registered by the State 
                or locality in which the care is provided; and
                    [(ii) allows parental access; and(D) such 
                amounts are not used to supplant any other 
                Federal or State funds used for child care 
                services.
    [(6)(A)(i) Each State shall prepare reports annually, 
beginning with fiscal year 1993, on the activities of the State 
carried out with funds made available under section 403(n).
    [(ii) The State shall make available for public inspection 
within the State copies of each report required by this 
paragraph, shall transmit a copy of each such report to the 
Secretary, and shall provide a copy of each such report, on 
request, to any interested public agency.
    [(iii) The Secretary shall annually compile, and submit to 
the Congress, the State reports transmitted to the Secretary 
pursuant to clause (ii).
    [(B) Each report prepared and transmitted by a State under 
subparagraph (A) shall set forth with respect to child care 
services provided under this subsection--
            [(i) showing separately for center-based child care 
        services, group home child care services, family child 
        care services, and relative care services, the number 
        of children who received such services and the average 
        cost of such services;
            [(ii) the criteria applied in determining 
        eligibility or priority for receiving services, and 
        sliding fee schedules;
            [(iii) the child care licensing and regulatory 
        (including registration) requirements in effect in the 
        State with respect to each type of service specified in 
        clause (i); and
            [(iv) the enforcement policies and practices in 
        effect in the State which apply to licensed and 
        regulated child care providers (including providers 
        required to register).
    [(C) Within 12 months after the date of the enactment of 
this subsection, the Secretary shall establish uniform 
reporting requirements for use by the States in preparing the 
information required by this paragraph, and make such other 
provision as may be necessary or appropriate to ensure that 
compliance with this subsection will not be unduly burdensome 
on the States.
    [(D) Not later than July 1, 1992, the Secretary shall issue 
a report on the implementation of this subsection, based on 
such information as as has been made available to the Secretary 
by the States.]

                           PAYMENT TO STATES

    Sec. 403. (a)  * * *
          * * * * * * *
    [(k)(1) Each State with a plan approved under part F shall 
be entitled to payments under subsection (l) for any fiscal 
year in an amount equal to the sum of the applicable 
percentages (specified in such subsection) of its expenditures 
to carry out the program under part F (subject to limitations 
prescribed by or pursuant to such part or this section on 
expenditures that may be included for purposes of determining 
payment under subsection (l)), but such payments for any fiscal 
year in the case of any State may not exceed the limitation 
determined under paragraph (2) with respect to the State.
    [(2) The limitation determined under this paragraph with 
respect to a State for any fiscal year is--
            [(A) the amount allotted to the State for fiscal 
        year 1987 under part C of this title as then in effect, 
        plus
            [(B) 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) $600,000,000 in the case of the fiscal year 
        1989,
            [(B) $800,000,000 in the case of the fiscal year 
        1990,
            [(C) $1,000,000,000 in the case of each of the 
        fiscal years 1991, 1992, and 1993,
            [(D) $1,100,000,000 in the case of the fiscal year 
        1994,
            [(E) $1,300,000,000 in the case of the fiscal year 
        1995, reduced by an amount equal to the total of those 
        funds that are within each State's limitation for 
        fiscal year 1995 that are not necessary to pay such 
        State's allowable claims for such fiscal year (except 
        that such amount for such year shall be deemed to be 
        $1,300,000,000 for the purpose of determining the 
        amount of the payment under subsection (l) to which 
        each State is entitled), and
            [(F) $1,000,000,000 in the case of the fiscal year 
        1996 and each succeeding fiscal year, reduced by an 
        amount equal to the total of those funds that are 
        within each State's limitation for fiscal year 1996 
        that are not necessary to pay such State's allowable 
        claims for such fiscal year (except that such amount 
        for such year shall be deemed to be $1,000,000,000 for 
        the purpose of determining the amount of the payment 
        under subsection (1) to which each State is entitled),
reduced by the aggregate amount allotted to all the States for 
fiscal year 1987 pursuant to part C of this title as then in 
effect.
    [(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.
    [(5) None of the funds available to a State for purposes of 
the programs or activities conducted under part F shall be used 
for construction.
    [(l)(1)(A) In lieu of any payment under subsection (a), the 
Secretary shall pay to each State with a plan approved under 
section 482(a) (subject to the limitation determined under 
section 482(i)(2)) with respect to expenditures by the State to 
carry out a program under part F (including expenditures for 
child care under section 402(g)(1)(A)(i), but only in the case 
of a State with respect to which section 1108 applies), an 
amount equal to--
            [(i) with respect to so much of such expenditures 
        in a fiscal year as do not exceed the State's 
        expenditures in the fiscal year 1987 with respect to 
        which payments were made to such State from its 
        allotment for such fiscal year pursuant to part C of 
        this title as then in effect, 90 percent; and
            [(ii) with respect to so much of such expenditures 
        in a fiscal year as exceed the amount described in 
        clause (i)--
                    [(I) 50 percent, in the case of 
                expenditures for administrative costs made by a 
                State in operating such a program for such 
                fiscal year (other than the personnel costs for 
                staff employed full-time in the operation of 
                such program) and the costs of transportation 
                and other work- related supportive services 
                under section 402(g)(2), and
                    [(II) the greater of 60 percent or the 
                Federal medical assistance percentage (as 
                defined in section 1118 in the case of any 
                State to which section 1108 applies, or as 
                defined in section 1905(b) in the case of any 
                other State), in the case of expenditures made 
                by a State in operating such a program for such 
                fiscal year (other than for costs described in 
                subclause (I)).
    [(B) With respect to the amount for which payment is made 
to a State under subparagraph (A)(i), the State's expenditures 
for the costs of operating a program established under part F 
may be in cash or in kind, fairly evaluated.
    [(2)(A) Notwithstanding paragraph (1), the Secretary shall 
pay to a State an amount equal to 50 percent of the 
expenditures made by such State in operating its program 
established under part F (in lieu of any different percentage 
specified in paragraph (1)(A)) if less than 55 percent of such 
expenditures are made with respect to individuals who are 
described in subparagraph (B).
    [(B) An individual is described in this paragraph if the 
individual--
            [(i)(I) is receiving aid to families with dependent 
        children, and
            [(II) has received such aid for any 36 of the 
        preceding 60 months;
            [(ii)(I) makes application for aid to families with 
        dependent children, and
            [(II) has received such aid for any 36 of the 60 
        months immediately preceding the most recent month for 
        which application has been made;
            [(iii) is a custodial parent under the age of 24 
        who (I) has not completed a high school education and, 
        at the time of application for aid to families with 
        dependent children, is not enrolled in high school (or 
        a high school equivalency course of instruction), or 
        (II) had little or no work experience in the preceding 
        year; or
            [(iv) is a member of a family in which the youngest 
        child is within 2 years of being ineligible for aid to 
        families with dependent children because of age.
    [(C) This paragraph may be waived by the Secretary with 
respect to any State which demonstrates to the satisfaction of 
the Secretary that the characteristics of the caseload in that 
State make it infeasible to meet the requirements of this 
paragraph, and that the State is targeting other long-term or 
potential long-term recipients.
    [(D) The Secretary shall biennially submit to the Congress 
any recommendations for modifications or additions to the 
groups of individuals described in subparagraph (B) that the 
Secretary determines would further the goal of assisting long-
term or potential long-term recipients of aid to families with 
dependent children to achieve self-sufficiency, which 
recommendations shall take into account the particular 
characteristics of the populations of individual States.
    [(3)(A) Notwithstanding paragraph (1), the Secretary shall 
pay to a State an amount equal to 50 percent of the 
expenditures made by such State in a fiscal year in operating 
its program established under part F (in lieu of any different 
percentage specified in paragraph (1)(A)) if the State's 
participation rate (determined under subparagraph (B)) for the 
preceding fiscal year does not exceed or equal--
            [(i) 7 percent if the preceding fiscal year is 
        1990;
            [(ii) 7 percent if such year is 1991;
            [(iii) 11 percent if such year is 1992;
            [(iv) 11 percent if such year is 1993;
            [(v) 15 percent if such year is 1994; and
            [(vi) 20 percent if such year is 1995.
    [(B)(i) The State's participation rate for a fiscal year 
shall be the average of its participation rates for computation 
periods (as defined in clause (ii)) in such fiscal year.
    [(ii) The computation periods shall be--
            [(I) the fiscal year, in the case of fiscal year 
        1990,
            [(II) the first six months, and the seventh through 
        twelfth months, in the case of fiscal year 1991,
            [(III) the first three months, the fourth through 
        sixth months, the seventh through ninth months, and the 
        tenth through twelfth months, in the case of fiscal 
        years 1992 and 1993, and
            [(IV) each month, in the case of fiscal years 1994 
        and 1995.
    [(iii) The State's participation rate for a computation 
period shall be the number, expressed as a percentage, equal 
to--
            [(I) the average monthly number of individuals 
        required or allowed by the State to participate in the 
        program under part F who have participated in such 
        program in months in the computation period, plus the 
        number of individuals required or allowed by the State 
        to participate in such program who have so participated 
        in that month in such period for which the number of 
        such participants is the greatest, divided by
            [(II) twice the average monthly number of 
        individuals required to participate in such period 
        (other than individuals described in subparagraph 
        (C)(iii)(I) or (D) of section 402(a)(19) with respect 
        to whom the State has exercised its option to require 
        their participation).
For purposes of this subparagraph, an individual shall not be 
considered to have satisfactorily participated in the program 
under part F solely by reason of such individual being 
registered to participate in such program.
    [(C) Notwithstanding any other provision of this paragraph, 
no State shall be subject to payment under this paragraph (in 
lieu of paragraph (1)(A)) for failing to meet any participation 
rate required under this paragraph with respect to any fiscal 
year before 1991.
    [(D) For purposes of this paragraph, an individual shall be 
determined to have participated in the program under part F, if 
such individual has participated in accordance with such 
requirements, consistent with regulations of the Secretary, as 
the State shall establish.
    [(E) If the Secretary determines that the State has failed 
to achieve the participation rate for any fiscal year specified 
in the numbered clauses of subparagraph (A), he may waive, in 
whole or in part, the reduction in the payment rate otherwise 
required by such subparagraph if he finds that--
            [(i) the State is in conformity with section 
        402(a)(19) and part F;
            [(ii) the State has made a good faith effort to 
        achieve the applicable participation rate for such 
        fiscal year; and
            [(iii) the State has submitted a proposal which is 
        likely to achieve the applicable participation rate for 
        the current fiscal year and the subsequent fiscal years 
        (if any) specified therein.
    [(4)(A)(i) Subject to subparagraph (B), in the case of any 
family eligible for aid to families with dependent children by 
reason of the unemployment of the parent who is the principal 
earner, the State agency shall require that at least one parent 
in any such family participate, for a total of at least 16 
hours a week during any period in which either parent is 
required to participate in the program, in a work 
supplementation program, a community work experience or other 
work experience program, on-the-job training, or a State 
designed work program approved by the Secretary, as such 
programs are described in section 482(d)(1). In the case of a 
parent under age 25 who has not completed high school or an 
equivalent course of education, the State may require such 
parent to participate in educational activities directed at the 
attainment of a high school diploma (or equivalent) or another 
basic education program in lieu of one or more of the programs 
specified in the preceding sentence.
    [(ii) For purposes of clause (i), an individual 
participating in a community work experience program under 
section 482 shall be considered to have met the requirement of 
such clause if he participates for the number of hours in any 
month equal to the monthly payment of aid to families with 
dependent children to the family of which he is a member, 
divided by the greater of the Federal or the applicable State 
minimum wage (and the portion of such monthly payment for which 
the State is reimbursed by a child support collection shall not 
be taken into account in determining the number of hours that 
such individual may be required to work).
    [(B) The requirement under subparagraph (A) shall not be 
considered to have been met by any State if the requirement is 
not met with respect to the following percentages of all 
families in the State eligible for aid to families with 
dependent children by reason of the unemployment of the parent 
who is the principal earner:
            [(i) 40 percent, in the case of the average of each 
        month in fiscal year 1994,
            [(ii) 50 percent, in the case of the average of 
        each month in fiscal year 1995,
            [(iii) 60 percent, in the case of the average of 
        each month in fiscal year 1996, and
            [(iv) 75 percent in the case of the average of each 
        month in each of the fiscal years 1997 and 1998.
    [(C) The percentage of participants for any month in a 
fiscal year for purposes of the preceding sentence shall equal 
the average of--
            [(i) the number of individuals described in 
        subparagraph (A)(i) who have met the requirement 
        prescribed therein, divided by
            [(ii) the total number of principal earners 
        described in such subparagraph (but excluding those in 
        families who have been recipients of aid for 2 months 
        or less if, during the period that the family received 
        aid, at least one parent engaged in intensive job 
        search).
    [(D) If the Secretary determines that the State has failed 
to meet the requirement under subparagraph (A) (determined with 
respect to the percentages prescribed in subparagraph (B)), he 
may waive, in whole or in part, any penalty if he finds that--
            [(i) the State is operating a program in conformity 
        with section 402(a)(19) and part F,
            [(ii) the State has made a good faith effort to 
        meet the requirement of subparagraph (A) but has been 
        unable to do so because of economic conditions in the 
        State (including significant numbers of recipients 
        living in remote locations or isolated rural areas 
        where the availability of work sites is severely 
        limited), or because of rapid and substantial increases 
        in the caseload that cannot reasonably be planned for, 
        and
            [(iii) the State has submitted a proposal which is 
        likely to achieve the required percentage of 
        participants for the subsequent fiscal years.]
          * * * * * * *
    [(n)(1) In addition to any payment under subsection (a) or 
(l), each State shall be entitled to payment from the Secretary 
of an amount equal to the lesser of--
            [(A) the Federal medical assistance percentage (as 
        defined in section 1905(b)) of the expenditures by the 
        State in providing child care services pursuant to 
        section 402(i), and in administering the provision of 
        such child care services, for any fiscal year; and
            [(B) the limitation determined under paragraph (2) 
        with respect to the State for the fiscal year.
    [(2)(A) The limitation determined under this paragraph with 
respect to a State for any fiscal year is the amount that bears 
the same ratio to the amount specified in subparagraph (B) for 
such fiscal year as the number of children residing in the 
State in the second preceding fiscal year bears to the number 
of children residing in the United States in the second 
preceding fiscal year.
    [(B) The amount specified in this subparagraph is--
            [(i) $300,000,000 for fiscal year 1991;
            [(ii) $300,000,000 for fiscal year 1992;
            [(iii) $300,000,000 for fiscal year 1993;
            [(iv) $300,000,000 for fiscal year 1994; and
            [(v) $300,000,000 for fiscal year 1995, and for 
        each fiscal year thereafter.
    [(C) If the limitation determined under subparagraph (A) 
with respect to a State for a fiscal year exceeds the amount 
paid to the State under this subsection for the fiscal year, 
the limitation determined under this paragraph with respect to 
the State for the immediately succeeding fiscal year shall be 
increased by the amount of such excess.
    [(3) Amounts appropriated for a fiscal year to carry out 
this part shall be made available for payments under this 
subsection for such fiscal year.]
          * * * * * * *

                DEPENDENT CHILDREN OF UNEMPLOYED PARENTS

    Sec. 407. (a)  * * *
    (b)(1) In providing for the provision of aid to families 
with dependent children under the State's plan approved under 
section 402, in the case of families that include dependent 
children within the meaning of subsection (a) of this section, 
as required by section 402(a)(41), the State's plan--
            (A)  * * *
            (B) shall provide--
                    [(i) for such assurances as will satisfy 
                the Secretary that unemployed parents of 
                dependent children as defined in subsection (a) 
                will participate or apply for participation in 
                a program under part F (unless the program is 
                not available in the area where the parent is 
                living) within 30 days after receipt of aid 
                with respect to such children;]
                    [(ii)] (i) for entering into cooperative 
                arrangements with the State agency responsible 
                for administering or supervising the 
                administration of vocational education in the 
                State, designed to assure maximum utilization 
                of available public vocational education 
                services and facilities in the State in order 
                to encourage the retraining of individuals 
                capable of being retrained;
                    [(iii)] (ii) for the denial of aid to 
                families with dependent children to any child 
                or relative specified in subsection (a) with 
                respect to any week for which such child's 
                parent described in subparagraph (A)(i) 
                qualifies for unemployment compensation under 
                an unemployment compensation law of a State or 
                of the United States, but refuses to apply for 
                or accept such unemployment compensation; and
                    [(iv)] (iii) for the reduction of the aid 
                to families with dependent children otherwise 
                payable to any child or relative specified in 
                subsection (a) by the amount of any 
                unemployment compensation that such child's 
                parent described in subparagraph (A)(i) 
                receives under an unemployment compensation law 
                of a State or of the United States[; and].
                    [(v) that, if and for so long as the 
                child's parent described in subparagraph 
                (A)(i), unless meeting a condition of section 
                402(a)(19)(C), is, without good cause, not 
                participating (or available for participation) 
                in a program under part F, or if exempt under 
                such section by reason of clause (vii) thereof 
                or because there has not been established or 
                provided under part F a program in which such 
                parent can effectively participate, is not 
                registered with the public employment offices 
                in the State, the needs of such parent shall 
                not be taken into account in determining the 
                need of such parent's family under section 
                402(a)(7), and the needs of such parent's 
                spouse shall not be so taken into account 
                unless such spouse is participating in such a 
                program, or if not participating solely by 
                reason of section 402(a)(19)(C)(vii) or because 
                there has not been established or provided 
                under part F a program in which such spouse can 
                effectively participate, is registered with the 
                public employment offices of the State; and if 
                neither parents' needs are so taken into 
                account, the payment provisions of section 
                402(a)(19)(G)(i)(I) shall apply.]
    (2)(A)  * * *
    (B)(i)  * * *
    (ii)(I) A State may not limit the number of months under 
clause (i) for which a family may receive aid to families with 
dependent children unless it provides in its plan assurances to 
the Secretary that it has a program (that meets such 
requirements as the Secretary may in regulation prescribe) for 
providing education, training, and employment services 
[(including any activity authorized under section 402(a)(19) or 
under part F)] in order to assist parents of children described 
in subsection (a) in preparing for and obtaining employment.
          * * * * * * *
    [(C) With respect to the participation in the program under 
section 402(a)(19) and part F of a family eligible for aid to 
families with dependent children by reason of this section, a 
State may, at its option--
            [(i) except as otherwise provided in such section 
        and such part, require that any parent participating in 
        such program engage in program activities for up to 40 
        hours per week; and
            [(ii) provide for the payment of aid to families 
        with dependent children at regular intervals of no 
        greater than one month but after the performance of 
        assigned program activities.]
    (c) Notwithstanding any other provisions of this section, 
expenditures pursuant to this section shall be excluded from 
aid to families with dependent children [(A)] where such 
expenditures are made under the plan with respect to any 
dependent child as defined in subsection (a), (i) for any part 
of the 30-day period referred to in subsection (b)(1)(A)(i), or 
(ii) for any period prior to the time when the parent satisfies 
subsection (b)(1)(A)(ii)[, and (B) if, and for as long as, no 
action is taken (after the 30-day period referred to in 
subsection (b)(1)(B)(i), under the program therein specified, 
to undertake appropriate steps directed towards the 
participation of such parent in a program under part F].
    (d) For purposes of this section--
            (1) the term ``quarter of work'' with respect to 
        any individual means (A) a calendar quarter in which 
        such individual received earned income of not less than 
        $50 (or which is a ``quarter of coverage'' as defined 
        in section 213(a)(2))[, or in which such individual 
        participated in a program under part F], (B) at the 
        option of the State, a calendar quarter in which such 
        individual attended, full-time, an elementary school, a 
        secondary school, or a vocational or technical training 
        course (approved by the Secretary) that is designed to 
        prepare the individual for gainful employment, or in 
        which such individual participated in an education or 
        training program established under the Job Training 
        Partnership Act, and (C) a calendar quarter ending 
        before October 1990 in which such individual 
        participated in a community work experience program 
        under section 409 (as in effect for a State immediately 
        before the effective date for that State of the 
        amendments made by title II of the Family Support Act 
        of 1988 or the work incentive program established under 
        part C (as in effect for a State immediately before 
        such effective date);
          * * * * * * *
    (e) The Secretary and the Secretary of Labor shall jointly 
enter into an agreement with each State which is able and 
willing to do so for the purpose of (1) simplifying the 
procedures to be followed by unemployed parents and other 
unemployed persons in such State [in participating in a program 
under part F and] in registering with public employment offices 
(under this section and otherwise) or in connection with 
applications for unemployment compensation, by reducing the 
number of locations or agencies where such persons must go in 
order to [participate in or] register for such programs and in 
connection with such applications, and (2) providing where 
possible for a single registration satisfying this section and 
the requirements of [both part F and] the applicable 
unemployment compensation laws.
          * * * * * * *

                 ASSISTANT SECRETARY FOR FAMILY SUPPORT

    Sec. 417. The programs under this part[, part D, and part 
F] and part D shall be administered by an Assistant Secretary 
for Family Support within the Department of Health and Human 
Services, who shall be appointed by the President, by and with 
the advice and consent of the Senate, and who shall be in 
addition to any other Assistant Secretary of Health and Human 
Services provided for by law.

SEC. 418. FUNDING FOR CHILD CARE.

    (a) General Child Care Entitlement.--
            (1) General entitlement.--Subject to the amount 
        appropriated under paragraph (3), each State shall, for 
        the purpose of providing child care assistance, be 
        entitled to payments under a grant under this 
        subsection for a fiscal year in an amount equal to--
                    (A) the sum of the total amount required to 
                be paid to the State under section 403 for 
                fiscal year 1994 or 1995 (whichever is greater) 
                with respect to amounts expended for child care 
                under section--
                            (i) 402(g) of this Act (as such 
                        section was in effect before October 1, 
                        1995); and
                            (ii) 402(i) of this Act (as so in 
                        effect); or
                    (B) the average of the total amounts 
                required to be paid to the State for fiscal 
                years 1992 through 1994 under the sections 
                referred to in subparagraph (A);
        whichever is greater.
            (2) Remainder.--
                    (A) Grants.--The Secretary shall use any 
                amounts appropriated for a fiscal year under 
                paragraph (3), and remaining after the 
                reservation described in paragraph (4) and 
                after grants are awarded under paragraph (1), 
                to make grants to States under this paragraph.
                    (B) Amount.--Subject to subparagraph (C), 
                the amount of a grant awarded to a State for a 
                fiscal year under this paragraph shall be based 
                on the formula used for determining the amount 
                of Federal payments to the State under section 
                403(n) (as such section was in effect before 
                October 1, 1995).
                    (C) Matching requirement.--The Secretary 
                shall pay to each eligible State in a fiscal 
                year an amount, under a grant under 
                subparagraph (A), equal to the Federal medical 
                assistance percentage for such State for fiscal 
                year 1995 (as defined in section 1905(b)) of so 
                much of the expenditures by the State for child 
                care in such year as exceed the State set-aside 
                for such State under paragraph (1)(A) for such 
                year and the amount of State expenditures in 
                fiscal year 1994 or 1995 (whichever is greater) 
                that equal the non-Federal share for the 
                programs described in subparagraph (A) of 
                paragraph (1).
                    (D) Redistribution.--
                            (i) In general.--With respect to 
                        any fiscal year, if the Secretary 
                        determines (in accordance with clause 
                        (ii)) that amounts under any grant 
                        awarded to a State under this paragraph 
                        for such fiscal year will not be used 
                        by such State during such fiscal year 
                        for carrying out the purpose for which 
                        the grant is made, the Secretary shall 
                        make such amounts available in the 
                        subsequent fiscal year for carrying out 
                        such purpose to 1 or more States which 
                        apply for such funds to the extent the 
                        Secretary determines that such States 
                        will be able to use such additional 
                        amounts for carrying out such purpose. 
                        Such available amounts shall be 
                        redistributed to a State pursuant to 
                        section 402(i) (as such section was in 
                        effect before October 1, 1995) by 
                        substituting ``the number of children 
                        residing in all States applying for 
                        such funds'' for ``the number of 
                        children residing in the United States 
                        in the second preceding fiscal year''.
                            (ii) Time of determination and 
                        distribution.--The determination of the 
                        Secretary under clause (i) for a fiscal 
                        year shall be made not later than the 
                        end of the first quarter of the 
                        subsequent fiscal year. The 
                        redistribution of amounts under clause 
                        (i) shall be made as close as 
                        practicable to the date on which such 
                        determination is made. Any amount made 
                        available to a State from an 
                        appropriation for a fiscal year in 
                        accordance with this subparagraph 
                        shall, for purposes of this part, be 
                        regarded as part of such State's 
                        payment (as determined under this 
                        subsection) for the fiscal year in 
                        which the redistribution is made.
            (3) Appropriation.--For grants under this section, 
        there are appropriated--
                    (A) $1,967,000,000 for fiscal year 1997;
                    (B) $2,067,000,000 for fiscal year 1998;
                    (C) $2,167,000,000 for fiscal year 1999;
                    (D) $2,367,000,000 for fiscal year 2000;
                    (E) $2,567,000,000 for fiscal year 2001; 
                and
                    (F) $2,717,000,000 for fiscal year 2002.
            (4) Indian tribes.--The Secretary shall reserve not 
        more than 1 percent of the aggregate amount 
        appropriated to carry out this section in each fiscal 
        year for payments to Indian tribes and tribal 
        organizations.
    (b) Use of Funds.--
            (1) In general.--Amounts received by a State under 
        this section shall only be used to provide child care 
        assistance. Amounts received by a State under a grant 
        under subsection (a)(1) shall be available for use by 
        the State without fiscal year limitation.
            (2) Use for certain populations.--A State shall 
        ensure that not less than 70 percent of the total 
        amount of funds received by the State in a fiscal year 
        under this section are used to provide child care 
        assistance to families who are receiving assistance 
        under a State program under this part, families who are 
        attempting through work activities to transition off of 
        such assistance program, and families who are at risk 
        of becoming dependent on such assistance program.
    (c) Application of Child Care and Development Block Grant 
Act of 1990.--Notwithstanding any other provision of law, 
amounts provided to a State under this section shall be 
transferred to the lead agency under the Child Care and 
Development Block Grant Act of 1990, integrated by the State 
into the programs established by the State under such Act, and 
be subject to requirements and limitations of such Act.
    (d) Definition.--As used in this section, the term 
``State'' means each of the 50 States or the District of 
Columbia.
          * * * * * * *

    Part E--Federal Payments for Foster Care and Adoption Assistance

          * * * * * * *

           STATE PLAN FOR FOSTER CARE AND ADOPTION ASSISTANCE

    Sec. 471. (a) In order for a State to be eligible for 
payments under this part, it shall have a plan approved by the 
Secretary which--
            (1)  * * *
          * * * * * * *
            (8) provides safeguards which restrict the use of 
        or disclosure of information concerning individuals 
        assisted under the State plan to purposes directly 
        connected with (A) the administration of the plan of 
        the State approved under this part, the plan or program 
        of the State under part A, B, or D of this title 
        [(including activities under part F)] or under title I, 
        V, X, XIV, XVI (as in effect in Puerto Rico, Guam, and 
        the Virgin Islands), XIX, or XX, or the supplemental 
        security income program established by title XVI, (B) 
        any investigation, prosecution, or criminal or civil 
        proceeding, conducted in connection with the 
        administration of any such plan or program, (C) the 
        administration of any other Federal or federally 
        assisted program which provides assistance, in cash or 
        in kind, or services, directly to individuals on the 
        basis of need, (D) any audit or similar activity 
        conducted in connection with the administration of any 
        such plan or program by any governmental agency which 
        is authorized by law to conduct such audit or activity, 
        and (E) reporting and providing information pursuant to 
        paragraph (9) to appropriate authorities with respect 
        to known or suspected child abuse or neglect; and the 
        safeguards so provided shall prohibit disclosure, to 
        any committee or legislative body (other than an agency 
        referred to in clause (D) with respect to an activity 
        referred to in such clause), of any information which 
        identifies by name or address any such applicant or 
        recipient; except that nothing contained herein shall 
        preclude a State from providing standards which 
        restrict disclosures to purposes more limited than 
        those specified herein, or which, in the case of 
        adoptions, prevent disclosure entirely;
          * * * * * * *

      [Part F--Job Opportunities and Basic Skills Training Program

                        [PURPOSE AND DEFINITIONS

    [Sec. 481. (a) Purpose.--It is the purpose of this part to 
assure that needy families with children obtain the education, 
training, and employment that will help them avoid long-term 
welfare dependence.
    [(b) Meaning of Terms.--Except to the extent otherwise 
specifically indicated, terms used in this part shall have the 
meanings given them in or under part A.

             [ESTABLISHMENT AND OPERATION OF STATE PROGRAMS

    [Sec. 482. (a) State Plans for Job Opportunities and Basic 
Skills Training Programs.--(1)(A) As a condition of its 
participation in the program of aid to families with dependent 
children under part A, each State shall establish and operate a 
job opportunities and basic skills training program (in this 
part referred to as the ``program'') under a plan approved by 
the Secretary as meeting all of the requirements of this part 
and section 402(a)(19), and shall, in accordance with 
regulations prescribed by the Secretary, periodically (but not 
less frequently than every 2 years) review and update its plan 
and submit the updated plan for approval by the Secretary.
    [(B) A State plan for establishing and operating the 
program must describe how the State intends to implement the 
program during the period covered by the plan, and must 
indicate, through cross-references to the appropriate 
provisions of this part and part A, that the program will be 
operated in accordance with such provision of law. In addition, 
such plan must contain (i) an estimate of the number of persons 
to be served by the program, (ii) a description of the services 
to be provided within the State and the political subdivisions 
thereof, the needs to be addressed through the provision of 
such services, the extent to which such services are expected 
to be made available by other agencies on a nonreimbursable 
basis, and the extent to which such services are to be provided 
or funded by the program, and (iii) such additional information 
as the Secretary may require by regulation to enable the 
Secretary to determine that the State program will meet all of 
the requirements of this part and part A.
    [(C) The Secretary shall consult with the Secretary of 
Labor on general plan requirements and on criteria to be used 
in approving State plans under this section.
    [(D)(i) Not later than October 1, 1992, each State shall 
make the program available in each political subdivision of 
such State where it is feasible to do so, after taking into 
account the number of prospective participants, the local 
economy, and other relevant factors.
    [(ii) If a State determines that it is not feasible to make 
the program available in each such subdivision, the State plan 
must provide appropriate justification to the Secretary.
    [(2) The State agency that administers or supervises the 
administration of the State's plan approved under section 402 
shall be responsible for the administration or supervision of 
the administration of the State's program.
    [(3) Federal funds made available to a State for purposes 
of the program shall not be used to supplant non-Federal funds 
for existing services and activities which promote the purpose 
of this part. State or local funds expended for such purpose 
shall be maintained at least at the level of such expenditures 
for the fiscal year 1986.
    [(b) Assessment and Review of Needs and Skills of 
Participants; Employability Plan.--(1)(A) The State agency must 
make an initial assessment of the educational, child care, and 
other supportive services needs as well as the skills, prior 
work experience, and employability of each participant in the 
program under this part, including a review of the family 
circumstances. The agency may also review the needs of any 
child of the participant.
    [(B) On the basis of such assessment, the State agency, in 
consultation with the participant, shall develop an 
employability plan for the participant. The employability plan 
shall explain the services that will be provided by the State 
agency and the activities in which the participant will take 
part under the program, including child care and other 
supportive services, shall set forth an employment goal for the 
participant, and shall, to the maximum extent possible and 
consistent with this section, reflect the respective 
preferences of such participant. The plan must take into 
account the participant's supportive services needs, available 
program resources, and local employment opportunities. The 
employability plan shall not be considered a contract.
    [(2) Following the initial assessment and review and the 
development of the employability plan with respect to any 
participant in the program, the State agency may require the 
participant (or the adult caretaker in the family of which the 
participant is a member) to negotiate and enter into an 
agreement with the State agency that specifies such matters as 
the participant's obligations under the program, the duration 
of participation in the program, and the activities to be 
conducted and the services to be provided in the course of such 
participation. If the State agency exercises the option under 
the preceding sentence, the State agency must give the 
participant such assistance as he or she may require in 
reviewing and understanding the agreement.
    [(3) The State agency may assign a case manager to each 
participant and the participant's family. The case manager so 
assigned must be responsible for assisting the family to obtain 
any services which may be needed to assure effective 
participation in the program.
    [(c) Provision of Program and Employment Information.--(1) 
The State agency must ensure that all applicants for and 
recipients of aid to families with dependent children are 
encouraged, assisted, and required to fulfill their 
responsibilities to support their children by preparing for, 
accepting, and retaining such employment as they are capable of 
performing.
    [(2) The State agency must inform all applicants for and 
recipients of aid to families with dependent children of the 
education, employment, and training opportunities, and the 
support services (including child care and health coverage 
transition options), for which they are eligible, the 
obligations of the State agency, and the rights, 
responsibilities, and obligations of participants in the 
program.
    [(3) The State agency must--
            [(A) provide (directly or through arrangements with 
        others) information on the types and locations of child 
        care services reasonably accessible to participants in 
        the program,
            [(B) inform participants that assistance is 
        available to help them select appropriate child care 
        services, and
            [(C) on request, provide assistance to participants 
        in obtaining child care services.
    [(4) The State agency must inform applicants for and 
recipients of aid to families with dependent children of the 
grounds for exemption from participation in the program and the 
consequences of refusal to participate if not exempt, and 
provide other appropriate information with respect to such 
participation.
    [(5) Within one month after the State agency gives a 
recipient of aid to families with dependent children the 
information described in the preceding provisions of this 
paragraph, the State agency must notify such recipient of the 
opportunity to indicate his or her desire to participate in the 
program, including a clear description of how to enter the 
program.
    [(d) Services and Activities Under the Program.--(1)(A) In 
carrying out the program, each State shall make available a 
broad range of services and activities to aid in carrying out 
the purpose of this part. Such services and activities--
            [(i) shall include--
                    [(I) educational activities (as 
                appropriate), including high school or 
                equivalent education (combined with training as 
                needed), basic and remedial education to 
                achieve a basic literacy level, and education 
                for individuals with limited English 
                proficiency;
                    [(II) job skills training;
                    [(III) job readiness activities to help 
                prepare participants for work; and
                    [(IV) job development and job placement; 
                and
            [(ii) must also include at least 2 of the 
        following:
                    [(I) group and individual job search as 
                described in subsection (g);
                    [(II) on-the-job training;
                    [(III) work supplementation programs as 
                described in subsection (e); and
                    [(IV) community work experience programs as 
                described in subsection (f) or any other work 
                experience program approved by the Secretary.
    [(B) The State may also offer to participants under the 
program (i) postsecondary education in appropriate cases, and 
(ii) such other education, training, and employment activities 
as may be determined by the State and allowed by regulations of 
the Secretary.
    [(2) If the State requires an individual who has attained 
the age of 20 years and has not earned a high school diploma 
(or equivalent) to participate in the program, the State agency 
shall include educational activities consistent with his or her 
employment goals as a component of the individual's 
participation in the program, unless the individual 
demonstrates a basic literacy level, or the employability plan 
for the individual identifies a long-term employment goal that 
does not require a high school diploma (or equivalent). Any 
other services or activities to which such a participant is 
assigned may not be permitted to interfere with his or her 
participation in an appropriate educational activity under this 
subparagraph.
    [(3) Notwithstanding any other provision of this section, 
the Secretary shall permit up to 5 States to provide services 
under the program, on a voluntary or mandatory basis, to non- 
custodial parents who are unemployed and unable to meet their 
child support obligations. Any State providing services to non-
custodial parents pursuant to this paragraph shall evaluate the 
provision of such services, giving particular attention to the 
extent to which the provision of such services to those parents 
is contributing to the achievement of the purpose of this part, 
and shall report the results of such evaluation to the 
Secretary.
    [(e) Work Supplementation Program.--(1) Any State may 
institute a work supplementation program under which such 
State, to the extent it considers appropriate, may reserve the 
sums that would otherwise be payable to participants in the 
program as aid to families with dependent children and use such 
sums instead for the purpose of providing and subsidizing jobs 
for such participants (as described in paragraph (3)(C)(i) and 
(ii)), as an alternative to the aid to families with dependent 
children that would otherwise be so payable to them.
    [(2)(A) Notwithstanding section 406 or any other provision 
of law, Federal funds may be paid to a State under part A, 
subject to this subsection, with respect to expenditures 
incurred in operating a work supplementation program under this 
subsection.
    [(B) Nothing in this part, or in any State plan approved 
under part A, shall be construed to prevent a State from 
operating (on such terms and conditions and in such cases as 
the State may find to be necessary or appropriate) a work 
supplementation program in accordance with this subsection and 
section 484.
    [(C) Notwithstanding section 402(a)(23) or any other 
provision of law, a State may adjust the levels of the 
standards of need under the State plan as the State determines 
to be necessary and appropriate for carrying out a work 
supplementation program under this subsection.
    [(D) Notwithstanding section 402(a)(1) or any other 
provision of law, a State operating a work supplementation 
program under this subsection may provide that the need 
standards in effect in those areas of the State in which such 
program is in operation may be different from the need 
standards in effect in the areas in which such program is not 
in operation, and such State may provide that the need 
standards for categories of recipients may vary among such 
categories to the extent the State determines to be appropriate 
on the basis of ability to participate in the work 
supplementation program.
    [(E) Notwithstanding any other provision of law, a State 
may make such further adjustments in the amounts of the aid to 
families with dependent children paid under the plan to 
different categories of recipients (as determined under 
subparagraph (D)) in order to offset increases in benefits from 
needs-related programs (other than the State plan approved 
under part A) as the State determines to be necessary and 
appropriate to further the purposes of the work supplementation 
program.
    [(F) In determining the amounts to be reserved and used for 
providing and subsidizing jobs under this subsection as 
described in paragraph (1), the State may use a sampling 
methodology.
    [(G) Notwithstanding section 402(a)(8) or any other 
provision of law, a State operating a work supplementation 
program under this subsection (i) may reduce or eliminate the 
amount of earned income to be disregarded under the State plan 
as the State determines to be necessary and appropriate to 
further the purposes of the work supplementation program, and 
(ii) during one or more of the first 9 months of an 
individual's employment pursuant to a program under this 
section, may apply to the wages of the individual the 
provisions of subparagraph (A)(iv) of section 402(a)(8) without 
regard to the provisions of subparagraph (B)(ii)(II) of such 
section.
    [(3)(A) A work supplementation program operated by a State 
under this subsection may provide that any individual who is an 
eligible individual (as determined under subparagraph (B)) 
shall take a supplemented job (as defined in subparagraph (C)) 
to the extent that supplemented jobs are available under the 
program. Payments by the State to individuals or to employers 
under the work supplementation program shall be treated as 
expenditures incurred by the State for aid to families with 
dependent children except as limited by paragraph (4).
    [(B) For purposes of this subsection, an eligible 
individual is an individual who is in a category which the 
State determines should be eligible to participate in the work 
supplementation program, and who would, at the time of 
placement in the job involved, be eligible for aid to families 
with dependent children under an approved State plan if such 
State did not have a work supplementation program in effect.
    [(C) For purposes of this section, a supplemented job is--
            [(i) a job provided to an eligible individual by 
        the State or local agency administering the State plan 
        under part A; or
            [(ii) a job provided to an eligible individual by 
        any other employer for which all or part of the wages 
        are paid by such State or local agency.
A State may provide or subsidize under the program any job 
which such State determines to be appropriate.
    [(D) At the option of the State, individuals who hold 
supplemented jobs under a State's work supplementation program 
shall be exempt from the retrospective budgeting requirements 
imposed pursuant to section 402(a)(13)(A)(ii) (and the amount 
of the aid which is payable to the family of any such 
individual for any month, or which would be so payable but for 
the individual's participation in the work supplementation 
program, shall be determined on the basis of the income and 
other relevant circumstances in that month).
    [(4) The amount of the Federal payment to a State under 
section 403 for expenditures incurred in making payments to 
individuals and employers under a work supplementation program 
under this subsection shall not exceed an amount equal to the 
amount which would otherwise be payable under such section if 
the family of each individual employed in the program 
established in such State under this subsection had received 
the maximum amount of aid to families with dependent children 
payable under the State plan to such a family with no income 
(without regard to adjustments under paragraph (2)) for the 
lesser of (A) 9 months, or (B) the number of months in which 
such individual was employed in such program.
    [(5)(A) Nothing in this subsection shall be construed as 
requiring the State or local agency administering the State 
plan to provide employee status to an eligible individual to 
whom it provides a job under the work supplementation program 
(or with respect to whom it provides all or part of the wages 
paid to the individual by another entity under such program), 
or as requiring any State or local agency to provide that an 
eligible individual filling a job position provided by another 
entity under such program be provided employee status by such 
entity during the first 13 weeks such individual fills that 
position.
    [(B) Wages paid under a work supplementation program shall 
be considered to be earned income for purposes of any provision 
of law.
    [(6) Any State that chooses to operate a work 
supplementation program under this subsection shall provide 
that any individual who participates in such program, and any 
child or relative of such individual (or other individual 
living in the same household as such individual) who would be 
eligible for aid to families with dependent children under the 
State plan approved under part A if such State did not have a 
work supplementation program, shall be considered individuals 
receiving aid to families with dependent children under the 
State plan approved under part A for purposes of eligibility 
for medical assistance under the State plan approved under 
title XIX.
    [(7) No individual receiving aid to families with dependent 
children under a State plan shall be excused by reason of the 
fact that such State has a work supplementation program from 
any requirement of this part relating to work requirements, 
except during periods in which such individual is employed 
under such work supplementation program.
    [(f) Community Work Experience Program.--(1)(A) Any State 
may establish a community work experience program in accordance 
with this subsection. The purpose of the community work 
experience program is to provide experience and training for 
individuals not otherwise able to obtain employment, in order 
to assist them to move into regular employment. Community work 
experience programs shall be designed to improve the 
employability of participants through actual work experience 
and training and to enable individuals employed under community 
work experience programs to move promptly into regular public 
or private employment. The facilities of the State public 
employment offices may be utilized to find employment 
opportunities for recipients under this program. Community work 
experience programs shall be limited to projects which serve a 
useful public purpose in fields such as health, social service, 
environmental protection, education, urban and rural 
development and redevelopment, welfare, recreation, public 
facilities, public safety, and day care. To the extent 
possible, the prior training, experience, and skills of a 
recipient shall be used in making appropriate work experience 
assignments.
    [(B)(i) A State that elects to establish a community work 
experience program under this subsection shall operate such 
program so that each participant (as determined by the State) 
either works or undergoes training (or both) with the maximum 
number of hours that any such individual may be required to 
work in any month being a number equal to the amount of the aid 
to families with dependent children payable with respect to the 
family of which such individual is a member under the State 
plan approved under this part, divided by the greater of the 
Federal minimum wage or the applicable State minimum wage (and 
the portion of a recipient's aid for which the State is 
reimbursed by a child support collection shall not be taken 
into account in determining the number of hours that such 
individual may be required to work).
    [(ii) After an individual has been assigned to a position 
in a community work experience program under this subsection 
for 9 months, such individual may not be required to continue 
in that assignment unless the maximum number of hours of 
participation is no greater than (I) the amount of the aid to 
families with dependent children payable with respect to the 
family of which such individual is a member under the State 
plan approved under this part (excluding any portion of such 
aid for which the State is reimbursed by a child support 
payment), divided by (II) the higher of (a) the Federal minimum 
wage or the applicable State minimum wage, whichever is 
greater, or (b) the rate of pay for individuals employed in the 
same or similar occupations by the same employer at the same 
site.
    [(C) Nothing contained in this subsection shall be 
construed as authorizing the payment of aid to families with 
dependent children as compensation for work performed, nor 
shall a participant be entitled to a salary or to any other 
work or training expense provided under any other provision of 
law by reason of his participation in a program under this 
subsection.
    [(D) Nothing in this part or in any State plan approved 
under this part shall be construed to prevent a State from 
operating (on such terms and conditions and in such cases as 
the State may find to be necessary or appropriate) a community 
work experience program in accordance with this subsection and 
subsection (d).
    [(E) Participants in community work experience programs 
under this subsection may perform work in the public interest 
(which otherwise meets the requirements of this subsection) for 
a Federal office or agency with its consent, and, 
notwithstanding section 1342 of title 31, United States Code, 
or any other provision of law, such agency may accept such 
services, but such participants shall not be considered to be 
Federal employees for any purpose.
    [(2) After each 6 months of an individual's participation 
in a community work experience program under this subsection, 
and at the conclusion of each assignment of the individual 
under such program, the State agency must provide a 
reassessment and revision, as appropriate, of the individual's 
employability plan.
    [(3) The State agency shall provide coordination among a 
community work experience program operated pursuant to this 
subsection, any program of job search under subsection (g), and 
the other employment-related activities under the program 
established by this section so as to insure that job placement 
will have priority over participation in the community work 
experience program, and that individuals eligible to 
participate in more than one such program are not denied aid to 
families with dependent children on the grounds of failure to 
participate in one such program if they are actively and 
satisfactorily participating in another. The State agency may 
provide that part-time participation in more than one such 
program may be required where appropriate.
    [(4) In the case of any State that makes expenditures in 
the form described in paragraph (1) under its State plan 
approved under section 482(a)(1), expenditures for the 
operation and administration of the program under this section 
may not include, for purposes of section 403, the cost of 
making or acquiring materials or equipment in connection with 
the work performed under a program referred to in paragraph (1) 
or the cost of supervision of work under such program, and may 
include only such other costs attributable to such programs as 
are permitted by the Secretary.
    [(g) Job Search Program.--(1) The State agency may 
establish and carry out a program of job search for individuals 
participating in the program under this part.
    [(2) Notwithstanding section 402(a)(19)(B)(i), the State 
agency may require job search by an individual applying for or 
receiving aid to families with dependent children (other than 
an individual described in section 402(a)(19)(C) who is not an 
individual with respect to whom section 402(a)(19)(D) 
applies)--
            [(A) subject to the next to last sentence of this 
        paragraph, beginning at the time such individual 
        applies for aid to families with dependent children and 
        continuing for a period (prescribed by the State) of 
        not more than 8 weeks (but this requirement may not be 
        used as a reason for any delay in making a 
        determination of an individual's eligibility for such 
        aid or in issuing a payment to or on behalf of any 
        individual who is otherwise eligible for such aid); and
            [(B) at such time or times after the close of the 
        period prescribed under subparagraph (A) as the State 
        agency may determine but not to exceed a total of 8 
        weeks in any period of 12 consecutive months.
In no event may an individual be required to participate in job 
search for more than 3 weeks before the State agency conducts 
the assessment and review with respect to such individual under 
subsection (b)(1)(A). Job search activities in addition to 
those required under the preceding provisions of this paragraph 
may be required only in combination with some other education, 
training, or employment activity which is designed to improve 
the individual's prospects for employment.
    [(3) Job search by an individual under this subsection 
shall in no event be treated, for any purpose, as an activity 
under the program if the individual has participated in such 
job search for 4 months out of the preceding 12 months.
    [(h) Dispute Resolution Procedures.--Each State shall 
establish a conciliation procedure for the resolution of 
disputes involving an individual's participation in the program 
and (if the dispute involved is not resolved through 
conciliation) shall provide an opportunity for a hearing with 
respect to the dispute, which hearing may be provided through a 
hearing process established for purposes of resolving disputes 
with respect to the program or through the provision of a 
hearing pursuant to section 402(a)(4); but in no event shall 
aid to families with dependent children be suspended, reduced, 
discontinued, or terminated as a result of a dispute involving 
an individual's participation in the program until such 
individual has an opportunity for a hearing that meets the 
standards set forth by the United States Supreme Court in 
Goldberg v. Kelly, 397 U.S. 254 (1970).
    [(i) Special Provisions Relating to Indian Tribes.--(1) 
Within 6 months after the date of the enactment of the Family 
Support Act of 1988, an Indian tribe or Alaska Native 
organization may apply to the Secretary to conduct a job 
opportunities and basic skills training program to carry out 
the purpose of this subsection. If the Secretary approves such 
tribe's or organization's application, the maximum amount that 
may be paid to the State under section 403(l) in which such 
tribe or organization is located shall be reduced by the 
Secretary in accordance with paragraph (2) and an amount equal 
to the amount of such reduction shall be paid directly to such 
tribe or organization (without the requirement of any 
nonfederal share) for the operation of such program. In 
determining whether to approve an application from an Alaska 
Native organization, the Secretary shall consider whether 
approval of the application would promote the efficient and 
nonduplicative administration of job opportunities and basic 
skills training programs in the State.
    [(2) The amount of the reduction under paragraph (1) with 
respect to any State in which is located an Indian tribe or 
Alaska Native organization with an application approved under 
such paragraph shall be an amount equal to the amount that 
bears the same ratio to the maximum amount that could be paid 
under section 403(l) to the State as--
            [(A) the number of adult Indians receiving aid to 
        families with dependent children who reside on the 
        reservation or within the designated service area bears 
        to the number of all such adult recipients in the 
        State, or
            [(B) the number of adult Alaska Natives receiving 
        aid to families with dependent children who reside 
        within the boundaries of such Alaska Native 
        organization bears to the number of all such adult 
        recipients in the State of Alaska.
    [(3) The job opportunities and basic skills training 
program set forth in the application of an Indian tribe or 
Alaska Native organization under paragraph (1) need not meet 
any requirement of the program under this part or under section 
402(a)(19) that the Secretary determines is inappropriate with 
respect to such job opportunities and basic skills training 
program.
    [(4) The job opportunities and basic skills training 
program of any Indian tribe or Alaska Native organization may 
be terminated voluntarily by such tribe or Alaska Native 
organization or may be terminated by the Secretary upon a 
finding that the tribe or Alaska Native organization is not 
conducting such program in substantial conformity with the 
terms of the application approved by the Secretary, and the 
maximum amount that may be paid under section 403(l) to the 
State within which the tribe or Alaska Native organization is 
located (as reduced pursuant to paragraph (1)) shall be 
increased by any portion of the amount retained by the 
Secretary with respect to such program (and not payable to such 
tribe or Alaska Native organization for obligations already 
incurred). The reduction under paragraph (1) shall in no event 
apply to a State for any fiscal year beginning after such 
program is terminated if no other such program remains in 
operation in the State.
    [(5) For purposes of this subsection, an Indian tribe is 
any tribe, band, nation, or other organized group or community 
of Indians that--
            [(A) is recognized as eligible for the special 
        programs and services provided by the United States to 
        Indians because of their status as Indians; and
            [(B) for which a reservation (as defined in 
        paragraph (6)) exists.
    [(6) For purposes of this subsection, a reservation 
includes Indian reservations, public domain Indian allotments, 
and former Indian reservations in Oklahoma.
    [(7) For purposes of this subsection--
            [(A) an Alaska Native organization is any organized 
        group of Alaska Natives eligible to operate a Federal 
        program under Public Law 93-638 or such group's 
        designee;
            [(B) the boundaries of an Alaska Native 
        organization shall be those of the geographical region, 
        established pursuant to section 7(a) of the Alaska 
        Native Claims Settlement Act, within which the Alaska 
        Native organization is located (without regard to the 
        ownership of the land within the boundaries);
            [(C) the Secretary may approve only one application 
        from an Alaska Native organization for each of the 12 
        geographical regions established pursuant to section 
        7(a) of the Alaska Native Claims Settlement Act; and
            [(D) any Alaska Native, otherwise eligible or 
        required to participate in a job opportunities and 
        basic skills training program, residing within the 
        boundaries of an Alaska Native organization whose 
        application has been approved by the Secretary, shall 
        be eligible to participate in the job opportunities and 
        basic skills training program administered by such 
        Alaska Native organization.
    [(8) Nothing in this subsection shall be construed to grant 
or defer any status or powers other than those expressly 
granted in this subsection or to validate or invalidate any 
claim by Alaska Natives of sovereign authority over lands or 
people.

                       [COORDINATION REQUIREMENTS

    [Sec. 483. (a)(1) The Governor of each State shall assure 
that program activities under this part are coordinated in that 
State with programs operated under the Job Training Partnership 
Act and with any other relevant employment, training, and 
education programs available in that State. Appropriate 
components of the State's plan developed under section 
482(a)(1) which relate to job training and work preparation 
shall be consistent with the coordination criteria specified in 
the Governor's coordination and special services plan required 
under section 121 of the Job Training Partnership Act.
    [(2) The State plan so developed shall be submitted to the 
State job training coordinating council not less than 60 days 
before its submission to the Secretary, for the purpose of 
review and comment by the council. Concurrent with submission 
of the plan to the State job training coordinating council, the 
proposed State plan shall be published and made reasonably 
available to the general public through local news facilities 
and public announcements, in order to provide the opportunity 
for review and comment.
    [(3) The comments and recommendations of the State job 
training coordinating council under paragraph (2) shall be 
transmitted to the Governor of the State.
    [(b) The Secretary of Health and Human Services shall 
consult with the Secretaries of Education and Labor on a 
continuing basis for the purpose of assuring the maximum 
coordination of education and training services in the 
development and implementation of the program under this part.
    [(c) The State agency responsible for administering or 
supervising the administration of the State plan approved under 
part A shall consult with the State education agency and the 
agency responsible for administering job training programs in 
the State in order to promote coordination of the planning and 
delivery of services under the program with programs operated 
under the Job Training Partnership Act and with education 
programs available in the State (including any program under 
the Adult Education Act.

       [PROVISIONS GENERALLY APPLICABLE TO PROVISION OF SERVICES

    [Sec. 484. (a) In assigning participants in the program 
under this part to any program activity, the State agency shall 
assure that--
            [(1) each assignment takes into account the 
        physical capacity, skills, experience, 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, 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;
            [(4) the conditions of participation are 
        reasonable, taking into account in each case the 
        proficiency of the participant and the child care and 
        other supportive services needs of the participant; and
            [(5) each assignment is based on available 
        resources, the participant's circumstances, and local 
        employment opportunities.
    [(b) Appropriate workers' compensation and tort claims 
protection must 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).
    [(c) No work assignment under the program shall result in--
            [(1) the displacement of any currently employed 
        worker or position (including partial displacement such 
        as a reduction in the hours of nonovertime work, wages, 
        or employment benefits), or result in the impairment of 
        existing contracts for services or collective 
        bargaining agreements;
            [(2) the employment or assignment of a participant 
        or the filling of a position when (A) any other 
        individual is on layoff from the same or any equivalent 
        position, or (B) the employer has terminated the 
        employment of any regular employee or otherwise reduced 
        its workforce with the effect of filling the vacancy so 
        created with a participant subsidized under the 
        program; or
            [(3) any infringement of the promotional 
        opportunities of any currently employed individual.
Funds available to carry out the program under this part may 
not be used to assist, promote, or deter union organizing. No 
participant may be assigned under section 482(e) or (f) to fill 
any established unfilled position vacancy.
    [(d)(1) The State shall establish and maintain (pursuant to 
regulations jointly issued by the Secretary and the Secretary 
of Labor) 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 (c). 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.
    [(2) The State shall hear complaints with respect to 
working conditions and workers' compensation, and wage rates in 
the case of individuals participating in community work 
experience programs described in section 482(f), under the 
State's fair hearing process. A decision of the State under 
such process may be appealed to the Secretary of Labor under 
such conditions as the joint regulations issued under 
subsection (f) may provide.
    [(e) The provisions of this section apply to any work-
related programs and activities under this part, and under any 
other work-related programs and activities authorized (in 
connection with the AFDC program) under section 1115.
    [(f) The Secretary of Health and Human Services and the 
Secretary of Labor shall jointly prescribe and issue 
regulations for the purpose of implementing and carrying out 
the provisions of this section, in accordance with the 
timetable established in section 203(a) of the Family Support 
Act of 1988

                          [CONTRACT AUTHORITY

    [Sec. 485. (a) The State agency that administers or 
supervises the administration of the State's plan approved 
under section 402 shall carry out the programs under this part 
directly or through arrangements or under contracts with 
administrative entities under section 4(2) of the Job Training 
Partnership Act, with State and local educational agencies, and 
with other public agencies or private organizations (including 
community-based organizations as defined in section 4(5) of 
such Act).
    [(b) Arrangements and contracts entered into under 
subsection (a) may cover any service or activity (including 
outreach) to be made available under the program to the extent 
that the service or activity is not otherwise available on a 
nonreimbursable basis.
    [(c) The State agency and private industry councils (as 
established under section 102 of the Job Training Partnership 
Act) shall consult on the development of arrangements and 
contracts under the program established under a plan approved 
under section 482(a)(1), and under programs established under 
such Act.
    [(d) In selecting service providers, the State agency shall 
take into account appropriate factors which may include past 
performance in providing similar services, demonstrated 
effectiveness, fiscal accountability, ability to meet 
performance standards, and such other factors as the State may 
determine to be appropriate.
    [(e) The State agency shall use the services of each 
private industry council to identify and provide advice on the 
types of jobs available or likely to become available in the 
service delivery area (as defined in the Job Training 
Partnership Act) of the council, and shall ensure that the 
State program provides training in any area for jobs of a type 
which are, or are likely to become, available in the area.

                       [INITIAL STATE EVALUATIONS

    [Sec. 486. (a) With the objective of--
            [(1) providing an in-depth assessment of potential 
        participants in the program under this part in each 
        State, so as to furnish an accurate picture on which to 
        base estimates of future demands for services in 
        conducting such program and to improve the efficiency 
        of targeting under such program,
            [(2) assuring that training for recipients of aid 
        under such program will be realistically geared to 
        labor market demands and that the program will produce 
        individuals with marketable skills, while avoiding 
        duplication and redundancy in the delivery of services, 
        and
            [(3) otherwise assuring that States will have the 
        information needed to carry out the purposes of the 
        program,
each State may undertake and carry out an evaluation of 
demographic characteristics of potential participants in the 
program under this part within the 12-month period beginning on 
the date of the enactment of the Family Support Act of 1988 
Such evaluation shall be carried out in each State by the 
agency which administers the State's program approved under 
section 402.
    [(b) In carrying out the evaluation under subsection (a) 
the State shall give particular attention to the current and 
anticipated demands of the labor market or markets within the 
State, the types of training which are needed to meet those 
demands, and any changes in the current service delivery 
systems which may be needed to satisfy the requirements of the 
program under this part.
    [(c) The evaluation shall be structured so as to produce 
accurate and usable information on the age, family status, 
educational and literacy levels, duration of eligibility for 
aid to families with dependent children, and work experience of 
the individuals and families who are potential participants in 
the program under this part, including the actual numbers of 
such individuals and families in each such category.
    [(d) The Secretary of Health and Human Services, in 
consultation with the Secretary of Labor, shall provide each 
State with such technical assistance and data as it may need in 
order to carry out its evaluation under subsection (a); and 
each State shall transmit its evaluation to the Secretary by 
the close of the 12-month period specified in such subsection. 
The Secretary of Health and Human Services shall take such 
evaluations into account in developing performance standards.
    [(e) As used in this section, the term ``potential 
participants'' with respect to any State's program under this 
part means collectively all individuals in such State who are 
recipients of aid to families with dependent children under 
part A and who are members of the target populations identified 
in section 403(l)(2).

                         [PERFORMANCE STANDARDS

    [Sec. 487. (a) Not later than 4 years after the effective 
date specified in section 204(a) of the Family Support Act of 
1988 , the Secretary 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 criteria for 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 recommendations with respect to 
        performance standards developed under paragraph (1) to 
        the appropriate committees of jurisdiction of the 
        Congress, which recommendations shall be made with 
        respect to specific measurements of outcomes and be 
        based on the degree of success which may reasonably be 
        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 with respect to the program 
under this part shall be reviewed periodically by the Secretary 
and modified to the extent necessary.
    [(b) The Secretary may collect information from the States 
to assist in the development of performance standards under 
subsection (a), and shall include in his regulations (issued 
pursuant to section 203(a) of the Family Support Act of 1988 
with respect to the program under this part) provisions 
establishing uniform reporting requirements under which States 
must furnish periodically information and data, including 
information and data (for each program activity) on the average 
monthly number of families assisted, the types of such 
families, the amounts spent per family, the length of their 
participation, and such other matters as the Secretary may 
determine.
    [(c) The Secretary shall develop and transmit to the 
Congress, for appropriate legislative action, a proposal for 
measuring State progress, providing technical assistance to 
enable States to meet performance standards, and modifying the 
Federal matching rate to reflect the relative effectiveness of 
the various States in carrying out the program.]

                  PART F--MANDATORY WORK REQUIREMENTS

SEC. 481. MANDATORY WORK REQUIREMENTS.

    (a) Participation Rate Requirements.--
            (1) All families.--A State that is operating a 
        program under part A for a fiscal year shall achieve 
        the minimum participation rate specified in the 
        following table for the fiscal year with respect to all 
        families receiving assistance under the State program 
        operated under part A:

                                                             The minimum
                                                           participation
            If the fiscal year is:                              rate is:
              1996......................................           20   
              1997......................................           25   
              1998......................................           30   
              1999......................................           35   
              2000......................................           40   
              2001......................................           45   
              2002 or thereafter........................           50.  

            (2) 2-parent families.--A State that is operating a 
        program under part A for a fiscal year shall achieve 
        the minimum participation rate specified in the 
        following table for the fiscal year with respect to 2-
        parent families receiving assistance under the State 
        program operated under part A:

                                                             The minimum
                                                           participation
            If the fiscal year is:                              rate is:
              1996......................................           50   
              1997......................................           75   
              1998......................................           75   
              1999 or thereafter........................           90.  

    (b) Calculation of Participation Rates.--
            (1) All families.--
                    (A) Average monthly rate.--For purposes of 
                subsection (a)(1), the participation rate for 
                all families of a State for a fiscal year is 
                the average of the participation rates for all 
                families of the State for each month in the 
                fiscal year.
                    (B) Monthly participation rates.--The 
                participation rate of a State for all families 
                of the State for a month, expressed as a 
                percentage, is--
                            (i) the number of families 
                        receiving assistance under the State 
                        program operated under part A that 
                        include an adult who is engaged in work 
                        for the month; divided by
                            (ii) the amount by which--
                                    (I) the number of families 
                                receiving such assistance 
                                during the month that include 
                                an adult receiving such 
                                assistance; exceeds
                                    (II) the number of families 
                                receiving such assistance that 
                                are subject in such month to a 
                                penalty described in subsection 
                                (e)(1) but have not been 
                                subject to such penalty for 
                                more than 3 months within the 
                                preceding 12-month period 
                                (whether or not consecutive).
            (2) 2-parent families.--
                    (A) Average monthly rate.--For purposes of 
                subsection (a)(2), the participation rate for 
                2-parent families of a State for a fiscal year 
                is the average of the participation rates for 
                2-parent families of the State for each month 
                in the fiscal year.
                    (B) Monthly participation rates.--The 
                participation rate of a State for 2-parent 
                families of the State for a month shall be 
                calculated by use of the formula set forth in 
                paragraph (1)(B), except that in the formula 
                the term `number of 2-parent families' shall be 
                substituted for the term `number of families' 
                each place such latter term appears.
            (3) Pro rata reduction of participation rate due to 
        caseload reductions not required by federal law.--The 
        Secretary shall prescribe regulations for reducing the 
        minimum participation rate otherwise required by this 
        section for a fiscal year by the number of percentage 
        points equal to the number of percentage points (if 
        any) by which--
                    (A) the number of families receiving 
                assistance during the fiscal year under the 
                State plan approved under part A is less than
                    (B) the number of families that received 
                aid under the State plan approved under part A 
                during fiscal year 1995.
                The minimum participation rate shall not be 
                reduced to the extent that the Secretary 
                determines that the reduction in the number of 
                families receiving such assistance is required 
                by Federal law.
            (4) State option for participation requirement 
        exemptions.--For any fiscal year, a State may, at its 
        option, not require an individual who is a single 
        custodial parent caring for a child who has not 
        attained 12 months of age to engage in work and may 
        disregard such an individual in determining the 
        participation rates under subsection (a).
    (c) Engaged in Work.--
            (1) All families.--For purposes of subsection 
        (b)(1)(B)(i), a recipient is engaged in work for a 
        month in a fiscal year if the recipient is 
        participating in work activities for at least the 
        minimum average number of hours per week specified in 
        the following table during the month, not fewer than 20 
        hours per week of which are attributable to an activity 
        described in paragraph (1), (2), (3), (4), (5), (6), 
        (7), or (8) of subsection (d):

                                                             The minimum
          If the month is                              average number of
            in fiscal year:                           hours per week is:
              1996......................................           20   
              1997......................................           20   
              1998......................................           20   
              1999......................................           25   
              2000......................................           30   
              2001......................................           30   
              2002......................................           35   
              2003 or thereafter........................           35.  

            (2) 2-parent families.--For purposes of subsection 
        (b)(2)(B)(i), an adult is engaged in work for a month 
        in a fiscal year if the adult is making progress in 
        work activities for at least 35 hours per week during 
        the month, not fewer than 30 hours per week of which 
        are attributable to an activity described in paragraph 
        (1), (2), (3), (4), (5), (6), (7), or (8) of subsection 
        (d).
            (3) Limitation on number of weeks for which job 
        search counts as work.--Notwithstanding paragraphs (1) 
        and (2), an individual shall not be considered to be 
        engaged in work by virtue of participation in an 
        activity described in subsection (d)(6), after the 
        individual has participated in such an activity for 4 
        weeks (except if the unemployment rate is above the 
        national average, 12 weeks) in a fiscal year. An 
        individual shall be considered to be participating in 
        such an activity for a week if the individual 
        participates in such an activity at any time during the 
        week.
            (4) Limitation on vocational education activities 
        counted as work.--For purposes of determining monthly 
        participation rates under paragraphs (1)(B)(i) and 
        (2)(B)(i) of subsection (b), not more than 20 percent 
        of adults in all families and in 2-parent families 
        determined to be engaged in work in the State for a 
        month may meet the work activity requirement through 
        participation in vocational educational training.
            (5) Single parent with child under age 6 deemed to 
        be meeting work participation requirements if parent is 
        engaged in work for 20 hours per week.--For purposes of 
        determining monthly participation rates under 
        subsection (b)(1)(B)(i), a recipient in a 1-parent 
        family who is the parent of a child who has not 
        attained 6 years of age is deemed to be engaged in work 
        for a month if the recipient is engaged in work for an 
        average of at least 20 hours per week during the month.
            (6) Teen head of household who maintains 
        satisfactory school attendance deemed to be meeting 
        work participation requirements.--For purposes of 
        determining monthly participation rates under 
        subsection (b)(1)(B)(i), a recipient who is a single 
        head of household and has not attained 20 years of age 
        is deemed to be engaged in work for a month in a fiscal 
        year if the recipient--
                    (A) maintains satisfactory attendance at 
                secondary school or the equivalent during the 
                month; or
                    (B) participates in education directly 
                related to employment for at least the minimum 
                average number of hours per week specified in 
                the table set forth in paragraph (1).
    (d) Work Activities Defined.--As used in this section, the 
term ``work activities'' means--
            (1) unsubsidized employment;
            (2) subsidized private sector employment;
            (3) subsidized public sector employment;
            (4) work experience (including work associated with 
        the refurbishing of publicly assisted housing) if 
        sufficient private sector employment is not available;
            (5) on-the-job training;
            (6) job search and job readiness assistance;
            (7) community service programs;
            (8) vocational educational training (not to exceed 
        12 months with respect to any individual);
            (9) job skills training directly related to 
        employment;
            (10) education directly related to employment, in 
        the case of a recipient who has not received a high 
        school diploma or a certificate of high school 
        equivalency; and
            (11) satisfactory attendance at secondary school or 
        high school equivalency program, in the case of a 
        recipient who has not completed secondary school.
    (e) Supplemental Grant for Operation of Work Program.--
            (1) Application requirements.--An eligible State 
        may submit to the Secretary an application for 
        additional funds to meet the requirements of this 
        section with respect to a fiscal year if the Secretary 
        determines that--
                    (A) the total expenditures of the State to 
                meet such requirements for the fiscal year 
                exceed the total expenditures of the State 
                during fiscal year 1994 to carry out part F (as 
                in effect on September 30, 1994);
                    (B) the work programs of the State under 
                this section are coordinated with the job 
                training programs established by title II of 
                the Job Training Partnership Act, or (if such 
                title is repealed by the Consolidated and 
                Reformed Education, Employment, and 
                Rehabilitation Systems Act) the Consolidated 
                and Reformed Education, Employment, and 
                Rehabilitation Systems Act; and
                    (C) the State needs additional funds to 
                meet such requirements or certifies that it 
                intends to exceed such requirements.
            (2) Grants.--The Secretary may make a grant to any 
        eligible State which submits an application in 
        accordance with paragraph (1) for a fiscal year in an 
        amount equal to the Federal medical assistance 
        percentage of the amount (if any) by which the total 
        expenditures of the State to meet or exceed the 
        requirements of this section for the fiscal year 
        exceeds the total expenditures of the State during 
        fiscal year 1994 to carry out part F (as in effect on 
        September 30, 1994).
            (3) Regulations.--The Secretary shall issue 
        regulations providing for the equitable distribution of 
        funds under this subsection.
            (4) Authorization of appropriations.--
                    (A) In general.--There are authorized to be 
                appropriated for grants under this subsection 
                $3,000,000,000 for fiscal year 1999.
                    (B) Availability.--Amounts appropriated 
                pursuant to subparagraph (A) are authorized to 
                remain available until expended.
    (f) Penalties.--
            (1) Against individuals.--
                    (A) In general.--Except as provided in 
                subparagraph (B), if an adult in a family 
                receiving assistance under the State program 
                operated under part A refuses to engage in work 
                required in accordance with this section, the 
                State shall--
                            (i) reduce the amount of assistance 
                        otherwise payable to the family pro 
                        rata (or more, at the option of the 
                        State) with respect to any period 
                        during a month in which the adult so 
                        refuses; or
                            (ii) terminate such assistance,
        subject to such good cause and other exceptions as the 
        State may establish.
                    (B) Exception.--Notwithstanding 
                subparagraph (A), a State may not reduce or 
                terminate assistance under the State program 
                operated under part A based on a refusal of an 
                adult to work if the adult is a single 
                custodial parent caring for a child who has not 
                attained 11 years of age, and the adult proves 
                that the adult has a demonstrated inability (as 
                determined by the State) to obtain needed child 
                care, for 1 or more of the following reasons:
                            (i) Unavailability of appropriate 
                        child care within a reasonable distance 
                        from the individual's home or work 
                        site.
                            (ii) Unavailability or 
                        unsuitability of informal child care by 
                        a relative or under other arrangements.
                            (iii) Unavailability of appropriate 
                        and affordable formal child care 
                        arrangements.
            (2) Against states.--
                    (A) In general.--If the Secretary 
                determines that a State that is operating a 
                program under part A for a fiscal year has 
                failed to comply with this section for the 
                fiscal year, the Secretary shall reduce the 
                total amount otherwise payable to the State 
                under section 403 for the immediately 
                succeeding fiscal year by an amount equal to 
                not more than 5 percent of such otherwise 
                payable amount.
                    (B) Penalty based on severity of failure.--
                The Secretary shall impose reductions under 
                subparagraph (A) based on the degree of 
                noncompliance.
    (g) Nondisplacement in Work Activities.--
            (1) In general.--Subject to paragraph (2), an adult 
        in a family receiving assistance under a State program 
        operated under part A attributable to funds provided by 
        the Federal Government may fill a vacant employment 
        position in order to engage in a work activity 
        described in subsection (d).
            (2) No filling of certain vacancies.--No adult in a 
        work activity described in subsection (d) which is 
        funded, in whole or in part, by funds provided by the 
        Federal Government shall be employed or assigned--
                    (A) when any other individual is on layoff 
                from the same or any substantially equivalent 
                job; or
                    (B) if the employer has terminated the 
                employment of any regular employee or otherwise 
                caused an involuntary reduction of its 
                workforce in order to fill the vacancy so 
                created with an adult described in paragraph 
                (1).
            (3) No preemption.--Nothing in this subsection 
        shall preempt or supersede any provision of State or 
        local law that provides greater protection for 
        employees from displacement.
    (h) Sense of the Congress.--It is the sense of the Congress 
that in complying with this section, each State that operates a 
program under part A is encouraged to assign the highest 
priority to requiring adults in 2-parent families and adults in 
single-parent families that include older preschool or school-
age children to be engaged in work activities.
    (i) Sense of the Congress That States Should Impose Certain 
Requirements on Noncustodial, Nonsupporting Minor Parents.--It 
is the sense of the Congress that the States should require 
noncustodial, nonsupporting parents who have not attained 18 
years of age to fulfill community work obligations and attend 
appropriate parenting or money management classes after school.

SEC. 482. INDIVIDUAL RESPONSIBILITY PLANS.

    (a) Assessment.--The State agency responsible for 
administering the State program funded under part A shall make 
an initial assessment of the skills, prior work experience, and 
employability of each recipient of assistance under the program 
who--
            (1) has attained 18 years of age; or
            (2) has not completed high school or obtained a 
        certificate of high school equivalency, and is not 
        attending secondary school.
    (b) Contents of Plans.--
            (1) In general.--On the basis of the assessment 
        made under subsection (a) with respect to an 
        individual, the State agency, in consultation with the 
        individual, shall develop an individual responsibility 
        plan for the individual, which--
                    (A) shall provide that participation by the 
                individual in job search activities shall be a 
                condition of eligibility for assistance under 
                the State program funded under part A, except 
                during any period for which the individual is 
                employed full-time in an unsubsidized job in 
                the private sector;
                    (B) sets forth an employment goal for the 
                individual and a plan for moving the individual 
                immediately into private sector employment;
                    (C) sets forth the obligations of the 
                individual, which may include a requirement 
                that the individual attend school, maintain 
                certain grades and attendance, keep school age 
                children of the individual in school, immunize 
                children, attend parenting and money management 
                classes, or do other things that will help the 
                individual become and remain employed in the 
                private sector;
                    (D) to the greatest extent possible shall 
                be designed to move the individual into 
                whatever private sector employment the 
                individual is capable of handling as quickly as 
                possible, and to increase the responsibility 
                and amount of work the individual is to handle 
                over time;
                    (E) shall describe the services the State 
                will provide the individual so that the 
                individual will be able to obtain and keep 
                employment in the private sector, and describe 
                the job counseling and other services that will 
                be provided by the State; and
                    (F) at the option of the State, may require 
                the individual to undergo appropriate substance 
                abuse treatment.
            (2) Timing.--The State agency shall comply with 
        paragraph (1) with respect to an individual--
                    (A) within 90 days (or, at the option of 
                the State, 180 days) after the effective date 
                of this part, in the case of an individual who, 
                as of such effective date, is a recipient of 
                aid under the State plan approved under part A 
                (as in effect immediately before such effective 
                date); or
                    (B) within 30 days (or, at the option of 
                the State, 90 days) after the individual is 
                determined to be eligible for such assistance, 
                in the case of any other individual.
    (c) Provision of Program and Employment Information.--The 
State shall inform all applicants for and recipients of 
assistance under the State program funded under part A of all 
available services under the program for which they are 
eligible.
    (d) Penalty for Noncompliance by Individual.--
            (1) In general.--Except as provided in paragraph 
        (2), the State shall reduce, by such amount as the 
        State considers appropriate, the amount of assistance 
        otherwise payable under the State program funded under 
        part A to a family that includes an individual who 
        fails without good cause to comply with an individual 
        responsibility plan signed by the individual.
            (2) Exception.--A State may not terminate the 
        provision of assistance to an individual under the 
        State program funded under part A, or reduce the amount 
        of assistance to be provided to an individual under the 
        program, if the State has failed to provide to the 
        individual the services referred to in subsection 
        (b)(1)(E) that are described in the individual 
        responsibility plan for the individual.
    (e) The exercise of the authority of this section shall be 
withing the sole discretion of the State.
          * * * * * * *

              TITLE XI--GENERAL PROVISIONS AND PEER REVIEW

          * * * * * * *

                       Part A--General Provisions

          * * * * * * *

 limitation on payments to puerto rico, the virgin islands, guam, and 
                             american samoa

    Sec. 1108. (a) The total amount certified by the Secretary 
of Health and Human Services under titles I, X, XIV, and XVI, 
and under parts A and E of title IV (exclusive of any amounts 
on account of services and items to which subsection (b) [or, 
in the case of part A of title IV, section 403(k)] applies)--
            (1)  * * *
          * * * * * * *
    (d) The total amount certified by the Secretary under parts 
A and E of title IV with respect to a fiscal year for payment 
to American Samoa [(exclusive of any amounts on account of 
services and items to which, in the case of part A of such 
title, section 403(k) applies)] shall not exceed $1,000,000.
          * * * * * * *

                         demonstration projects

    Sec. 1115. (a)  * * *
    (b)(1)  * * *
    (2) Any State which establishes and conducts demonstration 
projects under this subsection may, subject to paragraph (3), 
with respect to any such project--
            (A) waive, subject to paragraph (3), any or all of 
        the requirements of sections 402(a)(1) (relating to 
        statewide operation), 402(a)(3) (relating to 
        administration by a single State agency), 402(a)(8) 
        (relating to disregard of earned income), except that 
        no such waiver of 402(a)(8) shall operate to waive any 
        amount in excess of one-half of the earned income of 
        any individual[, and 402(a)(19) (relating to the work 
        incentive program)]; and
          * * * * * * *

      TITLE XIX--GRANTS TO STATES FOR MEDICAL ASSISTANCE PROGRAMS

          * * * * * * *

                   STATE PLANS FOR MEDICAL ASSISTANCE

    Sec. 1902. (a) A State plan for medical assistance must--
            (1)  * * *
          * * * * * * *
            (10) provide--
                    (A) for making medical assistance 
                available, including at least the care and 
                services listed in paragraphs (1) through (5), 
                (17) and (21) of section 1905(a), to--
                            (i) all individuals--
                                    (I) who are receiving aid 
                                or assistance under any plan of 
                                the State approved under title 
                                I, X, XIV, or XVI, or part A or 
                                part E of title IV (including 
                                individuals eligible under this 
                                title by reason of section 
                                402(a)(37), 406(h), or 473(b)[, 
                                or considered by the State to 
                                be receiving such aid as 
                                authorized under section 
                                482(e)(6)]),
          * * * * * * *
                              ----------                              


            SECTION 51 OF THE INTERNAL REVENUE CODE OF 1986

SEC. 51. AMOUNT OF CREDIT.

    (a)  * * *
          * * * * * * *
    (c) Wages Defined.--For purposes of this subpart--
            (1)  * * *
            (2) On-the-job training and work supplementation 
        payments.--
                    (A)  * * *
          * * * * * * *
                    [(B) Reduction for work supplementation 
                payments to employers.--The amount of wages 
                which would (but for this subparagraph) be 
                qualified wages under this section for an 
                employer with respect to an individual for a 
                taxable year shall be reduced by an amount 
                equal to the amount of the payments made to 
                such employer (however utilized by such 
                employer) with respect to such individual for 
                such taxable year under a program established 
                under section 482(e) of the Social Security 
                Act.]
          * * * * * * *
                              ----------                              


                CHILD ABUSE PREVENTION AND TREATMENT ACT

[SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

    [(a) Short Title.--This Act may be cited as the ``Child 
Abuse Prevention and Treatment Act''.
    [(b) Table of Contents.--The table of contents is as 
follows:

                           [TABLE OF CONTENTS

[Sec. 1. Short title and table of contents.
[Sec. 2. Findings.

                        [TITLE I--GENERAL PROGRAM

[Sec. 101. National Center on Child Abuse and Neglect.
[Sec. 102. Advisory Board on Child Abuse and Neglect.
[Sec. 103. Inter-Agency Task Force on Child Abuse and Neglect.
[Sec. 104. National clearinghouse for information relating to child 
          abuse.
[Sec. 105. Research and assistance activities of the National Center on 
          Child Abuse and Neglect.
[Sec. 106. Grants to public agencies and nonprofit private organizations 
          for demonstration or service programs and projects.
[Sec. 107. Grants to States for child abuse and neglect prevention and 
          treatment programs.
[Sec. 107A. Emergency child abuse prevention services grant.
[Sec. 108. Technical assistance to States for child abuse prevention and 
          treatment programs.
[Sec. 109. Grants to States for programs relating to the investigation 
          and prosecution of child abuse and neglect cases.
[Sec. 110. Miscellaneous requirements relating to assistance.
[Sec. 111. Coordination of child abuse and neglect programs.
[Sec. 112. Reports.
[Sec. 113. Definitions.
[Sec. 114. Authorization of appropriations.

[TITLE II--GRANTS WITH RESPECT TO ENCOURAGING STATES TO MAINTAIN CERTAIN 
                           FUNDING MECHANISMS

[Sec. 201. Findings and purpose.
[Sec. 202. Definitions.
[Sec. 203. Grants authorized.
[Sec. 204. State eligibility.
[Sec. 205. Limitations.
[Sec. 206. Withholding.
[Sec. 207. Audit.
[Sec. 208. Report.

 [TITLE III--CERTAIN PREVENTIVE SERVICES REGARDING CHILDREN OF HOMELSSS 
              FAMILIES OR FAMILIES AT RISK OF HOMELESSNESS

[Sec. 301. Demonstration grants for prevention of inappropriate 
          separation from family and for prevention of child abuse and 
          neglect.
[Sec. 302. Provisions with respect to carrying out purpose of 
          demonstration grants.
[Sec. 303. Additional required agreements.
[Sec. 304. Description of intended uses of grant.
[Sec. 305. Requirement of submission of application.
[Sec. 306. Authorization of appropriations.

[SEC. 2. FINDINGS.

    [Congress finds that--
            [(1) each year, hundreds of thousands of American 
        children are victims of abuse and neglect with such 
        numbers having increased dramatically over the past 
        decade;
            [(2) many of these children and their families fail 
        to receive adequate protection or treatment;
            [(3) the problem of child abuse and neglect 
        requires a comprehensive approach that--
                    [(A) integrates the work of social service, 
                legal, health, mental health, education, and 
                substance abuse agencies and organizations;
                    [(B) strengthens coordination among all 
                levels of government, and with private 
                agencies, civic, religious, and professional 
                organizations, and individual volunteers;
                    [(C) emphasizes the need for abuse and 
                neglect prevention, investigation, and 
                treatment at the neighborhood level;
                    [(D) ensures properly trained and support 
                staff with specialized knowledge, to carry out 
                their child protection duties; and
                    [(E) is sensitive to ethnic and cultural 
                diversity;
            [(4) the failure to coordinate and comprehensively 
        prevent and treat child abuse and neglect threatens the 
        futures of tens of thousands of children and results in 
        a cost to the Nation of billions of dollars in direct 
        expenditures for health, social, and special 
        educational services and ultimately in the loss of work 
        productivity;
            [(5) all elements of American society have a shared 
        responsibility in responding to this national child and 
        family emergency;
            [(6) substantial reductions in the prevalence and 
        incidence of child abuse and neglect and the 
        alleviation of its consequences are matters of the 
        highest national priority;
            [(7) national policy should strengthen families to 
        remedy the causes of child abuse and neglect, provide 
        support for intensive services to prevent the 
        unnecessary removal of children from families, and 
        promote the reunification of families if removal has 
        taken place;
            [(8) the child protection system should be 
        comprehensive, child-centered, family-focused, and 
        community-based, should incorporate all appropriate 
        measures to prevent the occurrence or recurrence of 
        child abuse and neglect, and should promote physical 
        and psychological recovery and social re-integration in 
        an environment that fosters the health, self-respect, 
        and dignity of the child;
            [(9) because of the limited resources available in 
        low-income communities, Federal aid for the child 
        protection system should be distributed with due regard 
        to the relative financial need of the communities;
            [(10) the Federal government should ensure that 
        every community in the United States has the fiscal, 
        human, and technical resources necessary to develop and 
        implement a successful and comprehensive child 
        protection strategy;
            [(11) the Federal government should provide 
        leadership and assist communities in their child 
        protection efforts by--
                    [(A) promoting coordinated planning among 
                all levels of government;
                    [(B) generating and sharing knowledge 
                relevant to child protection, including the 
                development of models for service delivery;
                    [(C) strengthening the capacity of States 
                to assist communities;
                    [(D) allocating sufficient financial 
                resources to assist States in implementing 
                community plans;
                    [(E) helping communities to carry out their 
                child protection plans by promoting the 
                competence of professional, paraprofessional, 
                and volunteer resources; and
                    [(F) providing leadership to end the abuse 
                and neglect of the nation's children and youth.

                       [TITLE I--GENERAL PROGRAM

[SEC. 101. NATIONAL CENTER ON CHILD ABUSE AND NEGLECT.

    [(a) Establishment.--The Secretary of Health and Human 
Services shall establish an office to be known as the National 
Center on Child Abuse and Neglect.
    [(b) Appointment of Director.--
            [(1) Appointment.--The Secretary shall appoint a 
        Director of the Center. Except as otherwise provided in 
        this Act, the Director shall be responsible only for 
        administration and operation of the Center and for 
        carrying out the functions of the Center under this 
        Act. The Director shall have experience in the field of 
        child abuse and neglect.
            [(2) Compensation.--The Director shall be 
        compensated at the annual rate provided for a level GS-
        15 employee under section 5332 of title 5, United 
        States Code.
    [(c) Other Staff and Resources.--The Secretary shall make 
available to the Center such staff and resources as are 
necessary for the Center to carry out effectively its functions 
under this Act. The Secretary shall require that professional 
staff have experience relating to child abuse and neglect. The 
Secretary is required to justify, based on the priorities and 
needs of the Center, the hiring of any professional staff 
member who does not have experience relating to child abuse and 
neglect.

[SEC. 102. ADVISORY BOARD ON CHILD ABUSE AND NEGLECT.

    [(a) Appointment.--The Secretary shall appoint an advisory 
board to be known as the Advisory Board on Child Abuse and 
Neglect.
    [(b) Solicitation of Nominations.--The Secretary shall 
publish a notice in the Federal Register soliciting nominations 
for the appointments required by subsection (a).
    [(c) Composition of Board.--
            [(1) Number of members.--The board shall consist of 
        15 members, each of which shall be a person who is 
        recognized for expertise in an aspect of the area of 
        child abuse, of which--
                    [(A) 2 shall be members of the task force 
                established under section 103; and
                    [(B) 13 shall be members of the general 
                public and may not be Federal employees.
            [(2) Representation.--The Secretary shall appoint 
        members from the general public under paragraph (1)(B) 
        who are individuals knowledgeable in child abuse and 
        neglect prevention, intervention, treatment, or 
        research, and with due consideration to representation 
        of ethnic or racial minorities and diverse geographic 
        areas, and who represent--
                    [(A) law (including the judiciary);
                    [(B) psychology (including child 
                development);
                    [(C) social services (including child 
                protective services);
                    [(D) medicine (including pediatrics);
                    [(E) State and local government;
                    [(F) organizations providing services to 
                disabled persons;
                    [(G) organizations providing services to 
                adolescents;
                    [(H) teachers;
                    [(I) parent self-help organizations;
                    [(J) parents' groups; and
                    [(K) voluntary groups.
            [(3) Terms of office.--(A) Except as otherwise 
        provided in this subsection, members shall be appointed 
        for terms of office of 4 years.
            [(B) Of the members of the board from the general 
        public first appointed under subsection (a)--
                    [(i) 4 shall be appointed for terms of 
                office of 2 years;
                    [(ii) 4 shall be appointed for terms of 
                office of 3 years; and
                    [(iii) 5 shall be appointed for terms of 
                office of 4 years,
        as determined by the members from the general public 
        during the first meeting of the board.
            [(C) No member of the board appointed under 
        subsection (a) shall be eligible to serve in excess of 
        two consecutive terms, but may continue to serve until 
        such member's successor is appointed.
            [(4) Vacancies.--Any member of the board appointed 
        under subsection (a) to fill a vacancy occurring before 
        the expiration of the term to which such member's 
        predecessor was appointed shall be appointed for the 
        remainder of such term. If the vacancy occurs prior to 
        the expiration of the term of a member of the board 
        appointed under subsection (a), a replacement shall be 
        appointed in the same manner in which the original 
        appointment was made.
            [(5) Removal.--No member of the board may be 
        removed during the term of office of such member except 
        for just and sufficient cause.
    [(d) Election of Officers.--The board shall elect a 
chairperson and vice-chairperson at its first meeting from 
among the members from the general public.
    [(e) Meetings.--The board shall meet not less than twice a 
year at the call of the chairperson. The chairperson, to the 
maximum extent practicable, shall coordinate meetings of the 
board with receipt of reports from the task force under section 
103(f).
    [(f) Duties.--The board shall--
            [(1) annually submit to the Secretary and the 
        appropriate committees of Congress a report 
        containing--
                    [(A) recommendations on coordinating 
                Federal child abuse and neglect activities to 
                prevent duplication and ensure efficient 
                allocations of resources and program 
                effectiveness; and
                    [(B) recommendations as to carrying out the 
                purposes of this Act;
            [(2) annually submit to the Secretary and the 
        Director a report containing long-term and short-term 
        recommendations on--
                    [(A) programs;
                    [(B) research;
                    [(C) grant and contract needs;
                    [(D) areas of unmet needs; and
                    [(E) areas to which the Secretary should 
                provide grant and contract priorities under 
                sections 105 and 106;
            [(3) annually review the budget of the Center and 
        submit to the Director a report concerning such review; 
        and
            [(4) not later than 24 months after the date of the 
        enactment of the Child Abuse Programs, Adoption 
        Opportunities, and Family Violence Prevention 
        Amendments Act of 1992, submit to the Secretary and the 
        appropriate committees of the Congress a report 
        containing the recommendations of the Board with 
        respect to--
                    [(A) a national policy designed to reduce 
                and ultimately to prevent child and youth 
                maltreatment-related deaths, detailing 
                appropriate roles and responsibilities for 
                State and local governments and the private 
                sector;
                    [(B) specific changes needed in Federal 
                laws and programs to achieve an effective 
                Federal role in the implementation of the 
                policy specified in subparagraph (A); and
                    [(C) specific changes needed to improve 
                national data collection with respect to child 
                and youth maltreatment-related deaths.
    [(g) Compensation.--
            [(1) In general.--Except as provided in paragraph 
        (3), members of the board, other than those regularly 
        employed by the Federal Government, while serving on 
        business of the board, may receive compensation at a 
        rate not in excess of the daily equivalent payable to a 
        GS-18 employee under section 5332 of title 5, United 
        States Code, including traveltime.
            [(2) Travel.--Except as provided in paragraph (3), 
        members of the board, while serving on business of the 
        board away from their homes or regular places of 
        business, may be allowed travel expenses (including per 
        diem in lieu of subsistence) as authorized by section 
        5703 of title 5, United States Code, for persons in the 
        Government service employed intermittently.
            [(3) Restriction.--The Director may not compensate 
        a member of the board under this section if the member 
        is receiving compensation or travel expenses from 
        another source while serving on business of the board.
    [(h) Authorization of Appropriations.--There are authorized 
to be appropriated to carry out this section, $1,000,000 for 
fiscal year 1992, and such sums as may be necessary for each of 
the fiscal years 1993 through 1995.

[SEC. 103. INTER-AGENCY TASK FORCE ON CHILD ABUSE AND NEGLECT.

    [(a) Establishment.--The Secretary shall establish a task 
force to be known as the Inter-Agency Task Force on Child Abuse 
and Neglect.
    [(b) Composition.--The Secretary shall request 
representation for the task force from Federal agencies with 
responsibility for programs and activities related to child 
abuse and neglect.
    [(c) Chairperson.--The task force shall be chaired by the 
Director.
    [(d) Duties.--The task force shall--
            [(1) coordinate Federal efforts with respect to 
        child abuse prevention and treatment programs;
            [(2) encourage the development by other Federal 
        agencies of activities relating to child abuse 
        prevention and treatment;
            [(3) coordinate the use of grants received under 
        this Act with the use of grants received under other 
        programs;
            [(4) prepare a comprehensive plan for coordinating 
        the goals, objectives, and activities of all Federal 
        agencies and organizations which have responsibilities 
        for programs and activities related to child abuse and 
        neglect, and submit such plan to such Advisory Board 
        not later than 12 months after the date of enactment of 
        the Child Abuse Prevention, Adoption, and Family 
        Services Act of 1988; and
            [(5) coordinate adoption related activities, 
        develop Federal standards with respect to adoption 
        activities under this Act, and prevent duplication with 
        respect to the allocation of resources to adoption 
        activities.
    [(e) Meetings.--The task force shall meet not less than 
three times annually at the call of the chairperson.
    [(f) Reports.--The task force shall report not less than 
twice annually to the Center and the Board.

[SEC. 104. NATIONAL CLEARINGHOUSE FOR INFORMATION RELATING TO CHILD 
                    ABUSE.

    [(a) Establishment.--Before the end of the 2-year period 
beginning on the date of the enactment of the Child Abuse 
Prevention, Adoption, and Family Services Act of 1988, the 
Secretary shall through the Center, or by contract of no less 
than 3 years duration let through a competition, establish a 
national clearinghouse for information relating to child abuse.
    [(b) Functions.--The Director shall, through the 
clearinghouse established by subsection (a)--
            [(1) maintain, coordinate, and disseminate 
        information on all programs, including private 
        programs, that show promise of success with respect to 
        the prevention, identification, and treatment of child 
        abuse and neglect, including the information provided 
        by the National Center for Child Abuse and Neglect 
        under section 105(b);
            [(2) maintain and disseminate information relating 
        to--
                    [(A) the incidence of cases of child abuse 
                and neglect in the general population;
                    [(B) the incidence of such cases in 
                populations determined by the Secretary under 
                section 105(a)(1) of the Child Abuse 
                Prevention, Adoption, and Family Services Act 
                of 1988;
                    [(C) the incidence of any such cases 
                related to alcohol or drug abuse; and
                    [(D) State and local recordkeeping with 
                respect to such cases; and
            [(3) directly or through contract, identify 
        effective programs carried out by the States pursuant 
        to title II and provide technical assistance to the 
        States in the implementation of such programs.
    [(c) Coordination With Available Resources.--In 
establishing a national clearinghouse as required by subsection 
(a), the Director shall--
            [(1) consult with other Federal agencies that 
        operate similar clearinghouses;
            [(2) consult with the head of each agency that is 
        represented on the task force on the development of the 
        components for information collection and management of 
        such clearinghouse;
            [(3) develop a Federal data system involving the 
        elements under subsection (b) which, to the extent 
        practicable, coordinates existing State, regional, and 
        local data systems; and
            [(4) solicit public comment on the components of 
        such clearinghouse.

[SEC. 105. RESEARCH AND ASSISTANCE ACTIVITIES OF THE NATIONAL CENTER ON 
                    CHILD ABUSE AND NEGLECT.

    [(a) Research.--
            [(1) Topics.--The Secretary shall, through the 
        Center, conduct research on--
                    [(A) the causes, prevention, 
                identification,, treatment and cultural 
                distinctions of child abuse and neglect;
                    [(B) appropriate, effective and culturally 
                sensitive investigative, administrative, and 
                judicial procedures with respect to cases of 
                child abuse; and
                    [(C) the national incidence of child abuse 
                and neglect, including--
                            [(i) the extent to which incidents 
                        of child abuse are increasing or 
                        decreasing in number and severity;
                            [(ii) the relationship of child 
                        abuse and neglect to nonpayment of 
                        child support, cultural diversity, 
                        disabilities, and various other 
                        factors; and
                            [(iii) the incidence of 
                        substantiated reported child abuse 
                        cases that result in civil child 
                        protection proceedings or criminal 
                        proceedings, including the number of 
                        such cases with respect to which the 
                        court makes a finding that abuse or 
                        neglect exists and the disposition of 
                        such cases.
            [(2) Priorities.--(A) The Secretary shall establish 
        research and demonstration priorities for making grants 
        or contracts for purposes of carrying out paragraph 
        (1)(A) and activities under section 106.
            [(B) In establishing research and demonstration 
        priorities as required by subparagraph (A), the 
        Secretary shall--
                    [(i) publish proposed priorities in the 
                Federal Register for public comment; and
                    [(ii) allow not less than 60 days for 
                public comment on such proposed priorities.
    [(b) Publication and Dissemination of Information.--The 
Secretary shall, through the Center--
            [(1) as a part of research activities, establish a 
        national data collection and analysis program--
                    [(A) which, to the extent practicable, 
                coordinates existing State child abuse and 
                neglect reports and which shall include--
                            [(i) standardized data on false, 
                        unfounded, or unsubstantiated reports; 
                        and
                            [(ii) information on the number of 
                        deaths due to child abuse and neglect; 
                        and
                    [(B) which shall collect, compile, analyze, 
                and make available State child abuse and 
                neglect reporting information which, to the 
                extent practical, is universal and case 
                specific, and integrated with other case-based 
                foster care and adoption data collected by the 
                Secretary;
            [(2) annually compile and analyze research on child 
        abuse and neglect and publish a summary of such 
        research;
            [(3) compile, evaluate, publish, and disseminate to 
        the States and to the clearinghouse, established under 
        section 104, materials and information designed to 
        assist the States in developing, establishing, and 
        operating the programs described in section 109, 
        including an evaluation of--
                    [(A) various methods and procedures for the 
                investigation and prosecution of child physical 
                and sexual abuse cases; and
                    [(B) resultant psychological trauma to the 
                child victim;
            [(4) compile, publish, and disseminate training 
        materials--
                    [(A) for persons who are engaged in or 
                intend to engage in the prevention, 
                identification, and treatment of child abuse 
                and neglect; and
                    [(B) to appropriate State and local 
                officials to assist in training law 
                enforcement, legal, judicial, medical, mental 
                health, and child welfare personnel in 
                appropriate methods of interacting during 
                investigative, administrative, and judicial 
                proceedings with children who have been 
                subjected to abuse; and
            [(5) establish model information collection 
        systems, in consultation with appropriate State and 
        local agencies and professionals.
    [(c) Provision of Technical Assistance.--The Secretary 
shall, through the Center, provide technical assistance to 
public and nonprofit private agencies and organizations, 
including disability organizations and persons who work with 
children with disabilities, to assist such agencies and 
organizations in planning, improving, developing, and carrying 
out programs and activities relating to the prevention, 
identification, and treatment of child abuse and neglect.
    [(d) Authority to Make Grants or Enter Into Contracts.--
            [(1) In general.--The functions of the Secretary 
        under this section may be carried out either directly 
        or through grant or contract.
            [(2) Duration.--Grants under this section shall be 
        made for periods of not more than 5 years. The 
        Secretary shall review each such grant at least 
        annually, utilizing peer review mechanisms to assure 
        the quality and progress of research conducted under 
        such grant.
            [(3) Preference for long-term studies.--In making 
        grants for purposes of conducting research under 
        subsection (a), the Secretary shall give special 
        consideration to applications for long-term projects.
    [(e) Peer Review for Grants.--
            [(1) Establishment of peer review process.--(A) The 
        Secretary shall establish a formal peer review process 
        for purposes of evaluating and reviewing applications 
        for grants and contracts under this section and 
        determining the relative merits of the projects for 
        which such assistance is requested.
            [(B) In establishing the process required by 
        subparagraph (A), the Secretary shall appoint to the 
        peer review panels only members who are experts in the 
        field of child abuse and neglect or related 
        disciplines, with appropriate expertise in the 
        application to be reviewed, and who are not individuals 
        who are officers or employees of the Office of Human 
        Development. The panels shall meet as often as is 
        necessary to facilitate the expeditious review of 
        applications for grants and contracts under this 
        section, but may not meet less than once a year.
            [(2) Review of applications for assistance.--Each 
        peer review panel established under paragraph (1)(A) 
        that reviews any application for a grant, contract, or 
        other financial assistance shall--
                    [(A) determine and evaluate the merit of 
                each project described in such application;
                    [(B) rank such application with respect to 
                all other applications it reviews in the same 
                priority area for the fiscal year involved, 
                according to the relative merit of all of the 
                projects that are described in such application 
                and for which financial assistance is 
                requested; and
                    [(C) make recommendations to the Secretary 
                concerning whether the application for the 
                project shall be approved.
            [(3) Notice of approval.--(A) The Secretary shall 
        provide grants and contracts under this section from 
        among the projects which the peer review panels 
        established under paragraph (1)(A) have determined to 
        have merit.
            [(B) In the instance in which the Secretary 
        approves an application for a program without having 
        approved all applications ranked above such application 
        (as determined under subsection (e)(2)(B)), the 
        Secretary shall append to the approved application a 
        detailed explanation of the reasons relied on for 
        approving the application and for failing to approve 
        each pending application that is superior in merit, as 
        indicated on the list under subsection (e)(2)(B).

[SEC. 106. GRANTS TO PUBLIC AGENCIES AND NONPROFIT PRIVATE 
                    ORGANIZATIONS FOR DEMONSTRATION OR SERVICE PROGRAMS 
                    AND PROJECTS.

    [(a) General Authority.--
            [(1) Demonstration or service programs and 
        projects.--The Secretary, through the Center, shall, in 
        accordance with subsections (b) and (c), make grants 
        to, and enter into contracts with, public agencies or 
        nonprofit private organizations (or combinations of 
        such agencies or organizations) for demonstration or 
        service programs and projects designed to prevent, 
        identify, and treat child abuse and neglect.
            [(2) Evaluations.--In making grants or entering 
        into contracts for demonstration projects, the 
        Secretary shall require all such projects to be 
        evaluated for their effectiveness. Funding for such 
        evaluations shall be provided either as a stated 
        percentage of a demonstration grant or contract, or as 
        a separate grant or contract entered into by the 
        Secretary for the purpose of evaluating a particular 
        demonstration project or group of projects.
    [(b) Grants for Resource Centers.--The Secretary shall, 
directly or through grants or contracts with public or private 
nonprofit organizations under this section, provide for the 
establishment of resource centers--
            [(1) serving defined geographic areas;
            [(2) staffed by multidisciplinary teams of 
        personnel trained in the prevention, identification, 
        and treatment of child abuse and neglect; and
            [(3) providing advice and consultation to 
        individuals, agencies, and organizations which request 
        such services.
    [(c) Discretionary Grants.--In addition to grants or 
contracts made under subsection (b), grants or contracts under 
this section may be used for the following:
            [(1) Training programs--
                    [(A) for professional and paraprofessional 
                personnel in the fields of medicine, law, 
                education, social work, and other relevant 
                fields who are engaged in, or intend to work 
                in, the field of prevention, identification, 
                and treatment of child abuse and neglect;
                    [(B) to provide culturally specific 
                instruction in methods of protecting children 
                from child abuse and neglect to children and to 
                persons responsible for the welfare of 
                children, including parents of and persons who 
                work with children with disabilities; or
                    [(C) to improve the recruitment, selection, 
                and training of volunteers serving in private 
                and public nonprofit children, youth and family 
                service organizations in order to prevent child 
                abuse and neglect through collaborative 
                analysis of current recruitment, selection, and 
                training programs and development of model 
                programs for dissemination and replication 
                nationally.
            [(2) Such other innovative programs and projects as 
        the Secretary may approve, including programs and 
        projects for parent self-help, for prevention and 
        treatment of alcohol and drug-related child abuse and 
        neglect, and for home health visitor programs designed 
        to reach parents of children in populations in which 
        risk is high, that show promise of successfully 
        preventing and treating cases of child abuse and 
        neglect, and for a parent self-help program of 
        demonstrated effectiveness which is national in scope.
            [(3) Projects which provide educational 
        identification, prevention, and treatment services in 
        cooperation with preschool and elementary and secondary 
        schools.
            [(4) Respite and crisis nursery programs provided 
        by community-based organizations under the direction 
        and supervision of hospitals.
            [(5) Respite and crisis nursery programs provided 
        by community-based organizations.
            [(6)(A) Providing hospital-based information and 
        referral services to--
                    [(i) parents of children with disabilities; 
                and
                    [(ii) children who have been neglected or 
                abused and their parents.
            [(B) Except as provided in subparagraph (C)(iii), 
        services provided under a grant received under this 
        paragraph shall be provided at the hospital involved--
                    [(i) upon the birth or admission of a child 
                with disabilities; and
                    [(ii) upon the treatment of a child for 
                abuse or neglect.
            [(C) Services, as determined as appropriate by the 
        grantee, provided under a grant received under this 
        paragraph shall be hospital-based and shall consist 
        of--
                    [(i) the provision of notice to parents 
                that information relating to community services 
                is available;
                    [(ii) the provision of appropriate 
                information to parents of a child with 
                disabilities regarding resources in the 
                community, particularly parent training 
                resources, that will assist such parents in 
                caring for their child;
                    [(iii) the provision of appropriate 
                information to parents of a child who has been 
                neglected or abused regarding resources in the 
                community, particularly parent training 
                resources, that will assist such parents in 
                caring for their child and reduce the 
                possibility of abuse or neglect;
                    [(iv) the provision of appropriate follow-
                up services to parents of a child described in 
                subparagraph (B) after the child has left the 
                hospital; and
                    [(v) where necessary, assistance in 
                coordination of community services available to 
                parents of children described in subparagraph 
                (B).
        The grantee shall assure that parental involvement 
        described in this subparagraph is voluntary.
            [(D) For purposes of this paragraph, a qualified 
        grantee is a nonprofit acute care hospital that--
                    [(i) is in a combination with--
                            [(I) a health-care provider 
                        organization;
                            [(II) a child welfare organization;
                            [(III) a disability organization; 
                        and
                            [(IV) a State child protection 
                        agency;
                    [(ii) submits an application for a grant 
                under this paragraph that is approved by the 
                Secretary;
                    [(iii) maintains an office in the hospital 
                involved for purposes of providing services 
                under such grant;
                    [(iv) provides assurances to the Secretary 
                that in the conduct of the project the 
                confidentiality of medical, social, and 
                personal information concerning any person 
                described in subparagraph (A) or (B) shall be 
                maintained, and shall be disclosed only to 
                qualified persons providing required services 
                described in subparagraph (C) for purposes 
                relating to conduct of the project; and
                    [(v) assumes legal responsibility for 
                carrying out the terms and conditions of the 
                grant.
            [(E) In awarding grants under this paragraph, the 
        Secretary shall--
                    [(i) give priority under this section for 
                two grants under this paragraph, provided that 
                one grant shall be made to provide services in 
                an urban setting and one grant shall be made to 
                provide services in rural setting; and
                    [(ii) encourage qualified grantees to 
                combine the amounts received under the grant 
                with other funds available to such grantees.
            [(7) Such other innovative programs and projects 
        that show promise of preventing and treating cases of 
        child abuse and neglect as the Secretary may approve.

[SEC. 107. GRANTS TO STATES FOR CHILD ABUSE AND NEGLECT PREVENTION AND 
                    TREATMENT PROGRAMS.

    [(a)  Development and Operation Grants.--The Secretary, 
acting through the Center, shall make grants to the States, 
based on the population of children under the age of 18 in each 
State that applies for a grant under this section, for purposes 
of assisting the States in improving the child protective 
service system of each such State in--
            [(1) the intake and screening of reports of abuse 
        and neglect through the improvement of the receipt of 
        information, decisionmaking, public awareness, and 
        training of staff;
            [(2)(A) investigating such reports through 
        improving response time, decisionmaking, referral to 
        services, and training of staff;
            [(B) creating and improving the use of 
        multidisciplinary teams and interagency protocols to 
        enhance investigations; and
            [(C) improving legal preparation and 
        representation;
            [(3) case management and delivery services provided 
        to families through the improvement of response time in 
        service provision, improving the training of staff, and 
        increasing the numbers of families to be served;
            [(4) enhancing the general child protective system 
        by improving assessment tools, automation systems that 
        support the program, information referral systems, and 
        the overall training of staff to meet minimum 
        competencies; or
            [(5) developing, strengthening, and carrying out 
        child abuse and neglect prevention, treatment, and 
        research programs.
Not more than 15 percent of a grant under this subsection may 
be expended for carrying out paragraph (5). The preceding 
sentence does not apply to any program or activity authorized 
in any of paragraphs (1) through (4).
    [(b) Eligibility Requirements.--In order for a State to 
qualify for a grant under subsection (a), such State shall--
            [(1) have in effect a State law relating to child 
        abuse and neglect, including--
                    [(A) provisions for the reporting of known 
                and suspected instances of child abuse and 
                neglect; and
                    [(B) provisions for immunity from 
                prosecution under State and local laws for 
                persons who report instances of child abuse or 
                neglect for circumstances arising from such 
                reporting;
            [(2) provide that upon receipt of a report of known 
        or suspected instances of child abuse or neglect an 
        investigation shall be initiated promptly to 
        substantiate the accuracy of the report, and, upon a 
        finding of abuse or neglect, immediate steps shall be 
        taken to protect the health and welfare of the abused 
        or neglected child and of any other child under the 
        same care who may be in danger of abuse or neglect;
            [(3) demonstrate that there are in effect 
        throughout the State, in connection with the 
        enforcement of child abuse and neglect laws and with 
        the reporting of suspected instances of child abuse and 
        neglect, such--
                    [(A) administrative procedures;
                    [(B) personnel trained in child abuse and 
                neglect prevention and treatment;
                    [(C) training procedures;
                    [(D) institutional and other facilities 
                (public and private); and
                    [(E) such related multidisciplinary 
                programs and services,
        as may be necessary or appropriate to ensure that the 
        State will deal effectively with child abuse and 
        neglect cases in the State;
            [(4) provide for--
                    [(A) methods to preserve the 
                confidentiality of all records in order to 
                protect the rights of the child and of the 
                child's parents or guardians, including methods 
                to ensure that disclosure (and redisclosure) of 
                information concerning child abuse or neglect 
                involving specific individuals is made only to 
                persons or entities that the State determines 
                have a need for such information directly 
                related to purposes of this Act; and
                    [(B) requirements for the prompt disclosure 
                of all relevant information to any Federal, 
                State, or local governmental entity, or any 
                agent of such entity, with a need for such 
                information in order to carry out its 
                responsibilities under law to protect children 
                from abuse and neglect;
            [(5) provide for the cooperation of law enforcement 
        officials, courts of competent jurisdiction, and 
        appropriate State agencies providing human services;
            [(6) provide that in every case involving an abused 
        or neglected child which results in a judicial 
        proceeding a guardian ad litem shall be appointed to 
        represent the child in such proceedings;
            [(7) provide that the aggregate of support for 
        programs or projects related to child abuse and neglect 
        assisted by State funds shall not be reduced below the 
        level provided during fiscal year 1973, and set forth 
        policies and procedures designed to ensure that Federal 
        funds made available under this Act for any fiscal year 
        shall be so used as to supplement and, to the extent 
        practicable, increase the level of State funds which 
        would, in the absence of Federal funds, be available 
        for such programs and projects;
            [(8) provide for dissemination of information, 
        including efforts to encourage more accurate reporting, 
        to the general public with respect to the problem of 
        child abuse and neglect and the facilities and 
        prevention and treatment methods available to combat 
        instances of child abuse and neglect;
            [(9) to the extent feasible, ensure that parental 
        organizations combating child abuse and neglect receive 
        preferential treatment; and
            [(10) have in place for the purpose of responding 
        to the reporting of medical neglect (including 
        instances of withholding of medically indicated 
        treatment from disabled infants with life-threatening 
        conditions), procedures or programs, or both (within 
        the State child protective services system), to provide 
        for--
                    [(A) coordination and consultation with 
                individuals designated by and within 
                appropriate health-care facilities;
                    [(B) prompt notification by individuals 
                designated by and within appropriate health-
                care facilities of cases of suspected medical 
                neglect (including instances of withholding of 
                medically indicated treatment from disabled 
                infants with life-threatening conditions); and
                    [(C) authority, under State law, for the 
                State child protective service system to pursue 
                any legal remedies, including the authority to 
                initiate legal proceedings in a court of 
                competent jurisdiction, as may be necessary to 
                prevent the withholding of medically indicated 
                treatment from disabled infants with life-
                threatening conditions.
    [(c) State Program Plan.--To be eligible to receive a grant 
under this section, a State shall submit every four years a 
plan to the Secretary that specifies the child protective 
service system area or areas described in subsection (a) that 
the State intends to address with funds received under the 
grant. The plan shall describe the current system capacity of 
the State in the relevant area or areas from which to assess 
programs with grant funds and specify the manner in which funds 
from the State's programs will be used to make improvements. 
The plan required under this subsection shall contain, with 
respect to each area in which the State intends to use funds 
from the grant, the following information with respect to the 
State:
            [(1) Intake and screening.--
                    [(A) Staffing.--The number of child 
                protective service workers responsible for the 
                intake and screening of reports of abuse and 
                neglect relative to the number of reports filed 
                in the previous year.
                    [(B) Training.--The types and frequency of 
                pre-service and in-service training programs 
                available to support direct line and 
                supervisory personnel in report-taking, 
                screening, decision-making, and referral for 
                investigation.
                    [(C) Public education.--An assessment of 
                the State or local agency's public education 
                program with respect to--
                            [(i) what is child abuse and 
                        neglect;
                            [(ii) who is obligated to report 
                        and who may choose to report; and
                            [(iii) how to report.
            [(2) Investigation of reports.--
                    [(A) Response time.--The number of reports 
                of child abuse and neglect filed in the State 
                in the previous year where appropriate, the 
                agency response time to each with respect to 
                initial investigation, the number of 
                substantiated and unsubstantiated reports, and 
                where appropriate, the response time with 
                respect to the provision of services.
                    [(B) Staffing.--The number of child 
                protective service workers responsible for the 
                investigation of child abuse and neglect 
                reports relative to the number of reports 
                investigated in the previous year.
                    [(C) Interagency coordination.--A 
                description of the extent to which interagency 
                coordination processes exist and are available 
                Statewide, and whether protocols or formal 
                policies governing interagency relationships 
                exist in the following areas--
                            [(i) multidisciplinary 
                        investigation teams among child welfare 
                        and law enforcement agencies;
                            [(ii) interagency coordination for 
                        the prevention, intervention and 
                        treatment of child abuse and neglect 
                        among agencies responsible for child 
                        protective services, criminal justice, 
                        schools, health, mental health, and 
                        substance abuse; and
                            [(iii) special interagency child 
                        fatality review panels, including a 
                        listing of those agencies that are 
                        involved.
                    [(D) Training.--The types and frequency of 
                pre-service and in-service training programs 
                available to support direct line and 
                supervisory personnel in such areas as 
                investigation, risk assessment, court 
                preparation, and referral to and provision of 
                services.
                    [(E) Legal representation.--A description 
                of the State agency's current capacity for 
                legal representation, including the manner in 
                which workers are prepared and trained for 
                court preparation and attendance, including 
                procedures for appealing substantiated reports 
                of abuse and neglect.
            [(3) Case management and delivery of ongoing family 
        services.--For children for whom a report of abuse and 
        neglect has been substantiated and the children remain 
        in their own homes and are not currently at risk of 
        removal, the State shall assess the activities and the 
        outcomes of the following services:
                    [(A) Response time.--The number of cases 
                opened for services as a result of 
                investigation of child abuse and neglect 
                reports filed in the previous year, including 
                the response time with respect to the provision 
                of services from the time of initial report and 
                initial investigation.
                    [(B) Staffing.--The number of child 
                protective service workers responsible for 
                providing services to children and their 
                families in their own homes as a result of 
                investigation of reports of child abuse and 
                neglect.
                    [(C) Training.--The types and frequency of 
                pre-service and in-service training programs 
                available to support direct line and 
                supervisory personnel in such areas as risk 
                assessment, court preparation, provision of 
                services and determination of case disposition, 
                including how such training is evaluated for 
                effectiveness.
                    [(D) Interagency coordination.--The extent 
                to which treatment services for the child and 
                other family members are coordinated with child 
                welfare, social service, mental health, 
                education, and other agencies.
            [(4) General system enhancement.--
                    [(A) Automation.--A description of the 
                capacity of current automated systems for 
                tracking reports of child abuse and neglect 
                from intake through final disposition and how 
                personnel are trained in the use of such 
                system.
                    [(B) Assessment tools.--A description of 
                whether, how, and what risk assessment tools 
                are used for screening reports of abuse and 
                neglect, determining whether child abuse and 
                neglect has occurred, and assessing the 
                appropriate level of State agency protection 
                and intervention, including the extent to which 
                such tool is used statewide and how workers are 
                trained in its use.
                    [(C) Information and referral.--A 
                description and assessment of the extent to 
                which a State has in place--
                            [(i) information and referral 
                        systems, including their availability 
                        and ability to link families to various 
                        child welfare services such as 
                        homemakers, intensive family-based 
                        services, emergency caretakers, home 
                        health visitors, daycare and services 
                        outside the child welfare system such 
                        as housing, nutrition, health care, 
                        special education, income support, and 
                        emergency resource assistance; and
                            [(ii) efforts undertaken to 
                        disseminate to the public information 
                        concerning the problem of child abuse 
                        and neglect and the prevention and 
                        treatment programs and services 
                        available to combat instances of such 
                        abuse and neglect.
                    [(D) Staff capacity and competence.--An 
                assessment of basic and specialized training 
                needs of all staff and current training 
                provided staff. Assessment of the competencies 
                of staff with respect to minimum knowledge in 
                areas such as child development, cultural and 
                ethnic diversity, functions and relationship of 
                other systems to child protective services and 
                in specific skills such as interviewing, 
                assessment, and decisionmaking relative to the 
                child and family, and the need for training 
                consistent with such minimum competencies.
            [(5) Innovative approaches.--A description of--
                    [(A) research and demonstration efforts for 
                developing, strengthening, and carrying out 
                child abuse and neglect prevention, treatment, 
                and research programs, including the 
                interagency efforts at the State level; and
                    [(B) the manner in which proposed research 
                and development activities build on existing 
                capacity in the programs being addressed.
    [(d) Waivers.--
            [(1) General rule.--Subject to paragraph (3) of 
        this subsection, any State which does not qualify for 
        assistance under this subsection may be granted a 
        waiver of any requirement under paragraph (2) of this 
        subsection--
                    [(A) for a period of not more than one 
                year, if the Secretary makes a finding that 
                such State is making a good faith effort to 
                comply with any such requirement, and for a 
                second one-year period if the Secretary makes a 
                finding that such State is making substantial 
                progress to achieve such compliance; or
                    [(B) for a nonrenewable period of not more 
                than two years in the case of a State the 
                legislature of which meets only biennially, if 
                the Secretary makes a finding that such State 
                is making a good faith effort to comply with 
                such requirement.
            [(2) Extension.--(A) Subject to paragraph (3) of 
        this subsection, any State whose waiver under paragraph 
        (1) expired as of the end of fiscal year 1986 may be 
        granted an extension of such waiver, if the Secretary 
        makes a finding that such State is making a good faith 
        effort to comply with the requirements under subsection 
        (b) of this section--
                    [(i) through the end of fiscal year 1988; 
                or
                    [(ii) in the case of a State the 
                legislature of which meets biennially, through 
                the end of the fiscal year 1989 or the end of 
                the next regularly scheduled session of such 
                legislature, whichever is earlier.
            [(B) This provision shall be effective 
        retroactively to October 1, 1986.
            [(3) Requirements under subsection (b)(10).--No 
        waiver under paragraph (1) or (2) may apply to any 
        requirement under subsection (b)(10) of this section.
    [(e) Reduction of Funds in Case of Failure To Obligate.--If 
a State fails to obligate funds awarded under subsection (a) 
before the expiration of the 18-month period beginning on the 
date of such award, the next award made to such State under 
this section after the expiration of such period shall be 
reduced by an amount equal of the amount of such unobligated 
funds unless the Secretary determines that extraordinary 
reasons justify the failure to so obligate.
    [(f) Restrictions Relating to Child Welfare Services.--
Programs or projects relating to child abuse and neglect 
assisted under part B of title IV of the Social Security Act 
shall comply with the requirements set forth in paragraphs 
(1)(A), (2), (4), (5), and (10) of subsection (b).
    [(g) Compliance and Education Grants.--The Secretary is 
authorized to make grants to the States for purposes of 
developing, implementing, or operating--
            [(1) the procedures or programs required under 
        subsection (b)(10);
            [(2) information and education programs or training 
        programs designed to improve the provision of services 
        to disabled infants with life-threatening conditions 
        for--
                    [(A) professional and paraprofessional 
                personnel concerned with the welfare of 
                disabled infants with life-threatening 
                conditions, including personnel employed in 
                child protective services programs and health-
                care facilities; and
                    [(B) the parents of such infants; and
            [(3) programs to assist in obtaining or 
        coordinating necessary services for families of 
        disabled infants with life-threatening conditions, 
        including--
                    [(A) existing social and health services;
                    [(B) financial assistance; and
                    [(C) services necessary to facilitate 
                adoptive placement of any such infants who have 
                been relinquished for adoption.

[SEC. 108. TECHNICAL ASSISTANCE TO STATES FOR CHILD ABUSE PREVENTION 
                    AND TREATMENT PROGRAMS.

    [(a) Training and Technical Assistance.--The Secretary 
shall provide, directly or through grants or contracts with 
public or private nonprofit organizations, for--
            [(1) training and technical assistance programs to 
        assist States in developing, implementing, or operating 
        programs and procedures meeting the requirements of 
        section 107(b)(10); and
            [(2) the establishment and operation of national 
        and regional information and resource clearinghouses 
        for the purpose of providing the most current and 
        complete information regarding medical treatment 
        procedures and resources and community resources for 
        the provision of services and treatment to disabled 
        infants with life-threatening conditions, including--
                    [(A) compiling, maintaining, updating, and 
                disseminating regional directories of community 
                services and resources (including the names and 
                phone numbers of State and local medical 
                organizations) to assist parents, families, and 
                physicians; and
                    [(B) attempting to coordinate the 
                availability of appropriate regional education 
                resources for health-care personnel.
    [(b) Limitation on Funding.--Not more than $1,000,000 of 
the funds appropriated for any fiscal year for purposes of 
carrying out this title may be used to carry out this section.

[SEC. 109. GRANTS TO STATES FOR PROGRAMS RELATING TO THE INVESTIGATION 
                    AND PROSECUTION OF CHILD ABUSE AND NEGLECT CASES.

    [(a) Grants to States.--The Secretary, acting through the 
Center and in consultation with the Attorney General, is 
authorized to make grants to the States for the purpose of 
assisting States in developing, establishing, and operating 
programs designed to improve--
            [(1) the handling of child abuse and neglect cases, 
        particularly cases of child sexual abuse and 
        exploitation, in a manner which limits additional 
        trauma to the child victim;
            [(2) the handling of cases of suspected child abuse 
        or neglect related fatalities; and
            [(3) the investigation and prosecution of cases of 
        child abuse and neglect, particularly child sexual 
        abuse and exploitation.
    [(b) Eligibility Requirements.--In order for a State to 
qualify for assistance under this section, such State shall--
            [(1) fulfill the requirements of sections
            [(2) establish a task force as provided in 
        subsection (c);
            [(3) fulfill the requirements of subsection (d);
            [(4) submit annually an application to the 
        Secretary at such time and containing such information 
        and assurances as the Secretary considers necessary, 
        including an assurance that the State will--
                    [(A) make such reports to the Secretary as 
                may reasonably be required; and
                    [(B) maintain and provide access to records 
                relating to activities under subsections (a) 
                and (b); and
            [(5) submit annually to the Secretary a report on 
        the manner in which assistance received under this 
        program was expended throughout the State, with 
        particular attention focused on the areas described in 
        paragraphs (1) through (3) of subsection (a).
    [(c) State Task Forces.--
            [(1) General rule.--Except as provided in paragraph 
        (2), a State requesting assistance under this section 
        shall establish or designate, and maintain a State 
        multidisciplinary task force on children's justice 
        (hereinafter referred to as ``State task force'') 
        composed of professionals with knowledge and experience 
        relating to the criminal justice system and issues of 
        child physical abuse, child neglect, child sexual abuse 
        and exploitation, and child maltreatment related 
        fatalities. The State task force shall include--
                    [(A) individuals representing the law 
                enforcement community;
                    [(B) judges and attorneys involved in both 
                civil and criminal court proceedings related to 
                child abuse and neglect (including individuals 
                involved with the defense as well as the 
                prosecution of such cases);
                    [(C) child advocates, including both 
                attorneys for children and, where such programs 
                are in operation, court appointed special 
                advocates;
                    [(D) health and mental health 
                professionals;
                    [(E) individuals representing child 
                protective service agencies;
                    [(F) individuals experienced in working 
                with children with disabilities
                    [(G) parents; and
                    [(H) representatives of parents' groups.
            [(2) Existing task force.--As determined by the 
        Secretary, a State commission or task force established 
        after January 1, 1983, with substantially comparable 
        membership and functions, may be considered the State 
        task force for purposes of this subsection.
    [(d) State Task Force Study.--Before a State receives 
assistance under this section, and at three year intervals 
thereafter, the State task force shall comprehensively--
            [(1) review and evaluate State investigative, 
        administrative and both civil and criminal judicial 
        handling of cases of child abuse and neglect, 
        particularly child sexual abuse and exploitation, as 
        well as cases involving suspected child maltreatment 
        related fatalities and cases involving a potential 
        combination of jurisdictions, such as interstate, 
        Federal-State, and State-Tribal;
            [(2) make policy and training recommendations in 
        each of the categories described in subsection (e).
The task force may make such other comments and recommendations 
as are considered relevant and useful.
    [(e) Adoption of State Task Force Recommendations.--
            [(1) General rule.--Subject to the provisions of 
        paragraph (2), before a State receives assistance under 
        this section, a State shall adopt recommendations of 
        the State task force in each of the following 
        categories--
                    [(A) investigative, administrative, and 
                judicial handling of cases of child abuse and 
                neglect, particularly child sexual abuse and 
                exploitation, as well as cases involving 
                suspected child maltreatment related fatalities 
                and cases involving a potential combination of 
                jurisdictions, such as interstate, Federal-
                State, and State-Tribal, in a manner which 
                reduces the additional trauma to the child 
                victim and the victim's family and which also 
                ensures procedural fairness to the accused;
                    [(B) experimental, model and demonstration 
                programs for testing innovative approaches and 
                techniques which may improve the rate of 
                successful prosecution or enhance the 
                effectiveness of judicial and administrative 
                action in child abuse cases, particularly child 
                sexual abuse cases, and which also ensure 
                procedural fairness to the accused; and
                    [(C) reform of State laws, ordinances, 
                regulations, protocols and procedures to 
                provide comprehensive protection for children 
                from abuse, particularly child sexual abuse and 
                exploitation, while ensuring fairness to all 
                affected persons.
            [(2) Exemption.--As determined by the Secretary, a 
        State shall be considered to be in fulfillment of the 
        requirements of this subsection if--
                    [(A) the State adopts an alternative to the 
                recommendations of the State task force, which 
                carries out the purpose of this section, in 
                each of the categories under paragraph (1) for 
                which the State task force's recommendations 
                are not adopted; or
                    [(B) the State is making substantial 
                progress toward adopting recommendations of the 
                State task force or a comparable alternative to 
                such recommendations.
    [(f) Funds Available.--For grants under this section, the 
Secretary shall use the amount authorized by section 1404A of 
the Victims of Crime Act of 1984.

[SEC. 110. MISCELLANEOUS REQUIREMENTS RELATING TO ASSISTANCE.

    [(a) Construction of Facilities.--
            [(1) Restriction on use of funds.--Assistance 
        provided under this Act may not be used for 
        construction of facilities.
            [(2) Lease, rental, or repair.--The Secretary may 
        authorize the use of funds received under this Act--
                    [(A) where adequate facilities are not 
                otherwise available, for the lease or rental of 
                facilities; or
                    [(B) for the repair or minor remodeling or 
                alteration of existing facilities.
    [(b) Geographical Distribution.--The Secretary shall 
establish criteria designed to achieve equitable distribution 
of assistance under this Act among the States, among geographic 
areas of the Nation, and among rural and urban areas of the 
Nation. To the extent possible, the Secretary shall ensure that 
the citizens of each State receive assistance from at least one 
project under this Act.
    [(c) Prevention Activities.--The Secretary, in consultation 
with the task force and the board, shall ensure that a majority 
share of assistance under this Act is available for 
discretionary research and demonstration grants.
    [(d) Limitation.--No funds appropriated for any grant or 
contract pursuant to authorizations made in this Act may be 
used for any purpose other than that for which such funds were 
authorized to be appropriated.

[SEC. 111. COORDINATION OF CHILD ABUSE AND NEGLECT PROGRAMS.

    [The Secretary shall prescribe regulations and make such 
arrangements as may be necessary or appropriate to ensure that 
there is effective coordination among programs related to child 
abuse and neglect under this Act and other such programs which 
are assisted by Federal funds.

[SEC. 112. REPORTS.

    [(a) Coordination Efforts.--Not later than March 1 of the 
second year following the date of enactment of the Child Abuse 
Prevention, Adoption, and Family Services Act of 1988 and every 
2 years thereafter, the Secretary shall submit to the 
appropriate committees of Congress a report on efforts during 
the 2-year period preceding the date of the report to 
coordinate the objectives and activities of agencies and 
organizations which are responsible for programs and activities 
related to child abuse and neglect.
    [(b) Effectiveness of State Programs and Technical 
Assistance.--Not later than two years after the first fiscal 
year for which funds are obligated under section 1404A of the 
Victims of Crime Act of 1984, the Secretary shall submit to the 
appropriate committees of Congress a report evaluating the 
effectiveness of--
            [(1) assisted programs in achieving the objectives 
        of section 109; and
            [(2) the technical assistance provided under 
        section 108.

[SEC. 113. DEFINITIONS.

    [For purposes of this title--
            [(1) the term ``board'' means the Advisory Board on 
        Child Abuse and Neglect established under section 102;
            [(2) the term ``Center'' means the National Center 
        on Child Abuse and Neglect established under section 
        101;
            [(3) the term ``child'' means a person who has not 
        attained the lesser of--
                    [(A) the age of 18; or
                    [(B) except in the case of sexual abuse, 
                the age specified by the child protection law 
                of the State in which the child resides;
            [(4) the term ``child abuse and neglect'' means the 
        physical or mental injury, sexual abuse or 
        exploitation, negligent treatment, or maltreatment of a 
        child by a person who is responsible for the child's 
        welfare, under circumstances which indicate that the 
        child's health or welfare is harmed or threatened 
        thereby, as determined in accordance with regulations 
        prescribed by the Secretary;
            [(5) the term ``person who is responsible for the 
        child's welfare'' includes--
                    [(A) any employee of a residential 
                facility; and
                    [(B) any staff person providing out-of-home 
                care;
            [(6) the term ``Secretary'' means the Secretary of 
        Health and Human Services;
            [(7) the term ``sexual abuse'' includes--
                    [(A) the employment, use, persuasion, 
                inducement, enticement, or coercion of any 
                child to engage in, or assist any other person 
                to engage in, any sexually explicit conduct or 
                simulation of such conduct for the purpose of 
                producing a visual depiction of such conduct; 
                or
                    [(B) the rape, molestation, prostitution, 
                or other form of sexual exploitation of 
                children, or incest with children;
            [(8) the term ``State'' means each of the several 
        States, the District of Columbia, the Commonwealth of 
        Puerto Rico, the Virgin Islands, Guam, American Samoa, 
        the Commonwealth of the Northern Mariana Islands, and 
        the Trust Territory of the Pacific Islands;
            [(9) the term ``task force'' means the Inter-Agency 
        Task Force on Child Abuse and Neglect established under 
        section 103; and
            [(10) the term ``withholding of medically indicated 
        treatment'' means the failure to respond to the 
        infant's life-threatening conditions by providing 
        treatment (including appropriate nutrition, hydration, 
        and medication) which, in the treating physician's or 
        physicians' reasonable medical judgment, will be most 
        likely to be effective in ameliorating or correcting 
        all such conditions, except that the term does not 
        include the failure to provide treatment (other than 
        appropriate nutrition, hydration, or medication) to an 
        infant when, in the treating physician's or physicians' 
        reasonable medical judgment--
                    [(A) the infant is chronically and 
                irreversibly comatose;
                    [(B) the provision of such treatment 
                would--
                            [(i) merely prolong dying;
                            [(ii) not be effective in 
                        ameliorating or correcting all of the 
                        infant's life-threatening conditions; 
                        or
                            [(iii) otherwise be futile in terms 
                        of the survival of the infant; or
                    [(C) the provision of such treatment would 
                be virtually futile in terms of the survival of 
                the infant and the treatment itself under such 
                circumstances would be inhumane.

[SEC. 114. AUTHORIZATION OF APPROPRIATIONS.

    [(a) In General.--
            [(1) Authorization.--There are authorized to be 
        appropriated to carry out this title, except for 
        section 107A, $100,000,000 for fiscal year 1992, and 
        such sums as may be necessary for each of the fiscal 
        years 1993 through 1995.
            [(2) Allocations.--
                    [(A) Of the amounts appropriated under 
                paragraph (1) for a fiscal year, $5,000,000 
                shall be available for the purpose of making 
                additional grants to the States to carry out 
                the provisions of section 107(g).
                    [(B) Of the amounts appropriated under 
                paragraph (1) for a fiscal year and available 
                after compliance with subparagraph (A)--
                            [(i) 33\1/3\ percent shall be 
                        available for activities under sections 
                        104, 105 and 106; and
                            [(ii) 66\2/3\ percent of such 
                        amounts shall be made available in each 
                        such fiscal year for activities under 
                        sections 107 and 108.
    [(b) Availability of Funds Without Fiscal Year 
Limitation.--The Secretary shall ensure that funds appropriated 
pursuant to authorizations in this title shall remain available 
until expended for the purposes for which they were 
appropriated.

          [TITLE II--COMMUNITY-BASED FAMILY RESOURCE PROGRAMS

[SEC. 201. COMMUNITY-BASED FAMILY RESOURCE PROGRAMS.

    [(a) Purpose.--The purpose of this title is to assist each 
State to develop and implement, or expand and enhance, a 
comprehensive, statewide system of family resource services 
through innovative funding mechanisms and collaboration with 
existing education, vocational rehabilitation, health, mental 
health, employment and training, child welfare, and other 
social services agencies within the State.
    [(b) Authority.--The Secretary shall make grants to States 
on a formula basis for the purpose of--
            [(1) establishing and expanding statewide networks 
        of community-based family resource programs, including 
        funds for the initial costs of providing specific 
        family resource services, that ensure family 
        involvement in the design and operation of family 
        resource programs which are responsive to the unique 
        and diverse strengths of children and families;
            [(2) promoting child abuse and neglect prevention 
        activities;
            [(3) promoting the establishment and operation of 
        State trust funds or other mechanisms for integrating 
        child and family services funding streams in order to 
        provide flexible funding for the development of 
        community-based family resource programs;
            [(4) establishing or expanding community-based 
        collaboration to foster the development of a continuum 
        of preventive services for children and families, which 
        are family-centered and culturally competent;
            [(5) encouraging public and private partnerships in 
        the establishment and expansion of family resource 
        programs; and
            [(6) increasing and promoting interagency 
        coordination among State agencies, and encouraging 
        public and private partnerships in the establishment 
        and expansion of family resource programs.
    [(c) Eligibility for Grants.--A State is eligible for a 
grant under this section for any fiscal year if--
            [(1) such State has established or maintained in 
        the previous fiscal year--
                    [(A) a trust fund, including appropriations 
                for such fund; or
                    [(B) any other mechanism that pools State, 
                Federal, and private funds for integrating 
                child and family service resources; and
            [(2) such trust fund or other funding mechanism 
        includes (in whole or in part) provisions making 
        funding available specifically for a broad range of 
        child abuse and neglect prevention activities and 
        family resource programs.
    [(d) Amount of Grant.--
            [(1) In general.--Amounts appropriated for a fiscal 
        year to provide grants under this section shall be 
        allotted to the designated lead agencies of eligible 
        States in each fiscal year so that--
                    [(A) 50 percent of the total amount 
                appropriated for such fiscal year is allotted 
                among each State based on the number of 
                children under the age of 18 residing in each 
                State, except that each State shall receive not 
                less than $100,000; and
                    [(B) the remaining 50 percent of the total 
                amount appropriated for such fiscal year is 
                allotted in an amount equal to 25 percent of 
                the total amount allocated by each such State 
                to the State's trust fund or other mechanism 
                for integrating family resource services in the 
                fiscal year prior to the fiscal year for which 
                the allotment is being determined.
            [(2) Allocation.--Funds identified by the State for 
        the purpose of qualifying for incentive funds under 
        paragraph (1)(B) shall be allocated through the 
        mechanism used to determine State eligibility under 
        subsection (c) and shall be controlled by the lead 
        agency described in subsection (f)(1).
    [(e) Existing Grants.--A State or entity that has a grant 
in effect on the date of enactment of this section under the 
Family Resource and Support Program or the Emergency Child 
Abuse Prevention Grants Program shall continue to receive funds 
under such Programs, subject to the original terms under which 
such funds were granted, through the end of the applicable 
grant cycle.
    [(f) Application.--No grant may be made to any eligible 
State under this section unless an application is prepared and 
submitted to the Secretary at such time, in such manner, and 
containing or accompanied by such information as the Secretary 
determines to be essential to carry out the purposes and 
provisions of this section, including--
            [(1) a description of the agency designated by the 
        Chief Executive Officer of the State to administer the 
        funds provided under this section and assume 
        responsibility for implementation and oversight of the 
        family resource programs and other child abuse and 
        neglect prevention activities, and an assurance that 
        the agency so designated--
                    [(A) is the trust fund advisory board, or 
                an existing organization created by executive 
                order or State statute that is not an existing 
                State agency, that has interdisciplinary 
                governance, including participants from 
                communities, and that integrates family 
                resource services and leverages State, Federal, 
                and private funds for family resource programs; 
                or
                    [(B) with respect to a State without a 
                trust fund mechanism or other organization that 
                meets the requirements of subparagraph (A), is 
                an existing State agency, or other public, 
                quasi-public, or nonprofit private agency 
                responsible for the development and 
                implementation of a statewide network of 
                community-based family resource programs;
            [(2) assurances that the agency designated under 
        paragraph (1) can demonstrate the capacity to fulfill 
        the purposes described in subsection (a), and shall 
        have--
                    [(A) a demonstrated ability to work with 
                other State and community-based agencies, to 
                provide training and technical assistance;
                    [(B) a commitment to parental participation 
                in the design and implementation of family 
                resource programs;
                    [(C) the capacity to promote a statewide 
                system of family resource programs throughout 
                the State; and
                    [(D) the capacity to exercise leadership in 
                implementing effective strategies for capacity 
                building, family and professional training, and 
                access to, and funding for, family resource 
                services across agencies;
            [(3) an assurance that the State has an interagency 
        process coordinated by the agency designated in 
        paragraph (1) for effective program development that--
                    [(A) does not duplicate existing processes 
                for developing collaborative efforts to better 
                serve children and families;
                    [(B) provides a written strategic plan for 
                the establishment of a network of family 
                resource programs (publicly available and 
                funded through public and private sources) that 
                identifies specific measurable goals and 
                objectives;
                    [(C) involves appropriate personnel in the 
                process, including--
                            [(i) parents (including parents of 
                        children with disabilities) and 
                        prospective participants in family 
                        resource programs, including respite 
                        care programs;
                            [(ii) staff of existing programs 
                        providing family resource services, 
                        including staff of Head Start programs 
                        and community action agencies that 
                        provide such services;
                            [(iii) representatives of State and 
                        local government such as social 
                        service, health, mental health, 
                        education, vocational rehabilitation, 
                        employment, economic development 
                        agencies, and organizations providing 
                        community services activities;
                            [(iv) representatives of the 
                        business community;
                            [(v) representatives of general 
                        purpose local governments;
                            [(vi) representatives of groups 
                        with expertise in child abuse 
                        prevention, including respite and 
                        crisis care;
                            [(vii) representatives of local 
                        communities in which family resource 
                        programs are likely to be located;
                            [(viii) representatives of groups 
                        with expertise in providing services to 
                        children with disabilities; and
                            [(ix) other individuals with 
                        expertise in the services that the 
                        family resource programs of the State 
                        intend to offer; and
                    [(D) coordinates activities funded under 
                this title with--
                            [(i) the State Interagency 
                        Coordinating Council, established under 
                        part H of the Individuals with 
                        Disabilities Education Act;
                            [(ii) the advisory panel 
                        established under section 613(a)(12) of 
                        the Individuals with Disabilities 
                        Education Act (20 U.S.C. 1413(a)(12));
                            [(iii) the State Rehabilitation 
                        Advisory Council established under the 
                        Rehabilitation Act of 1973;
                            [(iv) the State Development 
                        Disabilities Planning Council, 
                        established under the Developmental 
                        Disabilities Assistance and Bill of 
                        Rights Act;
                            [(v) the Head Start State 
                        Collaboration project;
                            [(vi) the State Advisory group 
                        designated in the Juvenile Justice and 
                        Delinquency Prevention Act of 1974; and
                            [(vii) other local or regional 
                        family service councils within the 
                        State, to the extent that such councils 
                        exist;
            [(4) an inventory and description of the current 
        family resource programs operating in the State, the 
        current unmet need for the services provided under such 
        programs, including the need for building increased 
        capacity to provide specific family resource services, 
        including respite care, and the intended scope of the 
        State family resource program, the population to be 
        served, the manner in which the program will be 
        operated, and the manner in which such program will 
        relate to other community services and public agencies;
            [(5) evidence that Federal assistance received 
        under this section--
                    [(A) has been supplemented with non-Federal 
                public and private assistance, including a 
                description of the projected level of financial 
                commitment by the State to develop a family 
                resource network; and
                    [(B) will be used to supplement and not 
                supplant other State and local public funds 
                expended for family resource programs;
            [(6) a description of the core services, as 
        required by this section, and other support services to 
        be provided by the program and the manner in which such 
        services will be provided, including the extent to 
        which either family resources, centers, home visiting, 
        or community collaboratives will be used;
            [(7) a description of any public information 
        activities the agency designated in paragraph (1) will 
        undertake for the purpose of promoting family stability 
        and preventing child abuse and neglect, including child 
        sexual abuse;
            [(8) an assurance that the State will provide funds 
        for the initial startup costs associated with specific 
        family resource services, including respite services, 
        and a description of the services to be funded;
            [(9) assurances that the State program will 
        maintain cultural diversity and be culturally 
        competent;
            [(10) a description of the guidelines for requiring 
        parental involvement in State and local program 
        development, policy design, and governance and the 
        process for assessing and demonstrating that parental 
        involvement in program development, operation, and 
        governance occurs;
            [(11) a description of the State and community-
        based interagency planning processes to be utilized to 
        develop and implement family resource programs;
            [(12) a description of the criteria that the State 
        will utilize for awarding grants for local programs so 
        that they meet the requirements of subsection (g);
            [(13) a description of the outreach and other 
        activities the program will undertake to maximize the 
        participation of racial and ethnic minorities, persons 
        with limited English proficiency, individuals with 
        disabilities, and members of other underserved or 
        underrepresented groups in all phases of the program;
            [(14) a plan for providing training, technical 
        assistance, and other assistance to local communities 
        in program development and networking activities;
            [(15) a description of the methods to be utilized 
        to evaluate the implementation and effectiveness of the 
        family resource programs within the State;
            [(16) a description of proposed actions by the 
        State that will facilitate the changing of laws, 
        regulations, policies, practices, procedures, and 
        organizational structures, that impede the availability 
        or provision of family resource services; and
            [(17) an assurance that the State will provide the 
        Secretary with reports, at such time and containing 
        such information as the Secretary may require.
    [(g) Local Program Requirements.--
            [(1) In general.--A State that receives a grant 
        under this section shall use amounts received under 
        such grant to establish local family resource programs 
        that--
                    [(A) undertake a community-based needs 
                assessment and program planning process which 
                involves parents, and local public and 
                nonprofit agencies (including those responsible 
                for providing health, education, vocational 
                rehabilitation, employment training, Head Start 
                and other early childhood, child welfare, and 
                social services);
                    [(B) develop a strategy to provide 
                comprehensive services to families to meet 
                identified needs through collaboration, 
                including public-private partnerships;
                    [(C) identify appropriate community-based 
                organizations to administer such programs 
                locally;
                    [(D) provide core services, and other 
                services directly or through contracts or 
                agreements with other local agencies;
                    [(E) involve parents in the development, 
                operation, and governance of the program; and
                    [(F) participate in the development and 
                maintenance of a statewide network of family 
                resource programs.
            [(2) Priority.--In awarding local grants under this 
        section, a State shall give priority to programs 
        serving low-income communities and programs serving 
        young parents or parents with young children and shall 
        ensure that such grants are equitably distributed among 
        urban and rural areas.
    [(h) Definitions.--As used in this section:
            [(1) Children with disabilities.--The term 
        ``children with disabilities'' has the meaning given 
        such term in section 602(a)(2) of Individuals With 
        Disabilities Education Act.
            [(2) Community referral services.--The term 
        ``community referral services'' means services to 
        assist families in obtaining community resources, 
        including respite services, health and mental health 
        services, employability development and job training 
        and other social services.
            [(3) Culturally competent.--The term ``culturally 
        competent'' means services, supports, or other 
        assistance that is conducted or provided in a manner 
        that--
                    [(A) is responsive to the beliefs, 
                interpersonal styles, attitudes, languages, and 
                behaviors of those individuals receiving 
                services; and
                    [(B) has the greatest likelihood of 
                ensuring maximum participation of such 
                individuals.
            [(4) Family resource program.--The term ``family 
        resource program'' means a program that offers 
        community-based services that provide sustained 
        assistance and support to families at various stages in 
        their development. Such services shall promote parental 
        competencies and behaviors that will lead to the 
        healthy and positive personal development of parents 
        and children through--
                    [(A) the provisions of assistance to build 
                family skills and assist parents in improving 
                their capacities to be supportive and nurturing 
                parents;
                    [(B) the provision of assistance to 
                families to enable such families to use other 
                formal and informal resources and opportunities 
                for assistance that are available within the 
                communities of such families; and
                    [(C) the creation of supportive networks to 
                enhance the childrearing capacity of parents 
                and assist in compensating for the increased 
                social isolation and vulnerability of families.
            [(5) Family resource services.--The term ``family 
        resource services'' means--
                    [(A) core services that must be provided 
                directly by the family resource program under 
                this section, including--
                            [(i) education and support services 
                        provided to assist parents in acquiring 
                        parenting skills, learning about child 
                        development, and responding 
                        appropriately to the behavior of their 
                        children;
                            [(ii) early developmental screening 
                        of children to assess the needs of such 
                        children and to identify the types of 
                        support to be provided;
                            [(iii) outreach services;
                            [(iv) community referral services; 
                        and
                            [(v) follow-up services; and
                    [(B) other services, which may be provided 
                either directly or through referral, 
                including--
                            [(i) early care and education (such 
                        as child care and Head Start);
                            [(ii) respite services;
                            [(iii) job readiness and counseling 
                        services (including skill training);
                            [(iv) education and literacy 
                        services;
                            [(v) nutritional education;
                            [(vi) life management skills 
                        training;
                            [(vii) peer counseling and crisis 
                        intervention, and family violence 
                        counseling services;
                            [(viii) referral for health 
                        (including prenatal care) and mental 
                        health services;
                            [(ix) substance abuse treatment; 
                        and
                            [(x) services to support families 
                        of children with disabilities that are 
                        designed to prevent inappropriate out-
                        of-the-home placement and maintain 
                        family unity.
            [(6) Interdisciplinary governance.--The term 
        ``interdisciplinary governance'' includes governance by 
        representatives from communities and representatives 
        from existing health, mental health, education, 
        vocational rehabilitation, employment and training, 
        child welfare, and other agencies within the State.
            [(7) Outreach services.--The term ``outreach 
        services'' means services provided to ensure (through 
        home visits or other methods) that parents and other 
        caretakers are aware of and able to participate in 
        family resource program activities.
            [(8) Respite services.--The term ``respite 
        services'' means short-term care services provided in 
        the temporary absence of the regular caregiver (parent, 
        other relative, foster parent, adoptive parent, 
        guardian) to children who meet one or more of the 
        following categories:
                    [(A) The children are in danger of abuse or 
                neglect.
                    [(B) The children have experienced abuse or 
                neglect.
                    [(C) The children have disabilities, or 
                chronic or terminal illnesses.
        Services provided within or outside the child's home 
        shall be short-term care, ranging from a few hours to a 
        few weeks of time, per year, and be intended to enable 
        the family to stay together and to keep the child 
        living in the child's home and community.
    [(i) Authorization of Appropriations.--There are authorized 
to be appropriated to carry out this title, $50,000,000 for 
fiscal year 1995.

[TITLE III--CERTAIN PREVENTIVE SERVICES REGARDING CHILDREN OF HOMELESS 
              FAMILIES OR FAMILIES AT RISK OF HOMELESSNESS

[SEC. 301. DEMONSTRATION GRANTS FOR PREVENTION OF INAPPROPRIATE 
                    SEPARATION FROM FAMILY AND FOR PREVENTION OF CHILD 
                    ABUSE AND NEGLECT.

    [(a) Establishment of Program.--The Secretary may make 
grants to entities described in subsection (b)(1) for the 
purpose of assisting such entities in demonstrating, with 
respect to children whose families are homeless or at risk of 
becoming homeless, the effectiveness of activities undertaken 
to prevent--
            [(1) the inappropriate separation of such children 
        from their families on the basis of homelessness or 
        other problems regarding the availability and 
        conditions of housing for such families; and
            [(2) the abuse and neglect of such children.
    [(b) Minimum Qualifications of Grantees.--
            [(1) In general.--The entities referred to in 
        subsection (a) are State and local agencies that 
        provide services in geographic areas described in 
        paragraph (2), and that have authority--
                    [(A) for removing children, temporarily or 
                permanently, from the custody of the parents 
                (or other legal guardians) of such children and 
                placing such children in foster care or other 
                out-of-home care; or
                    [(B) in the case of youths not less than 16 
                years of age for whom such a placement has been 
                made, for assisting such youths in preparing to 
                be discharged from such care into circumstances 
                of providing for their own support.
            [(2) Eligible geographic areas.--The geographic 
        areas referred to in paragraph (1) are geographic areas 
        in which homelessness and other housing problems are--
                    [(A) threatening the well-being of 
                children; and
                    [(B)(i) contributing to the placement of 
                children in out-of-home care;
                    [(ii) preventing the reunification of 
                children with their families; or
                    [(iii) in the case of youths not less than 
                16 years of age who have been placed in out-of-
                home care, preventing such youths from being 
                discharged from such care into circumstances of 
                providing their own support without adequate 
                living arrangements.
            [(3) Cooperation with appropriate public and 
        private entities.--The Secretary shall not make a grant 
        under subsection (a) unless the agency involved has 
        entered into agreements with appropriate entities in 
        the geographic area involved (including child welfare 
        agencies, public housing agencies, and appropriate 
        public and nonprofit private entities that provide 
        services to homeless families) regarding the joint 
        planning, coordination and delivery of services under 
        the grant.
    [(c) Requirement of Matching Funds.--
            [(1) In general.--The Secretary shall not make a 
        grant under subsection (a) unless the agency involved 
        agrees that, with respect to the costs to be incurred 
        by such agency in carrying out the purpose described in 
        such subsection, the agency will make available 
        (directly or through donations from public or private 
        entities) non-Federal contributions toward such costs 
        in an amount equal to not less than $1 for each $4 of 
        Federal funds provided in such grant.
            [(2) Determination of amount of non-federal 
        contribution.--Non-Federal contributions required under 
        paragraph (1) may be in cash or in kind, fairly 
        evaluated, including plant, equipment, or services. 
        Amounts provided by the Federal Government, or services 
        assisted or subsidized to any significant extent by the 
        Federal Government, shall not be included in 
        determining the amount of such non-Federal 
        contributions.

[SEC. 302. PROVISIONS WITH RESPECT TO CARRYING OUT PURPOSE OF 
                    DEMONSTRATION GRANTS.

    [(a) Joint Training of Appropriate Service Personnel.--
            [(1) In general.--The Secretary shall not make a 
        grant under section 301(a) unless the agency involved 
        agrees to establish, with respect to the subjects 
        described in paragraph (2), a program for joint 
        training concerning such subjects, for appropriate 
        personnel of child welfare agencies, public housing 
        agencies, and appropriate public and private entities 
        that provide services to homeless families.
            [(2) Specification of training subjects.--The 
        subjects referred to in paragraph (1) are--
                    [(A) the relationship between homelessness, 
                and other housing problems, and the initial and 
                prolonged placement of children in out-of-home 
                care;
                    [(B) the housing-related needs of families 
                with children who are at risk of placement in 
                out-of-home care; and
                    [(C) resources (including housing-related 
                assistance) that are available to prevent the 
                initial or prolonged placement in out-of-home 
                care of children whose families are homeless or 
                who have other housing problems.
    [(b) Additional Authorized Activities.--In addition to 
activities authorized in subsection (a), a grantee under 
section 301(a) may expend grant funds for--
            [(1) the hiring of additional personnel to provide 
        assistance in obtaining appropriate housing--
                    [(A) to families whose children are at 
                imminent risk of placement in out-of-home care 
                or who are awaiting the return of children 
                placed in such care; and
                    [(B) to youth who are preparing to be 
                discharged from such care into circumstances of 
                providing for their own support;
            [(2) training and technical assistance for the 
        personnel of shelters and other programs for homeless 
        families (including domestic violence shelters) to 
        assist such programs--
                    [(A) in the prevention and identification 
                of child abuse and neglect among the families 
                the programs served; and
                    [(B) in obtaining appropriate resources for 
                families who need social services, including 
                supportive services and respite care;
            [(3) the development and dissemination of 
        informational materials to advise homeless families 
        with children and others who are seeking housing of 
        resources and programs available to assist them; and
            [(4) other activities, if authorized by the 
        Secretary, that are necessary to address housing 
        problems that result in the inappropriate initial or 
        prolonged placement of children in out-of-home care.

[SEC. 303. ADDITIONAL REQUIRED AGREEMENTS.

    [(a) Reports to Secretary.--The Secretary shall not make a 
grant under section 301(a) unless the agency involved agrees 
that such agency will--
            [(1) annually prepare and submit to the Secretary a 
        report describing the specific activities carried out 
        by the agency under the grant; and
            [(2) include in the report submitted under 
        paragraph (1), the results of an evaluation of the 
        extent to which such activities have been effective in 
        carrying out the purpose described in such section, 
        including the effect of such activities regarding--
                    [(A) the incidence of placements of 
                children in out-of-home care;
                    [(B) the reunification of children with 
                their families; and
                    [(C) in the case of youths not less than 16 
                years of age who have been placed in out-of-
                home care, the discharge of such youths from 
                such care into circumstances of providing for 
                their own support with adequate living 
                arrangements.
    [(b) Evaluation by the Secretary.--The Secretary shall 
conduct evaluations to determine the effectiveness of 
demonstration programs supported under section 301(a) in--
            [(1) strengthening coordination between child 
        welfare agencies, housing authorities, and programs for 
        homeless families;
            [(2) preventing placements of children into out-of-
        home care due to homelessness or other housing 
        problems;
            [(3) facilitating the reunification of children 
        with their families; and
            [(4) in the case of youths not less than 16 years 
        old who have been placed in out-of-home care, 
        preventing such youth from being discharged from such 
        care into circumstances of providing their own support 
        without adequate living arrangements.
    [(c) Report to Congress.--
            [(1) Preparation of list.--Not later than April 1, 
        1991, the Secretary, after consultation with the 
        Secretary of Education, the Secretary of Housing and 
        Urban Development and the Secretary of Labor, shall 
        prepare and submit to the Committee on Education and 
        Labor of the House of Representatives and the Committee 
        on Labor and Human Resources of the Senate a list of 
        Federal programs that provide services, or fund grants, 
        contracts, or cooperative agreements for the provision 
        of services, directed to the prevention of homelessness 
        for families whose children are at risk of out of home 
        placement and the incidence of child abuse that may be 
        associated with homelessness, that shall include 
        programs providing--
                    [(A) rent, utility, and other subsidies;
                    [(B) training; and
                    [(C) for inter-agency coordination, at both 
                the local and State and Federal level.
            [(2) Contents of list.--The list prepared under 
        paragraph (1) shall include a description of--
                    [(A) the appropriate citations relating to 
                the authority for such programs;
                    [(B) entities that are eligible to 
                participate in each such program;
                    [(C) authorization levels and the annual 
                amounts appropriated for such programs for each 
                fiscal year in which such programs were 
                authorized;
                    [(D) the agencies and divisions 
                administering each such program;
                    [(E) the expiration date of the authority 
                of each such program; and
                    [(F) to the extent available, the extent to 
                which housing assistance under such programs 
                can be accessed by child welfare and other 
                appropriate agencies.
            [(3) Report.--Not later than March 1, 1993, the 
        Secretary shall prepare and submit to the appropriate 
        committees of Congress a report that contains a 
        description of the activities carried out under this 
        title, and an assessment of the effectiveness of such 
        programs in preventing initial and prolonged separation 
        of children from their families due to homelessness and 
        other housing problems. At a minimum the report shall 
        contain--
                    [(A) information describing the localities 
                in which activities are conducted;
                    [(B) information describing the specific 
                activities undertaken with grant funds and, 
                where relevant, the numbers of families and 
                children assisted by such activities;
                    [(C) information concerning the nature of 
                the joint training conducted with grant funds;
                    [(D) information concerning the manner in 
                which other agencies such as child welfare, 
                public housing authorities, and appropriate 
                public and nonprofit private entities are 
                consulting and coordinating with existing 
                programs that are designed to prevent 
                homelessness and to serve homeless families and 
                youth; and
                    [(E) information concerning the impact of 
                programs supported with grant funds under this 
                title on--
                            [(i) the incidence of the placement 
                        of children into out-of-home care;
                            [(ii) the reunification of children 
                        with their families; and
                            [(iii) in the case of youth not 
                        less than 16 years of age who have been 
                        placed in out-of-home care, the 
                        discharge of such youths from such care 
                        into circumstances of providing for 
                        their own support with adequate living 
                        arrangements.
    [(d) Restriction on Use of Grant.--The Secretary may not 
make a grant under section 301(a) unless the agency involved 
agrees that the agency will not expend the grant to purchase or 
improve real property.

[SEC. 304. DESCRIPTION OF INTENDED USES OF GRANT.

    [The Secretary shall not make a grant under section 301(a) 
unless--
            [(1) the agency involved submits to the Secretary a 
        description of the purposes for which the agency 
        intends to expend the grant;
            [(2) with respect to the entities with which the 
        agency has made agreements pursuant to section 
        301(b)(1), such entities have assisted the agency in 
        preparing the description required in paragraph (1); 
        and
            [(3) the description includes a statement of the 
        methods that the agency will utilize in conducting the 
        evaluations required in section 303(a)(2).

[SEC. 305. REQUIREMENT OF SUBMISSION OF APPLICATION.

    [The Secretary shall not make a grant under section 301(a) 
unless an application for the grant is submitted to the 
Secretary, the application contains the description of intended 
uses required in section 304, and the application is in such 
form, is made in such manner, and contains such agreements, 
assurances, and information as the Secretary determines to be 
necessary to carry out this title.

[SEC. 306. AUTHORIZATION OF APPROPRIATIONS.

    [(a) In General.--For the purpose of carrying out this 
title, there are authorized to be appropriated $12,500,000 for 
fiscal year 1992, and such sums as may be necessary for each of 
the fiscal years 1993 through 1995.
    [(b) Availability of Appropriations.--Amounts appropriated 
under subsection (a) shall remain available until expended.]

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Child and Family Services 
Block Grant Act of 1996''.

SEC. 2. FINDINGS.

    The Congress finds the following:
            (1) Each year, close to 1,000,000 American children 
        are victims of abuse and neglect.
            (2) Many of these children and their families fail 
        to receive adequate protection or treatment.
            (3) The problem of child abuse and neglect requires 
        a comprehensive approach that--
                    (A) integrates the work of social service, 
                legal, health, mental health, education, and 
                substance abuse agencies and organizations;
                    (B) strengthens coordination among all 
                levels of government, and with private 
                agencies, civic, religious, and professional 
                organizations, and individual volunteers;
                    (C) emphasizes the need for abuse and 
                neglect prevention, assessment, investigation, 
                and treatment at the neighborhood level;
                    (D) ensures properly trained and support 
                staff with specialized knowledge, to carry out 
                their child protection duties; and
                    (E) is sensitive to ethnic and cultural 
                diversity.
            (4) The child protection system should be 
        comprehensive, child-centered, family-focused, and 
        community-based, should incorporate all appropriate 
        measures to prevent the occurrence or recurrence of 
        child abuse and neglect, and should promote physical 
        and psychological recovery and social reintegration in 
        an environment that fosters the health, safety, self-
        respect, and dignity of the child.
            (5) The Federal Government should provide 
        leadership and assist communities in their child and 
        family protection efforts by--
                    (A) generating and sharing knowledge 
                relevant to child and family protection, 
                including the development of models for service 
                delivery;
                    (B) strengthening the capacity of States to 
                assist communities;
                    (C) helping communities to carry out their 
                child and family protection plans by promoting 
                the competence of professional, 
                paraprofessional, and volunteer resources; and
                    (D) providing leadership to end the abuse 
                and neglect of the Nation's children and youth.

SEC. 3. PURPOSES.

    The purposes of this Act are the following:
            (1) To assist each State in improving the child 
        protective service systems of such State by--
                    (A) improving risk and safety assessment 
                tools and protocols;
                    (B) developing, strengthening, and 
                facilitating training opportunities for 
                individuals who are mandated to report child 
                abuse or neglect or otherwise overseeing, 
                investigating, prosecuting, or providing 
                services to children and families who are at 
                risk of abusing or neglecting their children; 
                and
                    (C) developing, implementing, or operating 
                information, education, training, or other 
                programs designed to assist and provide 
                services for families of disabled infants with 
                life-threatening conditions.
            (2) To support State efforts to develop, operate, 
        expand and enhance a network of community-based, 
        prevention-focused, family resource and support 
        programs that are culturally competent and that 
        coordinate resources among existing education, 
        vocational rehabilitation, disability, respite, health, 
        mental health, job readiness, self-sufficiency, child 
        and family development, community action, Head Start, 
        child care, child abuse and neglect prevention, 
        juvenile justice, domestic violence prevention and 
        intervention, housing, and other human service 
        organizations within the State.
            (3) To facilitate the elimination of barriers to 
        adoption and to provide permanent and loving home 
        environments for children who would benefit from 
        adoption, particularly children with special needs, 
        including disabled infants with life-threatening 
        conditions, by--
                    (A) promoting model adoption legislation 
                and procedures in the States and territories of 
                the United States in order to eliminate 
                jurisdictional and legal obstacles to adoption;
                    (B) providing a mechanism for the 
                Department of Health and Human Services to--
                            (i) promote quality standards for 
                        adoption services, preplacement, post-
                        placement, and post-legal adoption 
                        counseling, and standards to protect 
                        the rights of children in need of 
                        adoption;
                            (ii) maintain a national adoption 
                        information exchange system to bring 
                        together children who would benefit 
                        from adoption and qualified prospective 
                        adoptive parents who are seeking such 
                        children, and conduct national 
                        recruitment efforts in order to reach 
                        prospective parents for children 
                        awaiting adoption; and
                            (iii) demonstrate expeditious ways 
                        to free children for adoption for whom 
                        it has been determined that adoption is 
                        the appropriate plan; and
                    (C) facilitating the identification and 
                recruitment of foster and adoptive families 
                that can meet children's needs.
            (4) To respond to the needs of children, in 
        particular those who are drug exposed or afflicted with 
        Acquired Immune Deficiency Syndrome (AIDS), by 
        supporting activities aimed at preventing the 
        abandonment of children, providing support to children 
        and their families, and facilitating the recruitment 
        and training of health and social service personnel.
            (5) To carry out any other activities as the 
        Secretary determines are consistent with this Act.

SEC. 4. DEFINITIONS.

    As used in this Act:
            (1) Child.--The term ``child'' means a person who 
        has not attained the lesser of--
                    (A) the age of 18; or
                    (B) except in the case of sexual abuse, the 
                age specified by the child protection law of 
                the State in which the child resides.
            (2) Child abuse and neglect.--The term ``child 
        abuse and neglect'' means, at a minimum, any recent act 
        or failure to act on the part of a parent or caretaker, 
        which results in death, serious physical or emotional 
        harm, sexual abuse or exploitation, or an act or 
        failure to act which presents an imminent risk of 
        serious harm.
            (3) Family resource and support programs.--The term 
        ``family resource and support program'' means a 
        community-based, prevention-focused entity that--
                    (A) provides, through direct service, the 
                core services required under this Act, 
                including--
                            (i) parent education, support and 
                        leadership services, together with 
                        services characterized by relationships 
                        between parents and professionals that 
                        are based on equality and respect, and 
                        designed to assist parents in acquiring 
                        parenting skills, learning about child 
                        development, and responding 
                        appropriately to the behavior of their 
                        children;
                            (ii) services to facilitate the 
                        ability of parents to serve as 
                        resources to one another (such as 
                        through mutual support and parent self-
                        help groups);
                            (iii) early developmental screening 
                        of children to assess any needs of 
                        children, and to identify types of 
                        support that may be provided;
                            (iv) outreach services provided 
                        through voluntary home visits and other 
                        methods to assist parents in becoming 
                        aware of and able to participate in 
                        family resources and support program 
                        activities;
                            (v) community and social services 
                        to assist families in obtaining 
                        community resources; and
                            (vi) followup services;
                    (B) provides, or arranges for the provision 
                of, other core services through contracts or 
                agreements with other local agencies; and
                    (C) provides access to optional services, 
                directly or by contract, purchase of service, 
                or interagency agreement, including--
                            (i) child care, early childhood 
                        development and early intervention 
                        services;
                            (ii) self-sufficiency and life 
                        management skills training;
                            (iii) education services, such as 
                        scholastic tutoring, literacy training, 
                        and General Educational Degree 
                        services;
                            (iv) job readiness skills;
                            (v) child abuse and neglect 
                        prevention activities;
                            (vi) services that families with 
                        children with disabilities or special 
                        needs may require;
                            (vii) community and social service 
                        referral;
                            (viii) peer counseling;
                            (ix) referral for substance abuse 
                        counseling and treatment; and
                            (x) help line services.
            (4) Indian tribe and tribal organization.--The 
        terms ``Indian tribe'' and ``tribal organization'' 
        shall have the same meanings given such terms in 
        subsections (e) and (l), respectively, of section 4 of 
        the Indian Self-Determination and Education Assistance 
        Act (25 U.S.C. 450b(e) and (l)).
            (5) Respite services.--The term ``respite 
        services'' means short-term care services provided in 
        the temporary absence of the regular caregiver (parent, 
        other relative, foster parent, adoptive parent, or 
        guardian) to children who--
                    (A) are in danger of abuse or neglect;
                    (B) have experienced abuse or neglect; or
                    (C) have disabilities, chronic, or terminal 
                illnesses.
        Such services shall be provided within or outside the 
        home of the child, be short-term care (ranging from a 
        few hours to a few weeks of time, per year), and be 
        intended to enable the family to stay together and to 
        keep the child living in the home and community of the 
        child.
            (6) Secretary.--The term ``Secretary'' means the 
        Secretary of Health and Human Services.
            (7) Sexual abuse.--The term ``sexual abuse'' 
        includes--
                    (A) the employment, use, persuasion, 
                inducement, enticement, or coercion of any 
                child to engage in, or assist any other person 
                to engage in, any sexually explicit conduct or 
                simulation of such conduct for the purpose of 
                producing a visual depiction of such conduct; 
                or
                    (B) the rape, molestation, prostitution, or 
                other form of sexual exploitation of children, 
                or incest with children.
            (8) State.--The term ``State'' means each of the 
        several States, the District of Columbia, the 
        Commonwealth of Puerto Rico, the Virgin Islands, Guam, 
        American Samoa, the Commonwealth of the Northern 
        Mariana Islands, and the Trust Territory of the Pacific 
        Islands.
            (9) Withholding of medically indicated treatment.--
        The term ``withholding of medically indicated 
        treatment'' means the failure to respond to the 
        infant's life-threatening conditions by providing 
        treatment (including appropriate nutrition, hydration, 
        and medication) which, in the treating physician's or 
        physicians' reasonable medical judgment, will be most 
        likely to be effective in ameliorating or correcting 
        all such conditions, except that the term does not 
        include the failure to provide treatment (other than 
        appropriate nutrition, hydration, or medication) to an 
        infant when, in the treating physician's or physicians' 
        reasonable medical judgment--
                    (A) the infant is chronically and 
                irreversibly comatose;
                    (B) the provision of such treatment would--
                            (i) merely prolong dying;
                            (ii) not be effective in 
                        ameliorating or correcting all of the 
                        infant's life-threatening conditions; 
                        or
                            (iii) otherwise be futile in terms 
                        of the survival of the infant; or
                    (C) the provision of such treatment would 
                be virtually futile in terms of the survival of 
                the infant and the treatment itself under such 
                circumstances would be inhumane.

                      TITLE I--GENERAL BLOCK GRANT

SEC. 101. CHILD AND FAMILY SERVICES BLOCK GRANTS.

    (a) Eligibility.--The Secretary shall award grants to 
eligible States that file a State plan that is approved under 
section 102 and that otherwise meet the eligibility 
requirements for grants under this title.
    (b) Amount of Grant.--The amount of a grant made to each 
State under subsection (a) for a fiscal year shall be based on 
the population of children under the age of 18 residing in each 
State that applies for a grant under this section.
    (c) Use of Amounts.--Amounts received by a State under a 
grant awarded under subsection (a) shall be used to carry out 
the purposes described in section 3.

SEC. 102. ELIGIBLE STATES.

    (a) In General.--As used in this title, the term ``eligible 
State'' means a State that has submitted to the Secretary, not 
later than October 1, 1996, and every 3 years thereafter, a 
plan which has been signed by the chief executive officer of 
the State and that includes the following:
            (1) Outline of child protection program.--A written 
        document that outlines the activities the State intends 
        to conduct to achieve the purpose of this title, 
        including the procedures to be used for--
                    (A) receiving and assessing reports of 
                child abuse or neglect;
                    (B) investigating such reports;
                    (C) with respect to families in which abuse 
                or neglect has been confirmed, providing 
                services or referral for services for families 
                and children where the State makes a 
                determination that the child may safely remain 
                with the family;
                    (D) protecting children by removing them 
                from dangerous settings and ensuring their 
                placement in a safe environment;
                    (E) providing training for individuals 
                mandated to report suspected cases of child 
                abuse or neglect;
                    (F) protecting children in foster care;
                    (G) promoting timely adoptions;
                    (H) protecting the rights of families, 
                using adult relatives as the preferred 
                placement for children separated from their 
                parents where such relatives meet the relevant 
                State child protection standards; and
                    (I) providing services to individuals, 
                families, or communities, either directly or 
                through referral, that are aimed at preventing 
                the occurrence of child abuse and neglect.
            (2) Certification of state law requiring the 
        reporting of child abuse and neglect.--A certification 
        that the State has in effect laws that require public 
        officials and other professionals to report, in good 
        faith, actual or suspected instances of child abuse or 
        neglect.
            (3) Certification of procedures for screening, 
        safety assessment, and prompt investigation.--A 
        certification that the State has in effect procedures 
        for receiving and responding to reports of child abuse 
        or neglect, including the reports described in 
        paragraph (2), and for the immediate screening, safety 
        assessment, and prompt investigation of such reports.
            (4) Certification of state procedures for removal 
        and placement of abused or neglected children.--A 
        certification that the State has in effect procedures 
        for the removal from families and placement of abused 
        or neglected children and of any other child in the 
        same household who may also be in danger of abuse or 
        neglect.
            (5) Certification of provisions for appointment of 
        guardian ad litem.--A certification that the State has 
        in effect laws and procedures requiring the appointment 
        of a guardian ad litem in every case involving an 
        abused or neglected child which results in a judicial 
        proceeding.
            (6) Certification of provisions for immunity from 
        prosecution.--A certification that the State has in 
        effect laws requiring immunity from prosecution under 
        State and local laws and regulations for individuals 
        making good faith reports of suspected or known 
        instances of child abuse or neglect.
            (7) Certification of provisions and procedures for 
        expungement of certain records.--A certification that 
        the State has in effect laws and procedures requiring 
        the facilitation of the prompt expungement of any 
        records that are accessible to the general public or 
        are used for purposes of employment or other background 
        checks in cases determined to be unsubstantiated or 
        false.
            (8) Certification of state procedures for 
        developing and reviewing written plans for permanent 
        placement of removed children.--A certification that 
        the State has in effect procedures for ensuring that a 
        written plan is prepared for children who have been 
        removed from their families. Such plan shall specify 
        the goals for achieving a permanent placement for the 
        child in a timely fashion, for ensuring that the 
        written plan is reviewed every 6 months (until such 
        placement is achieved), and for ensuring that 
        information about such children is collected regularly 
        and recorded in case records, and include a description 
        of such procedures.
            (9) Certification of state program to provide 
        independent living services.--A certification that the 
        State has in effect a program to provide independent 
        living services, for assistance in making the 
        transition to self-sufficient adulthood, to individuals 
        in the child protection program of the State who are 
        16, but who are not 20 (or, at the option of the State, 
        22), years of age, and who do not have a family to 
        which to be returned.
            (10) Certification of state procedures to respond 
        to reporting of medical neglect of disabled infants.--A 
        certification that the State has in place for the 
        purpose of responding to the reporting of medical 
        neglect of infants (including instances of withholding 
        of medically indicated treatment from disabled infants 
        with life-threatening conditions), procedures or 
        programs, or both (within the State child protective 
        services system), to provide for--
                    (A) coordination and consultation with 
                individuals designated by and within 
                appropriate health-care facilities;
                    (B) prompt notification by individuals 
                designated by and within appropriate health-
                care facilities of cases of suspected medical 
                neglect (including instances of withholding of 
                medically indicated treatment from disabled 
                infants with life-threatening conditions); and
                    (C) authority, under State law, for the 
                State child protective service to pursue any 
                legal remedies, including the authority to 
                initiate legal proceedings in a court of 
                competent jurisdiction, as may be necessary to 
                prevent the withholding of medically indicated 
                treatment from disabled infants with life-
                threatening conditions.
            (11) Identification of child protection goals.--The 
        quantitative goals of the State child protection 
        program.
            (12) Certification of child protection standards.--
        With respect to fiscal years beginning on or after 
        April 1, 1996, a certification that the State--
                    (A) has completed an inventory of all 
                children who, before the inventory, had been in 
                foster care under the responsibility of the 
                State for 6 months or more, which determined--
                            (i) the appropriateness of, and 
                        necessity for, the foster care 
                        placement;
                            (ii) whether the child could or 
                        should be returned to the parents of 
                        the child or should be freed for 
                        adoption or other permanent placement; 
                        and
                            (iii) the services necessary to 
                        facilitate the return of the child or 
                        the placement of the child for adoption 
                        or legal guardianship;
                    (B) is operating, to the satisfaction of 
                the Secretary--
                            (i) a statewide information system 
                        from which can be readily determined 
                        the status, demographic 
                        characteristics, location, and goals 
                        for the placement of every child who is 
                        (or, within the immediately preceding 
                        12 months, has been) in foster care;
                            (ii) a case review system for each 
                        child receiving foster care under the 
                        supervision of the State;
                            (iii) a service program designed to 
                        help children--
                                    (I) where appropriate, 
                                return to families from which 
                                they have been removed; or
                                    (II) be placed for 
                                adoption, with a legal 
                                guardian, or if adoption or 
                                legal guardianship is 
                                determined not to be 
                                appropriate for a child, in 
                                some other planned, permanent 
                                living arrangement; and
                            (iv) a preplacement preventive 
                        services program designed to help 
                        children at risk for foster care 
                        placement remain with their families; 
                        and
                    (C)(i) has reviewed (or not later than 
                October 1, 1997, will review) State policies 
                and administrative and judicial procedures in 
                effect for children abandoned at or shortly 
                after birth (including policies and procedures 
                providing for legal representation of such 
                children); and
                    (ii) is implementing (or not later than 
                October 1, 1997, will implement) such policies 
                and procedures as the State determines, on the 
                basis of the review described in clause (i), to 
                be necessary to enable permanent decisions to 
                be made expeditiously with respect to the 
                placement of such children.
            (13) Certification of reasonable efforts before 
        placement of children in foster care.--A certification 
        that the State in each case will--
                    (A) make reasonable efforts prior to the 
                placement of a child in foster care, to prevent 
                or eliminate the need for removal of the child 
                from the child's home, and to make it possible 
                for the child to return home; and
                    (B) with respect to families in which abuse 
                or neglect has been confirmed, provide services 
                or referral for services for families and 
                children where the State makes a determination 
                that the child may safely remain with the 
                family.
            (14) Certification of confidentiality and 
        requirements for information disclosure.--
                    (A) In general.--A certification that the 
                State has in effect and operational--
                            (i) requirements ensuring that 
                        reports and records made and maintained 
                        pursuant to the purposes of this part 
                        shall only be made available to--
                                    (I) individuals who are the 
                                subject of the report;
                                    (II) Federal, State, or 
                                local government entities, or 
                                any agent of such entities, 
                                having a need for such 
                                information in order to carry 
                                out their responsibilities 
                                under law to protect children 
                                from abuse and neglect;
                                    (III) child abuse citizen 
                                review panels;
                                    (IV) child fatality review 
                                panels;
                                    (V) a grand jury or court, 
                                upon a finding that information 
                                in the record is necessary for 
                                the determination of an issue 
                                before the court or grand jury; 
                                and
                                    (VI) other entities or 
                                classes of individuals 
                                statutorily authorized by the 
                                State to receive such 
                                information pursuant to a 
                                legitimate State purpose; and
                            (ii) provisions that allow for 
                        public disclosure of the findings or 
                        information about cases of child abuse 
                        or neglect that have resulted in a 
                        child fatality or near fatality.
                    (B) Limitation.--Disclosures made pursuant 
                to clause (i) or (ii) shall not include the 
                identifying information concerning the 
                individual initiating a report or complaint 
                alleging suspected instances of child abuse or 
                neglect.
                    (C) Definition.--For purposes of this 
                paragraph, the term ``near fatality'' means an 
                act that, as certified by a physician, places 
                the child in serious or critical condition.
    (b) Determinations.--The Secretary shall determine whether 
a plan submitted pursuant to subsection (a) contains the 
material required by subsection (a). The Secretary may not 
require a State to include in such a plan any material not 
described in subsection (a).

SEC. 103. DATA COLLECTION AND REPORTING.

    (a) National Child Abuse and Neglect Data System.--The 
Secretary shall establish a national data collection and 
analysis program--
            (1) which, to the extent practicable, coordinates 
        existing State child abuse and neglect reports and 
        which shall include--
                    (A) standardized data on substantiated, as 
                well as false, unfounded, or unsubstantiated 
                reports; and
                    (B) information on the number of deaths due 
                to child abuse and neglect; and
            (2) which shall collect, compile, analyze, and make 
        available State child abuse and neglect reporting 
        information which, to the extent practical, is 
        universal and case-specific and integrated with other 
        case-based foster care and adoption data collected by 
        the Secretary.
    (b) Adoption and Foster Care and Analysis and Reporting 
Systems.--The Secretary shall implement a system for the 
collection of data relating to adoption and foster care in the 
United States. Such data collection system shall--
            (1) avoid unnecessary diversion of resources from 
        agencies responsible for adoption and foster care;
            (2) assure that any data that is collected is 
        reliable and consistent over time and among 
        jurisdictions through the use of uniform definitions 
        and methodologies;
            (3) provide comprehensive national information with 
        respect to--
                    (A) the demographic characteristics of 
                adoptive and foster children and their 
                biological and adoptive or foster parents;
                    (B) the status of the foster care 
                population (including the number of children in 
                foster care, length of placement, type of 
                placement, availability for adoption, and goals 
                for ending or continuing foster care);
                    (C) the number and characteristics of--
                            (i) children placed in or removed 
                        from foster care;
                            (ii) children adopted or with 
                        respect to whom adoptions have been 
                        terminated; and
                            (iii) children placed in foster 
                        care outside the State which has 
                        placement and care responsibility; and
                    (D) the extent and nature of assistance 
                provided by Federal, State, and local adoption 
                and foster care programs and the 
                characteristics of the children with respect to 
                whom such assistance is provided; and
            (4) utilize appropriate requirements and incentives 
        to ensure that the system functions reliably throughout 
        the United States.
    (c) Additional Information.--The Secretary may require the 
provision of additional information under the data collection 
system established under subsection (b) if the addition of such 
information is agreed to by a majority of the States.
    (d) Annual Report by the Secretary.--Within 6 months after 
the end of each fiscal year, the Secretary shall prepare a 
report based on information provided by the States for the 
fiscal year pursuant to this section, and shall make the report 
and such information available to the Congress and the public.

 TITLE II--RESEARCH, DEMONSTRATIONS, TRAINING, AND TECHNICAL ASSISTANCE

SEC. 201. RESEARCH GRANTS.

    (a) In General.--The Secretary, in consultation with 
appropriate Federal officials and recognized experts in the 
field, shall award grants or contracts for the conduct of 
research in accordance with subsection (b).
    (b) Research.--Research projects to be conducted using 
amounts received under this section--
            (1) shall be designed to provide information to 
        better protect children from abuse or neglect and to 
        improve the well-being of abused or neglected children, 
        with at least a portion of any such research conducted 
        under a project being field initiated;
            (2) shall at a minimum, focus on--
                    (A) the nature and scope of child abuse and 
                neglect;
                    (B) the causes, prevention, assessment, 
                identification, treatment, cultural and 
                socioeconomic distinctions, and the 
                consequences of child abuse and neglect;
                    (C) appropriate, effective and culturally 
                sensitive investigative, administrative, and 
                judicial procedures with respect to cases of 
                child abuse; and
                    (D) the national incidence of child abuse 
                and neglect, including--
                            (i) the extent to which incidents 
                        of child abuse are increasing or 
                        decreasing in number and severity;
                            (ii) the incidence of substantiated 
                        and unsubstantiated reported child 
                        abuse cases;
                            (iii) the number of substantiated 
                        cases that result in a judicial finding 
                        of child abuse or neglect or related 
                        criminal court convictions;
                            (iv) the extent to which the number 
                        of unsubstantiated, unfounded and false 
                        reported cases of child abuse or 
                        neglect have contributed to the 
                        inability of a State to respond 
                        effectively to serious cases of child 
                        abuse or neglect;
                            (v) the extent to which the lack of 
                        adequate resources and the lack of 
                        adequate training of reporters have 
                        contributed to the inability of a State 
                        to respond effectively to serious cases 
                        of child abuse and neglect;
                            (vi) the number of unsubstantiated, 
                        false, or unfounded reports that have 
                        resulted in a child being placed in 
                        substitute care, and the duration of 
                        such placement;
                            (vii) the extent to which 
                        unsubstantiated reports return as more 
                        serious cases of child abuse or 
                        neglect;
                            (viii) the incidence and prevalence 
                        of physical, sexual, and emotional 
                        abuse and physical and emotional 
                        neglect in substitute care;
                            (ix) the incidence and outcomes of 
                        abuse allegations reported within the 
                        context of divorce, custody, or other 
                        family court proceedings, and the 
                        interaction between this venue and the 
                        child protective services system; and
                            (x) the cases of children reunited 
                        with their families or receiving family 
                        preservation services that result in 
                        subsequent substantiated reports of 
                        child abuse and neglect, including the 
                        death of the child; and
            (3) may include the appointment of an advisory 
        board to--
                    (A) provide recommendations on coordinating 
                Federal, State, and local child abuse and 
                neglect activities at the State level with 
                similar activities at the State and local level 
                pertaining to family violence prevention;
                    (B) consider specific modifications needed 
                in State laws and programs to reduce the number 
                of unfounded or unsubstantiated reports of 
                child abuse or neglect while enhancing the 
                ability to identify and substantiate legitimate 
                cases of abuse or neglect which place a child 
                in danger; and
                    (C) provide recommendations for 
                modifications needed to facilitate coordinated 
                national and Statewide data collection with 
                respect to child protection and child welfare.

SEC. 202. NATIONAL CLEARINGHOUSE FOR INFORMATION RELATING TO CHILD 
                    ABUSE.

    (a) Establishment.--The Secretary shall, through the 
Department of Health and Human Services, or by one or more 
contracts of not less than 3 years duration provided through a 
competition, establish a national clearinghouse for information 
relating to child abuse.
    (b) Functions.--The Secretary shall, through the 
clearinghouse established by subsection (a)--
            (1) maintain, coordinate, and disseminate 
        information on all programs, including private 
        programs, that show promise of success with respect to 
        the prevention, assessment, identification, and 
        treatment of child abuse and neglect;
            (2) maintain and disseminate information relating 
        to--
                    (A) the incidence of cases of child abuse 
                and neglect in the United States;
                    (B) the incidence of such cases in 
                populations determined by the Secretary under 
                section 105(a)(1) of the Child Abuse 
                Prevention, Adoption, and Family Services Act 
                of 1988 (as such section was in effect on the 
                day before the date of enactment of this Act); 
                and
                    (C) the incidence of any such cases related 
                to alcohol or drug abuse;
            (3) disseminate information related to data 
        collected and reported by States pursuant to section 
        103;
            (4) compile, analyze, and publish a summary of the 
        research conducted under section 201; and
            (5) solicit public comment on the components of 
        such clearinghouse.

SEC. 203. GRANTS FOR DEMONSTRATION PROJECTS.

    (a) Awarding of General Grants.--The Secretary may make 
grants to, and enter into contracts with, public and nonprofit 
private agencies or organizations (or combinations of such 
agencies or organizations) for the purpose of developing, 
implementing, and operating time limited, demonstration 
programs and projects for the following purposes:
            (1) Innovative programs and projects.--The 
        Secretary may award grants to public agencies that 
        demonstrate innovation in responding to reports of 
        child abuse and neglect including programs of 
        collaborative partnerships between the State child 
        protective service agency, community social service 
        agencies and family support programs, schools, churches 
        and synagogues, and other community agencies to allow 
        for the establishment of a triage system that--
                    (A) accepts, screens and assesses reports 
                received to determine which such reports 
                require an intensive intervention and which 
                require voluntary referral to another agency, 
                program or project;
                    (B) provides, either directly or through 
                referral, a variety of community-linked 
                services to assist families in preventing child 
                abuse and neglect; and
                    (C) provides further investigation and 
                intensive intervention where the child's safety 
                is in jeopardy.
            (2) Kinship care programs and projects.--The 
        Secretary may award grants to public entities to assist 
        such entities in developing or implementing procedures 
        using adult relatives as the preferred placement for 
        children removed from their home, where such relatives 
        are determined to be capable of providing a safe 
        nurturing environment for the child and where, to the 
        maximum extent practicable, such relatives comply with 
        relevant State child protection standards.
            (3) Adoption opportunities.--The Secretary may 
        award grants to public entities to assist such entities 
        in developing or implementing programs to expand 
        opportunities for the adoption of children with special 
        needs.
            (4) Family resource centers.--The Secretary may 
        award grants to public or nonprofit private entities to 
        provide for the establishment of family resource 
        programs and support services that--
                    (A) develop, expand, and enhance statewide 
                networks of community-based, prevention-focused 
                centers, programs, or services that provide 
                comprehensive support for families;
                    (B) promote the development of parental 
                competencies and capacities in order to 
                increase family stability;
                    (C) support the additional needs of 
                families with children with disabilities;
                    (D) foster the development of a continuum 
                of preventive services for children and 
                families through State and community-based 
                collaborations and partnerships (both public 
                and private); and
                    (E) maximize funding for the financing, 
                planning, community mobilization, 
                collaboration, assessment, information and 
                referral, startup, training and technical 
                assistance, information management, reporting, 
                and evaluation costs for establishing, 
                operating, or expanding a statewide network of 
                community-based, prevention-focused family 
                resource and support services.
            (5) Other innovative programs.--The Secretary may 
        award grants to public or private nonprofit 
        organizations to assist such entities in developing or 
        implementing innovative programs and projects that show 
        promise of preventing and treating cases of child abuse 
        and neglect (such as Parents Anonymous).
    (b) Grants for Abandoned Infant Programs.--The Secretary 
may award grants to public and nonprofit private entities to 
assist such entities in developing or implementing procedures--
            (1) to prevent the abandonment of infants and young 
        children, including the provision of services to 
        members of the natural family for any condition that 
        increases the probability of abandonment of an infant 
        or young child;
            (2) to identify and address the needs of abandoned 
        infants and young children;
            (3) to assist abandoned infants and young children 
        to reside with their natural families or in foster 
        care, as appropriate;
            (4) to recruit, train, and retain foster families 
        for abandoned infants and young children;
            (5) to carry out residential care programs for 
        abandoned infants and young children who are unable to 
        reside with their families or to be placed in foster 
        care;
            (6) to carry out programs of respite care for 
        families and foster families of infants and young 
        children; and
            (7) to recruit and train health and social services 
        personnel to work with families, foster care families, 
        and residential care programs for abandoned infants and 
        young children.
    (c) Evaluation.--In making grants for demonstration 
projects under this section, the Secretary shall require all 
such projects to be evaluated for their effectiveness. Funding 
for such evaluations shall be provided either as a stated 
percentage of a demonstration grant or as a separate grant 
entered into by the Secretary for the purpose of evaluating a 
particular demonstration project or group of projects.

SEC. 204. TECHNICAL ASSISTANCE.

    (a) Child Abuse and Neglect.--
            (1) In general.--The Secretary shall provide 
        technical assistance under this title to States to 
        assist such States in planning, improving, developing, 
        and carrying out programs and activities relating to 
        the prevention, assessment identification, and 
        treatment of child abuse and neglect.
            (2) Evaluation.--Technical assistance provided 
        under paragraph (1) may include an evaluation or 
        identification of--
                    (A) various methods and procedures for the 
                investigation, assessment, and prosecution of 
                child physical and sexual abuse cases;
                    (B) ways to mitigate psychological trauma 
                to the child victim; and
                    (C) effective programs carried out by the 
                States under this Act.
    (b) Adoption Opportunities.--The Secretary shall provide, 
directly or by grant to or contract with public or private 
nonprofit agencies or organizations--
            (1) technical assistance and resource and referral 
        information to assist State or local governments with 
        termination of parental rights issues, in recruiting 
        and retaining adoptive families, in the successful 
        placement of children with special needs, and in the 
        provision of pre- and post-placement services, 
        including post-legal adoption services; and
            (2) other assistance to help State and local 
        governments replicate successful adoption-related 
        projects from other areas in the United States.

SEC. 205. TRAINING RESOURCES.

    (a) Training Programs.--The Secretary may award grants to 
public or private nonprofit organizations--
            (1) for the training of professional and 
        paraprofessional personnel in the fields of medicine, 
        law, education, law enforcement, social work, and other 
        relevant fields who are engaged in, or intend to work 
        in, the field of prevention, identification, and 
        treatment of child abuse and neglect, including the 
        links between domestic violence and child abuse;
            (2) to provide culturally specific instruction in 
        methods of protecting children from child abuse and 
        neglect to children and to persons responsible for the 
        welfare of children, including parents of and persons 
        who work with children with disabilities; and
            (3) to improve the recruitment, selection, and 
        training of volunteers serving in private and public 
        nonprofit children, youth and family service 
        organizations in order to prevent child abuse and 
        neglect through collaborative analysis of current 
        recruitment, selection, and training programs and 
        development of model programs for dissemination and 
        replication nationally.
    (b) Dissemination of Information.--The Secretary may 
provide for and disseminate information relating to various 
training resources available at the State and local level to--
            (1) individuals who are engaged, or who intend to 
        engage, in the prevention, identification, assessment, 
        and treatment of child abuse and neglect; and
            (2) appropriate State and local officials, 
        including prosecutors, to assist in training law 
        enforcement, legal, judicial, medical, mental health, 
        education, and child welfare personnel in appropriate 
        methods of interacting during investigative, 
        administrative, and judicial proceedings with children 
        who have been subjected to abuse.

SEC. 206. APPLICATIONS AND AMOUNTS OF GRANTS.

    (a) Requirement of Application.--The Secretary may not make 
a grant to a State or other entity under this title unless--
            (1) an application for the grant is submitted to 
        the Secretary;
            (2) with respect to carrying out the purpose for 
        which the grant is to be made, the application provides 
        assurances of compliance satisfactory to the Secretary; 
        and
            (3) the application otherwise is in such form, is 
        made in such manner, and contains such agreements, 
        assurances, and information as the Secretary determines 
        to be necessary to carry out this title.
    (b) Amount of Grant.--The Secretary shall determine the 
amount of a grant to be awarded under this title.

SEC. 207. PEER REVIEW FOR GRANTS.

    (a) Establishment of Peer Review Process.--
            (1) In general.--The Secretary shall, in 
        consultation with experts in the field and other 
        Federal agencies, establish a formal, rigorous, and 
        meritorious peer review process for purposes of 
        evaluating and reviewing applications for grants under 
        this title and determining the relative merits of the 
        projects for which such assistance is requested. The 
        purpose of this process is to enhance the quality and 
        usefulness of research in the field of child abuse and 
        neglect.
            (2) Requirements for members.--In establishing the 
        process required by paragraph (1), the Secretary shall 
        appoint to the peer review panels only members who are 
        experts in the field of child abuse and neglect or 
        related disciplines, with appropriate expertise in the 
        application to be reviewed, and who are not individuals 
        who are officers or employees of the Administration for 
        Children and Families. The panels shall meet as often 
        as is necessary to facilitate the expeditious review of 
        applications for grants and contracts under this title, 
        but may not meet less than once a year. The Secretary 
        shall ensure that the peer review panel utilizes 
        scientifically valid review criteria and scoring 
        guidelines for review committees.
    (b) Review of Applications for Assistance.--Each peer 
review panel established under subsection (a)(1) that reviews 
any application for a grant shall--
            (1) determine and evaluate the merit of each 
        project described in such application;
            (2) rank such application with respect to all other 
        applications it reviews in the same priority area for 
        the fiscal year involved, according to the relative 
        merit of all of the projects that are described in such 
        application and for which financial assistance is 
        requested; and
            (3) make recommendations to the Secretary 
        concerning whether the application for the project 
        shall be approved.
The Secretary shall award grants under this title on the basis 
of competitive review.
    (c) Notice of Approval.--
            (1) In general.--The Secretary shall provide grants 
        under this title from among the projects which the peer 
        review panels established under subsection (a)(1) have 
        determined to have merit.
            (2) Requirement of explanation.--In the instance in 
        which the Secretary approves an application for a 
        program under this title without having approved all 
        applications ranked above such application, the 
        Secretary shall append to the approved application a 
        detailed explanation of the reasons relied on for 
        approving the application and for failing to approve 
        each pending application that is superior in merit.

SEC. 208. NATIONAL RANDOM SAMPLE STUDY OF CHILD WELFARE.

    (a) In General.--The Secretary shall conduct a national 
study based on random samples of children who are at risk of 
child abuse or neglect, or are determined by States to have 
been abused or neglected, and such other research as may be 
necessary.
    (b) Requirements.--The study required by subsection (a) 
shall--
            (1) have a longitudinal component; and
            (2) yield data reliable at the State level for as 
        many States as the Secretary determines is feasible.
    (c) Preferred Contents.--In conducting the study required 
by subsection (a), the Secretary should--
            (1) collect data on the child protection programs 
        of different small States (or different groups of such 
        States) in different years to yield an occasional 
        picture of the child protection programs of such 
        States;
            (2) carefully consider selecting the sample from 
        cases of confirmed abuse or neglect; and
            (3) follow each case for several years while 
        obtaining information on, among other things--
                    (A) the type of abuse or neglect involved;
                    (B) the frequency of contact with State or 
                local agencies;
                    (C) whether the child involved has been 
                separated from the family, and, if so, under 
                what circumstances;
                    (D) the number, type, and characteristics 
                of out-of-home placements of the child; and
                    (E) the average duration of each placement.
    (d) Reports.--
            (1) In general.--From time to time, the Secretary 
        shall prepare reports summarizing the results of the 
        study required by subsection (a).
            (2) Availability.--The Secretary shall make 
        available to the public any report prepared under 
        paragraph (1), in writing or in the form of an 
        electronic data tape.
            (3) Authority to charge fee.--The Secretary may 
        charge and collect a fee for the furnishing of reports 
        under paragraph (2).
            (4) Funding.--The Secretary shall carry out this 
        section using amounts made available under section 425 
        of the Social Security Act.

                     TITLE III--GENERAL PROVISIONS

SEC. 301. AUTHORIZATION OF APPROPRIATIONS.

    (a) Title I.--There are authorized to be appropriated to 
carry out title I, $230,000,000 for fiscal year 1996, and such 
sums as may be necessary for each of the fiscal years 1997 
through 2002.
    (b) Title II.--
            (1) In general.--Of the amount appropriated under 
        subsection (a) for a fiscal year, the Secretary shall 
        make available 12 percent of such amount to carry out 
        title II (except for sections 203 and 208).
            (2) Grants for demonstration projects.--Of the 
        amount made available under paragraph (1) for a fiscal 
        year, the Secretary shall make available not less than 
        40 percent of such amount to carry out section 203.
    (c) Indian Tribes.--Of the amount appropriated under 
subsection (a) for a fiscal year, the Secretary shall make 
available 1 percent of such amount to provide grants and 
contracts to Indian tribes and Tribal Organizations.
    (d) Availability of Appropriations.--Amounts appropriated 
under subsection (a) shall remain available until expended.

SEC. 302. GRANTS TO STATES FOR PROGRAMS RELATING TO THE INVESTIGATION 
                    AND PROSECUTION OF CHILD ABUSE AND NEGLECT CASES.

    (a) Grants to States.--The Secretary, in consultation with 
the Attorney General, is authorized to make grants to the 
States for the purpose of assisting States in developing, 
establishing, and operating programs designed to improve--
            (1) the handling of child abuse and neglect cases, 
        particularly cases of child sexual abuse and 
        exploitation, in a manner which limits additional 
        trauma to the child victim;
            (2) the handling of cases of suspected child abuse 
        or neglect related fatalities; and
            (3) the investigation and prosecution of cases of 
        child abuse and neglect, particularly child sexual 
        abuse and exploitation.
    (b) Eligibility Requirements.--In order for a State to 
qualify for assistance under this section, such State shall--
            (1) be an eligible State under section 102;
            (2) establish a task force as provided in 
        subsection (c);
            (3) fulfill the requirements of subsection (d);
            (4) submit annually an application to the Secretary 
        at such time and containing such information and 
        assurances as the Secretary considers necessary, 
        including an assurance that the State will--
                    (A) make such reports to the Secretary as 
                may reasonably be required; and
                    (B) maintain and provide access to records 
                relating to activities under subsection (a); 
                and
            (5) submit annually to the Secretary a report on 
        the manner in which assistance received under this 
        program was expended throughout the State, with 
        particular attention focused on the areas described in 
        paragraphs (1) through (3) of subsection (a).
    (c) State Task Forces.--
            (1) General rule.--Except as provided in paragraph 
        (2), a State requesting assistance under this section 
        shall establish or designate, and maintain, a State 
        multidisciplinary task force on children's justice 
        (hereafter in this section referred to as ``State task 
        force'') composed of professionals with knowledge and 
        experience relating to the criminal justice system and 
        issues of child physical abuse, child neglect, child 
        sexual abuse and exploitation, and child maltreatment 
        related fatalities. The State task force shall 
        include--
                    (A) individuals representing the law 
                enforcement community;
                    (B) judges and attorneys involved in both 
                civil and criminal court proceedings related to 
                child abuse and neglect (including individuals 
                involved with the defense as well as the 
                prosecution of such cases);
                    (C) child advocates, including both 
                attorneys for children and, where such programs 
                are in operation, court appointed special 
                advocates;
                    (D) health and mental health professionals;
                    (E) individuals representing child 
                protective service agencies;
                    (F) individuals experienced in working with 
                children with disabilities;
                    (G) parents; and
                    (H) representatives of parents' groups.
            (2) Existing task force.--As determined by the 
        Secretary, a State commission or task force established 
        after January 1, 1983, with substantially comparable 
        membership and functions, may be considered the State 
        task force for purposes of this subsection.
    (d) State Task Force Study.--Before a State receives 
assistance under this section, and at 3-year intervals 
thereafter, the State task force shall comprehensively--
            (1) review and evaluate State investigative, 
        administrative and both civil and criminal judicial 
        handling of cases of child abuse and neglect, 
        particularly child sexual abuse and exploitation, as 
        well as cases involving suspected child maltreatment 
        related fatalities and cases involving a potential 
        combination of jurisdictions, such as interstate, 
        Federal-State, and State-Tribal; and
            (2) make policy and training recommendations in 
        each of the categories described in subsection (e).
The task force may make such other comments and recommendations 
as are considered relevant and useful.
    (e) Adoption of State Task Force Recommendations.--
            (1) General rule.--Subject to the provisions of 
        paragraph (2), before a State receives assistance under 
        this section, a State shall adopt recommendations of 
        the State task force in each of the following 
        categories--
                    (A) investigative, administrative, and 
                judicial handling of cases of child abuse and 
                neglect, particularly child sexual abuse and 
                exploitation, as well as cases involving 
                suspected child maltreatment related fatalities 
                and cases involving a potential combination of 
                jurisdictions, such as interstate, Federal-
                State, and State-Tribal, in a manner which 
                reduces the additional trauma to the child 
                victim and the victim's family and which also 
                ensures procedural fairness to the accused;
                    (B) experimental, model and demonstration 
                programs for testing innovative approaches and 
                techniques which may improve the prompt and 
                successful resolution of civil and criminal 
                court proceedings or enhance the effectiveness 
                of judicial and administrative action in child 
                abuse and neglect cases, particularly child 
                sexual abuse and exploitation cases, including 
                the enhancement of performance of court-
                appointed attorneys and guardians ad litem for 
                children; and
                    (C) reform of State laws, ordinances, 
                regulations, protocols and procedures to 
                provide comprehensive protection for children 
                from abuse, particularly child sexual abuse and 
                exploitation, while ensuring fairness to all 
                affected persons.
            (2) Exemption.--As determined by the Secretary, a 
        State shall be considered to be in fulfillment of the 
        requirements of this subsection if--
                    (A) the State adopts an alternative to the 
                recommendations of the State task force, which 
                carries out the purpose of this section, in 
                each of the categories under paragraph (1) for 
                which the State task force's recommendations 
                are not adopted; or
                    (B) the State is making substantial 
                progress toward adopting recommendations of the 
                State task force or a comparable alternative to 
                such recommendations.
    (f) Funds Available.--For grants under this section, the 
Secretary shall use the amount authorized by section 1404A of 
the Victims of Crime Act of 1984.

SEC. 303. TRANSITIONAL PROVISION.

    A State or other entity that has a grant, contract, or 
cooperative agreement in effect, on the date of enactment of 
this Act, under the Family Resource and Support Program, the 
Community-Based Family Resource Program, the Family Support 
Center Program, the Emergency Child Abuse Prevention Grant 
Program, the Abandoned Infants Assistance Act of 1988, or the 
Temporary Child Care for Children with Disabilities and Crisis 
Nurseries Programs shall continue to receive funds under such 
grant, contract, or cooperative agreement, subject to the 
original terms under which such funds were provided, through 
the end of the applicable grant, contract, or agreement cycle.

SEC. 304. RULE OF CONSTRUCTION.

    (a) In General.--Nothing in this Act, or in part B or E of 
title IV of the Social Security Act, shall be construed--
            (1) as establishing a Federal requirement that a 
        parent or legal guardian provide a child any medical 
        service or treatment against the religious beliefs of 
        the parent or legal guardian; and
            (2) to require that a State find, or to prohibit a 
        State from finding, abuse or neglect in cases in which 
        a parent or legal guardian relies solely or partially 
        upon spiritual means rather than medical treatment, in 
        accordance with the religious beliefs of the parent or 
        legal guardian.
    (b) State Requirement.--Notwithstanding subsection (a), a 
State shall have in place authority under State law to permit 
the child protective service system of the State to pursue any 
legal remedies, including the authority to initiate legal 
proceedings in a court of competent jurisdiction, to provide 
medical care or treatment for a child when such care or 
treatment is necessary to prevent or remedy serious harm to the 
child, or to prevent the withholding of medically indicated 
treatment from children with life threatening conditions. 
Except with respect to the withholding of medically indicated 
treatments from disabled infants with life threatening 
conditions, case by case determinations concerning the exercise 
of the authority of this subsection shall be within the sole 
discretion of the State.
                              ----------                              


          SECTION 408 OF THE MISSING CHILDREN'S ASSISTANCE ACT

                    authorization of appropriations

      Sec. 408. [To] (a) In General.--To carry out the 
provisions of this title, there are authorized to be 
appropriated such sums as may be necessary for fiscal years 
1993, 1994, 1995, [and 1996] 1996, and 1997.
    (b) Evaluation.--The Administrator shall use not more than 
5 percent of the amount appropriated for a fiscal year under 
subsection (a) to conduct an evaluation of the effectiveness of 
the programs and activities established and operated under this 
title.
                              ----------                              


         SECTION 214B OF THE VICTIMS OF CHILD ABUSE ACT OF 1990

SEC. 214B. AUTHORIZATION OF APPROPRIATIONS.

    (a) Sections 213 and 214.--There are authorized to be 
appropriated to carry out sections 213 and 214--
            (1) $15,000,000 for fiscal year 1993; and
            (2) such sums as are necessary for fiscal years 
        1994, 1995, [and 1996] 1996, and 1997.
    (b) Section 214A.--There are authorized to be appropriated 
to carry out section 214A--
            (1) $5,000,000 for fiscal year 1993; and
            (2) such sums as are necessary for fiscal years 
        1994, 1995, [and 1996] 1996 and 1997.
                              ----------                              


  CHILD ABUSE PREVENTION AND TREATMENT AND ADOPTION REFORM ACT OF 1978

          * * * * * * *

                   [TITLE II--ADOPTION OPPORTUNITIES

[SEC. 201. CONGRESSIONAL FINDINGS AND DECLARATION OF PURPOSE.

    [(a) Findings.--Congress finds that--
            [(1) the number of children in substitute care 
        increased by nearly 50 percent between 1985 and 1990, 
        as our Nation's foster care population included more 
        than 400,000 children at the end of June, 1990;
            [(2) increasingly children entering foster care 
        have complex problems which require intensive services;
            [(3) an increasing number of infants are born to 
        mothers who did not receive prenatal care, are born 
        addicted to alcohol and other drugs, and exposed to 
        infection with the etiologic agent for the human 
        immunodeficiency virus, are medically fragile, and 
        technology dependent;
            [(4) the welfare of thousands of children in 
        institutions and foster homes and disabled infants with 
        life-threatening conditions may be in serious jeopardy 
        and some such children are in need of placement in 
        permanent, adoptive homes;
            [(5) many thousands of children remain in 
        institutions or foster homes solely because of local 
        and other barriers to their placement in permanent, 
        adoptive homes;
            [(6) the majority of such children are of school 
        age, members of sibling groups or disabled;
            [(7) currently one-half of children free for 
        adoption and awaiting placement are minorities;
            [(8) adoption may be the best alternative for 
        assuring the healthy development of such children;
            [(9) there are qualified persons seeking to adopt 
        such children who are unable to do so because of 
        barriers to their placement; and
            [(10) in order both to enhance the stability and 
        love of the child's home environment and to avoid 
        wasteful expenditures of public funds, such children 
        should not have medically indicated treatment withheld 
        from them nor be maintained in foster care or 
        institutions when adoption is appropriate and families 
        can be found for such children.
    [(b) Purpose.--It is the purpose of this title to 
facilitate the elimination of barriers to adoption and to 
provide permanent and loving home environments for children who 
would benefit from adoption, particularly children with special 
needs, including disabled infants with life-threatening 
conditions, by--
            [(1) promoting model adoption legislation and 
        procedures in the States and territories of the United 
        States in order to eliminate jurisdictional and legal 
        obstacles to adoption; and
            [(2) providing a mechanism for the Department of 
        Health and Human Services to--
                    [(A) promote quality standards for adoption 
                services, pre-placement, post-placement, and 
                post-legal adoption counseling, and standards 
                to protect the rights of children in need of 
                adoption;
                    [(B) maintain a national adoption 
                information exchange system to bring together 
                children who would benefit from adoption and 
                qualified prospective adoptive parents who are 
                seeking such children, and conduct national 
                recruitment efforts in order to reach 
                prospective parents for children awaiting 
                adoption; and
                    [(C) demonstrate expeditious ways to free 
                children for adoption for whom it has been 
                determined that adoption is the appropriate 
                plan.

                       [information and services

    [Sec. 203. (a) The Secretary shall establish in the 
Department of Health and Human Services an appropriate 
administrative arrangement to provide a centralized focus for 
planning and coordinating of all departmental activities 
affecting adoption and foster care and for carrying out the 
provisions of this title. The Secretary shall make available 
such consultant services, on-site technical assistance and 
personnel, together with appropriate administrative expenses, 
including salaries and travel costs, as are necessary for 
carrying out such purposes, including services to facilitate 
the adoption of children with special needs and particularly of 
disabled infants with life-threatening conditions and services 
to couples considering adoption of children with special needs. 
The Secretary shall, not later than 12 months after the date of 
enactment of this sentence, prepare and submit to the 
committees of Congress having jurisdiction over such services 
reports, as appropriate, containing appropriate data concerning 
the manner in which activities were carried out under this 
title, and such reports shall be made available to the public.
    [(b) In connection with carrying out the provisions of this 
title, the Secretary shall--
            [(1) conduct (directly or by grant to or contract 
        with public or private nonprofit agencies or 
        organizations) an education and training program on 
        adoption, and prepare, publish, and disseminate 
        (directly or by grant to or contract with public or 
        private nonprofit agencies and organizations) to all 
        interested parties, public and private agencies and 
        organizations (including, but not limited to, 
        hospitals, health care and family planning clinics, and 
        social services agencies), and governmental bodies, 
        information and education and training materials 
        regarding adoption and adoption assistance programs;
            [(2) conduct, directly or by grant or contract with 
        public or private nonprofit organizations, ongoing, 
        extensive recruitment efforts on a national level, 
        develop national public awareness efforts to unite 
        children in need of adoption with appropriate adoptive 
        parents, and establish a coordinated referral system of 
        recruited families with appropriate State or regional 
        adoption resources to ensure that families are served 
        in a timely fashion;
            [(3) notwithstanding any other provision of law, 
        provide (directly or by grant to or contract with 
        public or private nonprofit agencies or organizations) 
        for (A) the operation of a national adoption 
        information exchange system (including only such 
        information as is necessary to facilitate the adoptive 
        placement of children, utilizing computers and data 
        processing methods to assist in the location of 
        children who would benefit by adoption and in the 
        placement in adoptive homes of children awaiting 
        adoption); and (B) the coordination of such system with 
        similar State and regional systems;
            [(4) provide (directly or by grant to or contract 
        with public or private nonprofit agencies or 
        organizations, including adoptive family groups and 
        minority groups) for the provision of technical 
        assistance in the planning, improving, developing, and 
        carrying out of programs and activities relating to 
        adoption, and to promote professional leadership 
        training of minorities in the adoption field;
            [(5) encourage involvement of corporations and 
        small businesses in supporting adoption as a positive 
        family-strengthening option, including the 
        establishment of adoption benefit programs for 
        employees who adopt children;
            [(6) continue to study the nature, scope, and 
        effects of the placement of children in adoptive homes 
        (not including the homes of stepparents or relatives of 
        the child in question) by persons or agencies which are 
        not licensed by or subject to regulation by any 
        governmental entity;
            [(7) consult with other appropriate Federal 
        departments and agencies in order to promote maximum 
        coordination of the services and benefits provided 
        under programs carried out by such departments and 
        agencies with those carried out by the Secretary, and 
        provide for the coordination of such aspects of all 
        programs within the Department of Health and Human 
        Services relating to adoption;
            [(8) maintain (directly or by grant to or contract 
        with public or private nonprofit agencies or 
        organizations) a National Resource Center for Special 
        Needs Adoption to--
                    [(A) promote professional leadership 
                development of minorities in the adoption 
                field;
                    [(B) provide training and technical 
                assistance to service providers and State 
                agencies to improve professional competency in 
                the field of adoption and the adoption of 
                children with special needs; and
                    [(C) facilitate the development of 
                interdisciplinary approaches to meet the needs 
                of children who are waiting for adoption and 
                the needs of adoptive families; and
            [(9) provide (directly or by grant to or contract 
        with States, local government entities, public or 
        private nonprofit licensed child welfare or adoption 
        agencies or adoptive family groups and community-based 
        organizations with experience in working with minority 
        populations) for the provision of programs aimed at 
        increasing the number of minority children (who are in 
        foster care and have the goal of adoption) placed in 
        adoptive families, with a special emphasis on 
        recruitment of minority families--
                    [(A) which may include such activities as--
                            [(i) outreach, public education, or 
                        media campaigns to inform the public of 
                        the needs and numbers of such children;
                            [(ii) recruitment of prospective 
                        adoptive families for such children;
                            [(iii) expediting, where 
                        appropriate, the legal availability of 
                        such children;
                            [(iv) expediting, where 
                        appropriate, the agency assessment of 
                        prospective adoptive families 
                        identified for such children;
                            [(v) formation of prospective 
                        adoptive family support groups;
                            [(vi) training of personnel of--
                                    [(I) public agencies;
                                    [(II) private nonprofit 
                                child welfare and adoption 
                                agencies that are licensed by 
                                the State; and
                                    [(III) adoptive parents 
                                organizations and community-
                                based organizations with 
                                experience in working with 
                                minority populations;
                            [(vii) use of volunteers and 
                        adoptive parent groups; and
                            [(viii) any other activities 
                        determined by the Secretary to further 
                        the purposes of this Act; and
                    [(B) shall be subject to the condition that 
                such grants or contracts may be renewed if 
                documentation is provided to the Secretary 
                demonstrating that appropriate and sufficient 
                placements of such children have occurred 
                during the previous funding period.
    [(c)(1) The Secretary shall provide (directly or by grant 
to or contract with States, local government entities, public 
or private nonprofit licensed child welfare or adoption 
agencies or adoptive family groups) for the provision of post 
legal adoption services for families who have adopted special 
needs children.
    [(2) Services provided under grants made under this 
subsection shall supplement, not supplant, services from any 
other funds available for the same general purposes, 
including--
            [(A) individual counseling;
            [(B) group counseling;
            [(C) family counseling;
            [(D) case management;
            [(E) training public agency adoption personnel, 
        personnel of private, nonprofit child welfare and 
        adoption agencies licensed by the State to provide 
        adoption services, mental health services 
        professionals, and other support personnel to provide 
        services under this subsection;
            [(F) assistance to adoptive parent organizations; 
        and
            [(G) assistance to support groups for adoptive 
        parents, adopted children, and siblings of adopted 
        children.
    [(d)(1) The Secretary shall make grants for improving State 
efforts to increase the placement of foster care children 
legally free for adoption, according to a pre-established plan 
and goals for improvement. Grants funded by this section must 
include a strong evaluation component which outlines the 
innovations used to improve the placement of special needs 
children who are legally free for adoption, and the successes 
and failures of the initiative. The evaluations will be 
submitted to the Secretary who will compile the results of 
projects funded by this section and submit a report to the 
appropriate committees of Congress. The emphasis of this 
program must focus on the improvement of the placement rate--
not the aggregate number of special needs children placed in 
permanent homes. The Secretary, when reviewing grant 
applications shall give priority to grantees who propose 
improvements designed to continue in the absence of Federal 
funds.
    [(2) Each State entering into an agreement under this 
subsection shall submit an application to the Secretary for 
each fiscal year in a form and manner determined to be 
appropriate by the Secretary. Each application shall include 
verification of the placements described in paragraph (1).
    [(3)(A) Payments under this subsection shall begin during 
fiscal year 1989. Payments under this section during any fiscal 
year shall not exceed $1,000,000. No payment may be made under 
this subsection unless an amount in excess of $5,000,000 is 
appropriated for such fiscal year under section 205(a).
    [(B) Any payment made to a State under this subsection 
which is not used by such State for the purpose provided in 
paragraph (1) during the fiscal year payment is made shall 
revert to the Secretary on October 1st of the next fiscal year 
and shall be used to carry out the purposes of this Act.

                [study of unlicensed adoption placements

    [Sec. 204. The Secretary shall provide for a study (the 
results of which shall be reported to the appropriate 
committees of the Congress not later than eighteen months after 
the date of enactment of this Act) designed to determine the 
nature, scope, and effects of the interstate (and, to the 
extent feasible, intrastate) placement of children in adoptive 
homes (not including the homes of stepparents or relatives of 
the child in question) by persons or agencies which are not 
licensed by or subject to regulation by any governmental 
entity.

                    [authorization of appropriations

    [Sec. 205.(a) There are authorized to be appropriated, 
$10,000,000 for fiscal year 1992, and such sums as may be 
necessary for each of the fiscal years 1993 through 1995, to 
carry out programs and activities under this Act except for 
programs and activities authorized under sections 203(b)(9) and 
203(c)(1).
    [(b) For any fiscal year in which appropriations under 
subsection (a) exceeds $5,000,000, there are authorized to be 
appropriated $10,000,000 for fiscal year 1992, and such sums as 
may be necessary for each of the fiscal years 1993 through 
1995, to carry out section 203(b)(9), and there are authorized 
to be appropriated $10,000,000 for fiscal year 1992, and such 
sums as may be necessary for each of the fiscal years 1993 
through 1995, to carry out section 203(c)(1).
    [(c) The Secretary shall ensure that funds appropriated 
pursuant to authorizations in this Act shall remain available 
until expended for the purposes for which they were 
appropriated.]
                              ----------                              


                ABANDONED INFANTS ASSISTANCE ACT OF 1988

AN ACT To authorize the Secretary of Health and Human Services to make 
grants for demonstration projects for foster care and residential care 
  of infants and young children abandoned in hospitals, and for other 
                               purposes.

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

[SECTION 1. SHORT TITLE.

    [This Act may be cited as the ``Abandoned Infants 
Assistance Act of 1988''.

[SEC. 2. FINDINGS.

    [The Congress finds that--
            [(1) throughout the Nation, the number of infants 
        and young children who have been exposed to drugs taken 
        by their mothers during pregnancy has increased 
        dramatically;
            [(2) the inability of parents who abuse drugs to 
        provide adequate care for such infants and young 
        children and a lack of suitable shelter homes for such 
        infants and young children have led to the abandonment 
        of such infants and young children in hospitals for 
        extended periods;
            [(3) an unacceptable number of these infants and 
        young children will be medically cleared for discharge, 
        yet remain in hospitals as boarder babies;
            [(4) hospital-based child care for these infants 
        and young children is extremely costly and deprives 
        them of an adequate nurturing environment;
            [(5) training is inadequate for foster care 
        personnel working with medically fragile infants and 
        young children and infants and young children exposed 
        to drugs;
            [(6) a particularly devastating development is the 
        increase in the number of infants and young children 
        who are infected with the human immunodeficiency virus 
        (which is believed to cause acquired immune deficiency 
        syndrome and which is commonly known as HIV) or who 
        have been perinatally exposed to the virus or to a 
        dangerous drug;
            [(7) many such infants and young children have at 
        least one parent who is an intravenous drug abuser;
            [(8) such infants and young children are 
        particularly difficult to place in foster homes, and 
        are being abandoned in hospitals in increasing numbers 
        by mothers dying of acquired immune deficiency 
        syndrome, or by parents incapable of providing adequate 
        care;
            [(9) there is a need for comprehensive services for 
        such infants and young children, including foster 
        family care services, case management services, family 
        support services, respite and crisis intervention 
        services, counseling services, and group residential 
        home services;
            [(10) there is a need to support the families of 
        such infants and young children through the provision 
        of services that will prevent the abandonment of the 
        infants and children; and
            [(11) there is a need for the development of 
        funding strategies that coordinate and make the optimal 
        use of all private resources, and Federal, State, and 
        local resources, to establish and maintain such 
        services.

[TITLE I--PROJECTS REGARDING ABANDONMENT OF INFANTS AND YOUNG CHILDREN 
                              IN HOSPITALS

[SEC. 101. ESTABLISHMENT OF PROGRAM OF DEMONSTRATION PROJECTS.

    [(a) In General.--The Secretary of Health and Human 
Services may make grants to public and nonprofit private 
entities for the purpose of developing, implementing, and 
operating projects to demonstrate methods--
            [(1) to prevent the abandonment of infants and 
        young children, including the provision of services to 
        members of the natural family for any condition that 
        increases the probability of abandonment of an infant 
        or young child;
            [(2) to identify and address the needs of abandoned 
        infants and young children;
            [(3) to assist abandoned infants and young children 
        to reside with their natural families or in foster 
        care, as appropriate;
            [(4) to recruit, train, and retain foster families 
        for abandoned infants and young children;
            [(5) to carry out residential care programs for 
        abandoned infants and young children who are unable to 
        reside with their families or to be placed in foster 
        care;
            [(6) to carry out programs of respite care for 
        families and foster families of infants and young 
        children described in subsection (b);
            [(7) to recruit and train health and social 
        services personnel to work with families, foster care 
        families, and residential care programs for abandoned 
        infants and young children; and
            [(8) to prevent the abandonment of infants and 
        young children, and to care for the infants and young 
        children who have been abandoned, through model 
        programs providing health, educational, and social 
        services at a single site in a geographic area in which 
        a significant number of infants and young children 
        described in subsection (b) reside (with special 
        consideration given to applications from entities that 
        will provide the services of the project through 
        community-based organizations).
    [(b) Priority in Provision of Services.--The Secretary may 
not make a grant under subsection (a) unless the applicant for 
the grant agrees that, in carrying out the purpose described in 
subsection (a) (other than with respect to paragraph (6) of 
such subsection), the applicant will give priority to abandoned 
infants and young children--
            [(1) who are infected with the human 
        immunodeficiency virus or who have been perinatally 
        exposed to the virus; or
            [(2) who have been perinatally exposed to a 
        dangerous drug.
    [(c) Case Plan With Respect to Foster Care.--The Secretary 
may not make a grant under subsection (a) unless the applicant 
for the grant agrees that, if the applicant expends the grant 
to carry out any program of providing care to infants and young 
children in foster homes or in other nonmedical residential 
settings away from their parents, the applicant will ensure 
that--
            [(1) a case plan of the type described in paragraph 
        (1) of section 475 of the Social Security Act is 
        developed for each such infant and young child (to the 
        extent that such infant and young child is not 
        otherwise covered by such a plan); and
            [(2) the program includes a case review system of 
        the type described in paragraph (5) of such section 
        (covering each such infant and young child who is not 
        otherwise subject to such a system).
    [(d) Administration of Grant.--
            [(1) The Secretary may not make a grant under 
        subsection (a) unless the applicant for the grant 
        agrees--
                    [(A) to use the funds provided under this 
                section only for the purposes specified in the 
                application submitted to, and approved by, the 
                Secretary pursuant to subsection (e);
                    [(B) to establish such fiscal control and 
                fund accounting procedures as may be necessary 
                to ensure proper disbursement and accounting of 
                Federal funds paid to the applicant under this 
                section;
                    [(C) to report to the Secretary annually on 
                the utilization, cost, and outcome of 
                activities conducted, and services furnished, 
                under this section; and
                    [(D) that if, during the majority of the 
                180-day period preceding the date of the 
                enactment of this Act, the applicant has 
                carried out any program with respect to the 
                care of abandoned infants and young children, 
                the applicant will expend the grant only for 
                the purpose of significantly expanding, in 
                accordance with subsection (a), activities 
                under such program above the level provided 
                under such program during the majority of such 
                period.
            [(2) Subject to the availability of amounts made 
        available in appropriations Acts for the fiscal year 
        involved, the duration of a grant under subsection (a) 
        shall be for a period of 3 years, except that the 
        Secretary--
                    [(A) may terminate the grant if the 
                Secretary determines that the entity involved 
                has substantially failed to comply with the 
                agreements required as a condition of the 
                provision of the grant; and
                    [(B) shall continue the grant for one 
                additional year if the Secretary determines 
                that the entity has satisfactorily complied 
                with such agreements.
    [(e) Requirement of Application.--The Secretary may not 
make a grant under subsection (a) unless--
            [(1) an application for the grant is submitted to 
        the Secretary;
            [(2) with respect to carrying out the purpose for 
        which the grant is to be made, the application provides 
        assurances of compliance satisfactory to the Secretary; 
        and
            [(3) the application otherwise is in such form, is 
        made in such manner, and contains such agreements, 
        assurances, and information as the Secretary determines 
        to be necessary to carry out this section.
    [(f) Technical Assistance to Grantees.--The Secretary may, 
without charge to any grantee under subsection (a), provide 
technical assistance (including training) with respect to the 
planning, development, and operation of projects described in 
such subsection. The Secretary may provide such technical 
assistance directly, through contracts, or through grants.
    [(g) Technical Assistance With Respect to Process of 
Applying for Grant.--The Secretary may provide technical 
assistance (including training) to public and nonprofit private 
entities with respect to the process of applying to the 
Secretary for a grant under subsection (a). The Secretary may 
provide such technical assistance directly, through contracts, 
or through grants.

[SEC. 102. EVALUATIONS, STUDIES, AND REPORTS BY SECRETARY.

    [(a) Evaluations of Demonstration Projects.--The Secretary 
shall, directly or through contracts with public and nonprofit 
private entities, provide for evaluations of projects carried 
out under section 101 and for the dissemination of information 
developed as result of such projects.
    [(b) Dissemination of Information to Individuals With 
Special Needs.--
            [(1)(A) The Secretary may enter into contracts or 
        cooperative agreements with public or nonprofit private 
        entities for the development and operation of model 
        projects to disseminate the information described in 
        subparagraph (B) to individuals who are 
        disproportionately at risk of dysfunctional behaviors 
        that lead to the abandonment of infants or young 
        children.
            [(B) The information referred to in subparagraph 
        (A) is information on the availability to individuals 
        described in such subparagraph, and the families of the 
        individuals, of financial assistance and services under 
        Federal, State, local, and private programs providing 
        health services, mental health services, educational 
        services, housing services, social services, or other 
        appropriate services.
            [(2) The Secretary may not provide a contract or 
        cooperative agreement under paragraph (1) to an entity 
        unless--
                    [(A) the entity has demonstrated expertise 
                in the functions with respect to which such 
                financial assistance is to be provided; and
                    [(B) the entity agrees that in 
                disseminating information on programs described 
                in such paragraph, the entity will give 
                priority--
                            [(i) to providing the information 
                        to individuals described in such 
                        paragraph who--
                                    [(I) engage in the abuse of 
                                alcohol or drugs, who are 
                                infected with the human 
                                immunodeficiency virus, or who 
                                have limited proficiency in 
                                speaking the English language; 
                                or
                                    [(II) have been 
                                historically underserved in the 
                                provision of the information; 
                                and
                            [(ii) to providing information on 
                        programs that are operated in the 
                        geographic area in which the 
                        individuals involved reside and that 
                        will assist in eliminating or reducing 
                        the extent of behaviors described in 
                        such paragraph.
            [(3) In providing contracts and cooperative 
        agreements under paragraph (1), the Secretary may not 
        provide more than 1 such contract or agreement with 
        respect to any geographic area.
            [(4) Subject to the availability of amounts made 
        available in appropriations Acts for the fiscal year 
        involved, the duration of a contract or cooperative 
        agreement under paragraph (1) shall be for a period of 
        3 years, except that the Secretary may terminate such 
        financial assistance if the Secretary determines that 
        the entity involved has substantially failed to comply 
        with the agreements required as a condition of the 
        provision of the assistance.
    [(c) Study and Report on Number of Abandoned Infants and 
Young Children.--
            [(1) The Secretary shall conduct a study for the 
        purpose of determining--
                    [(A) an estimate of the number of infants 
                and young children abandoned in hospitals in 
                the United States and the number of such 
                infants and young children who are infants and 
                young children described in section 101(b); and
                    [(B) an estimate of the annual costs 
                incurred by the Federal Government and by State 
                and local governments in providing housing and 
                care for such infants and young children.
            [(2) Not later than April 1, 1992, the Secretary 
        shall complete the study required in paragraph (1) and 
        submit to the Congress a report describing the findings 
        made as a result of the study.
    [(d) Study and Report on Effective Care Methods.--
            [(1) The Secretary shall conduct a study for the 
        purpose of determining the most effective methods for 
        responding to the needs of abandoned infants and young 
        children.
            [(2) The Secretary shall, not later than April 1, 
        1991, complete the study required in paragraph (1) and 
        submit to the Congress a report describing the findings 
        made as a result of the study.

[SEC. 103. DEFINITIONS.

    [For purposes of this title:
            [(1) The terms ``abandoned'' and ``abandonment'', 
        with respect to infants and young children, mean that 
        the infants and young children are medically cleared 
        for discharge from acute-care hospital settings, but 
        remain hospitalized because of a lack of appropriate 
        out-of-hospital placement alternatives.
            [(2) The term ``dangerous drug'' means a controlled 
        substance, as defined in section 102 of the Controlled 
        Substances Act.
            [(3) The term ``natural family'' shall be broadly 
        interpreted to include natural parents, grandparents, 
        family members, guardians, children residing in the 
        household, and individuals residing in the household on 
        a continuing basis who are in a care-giving situation 
        with respect to infants and young children covered 
        under this Act.

[SEC. 104. AUTHORIZATION OF APPROPRIATIONS.

    [(a) In General.--
            [(1) For the purpose of carrying out this title 
        (other than section 102(b)), there are authorized to be 
        appropriated $20,000,000 for fiscal year 1992, 
        $25,000,000 for fiscal year 1993, $30,000,000 for 
        fiscal year 1994, and $35,000,000 for fiscal year 1995.
            [(2)(A) Of the amounts appropriated under paragraph 
        (1) for any fiscal year in excess of the amount 
        appropriated under this subsection for fiscal year 
        1991, as adjusted in accordance with subparagraph (B), 
        the Secretary shall make available not less than 50 
        percent for grants under section 101(a) to carry out 
        projects described in paragraph (8) of such section.
            [(B) For purposes of subparagraph (A), the amount 
        relating to fiscal year 1991 shall be adjusted for a 
        fiscal year to a greater amount to the extent necessary 
        to reflect the percentage increase in the consumer 
        price index for all urban consumers (U.S. city average) 
        for the 12-month period ending with March of the 
        preceding fiscal year.
            [(3) Not more than 5 percent of the amounts 
        appropriate under paragraph (1) for any fiscal year may 
        be obligated for carrying out section 102(a).
    [(b) Dissemination of Information for Individuals With 
Special Needs.--For the purpose of carrying out section 102(b), 
there is authorized to be appropriated $5,000,000 for each of 
the fiscal years 1992 through 1995.
    [(c) Administrative Expenses.--
            [(1) For the purpose of the administration of this 
        title by the Secretary, there is authorized to be 
        appropriated for each fiscal year specified in 
        subsection (a)(1) an amount equal to 5 percent of the 
        amount authorized in such subsection to be appropriated 
        for the fiscal year. With respect to the amounts 
        appropriated under such subsection, the preceding 
        sentence may not be construed to prohibit the 
        expenditure of the amounts for the purpose described in 
        such sentence.
            [(2) The Secretary may not obligate any of the 
        amounts appropriated under paragraph (1) for a fiscal 
        year unless, from the amounts appropriated under 
        subsection (a)(1) for the fiscal year, the Secretary 
        has obligated for the purpose described in such 
        paragraph an amount equal to the amounts obligated by 
        the Secretary for such purpose in fiscal year 1991.
    [(d) Availability of Funds.--Amounts appropriated under 
this section shall remain available until expended.

 [TITLE II--MEDICAL COSTS OF TREATMENT WITH RESPECT TO ACQUIRED IMMUNE 
                          DEFICIENCY SYNDROME

[SEC. 201. STUDY AND REPORT ON ASSISTANCE.

    [(a) Study.--The Secretary shall conduct a study for the 
purpose of--
            [(1) determining cost-effective methods for 
        providing assistance to individuals for the medical 
        costs of treatment of conditions arising from infection 
        with the etiologic agent for acquired immune deficiency 
        syndrome, including determining the feasibility of 
        risk-pool health insurance for individuals at risk of 
        such infection;
            [(2) determining the extent to which Federal 
        payments under title XIX of the Social Security Act are 
        being expended for medical costs described in paragraph 
        (1); and
            [(3) providing an estimate of the extent to which 
        such Federal payments will be expended for such medical 
        costs during the 5-year period beginning on the date of 
        the enactment of this Act.
    [(b) Report.--The Secretary shall, not later than 12 months 
after the date of the enactment of this Act, complete the study 
required in subsection (a) and submit to the Committee on 
Energy and Commerce of the House of Representatives, and to the 
Committee on Labor and Human Resources of the Senate, a report 
describing the findings made as a result of the study.

                     [TITLE III--GENERAL PROVISIONS

[SEC. 301. DEFINITIONS.

For purposes of this Act:
            [(1) The term ``acquired immune deficiency 
        syndrome'' includes infection with the etiologic agent 
        for such syndrome, any condition indicating that an 
        individual is infected with such etiologic agent, and 
        any condition arising from such etiologic agent.
            [(2) The term ``Secretary'' means the Secretary of 
        Health and Human Services.]
                              ----------                              


    TEMPORARY CHILD CARE FOR CHILDREN WITH DISABILITIES AND CRISIS 
                         NURSERIES ACT OF 1986

  [TITLE II--TEMPORARY CHILD CARE FOR HANDICAPPED CHILDREN AND CRISIS 
                               NURSERIES

[SEC. 201 SHORT TITLE.

    [This title may be cited as the ``Temporary Child Care for 
Children With Disabilities and Crisis Nurseries Act of 1986''.

[SEC. 202. FINDINGS.

    [The Congress finds that it is necessary to establish 
demonstration programs of grants to the States to assist 
private and public agencies and organizations provide: (A) 
temporary non-medical child care for children with special 
needs to alleviate social, emotional, and financial stress 
among children and families of such children, and (B) crisis 
nurseries for children who are abused and neglected, at risk of 
abuse or neglect, or who are in families receiving child 
protective services.

[SEC. 203. TEMPORARY CHILD CARE FOR HANDICAPPED AND CHRONICALLY ILL 
                    CHILDREN.

    [The Secretary of Health and Human Services shall establish 
a demonstration program of grants to States to assist private 
and public agencies and organizations to provide in-home or 
out-of-home temporary non-medical child care for children with 
disabilities, and children with chronic or terminal illnesses. 
Such care shall be provided on a sliding fee scale with hourly 
and daily rates.

[SEC. 204. CRISIS NURSERIES.

    [The Secretary of Health and Human Services shall establish 
a demonstration program of grants to States to assist private 
and public agencies and organizations to provide crisis 
nurseries for children who are abused and neglected, are at 
high risk of abuse and neglect, or who are in families 
receiving child protective services. Such service shall be 
provided without fee for a maximum of 30 days in any year. 
Crisis nurseries shall also provide referral to support 
services.

[SEC. 205. ADMINISTRATIVE PROVISIONS.

    [(a) Applications.--
            [(1) (A) Any State which desires to receive a grant 
        under section 203 or 204 shall submit an application to 
        the Secretary in such form and at such times as the 
        Secretary may require. Such application shall--
                    [(i) describe the proposed State program, 
                including the services to be provided, the 
                agencies and organizations that will provide 
                the services, and the criteria for selection of 
                children and families for participation in 
                projects under the program;
                    [(ii) contain an estimate of the cost of 
                developing, implementing, and evaluating the 
                State program;
                    [(iii) set forth the plan for dissemination 
                of the results of the projects;
                    [(iv) specify the State agency designated 
                to administer programs and activities assisted 
                under this title and the plans for coordinating 
                interagency support of the program; and
                    [(v) with respect to State agencies 
                described in subparagraph (B), provide 
                documentation of a commitment by all such 
                agencies to develop a State plan for 
                coordination among the agencies in carrying out 
                programs and activities provided by the State 
                pursuant to a grant under section 203.
            [(B) State agencies referred to in subparagraph 
        (A)(v) are State agencies responsible for providing 
        services to children with disabilities or with chronic 
        or terminal illnesses, or responsible for financing 
        services for such children, or both, including State 
        agencies responsible for carrying out State programs 
        that--
                    [(i) receive Federal financial assistance; 
                and
                    [(ii) relate to social services, maternal 
                and child health, comprehensive health and 
                mental health, medical assistance and infants, 
                or toddlers and families.
            [(2) Such application shall contain assurance 
        that--
                    [(A) not more than 5 percent of funds made 
                available under this title will be used for 
                State administrative costs;
                    [(B) projects will be of sufficient size, 
                scope, and quality to achieve the objectives of 
                the program;
                    [(C) in the distribution of funds made 
                available under section 203, a State will give 
                priority consideration to agencies and 
                organizations with experience in working with 
                children with disabilities, with chronically 
                ill children, and with the families of such 
                children, and which serve communities with the 
                greatest need for such services;
                    [(D) in the distribution of funds made 
                available under section 204, the State will 
                give priority consideration to agencies and 
                organizations with experience in working with 
                abused or neglected children and their 
                families, and with children at high risk of 
                abuse and neglect and their families, and which 
                serve communities which demonstrate the 
                greatest need for such services; and
                    [(E) Federal funds made available under 
                this title will be so used as to supplement 
                and, to the extent practicable, increase the 
                amount of State and local funds that would in 
                the absence of such Federal funds be made 
                available for the uses specified in this title, 
                and in no case supplant such State or local 
                funds.
    [(b) Award of Grants.--
            [(1) In reviewing applications for grants under 
        this title, the Secretary shall consider, among other 
        factors, the equitable geographical distribution of 
        grants.
            [(2) In the award of temporary non-medical child 
        care demonstration grants under section 203, the 
        Secretary shall give a preference to States in which 
        such care is unavailable.
            [(3) Of the funds appropriated under section 206, 
        one-half shall be available for grants under section 
        203 and one-half shall be available for grants under 
        section 204.
    [(c) Evaluations.--States receiving grants under this 
title, shall annually submit a report to the Secretary 
evaluating funded programs. Such report shall include--
            [(1)(A) information concerning costs, the number of 
        participants, impact on family stability, the incidence 
        of abuse and neglect, the types, amounts, and costs of 
        various services provided, demographic data on 
        recipients of services, and such other information as 
        the Secretary may require; and
            [(B) with respect to services provided by the 
        States pursuant to section 203, information concerning 
        the number of families receiving services and 
        documentation of parental satisfaction with the 
        services provided;
            [(2) a specification of the amount and source of 
        public funds, and of private funds, expended in the 
        State for temporary child care for children with 
        disabilities or with chronic or terminal illnesses; and
            [(3) a State strategy for expanding the 
        availability in the State of temporary child care, and 
        other family support, for families of children with 
        disabilities or with chronic or terminal illnesses, 
        which strategy specifies the manner in which the State 
        intends to expend any Federal financial assistance 
        available to the State for such purpose, including any 
        such assistance provided to the State for programs 
        described in section 205(a)(1)(B).
    [(d) Definitions.--For the purposes of this title--
            [(1) the term ``Secretary'' means the Secretary of 
        Health and Human Services;
            [(2) the term ``children with disabilities'' has 
        the meaning given such term in section 602(a)(1) of the 
        Individuals with Disabilities Education Act;
            [(3) the term ``crisis nursery'' means a center 
        providing temporary emergency services and care for 
        children;
            [(4) the term ``non-medical child care'' means the 
        provision of care to provide temporary relief for the 
        primary caregiver; and
            [(5) the term ``State'' means any of the several 
        States, the District of Columbia, the Virgin Islands of 
        the United States, the Commonwealth of Puerto Rico, 
        Guam, American Samoa, the Commonwealth of the Northern 
        Mariana Islands, the Marshall Islands, the Federated 
        States of Micronesia, or Palau.

[SEC. 206. AUTHORIZATION OF APPROPRIATIONS.

    [There are authorized to be appropriated for the purposes 
of this title such sums as may be necessary for each of the 
fiscal years 1987, 1988, and 1989, $20,000,000 for each of the 
fiscal years 1990 and 1991, and $20,000,000 for each of the 
fiscal years 1992 through 1995. Amounts appropriated under the 
preceding sentence shall remain available until expended.

[SEC. 207. EFFECTIVE DATE.

    [This title shall take effect October 1, 1986.
                              ----------                              


              STEWART B. McKINNEY HOMELESS ASSISTANCE ACT

          * * * * * * *

    TITLE VII--EDUCATION, TRAINING, AND COMMUNITY SERVICES PROGRAMS

          * * * * * * *

                  [Subtitle F--Family Support Centers

[SEC. 771. DEFINITIONS.

    [As used in this subtitle:
            [(1) Advisory council.--The term ``advisory 
        council'' means the advisory council established under 
        section 772(e)(2)(K).
            [(2) Eligible entity.--The term ``eligible entity'' 
        means State or local agencies, a Head Start agency, any 
        community-based organization of demonstrated 
        effectiveness as a community action agency under 
        section 210 of the Economic Opportunity Act of 1984 (42 
        U.S.C. 2790), public housing agencies as defined in 
        section 3(b)(6) of the United States Housing Act of 
        1937, State Housing Finance Agencies, local education 
        agencies, an institution of higher education, a public 
        hospital, a community development corporation, a 
        private industry council as defined under section 
        102(a) of the Job Training Partnership Act, a community 
        health center, and any other public or private 
        nonprofit agency or organization specializing in 
        delivering social services.
            [(3) Family case managers.--The term ``family case 
        managers'' means advisers operating under the 
        provisions of section 774.
            [(4) Governmentally subsidized housing.--The term 
        ``governmentally subsidized housing'' means any rental 
        housing that is assisted under any Federal, State or 
        local program (including a tax credit or tax exempt 
        financing program) and that serves a population that 
        predominately consists of very low income families or 
        individuals.
            [(5) Homeless.--The term ``homeless'' has the same 
        meaning given such term in the subsections (a) and (c) 
        of section 103 of the Stewart B. McKinney Homeless 
        Assistance Act (42 U.S.C. 11302 (a) and (c)).
            [(6) Intensive and comprehensive supportive 
        services.--The term ``intensive and comprehensive 
        supportive services'' means--
                    [(A) in the case of services provided to 
                infants, children and youth, such services that 
                shall be designed to enhance the physical, 
                social, and educational development of such 
                infants and children and that shall include, 
                where appropriate nutritional services, 
                screening and referral services, child care 
                services, early childhood development programs, 
                early intervention services for children with, 
                or at-risk of developmental delays, drop-out 
                prevention services, after-school activities, 
                job readiness and job training services, 
                education (including basic skills and literacy 
                services), emergency services including special 
                outreach services targeted to homeless and 
                runaway youth, crisis intervention and 
                counseling services, and such other services 
                that the Secretary may deem necessary and 
                appropriate;
                    [(B) in the case of services provided to 
                parents and other family members, services 
                designed to better enable parents and other 
                family members to contribute to their child's 
                healthy development and that shall include, 
                where appropriate, substance abuse education, 
                counseling, referral for treatment, crisis 
                intervention, employment counseling and 
                training as appropriate, life-skills training 
                including personal financial counseling, 
                education including basic skills and literacy 
                services, parenting classes, training in 
                consumer homemaking, and such other services as 
                the Secretary shall deem necessary and 
                appropriate;
                    [(C) in the case of services provided by 
                family case managers, needs assessment and 
                support in accessing and maintaining 
                appropriate public assistance and social 
                services, referral for substance abuse 
                counseling and treatment, counseling and crisis 
                intervention, family advocacy services, and 
                housing assistance activities, housing 
                counseling and eviction or foreclosure 
                prevention assistance and referral to sources 
                of emergency rental or mortgage assistance 
                payments and home energy assistance, and other 
                services as appropriate.
            [(7) Low income.--The term ``low income'' when 
        applied to families or individuals means a family or 
        individual income that does not exceed 80 percent of 
        the median income for an individual or family in the 
        area, as determined by the Secretary of Housing and 
        Urban Development, except that such Secretary may 
        establish income ceilings that are higher or lower than 
        80 percent of the median for the area on the basis of a 
        finding by such Secretary that such variations are 
        necessary because of prevailing levels of construction 
        costs or unusually high or low individual or family 
        incomes.
            [(8) Secretary.--The term ``Secretary'' means the 
        Secretary of Health and Human Services.
            [(9) Very low income.--The term ``very low income'' 
        when applied to families or individuals means a family 
        or individual income that does not exceed 50 percent of 
        the median income for an individual or family in the 
        area, as determined by the Secretary, except that the 
        Secretary may establish income ceilings that are higher 
        or lower than 50 percent of the median for the area on 
        the basis of a finding by the Secretary that such 
        variations are necessary because of unusually high or 
        low individual or family incomes.

[SEC. 772. GENERAL GRANTS FOR THE PROVISION OF SERVICES.

    [(a) Authority.--The Secretary is authorized to make not 
more than 30 grants to eligible entities in rural, urban and 
suburban areas to pay the cost of demonstration programs 
designed to encourage the provision of intensive and 
comprehensive supportive services that will enhance the 
physical, social, and educational development of low-income 
individuals and families, especially those individuals in very 
low-income families who were previously homeless and who are 
currently residing in governmentally subsidized housing or who 
are at risk of becoming homeless. Such grants shall be of 
sufficient size, scope, and quality to be effective, and shall 
be distributed to various entities including those in or near 
public housing developments, and in low income areas both urban 
and nonurban.
    [(b) Gateway Programs.--The Secretary shall make available 
not more than 5 demonstration grants in each fiscal year for 
Gateway programs in accordance with section 775.
    [(c) Agreements With Eligible Entities.--The Secretary 
shall enter into contracts, agreements, or other arrangements 
with eligible entities to carry out the provisions of this 
section.
    [(d) Considerations by Secretary.--In carrying out the 
provisions of this section, the Secretary shall consider--
            [(1) the capacity of the eligible entity to 
        administer the comprehensive program for which 
        assistance is sought;
            [(2) the proximity of the entities and facilities 
        associated with the program to the low-income families 
        to be served by the program or the ability of the 
        entity to provide mobile or offsite services;
            [(3) the ability of the eligible entity to 
        coordinate and integrate its activities with State and 
        local public agencies (such as agencies responsible for 
        education, employment and training, health and mental 
        health services, substance abuse services, social 
        services, child care, nutrition, income assistance, 
        housing and energy assistance, and other relevant 
        services), with public or private non-profit agencies 
        and organizations that have a demonstrated record of 
        effectiveness in providing assistance to homeless 
        families, and with appropriate nonprofit private 
        organizations involved in the delivery of eligible 
        support services;
            [(4) fiscal and administrative management of the 
        eligible entity;
            [(5) the involvement of project participants and 
        community representatives in the planning and operation 
        of the program to the extent practicable; and
            [(6) the availability and proximity of comparable 
        services provided by Community Action Agencies unless 
        the Community Action Agency is the applicant and 
        intends to expand existing services.
    [(e) Requirements.--
            [(1) In general.--Each eligible entity desiring to 
        receive a grant under this section shall--
                    [(A) have demonstrated effectiveness in 
                providing or arranging for the provision of 
                services such as those required under this 
                section;
                    [(B) to the maximum extent practicable, 
                expand, coordinate, integrate, or contract with 
                existing service providers, and avail itself of 
                other resource and reimbursement mechanisms 
                that may be used to provide services; and
                    [(C) submit an application at such time in 
                such manner and containing or accompanied by 
                such information, including the information 
                required under paragraph (2), as the Secretary 
                shall reasonably require.
            [(2) Application.--Each application submitted under 
        paragraph (1)(C) shall--
                    [(A) identify the population and geographic 
                location to be served by the program;
                    [(B) provide assurances that services are 
                closely related to the identifiable needs of 
                the target population;
                    [(C) provide assurances that each program 
                will provide directly or arrange for the 
                provision of intensive and comprehensive 
                supportive services;
                    [(D) identify the referral providers, 
                agencies, and organizations that the program 
                will use;
                    [(E) describe the method of furnishing 
                services at offsite locations, if appropriate;
                    [(F) describe the manner in which the 
                services offered will be accessed through 
                existing program providers to the extent that 
                they are located in the immediate vicinity of 
                the target population, or will contract with 
                such providers for community-based services 
                within the community to be served, and that 
                funds provided under this section will be 
                utilized to create new services only to the 
                extent that no other funds can be obtained to 
                fulfill the purpose.
                    [(G) describe how the program will relate 
                to the State and local agencies providing 
                assistance to homeless families, or providing 
                health, nutritional, job training, education, 
                housing and energy assistance, and income 
                maintenance services;
                    [(H) describe the collection and provision 
                of data on groups of individuals and geographic 
                areas to be served, including types of services 
                to be furnished, estimated cost of providing 
                comprehensive services on an average per user 
                basis, types and natures of conditions and 
                needs to be identified and assisted, and such 
                other information as the Secretary requires;
                    [(I) describe the manner in which the 
                applicant will implement the requirement of 
                section 773;
                    [(J) provide for the establishment of an 
                advisory council that shall provide policy and 
                programming guidance to the eligible entity, 
                consisting of not more than 15 members that 
                shall include--
                            [(i) participants in the programs, 
                        including parents;
                            [(ii) representatives of local 
                        private industry;
                            [(iii) individuals with expertise 
                        in the services the program intends to 
                        offer;
                            [(iv) representatives of the 
                        community in which the program will be 
                        located;
                            [(v) representatives of local 
                        government social service providers;
                            [(vi) representatives of local law 
                        enforcement agencies;
                            [(vii) representatives of the local 
                        public housing agency, where 
                        appropriate; and
                            [(viii) representatives of local 
                        education providers;
                    [(K) describe plans for evaluating the 
                impact of the program;
                    [(L) include such additional assurances, 
                including submitting necessary reports, as the 
                Secretary may reasonably require;
                    [(M) contain an assurance that if the 
                applicant intends to assess fees for services 
                provided with assistance under this section, 
                such fees shall be nominal in relation to the 
                financial situation of the recipient of such 
                services; and
                    [(N) contain an assurance that amounts 
                received under a grant awarded under this 
                section shall be used to supplement not 
                supplant Federal, State and local funds 
                currently utilized to provide services of the 
                type described in this section.
    [(f) Administrative Provisions.--
            [(1) Administrative costs.--Two percent of the 
        amounts appropriated under this title may be used by 
        the Secretary to administer and evaluate the program 
        established under this title and to provide technical 
        assistance to entities for the development and 
        submission of applications for grants under this 
        section.
            [(2) Limitation.--Not more than 30 grants may be 
        made under this subtitle.
            [(3) Amount of grants.--No grant made under this 
        subtitle may exceed $2,500,000 per year nor more than a 
        total of $4,000,000 for 2 years. Funds received under 
        such grants shall remain available until expended.
    [(g) Family Support Centers.--Each program that receives 
assistance under this section shall establish one or more 
family support centers that operate--
            [(1) in or near the immediate vicinity of 
        governmentally subsidized housing;
            [(2) in urban poverty areas; or
            [(3) in non-urban poverty areas.
Such centers shall be the primary location for the 
administration of the programs and the provision of services 
under this title.

[SEC. 773. TRAINING AND RETENTION.

    [The Secretary shall require that entities that receive a 
grant under section 772 use not more than 7 percent of such 
grant to improve the retention and effectiveness of staff and 
volunteers.

[SEC. 774. FAMILY CASE MANAGERS.

    [(a) Requirement.--Each entity that receives a grant under 
section 772 shall employ, subject to subsection (e), an 
appropriate number of individuals with expertise in the 
provision of intensive and comprehensive supportive services to 
serve as family case managers for the program.
    [(b) Needs Assessment.--Each low-income family that desires 
to receive services from a program that receives assistance 
under this subtitle shall be assessed by a family case manager 
on such family's initial visit to such program as to their need 
for services.
    [(c) Continuing Functions.--Family case managers shall 
formulate a service plan based on a needs assessment for each 
family. Such case manager shall carry out such plan, and remain 
available to provide such family with counseling and referral 
services, to enable such family to become self-sufficient. In 
carrying out such plan the case manager shall conduct 
monitoring, tracking, and follow-up activities, as appropriate.
    [(d) Limitation.--Each family case manager shall have a 
caseload that is of a sufficiently small size so as to permit 
such manager to effectively manage the delivery of 
comprehensive services to those families assigned to such 
manager.

[SEC. 775. GATEWAY PROGRAMS.

    [(a) In General.--The Secretary shall use amounts made 
available in accordance with section 772(b) to make not more 
than 5 demonstration grants to local education agencies who, in 
consultation with the local public housing authority and 
private industry council, agree to provide on-site education, 
training and necessary support services to economically 
disadvantaged residents of public housing.
    [(b) Selection of Grant Recipients.--The Secretary of 
Health and Human Services, in consultation with the Secretary 
of Education, shall select a local education agency to receive 
a grant under subsection (a) if such agency has cooperated with 
the local public housing authority in order to meet the 
following requirements:
            [(1) The local education agency shall demonstrate 
        to the Secretary that training and ancillary support 
        services will be accessed through existing program 
        providers to the extent that they are located in the 
        immediate vicinity of the public housing development, 
        or will contract with such providers for on-site 
        service delivery, and that funds provided under this 
        section will be utilized to purchase such services only 
        to the extent that no other funds can be obtained to 
        fulfill the purpose.
            [(2) The public housing agency shall agree to make 
        available suitable facilities in the public housing 
        development for the provision of education, training 
        and support services under this section.
            [(3) The local education agency shall demonstrate 
        that the recipients of service have been recruited with 
        the assistance of the public housing authority and are 
        eligible individuals in accordance with the priorities 
        established in subsection (c).
            [(4) The local education agency shall demonstrate 
        the ability to coordinate the services provided in this 
        section with other services provided, with the public 
        housing development and private industry council as 
        well as with other public and private agencies and 
        community-based organizations of demonstrated 
        effectiveness providing similar and ancillary services 
        to the target population.
            [(5) The local education agency shall demonstrate 
        that they have, to the fullest extent practicable, 
        attempted to employ residents of the public housing 
        development to carry out the purposes of this section 
        whenever qualified residents are available.
    [(c) Individuals Eligible for Services.--Local education 
agencies receiving grants under this section shall target 
participation in the training and services provided under such 
grants to individuals who--
            [(1) reside in public housing;
            [(2) are economically disadvantaged; and
            [(3) have encountered barriers to employment 
        because of basic skills deficiency including not having 
        a high school diploma, GED, or the equivalent.
    [(d) Priority.--Local education agencies providing services 
under this section shall give priority to single heads of 
households with young dependent children.
    [(e) Mandatory Services.--Any local education agency that 
receives a grant under this section shall establish a Gateway 
program to provide--
            [(1) outreach and information services designed to 
        make eligible individuals aware of available services;
            [(2) literacy and bilingual education services, 
        where appropriate;
            [(3) remedial education and basic skills training;
            [(4) employment training and personal management 
        skill development or referrals for such services; and
            [(5) child care or dependent care for dependents of 
        eligible individuals during those times, including 
        afternoons and evenings, when training services are 
        being provided.
To the extent practicable, child care or dependent care 
services shall be designed to employ public housing residents 
after appropriate training.
    [(f) Permissive Services.--Local education agencies 
receiving grants under this section may make available, as part 
of their Gateway programs--
            [(1) pre-employment skills training;
            [(2) employment counseling and application 
        assistance;
            [(3) job development services;
            [(4) job training;
            [(5) Federal employment-related activity services;
            [(6) completion of high school or GED program 
        services;
            [(7) transitional assistance, including child care 
        for up to 6 months to enable such individual to 
        successfully secure unsubsidized employment;
            [(8) substance abuse prevention and education; and
            [(9) other support services that the Secretary 
        deems to be appropriate.

[SEC. 776. EVALUATION.

    [(a) In General.--The Secretary shall contract for an 
independent evaluation of the programs and entities that 
receive assistance under this title. Such evaluation shall be 
complete not later than the date that is 15 months after the 
date on which the first grants are awarded under this title.
    [(b) Matter to be Evaluated.--The evaluation conducted 
under subsection (a) shall examine the degree to which the 
programs receiving assistance under this title have fulfilled 
the objectives included in the application in accordance with 
section 722(e)(2) in--
            [(1) enhancing the living conditions in low income 
        housing and in neighborhoods;
            [(2) improving the physical, social and educational 
        development of low income children and families served 
        by the program;
            [(3) achieving progress towards increased potential 
        for independence and self-sufficiency among families 
        served by the program;
            [(4) the degree to which the provision of services 
        is affected by caseload size;
            [(5) promoting increases in literacy levels and 
        basic employment skills among residents of public 
        housing developments served by grants under section 
        776; and
            [(6) such other factors that the Secretary may 
        reasonably require.
    [(c) Information.--Each eligible entity receiving a grant 
under this subtitle shall furnish information requested by 
evaluators in order to carry out this section.
    [(d) Results.--The results of such evaluation shall be 
provided by the Secretary to the eligible entities conducting 
the programs to enable such entities to improve such programs.

[SEC. 777. REPORT.

    [Not later than July 1, 1992, the Secretary shall prepare 
and submit, to the Committee on Education and Labor, of the 
House of Representatives and the Committee on Labor and Human 
Resources of the Senate, a report--
            [(1) concerning the evaluation required under 
        section 776;
            [(2) providing recommendations for replicating 
        grant programs, including identifying the geographic 
        and demographic characteristics of localities where 
        this service coordination and delivery system may prove 
        effective;
            [(3) describing any alternative sources of funding 
        utilized or available for the provision of services of 
        the type described in this subtitle; and
            [(4) describing the degree to which entities are 
        coordinating with other existing programs.

[SEC. 778. CONSTRUCTION.

    [Nothing in this subtitle shall be construed to modify the 
Federal selection preferences described in section 6 of the 
United States Housing Act of 1937 (42 U.S.C. 1437d) or the 
authorized policies and procedures of governmental housing 
authorities operating under annual assistance contracts 
pursuant to such Act with respect to admissions, tenant 
selection and evictions.

[SEC. 779. AUTHORIZATION OF APPROPRIATIONS.

    [There are authorized to be appropriated to carry out this 
subtitle, $50,000,000 for fiscal year 1991, $55,000,000 for 
fiscal year 1992, and such sums as may be necessary for fiscal 
year 1993.]
                              ----------                              


           CHILD CARE AND DEVELOPMENT BLOCK GRANT ACT OF 1990

          Subchapter C--Child Care and Development Block Grant

SEC. 658A. SHORT TITLE AND GOALS.

    (a) Short Title.--This subchapter may be cited as the 
``Child Care and Development Block Grant Act of 1990''.
    (b) Goals.--The goals of this subchapter are--
            (1) to allow each State maximum flexibility in 
        developing child care programs and policies that best 
        suit the needs of children and parents within such 
        State;
            (2) to promote parental choice to empower working 
        parents to make their own decisions on the child care 
        that best suits their family's needs;
            (3) to encourage States to provide consumer 
        education information to help parents make informed 
        choices about child care;
            (4) to assist States to provide child care to 
        parents trying to achieve independence from public 
        assistance; and
            (5) to assist States in implementing the health, 
        safety, licensing, and registration standards 
        established in State regulations.

[SEC. 658B. AUTHORIZATION OF APPROPRIATIONS.

    [There are authorized to be appropriated to carry out this 
subchapter, $750,000,000 for fiscal year 1991, $825,000,000 for 
fiscal year 1992, $925,000,000 for fiscal year 1993, and such 
sums as may be necessary for each of the fiscal years 1994 and 
1995.]

SEC. 658B. AUTHORIZATION OF APPROPRIATIONS.

    There is authorized to be appropriated to carry out this 
subchapter $1,000,000,000 for each of the fiscal years 1996 
through 2002.
          * * * * * * *

SEC. 658D. LEAD AGENCY.

    (a)  * * *
    (b) Duties.--
            (1) In general.--The lead agency shall--
                    (A) administer, directly or through other 
                [State] governmental or nongovernmental 
                agencies, the financial assistance received 
                under this subchapter by the State;
                    (B) develop the State plan to be submitted 
                to the Secretary under section 658E(a);
                    (C) in conjunction with the development of 
                the State plan as required under subparagraph 
                (B), hold at least one hearing in the State 
                with sufficient time and Statewide distribution 
                of the notice of such hearing, to provide to 
                the public an opportunity to comment on the 
                provision of child care services under the 
                State plan; and
                    (D) coordinate the provision of services 
                under this subchapter with other Federal, State 
                and local child care and early childhood 
                development programs.
            (2) Development of plan.--In the development of the 
        State plan described in paragraph (1)(B), the lead 
        agency shall consult with appropriate representatives 
        of units of general purpose local government. [Such 
        consultations may include consideration of local child 
        care needs and resources, the effectiveness of existing 
        child care and early childhood development services, 
        and the methods by which funds made available under 
        this subchapter can be used to effectively address 
        local shortages.]

SEC. 658E. APPLICATION AND PLAN.

    (a)  * * *
    (b) Period Covered by Plan.--The State plan contained in 
the application under subsection (a) shall be designed to be 
[implemented--
            [(1) during a 3-year period for the initial State 
        plan; and
            [(2)] implemented during a 2-year period [for 
        subsequent State plans].
    (c) Requirements of a Plan.--
            (1) Lead agency.--The State plan shall identify the 
        lead agency designated under section 658D.
            (2) Policies and procedures.--The State plan shall:
                    (A) Parental choice of providers.--Provide 
                assurances that--
                            (i) the parent or parents of each 
                        eligible child within the State who 
                        receives or is offered child care 
                        services for which financial assistance 
                        is provided under this subchapter[, 
                        other than through assistance provided 
                        under paragraph (3)(C),] are given the 
                        option either--
                                    (I) to enroll such child 
                                with a child care provider that 
                                has a grant or contract for the 
                                provision of such services; or
                                    (II) to receive a child 
                                care certificate as defined in 
                                section 658P(2);
                            (ii) in cases in which the parent 
                        selects the option described in clause 
                        (i)(I), the child will be enrolled with 
                        the eligible provider selected by the 
                        parent to the maximum extent 
                        practicable; and
                            (iii) child care certificates 
                        offered to parents selecting the option 
                        described in clause (i)(II) shall be of 
                        a value commensurate with the subsidy 
                        value of child care services provided 
                        under the option described in clause 
                        (i)(I);
                [except that nothing in this subparagraph shall 
                require a State to have a child care 
                certificate program in operation prior to 
                October 1, 1992] and provide a detailed 
                description of the procedures the State will 
                implement to carry out the requirements of this 
                subparagraph.
                    (B) Unlimited parental access.--[Provide 
                assurances] Certify that procedures are in 
                effect within the State to ensure that child 
                care providers who provide services for which 
                assistance is made available under this 
                subchapter afford parents unlimited access to 
                their children and to the providers caring for 
                their children, during the normal hours of 
                operation of such providers and whenever such 
                children are in the care of such providers and 
                provide a detailed description of such 
                procedures.
                    (C) Parental complaints.--[Provide 
                assurances] Certify that the State maintains a 
                record of substantiated parental complaints and 
                makes information regarding such parental 
                complaints available to the public on request 
                and provide a detailed description of how such 
                record is maintained and is made available.
                    [(D) Consumer education.--Provide 
                assurances that consumer education information 
                will be made available to parents and the 
                general public within the State concerning 
                licensing and regulatory requirements, 
                complaint procedures, and policies and 
                practices relative to child care services 
                within the State.
                    [(E) Compliance with state and local 
                regulatory requirements.--Provide assurances 
                that--
                            [(i) all providers of child care 
                        services within the State for which 
                        assistance is provided under this 
                        subchapter comply with all licensing or 
                        regulatory requirements (including 
                        registration requirements) applicable 
                        under State and local law; and
                            [(ii) providers within the State 
                        that are not required to be licensed or 
                        regulated under State or local law are 
                        required to be registered with the 
                        State prior to payment being made under 
                        this subchapter, in accordance with 
                        procedures designed to facilitate 
                        appropriate payment to such providers, 
                        and to permit the State to furnish 
                        information to such providers, 
                        including information on the 
                        availability of health and safety 
                        training, technical assistance, and any 
                        relevant information pertaining to 
                        regulatory requirements in the State, 
                        and that such providers shall be 
                        permitted to register with the State 
                        after selection by the parents of 
                        eligible children and before such 
                        payment is made.
                This subparagraph shall not be construed to 
                prohibit a State from imposing more stringent 
                standards and licensing or regulatory 
                requirements on child care providers within the 
                State that provide services for which 
                assistance is provided under this subchapter 
                than the standards or requirements imposed on 
                other child care providers in the State.]
                    (D) Consumer education information.--
                Certify that the State will collect and 
                disseminate to parents of eligible children and 
                the general public, consumer education 
                information that will promote informed child 
                care choices.
                    (E) Compliance with state licensing 
                requirements.--
                            (i) In general.--Certify that the 
                        State has in effect licensing 
                        requirements applicable to child care 
                        services provided within the State, and 
                        provide a detailed description of such 
                        requirements and of how such 
                        requirements are effectively enforced. 
                        Nothing in the preceding sentence shall 
                        be construed to require that licensing 
                        requirements be applied to specific 
                        types of providers of child care 
                        services.
                            (ii) Indian tribes and tribal 
                        organizations.--In lieu of any 
                        licensing and regulatory requirements 
                        applicable under State and local law, 
                        the Secretary, in consultation with 
                        Indian tribes and tribal organizations, 
                        shall develop minimum child care 
                        standards (that appropriately reflect 
                        tribal needs and available resources) 
                        that shall be applicable to Indian 
                        tribes and tribal organization 
                        receiving assistance under this 
                        subchapter.
          * * * * * * *
                    (G) Compliance with state and local health 
                and safety requirements.--[Provide assurances] 
                Certify that procedures are in effect to ensure 
                that child care providers within the State that 
                provide services for which assistance is 
                provided under this subchapter comply with all 
                applicable State or local health and safety 
                requirements as described in subparagraph (F).
                    [(H) Reduction in standards.--Provide 
                assurances that if the State reduces the level 
                of standards applicable to child care services 
                provided in the State on the date of enactment 
                of this subchapter, the State shall inform the 
                Secretary of the rationale for such reduction 
                in the annual report of the State described in 
                section 658K.
                    [(I) Review of state licensing and 
                regulatory requirements.--Provide assurances 
                that not later than 18 months after the date of 
                the submission of the application under section 
                658E, the State will complete a full review of 
                the law applicable to, and the licensing and 
                regulatory requirements and policies of, each 
                licensing agency that regulates child care 
                services and programs in the State unless the 
                State has reviewed such law, requirements, and 
                policies in the 3-year period ending on the 
                date of the enactment of this subchapter.
                    [(J) Supplementation.--Provide assurances 
                that funds received under this subchapter by 
                the State will be used only to supplement, not 
                to supplant, the amount of Federal, State, and 
                local funds otherwise expended for the support 
                of child care services and related programs in 
                the State.]
                    (H) Meeting the needs of certain 
                populations.--Demonstrate the manner in which 
                the State will meet the specific child care 
                needs of families who are receiving assistance 
                under a State program under part A of title IV 
                of the Social Security Act, families who are 
                attempting through work activities to 
                transition off of such assistance program, and 
                families that are at risk of becoming dependent 
                on such assistance program.
            (3) Use of block grant funds.--
                    (A) General requirement.--The State plan 
                shall provide that the State will use the 
                amounts provided to the State for each fiscal 
                year under this subchapter as required under 
                subparagraphs [(B) and (C)] (B) through (D).
                    (B) Child care services[.--Subject to the 
                reservation contained in subparagraph (C), the] 
                and related activities.--The State shall use 
                amounts provided to the State for each fiscal 
                year under this subchapter [for--
                            [(i) child care services, that meet 
                        the requirements of this subchapter, 
                        that are provided to eligible children 
                        in the State on a sliding fee scale 
                        basis using funding methods provided 
                        for in section 658E(c)(2)(A)] for child 
                        care services on sliding fee scale 
                        basis, activities that improve the 
                        quality or availability of such 
                        services, and any other activity that 
                        the State deems appropriate to realize 
                        any of the goals specified in 
                        paragraphs (2) through (5) of section 
                        658A(b), with priority being given for 
                        services provided to children of 
                        families with very low family incomes 
                        (taking into consideration family size) 
                        and to children with special needs[; 
                        and].
                            [(ii) activities designed to 
                        improve the availability and quality of 
                        child care.]
                    [(C) Activities to improve the quality of 
                child care and to increase the availability of 
                early childhood development and before- and 
                after-school care services.--The State shall 
                reserve 25 percent of the amounts provided to 
                the State for each fiscal year under this 
                subchapter to carry out activities designed to 
                improve the quality of child care (as described 
                in section 658G) and to provide before- and 
                after-school and early childhood development 
                services (as described in section 658H).]
                    (C) Limitation on administrative costs.--
                Not more than 5 percent of the aggregate amount 
                of funds available to the State to carry out 
                this subchapter by a State in each fiscal year 
                may be expended for administrative costs 
                incurred by such State to carry out all of its 
                functions and duties under this subchapter. As 
                used in the preceding sentence, the term 
                ``administrative costs'' shall not include the 
                costs of providing direct services.
                    (D) Assistance for certain families.--A 
                State shall ensure that a substantial portion 
                of the amounts available (after the State has 
                complied with the requirement of section 
                418(b)(2) of the Social Security Act with 
                respect to each of the fiscal years 1997 
                through 2002) to the State to carry out 
                activities under this subchapter in each fiscal 
                year is used to provide assistance to low-
                income working families other than families 
                described in paragraph (2)(H).
            (4) Payment rates.--
                    (A) In general.--The State plan shall 
                [provide assurances] certify that payment rates 
                for the provision of child care services for 
                which assistance is provided under this 
                subchapter are sufficient to ensure equal 
                access for eligible children to comparable 
                child care services in the State or substate 
                area that are provided to children whose 
                parents are not eligible to receive assistance 
                under this subchapter or for child care 
                assistance under any other Federal or State 
                programs and shall provide a summary of the 
                facts relied on by the State to determine that 
                such rates are sufficient to ensure such 
                access. [Such payment rates shall take into 
                account the variations in the costs of 
                providing child care in different settings and 
                to children of different age groups, and the 
                additional costs of providing child care for 
                children with special needs.]
          * * * * * * *

SEC. 658F. LIMITATIONS ON STATE ALLOTMENTS.

    (a)  * * *
    (b) Construction of Facilities.--
            (1) In general.--[No] Except as provided for in 
        section 658O(c)(6), no funds made available under this 
        subchapter shall be expended for the purchase or 
        improvement of land, or for the purchase, construction, 
        or permanent improvement (other than minor remodeling) 
        of any building or facility.
          * * * * * * *

[SEC. 658G. ACTIVITIES TO IMPROVE THE QUALITY OF CHILD CARE.

    [A State that receives financial assistance under this 
subchapter shall use not less than 20 percent of the amounts 
reserved by such State under section 658E(c)(3)(C) for each 
fiscal year for one or more of the following:
            [(1) Resource and referral programs.--Operating 
        directly or providing financial assistance to private 
        nonprofit organizations or public organizations 
        (including units of general purpose local government) 
        for the development, establishment, expansion, 
        operation, and coordination of resource and referral 
        programs specifically related to child care.
            [(2) Grants or loans to assist in meeting state and 
        local standards.--Making grants or providing loans to 
        child care providers to assist such providers in 
        meeting applicable State and local child care 
        standards.
            [(3) Monitoring of compliance with licensing and 
        regulatory requirements.--Improving the monitoring of 
        compliance with, and enforcement of, State and local 
        licensing and regulatory requirements (including 
        registration requirements).
            [(4) Training.--Providing training and technical 
        assistance in areas appropriate to the provision of 
        child care services, such as training in health and 
        safety, nutrition, first aid, the recognition of 
        communicable diseases, child abuse detection and 
        prevention, and the care of children with special 
        needs.
            [(5) Compensation.--Improving salaries and other 
        compensation paid to full- and part-time staff who 
        provide child care services for which assistance is 
        provided under this subchapter.

[SEC. 658H. EARLY CHILDHOOD DEVELOPMENT AND BEFORE- AND AFTER-SCHOOL 
                    SERVICES.

    [(a) In General.--A State that receives financial 
assistance under this subchapter shall use not less than 75 
percent of the amounts reserved by such State under section 
658E(c)(3)(C) for each fiscal year to establish or expand and 
conduct, through the provision of grants or contracts, early 
childhood development or before- and after-school child care 
programs, or both.
    [(b) Program Description.--Programs that receive assistance 
under this section shall--
            [(1) in the case of early childhood development 
        programs, consist of services that are not intended to 
        serve as a substitute for a compulsory academic 
        programs but that are intended to provide an 
        environment that enhances the educational, social, 
        cultural, emotional, and recreational development of 
        children; and
            [(2) in the case of before- and after-school child 
        care programs--
                    [(A) be provided Monday through Friday, 
                including school holidays and vacation periods 
                other than legal public holidays, to children 
                attending early childhood development programs, 
                kindergarten, or elementary or secondary school 
                classes during such times of the day and on 
                such days that regular instructional services 
                are not in session; and
                    [(B) not be intended to extend or replace 
                the regular academic program.
    [(c) Priority for Assistance.--In awarding grants and 
contracts under this section, the State shall give the highest 
priority to geographic areas within the State that are eligible 
to receive grants under section 1006 of the Elementary and 
Secondary Education Act of 1965, and shall then give priority 
to--
            [(1) any other areas with concentrations of 
        poverty; and
            [(2) any areas with very high or very low 
        population densities.]

SEC. 658G. ACTIVITIES TO IMPROVE THE QUALITY OF CHILD CARE.

    A State that receives funds to carry out this subchapter 
for a fiscal year, shall use not less than 4 percent of the 
amount of such funds for activities that are designed to 
provide comprehensive consumer education to parents and the 
public, activities that increase parental choice, and 
activities designed to improve the quality and availability of 
child care (such as resource and referral services).

SEC. 658I. ADMINISTRATION AND ENFORCEMENT.

    (a)  * * *
    (b) Enforcement.--
            (1) Review of compliance with state plan.--The 
        Secretary shall review and monitor State compliance 
        with this subchapter and the plan approved under 
        section 658E(c) for the State[, and shall have the 
        power to terminate payments to the State in accordance 
        with paragraph (2)].
            (2) Noncompliance.--
                    (A) In general.--If the Secretary, after 
                reasonable notice to a State and opportunity 
                for a hearing, finds that--
                            (i) there has been a failure by the 
                        State to comply substantially with any 
                        provision or requirement set forth in 
                        the plan approved under section 658E(c) 
                        for the State; or
                            (ii) in the operation of any 
                        program for which assistance is 
                        provided under this subchapter there is 
                        a failure by the State to comply 
                        substantially with any provision of 
                        this subchapter;
                the Secretary shall notify the State of the 
                [finding and that no further payments may be 
                made to such State under this subchapter (or, 
                in the case of noncompliance in the operation 
                of a program or activity, that no further 
                payments to the State will be made with respect 
                to such program or activity) until the 
                Secretary is satisfied that there is no longer 
                any such failure to comply or that the 
                noncompliance will be promptly corrected.] 
                finding and shall require that the State 
                reimburse the Secretary for any funds that were 
                improperly expended for purposes prohibited or 
                not authorized by this subchapter, that the 
                Secretary deduct from the administrative 
                portion of the State allotment for the 
                following fiscal year an amount that is less 
                than or equal to any improperly expended funds, 
                or a combination of such options.
          * * * * * * *

SEC. 658J. PAYMENTS.

    (a)  * * *
          * * * * * * *
    (c) Spending of Funds by State.--Payments to a State from 
the allotment under section 658O for any fiscal year may be 
[expended] obligated by the State in that fiscal year or in the 
succeeding 3 fiscal years.

SEC. 658K. [ANNUAL REPORT] REPORTS AND AUDITS.

    [(a) Annual Report.--Not later than December 31, 1992, and 
annually thereafter, a State that receives assistance under 
this subchapter shall prepare and submit to the Secretary a 
report--
            [(1) specifying the uses for which the State 
        expended funds specified under paragraph (3) of section 
        658E(c) and the amount of funds expended for such uses;
            [(2) containing available data on the manner in 
        which the child care needs of families in the State are 
        being fulfilled, including information concerning--
                    [(A) the number of children being assisted 
                with funds provided under this subchapter, and 
                under other Federal child care and pre-school 
                programs;
                    [(B) the type and number of child care 
                programs, child care providers, caregivers, and 
                support personnel located in the State;
                    [(C) salaries and other compensation paid 
                to full- and part-time staff who provide child 
                care services; and
                    [(D) activities in the State to encourage 
                public-private partnerships that promote 
                business involvement in meeting child care 
                needs;
            [(3) describing the extent to which the 
        affordability and availability of child care services 
        has increased;
            [(4) if applicable, describing, in either the first 
        or second such report, the findings of the review of 
        State licensing and regulatory requirements and 
        policies described in section 658E(c), including a 
        description of actions taken by the State in response 
        to such reviews;
            [(5) containing an explanation of any State action, 
        in accordance with section 658E, to reduce the level of 
        child care standards in the State, if applicable; and
            [(6) describing the standards and health and safety 
        requirements applicable to child care providers in the 
        State, including a description of State efforts to 
        improve the quality of child care;
during the period for which such report is required to be 
submitted.]
    (a) Reports.--
            (1) Collection of information by states.--
                    (A) In general.--A State that receives 
                funds to carry out this subchapter shall 
                collect the information described in 
                subparagraph (B) on a monthly basis.
                    (B) Required information.--The information 
                required under this subparagraph shall include, 
                with respect to a family unit receiving 
                assistance under this subchapter information 
                concerning--
                            (i) family income;
                            (ii) county of residence;
                            (iii) the gender, race, and age of 
                        children receiving such assistance;
                            (iv) whether the family includes 
                        only 1 parent;
                            (v) the sources of family income, 
                        including the amount obtained from (and 
                        separately identified)--
                                    (I) employment, including 
                                self-employment;
                                    (II) cash or other 
                                assistance under part A of 
                                title IV of the Social Security 
                                Act;
                                    (III) housing assistance;
                                    (IV) assistance under the 
                                Food Stamp Act of 1977; and
                                    (V) other assistance 
                                programs;
                            (vi) the number of months the 
                        family has received benefits;
                            (vii) the type of child care in 
                        which the child was enrolled (such as 
                        family child care, home care, or 
                        center-based child care);
                            (viii) whether the child care 
                        provider involved was a relative;
                            (ix) the cost of child care for 
                        such families; and
                            (x) the average hours per week of 
                        such care;
                during the period for which such information is 
                required to be submitted.
                    (C) Submission to secretary.--A State 
                described in subparagraph (A) shall, on a 
                quarterly basis, submit the information 
                required to be collected under subparagraph (B) 
                to the Secretary.
                    (D) Sampling.--The Secretary may disapprove 
                the information collected by a State under this 
                paragraph if the State uses sampling methods to 
                collect such information.
            (2) Biannual reports.--Not later than December 31, 
        1997, and every 6 months thereafter, a State described 
        in paragraph (1)(A) shall prepare and submit to the 
        Secretary a report that includes aggregate data 
        concerning--
                    (A) the number of child care providers that 
                received funding under this subchapter as 
                separately identified based on the types of 
                providers listed in section 658P(5);
                    (B) the monthly cost of child care 
                services, and the portion of such cost that is 
                paid for with assistance provided under this 
                subchapter, listed by the type of child care 
                services provided;
                    (C) the number of payments made by the 
                State through vouchers, contracts, cash, and 
                disregards under public benefit programs, 
                listed by the type of child care services 
                provided;
                    (D) the manner in which consumer education 
                information was provided to parents and the 
                number of parents to whom such information was 
                provided; and
                    (E) the total number (without duplication) 
                of children and families served under this 
                subchapter;
        during the period for which such report is required to 
        be submitted.
    (b) Audits.--
            (1) Requirement.--A State shall, after the close of 
        each program period covered by [a] an application 
        approved under section 658E(d) audit its expenditures 
        during such program period from amounts received under 
        this subchapter.
            (2) Independent auditor.--Audits under this 
        subsection shall be conducted by an entity that is 
        independent of [any agency administering activities 
        that receive] the State that receives assistance under 
        this subchapter and be in accordance with generally 
        accepted auditing principles.
            (3) Submission.--Not later than 30 days after the 
        completion of an audit under this subsection, the State 
        shall submit a copy of the audit to the legislature of 
        the State and to the Secretary.
            (4) Repayment of amounts.--Each State shall repay 
        to the United States any amounts determined through an 
        audit under this subsection not to have been expended 
        in accordance with this subchapter, or the Secretary 
        may offset such amounts against any other amount to 
        which the State is or may be [entitles] entitled under 
        this subchapter.

SEC. 658L. REPORT BY SECRETARY.

    Not later than July 31, [1993] 1997, and [annually] 
biennially thereafter, the Secretary shall prepare and submit 
to the Committee on [Education and Labor] Economic and 
Educational Opportunities of the House of Representatives and 
the Committee on Labor and Human Resources of the Senate a 
report that contains a summary and analysis of the data and 
information provided to the Secretary in the State reports 
submitted under section 658K. Such report shall include an 
assessment, and where appropriate, recommendations for the 
Congress concerning efforts that should be undertaken to 
improve the access of the public to quality and affordable 
child care in the United States.
          * * * * * * *

SEC. 658O. AMOUNTS RESERVED; ALLOTMENTS.

    (a) Amounts Reserved.--
            (1) Territories and [Possessions] possessions.--The 
        Secretary shall reserve not to exceed one half of 1 
        percent of the amount appropriated under this 
        subchapter in each fiscal year for payments to Guam, 
        American Samoa, the Virgin Islands of the United 
        States, and the Commonwealth of the Northern Mariana 
        Islands[, and the Trust Territory of the Pacific 
        Islands] to be allotted in accordance with their 
        respective needs.
            (2) Indians tribes.--The Secretary shall reserve 
        not more than [3] 1 percent of the amount appropriated 
        under section 658B in each fiscal year for payments to 
        Indian tribes and tribal organizations with 
        applications approved under subsection (c).
          * * * * * * *
    (c) Payments for the Benefit of Indian Children.--
            (1)  * * *
          * * * * * * *
            (5) Dual eligibility of indian children.--The 
        awarding of a grant or contract under this section for 
        programs or activities to be conducted in a State or 
        States shall not affect the eligibility of any Indian 
        child to receive services provided or to participate in 
        programs and activities carried [our] out under a grant 
        to the State or States under this subchapter.
            (6) Construction or renovation of facilities.--
                    (A) Request for use of funds.--An Indian 
                tribe or tribal organization may submit to the 
                Secretary a request to use amounts provided 
                under this subsection for construction or 
                renovation purposes.
                    (B) Determination.--With respect to a 
                request submitted under subparagraph (A), and 
                except as provided in subparagraph (C), upon a 
                determination by the Secretary that adequate 
                facilities are not otherwise available to an 
                Indian tribe or tribal organization to enable 
                such tribe or organization to carry out child 
                care programs in accordance with this 
                subchapter, and that the lack of such 
                facilities will inhibit the operation of such 
                programs in the future, the Secretary may 
                permit the tribe or organization to use 
                assistance provided under this subsection to 
                make payments for the construction or 
                renovation of facilities that will be used to 
                carry out such programs.
                    (C) Limitation.--The Secretary may not 
                permit an Indian tribe or tribal organization 
                to use amounts provided under this subsection 
                for construction or renovation if such use will 
                result in a decrease in the level of child care 
                services provided by the tribe or organization 
                as compared to the level of such services 
                provided by the tribe or organization in the 
                fiscal year preceding the year for which the 
                determination under subparagraph (A) is being 
                made.
                    (D) Uniform procedures.--The Secretary 
                shall develop and implement uniform procedures 
                for the solicitation and consideration of 
                requests under this paragraph.
          * * * * * * *
    (e) Reallotments.--
            (1)  * * *
          * * * * * * *
            (4) Indian tribes or tribal organizations.--Any 
        portion of a grant or contract made to an Indian tribe 
        or tribal organization under subsection (c) that the 
        Secretary determines is not being used in a manner 
        consistent with the provision of this subchapter in the 
        period for which the grant or contract is made 
        available, shall be allotted by the Secretary to other 
        tribes or organizations that have submitted 
        applications under subsection (c) in accordance with 
        their respective needs.

SEC. 658P. DEFINITIONS.

    As used in this subchapter:
            (1) Caregiver.--The term ``caregiver'' means an 
        individual who provides a service directly to an 
        eligible child on a person-to-person basis.
            (2) Child care certificate.--The term ``child care 
        certificate'' means a certificate (that may be a check 
        or other disbursement) that is issued by a State or 
        local government under this subchapter directly to a 
        parent who may use such certificate only as payment for 
        child care services or as a deposit for child care 
        services if such a deposit is required of other 
        children being cared for by the provider. Nothing in 
        this subchapter shall preclude the use of such 
        certificates for sectarian child care services if 
        freely chosen by the parent. For purposes of this 
        subchapter, child care certificates shall not be 
        considered to be grants or contracts.
            [(3) Elementary school.--The term ``elementary 
        school'' means a day or residential school that 
        provides elementary education, as determined under 
        State law.]
            (4) Eligible child.--The term ``eligible child'' 
        means an individual--
                    (A) who is less than 13 years of age;
                    (B) whose family income does not exceed 
                [75] 85 percent of the State median income for 
                a family of the same size; and
          * * * * * * *
            (5) Eligible child care provider.--The term 
        ``eligible child care provider'' means--
                    (A)  * * *
                    (B) a child care provider that is 18 years 
                of age or older who provides child care 
                services only to eligible children who are, by 
                affinity or consanguinity, or by court decree, 
                the grandchild, great grandchild, sibling (if 
                such provider lives in a separate residence), 
                niece, or nephew of such provider, if such 
                provider [is registered and] complies with any 
                [State] applicable requirements that govern 
                child care provided by the relative involved.
          * * * * * * *
            [(10) Secondary school.--The term ``secondary 
        school'' means a day or residential school which 
        provides secondary education, as determined under State 
        law.]
          * * * * * * *
            (13) State.--The term ``State'' means any of the 
        several States, the District of Columbia, the Virgin 
        Islands of the United States, the Commonwealth of 
        Puerto Rico, Guam, American Samoa, or the Commonwealth 
        of the Northern Mariana Islands[, and the Trust 
        Territory of the Pacific Islands].
            (14) Tribal organization.--[The term]
                    (A) In general.--The term ``tribal 
                organization'' has the meaning given it in 
                section 4(l) of the Indian Self-Determination 
                and Education Assistance Act (25 U.S.C. 
                450b(l)).
                    (B) Other organizations.--Such term 
                includes a Native Hawaiian Organization, as 
                defined in section 4009(4) of the Augustus F. 
                Hawkins-Robert T. Stafford Elementary and 
                Secondary School Improvement Amendments of 1988 
                (20 U.S.C. 4909(4)) and a private nonprofit 
                organization established for the purpose of 
                serving youth who are Indians or Native 
                Hawaiians.
          * * * * * * *
                              ----------                              


               HUMAN SERVICES REAUTHORIZATION ACT OF 1986

          * * * * * * *

 [TITLE VI--CHILD DEVELOPMENT ASSOCIATE SCHOLARSHIP ASSISTANCE PROGRAM

[SEC. 601. SHORT TITLE.

    [This title may be cited as the ``Child Development 
Associate Scholarship Assistance Act of 1985''.

[SEC. 602. GRANTS AUTHORIZED.

    [The Secretary is authorized to make a grant for any fiscal 
year to any State receiving a grant under title XX of the 
Social Security Act for such fiscal year to enable such State 
to award scholarships to eligible individuals within the State 
who are candidates for the Child Development Associate 
credential.

[SEC. 603. APPLICATIONS.

    [(a) Application Required.--A State desiring to participate 
in the grant program established by this title shall submit an 
application to the Secretary in such form as the Secretary may 
require.
    [(b) Contents of Applications.--A State's application shall 
contain appropriate assurances that--
            [(1) scholarship assistance made available with 
        funds provided under this title will be awarded--
                    [(A) only to eligible individuals;
                    [(B) on the basis of the financial need of 
                such individuals; and
                    [(C) in amounts sufficient to cover the 
                cost of application, assessment, and 
                credentialing (including, at the option of the 
                State, any training necessary for 
                credentialing) for the Child Development 
                Associate credential for such individuals;
            [(2) not more than 35 percent of the funds received 
        under this title by a State may be used to provide 
        scholarship assistance under paragraph (1) to cover the 
        cost of training described in paragraph (1)(C); and
            [(3) not more than 10 percent of the funds received 
        by the State under this title will be used for the 
        costs of administering the program established in such 
        State to award such assistance.
    [(c) Equitable Distribution.--In making grants under this 
title, the Secretary shall--
            [(1) distribute such grants equitably among States; 
        and
            [(2) ensure that the needs of rural and urban areas 
        are appropriately addressed.

[SEC. 604. DEFINITIONS.

    [For purposes of this title--
            [(1) the term ``eligible individual'' means a 
        candidate for the Child Development Associate 
        credential whose income does not exceed the 130 percent 
        of the lower living standard income level, by more than 
        50 percent;
            [(2) the term ``lower living standard income 
        level'' means that income level (adjusted for regional, 
        metropolitan, urban, and rural differences and family 
        size) determined annually by the Secretary of Labor and 
        based on the most recent lower living family budget 
        issued by the Secretary of Labor;
            [(3) the term ``Secretary'' means the Secretary of 
        Health and Human Services; and
            [(4) the term ``State'' means each of the several 
        States, the District of Columbia, the Commonwealth of 
        Puerto Rico, Guam, American Samoa, the Virgin Islands, 
        the Commonwealth of the Northern Mariana Islands, the 
        Marshall Islands, the Federated States of Micronesia, 
        and Palau.

[SEC. 605. ADMINISTRATIVE PROVISIONS.

    [(a) Reporting.--Each State receiving grants under this 
title shall annually submit to the Secretary information on the 
number of eligible individuals assisted under the grant 
program, and their positions and salaries before and after 
receiving the Child Development Associate credential.
    [(b) Payments.--Payments pursuant to grants made under this 
title may be made in installments, and in advance or by way of 
reimbursement, with necessary adjustments on account of 
overpayments or underpayments, as the Secretary may determine.

[SEC. 606. AUTHORIZATION OF APPROPRIATIONS.

    [There are authorized to be appropriated to carry out this 
title such sums as may be necessary for fiscal year 1995.]
          * * * * * * *
                              ----------                              


               OMNIBUS BUDGET RECONCILIATION ACT OF 1981

          * * * * * * *

                   TITLE VI--HUMAN SERVICES PROGRAMS

  Subtitle A--Authorizations Savings for Fiscal Years 1982, 1983, and 
                                  1984

          * * * * * * *

                 CHAPTER 8--COMMUNITY SERVICES PROGRAMS

          * * * * * * *

    [Subchapter E--Grants to States for Planning and Development of 
             Dependent Care Programs and for Other Purposes

                    [authorization of appropriations

    [Sec. 670A. For the purpose of making allotments to States 
to carry out the activities described in section 670D, there is 
authorized to be appropriated $13,000,000 for fiscal year 1995.

                              [allotments

    [Sec. 670B. (a) From the amounts appropriated under section 
6701A for each fiscal year, the Secretary shall allot to each 
State an amount which bears the same ratio to the total amount 
appropriated under such section for such fiscal year as the 
population of the State bears to the population of all States, 
except that no State may receive less than $50,000 in each 
fiscal year.
    [(b) For the purpose of the exception contained in 
subsection (a), the term ``State'' does not include Guam, 
American Samoa, the Virgin Islands, the Trust Territory of the 
Pacific Islands, and the Commonwealth of the Northern Mariana 
Islands.

                  [payments under allotments to states

    [Sec. 670C. The Secretary shall make payment, as provided 
by section 6503(a) of title 31, United States Code, to each 
State from its allotment under section 670B from amounts 
appropriated under section 670A.

                           [use of allotments

    [Sec. 670D. (a)(1) Subject to the provisions of subsections 
(c) and (d), amounts paid to a State under section 670C from it 
allotment under section 670B may be used for the planning, 
development, establishment, operation, expansion, or 
improvement by the States, directly or by grant or contract 
with public or private entities, of State and local resource 
and referral systems to provide information concerning the 
availability, types, costs, and locations of dependent care 
services. The information provided by any such system may 
include--
            [(A) the types of dependent care services 
        available, including services provided by individual 
        homes, religious organizations, community 
        organizations, employers, private industry, and public 
        and private institutions;
            [(B) the cost of available dependent care services;
            [(C) the locations in which dependent care services 
        are provided;
            [(D) the forms of transportation available to such 
        locations;
            [(E) the hours during which such dependent care 
        services are available;
            [(F) the dependents eligible to enroll for such 
        dependent care services; and
            [(G) any resource and referral system planned, 
        developed, established, expanded, or improved with 
        amounts paid to a State under this subchapter.
    [(2) The State, with respect to the uses of funds described 
in paragraph (1) of this subsection shall--
            [(A) provide assurances that no information will be 
        included with respect to any dependent care services 
        which are not provided in compliance with the laws of 
        the State and localities in which such services are 
        provided; and
            [(B) provide assurances that the information 
        provided will be the latest information available and 
        will be kept up to date.
    [(b)(1) Subject to the provisions of subsections (c) and 
(d), amounts paid to a State under section 670C from its 
allotment under section 670B may be used for the planning, 
development, establishment, operation, expansion, or 
improvement by the States, directly, or by grant or contract, 
with public agencies or private nonprofit organizations of 
programs to furnish school-age child care services before and 
after school. Amounts so paid to a State and used for the 
operation of such child care services shall be designed to 
enable children, whose families lack adequate financial 
resources, to participate in before or after school child care 
programs.
    [(2) The State, with respect to the uses of funds described 
in paragraph (1) of this subsection shall--
            [(A) provide assurances, in the case of an 
        applicant that is not a State or local educational 
        agency, that the applicant has or will enter into an 
        agreement with the State or local educational agency, 
        institution of higher education or community center 
        containing provisions for--
                    [(i) the use of facilities for the 
                provision of before or after school child care 
                services (including such use during holidays 
                and vacation periods),
                    [(ii) the restrictions, if any, on the use 
                of such space, and
                    [(iii) the times when the space will be 
                available for the use of the applicant;
            [(B) provide an estimate of the costs of the 
        establishment of the child care service program in the 
        facilities;
            [(C) provide assurances that the parents of school-
        age children will be involved in the development and 
        implementation of the program for which assistance is 
        sought under this Act;
            [(D) provide assurances that the applicant is able 
        and willing to seek to enroll racially, ethnically, and 
        economically diverse school-age children, as well as 
        handicapped school-age children, in the child care 
        service program for which assistance is sought under 
        this Act;
            [(E) provide assurances that the child care program 
        is in compliance with State and local child care 
        licensing laws and regulations governing day care 
        services for school-age children to the extent that 
        such regulations are appropriate to the age group 
        served; and
            [(F) provide such other assurance as the chief 
        executive officer of the State may reasonably require 
        to carry out this Act.
    [(c)(1) Except as provided in paragraph (2), of the 
allotment to each State in each fiscal year--
            [(A) 40 percent shall be available for the 
        activities described in subsection (a); and
            [(B) 60 percent shall be available for the 
        activities described in subsection (b).
    [(2) For any fiscal year the Secretary may waive the 
percentage requirements specified in paragraph (1) on the 
request of a State if such State demonstrates to the 
satisfaction of the Secretary--
            [(A) that the amount of funds available as a result 
        of one of such percentage requirements is not needed in 
        such fiscal year for the activities for which such 
        amount is so made available; and
            [(B) the adequacy of the alternative percentages, 
        relative to need, the State specifies the State will 
        apply with respect to all of the activities referred to 
        in paragraph (1) if such waiver is granted.
    [(d) A State may not use amounts paid to it under this 
subchapter to--
            [(1) make cash payments to intended recipient of 
        dependent care services including child care services;
            [(2) pay for construction or renovation; or
            [(3) satisfy any requirement for the expenditure of 
        non-Federal funds as a condition for the receipt of 
        Federal funds.
    [(e)(1) The Federal share of any project supported under 
this subchapter shall be not more than 75 percent.
    [(2) Not more than 10 percent of the allotment of each 
State under this subchapter may be available for the cost of 
administration.
    [(f) Project supported under this section to plan, develop, 
establish, expand, operate, or improve a State or local 
resource and referral system or before or after school child 
care program shall not duplicate any services which are 
provided before the date of the enactment of this subchapter, 
by the State or locality which will be served by such system.
    [(g) The Secretary may provide technical assistance to 
States in planning and carrying out activities under this 
subchapter.
        [application and description of activities; requirements
    [Sec. 670E. (a)(1) In order to receive an allotment under 
section 670B, each State shall submit an application to the 
Secretary. Each such application shall be in such form and 
submitted by such date as the Secretary shall require.
    [(2) Each application required under paragraph (1) for an 
allotment under section 670B shall contain assurances that the 
State will meet the requirements of subsection (b).
    [(b) As part of the annual application required by 
subsection (a), the chief executive officer of each State 
shall--
            [(1) certify that the State agrees to use the funds 
        allotted to it under section 670B in accordance with 
        the requirements of this subchapter; and
            [(2) certify that the State agrees that Federal 
        funds made available under section 670C for any period 
        will be so used as to supplement and increase the level 
        of State, local, and other non-Federal funds that would 
        in the absence of such Federal funds be made available 
        for the programs and activities for which funds are 
        provided under that section and will in no event 
        supplant such State, local, and other non-Federal 
        funds.
The Secretary may not prescribe for a State the manner of 
compliance with the requirements of this subsection.
    [(c)(1) The chief executive officer of a State shall, as 
part of the application required by subsection (a), also 
prepare and furnish the Secretary (in accordance with such form 
as the Secretary shall provide) with a description of the 
intended use of the payments the State will receive under 
section 670C, including information on the programs and 
activities to be supported. The description shall be made 
public within the State in such manner as to facilitate comment 
from any person (including any Federal or other public agency) 
during development of the description and after its 
transmittal. The description shall be revised (consistent with 
this section) until September 30, 1991, as may be necessary to 
reflect substantial changes in the programs and activities 
assisted by the State under this subchapter, and any revision 
shall be subject to the requirements of the preceding sentence.
    [(2) The chief executive officer of each State shall 
include in such a description of--
            [(A) the number of children who participated in 
        before and after school child care programs assisted 
        under this subchapter;
            [(B) the characteristics of the children so served 
        including age levels, handicapped condition, income 
        level of families in such programs;
            [(C) the salary level and benefits paid to 
        employees in such child care programs; and
            [(D) the number of clients served in resource and 
        referral systems assisted under this subchapter, and 
        the types of assistance they requested.
    [(d) Except where inconsistent with the provisions of this 
subchapter, the provisions of section 1903(b), paragraphs (1) 
through (5) of section 1906(a), and sections 1906(b), 1907, 
1908, and 1909 of the Public Health Service Act shall apply to 
this subchapter in the same manner as such provisions apply to 
part A of title XIX of such Act.
                                [report
    [Sec. 670F. Within three years after the date of enactment 
of this subchapter, the Secretary shall prepare and transmit to 
the Senate Committee on Labor and Human Resources and the House 
Committee on Education and Labor a report concerning the 
activities conducted by the States with amounts provided under 
this subchapter.
                              [definitions
    [Sec. 670G. For purposes of this subchapter--
            [(1) the term ``community center'' means facilities 
        operated by nonprofit community-based organizations for 
        the provision of recreational, social, or educational 
        services to the general public;
            [(2) the term ``dependent'' means--
                    [(A) an individual who has not attained the 
                age of 17 years;
                    [(B) an individual who has attained the age 
                of 55 years; or
                    [(C) an individual with a developmental 
                disability;
            [(3) the term ``developmental disability'' has the 
        same meaning as in section 102(7) of the Developmental 
        Disabilities Assistance and Bill of Rights Act;
            [(4) the term ``equipment'' has the same meaning 
        given that term by section 198(a)(8) of the Elementary 
        and Secondary Education Act of 1965;
            [(5) the term ``institution of higher education'' 
        has the same meaning given that term under section 
        1201(a) of the Higher Education Act of 1965;
            [(6) the term ``local educational agency'' has the 
        same meaning given that term under section 14101 of the 
        Elementary and Secondary Education Act of 1965 of the 
        Elementary and Secondary Education Act of 1965;
            [(7) the term ``school-age children'' means 
        children aged five through thirteen, except that in any 
        State in which by State law children at an earlier age 
        are provided free public education, the age provided in 
        State law shall be substituted for age five;
            [(8) the term ``school facilities'' means 
        classrooms and related facilities used for the 
        provision of education;
            [(9) the term ``Secretary'' means the Secretary of 
        Health and Human Services;
            [(10) the term ``State'' means each of the several 
        States, the District of Columbia, the Commonwealth of 
        Puerto Rico, Guam, American Samoa, the Virgin Islands, 
        the Federated States of Micronesia, the Republic of the 
        Marshall Islands, Palau, and the Commonwealth of the 
        Northern Mariana Islands; and
            [(11) the term ``State educational agency'' has the 
        meaning given that term under section 14101 of the 
        Elementary and Secondary Education Act of 1965.
                              [short title
    [Sec. 670H. This subchapter may be cited as the ``State 
Dependent Care Development Grants Act''.]
          * * * * * * *
                              ----------                              


             ELEMENTARY AND SECONDARY EDUCATION ACT OF 1965

          * * * * * * *

               TITLE X--PROGRAMS OF NATIONAL SIGNIFICANCE

          * * * * * * *

                       PART D--ARTS IN EDUCATION

          * * * * * * *

    Subpart 2--Cultural Partnerships for At-Risk Children and Youth

          * * * * * * *

SEC. 10413. AUTHORIZED ACTIVITIES.

    (a) In General.--Grants awarded under this subpart may be 
used--
            (1)  * * *
          * * * * * * *
            [(4) to provide child care for children of at-risk 
        students who would not otherwise be able to participate 
        in the program;]
          * * * * * * *

            PART I--21ST CENTURY COMMUNITY LEARNING CENTERS

          * * * * * * *

SEC. 10963. URBAN SCHOOL GRANTS.

    (a)  * * *
    (b) Authorized Activities.--Funds under this section may be 
used to--
            (1)  * * *
            (2) ensure the readiness of all urban public school 
        children for school, such as--
                    (A)  * * *
          * * * * * * *
                    [(G) establishment of comprehensive child 
                care centers in public secondary schools for 
                students who are parents and their children; 
                and]
          * * * * * * *

SEC. 10974. USES OF FUNDS.

    (a) In General.--Grant funds made available under section 
10973 may be used by rural eligible local educational agencies 
to meet the National Education Goals through programs designed 
to--
            (1)  * * *
          * * * * * * *
            (6) ensure the readiness of all rural children for 
        school, such as--
                    (A)  * * *
          * * * * * * *
                    [(G) establishment of comprehensive child 
                care centers in public secondary schools for 
                student parents and their children; and]
          * * * * * * *
                              ----------                              


           SECTION 9205 OF THE NATIVE HAWAIIAN EDUCATION ACT

[SEC. 9205. NATIVE HAWAIIAN FAMILY-BASED EDUCATION CENTERS.

    [(a) General Authority.--The Secretary is authorized to 
make direct grants, to Native Hawaiian educational 
organizations or educational entities with experience in 
developing or operating Native Hawaiian programs or programs of 
instruction conducted in the Native Hawaiian language, to 
expand the operation of Family-Based Education Centers 
throughout the Hawaiian Islands. The programs of such centers 
may be conducted in the Hawaiian language, the English 
language, or a combination thereof, and shall include--
            [(1) parent-infant programs for prenatal through 
        three-year-olds;
            [(2) preschool programs for four- and five-year-
        olds;
            [(3) continued research and development; and
            [(4) a long-term followup and assessment program, 
        which may include educational support services for 
        Native Hawaiian language immersion programs or 
        transition to English speaking programs.
    [(b) Administrative Costs.--Not more than 7 percent of the 
funds appropriated to carry out the provisions of this section 
for any fiscal year may be used for administrative purposes.
    [(c) Authorization of Appropriations.--In addition to any 
other amount authorized to be appropriated for the centers 
described in subsection (a), there are authorized to be 
appropriated $6,000,000 for fiscal year 1995, and such sums as 
may be necessary for each of the four succeeding fiscal years, 
to carry out this section. Funds appropriated under the 
authority of this subsection shall remain available until 
expended.]
                              ----------                              


                       NATIONAL SCHOOL LUNCH ACT

          * * * * * * *

                     STATE DISBURSEMENT TO SCHOOLS

    Sec. 8. (a) Funds paid to any State during any fiscal year 
pursuant to section 4 shall be disbursed by the State 
educational agency, in accordance with such agreements approved 
by the Secretary as may be entered into by such State agency 
and the schools in the State, to those schools in the State 
which the State educational agency, taking into account need 
and attendance, determines are eligible to participate in the 
school lunch program.
    (b) The agreements described in [the preceding sentence] 
subsection (a) shall be permanent agreements that may be 
amended as necessary. [Nothing in the preceding sentence shall 
be construed to limit the ability of the State educational 
agency to]
    (c) The State educational agency may suspend or terminate 
any such agreement in accordance with regulations prescribed by 
the Secretary. [Such disbursement to any school shall be made 
only for the purpose of assisting it to obtain agricultural 
commodities and other foods for consumption by children in the 
school lunch program. The terms ``child'' and ``children'' as 
used in this Act shall be deemed to include individuals 
regardless of age who are determined by the State educational 
agency, in accordance with regulations prescribed by the 
Secretary, to have 1 or more mental or physical handicaps and 
who are attending any child care institution as defined in 
section 17 of this Act or any nonresidential public or 
nonprofit private school of high school grade or under for the 
purpose of participating in a school program established for 
individuals with mental or physical handicaps: Provided, That 
no institution that is not otherwise eligible to participate in 
the program under section 17 of this Act shall be deemed so 
eligible because of this sentence.]
    (d) [Such food costs] Use of funds paid to States may 
include, in addition to the purchase price of agricultural 
commodities and other foods, the cost of processing, 
distributing, transporting, storing, or handling thereof.
    (e) In no event shall such disbursement for food to any 
school for any fiscal year exceed an amount determined by 
multiplying the number of lunches served in the school in the 
school lunch program under this Act during such year by the 
maximum per meal reimbursement rate for the State, for the type 
of lunch served, as prescribed by the Secretary.
    (f) In any fiscal year in which the national average 
payment per lunch determined under section 4 is increased above 
the amount prescribed in the previous fiscal year, the maximum 
per meal reimbursement rate for the type of lunch served, shall 
be increased by a like amount.
Lunch assistance disbursements to schools under this section 
and under section 11 of this Act may be made in advance or by 
way of reimbursement in accordance with procedures prescribed 
by the Secretary.

               NUTRITIONAL AND OTHER PROGRAM REQUIREMENTS

    Sec. 9. (a)(1)  * * *
    (2)[(A)] Lunches served by schools participating in the 
school lunch program under this Act--
            [(i)] (A) shall offer students fluid milk; and
            [(ii)] (B) shall offer students a variety of fluid 
        milk consistent with prior year preferences unless the 
        prior year preference for any such variety of fluid 
        milk is less than 1 percent of the total milk consumed 
        at the school.
    [(B)(i) The Secretary shall purchase in each calendar year 
to carry out the school lunch program under this Act, and the 
school breakfast program under section 4 of the Child Nutrition 
Act of 1966 (42 U.S.C. 1773), lowfat cheese on a bid basis in a 
quantity that is the milkfat equivalent of the quantity of 
milkfat the Secretary estimates the Commodity Credit 
Corporation will purchase each calendar year as a result of the 
elimination of the requirement that schools offer students 
fluid whole milk and fluid unflavored lowfat milk, based on 
data provided by the Director of Office of Management and 
Budget.
    [(ii) Not later than 30 days after the Secretary provides 
an estimate required under clause (i), the Director of the 
Congressional Budget Office shall provide to the appropriate 
committees of Congress a report on whether the Director concurs 
with the estimate of the Secretary.
    [(iii) The quantity of lowfat cheese that is purchased 
under this subparagraph shall be in addition to the quantity of 
cheese that is historically purchased by the Secretary to carry 
out school feeding programs. The Secretary shall take such 
actions as are necessary to ensure that purchases under this 
subparagraph shall not displace commercial purchases of cheese 
by schools.
    [(3) The Secretary shall establish, in cooperation with 
State educational agencies, administrative procedures, which 
shall include local educational agency and student 
participation, designed to diminish waste of foods which are 
served by schools participating in the school lunch program 
under this Act without endangering the nutritional integrity of 
the lunches served by such schools.
    [(4)] (3) Students in senior high schools that participate 
in the school lunch program under this Act (and, when approved 
by the local school district or nonprofit private schools, 
students in any other grade level) shall not be required to 
accept offered foods they do not intend to consume, and any 
such failure to accept offered foods shall not affect the full 
charge to the student for a lunch meeting the requirements of 
this subsection or the amount of payments made under this Act 
to any such school for such lunch.
    (b)(1)  * * *
    (2)[(A) Following the determination by the Secretary under 
paragraph (1) of this subsection of the income eligibility 
guidelines for each school year, each State educational agency 
shall announce the income eligibility guidelines, by family 
size, to be used by schools in the State in making 
determinations of eligibility for free and reduced price 
lunches. Local school authorities shall, each year, publicly 
announce the income eligibility guidelines for free and reduced 
price lunches on or before the opening of school.
    [(B)] (A) Applications for free and reduced price lunches, 
in such form as the Secretary may prescribe or approve, and any 
descriptive material, shall be distributed to the parents or 
guardians of children in attendance at the school, and shall 
contain only the family size income levels for reduced price 
meal eligibility with the explanation that households with 
incomes less than or equal to these values would be eligible 
for free or reduced price lunches. Such forms and descriptive 
material may not contain the income eligibility guidelines for 
free lunches.
    [(C)] (B)(i) Except as provided in clause (ii), each 
eligibility determination shall be made on the basis of a 
complete application executed by an adult member of the 
household. The Secretary, State, or local food authority may 
verify any data contained in such application. A local school 
food authority shall undertake such verification of information 
contained in any such application as the Secretary may by 
regulation prescribe and, in accordance with such regulations, 
shall make appropriate changes in the eligibility determination 
with respect to such application on the basis of such 
verification.
          * * * * * * *
                    (C) Free and reduced price policy 
                statement.--After the initial submission, a 
                school shall not be required to submit a free 
                and reduced price policy statement to a State 
                educational agency under this Act unless there 
                is a substantive change in the free and reduced 
                price policy of the school. A routine change in 
                the policy of a school, such as an annual 
                adjustment of the income eligibility guidelines 
                for free and reduced price meals, shall not be 
                sufficient cause for requiring the school to 
                submit a policy statement.
          * * * * * * *
    (5) Any child who has a parent or guardian who (A) is 
responsible for the principal support of such child and (B) is 
unemployed shall be served a free or reduced price lunch, 
respectively, during any period (i) in which such child's 
parent or guardian continues to be unemployed and (ii) the 
income of the child's parents or guardians during such period 
of unemployment falls within the income eligibility criteria 
for free lunches or reduced price lunches, respectively, based 
on the current rate of income of such parents or guardians. 
Local school authorities shall publicly announce that such 
children are eligible for free or reduced price lunch, and 
shall make determinations with respect to the status of any 
parent or guardian of any child under clauses (A) and (B) of 
the preceding sentence on the basis of a statement executed in 
such form as the Secretary may prescribe by such parent or 
guardian. [No physical segregation of, or other discrimination 
against, any child eligible for a free or reduced price lunch 
under this paragraph shall be made by the school nor shall 
there be any overt identification of any such child by special 
tokens or tickets, announced or published lists of names, or by 
any other means.]
    (6)(A)  * * *
    (B) Proof of receipt of food stamps or aid to families with 
dependent children, or of enrollment or participation in a Head 
Start program on the basis described in subparagraph (A)(iii), 
shall be sufficient to satisfy any verification requirement 
imposed under [paragraph (2)(C)] paragraph (2)(B).
    (c) School lunch programs under this Act shall be operated 
on a nonprofit basis. [Each school shall, insofar as 
practicable, utilize in its lunch program commodities 
designated from time to time by the Secretary as being in 
abundance, either nationally or in the school area, or 
commodities donated by the Secretary.] Commodities purchased 
under the authority of section 32 of the Act of August 24, 
1935, may be donated by the Secretary to schools, in accordance 
with the needs as determined by local school authorities, for 
utilization in the school lunch program under this Act as well 
as to other schools carrying out nonprofit school lunch 
programs and institutions authorized to receive such 
commodities. [The Secretary is authorized to prescribe terms 
and conditions respecting the use of commodities donated under 
such section 32, under section 416 of the Agricultural Act of 
1949 and under section 709 of the Food and Agriculture Act of 
1965 as will maximize the nutritional and financial 
contributions of such donated commodities in such schools and 
institutions.] The requirements of this section relating to the 
service of meals without cost or at a reduced cost shall apply 
to the lunch program of any school utilizing commodities 
donated under any of the provisions of law referred to in the 
preceding sentence. [None of the requirements of this section 
in respect to the amount, for ``reduced cost'' meals and to 
eligibility for meals without cost shall apply to schools (as 
defined in section 12(d)(6) of this Act which are private and 
nonprofit as defined in the last sentence of section 12(d)(6) 
of this Act) which participate in the school lunch program 
under this Act until such time as the State educational agency, 
or in the case of such schools which participate under the 
provisions of section 10 of this Act the Secretary certifies 
that sufficient funds from sources other than children's 
payments are available to enable such schools to meet these 
requirements.]
    (d)(1) The Secretary shall require as a condition of 
eligibility for receipt of free or reduced price lunches that 
the member of the household who executes the application 
furnish the social security account number of the parent or 
guardian who is the primary wage earner responsible for the 
care of the child for whom the application is made, or that of 
another appropriate adult member of the child's household, as 
determined by the Secretary. The Secretary shall require that 
social security account numbers of all adult members of the 
household be provided if verification of the data contained in 
the application is sought under [subsection (b)(2)(C)] 
subsection (b)(2)(B).
          * * * * * * *
    (f)[(1) Not later than the first day of the 1996-97 school 
year, the Secretary, State educational agencies, schools, and 
school food service authorities shall, to the maximum extent 
practicable, inform students who participate in the school 
lunch and school breakfast programs, and parents and guardians 
of the students, of--
            [(A) the nutritional content of the lunches and 
        breakfasts that are served under the programs; and
            [(B) the consistency of the lunches and breakfasts 
        with the guidelines contained in the most recent 
        `Dietary Guidelines for Americans' that is published 
        under section 301 of the National Nutrition Monitoring 
        and Related Research Act of 1990 (7 U.S.C. 5341) 
        (referred to in this subsection as the `Guidelines'), 
        including the consistency of the lunches and breakfasts 
        with the guideline for fat content.
    [(2)(A) Except as provided in subparagraph (B), not later 
than the first day of the 1996-97 school year, schools that are 
participating in the school lunch or school breakfast program 
shall serve lunches and breakfasts under the programs that are 
consistent with the Guidelines (as measured in accordance with 
subsection (a)(1)(A)(ii) and section 4(e)(1)).] (1) Nutritional 
requirements.--Except as provided in paragraph (2), not later 
than the first day of the 1996-1997 school year, schools that 
are participating in the school lunch or school breakfast 
program shall serve lunches and breakfasts under the program 
that--
                    (A) are consistent with the goals of the 
                most recent Dietary Guidelines for Americans 
                published under section 301 of the National 
                Nutrition Monitoring and Related Research Act 
                of 1990 (7 U.S.C. 5341); and
                    (B) provide, on the average over each week, 
                at least--
                            (i) with respect to school lunches, 
                        \1/3\ of the daily recommended dietary 
                        allowance established by the Food and 
                        Nutrition Board of the National 
                        Research Council of the National 
                        Academy of Sciences; and
                            (ii) with respect to school 
                        breakfasts, \1/4\ of the daily 
                        recommended dietary allowance 
                        established by the Food and Nutrition 
                        Board of the National Research Council 
                        of the National Academy of Sciences.
    [(B)] (2) State educational agencies may grant waivers from 
the requirements of subparagraph (A) subject to criteria 
established by the appropriate State educational agency. The 
waivers shall not permit schools to implement the requirements 
later than July 1, 1998, or a later date determined by the 
Secretary.
    [(C)] (3) To assist schools in meeting the requirements of 
this paragraph, the Secretary--
            [(i)] (A) shall--
                    [(I)] (i) develop, and provide to schools, 
                standardized recipes, menu cycles, and food 
                product specification and preparation 
                techniques; and
                    [(II)] (ii) provide to schools information 
                regarding nutrient standard menu planning, 
                assisted nutrient standard menu planning, and 
                food-based menu systems; and
            [(ii)] (B) may provide to schools information 
        regarding other approaches, as determined by the 
        Secretary.
    [(D)] (4) Use of any reasonable approach.--
            [(i)] (A) In general.--A school food service 
        authority may use any reasonable approach, within 
        guidelines established by the Secretary in a timely 
        manner, to meet the requirements of this paragraph, 
        including--
                    [(I)] (i) using the school nutrition meal 
                pattern in effect for the 1994-1995 school 
                year; and
                    [(II)] (ii) using any of the approaches 
                described in [subparagraph (C)] paragraph (3).
            [(ii)] (B) Nutrient analysis.--The Secretary may 
        not require a school to conduct or use a nutrient 
        analysis to meet the requirements of this paragraph.
          * * * * * * *
    [(h) In carrying out this Act and the Child Nutrition Act 
of 1966 (42 U.S.C. 1771 et seq.), a State educational agency 
may use resources provided through the nutrition education and 
training program authorized under section 19 of the Child 
Nutrition Act of 1966 (42 U.S.C. 1788) for training aimed at 
improving the quality and acceptance of school meals.]
          * * * * * * *

                           SPECIAL ASSISTANCE

    Sec. 11. (a)(1)(A) * * *
          * * * * * * *
    (D)(i) In the case of any school that[, on the date of 
enactment of this subparagraph,] is receiving special 
assistance payments under this paragraph for a 3-school-year 
period described in subparagraph (C), the State may grant, at 
the end of the 3-school-year period, an extension of the period 
for an additional 2 school years, if the State determines, 
through available socioeconomic data approved by the Secretary, 
that the income level of the population of the school has 
remained stable.
          * * * * * * *
    [(d) In carrying out this section, the terms and conditions 
governing the operation of the school lunch program set forth 
in other sections of this Act, including those applicable to 
funds apportioned or paid pursuant to section 4 but excluding 
the provisions of section 7 relating to matching, shall be 
applicable to the extent they are not inconsistent with the 
express requirements of this section.
    [(e)] (d)(1) The Secretary, when appropriate, may request 
each school participating in the school lunch program under 
this Act to report monthly to the State educational agency the 
average number of children in the school who received free 
lunches and the average number of children who received reduced 
price lunches during the immediately preceding month.
    (2) [The] On request of the Secretary, the State 
educational agency of each State shall report to the Secretary 
[each month] the average number of children in the State who 
received free lunches and the average number of children in the 
State who received reduced price lunches during the immediately 
preceding month.
    [(f)] (e) Commodity only schools shall also be eligible for 
special assistance payments under this section. Such schools 
shall serve meals free to children who meet the eligibility 
requirements for free meals under section 9(b) of this Act, and 
shall serve meals at a reduced price, not exceeding the price 
specified in section 9(b)(3) of this Act, to children meeting 
the eligibility requirements for reduced price meals under such 
section. No physical segregation of, or other discrimination 
against, any child eligible for a free or reduced priced lunch 
shall be made by the school, nor shall there by any overt 
identification of any such child by any means.

                MISCELLANEOUS PROVISIONS AND DEFINITIONS

    Sec. 12. (a) States, State educational agencies, and 
schools participating in the school lunch program under this 
Act shall keep such accounts and records as may be necessary to 
enable the Secretary to determine whether the provisions of 
this Act are being complied with. Such accounts and records 
shall [at all times be available] be available at any 
reasonable time for inspection and audit by representatives of 
the Secretary and shall be preserved for such period of time, 
not in excess of five years, as the Secretary determines is 
necessary.
          * * * * * * *
    (c) In carrying out the provisions of this Act, [neither 
the Secretary nor the State shall] the Secretary shall not 
impose any requirement with respect to teaching personnel, 
curriculum, instruction, methods of instruction, and materials 
of instruction in any school.
    (d) For the purposes of this Act--
            (1) ``child'' includes an individual, regardless of 
        age, who--
                    (A) is determined by a State educational 
                agency, in accordance with regulations 
                prescribed by the Secretary, to have 1 or more 
                mental or physical disabilities; and
                    (B) is attending any institution, as 
                defined in section 17(a), or any nonresidential 
                public or nonprofit private school of high 
                school grade or under, for the purpose of 
                participating in a school program established 
                for individuals with mental or physical 
                disabilities.
        No institution that is not otherwise eligible to 
        participate in the program under section 17 shall be 
        considered eligible because of this paragraph.
            [(7)] (2) ``Commodity only schools'' means schools 
        that do not participate in the school lunch program 
        under this Act, but which receive commodities made 
        available by the Secretary for use by such schools in 
        nonprofit lunch programs.
            [(5)] (3) ``School'' means (A) any public or 
        nonprofit private school of high school grade or under, 
        (B) any public or licensed nonprofit private 
        residential child care institution (including, but not 
        limited to, orphanages and homes for the mentally 
        retarded, but excluding Job Corps Centers funded by the 
        Department of Labor) For purposes of this paragraph, 
        the term ``nonprofit'', when applied to any such 
        private school or institution, means any such school or 
        institution which is exempt from tax under section 
        501(c)(3) of the Internal Revenue Code of 1986.
            [(6)] (4) ``School year'' means the annual period 
        from July 1 through June 30.
            [(8)] (5) ``Secretary'' means the Secretary of 
        Agriculture.
            [(1)] (6) ``State'' means any of the fifty States, 
        the District of Columbia, the Commonwealth of Puerto 
        Rico, the Virgin Islands, Guam, American Samoa, or [the 
        Trust Territory of the Pacific Islands] the 
        Commonwealth of the Northern Mariana Islands.
            [(2)] (7) ``State educational agency'' means, as 
        the State legislature may determine, (A) the chief 
        State school officer (such as the State superintendent 
        of public instruction, commissioner of education, or 
        similar officer), or (B) a board of education 
        controlling the State department of education.
            [(3) ``Participation rate'' for a State means a 
        number equal to the number of lunches, consisting of a 
        combination of foods and meeting the minimum 
        requirements prescribed by the Secretary pursuant to 
        section 9, served in the fiscal year beginning two 
        years immediately prior to the fiscal year for which 
        the Federal funds are appropriated by schools 
        participating in the program under this Act in the 
        State, as determined by the Secretary.
            [(4) ``Assistance need rate'' (A) in the case of 
        any State having an average annual per capita income 
        equal to or greater than the average annual per capita 
        income for all the States, shall be 5; and (B) in the 
        case of any State having an average annual per capita 
        income less than the average annual per capita income 
        for all the States, shall be the product of 5 and the 
        quotient obtained by dividing the average annual per 
        capita income for all the States by the average annual 
        per capita income for such State, except that such 
        product may not exceed 9 for any such State. For the 
        purposes of this paragraph (i) the average annual per 
        capita income for any State and for all the States 
        shall be determined by the Secretary on the basis of 
        the average annual per capita income for each State and 
        for all the States for the three most recent years for 
        which such data are available and certified to the 
        Secretary by the Department of Commerce; and (ii) the 
        average annual per capita income for American Samoa 
        shall be disregarded in determining the average annual 
        per capita income for all the States for periods ending 
        before July 1, 1967.]
          * * * * * * *
    (f) In providing assistance for school breakfasts and 
lunches served in Alaska, Hawaii, Guam, American Samoa, Puerto 
Rico, the Virgin Islands of the United States, [the Trust 
Territory of the Pacific Islands,] and the Commonwealth of the 
Northern Mariana Islands, the Secretary may establish 
appropriate adjustments for each such State to the national 
average payment rates prescribed under sections 4 and 11 of 
this Act and section 4 of the Child Nutrition Act of 1966, to 
reflect the differences between the costs of providing lunches 
and breakfasts in those States and the costs of providing 
lunches and breakfasts in all other States.
          * * * * * * *
    (k)[(1) Prior to the publication of final regulations that 
implement changes that are intended to bring the meal pattern 
requirements of the school lunch and breakfast programs into 
conformance with the guidelines contained in the most recent 
``Dietary Guidelines for Americans'' that is published under 
section 301 of the National Nutrition Monitoring and Related 
Research Act of 1990 (7 U.S.C. 5341) (referred to in this 
subsection as the ``Guidelines''), the Secretary shall issue 
proposed regulations permitting the use of food-based menu 
systems.
    [(2) Notwithstanding chapter 5 of title 5, United States 
Code, not later than 45 days after the publication of the 
proposed regulations permitting the use of food-based menu 
systems, the Secretary shall publish notice in the Federal 
Register of, and hold, a public meeting with--
            [(A) representatives of affected parties, such as 
        Federal, State, and local administrators, school food 
        service administrators, other school food service 
        personnel, parents, and teachers; and
            [(B) organizations representing affected parties, 
        such as public interest antihunger organizations, 
        doctors specializing in pediatric nutrition, health and 
        consumer groups, commodity groups, food manufacturers 
        and vendors, and nutritionists involved with the 
        implementation and operation of programs under this Act 
        and the Child Nutrition Act of 1966 (42 U.S.C. 1771 et 
        seq.);
to discuss and obtain public comments on the proposed rule.]
    [(3)] (1) Not later than June 1, 1995, the Secretary shall 
issue final regulations to conform the nutritional requirements 
of the school lunch and breakfast programs with the Guidelines. 
The final regulations shall include--
            (A) rules permitting the use of food-based menu 
        systems; and
            (B) adjustments to the rule on nutrition objectives 
        for school meals published in the Federal Register on 
        June 10, 1994 (59 Fed. Reg. 30218).
    [(4)] (2) No school food service authority shall be 
required to implement final regulations issued pursuant to this 
subsection until the regulations have been final for at least 1 
year.
    [(5) The final regulations shall reflect comments made at 
each phase of the proposed rulemaking process, including the 
public meeting required under paragraph (2).]
    (l)(1) * * *
    (2)(A) To request a waiver under paragraph (1), a State or 
eligible service provider (through the appropriate 
administering State agency) shall submit an application to the 
Secretary that--
            (i) identifies the statutory or regulatory 
        requirements that are requested to be waived;
            (ii) in the case of a State requesting a waiver, 
        describes actions, if any, that the State has 
        undertaken to remove State statutory or regulatory 
        barriers;
            (iii) describes the goal of the waiver to improve 
        services under the program and the expected outcomes if 
        the waiver is granted; and
            (iv) includes a description of the impediments to 
        the efficient operation and administration of the 
        program[;].
            [(v) describes the management goals to be achieved, 
        such as fewer hours devoted to, or fewer number of 
        personnel involved in, the administration of the 
        program;
            [(vi) provides a timetable for implementing the 
        waiver; and
            [(vii) describes the process the State or eligible 
        service provider will use to monitor the progress in 
        implementing the waiver, including the process for 
        monitoring the cost implications of the waiver to the 
        Federal Government.]
    (B) An application described in subparagraph (A) shall be 
developed by the State or eligible service provider and shall 
be submitted to the Secretary by the State.
    (3)[(A)] The Secretary shall act promptly on a waiver 
request contained in an application submitted under paragraph 
(2) and shall either grant or deny the request. The Secretary 
shall state in writing the reasons for granting or denying the 
request.
    [(B) If the Secretary grants a waiver request, the 
Secretary shall state in writing the expected outcome of 
granting the waiver.
    [(C) The result of the decision of the Secretary shall be 
disseminated by the State or eligible service provider through 
normal means of communication.
    [(D)(i) Except as provided in clause (ii), a waiver granted 
by the Secretary under this subsection shall be for a period 
not to exceed 3 years.
    [(ii) The Secretary may extend the period if the Secretary 
determines that the waiver has been effective in enabling the 
State or eligible service provider to carry out the purposes of 
the program.]
    (4) The Secretary may not grant a waiver under this 
subsection [of any requirement relating] that increases Federal 
costs or that relates to--
            (A) the nutritional content of meals served;
            (B) Federal reimbursement rates;
            (C) the provision of free and reduced price meals;
            [(D) offer versus serve provisions;]
            [(E)] (D) limits on the price charged for a reduced 
        price meal;
            [(F)] (E) maintenance of effort;
            [(G)] (F) equitable participation of children in 
        private schools;
            [(H)] (G) distribution of funds to State and local 
        school food service authorities and service 
        institutions participating in a program under this Act 
        and the Child Nutrition Act of 1966 (42 U.S.C. 1771 et 
        seq.);
            [(I)] (H) the disclosure of information relating to 
        students receiving free or reduced price meals and 
        other recipients of benefits;
            [(J)] (I) prohibiting the operation of a profit 
        producing program;
            [(K)] (J) the sale of competitive foods;
            [(L)] (K) the commodity distribution program under 
        section 14;
            [(M)] (L) the special supplemental nutrition 
        program authorized under section 17 of the Child 
        Nutrition Act of 1966 (42 U.S.C. 1786); [and] or
            [(N)] (M) enforcement of any constitutional or 
        statutory right of an individual, including any right 
        under--
                    (i) title VI of the Civil Rights Act of 
                1964 (42 U.S.C. 2000d et seq.);
          * * * * * * *
    (6)[(A)(i) An eligible service provider that receives a 
waiver under this subsection shall annually submit to the State 
a report that--
            [(I) describes the use of the waiver by the 
        eligible service provider; and
            [(II) evaluates how the waiver contributed to 
        improved services to children served by the program for 
        which the waiver was requested.
    [(ii) The State shall annually submit to the Secretary a 
report that summarizes all reports received by the State from 
eligible service providers.
    [(B)] The Secretary shall annually submit to the Committee 
on Education and Labor of the House of Representatives and the 
Committee on Agriculture, Nutrition, and Forestry of the 
Senate, a report--
            [(i)] (A) summarizing the use of waivers by the 
        State and eligible service providers;
            [(ii)] (B) describing whether the waivers resulted 
        in improved services to children;
            [(iii)] (C) describing the impact of the waivers on 
        providing nutritional meals to participants; and
            [(iv)] (D) describing how the waivers reduced the 
        quantity of paperwork necessary to administer the 
        program.
          * * * * * * *
    [(m)(1) The Secretary, acting through the Administrator of 
the Food and Nutrition Service or through the Extension 
Service, shall award on an annual basis grants to a private 
nonprofit organization or educational institution in each of 3 
States to create, operate, and demonstrate food and nutrition 
projects that are fully integrated with elementary school 
curricula.
    [(2) Each organization or institution referred to in 
paragraph (1) shall be selected by the Secretary and shall--
            [(A) assist local schools and educators in offering 
        food and nutrition education that integrates math, 
        science, and verbal skills in the elementary grades;
            [(B) assist local schools and educators in teaching 
        agricultural practices through practical applications, 
        like gardening;
            [(C) create community service learning 
        opportunities or educational programs;
            [(D) be experienced in assisting in the creation of 
        curriculum-based models in elementary schools;
            [(E) be sponsored by an organization or 
        institution, or be an organization or institution, that 
        provides information, or conducts other educational 
        efforts, concerning the success and productivity of 
        American agriculture and the importance of the free 
        enterprise system to the quality of life in the United 
        States; and
            [(F) be able to provide model curricula, examples, 
        advice, and guidance to schools, community groups, 
        States, and local organizations regarding means of 
        carrying out similar projects.
    [(3) Subject to the availability of appropriations to carry 
out this subsection, the Secretary shall make grants to each of 
the 3 private organizations or institutions selected under this 
subsection in amounts of not less than $100,000, nor more than 
$200,000, for each of fiscal years 1995 through 1998.
    [(4) The Secretary shall establish fair and reasonable 
auditing procedures regarding the expenditure of funds under 
this subsection.
    [(5) There are authorized to be appropriated to carry out 
this subsection such sums as are necessary for each of fiscal 
years 1995 through 1998.]

                SUMMER FOOD SERVICE PROGRAM FOR CHILDREN

    Sec. 13. (a)(1) The Secretary is authorized to carry out a 
program to assist States, through grants-in-aid and other 
means, to [initiate, maintain, and expand] initiate and 
maintain nonprofit food service programs for children in 
service institutions. For purposes of this section, (A) 
``program'' means the summer food service program for children 
authorized by this section; (B) ``service institutions'' means 
public or private nonprofit school food authorities, local, 
municipal, or county governments, public or private nonprofit 
higher education institutions participating in the National 
Youth Sports Program, and residential public or private 
nonprofit summer camps, that develop special summer or school 
vacation programs providing food service similar to that made 
available to children during the school year under the school 
lunch program under this Act or the school breakfast program 
under the Child Nutrition Act of 1966; (C) ``areas in which 
poor economic conditions exist'' means areas in which at least 
50 percent of the children are eligible for free or reduced 
price school meals under this Act and the Child Nutrition Act 
of 1966, as determined by information provided from departments 
of welfare, zoning commissions, census tracts, by the number of 
free and reduced price lunches or breakfasts served to children 
attending public and nonprofit private schools located in the 
area of program food service sites, or from other appropriate 
sources, including statements of eligibility based upon income 
for children enrolled in the program; (D) ``children'' means 
individuals who are eighteen years of age and under, and 
individuals who are older than eighteen who are (i) determined 
by a State educational agency or a local public educational 
agency of a State, in accordance with regulations prescribed by 
the Secretary, to be mentally or physically handicapped, and 
(ii) participating in a public or nonprofit private school 
program established for the mentally or physically handicapped; 
and (E) ``State'' means any of the fifty States, the District 
of Columbia, the Commonwealth of Puerto Rico, the Virgin 
Islands of the United States, Guam, American Samoa, [the Trust 
Territory of the Pacific Islands,] and the Northern Mariana 
Islands.
          * * * * * * *
    (7)(A) [Except as provided in subparagraph (C), private] 
Private nonprofit organizations, as defined in subparagraph (B) 
(other than organizations eligible under paragraph (1)), shall 
be eligible for the program under the same terms and conditions 
as other service institutions.
          * * * * * * *
    [(b)(1) Payments to service institutions shall equal the 
full cost of food service operations (which cost shall include 
the cost of obtaining, preparing, and serving food, but shall 
not include administrative costs), except that such payments to 
any institution shall not exceed (1) 85.75 cents for each lunch 
and supper served; (2) 47.75 cents for each breakfast served; 
or (3) 22.50 cents for each meal supplement served: Provided, 
That such amounts shall be adjusted each January 1 to the 
nearest one-fourth cent in accordance with the changes for the 
twelve-month period ending the preceding November 30 in the 
series for food away from home of the Consumer Price Index for 
All Urban Consumers published by the Bureau of Labor Statistics 
of the Department of Labor: Provided further, That the 
Secretary may make such adjustments in the maximum 
reimbursement levels as the Secretary determines appropriate 
after making the study prescribed in paragraph (4) of this 
subsection.]
    (b) Service Institutions.--
            (1) Payments.--
                    (A) In general.--Except as otherwise 
                provided in this paragraph, payments to service 
                institutions shall equal the full cost of food 
                service operations (which cost shall include 
                the costs of obtaining, preparing, and serving 
                food, but shall not include administrative 
                costs).
                    (B) Maximum amounts.--Subject to 
                subparagraph (C), payments to any institution 
                under subparagraph (A) shall not exceed--
                            (i) $1.82 for each lunch and supper 
                        served;
                            (ii) $1.13 for each breakfast 
                        served; and
                            (iii) 46 cents for each meal 
                        supplement served.
                    (C) Adjustments.--Amounts specified in 
                subparagraph (B) shall be adjusted on January 
                1, 1997, and each January 1 thereafter, to the 
                nearest lower cent increment in accordance with 
                the changes for the 12-month period ending the 
                preceding November 30 in the series for food 
                away from home of the Consumer Price Index for 
                All Urban Consumers published by the Bureau of 
                Labor Statistics of the Department of Labor. 
                Each adjustment shall be based on the unrounded 
                adjustment for the prior 12-month period.
    (2) Any service institution may only serve lunch and either 
breakfast or a meal supplement during each day of operation, 
except that any service institution that is a camp or that 
serves meals primarily to migrant children may serve up to 
[four meals] 3 meals, or 2 meals and 1 supplement, during each 
day of operation, if (A) the service institution has the 
administrative capability and the food preparation and food 
holding capabilities (where applicable) to serve more than one 
meal per day, and (B) the service period of different meals 
does not coincide or overlap. [The meals that camps and migrant 
programs may serve shall include a breakfast, a lunch, a 
supper, and meal supplements.]
          * * * * * * *
    (c)(1)  * * *
    (2)[(A) Notwithstanding any other provision of this Act, 
any higher education institution that receives reimbursements 
under the program for meals and meal supplements served to low-
income children under the National Youth Sports Program is 
eligible to receive reimbursements for not more than 2 meals or 
1 meal and 1 meal supplement per day for not more than 30 days 
for each child participating in a National Youth Sports Program 
operated by such institution during the months other than May 
through September. The program under this paragraph shall be 
administered within the State by the same State agency that 
administers the program during the months of May through 
September.]
    [(B)] (A) Children participating in National Youth Sports 
Programs operated by higher education institutions[, and such 
higher education institutions,] shall be eligible to 
participate in the program under this paragraph [without 
application] upon showing residence in areas in which poor 
economic conditions exist or on the basis of income eligibility 
statements for children enrolled in the program. The higher 
education institutions referred to in the preceding sentence 
shall be eligible to participate in the program under this 
paragraph without application.
    [(C)] (B) Higher education institutions shall be reimbursed 
for meals and meal supplements served under this paragraph--
            (i) in the case of lunches and suppers, at the same 
        rates as the payment rates established for free lunches 
        under section 11; and
            (ii) in the case of breakfasts or meal supplements, 
        at the same rates as the [severe need] payment rates 
        established for free breakfasts under section 4 of the 
        Child Nutrition Act of 1966.
    [(D)] (C)(i) Meals for which a higher education institution 
is reimbursed under this paragraph shall fulfill the minimum 
nutritional requirements and meal patterns prescribed by the 
Secretary--
            (I) for meals served under the school lunch program 
        under this Act, in the case of reimbursement for 
        lunches or suppers; and
            (II) for meals served under the school breakfast 
        program under section 4 of the Child Nutrition Act of 
        1966, in the case of reimbursement for breakfasts.
    (ii) The Secretary may modify the minimum nutritional 
requirements and meal patterns prescribed by the Secretary for 
meals served under the school breakfast program under section 4 
of the Child Nutrition Act of 1966 for application to meal 
supplements for which a higher education institution is 
reimbursed under this paragraph.
    [(E)] (D) The Secretary shall issue regulations governing 
the implementation, operation, and monitoring of programs 
receiving assistance under this paragraph that, to the maximum 
extent practicable, are comparable to those established for 
higher education institutions participating in the National 
Youth Sports Program and receiving reimbursements under the 
program for the months of May through September.
          * * * * * * *
    (e)(1) Not later than June 1, July 15, and August 15 of 
each year, or, in the case of service institutions that operate 
under a continuous school calendar, the first day of each month 
of operation, the State shall forward advance program payments 
to each service [institution: Provided, That (A) the] 
institution. The State shall not release the second month's 
advance program payment to any service institution (excluding a 
school) that has not certified that it has held training 
sessions for its own personnel and the site personnel with 
regard to program duties and [responsibilities, and (B) no] 
responsibilities. No advance program payment may be made for 
any month in which the service institution will operate under 
the program for less than ten days.
          * * * * * * *
    (f)(1) Service institutions receiving funds under this 
section shall serve meals consisting of a combination of foods 
and meeting minimum nutritional standards prescribed by the 
Secretary on the basis of tested nutritional research.
    (2) The Secretary shall provide technical assistance to 
service institutions and private nonprofit organizations 
participating in the program to assist the institutions and 
organizations in complying with the nutritional requirements 
prescribed by the Secretary pursuant to this subsection. [The 
Secretary shall provide additional technical assistance to 
those service institutions and private nonprofit organizations 
that are having difficulty maintaining compliance with the 
requirements.]
    (3) Meals described in [the first sentence] paragraph (1) 
shall be served without cost to children attending service 
institutions approved for operation under this section, except 
that, in the case of camps, charges may be made for meals 
served to children other than those who meet the eligibility 
requirements for free or reduced price meals in accordance with 
subsection (a)(5) of this section.
    (4) To assure meal quality, States shall, with the 
assistance of the Secretary, prescribe model meal 
specifications and model food quality standards, and ensure 
that all service institutions contracting for the preparation 
of meals with food service management companies include in 
their contracts menu cycles, local food safety standards, and 
food quality standards approved by the State.
    (5) Such contracts shall require (A) periodic inspections, 
by an independent agency or the local health department for the 
locality in which the meals are served, of meals prepared in 
accordance with the contract in order to determine bacteria 
levels present in such meals, and (B) [that bacteria levels 
conform to the standards which are applied by the local health 
authority for that locality with respect to the levels of 
bacteria that may be present in meals served by other 
establishments in that locality.] conformance with standards 
set by local health authorities.
    (6) Such inspections and any testing resulting therefrom 
shall be in accordance with the practices employed by such 
local health authority.
            (7) Offer versus serve.--A school food authority 
        participating as a service institution may permit a 
        child attending a site on school premises operated 
        directly by the authority to refuse not more than 1 
        item of a meal that the child does not intend to 
        consume. A refusal of an offered food item shall not 
        affect the amount of payments made under this section 
        to a school for the meal.
          * * * * * * *
    (l)(1)  * * *
          * * * * * * *
    [(4) In accordance with regulations issued by the 
Secretary, positive efforts shall be made by service 
institutions to use small businesses and minority-owned 
businesses as sources of supplies and services. Such efforts 
shall afford those sources the maximum feasible opportunity to 
compete for contracts using program funds.]
    [(5) Each State, with the assistance of the Secretary, 
shall establish a standard form of contract for use by service 
institutions and food service management companies.] (4) The 
Secretary shall prescribe requirements governing bid and 
contract procedures for acquisition of the services of food 
service management companies, including, but not limited to, 
bonding requirements (which may provide exemptions applicable 
to contracts of $100,000 or less), procedures for review of 
contracts by States, and safeguards to prevent collusive 
bidding activities between service institutions and food 
service management companies.
    (m) States and service institutions participating in 
programs under this section shall keep such accounts and 
records as may be necessary to enable the Secretary to 
determine whether there has been compliance with this section 
and the regulations issued hereunder. Such accounts and records 
shall [at all times be available] be available at any 
reasonable time for inspection and audit by representatives of 
the Secretary and shall be preserved for such period of time, 
not in excess of five years, as the Secretary determines 
necessary.
    (n) Each State desiring to participate in the program shall 
notify the Secretary by January 1 of each year of its intent to 
administer the program and shall submit for approval by 
February 15 a management and administration plan for the 
program for the fiscal year, which shall include, but not be 
limited to, (1) the State's administrative budget for the 
fiscal year, and the State's plans to comply with any standards 
prescribed by the Secretary under subsection (k) of this 
section; (2) the State's plans for use of program funds and 
funds from within the State to the maximum extent practicable 
to reach needy children [, including the State's methods of 
assessing need, and its plans and schedule for informing 
service institutions of the availability of the program]; [(3) 
the State's best estimate of the number and character of 
service institutions and sites to be approved, and of meals to 
be served and children to participate for the fiscal year, and 
a description of the estimating methods used; (4)] (3) the 
State's plans [and schedule] for providing technical assistance 
and training eligible service institutions; [(5)] (4) the 
State's plans for monitoring and inspecting service 
institutions, feeding sites, and food service management 
companies and for ensuring that such companies do not enter 
into contracts for more meals than they can provide effectively 
and efficiently; [(6)] (5) the State's plan for timely and 
effective action against program violators; and [(7)] (6) the 
State's plan for ensuring fiscal integrity by auditing service 
institutions not subject to auditing requirements prescribed by 
the Secretary.
          * * * * * * *
    [(p) During the fiscal years 1990 and 1991, the Secretary 
and the States shall carry out a program to disseminate to 
potentially eligible private nonprofit organizations 
information concerning the amendments made by the Child 
Nutrition and WIC Reauthorization Act of 1989 regarding the 
eligibility under subsection (a)(7) of private nonprofit 
organizations for the program established under this section.]
    [(q)] (p)(1) In addition to the normal monitoring of 
organizations receiving assistance under this section, the 
Secretary shall establish a system under which the Secretary 
and the States shall monitor the compliance of private 
nonprofit organizations with the requirements of this section 
and with regulations issued to implement this section.
    [(2) The Secretary shall require each State to establish 
and implement an ongoing training and technical assistance 
program for private nonprofit organizations that provides 
information on program requirements, procedures, and 
accountability. The Secretary shall provide assistance to State 
agencies regarding the development of such training and 
technical assistance programs.]
    [(3)] (2) In the fiscal year 1990 and each succeeding 
fiscal year, the Secretary may reserve for purposes of carrying 
out [paragraphs (1) and (2) of this subsection] paragraph (1) 
not more than \1/2\ of 1 percent of amounts appropriated for 
purposes of carrying out this section.
    [(4) For the purposes of this subsection, the term 
``private nonprofit organization'' has the meaning given such 
term in subsection (a)(7)(B).]
    [(r)] (q) For the fiscal year beginning October 1, 1977, 
and each succeeding fiscal year ending before October 1, 1998, 
there are hereby authorized to be appropriated such sums as are 
necessary to carry out the purposes of this section.

                     COMMODITY DISTRIBUTION PROGRAM

    Sec. 14. (a)  * * *
    (b)[(1) Among the products to be included in the food 
donations to the school lunch program shall be cereal and 
shortening and oil products.]
    [(2)] (1) The Secretary shall maintain and continue to 
improve the overall nutritional quality of entitlement 
commodities provided to schools to assist the schools in 
improving the nutritional content of meals.
    [(3)] (2) The Secretary shall--
            (A) require that nutritional content information 
        labels be placed on packages or shipments of 
        entitlement commodities provided to the schools; or
            (B) otherwise provide nutritional content 
        information regarding the commodities provided to the 
        schools.
          * * * * * * *
    (d) In providing assistance under this Act and the Child 
Nutrition Act of 1966 for school lunch and breakfast programs, 
the Secretary shall establish procedures which will--
            (1) ensure that the views of local school districts 
        and private nonprofit schools with respect to the type 
        of commodity assistance needed in schools are fully and 
        accurately reflected in reports to the Secretary by the 
        State with respect to State commodity preferences and 
        that such views are considered by the Secretary in the 
        purchase and distribution of commodities and by the 
        States in the allocation of such commodities among 
        schools within the States;
            (2) solicit the views of States with respect to the 
        acceptability of commodities;
            (3) ensure that the timing of commodity deliveries 
        to States is consistent with State school year 
        calendars and that such deliveries occur with 
        sufficient advance notice;
            (4) provide for systematic review of the costs and 
        benefits of providing commodities of the kind and 
        quantity that are suitable to the needs of local school 
        districts and private nonprofit schools; and
            (5) make available technical assistance on the use 
        of commodities available under this Act and the Child 
        Nutrition Act of 1966.
[Within eighteen months after the date of the enactment of this 
subsection, the Secretary shall report to Congress on the 
impact of procedures established under this subsection, 
including the nutritional, economic, and administrative 
benefits of such procedures. In purchasing commodities for 
programs carried out under this Act and the Child Nutrition Act 
of 1966, the Secretary shall establish procedures to ensure 
that contracts for the purchase of such commodities shall not 
be entered into unless the previous history and current 
patterns of the contracting party with respect to compliance 
with applicable meat inspection laws and with other appropriate 
standards relating to the wholesomeness of food for human 
consumption are taken into account.
    [(e) Each State educational agency that receives food 
assistance payments under this section for any school year 
shall establish for such year an advisory council, which shall 
be composed of representatives of schools in the State that 
participate in the school lunch program. The council shall 
advise such State agency with respect to the needs of such 
schools relating to the manner of selection and distribution of 
commodity assistance for such program.]
    [(f)] (e) Commodity only schools shall be eligible to 
receive donated commodities equal in value to the sum of the 
national average value of donated foods established under 
section 6(e) of this Act and the national average payment 
established under section 4 of this Act. Such schools shall be 
eligible to receive up to 5 cents per meal of such value in 
cash for processing and handling expenses related to the use of 
such commodities. Lunches served in such schools shall consist 
of a combination of foods which meet the minimum nutritional 
requirements prescribed by the Secretary under section 9(a) of 
this Act, and shall represent the four basic food groups, 
including a serving of fluid milk.
    [(g)] (f)(1) As used in this subsection, the term 
``eligible school district'' has the same meaning given such 
term in section 1581(a) of the Food Security Act of 1985.
    (2) In accordance with the terms and conditions of section 
1581 of such Act, the Secretary shall permit an eligible school 
district to continue to receive assistance in the form of cash 
or commodity letters of credit assistance, in lieu of 
commodities, to carry out the school lunch program operated in 
the district.
    [(3)(A) On request of a participating school district (and 
after consultation with the Comptroller General of the United 
States with respect to accounting procedures used to determine 
any losses) and subject to the availability of funds, the 
Secretary shall provide cash compensation to an eligible school 
district for losses sustained by the district as a result of 
the alteration of the methodology used to conduct the study 
referred to in section 1581(a) of such Act during the school 
year ending June 30, 1983. The Secretary, in computing losses 
sustained by any school district under the preceding sentence, 
shall base such computation on the difference between the value 
of bonus commodity assistance received by such school district 
under this Act for the school year ending June 30, 1983, and 
the value of bonus commodities received by such school district 
under this Act for the school year ending June 30, 1982. For 
the purposes of this subparagraph--
            [(i) the term ``bonus commodities'' means 
        commodities provided in addition to commodities 
        provided pursuant to section 6(e); and
            [(ii) the term ``bonus commodity assistance'' means 
        assistance, in the form of bonus commodities, cash, or 
        commodity letters of credit, provided in addition to 
        assistance provided pursuant to section 6(e).
The Secretary may provide cash compensation under this 
subparagraph only to eligible school districts that submit 
applications for such compensation not later than 1 year after 
the date of the enactment of the Child Nutrition and WIC 
Reauthorization Act of 1989. The Secretary shall, during the 
45-day period beginning on October 1, 1990, complete action on 
any claim submitted under this subparagraph.
    [(B) There are authorized to be appropriated such sums as 
may be necessary to carry out this paragraph, to be available 
without fiscal year limitation.]
          * * * * * * *

                  CHILD [AND ADULT] CARE FOOD PROGRAM

    Sec. 17. (a) The Secretary may carry out a program to 
assist States through grants-in-aid and other means to 
[initiate, maintain, and expand] initiate and maintain 
nonprofit food service programs for children in institutions 
providing child care. For purposes of this section, the term 
``institution'' means any public or private nonprofit 
organization providing nonresidential child care, including, 
but not limited to, child care centers, settlement houses, 
recreational centers, Head Start centers, and institutions 
providing child care facilities for children with handicaps; 
and such term shall also mean any other private organization 
providing nonresidential day care services for which it 
receives compensation from amounts granted to the States under 
title XX of the Social Security Act (but only if such 
organization receives compensation under such title for at 
least 25 percent of its enrolled children or 25 percent of its 
licensed capacity, whichever is less). In addition, the term 
``institution'' shall include programs developed to provide day 
care outside school hours for schoolchildren, and public or 
nonprofit private organizations that sponsor family or group 
day care homes. Reimbursement may be provided under this 
section only for meals or supplements served to children not 
over 12 years of age (except that such age limitation shall not 
be applicable for children of migrant workers if 15 years of 
age or less or for children with handicaps). The Secretary may 
establish separate guidelines for institutions that provide 
care to school children outside of school hours. For purposes 
of determining eligibility--
            (1) no institution, other than a family or group 
        day care home sponsoring organization, or family or 
        group day care home shall be eligible to participate in 
        the program unless it has Federal, State, or local 
        licensing or approval, or is complying with appropriate 
        renewal procedures as prescribed by the Secretary and 
        the State has no information indicating that the 
        institution's license will not be renewed; or where 
        Federal, State, or local licensing or approval is not 
        available, it receives funds under title XX of the 
        Social Security Act or otherwise demonstrates that it 
        meets either any applicable State or local government 
        licensing or approval standards or approval standards 
        established by the Secretary after consultation with 
        the Secretary of Health and Human Services; and
            (2) no institution shall be eligible to participate 
        in the program unless it satisfies the following 
        criteria:
                    (A) accepts final administrative and 
                financial responsibility for management of an 
                effective food service;
                    (B) has not been seriously deficient in its 
                operation of the child care food program, or 
                any other program under this Act or the Child 
                Nutrition Act of 1966, for a period of time 
                specified by the Secretary; [and]
                    (C) will provide adequate supervisory and 
                operational personnel for overall monitoring 
                and management of the child care food 
                program[.]; and
                    (D) in the case of a family or group day 
                care home sponsoring organization that employs 
                more than 1 employee, the organization does not 
                base payments to an employee of the 
                organization on the number of family or group 
                day care homes recruited.
          * * * * * * *
    (c)(1) For purposes of this section, except as provided in 
subsection (f)(3), the national average payment rate for free 
lunches and suppers, the national average payment rate for 
reduced price lunches and suppers, and the national average 
payment rate for paid lunches and suppers shall be the same as 
the national average payment rates for free lunches, reduced 
price lunches, and paid lunches, respectively, under sections 4 
and 11 of this Act as appropriate (as adjusted pursuant to 
section 11(a) of this Act).
    (2) For purposes of this section, except as provided in 
subsection (f)(3), the national average payment rate for free 
breakfasts, the national average payment rate for reduced price 
breakfasts, and the national average payment rate for paid 
breakfasts shall be the same as the national average payment 
rates for free breakfasts, reduced price breakfasts, and paid 
breakfasts, respectively, under section 4(b) of the Child 
Nutrition Act of 1966 (as adjusted pursuant to section 11(a) of 
this Act).
    (3) For purposes of this section, except as provided in 
subsection (f)(3), the national average payment rate for free 
supplements shall be 30 cents, the national average payment 
rate for reduced price supplements shall be one-half the rate 
for free supplements, and the national average payment rate for 
paid supplements shall be 2.75 cents (as adjusted pursuant to 
section 11(a) of this Act).
    (4) Determinations with regard to eligibility for free and 
reduced price meals and supplements shall be made in accordance 
with the income eligibility guidelines for free lunches and 
reduced price lunches, respectively, under section 9 of this 
Act.
    (5) A child shall be considered automatically eligible for 
benefits under this section without further application or 
eligibility determination, if the child is enrolled as a 
participant in a Head Start program authorized under the Head 
Start Act (42 U.S.C. 9831 et seq.), on the basis of a 
determination that the child is a member of a family that meets 
the low-income criteria prescribed under section 645(a)(1)(A) 
of the Head Start Act (42 U.S.C. 9840(a)(1)(A)).
    (6)(A) A child who has not yet entered kindergarten shall 
be considered automatically eligible for benefits under this 
section without further application or eligibility 
determination if the child is enrolled as a participant in the 
Even Start program under part B of chapter 1 of title I of the 
Elementary and Secondary Education Act of 1965 (20 U.S.C. 2741 
et seq.).
    (B) Subparagraph (A) shall apply only with respect to the 
provision of benefits under this section for the period 
beginning September 1, 1995, and ending September 30, 1997.
    (d)(1) Any eligible public institution shall be approved 
for participation in the child care food program upon its 
request. Any eligible private institution shall be approved for 
participation if it (A) has tax exempt status under the 
Internal Revenue Code of 1986 or, under conditions established 
by the Secretary, is moving toward compliance with the 
requirements for tax exempt status, or (B) is currently 
operating a Federal program requiring nonprofit status. Family 
or group day care homes need not have individual tax exempt 
certification if they are sponsored by an institution that has 
tax exempt status, or, under conditions established by the 
Secretary, such institution is moving toward compliance with 
the requirements for tax exempt status or is currently 
operating a Federal program requiring nonprofit status. An 
institution applying for participation under this section shall 
be notified of approval or disapproval in writing within thirty 
days after the date its completed application is filed. If an 
institution submits an incomplete application to the State, the 
State shall so notify the institution within fifteen days of 
receipt of the application[, and shall provide technical 
assistance, if necessary, to the institution for the purpose of 
completing its application].
    (2)(A) The Secretary shall develop a policy that allows 
institutions providing child care that participate in the 
program under this section, at the option of the State agency, 
to reapply for assistance under this section at 3-year 
intervals.
    (B) Each State agency that exercises the option authorized 
by subparagraph (A) shall confirm on an annual basis that each 
such institution is in compliance with the licensing or 
approval provisions of subsection (a)(1).
          * * * * * * *
    (f)(1)  * * *
    (2)(A)  * * *
    (B) No reimbursement may be made to any institution under 
this paragraph, or to family or group day care home sponsoring 
organizations under paragraph (3) of this subsection, for more 
than two meals and one supplement per day per child, or in the 
case of an institution (but not in the case of a family or 
group day care home sponsoring organization), [two meals and 
two supplements or three meals and one supplement] two meals 
and one supplement per day per child, for children that are 
maintained in a child care setting for eight or more hours per 
day.
    [(3)(A) Institutions that participate in the program under 
this section as family or group day care home sponsoring 
organizations shall be provided, for payment to such homes, a 
reimbursement factor set by the Secretary for the cost of 
obtaining and preparing food and prescribed labor costs, 
involved in providing meals under this section, without a 
requirement for documentation of such costs, except that 
reimbursement shall not be provided under this subparagraph for 
meals or supplements served to the children of a person acting 
as a family or group day care home provider unless such 
children meet the eligibility standards for free or reduced 
price meals under section 9 of this Act. The reimbursement 
factor in effect as of the date of the enactment of this 
sentence shall be reduced by 10 percent. The reimbursement 
factor under this subparagraph shall be adjusted on July 1 of 
each year to reflect changes in the Consumer Price Index for 
food away from home for the most recent 12-month period for 
which such data are available. The reimbursement factor under 
this subparagraph shall be rounded to the nearest one-fourth 
cent.]
            (3) Reimbursement of family or group day care home 
        sponsoring organizations.--
                    (A) Reimbursement factor.--
                            (i) In general.--An institution 
                        that participates in the program under 
                        this section as a family or group day 
                        care home sponsoring organization shall 
                        be provided, for payment to a home 
                        sponsored by the organization, 
                        reimbursement factors in accordance 
                        with this subparagraph for the cost of 
                        obtaining and preparing food and 
                        prescribed labor costs involved in 
                        providing meals under this section.
                            (ii) Tier i family or group day 
                        care homes.--
                                    (I) Definition.--In this 
                                paragraph, the term ``tier I 
                                family or group day care home'' 
                                means--
                                            (aa) a family or 
                                        group day care home 
                                        that is located in a 
                                        geographic area, as 
                                        defined by the 
                                        Secretary based on 
                                        census data, in which 
                                        at least 50 percent of 
                                        the children residing 
                                        in the area are members 
                                        of households whose 
                                        incomes meet the income 
                                        eligibility guidelines 
                                        for free or reduced 
                                        price meals under 
                                        section 9;
                                            (bb) a family or 
                                        group day care home 
                                        that is located in an 
                                        area served by a school 
                                        enrolling elementary 
                                        students in which at 
                                        least 50 percent of the 
                                        total number of 
                                        children enrolled are 
                                        certified eligible to 
                                        receive free or reduced 
                                        price school meals 
                                        under this Act or the 
                                        Child Nutrition Act of 
                                        1966 (42 U.S.C. 1771 et 
                                        seq.); or
                                            (cc) a family or 
                                        group day care home 
                                        that is operated by a 
                                        provider whose 
                                        household meets the 
                                        income eligibility 
                                        guidelines for free or 
                                        reduced price meals 
                                        under section 9 and 
                                        whose income is 
                                        verified by the 
                                        sponsoring or 
                                        organization of the 
                                        home under regulations 
                                        established by the 
                                        Secretary.
                                    (II) Reimbursement.--Except 
                                as provided in subclause (III), 
                                a tier I family or group day 
                                care home shall be provided 
                                reimbursement factors under 
                                this clause without a 
                                requirement for documentation 
                                of the costs described in 
                                clause (i), except that 
                                reimbursement shall not be 
                                provided under this subclause 
                                for meals or supplements served 
                                to the children of a person 
                                acting as a family or group day 
                                care home provider unless the 
                                children meet the income 
                                eligibility guidelines for free 
                                or reduced price meals under 
                                section 9.
                                    (III) Factors.--Except as 
                                provided in subclause (IV), the 
                                reimbursement factors applied 
                                to a home referred to in 
                                subclause (II) shall be the 
                                factors in effect on July 1, 
                                1996.
                                    (IV) Adjustments.--The 
                                reimbursement factors under 
                                this subparagraph shall be 
                                adjusted on July 1, 1997, and 
                                each July 1 thereafter, to 
                                reflect changes in the Consumer 
                                Price Index for food at home 
                                for the most recent 12-month 
                                period for which the data are 
                                available. The reimbursement 
                                factors under this subparagraph 
                                shall be rounded to the nearest 
                                lower cent increment and based 
                                on the unrounded adjustment in 
                                effect on June 30 of the 
                                preceding school year.
                            (iii) Tier ii family or group day 
                        care homes.--
                                    (I) In general.--
                                            (aa) Factors.--
                                        Except as provided in 
                                        subclause (II), with 
                                        respect to meals or 
                                        supplements served 
                                        under this clause by a 
                                        family or group day 
                                        care home that does not 
                                        meet the criteria set 
                                        forth in clause 
                                        (ii)(I), the 
                                        reimbursement factors 
                                        shall be 90 cents for 
                                        lunches and suppers, 25 
                                        cents for breakfasts, 
                                        and 10 cents for 
                                        supplements.
                                            (bb) Adjustments.--
                                        The factors shall be 
                                        adjusted on July 1, 
                                        1997, and each July 1 
                                        thereafter, to reflect 
                                        changes in the Consumer 
                                        Price Index for food at 
                                        home for the most 
                                        recent 12-month period 
                                        for which the data are 
                                        available. The 
                                        reimbursement factors 
                                        under this item shall 
                                        be rounded down to the 
                                        nearest lower cent 
                                        increment and based on 
                                        the unrounded 
                                        adjustment for the 
                                        preceding 12-month 
                                        period.
                                            (cc) 
                                        Reimbursement.--A 
                                        family or group day 
                                        care home shall be 
                                        provided reimbursement 
                                        factors under this 
                                        subclause without a 
                                        requirement for 
                                        documentation of the 
                                        costs described in 
                                        clause (i), except that 
                                        reimbursement shall not 
                                        be provided under this 
                                        subclause for meals or 
                                        supplements served to 
                                        the children of a 
                                        person acting as a 
                                        family or group day 
                                        care home provider 
                                        unless the children 
                                        meet the income 
                                        eligibility guidelines 
                                        for free or reduced 
                                        price meals under 
                                        section 9.
                                    (II) Other factors.--A 
                                family or group day care home 
                                that does not meet the criteria 
                                set forth in clause (ii)(I) may 
                                elect to be provided 
                                reimbursement factors 
                                determined in accordance with 
                                the following requirements:
                                            (aa) Children 
                                        eligible for free or 
                                        reduced price meals.--
                                        In the case of meals or 
                                        supplements served 
                                        under this subsection 
                                        to children who are 
                                        members of households 
                                        whose incomes meet the 
                                        income eligibility 
                                        guidelines for free or 
                                        reduced price meals 
                                        under section 9, the 
                                        family or group day 
                                        care home shall be 
                                        provided reimbursement 
                                        factors set by the 
                                        Secretary in accordance 
                                        with clause (ii)(III).
                                            (bb) Ineligible 
                                        children.--In the case 
                                        of meals or supplements 
                                        served under this 
                                        subsection to children 
                                        who are members of 
                                        households whose 
                                        incomes do not meet the 
                                        income eligibility 
                                        guidelines, the family 
                                        or group day care home 
                                        shall be provided 
                                        reimbursement factors 
                                        in accordance with 
                                        subclause (I).
                                    (III) Information and 
                                determinations.--
                                            (aa) In general.--
                                        If a family or group 
                                        day care home elects to 
                                        claim the factors 
                                        described in subclause 
                                        (II), the family or 
                                        group day care home 
                                        sponsoring organization 
                                        serving the home shall 
                                        collect the necessary 
                                        income information, as 
                                        determined by the 
                                        Secretary, from any 
                                        parent or other 
                                        caretaker to make the 
                                        determinations 
                                        specified in subclause 
                                        (II) and shall make the 
                                        determinations in 
                                        accordance with rules 
                                        prescribed by the 
                                        Secretary.
                                            (bb) Categorical 
                                        eligibility.--In making 
                                        a determination under 
                                        item (aa), a family or 
                                        group day care home 
                                        sponsoring organization 
                                        may consider a child 
                                        participating in or 
                                        subsidized under, or a 
                                        child with a parent 
                                        participating in or 
                                        subsidized under, a 
                                        federally or State 
                                        supported child care or 
                                        other benefit program 
                                        with an income 
                                        eligibility limit that 
                                        does not exceed the 
                                        eligibility standard 
                                        for free or reduced 
                                        price meals under 
                                        section 9 to be a child 
                                        who is a member of a 
                                        household whose income 
                                        meets the income 
                                        eligibility guidelines 
                                        under section 9.
                                            (cc) Factors for 
                                        children only.--A 
                                        family or group day 
                                        care home may elect to 
                                        receive the 
                                        reimbursement factors 
                                        prescribed under clause 
                                        (ii)(III) solely for 
                                        the children 
                                        participating in a 
                                        program referred to in 
                                        item (bb) if the home 
                                        elects not to have 
                                        income statements 
                                        collected from parents 
                                        or other caretakers.
                                    (IV) Simplified meal 
                                counting and reporting 
                                procedures.--The Secretary 
                                shall prescribe simplified meal 
                                counting and reporting 
                                procedures for use by a family 
                                or group day care home that 
                                elects to claim the factors 
                                under subclause (II) and by a 
                                family or group day care home 
                                sponsoring organization that 
                                sponsors the home. The 
                                procedures the Secretary 
                                prescribes may include 1 or 
                                more of the following:
                                            (aa) Setting an 
                                        annual percentage for 
                                        each home of the number 
                                        of meals served that 
                                        are to be reimbursed in 
                                        accordance with the 
                                        reimbursement factors 
                                        prescribed under clause 
                                        (ii)(III) and an annual 
                                        percentage of the 
                                        number of meals served 
                                        that are to be 
                                        reimbursed in 
                                        accordance with the 
                                        reimbursement factors 
                                        prescribed under 
                                        subclause (I), based on 
                                        the family income of 
                                        children enrolled in 
                                        the home in a specified 
                                        month or other period.
                                            (bb) Placing a home 
                                        into 1 of 2 or more 
                                        reimbursement 
                                        categories annually 
                                        based on the percentage 
                                        of children in the home 
                                        whose households have 
                                        incomes that meet the 
                                        income eligibility 
                                        guidelines under 
                                        section 9, with each 
                                        such reimbursement 
                                        category carrying a set 
                                        of reimbursement 
                                        factors such as the 
                                        factors prescribed 
                                        under clause (ii)(III) 
                                        or subclause (I) or 
                                        factors established 
                                        within the range of 
                                        factors prescribed 
                                        under clause (ii)(III) 
                                        and subclause (I).
                                            (cc) Such other 
                                        simplified procedures 
                                        as the Secretary may 
                                        prescribe.
                                    (V) Minimum verification 
                                requirements.--The Secretary 
                                may establish any necessary 
                                minimum verification 
                                requirements.
    (B) Family or group day care home sponsoring organizations 
shall also receive reimbursement for their administrative 
expenses in amounts not exceeding the maximum allowable levels 
prescribed by the Secretary. Such levels shall be adjusted July 
1 of each year to reflect changes in the Consumer Price Index 
for all items for the most recent 12-month period for which 
such data are available. [The maximum allowable levels for 
administrative expense payments, as in effect as of the date of 
the enactment of this subparagraph, shall be adjusted by the 
Secretary so as to achieve a 10 percent reduction in the total 
amount of reimbursement provided to institutions for such 
administrative expenses. In making the reduction required by 
the preceding sentence, the Secretary shall increase the 
economy of scale factors used to distinguish institutions that 
sponsor a greater number of family or group day care homes from 
those that sponsor a lesser number of such homes.]
    (C)[(i)] Reimbursement for administrative expenses shall 
also include start-up funds to finance the administrative 
expenses for such institutions to initiate successful operation 
under the program and expansion funds to finance the 
administrative expenses for such institutions to expand into 
low-income or rural areas. Institutions that have received 
start-up funds may also apply at a later date for expansion 
funds. Such start-up funds and expansion funds shall be in 
addition to other reimbursement to such institutions for 
administrative expenses. Start-up funds and expansion funds 
shall be payable to enable institutions satisfying the criteria 
of subsection (d) of this section, and any other standards 
prescribed by the Secretary, to develop an application for 
participation in the program as a family or group day care home 
sponsoring organization or to implement the program upon 
approval of the application. Such start-up funds and expansion 
funds shall be payable in accordance with the procedures 
prescribed by the Secretary. The amount of start-up funds and 
expansion funds payable to an institution shall be not less 
than the institution's anticipated reimbursement for 
administrative expenses under the program for one month and not 
more than the institution's anticipated reimbursement for 
administrative expenses under the program for two months.
    [(ii) Funds for administrative expenses may be used by 
family or group day care home sponsoring organizations to 
conduct outreach and recruitment to unlicensed family or group 
day care homes so that the day care homes may become licensed.]
                    (D) Grants to states to provide assistance 
                to family or group day care homes.--
                            (i) In general.--
                                    (I) Reservation.--From 
                                amounts made available to carry 
                                out this section, the Secretary 
                                shall reserve $5,000,000 of the 
                                amount made available for 
                                fiscal year 1997.
                                    (II) Purpose.--The 
                                Secretary shall use the funds 
                                made available under subclause 
                                (I) to provide grants to States 
                                for the purpose of providing--
                                            (aa) assistance, 
                                        including grants, to 
                                        family and day care 
                                        home sponsoring 
                                        organizations and other 
                                        appropriate 
                                        organizations, in 
                                        securing and providing 
                                        training, materials, 
                                        automated data 
                                        processing assistance, 
                                        and other assistance 
                                        for the staff of the 
                                        sponsoring 
                                        organizations; and
                                            (bb) training and 
                                        other assistance to 
                                        family and group day 
                                        care homes in the 
                                        implementation of the 
                                        amendment to 
                                        subparagraph (A) made 
                                        by section 3408(e)(1) 
                                        of the Personal 
                                        Responsibility and Work 
                                        Opportunity Act of 
                                        1996.
                            (ii) Allocation.--The Secretary 
                        shall allocate from the funds reserved 
                        under clause (i)(I)--
                                    (I) $30,000 in base funding 
                                to each State; and
                                    (II) any remaining amount 
                                among the States, based on the 
                                number of family day care homes 
                                participating in the program in 
                                a State during fiscal year 1995 
                                as a percentage of the number 
                                of all family day care homes 
                                participating in the program 
                                during fiscal year 1995.
                            (iii) Retention of funds.--Of the 
                        amount of funds made available to a 
                        State for fiscal year 1997 under clause 
                        (i), the State may retain not to exceed 
                        30 percent of the amount to carry out 
                        this subparagraph.
                            (iv) Additional payments.--Any 
                        payments received under this 
                        subparagraph shall be in addition to 
                        payments that a State receives under 
                        subparagraph (A).
                    (E) Provision of data to family or group 
                day care home sponsoring organizations.--
                            (i) Census data.--The Secretary 
                        shall provide to each State agency 
                        administering a child care food program 
                        under this section data from the most 
                        recent decennial census survey or other 
                        appropriate census survey for which the 
                        data are available showing which areas 
                        in the State meet the requirements of 
                        subparagraph (A)(ii)(I)(aa). The State 
                        agency shall provide the data to family 
                        or group day care home sponsoring 
                        organizations located in the State.
                            (ii) School data.--
                                    (I) In general.--A State 
                                agency administering the school 
                                lunch program under this Act or 
                                the school breakfast program 
                                under the Child Nutrition Act 
                                of 1966 (42 U.S.C. 1771 et 
                                seq.) shall provide to approved 
                                family or group day care home 
                                sponsoring organizations a list 
                                of schools serving elementary 
                                school children in the State in 
                                which not less than \1/2\ of 
                                the children enrolled are 
                                certified to receive free or 
                                reduced price meals. The State 
                                agency shall collect the data 
                                necessary to create the list 
                                annually and provide the list 
                                on a timely basis to any 
                                approved family or group day 
                                care home sponsoring 
                                organization that requests the 
                                list.
                                    (II) Use of data from 
                                preceding school year.--In 
                                determining for a fiscal year 
                                or other annual period whether 
                                a home qualifies as a tier I 
                                family or group day care home 
                                under subparagraph (A)(ii)(I), 
                                the State agency administering 
                                the program under this section, 
                                and a family or group day care 
                                home sponsoring organization, 
                                shall use the most current 
                                available data at the time of 
                                the determination.
                            (iii) Duration of determination.--
                        For purposes of this section, a 
                        determination that a family or group 
                        day care home is located in an area 
                        that qualifies the home as a tier I 
                        family or group day care home (as the 
                        term is defined in subparagraph 
                        (A)(ii)(I)), shall be in effect for 3 
                        years (unless the determination is made 
                        on the basis of census data, in which 
                        case the determination shall remain in 
                        effect until more recent census data 
                        are available) unless the State agency 
                        determines that the area in which the 
                        home is located no longer qualifies the 
                        home as a tier I family or group day 
                        care home.
    (4) By the first day of each month of operation, the State 
[shall] may provide advance payments for the month to each 
approved institution in an amount that reflects the full level 
of valid claims customarily received from such institution for 
one month's operation. In the case of a newly participating 
institution, the amount of the advance shall reflect the 
State's best estimate of the level of valid claims such 
institutions will submit. If the State has reason to believe 
that an institution will not be able to submit a valid claim 
covering the period for which such an advance has been made, 
the subsequent month's advance payment shall be withheld until 
the State receives a valid claim. Payments advanced to 
institutions that are not subsequently deducted from a valid 
claim for reimbursement shall be repaid upon demand by the 
State. Any prior payment that is under dispute may be 
subtracted from an advance payment.
    (g)(1)(A) Meals served by institutions participating in the 
program under this section shall consist of a combination of 
foods that meet minimum nutritional requirements prescribed by 
the Secretary on the basis of tested nutritional research. 
[Such meals shall be served free to needy children.]
    (B) The Secretary shall provide technical assistance to 
those institutions participating in the program under this 
section to assist the institutions and family or group day care 
home sponsoring organizations in complying with the nutritional 
requirements prescribed by the Secretary pursuant to 
subparagraph (A). [The Secretary shall provide additional 
technical assistance to those institutions and family or group 
day care home sponsoring organizations that are having 
difficulty maintaining compliance with the requirements.]
    (2) No physical segregation or other discrimination against 
any child shall be made because of his or her inability to pay, 
nor shall there be any overt identification of any such child 
by special tokens or tickets, different meals or meal service, 
announced or published lists of names, or other means.
          * * * * * * *
    [(k)(1) States participating in the program under this 
section shall provide sufficient training, technical 
assistance, and monitoring to facilitate expansion and 
effective operation of the program, and shall take affirmative 
action to expand the availability of benefits under this 
section. Such action, at a minimum, shall include annual 
notification to each nonparticipating institution or family or 
group day care home within the State that is licensed, 
approved, or registered, or that receives funds under title XX 
of the Social Security Act, of the availability of the program, 
the requirements for program participation, and the application 
procedures to be followed in the program. The list of 
institutions so notified each year shall be available to the 
public upon request. The Secretary shall assist the States in 
developing plans to fulfill the requirements of this 
subsection.
    [(2) The Secretary shall conduct demonstration projects to 
test innovative approaches to remove or reduce barriers to 
participation in the program established under this section 
regarding family or group day care homes that operate in low-
income areas or that primarily serve low-income children. As 
part of such demonstration projects, the Secretary may provide 
grants to, or otherwise modify administrative reimbursement 
rates for, family or group day care home sponsoring 
organizations.
    [(3) The Secretary and the States shall provide training 
and technical assistance to assist family and group day care 
home sponsoring organizations in reaching low-income children.
    [(4) The Secretary shall instruct States to provide, 
through sponsoring organizations, information and training 
concerning child health and development to family or group day 
care homes participating in the program.]
    (k) Training and Technical Assistance.--A State 
participating in the program established under this section 
shall provide sufficient training, technical assistance, and 
monitoring to facilitate effective operation of the program. 
The Secretary shall assist the State in developing plans to 
fulfill the requirements of this subsection.
          * * * * * * *
    (m) States and institutions participating in the program 
under this section shall keep such accounts and records as may 
be necessary to enable the Secretary to determine whether there 
has been compliance with the requirements of this section. Such 
accounts and records shall be available [at all times] at any 
reasonable time for inspection and audit by representatives of 
the Secretary, the Comptroller General of the United States, 
and appropriate State representatives and shall be preserved 
for such period of time, not in excess of five years, as the 
Secretary determines necessary.
          * * * * * * *
    (o)(1) For purposes of this section, [adult day care 
centers] day care centers for chronically impaired disabled 
persons shall be considered eligible institutions for 
reimbursement for meals or supplements served [to persons 60 
years of age or older or] to chronically impaired disabled 
persons, including victims of Alzheimer's disease and related 
disorders with neurological and organic brain dysfunction. 
Reimbursement provided to such institutions for such purposes 
shall improve the quality of meals or level of services 
provided or increase participation in the program. Lunches 
served by each such institution for which reimbursement is 
claimed under this section shall provide, on the average, 
approximately \1/3\ of the daily recommended dietary allowance 
established by the Food and Nutrition Board of the National 
Research Council of the National Academy of Sciences. Such 
institutions shall make reasonable efforts to serve meals that 
meet the special dietary requirements of participants, 
including efforts to serve foods in forms palatable to 
participants.
    (2) For purposes of this subsection--
            (A) the term ``[adult day care center] day care 
        center for chronically impaired disabled persons'' 
        means any public agency or private nonprofit 
        organization, or any proprietary title XIX or title XX 
        center, which--
                    (i) is licensed or approved by Federal, 
                State, or local authorities to provide [adult] 
                day care services to chronically impaired 
                disabled [adults or persons 60 years of age or 
                older] persons in a group setting outside their 
                homes, or a group living arrangement, on a less 
                than 24-hour basis; and
                    (ii) provides for such care and services 
                directly or under arrangements made by the 
                agency or organization whereby the agency or 
                organization maintains professional management 
                responsibility for all such services; and
            (B) the term ``proprietary title XIX or title XX 
        center'' means any private, for-profit center providing 
        [adult day care services] day care services for 
        chronically impaired disabled persons for which it 
        receives compensation from amounts granted to the 
        States under title XIX or XX of the Social Security Act 
        and which title XIX or title XX beneficiaries were not 
        less than 25 percent of enrolled eligible participants 
        in a calendar month preceding initial application or 
        annual reapplication for program participation.
          * * * * * * *
    [(q)(1) The Secretary shall provide State agencies with 
basic information concerning the importance and benefits of the 
special supplemental nutrition program for women, infants, and 
children authorized under section 17 of the Child Nutrition Act 
of 1966 (42 U.S.C. 1786).
    [(2) The State agency shall--
            [(A) provide each child care institution 
        participating in the program established under this 
        section, other than institutions providing day care 
        outside school hours for schoolchildren, with materials 
        that include--
                    [(i) a basic explanation of the benefits 
                and importance of the special supplemental 
                nutrition program for women, infants, and 
                children;
                    [(ii) the maximum income limits, according 
                to family size, applicable to children up to 
                age 5 in the State under the special 
                supplemental nutrition program for women, 
                infants, and children; and
                    [(iii) a listing of the addresses and phone 
                numbers of offices at which parents may apply;
            [(B) annually provide the institutions with an 
        update of the information on income limits described in 
        subparagraph (A)(ii); and
            [(C) ensure that, at least once a year, the 
        institutions to which subparagraph (A) applies provide 
        written information to parents that includes--
                    [(i) basic information on the benefits 
                provided under the special supplemental 
                nutrition program for women, infants, and 
                children;
                    [(ii) information on the maximum income 
                limits, according to family size, applicable to 
                the program; and
                    [(iii) information on where parents may 
                apply to participate in the program.]
          * * * * * * *

SEC. 17B. HOMELESS CHILDREN NUTRITION PROGRAM.

    (a)  * * *
          * * * * * * *
    (d) Funding Priorities.--From the amount described in 
subsection (g), the Secretary shall provide funding for 
projects carried out under this section for a particular fiscal 
year (referred to in this subsection as the ``current fiscal 
year'') in the following order of priority, to the maximum 
extent practicable:
            (1) The Secretary shall first provide the funding 
        to entities and organizations, each of which--
                    (A) received funding under this section or 
                section [18(c)] 18(b) (as in effect on the day 
                before the date of enactment of this section) 
                to carry out a project for the preceding fiscal 
                year; and
          * * * * * * *
    (f) Plan To Allow Participation in the Child [and Adult] 
Care Food Program.--Not later than September 30, 1996, the 
Secretary shall submit to the Committee on Education and Labor 
of the House of Representatives and the Committee on 
Agriculture, Nutrition, and Forestry of the Senate a plan 
describing--
            (1) how emergency shelters and homeless children 
        who have not attained the age of 6 and who are served 
        by the shelters under the program might participate in 
        the child [and adult] care food program authorized 
        under section 17 by September 30, 1998; and
            (2) the advantages and disadvantages of the action 
        described in paragraph (1).
          * * * * * * *

                             PILOT PROJECTS

    Sec. 18. [(a) The Secretary may conduct pilot projects in 
not more than three States in which the Secretary is currently 
administering programs to evaluate the effects of the Secretary 
contracting with private profit and nonprofit organizations to 
act as a State agency under this Act and the Child Nutrition 
Act of 1966 for schools, institutions, or service institutions 
referred to in section 10 of this Act and section 5 of the 
Child Nutrition Act of 1966.]
    [(b)] (a)(1) Upon request to the Secretary, any school 
district that on January 1, 1987, was receiving all cash 
payments or all commodity letters of credit in lieu of 
entitlement commodities for its school lunch program shall 
receive all cash payments or all commodity letters of credit in 
lieu of entitlement commodities for its school lunch program 
beginning July 1, 1987. The Secretary, directly or through 
contract, shall administer the project under this subsection.
    (2) Any school district that elects under paragraph (1) to 
receive all cash payments or all commodity letters of credit in 
lieu of entitlement commodities for its school lunch program 
shall receive bonus commodities in the same manner as if such 
school district was receiving all entitlement commodities for 
its school lunch program.
    [(c)] (b)(1) Using the funds provided under paragraph (7), 
the Secretary shall conduct at least 1 demonstration project 
through a participating entity during each of fiscal years 1995 
through 1998 that is designed to provide food and nutrition 
services throughout the year to--
            (A)  * * *
          * * * * * * *
    [(d)] (c)(1)(A) The Secretary shall carry out a pilot 
program for purposes of identifying alternatives to--
            (i) daily counting by category of meals provided by 
        school lunch programs under this Act; and
          * * * * * * *
    [(3)(A) The Secretary shall carry out a pilot program under 
which a limited number of schools participating in the special 
assistance program under section 11(a)(1) that have universal 
free school lunch programs shall have the option of determining 
the number of free meals, reduced price meals, and paid meals 
provided daily under the school lunch program operated by such 
school by applying percentages determined under subparagraph 
(B) to the daily total student meal count.
    [(B) The percentages determined under this subparagraph 
shall be established on the basis of the master roster of 
students enrolled in the school concerned, which--
            [(i) shall include a notation as to the eligibility 
        status of each student with respect to the school lunch 
        program; and
            [(ii) shall be updated not later than September 30 
        of each year.
    [(C) For the purposes of this paragraph, a universal free 
school lunch program is a program under which the school 
operating the program elects to serve all children in that 
school free lunches under the school lunch program during any 
period of 3 successive years and pays, from sources other than 
Federal funds, for the costs of serving such lunches which are 
in excess of the value of assistance received under this Act 
with respect to the number of lunches served during that 
period.]
    [(4)] (3) In addition to the pilot projects described in 
this subsection, the Secretary may conduct other pilot projects 
to test alternative counting and claiming procedures.
    [(5)] (4) Each pilot program carried out under this 
subsection shall be evaluated by the Secretary after it has 
been in operation for 3 years.
    [(e)] (d)(1)[(A)] The Secretary [shall] may establish a 
demonstration program to provide grants to eligible 
institutions or schools to provide meals or supplements to 
adolescents participating in educational, recreational, or 
other programs and activities provided outside of school hours.
    [(B) The amount of a grant under subparagraph (A) shall be 
equal to the amount necessary to provide meals or supplements 
described in such subparagraph and shall be determined in 
accordance with reimbursement payment rates for meals and 
supplements under the child and adult care food program under 
section 17.]
    (2) The Secretary may not provide a grant under paragraph 
(1) to an eligible institution or school unless the institution 
or school submits to the Secretary an application containing 
such information as the Secretary may reasonably require.
    (3) The Secretary may not provide a grant under paragraph 
(1) to an eligible institution or school unless the institution 
or school agrees that the institution or school will--
            (A) use amounts from the grant to provide meals or 
        supplements under educational, recreational, or other 
        programs and activities for adolescents outside of 
        school hours, and the programs and activities are 
        carried out in geographic areas in which there are high 
        rates of poverty, violence, or drug and alcohol abuse 
        among school-aged youths; and
            (B) use the same meal patterns as meal patterns 
        required under the child [and adult] care food program 
        under section 17.
    (4) Determinations with regard to eligibility for free and 
reduced price meals and supplements provided under programs and 
activities under this subsection shall be made in accordance 
with the income eligibility guidelines for free and reduced 
price lunches under section 9.
    [(5)(A) Except as provided in subparagraph (B), the 
Secretary shall expend to carry out this subsection, from 
amounts appropriated for purposes of carrying out section 17, 
$325,000 for fiscal year 1995, $475,000 for each of fiscal 
years 1996 and 1997, and $525,000 for fiscal year 1998. In 
addition to amounts described in the preceding sentence, the 
Secretary shall expend any additional amounts in any fiscal 
year as may be provided in advance in appropriations Acts.
    [(B) The Secretary may expend less than the amount required 
under subparagraph (A) if there is an insufficient number of 
suitable applicants.]
            (5) Authorization of appropriations.--There are 
        authorized to be appropriated to carry out this 
        subsection such sums as are necessary for each of 
        fiscal years 1997 and 1998.
    (6) As used in this subsection:
            (A) The term ``adolescent'' means a child who has 
        attained the age of 13 but has not attained the age of 
        19.
            (B) The term ``eligible institution or school'' 
        means--
                    (i) an institution, as the term is defined 
                in section 17; or
                    (ii) an elementary or secondary school 
                participating in the school lunch program under 
                this Act.
            (C) The term ``outside of school hours'' means 
        after-school hours, weekends, or holidays during the 
        regular school year.
    [(f)] (e)(1) Subject to the availability of appropriations 
to carry out this subsection, the Secretary shall establish 
pilot projects in at least 25 school districts under which the 
milk offered by schools meets the fortification requirements of 
paragraph (3) for lowfat, skim, and other forms of fluid milk.
          * * * * * * *
    [(g)(1) The Secretary is authorized to establish a pilot 
project to assist schools participating in the school lunch 
program established under this Act, and the school breakfast 
program established under section 4 of the Child Nutrition Act 
of 1966 (42 U.S.C. 1773), to offer participating students 
additional choices of fruits, vegetables, legumes, cereals, and 
grain-based products (including, subject to paragraph (6), 
organically produced agricultural commodities and products) 
(collectively referred to in this subsection as ``qualified 
products'').
    [(2) The Secretary shall establish procedures under which 
schools may apply to participate in the pilot project. To the 
maximum extent practicable, the Secretary shall select 
qualified schools that apply from each State.
    [(3) The Secretary may provide a priority for receiving 
funds under this subsection to--
            [(A) schools that are located in low-income areas 
        (as defined by the Secretary); and
            [(B) schools that rarely offer 3 or more choices of 
        qualified products per meal.
    [(4) On request, the Secretary shall provide information to 
the Committee on Education and Labor, and the Committee on 
Agriculture, of the House of Representatives and the Committee 
on Agriculture, Nutrition, and Forestry of the Senate on the 
impact of the pilot project on participating schools, 
including--
            [(A) the extent to which participating children 
        increased consumption of qualified products;
            [(B) the extent to which increased consumption of 
        qualified products offered under the pilot project has 
        contributed to a reduction in fat intake in the school 
        breakfast and school lunch programs;
            [(C) the desirability of requiring that--
                    [(i) each school participating in the 
                school breakfast program increase the number of 
                choices of qualified products offered per meal 
                to at least 2 choices;
                    [(ii) each school participating in the 
                school lunch program increase the number of 
                choices of qualified products offered per meal; 
                and
                    [(iii) the Secretary provide additional 
                Federal reimbursements to assist schools in 
                complying with clauses (i) and (ii);
            [(D) the views of school food service authorities 
        on the pilot project; and
            [(E) any increase or reduction in costs to the 
        schools in offering the additional qualified products.
    [(5) Subject to the availability of funds appropriated to 
carry out this subsection, the Secretary shall use not more 
than $5,000,000 for each of fiscal years 1995 through 1997 to 
carry out this subsection.
    [(6) For purposes of this subsection, qualified products 
shall include organically produced agricultural commodities and 
products beginning on the date the Secretary establishes an 
organic certification program for producers and handlers of 
agricultural products in accordance with the Organic Foods 
Production Act of 1990 (7 U.S.C. 6501 et seq.).
    [(h)(1) The Secretary is authorized to establish a pilot 
project to assist schools participating in the school lunch 
program established under this Act, and the school breakfast 
program established under section 4 of the Child Nutrition Act 
of 1966 (42 U.S.C. 1773), to offer participating students 
additional choices of lowfat dairy products (including lactose-
free dairy products) and lean meat and poultry products 
(including, subject to paragraph (6), organically produced 
agricultural commodities and products) (collectively referred 
to in this subsection as ``qualified products'').
    [(2) The Secretary shall establish procedures under which 
schools may apply to participate in the pilot project. To the 
maximum extent practicable, the Secretary shall select 
qualified schools that apply from each State.
    [(3) The Secretary may provide a priority for receiving 
funds under this subsection to--
            [(A) schools that are located in low-income areas 
        (as defined by the Secretary); and
            [(B) schools that rarely offer 3 or more choices of 
        qualified products per meal.
    [(4) On request, the Secretary shall provide information to 
the Committee on Education and Labor, and the Committee on 
Agriculture, of the House of Representatives and the Committee 
on Agriculture, Nutrition, and Forestry of the Senate on the 
impact of the pilot project on participating schools, 
including--
            [(A) the extent to which participating children 
        increased consumption of qualified products;
            [(B) the extent to which increased consumption of 
        qualified products offered under the pilot project has 
        contributed to a reduction in fat intake in the school 
        breakfast and school lunch programs;
            [(C) the desirability of requiring that--
                    [(i) each school participating in the 
                school breakfast program increase the number of 
                choices of qualified products offered per meal 
                to at least 2 choices;
                    [(ii) each school participating in the 
                school lunch program increase the number of 
                choices of qualified products offered per meal; 
                and
                    [(iii) the Secretary provide additional 
                Federal reimbursements to assist schools in 
                complying with clauses (i) and (ii);
            [(D) the views of the school food service 
        authorities on the pilot project; and
            [(E) any increase or reduction in costs to the 
        schools in offering the additional qualified products.
    [(5) Subject to the availability of funds appropriated to 
carry out this subsection, the Secretary shall use not more 
than $5,000,000 for each of fiscal years 1995 through 1997 to 
carry out this subsection.
    [(6) For purposes of this subsection, qualified products 
shall include organically produced agricultural commodities and 
products beginning on the date the Secretary establishes an 
organic certification program for producers and handlers of 
agricultural products in accordance with the Organic Foods 
Production Act of 1990 (7 U.S.C. 6501 et seq.).
    [(i)(1) Subject to the availability of advance 
appropriations under paragraph (8), the Secretary shall make 
grants to a limited number of schools to conduct pilot projects 
in 2 or more States approved by the Secretary to--
            [(A) reduce paperwork;
            [(B) reduce application and meal counting 
        requirements; and
            [(C) make changes that will increase participation 
        in the school lunch and school breakfast programs.
    [(2)(A) Except as provided in subparagraph (B), the 
Secretary may waive the requirements of this Act and the Child 
Nutrition Act of 1966 (42 U.S.C. 1771 et seq.) relating to 
counting of meals, applications for eligibility, and related 
requirements that would preclude the Secretary from making a 
grant to conduct a pilot project under paragraph (1).
    [(B) The Secretary may not waive a requirement under 
subparagraph (A) if the waiver would prevent a program 
participant, a potential program recipient, or a school from 
receiving all of the benefits and protections of this Act, the 
Child Nutrition Act of 1966, or a Federal statute or regulation 
that protects an individual constitutional right or a statutory 
civil right.
    [(C) No child otherwise eligible for free or reduced price 
meals under section 9 or under section 4 of the Child Nutrition 
Act of 1966 (42 U.S.C. 1773) shall be required to pay more 
under a program carried out under this subsection for such a 
meal than the child would otherwise pay under section 9 or 
under section 4 of the Child Nutrition Act of 1966 (42 U.S.C. 
1771 et seq.), respectively.
    [(3) To be eligible to receive a grant to conduct a pilot 
project under this subsection, a school shall--
            [(A) submit an application to the Secretary at such 
        time, in such manner, and accompanied by such 
        information as the Secretary may reasonably require, 
        including, at a minimum, information--
                    [(i) demonstrating that the program carried 
                out under the project differs from programs 
                carried out under subparagraph (C), (D), or (E) 
                of section 11(a)(1);
                    [(ii) demonstrating that at least 40 
                percent of the students participating in the 
                school lunch program at the school are eligible 
                for free or reduced price meals;
                    [(iii) demonstrating that the school 
                operates both a school lunch program and a 
                school breakfast program;
                    [(iv) describing the funding, if any that 
                the school will receive from non-Federal 
                sources to carry out the pilot project;
                    [(v) describing and justifying the 
                additional amount, over the most recent prior 
                year reimbursement amount received under the 
                school lunch program and the school breakfast 
                program (adjusted for inflation and 
                fluctuations in enrollment), that the school 
                needs from the Federal government to conduct 
                the pilot; and
                    [(vi) describing the policy of the school 
                on a la carte and competitive foods;
            [(B) not have a history of violations of this Act 
        or the Child Nutrition Act of 1966 (42 U.S.C. 1771 et 
        seq.); and
            [(C) meet any other requirement that the Secretary 
        may reasonably require.
    [(4) To the extent practicable, the Secretary shall select 
schools to participate in the pilot program under this 
subsection in a manner that will provide for an equitable 
distribution among the following types of schools:
            [(A) Urban and rural schools.
            [(B) Elementary, middle, and high schools.
            [(C) Schools of varying income levels.
    [(5)(A) Except as provided in subparagraph (B), a school 
conducting a pilot project under this subsection shall receive 
commodities in an amount equal to the amount the school 
received in the prior year under the school lunch program under 
this Act and under the school breakfast program under section 4 
of the Child Nutrition Act of 1966, adjusted for inflation and 
fluctuations in enrollment.
    [(B) Commodities required for the pilot project in excess 
of the amount of commodities received by the school in the 
prior year under the school lunch program and the school 
breakfast program may be funded from amounts appropriated to 
carry out this section.
    [(6)(A) Except as provided in subparagraph (B), a school 
conducting a pilot project under this subsection shall receive 
a total Federal reimbursement under the school lunch program 
and school breakfast program in an amount equal to the total 
Federal reimbursement for the school in the prior year under 
each such program (adjusted for inflation and fluctuations in 
enrollment).
    [(B) Funds required for the pilot project in excess of the 
level of reimbursement received by the school in the prior year 
(adjusted for inflation and fluctuations in enrollment) may be 
taken from any non-Federal source or from amounts appropriated 
to carry out this subsection. If no appropriations are made for 
the pilot projects, schools may not conduct the pilot projects.
    [(7)(A) The Secretary shall require each school conducting 
a pilot project under this subsection to submit to the 
Secretary documentation sufficient for the Secretary, to the 
extent practicable, to--
            [(i) determine the effect that participation by 
        schools in the pilot projects has on the rate of 
        student participation in the school lunch program and 
        the school breakfast program, in total and by various 
        income groups;
            [(ii) compare the quality of meals served under the 
        pilot project to the quality of meals served under the 
        school lunch program and the school breakfast program 
        during the school year immediately preceding 
        participation in the pilot project;
            [(iii) summarize the views of students, parents, 
        and administrators with respect to the pilot project;
            [(iv) compare the amount of administrative costs 
        under the pilot project to the amount of administrative 
        costs under the school lunch program and the school 
        breakfast program during the school year immediately 
        preceding participation in the pilot project;
            [(v) determine the reduction in paperwork under the 
        pilot project from the amount of paperwork under the 
        school lunch and school breakfast programs at the 
        school; and
            [(vi) determine the effect of participation in the 
        pilot project on sales of, and school policy regarding, 
        a la carte and competitive foods.
    [(B) Not later than January 31, 1998, the Secretary shall 
submit to the Committee on Education and Labor of the House of 
Representatives and the Committee on Agriculture, Nutrition, 
and Forestry of the Senate a report containing--
            [(i) a description of the pilot projects approved 
        by the Secretary under this subsection;
            [(ii) a compilation of the information received by 
        the Secretary under paragraph (1) as of this date from 
        each school conducting a pilot project under this 
        subsection; and
            [(iii) an evaluation of the program by the 
        Secretary.
    [(8) There are authorized to be appropriated to carry out 
this subsection $9,000,000 for each fiscal year during the 
period beginning October 1, 1995, and ending July 31, 1998.

[SEC. 19. REDUCTION OF PAPERWORK.

    [(a) In General.--In carrying out functions under this Act 
and the Child Nutrition Act of 1966, the Secretary shall, to 
the maximum extent possible, reduce the paperwork required of 
State and local educational agencies, schools, other agencies 
participating in nutrition programs assisted under such Acts, 
and families of children participating in the programs, in 
connection with such participation.
    [(b) Consultation; Public Comment.--In carrying out the 
requirements of subsections (a), the Secretary shall--
            [(1) consult with State and local administrators of 
        programs assisted under this Act or the Child Nutrition 
        Act of 1966;
            [(2) convene at least 1 meeting of the 
        administrators described in paragraph (1) not later 
        than the expiration of the 10-month period beginning on 
        the date of the enactment of the Child Nutrition and 
        WIC Reauthorization Act of 1989; and
            [(3) obtain suggestions from members of the public 
        with respect to reduction of paperwork.
    [(c) Report.--Before the expiration of the 1-year period 
beginning on the date of the enactment of the Child Nutrition 
and WIC Reauthorization Act of 1989, the Secretary shall report 
to the Congress concerning the extent to which a reduction has 
occurred in the amount of paperwork described in subsection 
(a). Such report shall be developed in consultation with the 
administrators described in subsection (b)(1).]
          * * * * * * *

[SEC. 23. INFORMATION ON INCOME ELIGIBILITY.

    [(a) Information To Be Provided.--In the case of each 
program established under this Act and the Child Nutrition Act 
of 1966, the Secretary shall provide to each appropriate State 
agency--
            [(1) information concerning what types of income 
        are counted in determining the eligibility of children 
        to receive free or reduced price meals under the 
        program in which such State, State agency, local 
        agency, or other entity is participating, particularly 
        with respect to how net self-employment income is 
        determined for family day care providers participating 
        in the child care food program (including the treatment 
        of reimbursements provided under this section); and
            [(2) information concerning the consideration of 
        applications for free or reduced price meals from 
        households in which the head of the household is less 
        than 21 years old.
    [(b) Time for Provision of Information.--The Secretary 
shall provide the information required by subsection (a) before 
the expiration of the 60-day period beginning on the date of 
the enactment of the Child Nutrition and WIC Reauthorization 
Act of 1989 and shall as necessary provide revisions of such 
information.
    [(c) Form Simplification.--Not later than July 1, 1990, the 
Secretary shall--
            [(1) review the model application forms for 
        programs under this Act and programs under the Child 
        Nutrition Act of 1966; and
            [(2) simplify the format and instructions for such 
        forms so that the forms are easily understandable by 
        the individuals who must complete them.''.

[SEC. 24. NUTRITION GUIDANCE FOR CHILD NUTRITION PROGRAMS.

    [(a) Nutrition Guidance Publication.--
            [(1) Development.--The Secretary of Agriculture and 
        the Secretary of Health and Human Services shall 
        jointly develop and approve a publication to be 
        entitled ``Nutrition Guidance for Child Nutrition 
        Programs'' (hereafter in this section referred to as 
        the ``publication''). The Secretary shall develop the 
        publication as required by the preceding sentence 
        before the expiration of the 2-year period beginning on 
        the date of the enactment of the Child Nutrition and 
        WIC Reauthorization Act of 1989.
            [(2) Time for distribution.--Before the expiration 
        of the 6-month period beginning on the date that the 
        development of the publication is completed, the 
        Secretary shall distribute the publication to school 
        food service authorities and institutions and 
        organizations participating in covered programs.
    [(b) Revision of Menu Planning Guides.--The Secretary 
shall, as necessary, revise the menu planning guides for each 
covered program to include recommendations for the 
implementation of nutrition guidance described in the 
publication.
    [(c) Application of Nutrition Guidance to Meal Programs.--
In carrying out any covered program, school food authorities 
and other organizations and institutions participating in such 
program shall apply the nutrition guidance described in the 
publication when preparing meals and meal supplements served 
under such program.
    [(d) Implementation.--In carrying out covered programs, the 
Secretary shall ensure that meals and meal supplements served 
under such programs are consistent with the nutrition guidance 
described in the publication.
    [(e) Revision of Publication.--The Secretary and the 
Secretary of Health and Human Services may jointly update and 
approve the publication as warranted by scientific evidence.
    [(f) Covered Programs.--For the purposes of this section, 
the term ``covered program'' includes--
            [(1) the school lunch program under this Act;
            [(2) the summer food service program for children 
        under section 13;
            [(3) the child care food program under section 17; 
        and
            [(4) the school breakfast program under section 4 
        of the Child Nutrition Act of 1966.]

SEC. 25. DUTIES OF THE SECRETARY RELATING TO NONPROCUREMENT DEBARMENT.

    (a)  * * *
    (b) Definitions.--As used in this section:
            (1) Child nutrition program.--The term ``child 
        nutrition program'' means--
                    (A) the school lunch program established 
                under this Act;
                    (B) the summer food service program for 
                children established under section 13;
                    (C) the child [and adult] care food program 
                established under section 17;
          * * * * * * *

[SEC. 26. INFORMATION CLEARINGHOUSE.

    [(a) In General.--The Secretary shall enter into a contract 
with a nongovernmental organization described in subsection (b) 
to establish and maintain a clearinghouse to provide 
information to nongovernmental groups located throughout the 
United States that assist low-income individuals or communities 
regarding food assistance, self-help activities to aid 
individuals in becoming self-reliant, and other activities that 
empower low-income individuals or communities to improve the 
lives of low-income individuals and reduce reliance on Federal, 
State, or local governmental agencies for food or other 
assistance.
    [(b) Nongovernmental Organization.--The nongovernmental 
organization referred to in subsection (a) shall be selected on 
a competitive basis and shall--
            [(1) be experienced in the gathering of first-hand 
        information in all the States through onsite visits to 
        grassroots organizations in each State that fight 
        hunger and poverty or that assist individuals in 
        becoming self-reliant;
            [(2) be experienced in the establishment of a 
        clearinghouse similar to the clearinghouse described in 
        subsection (a);
            [(3) agree to contribute in-kind resources towards 
        the establishment and maintenance of the clearinghouse 
        and agree to provide clearinghouse information, free of 
        charge, to the Secretary, States, counties, cities, 
        antihunger groups, and grassroots organizations that 
        assist individuals in becoming self-sufficient and 
        self-reliant;
            [(4) be sponsored by an organization, or be an 
        organization, that--
                    [(A) has helped combat hunger for at least 
                10 years;
                    [(B) is committed to reinvesting in the 
                United States; and
                    [(C) is knowledgeable regarding Federal 
                nutrition programs;
            [(5) be experienced in communicating the purpose of 
        the clearinghouse through the media, including the 
        radio and print media, and be able to provide access to 
        the clearinghouse information through computer or 
        telecommunications technology, as well as through the 
        mails; and
            [(6) be able to provide examples, advice, and 
        guidance to States, counties, cities, communities, 
        antihunger groups, and local organizations regarding 
        means of assisting individuals and communities to 
        reduce reliance on government programs, reduce hunger, 
        improve nutrition, and otherwise assist low-income 
        individuals and communities become more self-
        sufficient.
    [(c) Audits.--The Secretary shall establish fair and 
reasonable auditing procedures regarding the expenditures of 
funds to carry out this section.
    [(d) Funding.--Out of any moneys in the Treasury not 
otherwise appropriated, the Secretary of the Treasury shall pay 
to the Secretary to provide to the organization selected under 
this section, to establish and maintain the information 
clearinghouse, $200,000 for each of fiscal years 1995 and 1996, 
$150,000 for fiscal year 1997, and $100,000 for fiscal year 
1998. The Secretary shall be entitled to receive the funds and 
shall accept the funds.]
          * * * * * * *
                              ----------                              


    SECTION 3 OF THE HEALTHY MEALS FOR HEALTHY AMERICANS ACT OF 1994

SEC. 3. SENSE OF CONGRESS.

    It is the sense of Congress that--
            (1) funds should be made available for child 
        nutrition programs to remove barriers to the 
        participation of needy children in the school lunch 
        program, school breakfast program, summer food service 
        program for children, and the child [and adult] care 
        food program under the National School Lunch Act (42 
        U.S.C. 1751 et seq.) and the Child Nutrition Act of 
        1966 (42 U.S.C. 1771 et seq.);
          * * * * * * *
                              ----------                              


                      CHILD NUTRITION ACT OF 1966

          * * * * * * *

                   SPECIAL MILK PROGRAM AUTHORIZATION

    Sec. 3. (a)(1)  * * *
          * * * * * * *
    (3) For the purposes of this section ``United States'' 
means the fifty States, Guam, the Commonwealth of Puerto Rico, 
the Virgin Islands, American Samoa, [the Trust Territory of the 
Pacific Islands] the Commonwealth of the Northern Mariana 
Islands, and the District of Columbia.
          * * * * * * *

                 SCHOOL BREAKFAST PROGRAM AUTHORIZATION

    Sec. 4. (a)  * * *

                        APPORTIONMENT TO STATES

    (b)(1)(A)  * * *
          * * * * * * *
                    (E) Free and reduced price policy 
                statement.--After the initial submission, a 
                school shall not be required to submit a free 
                and reduced price policy statement to a State 
                educational agency under this Act unless there 
                is a substantive change in the free and reduced 
                price policy of the school. A routine change in 
                the policy of a school, such as an annual 
                adjustment of the income eligibility guidelines 
                for free and reduced price meals, shall not be 
                sufficient cause for requiring the school to 
                submit a policy statement.
          * * * * * * *

               NUTRITIONAL AND OTHER PROGRAM REQUIREMENTS

    (e)(1)[(A)] Breakfasts served by schools participating in 
the school breakfast program under this section shall consist 
of a combination of foods and shall meet minimum nutritional 
requirements prescribed by the Secretary on the basis of tested 
nutritional research, except that the minimum nutritional 
requirements shall be measured by not less than the weekly 
average of the nutrient content of school breakfasts. Such 
breakfasts shall be served free or at a reduced price to 
children in school under the same terms and conditions as are 
set forth with respect to the service of lunches free or at a 
reduced price in section 9 of the National School Lunch Act.
    [(B) The Secretary shall provide through State educational 
agencies technical assistance and training, including technical 
assistance and training in the preparation of foods high in 
complex carbohydrates and lower-fat versions of foods commonly 
used in the school breakfast program established under this 
section, to schools participating in the school breakfast 
program to assist the schools in complying with the nutritional 
requirements prescribed by the Secretary pursuant to 
subparagraph (A) and in providing appropriate meals to children 
with medically certified special dietary needs. The Secretary 
shall provide through State educational agencies additional 
technical assistance to schools that are having difficulty 
maintaining compliance with the requirements.]
          * * * * * * *

                         [EXPANSION OF PROGRAM

    [(f)(1)(A) As a national nutrition and health policy, it is 
the purpose and intent of the Congress that the school 
breakfast program be made available in all schools where it is 
needed to provide adequate nutrition for children in 
attendance. The Secretary is hereby directed, in cooperation 
with State educational agencies, to carry out a program of 
information in furtherance of this policy.
            [(i) marketing the program in a manner that expands 
        participation in the program by schools and students; 
        and
            [(ii) improving public education and outreach 
        efforts in language appropriate materials that enhance 
        the public image of the program.
    [(C) As used in this paragraph, the term ``language 
appropriate materials'' means materials using a language other 
than the English language in a case in which the language is 
dominant for a large percentage of individuals participating in 
the program.
    [(2)(A) Each State educational agency shall--
            [(i) provide information to school boards and 
        public officials concerning the benefits and 
        availability of the school breakfast program; and
            [(ii) select each year, for additional 
        informational efforts concerning the program, schools 
        in the State--
                    [(I) in which a substantial portion of 
                school enrollment consists of children from 
                low-income families; and
                    [(II) that do not participate in the school 
                breakfast program.
    [(B) Not later than October 1, 1993, the Secretary shall 
report to the Committee on Education and Labor of the House of 
Representatives and the Committee on Agriculture, Nutrition, 
and Forestry of the Senate concerning the efforts of the 
Secretary and the States to increase the participation of 
schools in the program.

                      [STARTUP AND EXPANSION COSTS

    [(g)(1) Out of any moneys in the Treasury not otherwise 
appropriated, the Secretary of the Treasury shall provide to 
the Secretary $5,000,000 for each of fiscal years 1991 through 
1997, $6,000,000 for fiscal year 1998, and $7,000,000 for 
fiscal year 1999 and each subsequent fiscal year to make 
payments under this subsection. The Secretary shall be entitled 
to receive the funds and shall accept the funds. The Secretary 
shall use the funds to make payments on a competitive basis and 
in the following order of priority (subject to other provisions 
of this subsection), to--
            [(A) State educational agencies in a substantial 
        number of States for distribution to eligible schools 
        to assist the schools with nonrecurring expenses 
        incurred in--
                    [(i) initiating a school breakfast program 
                under this section; or
                    [(ii) expanding a school breakfast program; 
                and
            [(B) a substantial number of States for 
        distribution to service institutions to assist the 
        institutions with nonrecurring expenses incurred in--
                    [(i) initiating a summer food service 
                program for children; or
                    [(ii) expanding a summer food service 
                program for children.
    [(2) Payments received under this subsection shall be in 
addition to payments to which State agencies are entitled under 
subsection (b) and section 13 of the National School Lunch Act 
(42 U.S.C. 1761).
    [(3) To be eligible to receive a payment under this 
subsection, a State educational agency shall submit to the 
Secretary a plan to initiate or expand school breakfast 
programs conducted in the State, including a description of the 
manner in which the agency will provide technical assistance 
and funding to schools in the State to initiate or expand the 
programs.
    [(4) In making payments under this subsection for any 
fiscal year to initiate or expand school breakfast programs, 
the Secretary shall provide a preference to State educational 
agencies that--
            [(A) have in effect a State law that requires the 
        expansion of the programs during the year;
            [(B) have significant public or private resources 
        that have been assembled to carry out the expansion of 
        the programs during the year;
            [(C) do not have a school breakfast program 
        available to a large number of low-income children in 
        the State; or
            [(D) serve an unmet need among low-income children, 
        as determined by the Secretary.
    [(5) In making payments under this subsection for any 
fiscal year to initiate or expand summer food service programs 
for children, the Secretary shall provide a preference to 
States--
            [(A)(i) in which the numbers of children 
        participating in the summer food service program for 
        children represent the lowest percentages of the number 
        of children receiving free or reduced price meals under 
        the school lunch program established under the National 
        School Lunch Act (42 U.S.C. 1751 et seq.); or
            [(ii) that do not have a summer food service 
        program for children available to a large number of 
        low-income children in the State; and
            [(B) that submit to the Secretary a plan to expand 
        the summer food service programs for children conducted 
        in the State, including a description of--
                    [(i) the manner in which the State will 
                provide technical assistance and funding to 
                service institutions in the State to expand the 
                programs; and
                    [(ii) significant public or private 
                resources that have been assembled to carry out 
                the expansion of the programs during the year.
    [(6) The Secretary shall act in a timely manner to recover 
and reallocate to other States any amounts provided to a State 
educational agency or State under this subsection that are not 
used by the agency or State within a reasonable period (as 
determined by the Secretary).
    [(7) The Secretary shall allow States to apply on an annual 
basis for assistance under this subsection.
    [(8) Each State agency and State, in allocating funds 
within the State, shall give preference for assistance under 
this subsection to eligible schools and service institutions 
that demonstrate the greatest need for a school breakfast 
program or a summer food service program for children, 
respectively.
    [(9) Expenditures of funds from State and local sources for 
the maintenance of the school breakfast program and the summer 
food service program for children shall not be diminished as a 
result of payments received under this subsection.
    [(10) As used in this subsection:
            [(A) The term ``eligible school'' means a school--
                    [(i) attended by children a significant 
                percentage of whom are members of low-income 
                families;
                    [(ii)(I) as used with respect to a school 
                breakfast program, that agrees to operate the 
                school breakfast program established or 
                expanded with the assistance provided under 
                this subsection for a period of not less than 3 
                years; and
                    [(II) as used with respect to a summer food 
                service program for children, that agrees to 
                operate the summer food service program for 
                children established or expanded with the 
                assistance provided under this subsection for a 
                period of not less than 3 years.
            [(B) The term ``service institution'' means an 
        institution or organization described in paragraph 
        (1)(B) or (7) of section 13(a) of the National School 
        Lunch Act (42 U.S.C. 1761(a)(1)(B) or (7)).
            [(C) The term ``summer food service program for 
        children'' means a program authorized by section 13 of 
        such Act (42 U.S.C. 1761).]
          * * * * * * *

                     STATE ADMINISTRATIVE EXPENSES

    Sec. 7. (a)  * * *
          * * * * * * *
    [(e) The State may use a portion of the funds available 
under this section to assist in the administration of the 
commodity distribution program.]
    [(f)] (e) Each State shall submit to the Secretary for 
approval by October 1 of [each year an annual plan] the initial 
fiscal year a plan for the use of State administrative expense 
funds, including a staff formula for State personnel, system 
level supervisory and operating personnel, and school level 
personnel. After submitting the initial plan, a State shall 
only be required to submit to the Secretary for approval a 
substantive change in the plan.
    [(g)] (f) Payments of funds under this section shall be 
made only to States that agree to maintain a level of funding 
out of State revenues, for administrative costs in connection 
with programs under this Act (except section 17 of this Act) 
and the National School Lunch Act (except section 13 of that 
Act), not less than the amount expended or obligated in fiscal 
year 1977, and that agree to participate fully in any studies 
authorized by the Secretary.
    [(h) The Secretary may not provide amounts under this 
section to a State for administrative costs incurred in any 
fiscal year unless the State agrees to participate in any study 
or survey of programs authorized under this Act or the National 
School Lunch Act (42 U.S.C. 1751 et seq.) and conducted by the 
Secretary.]
    [(i)] (g) For the fiscal year beginning October 1, 1977, 
and each succeeding fiscal year ending before October 1, 1998, 
there are hereby authorized to be appropriated such sums as may 
be necessary for the purposes of this section.
          * * * * * * *

                              REGULATIONS

    Sec. 10. (a)  * * *
    (b)[(1)] The regulations shall not prohibit the sale of 
competitive foods approved by the Secretary in food service 
facilities or areas during the time of service of food under 
this Act or the National School Lunch Act if the proceeds from 
the sales of such foods will inure to the benefit of the 
schools or of organizations of students approved by the 
schools.
    [(2) The Secretary shall develop and provide to State 
agencies, for distribution to private elementary schools and to 
public elementary schools through local educational agencies, 
model language that bans the sale of competitive foods of 
minimal nutritional value anywhere on elementary school grounds 
before the end of the last lunch period.
    [(3) The Secretary shall provide to State agencies, for 
distribution to private secondary schools and to public 
secondary schools through local educational agencies, a copy of 
regulations (in existence on the effective date of this 
paragraph) concerning the sale of competitive foods of minimal 
nutritional value.
    [(4) Paragraphs (2) and (3) shall not apply to a State that 
has in effect a ban on the sale of competitive foods of minimal 
nutritional value in schools in the State.]
          * * * * * * *

                              PROHIBITIONS

    Sec. 11. (a) In carrying out the provisions of sections 3 
and 4 of this Act, [neither the Secretary nor the State shall] 
the Secretary shall not impose any requirements with respect to 
teaching personnel, curriculum, instruction, methods of 
instruction, and materials of instruction.
          * * * * * * *

                MISCELLANEOUS PROVISIONS AND DEFINITIONS

    Sec. 15. For the purposes of this Act--
            (1) ``State'' means any of the fifty States, the 
        District of Columbia, the Commonwealth of Puerto Rico, 
        the Virgin Islands, Guam, American Samoa, or [the Trust 
        Territory of the Pacific Islands] the Commonwealth of 
        the Northern Mariana Islands.
          * * * * * * *
            (3) ``School'' means (A) any public or nonprofit 
        private school of high school grade or under, including 
        kindergarten and preschool programs operated by such 
        school, and (B) any public or licensed nonprofit 
        private residential child care institution (including, 
        but not limited to, orphanages and homes for the 
        mentally retarded, but excluding Job Corps Centers 
        funded by the Department of Labor)[, and (C) with 
        respect to the Commonwealth of Puerto Rico, nonprofit 
        child care centers certified as such by the Governor of 
        Puerto Rico]. For purposes of clauses (A) and (B) of 
        this paragraph, the term ``nonprofit'', when applied to 
        any such private school or institution, means any such 
        school or institution which is exempt from tax under 
        section 501(c)(3) of the Internal Revenue Code of 1986.
          * * * * * * *

                          ACCOUNTS AND RECORDS

    Sec. 16. (a) States, State educational agencies, schools, 
and nonprofit institutions participating in programs under this 
Act shall keep such accounts and records as may be necessary to 
enable the Secretary to determine whether there has been 
compliance with this Act and the regulations hereunder. Such 
accounts and records shall [at all times be available] be 
available at any reasonable time for inspection and audit by 
representatives of the Secretary and shall be preserved for 
such period of time, not in excess of three years, as the 
Secretary determines is necessary.
          * * * * * * *

SPECIAL SUPPLEMENTAL NUTRITION PROGRAM FOR WOMEN, INFANTS, AND CHILDREN

    Sec. 17. (a)  * * *
    (b) As used in this section--
            (1)  * * *
          * * * * * * *
            (15) ``Homeless individual'' means--
                    (A) an individual who lacks a fixed and 
                regular nighttime residence; or
                    (B) an individual whose primary nighttime 
                residence is--
                            (i) a supervised publicly or 
                        privately operated shelter (including a 
                        welfare hotel or congregate shelter) 
                        designed to provide temporary living 
                        accommodations;
                            (ii) an institution that provides a 
                        temporary residence for individuals 
                        intended to be institutionalized;
                            (iii) a temporary accommodation of 
                        not more than 365 days in the residence 
                        of another individual; or
                            (iv) a public or private place not 
                        designed for, or ordinarily used as, a 
                        regular sleeping accommodation for 
                        human beings.
            (16) ``Drug abuse education'' means--
                    (A) the provision of information concerning 
                the dangers of drug abuse; and
                    (B) the referral of participants who are 
                suspected drug abusers to drug abuse clinics, 
                treatment programs, counselors, or other drug 
                abuse professionals[; and].
                    [(C) the provision of materials developed 
                by the Secretary under subsection (n).]
          * * * * * * *
    (c)(1)  * * *
          * * * * * * *
    [(5) The Secretary shall promote the special supplemental 
nutrition program by producing and distributing materials, 
including television and radio public service announcements in 
English and other appropriate languages, that inform 
potentially eligible individuals of the benefits and services 
under the program.]
    (d)(1)  * * *
          * * * * * * *
    [(4) The Secretary shall report biennially to Congress and 
the National Advisory Council on Maternal, Infant, and Fetal 
Nutrition established under subsection (k) on--
            [(A) the income and nutritional risk 
        characteristics of participants in the program;
            [(B) participation in the program by members of 
        families of migrant farmworkers; and
            [(C) such other matters relating to participation 
        in the program as the Secretary considers appropriate.]
    (e)(1) The State agency [shall ensure that nutrition 
education and drug abuse education is provided] shall provide 
nutrition education and may provide drug abuse education to all 
pregnant, postpartum, and breastfeeding participants in the 
program and to parents or caretakers of infant and child 
participants in the program. The State agency may also provide 
nutrition education and drug abuse education to pregnant, 
postpartum, and breastfeeding women and to parents or 
caretakers of infants and children enrolled at local agencies 
operating the program under this section who do not participate 
in the program.
    (2) The Secretary shall prescribe standards to ensure that 
adequate nutrition education services and breastfeeding 
promotion and support are provided. The State agency shall 
provide training to persons providing nutrition education under 
this section. [Nutrition education and breastfeeding promotion 
and support shall be evaluated annually by each State agency, 
and such evaluation shall include the views of participants 
concerning the effectiveness of the nutrition education and 
breastfeeding promotion and support they have received.]
          * * * * * * *
    (4) The State agency [shall]--
            [(A) ensure that written information concerning 
        food stamps, the program for aid to families with 
        dependent children under part A of title IV of the 
        Social Security Act, and the child support enforcement 
        program under part D of title IV of the Social Security 
        Act is provided on at least 1 occasion to each adult 
        participant in and each applicant for the program;]
            [(B)] (A) shall provide each local agency with 
        materials showing the maximum income limits, according 
        to family size, applicable to pregnant women, infants, 
        and children up to age 5 under the medical assistance 
        program established under title XIX of the Social 
        Security Act (in this section referred to as the 
        ``medicaid program''); [and]
            [(C)] (B) shall provide to individuals applying for 
        the program under this section, or reapplying at the 
        end of their certification period, written information 
        about the medicaid program and referral to such program 
        or to agencies authorized to determine presumptive 
        eligibility for such program, if such individuals are 
        not participating in such program and appear to have 
        family income below the applicable maximum income 
        limits for such program[.]; and
            (C) may provide a local agency with materials 
        describing other programs for which participants in the 
        program may be eligible.
    (5) [The State agency shall ensure that each local agency 
shall] Each local agency shall maintain and make available for 
distribution a list of local resources for substance abuse 
counseling and treatment.
    [(6) Each local agency may use a master file to document 
and monitor the provision of nutrition education services 
(other than the initial provision of such services) to 
individuals that are required, under standards prescribed by 
the Secretary, to be included by the agency in group nutrition 
education classes.]
    (f)(1)(A) Each State agency shall submit [annually to the 
Secretary, by a date specified by the Secretary, a] to the 
Secretary, by a date specified by the Secretary, an initial 
plan of operation and administration for a fiscal year. After 
submitting the initial plan, a State shall only be required to 
submit to the Secretary for approval a substantive change in 
the plan.
    (B) To be eligible to receive funds under this section for 
a fiscal year, a State agency must receive the approval of the 
Secretary for the plan submitted for the fiscal year.
    (C) The plan shall include--
            (i) a description of the food delivery system of 
        the State agency and the method of enabling 
        participants to receive supplemental foods under the 
        program, to be administered in accordance with 
        standards developed by the Secretary;
            (ii) a description of the financial management 
        system of the State agency;
            [(iii) a plan to coordinate operations under the 
        program with special counseling services, such as the 
        expanded food and nutrition education program, 
        immunization programs, local programs for breastfeeding 
        promotion, prenatal care, well-child care, family 
        planning, drug abuse education, alcohol and drug abuse 
        counseling and treatment, child abuse counseling, and 
        with the aid to families with dependent children, food 
        stamp, maternal and child health care, and medicaid 
        programs, including medicaid programs that use 
        coordinated care providers under a contract entered 
        into under section 1903(m), or a waiver granted under 
        section 1915(b), of the Social Security Act (42 U.S.C. 
        1396b(m) or 1396n(b)) (including coordination through 
        the referral of potentially eligible women, infants, 
        and children between the program authorized under this 
        section and the medicaid program);]
            (iii) a plan to coordinate operations under the 
        program with other services or programs that may 
        benefit participants in, and applicants for, the 
        program;
            (iv) a plan to provide program benefits under this 
        section to, and to meet the special nutrition education 
        needs of, eligible migrants, homeless individuals, and 
        Indians;
            (v) a plan to expend funds to carry out the program 
        during the relevant fiscal year;
            (vi) a plan to provide program benefits under this 
        section to unserved and underserved areas in the State 
        (including a plan to improve access to the program for 
        participants and prospective applicants who are 
        employed, or who reside in rural areas), if sufficient 
        funds are available to carry out this clause;
            (vii) a plan [to provide program benefits under 
        this section to eligible individuals most in need of 
        the benefits and to provide eligible individuals not 
        participating in the program with information on the 
        program, the eligibility criteria for the program, and 
        how to apply for the program, with emphasis on] for 
        reaching and enrolling eligible women in the early 
        months of pregnancy, including provisions to reach and 
        enroll eligible migrants;
            (viii) a plan to provide program benefits under 
        this section to unserved infants and children under the 
        care of foster parents, protective services, or child 
        welfare authorities, including infants exposed to drugs 
        perinatally;
            [(ix) if the State agency chooses to provide 
        program benefits under this section to some or all 
        eligible individuals who are incarcerated in prisons or 
        juvenile detention facilities that do not receive 
        Federal assistance under any program specifically 
        established to assist pregnant women regarding their 
        nutrition and health needs, a plan for the provision of 
        such benefits to, and to meet the special nutrition 
        education needs of, such individuals, which may 
        include--
                    [(I) providing supplemental foods to such 
                individuals that are different from those 
                provided to other participants in the program 
                under this section;
                    [(II) providing such foods to such 
                individuals in a different manner than to other 
                participants in the program under this section 
                in order to meet the special needs of such 
                individuals; and
                    [(III) the development of nutrition 
                education materials appropriate for the special 
                needs of such individuals;
            [(x) a plan to improve access to the program for 
        participants and prospective applicants who are 
        employed, or who reside in rural areas, by addressing 
        their special needs through the adoption or revision of 
        procedures and practices to minimize the time 
        participants and applicants must spend away from work 
        and the distances that participants and applicants must 
        travel, including appointment scheduling, adjustment of 
        clinic hours, clinic locations, or mailing of multiple 
        vouchers;]
            [(xi)] (ix) a plan to provide nutrition education 
        and promote breastfeeding;
            [(xii) if the State agency chooses to request the 
        funds conversion authority established in clause (h)(5) 
        of this section, an estimate of the increased 
        participation which will result from its cost-saving 
        initiative, including an explanation of how the 
        estimate was developed; and]
            [(xiii)] (x) such other information as the 
        Secretary [may require] may reasonably require.
    [(D) The Secretary may permit a State agency to submit only 
those parts of a plan that differ from plans submitted for 
previous fiscal years.]
    [(E)] (D) The Secretary may not approve any plan that 
permits a person to participate simultaneously in both the 
program authorized under this section and the commodity 
supplemental food program authorized under sections 4 and 5 of 
the Agriculture and Consumer Protection Act of 1973 (7 U.S.C. 
612c note).
    [(2) A State agency shall establish a procedure under which 
members of the general public are provided an opportunity to 
comment on the development of the State agency plan.]
    [(3)] (2) The Secretary shall establish procedures under 
which eligible migrants may, to the maximum extent feasible, 
continue to participate in the program under this section when 
they are present in States other than the State in which they 
were originally certified for participation in the program and 
shall ensure that local programs provide priority consideration 
to serving migrant participants who are residing in the State 
for a limited period of time. Each State agency shall be 
responsible for administering the program for migrant 
populations within its jurisdiction.
    [(4)] (3) State agencies shall submit monthly financial 
reports and participation data to the Secretary.
    [(5)] (4) State and local agencies operating under the 
program shall keep such accounts and records, including medical 
records, as may be necessary to enable the Secretary to 
determine whether there has been compliance with this section 
and to determine and evaluate the benefits of the nutritional 
assistance provided under this section. Such accounts and 
records shall [at all times be available] be available at any 
reasonable time for inspection and audit by representatives of 
the Secretary and shall be preserved for such period of time, 
not in excess of five years, as the Secretary determines 
necessary.
    [(6) The State agency, upon receipt of a completed 
application from a local agency for participation in the 
program (and the Secretary, upon receipt of a completed 
application from a State agency), shall notify the applicant 
agency in writing within thirty days of the approval or 
disapproval of the application, and any disapproval shall be 
accompanied with a statement of the reasons for such 
disapproval. Within fifteen days after receipt of an incomplete 
application, the State agency (or the Secretary) shall notify 
the applicant agency of the additional information needed to 
complete the application.]
    [(7)] (5)(A) Local agencies participating in the program 
under this section shall notify persons of their eligibility or 
ineligibility for the program within twenty days of the date 
that the household, during office hours of a local agency, 
personally makes an oral or written request to participate in 
the program. The Secretary shall establish a shorter 
notification period for categories of persons who, due to 
special nutritional risk conditions, must receive benefits more 
expeditiously.
    (B) State agencies may provide for the delivery of vouchers 
to any participant who is not scheduled for nutrition education 
counseling or a recertification interview through means, such 
as mailing, that do not require the participant to travel to 
the local agency to obtain vouchers. The State agency shall 
describe any plans for issuance of vouchers by mail in its plan 
submitted under paragraph (1). The Secretary may disapprove a 
State plan with respect to the issuance of vouchers by mail in 
any specified jurisdiction or part of a jurisdiction within a 
State only if the Secretary finds that such issuance would pose 
a significant threat to the integrity of the program under this 
section in such jurisdiction or part of a jurisdiction.
    [(8)(A) The State agency shall, in cooperation with 
participating local agencies, publicly announce and distribute 
information on the availability of program benefits (including 
the eligibility criteria for participation and the location of 
local agencies operating the program) to offices and 
organizations that deal with significant numbers of potentially 
eligible individuals (including health and medical 
organizations, hospitals and clinics, welfare and unemployment 
offices, social service agencies, farmworker organizations, 
Indian tribal organizations, organizations and agencies serving 
homeless individuals and shelters for victims of domestic 
violence, and religious and community organizations in low 
income areas).
    [(B) The information shall be publicly announced by the 
State agency and by local agencies at least annually.
    [(C) The State agency and local agencies shall distribute 
the information in a manner designed to provide the information 
to potentially eligible individuals who are most in need of the 
benefits, including pregnant women in the early months of 
pregnancy.
    [(D) Each local agency operating the program within a 
hospital and each local agency operating the program that has a 
cooperative arrangement with a hospital shall--
            [(i) advise potentially eligible individuals that 
        receive inpatient or outpatient prenatal, maternity, or 
        postpartum services, or accompany a child under the age 
        of 5 who receives well-child services, of the 
        availability of program benefits; and
            [(ii) to the extent feasible, provide an 
        opportunity for individuals who may be eligible to be 
        certified within the hospital for participation in such 
        program.]
    [(9)] (6)(A) The State agency shall grant a fair hearing, 
and a prompt determination thereafter, in accordance with 
regulations issued by the Secretary, to any applicant, 
participant, or local agency aggrieved by the action of a State 
or local agency as it affects participation.
    (B) Any State agency that must suspend or terminate 
benefits to any participant during the participant's 
certification period due to a shortage of funds for the program 
shall first issue a notice to such participant. [Such notice 
shall include, in addition to other information required by the 
Secretary, the categories of participants whose benefits are 
being suspended or terminated due to such shortage.]
    [(10)] (7) If an individual certified as eligible for 
participation in the program under this section in one area 
moves to another area in which the program is operating, that 
individual's certification of eligibility shall remain valid 
for the period for which the individual was originally 
certified.
    [(11)] (8) The Secretary shall establish standards for the 
proper, efficient, and effective administration of the 
program[, including standards that will ensure sufficient State 
agency staff]. If the Secretary determines that a State agency 
has failed without good cause to administer the program in a 
manner consistent with this section or to implement the 
approved plan of operation and administration under this 
subsection, the Secretary may withhold such amounts of the 
State agency's funds for nutrition services and administration 
as the Secretary deems appropriate. Upon correction of such 
failure during a fiscal year by a State agency, any funds so 
withheld for such fiscal year shall be provided the State 
agency.
    [(12)] (9) The Secretary shall prescribe by regulation the 
supplemental foods to be made available in the program under 
this section. To the degree possible, the Secretary shall 
assure that the fat, sugar, and salt content of the prescribed 
foods is appropriate. [Products specifically designed for 
pregnant, postpartum, and breastfeeding women, or infants shall 
be available at the discretion of the Secretary if the products 
are commercially available or are justified to and approved by 
the Secretary based on clinical tests performed in accordance 
with standards prescribed by the Secretary.]
    [(13)] (10) A competent professional authority shall be 
responsible for prescribing the appropriate supplemental foods, 
taking into account medical and nutritional conditions and 
cultural eating patterns, and, in the case of homeless 
individuals, the special needs and problems of such 
individuals.
    [(14)] (11) The State agency [shall] may (A) provide 
nutrition education, breastfeeding promotion, and drug abuse 
education materials and instruction in languages other than 
English and (B) use appropriate foreign language materials in 
the administration of the program, in areas in which a 
substantial number of low-income households speak a language 
other than English.
    [(15)] (12) If a State agency determines that a member of a 
family has received an overissuance of food benefits under the 
program authorized by this section as the result of such member 
intentionally making a false or misleading statement or 
intentionally misrepresenting, concealing, or withholding 
facts, the State agency shall recover, in cash, from such 
member an amount that the State agency determines is equal to 
the value of the overissued food benefits, unless the State 
agency determines that the recovery of the benefits would not 
be cost effective.
    [(16)] (13) To be eligible to participate in the program 
authorized by this section, a manufacturer of infant formula 
that supplies formula for the program shall--
            (A) register with the Secretary of Health and Human 
        Services under the Federal Food, Drug, and Cosmetic Act 
        (21 U.S.C. 321 et seq.); and
            (B) before bidding for a State contract to supply 
        infant formula for the program, certify with the State 
        health department that the formula complies with such 
        Act and regulations issued pursuant to such Act.
    [(17)] (14) The State agency may adopt methods of 
delivering benefits to accommodate the special needs and 
problems of homeless individuals [and to accommodate the 
special needs and problems of individuals who are incarcerated 
in prisons or juvenile detention facilities].
    [(18)] (15) Notwithstanding subsection (d)(2)(A)(i), not 
later than July 1 of each year, a State agency may implement 
income eligibility guidelines under this section concurrently 
with the implementation of income eligibility guidelines under 
the medicaid program established under title XIX of the Social 
Security Act (42 U.S.C. 1396 et seq.).
    [(19)] (16) Each local agency participating in the program 
under this section [shall] may provide information about other 
potential sources of food assistance in the local area to 
individuals who apply in person to participate in the program 
under this section, but who cannot be served because the 
program is operating at capacity in the local area.
    [(20)] (17) The State agency shall adopt policies that--
            (A) require each local agency to attempt to contact 
        each pregnant woman who misses an appointment to apply 
        for participation in the program under this section, in 
        order to reschedule the appointment, unless the phone 
        number and the address of the woman are unavailable to 
        such local agency; and
            (B) in the case of local agencies that do not 
        routinely schedule appointments for individuals seeking 
        to apply or be recertified for participation in the 
        program under this section, require each such local 
        agency to schedule appointments for each employed 
        individual seeking to apply or be recertified for 
        participation in such program so as to minimize the 
        time each such individual is absent from the workplace 
        due to such application or request for recertification.
    [(21)] (18) Each State agency shall conduct monitoring 
reviews of each local agency at least biennially.
    [(22) In the State plan submitted to the Secretary for 
fiscal year 1994, each State agency shall advise the Secretary 
regarding the procedures to be used by the State agency to 
reduce the purchase of low-iron infant formula for infants on 
the program for whom such formula has not been prescribed by a 
physician or other appropriate health professional, as 
determined by regulations issued by the Secretary.]
    [(23)] (19) A State agency may use funds recovered as a 
result of violations in the food delivery system of the program 
in the year in which the funds are collected for the purpose of 
carrying out the program.
    [(24)] (20) The Secretary and the Secretary of Health and 
Human Services shall carry out an initiative to assure that, in 
a case in which a State medicaid program uses coordinated care 
providers under a contract entered into under section 1903(m), 
or a waiver granted under section 1915(b), of the Social 
Security Act (42 U.S.C. 1396b(m) or 1396n(b)), coordination 
between the program authorized by this section and the medicaid 
program is continued, including--
            (A) the referral of potentially eligible women, 
        infants, and children between the 2 programs; and
            (B) the timely provision of medical information 
        related to the program authorized by this section to 
        agencies carrying out the program.
    (g)(1)  * * *
          * * * * * * *
    (5) Of the sums appropriated for any fiscal year for the 
program under this section, one-half of 1 percent, not to 
exceed $5,000,000, shall be available to the Secretary for the 
purpose of evaluating program performance, evaluating health 
benefits, preparing [the report required under subsection 
(d)(4)] reports on program participant characteristics, 
providing technical assistance to improve State agency 
administrative systems, administration of pilot projects, 
including projects designed to meet the special needs of 
migrants, Indians, and rural populations, and carrying out 
technical assistance and research evaluation projects of the 
programs under this section.
    [(6) Upon the completion of the 1990 decennial census, the 
Secretary, in coordination with the Secretary of Commerce, 
shall make available an estimate, by State and county (or 
equivalent political subdivision) of the number of women, 
infants, and children who are members of families that have 
incomes below the maximum income limit for participation in the 
program under this section.]
    (h)(1)  * * *
          * * * * * * *
    (4) The Secretary shall--
            (A)  * * *
          * * * * * * *
            (E) not later than 1 year after the date of 
        enactment of this subparagraph, develop uniform 
        requirements for the collection of data regarding the 
        incidence and duration of breastfeeding among 
        participants in the program [and, on development of the 
        uniform requirements, require each State agency to 
        report the data for inclusion in the report to Congress 
        described in subsection (d)(4)].
          * * * * * * *
    (8)[(A) No State may receive its allocation under this 
subsection unless on or before August 30, 1989 (or a subsequent 
date established by the Secretary for any State) such State 
has--
            [(i) examined the feasibility of implementing cost 
        containment measures with respect to procurement of 
        infant formula, and, where practicable, other foods 
        necessary to carry out the program under this section; 
        and
            [(ii) initiated action to implement such measures 
        unless the State demonstrates, to the satisfaction of 
        the Secretary, that such measures would not lower costs 
        or would interfere with the delivery of formula or 
        foods to participants in the program.]
    [(B)] (A)(i) Except as provided in [subparagraphs (C), (D), 
and (E)(iii), in carrying out subparagraph (A),] subparagraphs 
(B) and (C)(iii), any State that provides for the purchase of 
foods under the program at retail grocery stores shall, with 
respect to the procurement of infant formula, use--
            (I) a competitive bidding system; or
            (II) any other cost containment measure that yields 
        savings equal to or greater than savings generated by a 
        competitive bidding system when such savings are 
        determined by comparing the amounts of savings that 
        would be provided over the full term of contracts 
        offered in response to a single invitation to submit 
        both competitive bids and bids for other cost 
        containment systems for the sale of infant formula.
    (ii) In determining whether a cost containment measure 
other than competitive bidding yields equal or greater savings, 
the State, in accordance with regulations issued by the 
Secretary, may take into account other cost factors (in 
addition to rebate levels and procedures for adjusting rebate 
levels when wholesale price levels rise), such as--
            (I) the number of infants who would not be expected 
        to receive the contract brand of infant formula under a 
        competitive bidding system;
            (II) the number of cans of infant formula for which 
        no rebate would be provided under another rebate 
        system; and
            (III) differences in administrative costs relating 
        to the implementation of the various cost containment 
        systems (such as costs of converting a computer system 
        for the purpose of operating a cost containment system 
        and costs of preparing participants for conversion to a 
        new or alternate cost containment system).
    [(C) In the case of any State that has a contract in effect 
on the date of the enactment of the Child Nutrition and WIC 
Reauthorization Act of 1989, subparagraph (B) shall not apply 
to the program operated by such State under this section until 
the term of such contract, as such term is specified by the 
contract as in effect on such date, expires. In the case of any 
State that has more than 1 such contract in effect on the date 
of the enactment of such Act, subparagraph (B) shall not apply 
until the term of the contract with the latest expiration date, 
as such term is specified by such contract as in effect on the 
date of the enactment of such Act, expires.]
    [(D)] (B)(i) The Secretary shall waive the requirement of 
subparagraph [(B)] (A) in the case of any State that 
demonstrates to the Secretary that--
            (I) compliance with subparagraph [(B)] (A) would be 
        inconsistent with efficient or effective operation of 
        the program operated by such State under this section; 
        or
            (II) the amount by which the savings yielded by an 
        alternative cost containment system would be less than 
        the savings yielded by a competitive bidding system is 
        sufficiently minimal that the difference is not 
        significant.
    (ii) The Secretary shall prescribe criteria under which a 
waiver may be granted pursuant to clause (i).
    (iii) The Secretary shall provide information on a timely 
basis to the Committee on Education and Labor of the House of 
Representatives and the Committee on Agriculture, Nutrition, 
and Forestry of the Senate on waivers that have been granted 
under clause (i).
    [(E)] (C)(i) The Secretary shall provide technical 
assistance to small Indian State agencies carrying out this 
paragraph in order to assist such agencies to achieve the 
maximum cost containment savings feasible.
    (ii) The Secretary shall also provide technical assistance, 
on request, to State agencies that desire to consider a cost 
containment system that covers more than 1 State agency.
    (iii) The Secretary may waive the requirement of 
subparagraph [(B)] (A) in the case of any Indian State agency 
that has not more than 1,000 participants.
    [(F)] (D) No State may enter into a cost containment 
contract (in this subparagraph referred to as the original 
contract'') that prescribes conditions that would void, reduce 
the savings under, or otherwise limit the original contract if 
the State solicited or secured bids for, or entered into, a 
subsequent cost containment contract to take effect after the 
expiration of the original contract.
    [(G)(i)] (E) The Secretary shall offer to solicit bids on 
behalf of State agencies regarding cost-containment contracts 
to be entered into by infant formula manufacturers and State 
agencies. The Secretary shall make the offer to State agencies 
once every 12 months. Each such bid solicitation shall only 
take place if two or more State agencies request the Secretary 
to perform the solicitation. For such State agencies, the 
Secretary shall solicit bids and select the winning bidder for 
a cost containment contract to be entered into by State 
agencies and infant formula manufacturers or suppliers.
    [(ii) If the Secretary determines that the number of State 
agencies making the election in clause (i) so warrants, the 
Secretary may, in consultation with such State agencies, divide 
such State agencies into more than one group of such agencies 
and solicit bids for a contract for each such group. In 
determining the size of the groups of agencies, the Secretary 
shall, to the extent practicable, take into account the need to 
maximize the number of potential bidders so as to increase 
competition among infant formula manufacturers.
    [(iii) State agencies that elect to authorize the Secretary 
to perform the bid solicitation and selection process on their 
behalf and enter into the resulting containment contract shall 
obtain the rebates or discounts from the manufacturers or 
suppliers participating in the contract.
    [(iv) In soliciting bids and determining the winning bidder 
under clause (i), the Secretary shall comply with the 
requirements of subparagraphs (B) and (F).
    [(v)(I) Except as provided in subclause (II), the term of 
the contract for which bids are to be solicited under this 
paragraph shall be announced by the Secretary in consultation 
with the affected State agencies and shall be not less than 2 
years.
    [(II) If the law of a State regarding the duration of 
contracts is inconsistent with subclause (I), the Secretary 
shall permit a 1-year contract, with the option provided to the 
State to extend the contract for additional years.
    [(vi) In prescribing specifications for the bids, the 
Secretary shall ensure that the contracts to be entered into by 
the State agencies and the infant formula manufacturers or 
suppliers provide for a constant net price for infant formula 
products for the full term of the contracts and provide for 
rebates or discounts for all units of infant formula sold 
through the program that are produced by the manufacturer 
awarded the contract and that are for a type of formula product 
covered under the contract. The contracts shall cover all types 
of infant formula products normally covered under cost 
containment contracts entered into by State agencies.
    [(vii) The Secretary shall also develop procedures for--
            [(I) rejecting all bids for any joint contract and 
        announcing a resolicitation of infant formula bids 
        where necessary;
            [(II) permitting a State agency that has authorized 
        the Secretary to undertake bid solicitation on its 
        behalf under this subparagraph to decline to enter into 
        the joint contract to be negotiated and awarded 
        pursuant to the solicitation if the agency promptly 
        determines after the bids are opened that participation 
        would not be in the best interest of its program; and
            [(III) assuring infant formula manufacturers 
        submitting a bid under this subparagraph that a 
        contract awarded pursuant to the bid will cover State 
        agencies serving no fewer than a number of infants to 
        be specified in the bid solicitation.
    [(viii) The bid solicitation and selection process on 
behalf of the State agencies shall be conducted in accordance 
with any procedures the Secretary deems necessary for the 
effective and efficient administration of the bid solicitation 
and selection process and consistent with the requirements of 
this subparagraph. The procedures established by the Secretary 
shall ensure that--
            [(I) the bid solicitation and selection process is 
        conducted in a manner providing full and open 
        competition; and
            [(II) the bid solicitation and selection process is 
        free of any real or apparent conflict of interest.''.
    [(ix) Not later than September 30, 1996, the Secretary 
shall offer to solicit bids on behalf of State agencies 
regarding cost containment contracts to be entered into by 
infant cereal manufacturers and State agencies. In carrying out 
this clause, the Secretary shall, to the maximum extent 
feasible, follow the procedures prescribed in this subparagraph 
regarding offers made by the Secretary with regard to 
soliciting bids regarding infant formula cost containment 
contracts. The Secretary may carry out this clause without 
issuing regulations.]
    [(H)] (F) In soliciting bids for contracts for infant 
formula for the program authorized by this section, the 
Secretary shall solicit bids from infant formula manufacturers 
under procedures in which bids for rebates or discounts are 
solicited for milk-based and soy-based infant formula, 
separately, except where the Secretary determines that such 
solicitation procedures are not in the best interest of the 
program.
    [(I)] (G) To reduce the costs of any supplemental foods, 
the [Secretary--
            [(i) shall promote, but not require, the joint 
        purchase of infant formula among State agencies 
        electing not to participate under the procedures set 
        forth in subparagraph (G);
            [(ii) shall encourage and promote (but not require) 
        the purchase of supplemental foods other than infant 
        formula under cost containment procedures;
            [(iii) shall inform State agencies of the benefits 
        of cost containment and provide assistance and 
        technical advice at State agency request regarding the 
        State agency's use of cost containment procedures;
            [(iv) shall encourage (but not require) the joint 
        purchase of supplemental foods other than infant 
        formula under procedures specified in subparagraph (B), 
        if the Secretary determines that--
                    [(I) the anticipated savings are expected 
                to be significant;
                    [(II) the administrative expenses involved 
                in purchasing the food item through competitive 
                bidding procedures, whether under a rebate or 
                discount system, will not exceed the savings 
                anticipated to be generated by the procedures; 
                and
                    [(III) the procedures would be consistent 
                with the purposes of the program; and
            [(v) may] Secretary may make available additional 
        funds to State agencies out of the funds otherwise 
        available under paragraph (1)(A) for nutrition services 
        and administration in an amount not exceeding one half 
        of 1 percent of the amounts to help defray reasonable 
        anticipated expenses associated with innovations in 
        cost containment or associated with procedures that 
        tend to enhance competition.
    [(J)] (H)(i) Any person, company, corporation, or other 
legal entity that submits a bid to supply infant formula to 
carry out the program authorized by this section and announces 
or otherwise discloses the amount of the bid, or the rebate or 
discount practices of such entities, in advance of the time the 
bids are opened by the Secretary or the State agency, or any 
person, company, corporation, or other legal entity that makes 
a statement (prior to the opening of bids) relating to levels 
of rebates or discounts, for the purpose of influencing a bid 
submitted by any other person, shall be ineligible to submit 
bids to supply infant formula to the program for the bidding in 
progress for up to 2 years from the date the bids are opened 
and shall be subject to a civil penalty of up to $100,000,000, 
as determined by the Secretary to provide restitution to the 
program for harm done to the program. The Secretary shall issue 
regulations providing such person, company, corporation, or 
other legal entity appropriate notice, and an opportunity to be 
heard and to respond to charges.
    (ii) The Secretary shall determine the length of the 
disqualification, and the amount of the civil penalty referred 
to in clause (i) based on such factors as the Secretary by 
regulation determines appropriate.
    (iii) Any person, company, corporation, or other legal 
entity disqualified under clause (i) shall remain obligated to 
perform any requirements under any contract to supply infant 
formula existing at the time of the disqualification and until 
each such contract expires by its terms.
    [(K)] (I) Not later than the expiration of the 180-day 
period beginning on the date of enactment of this subparagraph, 
the Secretary shall prescribe regulations to carry out this 
paragraph.
    [(L)] (J) A State shall not incur any interest liability to 
the Federal Government on rebate funds for infant formula and 
other foods if all interest earned by the State on the funds is 
used for program purposes.
    [(M)(i) The Secretary shall establish pilot projects in at 
least 1 State, with the consent of the State, to determine the 
feasibility and cost of requiring States to carry out a system 
for using universal product codes to assist retail food stores 
that are vendors under the program in providing the type of 
infant formula that the participants in the program are 
authorized to obtain. In carrying out the projects, the 
Secretary shall determine whether the system reduces the 
incidence of incorrect redemptions of low-iron formula or 
brands of infant formula not authorized to be redeemed through 
the program, or both.
    [(ii) The Secretary shall provide a notification to the 
Committee on Education and Labor of the House of 
Representatives and the Committee on Agriculture, Nutrition, 
and Forestry of the Senate regarding whether the system is 
feasible, is cost-effective, reduces the incidence of incorrect 
redemptions described in clause (i), and results in any 
additional costs to States.
    [(iii) The system shall not require a vendor under the 
program to obtain special equipment and shall not be applicable 
to a vendor that does not have equipment that can use universal 
product codes.]
          * * * * * * *
    (10)(A) For each of fiscal years 1995 through 1998, the 
Secretary shall use for the purposes specified in subparagraph 
(B), $10,000,000 or the amount of nutrition services and 
administration funds for the prior fiscal year that has not 
been obligated, whichever is less.
    (B) Funds under subparagraph (A) shall be used for--
            (i) development of infrastructure for the program 
        under this section, including management information 
        systems; and
            (ii) special State projects of regional or national 
        significance to improve the services of the program 
        under this section[; and].
            [(iii) special breastfeeding support and promotion 
        projects, including projects to assess the 
        effectiveness of particular breastfeeding promotion 
        strategies and to develop State or local agency 
        capacity or facilities to provide quality breastfeeding 
        services.]
          * * * * * * *
    (k)(1)  * * *
          * * * * * * *
    (3) The [Secretary shall designate] Council shall elect a 
Chairman and a Vice Chairman. The Council shall meet at the 
call of the Chairman, but shall meet at least once a year. 
Eleven members shall constitute a quorum.
          * * * * * * *
    [(n)(1) The Secretary, before the end of the 6-month period 
beginning on the date of the enactment of the Anti-Drug Abuse 
Act of 1988, shall, directly or through grant or contract, 
conduct a study with respect to appropriate methods of drug 
abuse education instruction.
    [(2) The Secretary shall--
            [(A) directly, or through grant or contract, 
        prepare materials for purposes of drug abuse education 
        provided under this section; and
            [(B) distribute the materials prepared under 
        subparagraph (A) to each State agency for distribution 
        to local agencies participating in the program under 
        this section.
    [(3) There is authorized to be appropriated--
            [(A) $500,000 for the fiscal year 1989 for purposes 
        of carrying out the study required by paragraph (1);
            [(B) $2,750,000 for the fiscal year 1989 and such 
        sums as may be necessary for each succeeding fiscal 
        year for purposes of preparing drug abuse education 
        materials as required by paragraph (2)(A); and
            [(C) $6,750,000 for the fiscal year 1989 and such 
        sums as may be necessary for each succeeding fiscal 
        year for purposes of--
                    [(i) distributing drug abuse education 
                materials as required by paragraph (2)(B); and
                    [(ii) making referrals under drug abuse 
                education programs.
    [(4) The State agency, in each fiscal year, shall provide 
drug abuse education to participants in the program under this 
section commensurate with amounts appropriated for such fiscal 
year pursuant to the authorizations contained in paragraph (3).
    [(o)(1) Subject to the availability of funds appropriated 
for the purpose of carrying out this subsection, the Secretary 
is authorized to establish a demonstration program for the 
establishment of clinics for participants in the program under 
this section at community colleges that offer nursing education 
programs. In determining the location of clinics under this 
subsection, the Secretary shall consider--
            [(A) the location of the community college under 
        consideration;
            [(B) its accessibility to individuals eligible to 
        participate in the special supplemental nutrition 
        program under this section; and
            [(C) its willingness to operate the clinic during 
        nontraditional hours.
    [(2) The Secretary shall, from funds appropriated for the 
purpose of carrying out this subsection--
            [(A) evaluate any demonstration program carried out 
        under paragraph (1); and
            [(B) submit to the Congress a report containing the 
        results of such evaluation.
    [(3) There is authorized to be appropriated for purposes of 
carrying out this subsection $1,000,000 for the fiscal year 
1990 and such sums as may be necessary for each of the fiscal 
years 1991 and 1992.
    [(p)(1) The Secretary is authorized to make grants to State 
agencies for the purpose of improving and updating information 
and data systems used for purposes of carrying out programs 
under this section.
    [(2) Any State that desires to receive a grant under this 
subsection shall submit an application to the Secretary at such 
time, and containing or accompanied by such information, as the 
Secretary may reasonably require. Grants shall be awarded based 
on the need demonstrated by States in their applications.
    [(3) There is authorized to be appropriated for purposes of 
carrying out this subsection $2,000,000 for the fiscal year 
1990 and such sums as may be necessary for each of the fiscal 
years 1991, 1992, 1993, and 1994.]
    (n) Disqualification of Vendors Who Are Disqualified Under 
the Food Stamp Program.--
            (1) In general.--The Secretary shall issue 
        regulations providing criteria for the disqualification 
        under this section of an approved vendor that is 
        disqualified from accepting benefits under the food 
        stamp program established under the Food Stamp Act of 
        1977 (7 U.S.C. 2011 et seq.).
            (2) Terms.--A disqualification under paragraph 
        (1)--
                    (A) shall be for the same period as the 
                disqualification from the program referred to 
                in paragraph (1);
                    (B) may begin at a later date than the 
                disqualification from the program referred to 
                in paragraph (1); and
                    (C) shall not be subject to judicial or 
                administrative review.
    [Sec. 18. (a) The Secretary is hereby authorized and 
directed to make cash grants to State educational agencies for 
the purpose of conducting experimental or demonstration 
projects to teach schoolchildren the nutritional value of foods 
and the relationship of nutrition to human health.
    [(b) In order to carry out the program, provided for in 
subsection (a) of this section, there is hereby authorized to 
be appropriated not to exceed $1,000,000 annually. The 
Secretary shall withhold not less than 1 per centum of any 
funds appropriated under this section and shall expend these 
funds to carry out research and development projects relevant 
to the purpose of this section, particularly to develop 
materials and techniques for the innovative presentation of 
nutritional information.]

                    NUTRITION EDUCATION AND TRAINING

    Sec. 19. (a) Congress finds [that--
            [(1) the proper nutrition of the Nation's children 
        is a matter of highest priority;
            [(2) the lack of understanding of the principles of 
        good nutrition and their relationship to health can 
        contribute to a child's rejection of highly nutritious 
        foods and consequent plate waste in school food service 
        operations;
            [(3) many school food service personnel have not 
        had adequate training in food service management skills 
        and principles, and many teachers and school food 
        service operators have not had adequate training in the 
        fundamentals of nutrition or how to convey this 
        information so as to motivate children to practice 
        sound eating habits;
            [(4) parents exert a significant influence on 
        children in the development of nutritional habits and 
        lack of nutritional knowledge on the part of parents 
        can have detrimental effects on children's nutritional 
        development; and
            [(5) there is a need to create opportunities for 
        children to learn about the importance of the 
        principles of good nutrition in their daily lives and 
        how these principles are applied in the school 
        cafeteria.] that effective dissemination of 
        scientifically valid information to children 
        participating or eligible to participate in the school 
        lunch and related child nutrition programs should be 
        encouraged.

                                PURPOSE

    (b) It is the purpose of this section to [encourage 
effective dissemination of scientifically valid information to 
children participating or eligible to participate in the school 
lunch and related child nutrition programs by establishing] 
establish a system of grants to State educational agencies for 
the development of comprehensive nutrition education and 
training programs. Such nutrition education programs shall 
fully use as a learning laboratory the school lunch and child 
nutrition programs.
          * * * * * * *

                              USE OF FUNDS

    (f)(1)[(A)] The funds made available under this section 
may, under guidelines established by the Secretary, be used by 
State educational agencies for--
            [(i)] (A) employing a nutrition education 
        specialist to coordinate the program, including travel 
        and related personnel costs;
            [(ii)] (B) undertaking an assessment of the 
        nutrition education needs of the State;
            [(iii)] (C) developing a State plan of operation 
        and management for nutrition education;
            [(iv)] (D) applying for and carrying out planning 
        and assessment grants;
            [(v)] (E) pilot projects and related purposes;
            [(vi)] (F) the planning, development, and conduct 
        of nutrition education programs and workshops for food 
        service and educational personnel;
            [(vii)] (G) coordinating and promoting nutrition 
        education and training activities in local school 
        districts (incorporating, to the maximum extent 
        practicable, as a learning laboratory, the child 
        nutrition programs);
            [(viii)] (H) contracting with public and private 
        nonprofit educational institutions for the conduct of 
        nutrition education instruction and programs relating 
        to the purposes of this section;
            [(ix) providing funding for a nutrition component 
        that can be offered in consumer and homemaking 
        education programs as well as in the health education 
        curriculum offered to children in kindergarten through 
        grade 12;
            [(x) instructing teachers, school administrators, 
        or other school staff on how to promote better 
        nutritional health and to motivate children from a 
        variety of linguistic and cultural backgrounds to 
        practice sound eating habits;
            [(xi) developing means of providing nutrition 
        education in language appropriate materials to children 
        and families of children through after-school programs;
            [(xii) training in relation to healthy and 
        nutritious meals;
            [(xiii) creating instructional programming, 
        including language appropriate materials and 
        programming, for teachers, school food service 
        personnel, and parents on the relationships between 
        nutrition and health and the role of the Food Guide 
        Pyramid established by the Secretary;
            [(xiv) funding aspects of the Strategic Plan for 
        Nutrition and Education issued by the Secretary;
            [(xv) encouraging public service advertisements, 
        including language appropriate materials and 
        advertisements, to promote healthy eating habits for 
        children;
            [(xvi) coordinating and promoting nutrition 
        education and training activities in local school 
        districts (incorporating, to the maximum extent 
        practicable, as a learning laboratory, child nutrition 
        programs);
            [(xvii) contracting with public and private 
        nonprofit educational institutions for the conduct of 
        nutrition education instruction and programs relating 
        to the purpose of this section;
            [(xviii) increasing public awareness of the 
        importance of breakfasts for providing the energy 
        necessary for the cognitive development of school-age 
        children;
            [(xix) coordinating and promoting nutrition 
        education and training activities carried out under 
        child nutrition programs, including the summer food 
        service program for children established under section 
        13 of the National School Lunch Act (42 U.S.C. 1761) 
        and the child and adult care food program established 
        under section 17 of such Act (42 U.S.C. 1766); and]
            [(xx)] (I) related nutrition education purposes, 
        including the preparation, testing, distribution, and 
        evaluation of visual aids and other informational and 
        educational materials[.]; and
            (J) other appropriate related activities, as 
        determined by the State.
    [(B) As used in this paragraph, the term ``language 
appropriate'' used with respect to materials, programming, or 
advertisements means materials, programming, or advertisements, 
respectively, using a language other than the English language 
in a case in which the language is dominant for a large 
percentage of individuals participating in the program.]
    [(2) Any State desiring to receive grants authorized by 
this section may, from the funds appropriated to carry out this 
section, receive a planning and assessment grant for the 
purposes of carrying out the responsibilities described in 
clauses (A), (B), (C), and (D) of paragraph (1) of this 
subsection. Any State receiving a planning and assessment 
grant, may, during the first year of participation, be advanced 
a portion of the funds necessary to carry out such 
responsibilities: Provided, That in order to receive additional 
funding, the State must carry out such responsibilities.]
    [(3)] (2) A State agency may use an amount equal to not 
more than 15 percent of the funds made available through a 
grant under this section for expenditures for administrative 
purposes in connection with the program authorized under this 
section if the State makes available at least an equal amount 
for administrative or program purposes in connection with the 
program.
    [(4) Nothing in this section shall prohibit State or local 
educational agencies from making available or distributing to 
adults nutrition education materials, resources, activities, or 
programs authorized under this section.]

                     ACCOUNTS, RECORDS, AND REPORTS

    (g)(1) State educational agencies participating in programs 
under this section shall keep such accounts and records as may 
be necessary to enable the Secretary to determine whether there 
has been compliance with this section and the regulations 
issued hereunder. Such accounts and records shall [at all times 
be available] be available at any reasonable time for 
inspection and audit by representatives of the Secretary and 
shall be preserved for such period of time, not in excess of 
five years, as the Secretary determines to be necessary.
    (2) State educational agencies shall provide reports on 
expenditures of Federal funds, program participation, program 
costs, and related matters, in such form and at such times as 
the Secretary may prescribe.

              STATE COORDINATORS FOR NUTRITION; STATE PLAN

    (h)(1) In order to be eligible for assistance under this 
section, a State shall appoint a nutrition education specialist 
to serve as a State coordinator for school nutrition education. 
It shall be the responsibility of the State coordinator to make 
an assessment of the nutrition education needs in the State [as 
provided in paragraph (2) of this subsection], prepare a State 
plan [as provided in paragraph (3) of this subsection], and 
coordinate programs under this Act with all other nutrition 
education programs provided by the State with Federal or State 
funds.
    (2) Upon receipt of funds authorized by this section, the 
State coordinator shall prepare an itemized budget and assess 
the nutrition education and training needs of the State. [Such 
assessment shall include, but not be limited to, the 
identification and location of all students in need of 
nutrition education. The assessment shall also identify State 
and local individual, group, and institutional resources within 
the State for materials, facilities, staffs, and methods 
related to nutrition education.]
    [(3) Within nine months after the award of the planning and 
assessment grant, the State coordinator shall develop, prepare, 
and furnish the Secretary, for approval, a comprehensive plan 
for nutrition education within such State. The Secretary shall 
act on such plan not later than sixty days after it is 
received. Each such plan shall describe (A) the findings of the 
nutrition education needs assessment within the State; (B) 
provisions for coordinating the nutrition education program 
carried out with funds made available under this section with 
any related publicly supported programs being carried out 
within the State; (C) plans for soliciting the advice and 
recommendations of the State educational agency, interested 
teachers, food nutrition professionals and paraprofessionals, 
school food service personnel, administrators, representatives 
from consumer groups, parents, and other individuals concerned 
with the improvement of child nutrition; (D) plans for reaching 
all students in the State with instruction in the nutritional 
value of foods and the relationships among food, nutrition, and 
health, for training food service personnel in the principles 
and skills of food service management, and for instructing 
teachers in sound principles of nutrition education; (E) plans 
for using, on a priority basis, the resources of the land-grant 
colleges eligible to receive funds under the Act of July 2, 
1862, or the Act of August 30, 1890, including the Tuskegee 
Institute; and (F) a comprehensive plan for providing nutrition 
education during the first fiscal year beginning after the 
submission of the plan and the succeeding 4 fiscal years. To 
the maximum extent practicable, the State's performance under 
such plan shall be reviewed and evaluated by the Secretary on a 
regular basis, including the use of public hearings. Each plan 
developed as required by this section shall be updated on an 
annual basis.]

                       APPROPRIATIONS AUTHORIZED

    (i)(1) For the fiscal years beginning October 1, 1977, and 
October 1, 1978, grants to the States for the conduct of 
nutrition education and information programs shall be based on 
a rate of 50 cents for each child enrolled in schools or in 
institutions within the State, except that no State shall 
receive an amount less than $75,000 per year.
    (2)(A) Out of any moneys in the Treasury not otherwise 
appropriated, and in addition to any amounts otherwise made 
available for fiscal year 1995, the Secretary of the Treasury 
shall provide to the Secretary $1,000 for fiscal year 1995 and 
$10,000,000 for fiscal year 1996 [and each succeeding fiscal 
year] for making grants under this section to each State for 
the conduct of nutrition education and training programs. The 
Secretary shall be entitled to receive the funds and shall 
accept the funds.
          * * * * * * *
            (3) Fiscal years 1997 through 2002.--
                    (A) In general.--There are authorized to be 
                appropriated to carry out this section 
                $10,000,000 for each of fiscal years 1997 
                through 2002.
                    (B) Grants.--
                            (i) In general.--Grants to each 
                        State from the amounts made available 
                        under subparagraph (A) shall be based 
                        on a rate of 50 cents for each child 
                        enrolled in schools or institutions 
                        within the State, except that no State 
                        shall receive an amount less than 
                        $75,000 per fiscal year.
                            (ii) Insufficient funds.--If the 
                        amount made available for any fiscal 
                        year is insufficient to pay the amount 
                        to which each State is entitled under 
                        clause (i), the amount of each grant 
                        shall be ratably reduced.
    [(3)] (4) Funds made available to any State under this 
section shall remain available to the State for obligation in 
the fiscal year succeeding the fiscal year in which the funds 
were received by the State.
    [(4)] (5) Enrollment data used for purposes of this 
subsection shall be the latest available as certified by the 
Department of Education.
    [(j)(1) The Secretary shall assess the nutrition education 
and training program carried out under this section to 
determine what nutrition education needs are for children 
participating under the National School Lunch Act in the school 
lunch program, the summer food service program, and the child 
care food program.
    [(2) The assessment required by paragraph (1) shall be 
completed not later than October 1, 1990.]
          * * * * * * *
         TITLE IV--COMMITTEE ON WAYS AND MEANS: WELFARE REFORM

SEC. 4001. SHORT TITLE.

    This title may be cited as the ``Personal Responsibility 
and Work Opportunity Act of 1996''.

SEC. 4002. TABLE OF CONTENTS.

Sec. 4001. Short title.
Sec. 4002. Table of contents.

  Subtitle A--Block Grants for Temporary Assistance for Needy Families

Sec. 4101. Findings.
Sec. 4102. Reference to Social Security Act.
Sec. 4103. Block grants to States.
Sec. 4104. Services provided by charitable, religious, or private 
          organizations.
Sec. 4105. Census data on grandparents as primary caregivers for their 
          grandchildren.
Sec. 4106. Report on data processing.
Sec. 4107. Study on alternative outcomes measures.
Sec. 4108. Conforming amendments to the Social Security Act.
Sec. 4109. Conforming amendments to the Food Stamp Act of 1977 and 
          related provisions.
Sec. 4110. Conforming amendments to other laws.
Sec. 4111. Development of prototype of counterfeit-resistant social 
          security card required.
Sec. 4112. Disclosure of receipt of Federal funds.
Sec. 4113. Modifications to the job opportunities for certain low-income 
          individuals program.
Sec. 4114. Secretarial submission of legislative proposal for technical 
          and conforming amendments.
Sec. 4115. Effective date; transition rule.

                Subtitle B--Supplemental Security Income

Sec. 4200. Reference to Social Security Act.

                   Chapter 1--Eligibility Restrictions

Sec. 4201. Denial of SSI benefits for 10 years to individuals found to 
          have fraudulently misrepresented residence in order to obtain 
          benefits simultaneously in 2 or more States.
Sec. 4202. Denial of SSI benefits for fugitive felons and probation and 
          parole violators.
Sec. 4203. Treatment of prisoners.
Sec. 4204. Effective date of application for benefits.

                Chapter 2--Benefits For Disabled Children

Sec. 4211. Definition and eligibility rules.
Sec. 4212. Eligibility redeterminations and continuing disability 
          reviews.
Sec. 4213. Additional accountability requirements.
Sec. 4214. Reduction in cash benefits payable to institutionalized 
          individuals whose medical costs are covered by private 
          insurance.
Sec. 4215. Regulations.

              Chapter 3--Additional Enforcement Provisions

Sec. 4221. Installment payment of large past-due supplemental security 
          income benefits.
Sec. 4222. Recovery of supplemental security income overpayments from 
          social security benefits.
Sec. 4223. Regulations.

                Chapter 4--State Supplementation Programs

Sec. 4225. Repeal of maintenance of effort requirements applicable to 
          optional State programs for supplementation of SSI benefits.

    Chapter 5--Studies Regarding Supplemental Security Income Program

Sec. 4231. Annual report on the supplemental security income program.
Sec. 4232. Study of disability determination process.
Sec. 4233. Study by General Accounting Office.

       Chapter 6--National Commission on the Future of Disability

Sec. 4241. Establishment.
Sec. 4242. Duties of the commission.
Sec. 4243. Membership.
Sec. 4244. Staff and support services.
Sec. 4245. Powers of commission.
Sec. 4246. Reports.
Sec. 4247. Termination.
Sec. 4248. Authorization of appropriations.

                        Subtitle C--Child Support

Sec. 4300. Reference to Social Security Act.

      Chapter 1--Eligibility For Services; Distribution of Payments

Sec. 4301. State obligation to provide child support enforcement 
          services.
Sec. 4302. Distribution of child support collections.
Sec. 4303. Privacy safeguards.
Sec. 4304. Rights to notification of hearings.

                   Chapter 2--Locate And Case Tracking

Sec. 4311. State case registry.
Sec. 4312. Collection and disbursement of support payments.
Sec. 4313. State directory of new hires.
Sec. 4314. Amendments concerning income withholding.
Sec. 4315. Locator information from interstate networks.
Sec. 4316. Expansion of the Federal Parent Locator Service.
Sec. 4317. Collection and use of social security numbers for use in 
          child support enforcement.

          Chapter 3--Streamlining And Uniformity of Procedures

Sec. 4321. Adoption of uniform State laws.
Sec. 4322. Improvements to full faith and credit for child support 
          orders.
Sec. 4323. Administrative enforcement in interstate cases.
Sec. 4324. Use of forms in interstate enforcement.
Sec. 4325. State laws providing expedited procedures.

                   Chapter 4--Paternity Establishment

Sec. 4331. State laws concerning paternity establishment.
Sec. 4332. Outreach for voluntary paternity establishment.
Sec. 4333. Cooperation by applicants for and recipients of part A 
          assistance.

              Chapter 5--Program Administration and Funding

Sec. 4341. Performance-based incentives and penalties.
Sec. 4342. Federal and State reviews and audits.
Sec. 4343. Required reporting procedures.
Sec. 4344. Automated data processing requirements.
Sec. 4345. Technical assistance.
Sec. 4346. Reports and data collection by the Secretary.

       Chapter 6--Establishment And Modification of Support Orders

Sec. 4351. Simplified process for review and adjustment of child support 
          orders.
Sec. 4352. Furnishing consumer reports for certain purposes relating to 
          child support.
Sec. 4353. Nonliability for financial institutions providing financial 
          records to State child support enforcement agencies in child 
          support cases.

                Chapter 7--Enforcement Of Support Orders

Sec. 4361. Internal Revenue Service collection of arrearages.
Sec. 4362. Authority to collect support from Federal employees.
Sec. 4363. Enforcement of child support obligations of members of the 
          Armed Forces.
Sec. 4364. Voiding of fraudulent transfers.
Sec. 4365. Work requirement for persons owing past-due child support.
Sec. 4366. Definition of support order.
Sec. 4367. Reporting arrearages to credit bureaus.
Sec. 4368. Liens.
Sec. 4369. State law authorizing suspension of licenses.
Sec. 4370. Denial of passports for nonpayment of child support.
Sec. 4371. International support enforcement.
Sec. 4372. Financial institution data matches.
Sec. 4373. Enforcement of orders against paternal or maternal 
          grandparents in cases of minor parents.
Sec. 4374. Nondischargeability in bankruptcy of certain debts for the 
          support of a child.

                       Chapter 8--Medical Support

Sec. 4376. Correction to ERISA definition of medical child support 
          order.
Sec. 4377. Enforcement of orders for health care coverage.

Chapter 9--Enhancing Responsibility and Opportunity for Non-residential 
                                 Parents

Sec. 4381. Grants to States for access and visitation programs.

          Chapter 10--Effective Dates and Conforming Amendments

Sec. 4391. Effective dates and conforming amendments.

     Subtitle D--Restricting Welfare and Public Benefits for Aliens

Sec. 4400. Statements of national policy concerning welfare and 
          immigration.

               Chapter 1--Eligibility For Federal Benefits

Sec. 4401. Aliens who are not qualified aliens ineligible for Federal 
          public benefits.
Sec. 4402. Limited eligibility of qualified aliens for certain Federal 
          programs.
Sec. 4403. Five-year limited eligibility of qualified aliens for Federal 
          means-tested public benefit.
Sec. 4404. Notification and information reporting.

   Chapter 2--Eligibility For State and Local Public Benefits Programs

Sec. 4411. Aliens who are not qualified aliens or nonimmigrants 
          ineligible for State and local public benefits.
Sec. 4412. State authority to limit eligibility of qualified aliens for 
          State public benefits.

       Chapter 3--Attribution Of Income and Affidavits of Support

Sec. 4421. Federal attribution of sponsor's income and resources to 
          alien.
Sec. 4422. Authority for States to provide for attribution of sponsors 
          income and resources to the alien with respect to State 
          programs.
Sec. 4423. Requirements for sponsor's affidavit of support.
Sec. 4424. Cosignature of alien student loans.

                      Chapter 4--General Provisions

Sec. 4431. Definitions.
Sec. 4432. Verification of eligibility for Federal public benefits.
Sec. 4433. Statutory construction.
Sec. 4434. Communication between State and local government agencies and 
          the Immigration and Naturalization Service.
Sec. 4435. Qualifying quarters.

      Chapter 5--Conforming Amendments Relating to Assisted Housing

Sec. 4441. Conforming amendments relating to assisted housing.

    Chapter 6--Earned Income Credit Denied to Unauthorized Employees

Sec. 4451. Earned income credit denied to individuals not authorized to 
          be employed in the United States.

                  Subtitle E--Reform of Public Housing

Sec. 4601. Fraud under means-tested welfare and public assistance 
          programs.

   Subtitle F--Child Protection Block Grant Programs and Foster Care, 
          Adoption Assistance, and Independent Living Programs

    Chapter 1--Child Protection Block Grant Program and Foster Care, 
          Adoption Assistance, and Independent Living Programs

    SUBCHAPTER A--BLOCK GRANTS TO STATES FOR THE PROTECTION OF CHILDREN

Sec. 4701. Establishment of program.
Sec. 4702. Conforming amendments.

  SUBCHAPTER B--FOSTER CARE, ADOPTION ASSISTANCE, AND INDEPENDENT LIVING 
                                PROGRAMS

Sec. 4711. Conforming amendments to part E of title IV.

                        SUBCHAPTER C--MISCELLANEOUS

Sec. 4721. Secretarial submission of legislative proposal for technical 
          and conforming amendments.
Sec. 4722. Sense of the Congress regarding timely adoption of children.
Sec. 4723. Effective date; transition rules.

            Chapter 2--Child And Family Services Block Grant

Sec. 4751. Child and family services block grant.
Sec. 4752. Reauthorizations.
Sec. 4753. Repeals.

                         Subtitle G--Child Care

Sec. 4801. Short title and references.
Sec. 4802. Goals.
Sec. 4803. Authorization of appropriations and entitlement authority.
Sec. 4804. Lead agency.
Sec. 4805. Application and plan.
Sec. 4806. Limitation on State allotments.
Sec. 4807. Activities to improve the quality of child care.
Sec. 4808. Repeal of early childhood development and before- and after-
          school care requirement.
Sec. 4809. Administration and enforcement.
Sec. 4810. Payments.
Sec. 4811. Annual report and audits.
Sec. 4812. Report by the Secretary.
Sec. 4813. Allotments.
Sec. 4814. Definitions.
Sec. 4815. Repeals.
Sec. 4816. Effective date.

                        Subtitle H--Miscellaneous

Sec. 4901. Appropriation by State legislatures.
Sec. 4902. Sanctioning for testing positive for controlled substances.
Sec. 4903. Reduction in block grants to States for social services.
Sec. 4904. Rules relating to denial of earned income credit on basis of 
          disqualified income.
Sec. 4905. Modification of adjusted gross income definition for earned 
          income credit.
Sec. 4906. Modification of earned income credit amount and phaseout.

  Subtitle A--Block Grants for Temporary Assistance for Needy Families

SEC. 4101. FINDINGS.

    The Congress makes the following findings:
            (1) Marriage is the foundation of a successful 
        society.
            (2) Marriage is an essential institution of a 
        successful society which promotes the interests of 
        children.
            (3) Promotion of responsible fatherhood and 
        motherhood is integral to successful child rearing and 
        the well-being of children.
            (4) In 1992, only 54 percent of single-parent 
        families with children had a child support order 
        established and, of that 54 percent, only about one-
        half received the full amount due. Of the cases 
        enforced through the public child support enforcement 
        system, only 18 percent of the caseload has a 
        collection.
            (5) The number of individuals receiving aid to 
        families with dependent children (in this section 
        referred to as ``AFDC'') has more than tripled since 
        1965. More than two-thirds of these recipients are 
        children. Eighty-nine percent of children receiving 
        AFDC benefits now live in homes in which no father is 
        present.
                    (A)(i) The average monthly number of 
                children receiving AFDC benefits--
                            (I) was 3,300,000 in 1965;
                            (II) was 6,200,000 in 1970;
                            (III) was 7,400,000 in 1980; and
                            (IV) was 9,300,000 in 1992.
                    (ii) While the number of children receiving 
                AFDC benefits increased nearly threefold 
                between 1965 and 1992, the total number of 
                children in the United States aged 0 to 18 has 
                declined by 5.5 percent.
                    (B) The Department of Health and Human 
                Services has estimated that 12,000,000 children 
                will receive AFDC benefits within 10 years.
                    (C) The increase in the number of children 
                receiving public assistance is closely related 
                to the increase in births to unmarried women. 
                Between 1970 and 1991, the percentage of live 
                births to unmarried women increased nearly 
                threefold, from 10.7 percent to 29.5 percent.
            (6) The increase of out-of-wedlock pregnancies and 
        births is well documented as follows:
                    (A) It is estimated that the rate of 
                nonmarital teen pregnancy rose 23 percent from 
                54 pregnancies per 1,000 unmarried teenagers in 
                1976 to 66.7 pregnancies in 1991. The overall 
                rate of nonmarital pregnancy rose 14 percent 
                from 90.8 pregnancies per 1,000 unmarried women 
                in 1980 to 103 in both 1991 and 1992. In 
                contrast, the overall pregnancy rate for 
                married couples decreased 7.3 percent between 
                1980 and 1991, from 126.9 pregnancies per 1,000 
                married women in 1980 to 117.6 pregnancies in 
                1991.
                    (B) The total of all out-of-wedlock births 
                between 1970 and 1991 has risen from 10.7 
                percent to 29.5 percent and if the current 
                trend continues, 50 percent of all births by 
                the year 2015 will be out-of-wedlock.
            (7) The negative consequences of an out-of-wedlock 
        birth on the mother, the child, the family, and society 
        are well documented as follows:
                    (A) Young women 17 and under who give birth 
                outside of marriage are more likely to go on 
                public assistance and to spend more years on 
                welfare once enrolled. These combined effects 
                of ``younger and longer'' increase total AFDC 
                costs per household by 25 percent to 30 percent 
                for 17-year-olds.
                    (B) Children born out-of-wedlock have a 
                substantially higher risk of being born at a 
                very low or moderately low birth weight.
                    (C) Children born out-of-wedlock are more 
                likely to experience low verbal cognitive 
                attainment, as well as more child abuse, and 
                neglect.
                    (D) Children born out-of-wedlock were more 
                likely to have lower cognitive scores, lower 
                educational aspirations, and a greater 
                likelihood of becoming teenage parents 
                themselves.
                    (E) Being born out-of-wedlock significantly 
                reduces the chances of the child growing up to 
                have an intact marriage.
                    (F) Children born out-of-wedlock are 3 
                times more likely to be on welfare when they 
                grow up.
            (8) Currently 35 percent of children in single-
        parent homes were born out-of-wedlock, nearly the same 
        percentage as that of children in single-parent homes 
        whose parents are divorced (37 percent). While many 
        parents find themselves, through divorce or tragic 
        circumstances beyond their control, facing the 
        difficult task of raising children alone, nevertheless, 
        the negative consequences of raising children in 
        single-parent homes are well documented as follows:
                    (A) Only 9 percent of married-couple 
                families with children under 18 years of age 
                have income below the national poverty level. 
                In contrast, 46 percent of female-headed 
                households with children under 18 years of age 
                are below the national poverty level.
                    (B) Among single-parent families, nearly 
                \1/2\ of the mothers who never married received 
                AFDC while only \1/5\ of divorced mothers 
                received AFDC.
                    (C) Children born into families receiving 
                welfare assistance are 3 times more likely to 
                be on welfare when they reach adulthood than 
                children not born into families receiving 
                welfare.
                    (D) Mothers under 20 years of age are at 
                the greatest risk of bearing low-birth-weight 
                babies.
                    (E) The younger the single parent mother, 
                the less likely she is to finish high school.
                    (F) Young women who have children before 
                finishing high school are more likely to 
                receive welfare assistance for a longer period 
                of time.
                    (G) Between 1985 and 1990, the public cost 
                of births to teenage mothers under the aid to 
                families with dependent children program, the 
                food stamp program, and the medicaid program 
                has been estimated at $120,000,000,000.
                    (H) The absence of a father in the life of 
                a child has a negative effect on school 
                performance and peer adjustment.
                    (I) Children of teenage single parents have 
                lower cognitive scores, lower educational 
                aspirations, and a greater likelihood of 
                becoming teenage parents themselves.
                    (J) Children of single-parent homes are 3 
                times more likely to fail and repeat a year in 
                grade school than are children from intact 2-
                parent families.
                    (K) Children from single-parent homes are 
                almost 4 times more likely to be expelled or 
                suspended from school.
                    (L) Neighborhoods with larger percentages 
                of youth aged 12 through 20 and areas with 
                higher percentages of single-parent households 
                have higher rates of violent crime.
                    (M) Of those youth held for criminal 
                offenses within the State juvenile justice 
                system, only 29.8 percent lived primarily in a 
                home with both parents. In contrast to these 
                incarcerated youth, 73.9 percent of the 
                62,800,000 children in the Nation's resident 
                population were living with both parents.
            (9) Therefore, in light of this demonstration of 
        the crisis in our Nation, it is the sense of the 
        Congress that prevention of out-of-wedlock pregnancy 
        and reduction in out-of-wedlock birth are very 
        important Government interests and the policy contained 
        in part A of title IV of the Social Security Act (as 
        amended by section 4103(a) of this Act) is intended to 
        address the crisis.

SEC. 4102. REFERENCE TO SOCIAL SECURITY ACT.

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

SEC. 4103. BLOCK GRANTS TO STATES.

    (a) In General.--Part A of title IV (42 U.S.C. 601 et seq.) 
is amended--
            (1) by striking all that precedes section 418 (as 
        added by section 4803(b)(2) of this Act) and inserting 
        the following:

  ``PART A--BLOCK GRANTS TO STATES FOR TEMPORARY ASSISTANCE FOR NEEDY 
                                FAMILIES

``SEC. 401. PURPOSE.

    ``(a) In General.--The purpose of this part is to increase 
the flexibility of States in operating a program designed to--
            ``(1) provide assistance to needy families so that 
        children may be cared for in their own homes or in the 
        homes of relatives;
            ``(2) end the dependence of needy parents on 
        government benefits by promoting job preparation, work, 
        and marriage;
            ``(3) prevent and reduce the incidence of out-of-
        wedlock pregnancies and establish annual numerical 
        goals for preventing and reducing the incidence of 
        these pregnancies; and
            ``(4) encourage the formation and maintenance of 
        two-parent families.
    ``(b) No Individual Entitlement.--This part shall not be 
interpreted to entitle any individual or family to assistance 
under any State program funded under this part.

``SEC. 402. ELIGIBLE STATES; STATE PLAN.

    ``(a) In General.--As used in this part, the term `eligible 
State' means, with respect to a fiscal year, a State that, 
during the 2-year period immediately preceding the fiscal year, 
has submitted to the Secretary a plan that the Secretary has 
found includes the following:
            ``(1) Outline of family assistance program.--
                    ``(A) General provisions.--A written 
                document that outlines how the State intends to 
                do the following:
                            ``(i) Conduct a program, designed 
                        to serve all political subdivisions in 
                        the State (not necessarily in a uniform 
                        manner), that provides assistance to 
                        needy families with (or expecting) 
                        children and provides parents with job 
                        preparation, work, and support services 
                        to enable them to leave the program and 
                        become self-sufficient.
                            ``(ii) Require a parent or 
                        caretaker receiving assistance under 
                        the program to engage in work (as 
                        defined by the State) once the State 
                        determines the parent or caretaker is 
                        ready to engage in work, or once the 
                        parent or caretaker has received 
                        assistance under the program for 24 
                        months (whether or not consecutive), 
                        whichever is earlier.
                            ``(iii) Ensure that parents and 
                        caretakers receiving assistance under 
                        the program engage in work activities 
                        in accordance with section 407.
                            ``(iv) Take such reasonable steps 
                        as the State deems necessary to 
                        restrict the use and disclosure of 
                        information about individuals and 
                        families receiving assistance under the 
                        program attributable to funds provided 
                        by the Federal Government.
                            ``(v) Establish goals and take 
                        action (including provision of 
                        education and counseling (including 
                        abstinence-based programs) and pre-
                        pregnancy health services) to prevent 
                        and reduce the incidence of out-of-
                        wedlock pregnancies, with special 
                        emphasis on teenage pregnancies, and 
                        establish numerical goals for reducing 
                        the illegitimacy ratio of the State (as 
                        defined in section 403(a)(2)(B)) for 
                        calendar years 1996 through 2005.
                    ``(B) Special provisions.--
                            ``(i) The document shall indicate 
                        whether the State intends to treat 
                        families moving into the State from 
                        another State differently than other 
                        families under the program, and if so, 
                        how the State intends to treat such 
                        families under the program.
                            ``(ii) The document shall indicate 
                        whether the State intends to provide 
                        assistance under the program to 
                        individuals who are not citizens of the 
                        United States, and if so, shall include 
                        an overview of such assistance.
                            ``(iii) The document shall set 
                        forth objective criteria for the 
                        delivery of benefits and the 
                        determination of eligibility and for 
                        fair and equitable treatment, including 
                        an explanation of how the State will 
                        provide opportunities for recipients 
                        who have been adversely affected to be 
                        heard in a State administrative or 
                        appeal process.
            ``(2) Certification that the state will operate a 
        child support enforcement program.--A certification by 
        the chief executive officer of the State that, during 
        the fiscal year, the State will operate a child support 
        enforcement program under the State plan approved under 
        part D.
            ``(3) Certification that the state will operate a 
        child protection program.--A certification by the chief 
        executive officer of the State that, during the fiscal 
        year, the State will operate a child protection program 
        under the State plan approved under part B.
            ``(4) Certification of the administration of the 
        program.--A certification by the chief executive 
        officer of the State specifying which State agency or 
        agencies will administer and supervise the program 
        referred to in paragraph (1) for the fiscal year, which 
        shall include assurances that local governments and 
        private sector organizations--
                    ``(A) have been consulted regarding the 
                plan and design of welfare services in the 
                State so that services are provided in a manner 
                appropriate to local populations; and
                    ``(B) have had at least 45 days to submit 
                comments on the plan and the design of such 
                services.
            ``(5) Certification that the state will provide 
        indians with equitable access to assistance.--A 
        certification by the chief executive officer of the 
        State that, during the fiscal year, the State will 
        provide each Indian who is a member of an Indian tribe 
        in the State that does not have a tribal family 
        assistance plan approved under section 412 with 
        equitable access to assistance under the State program 
        funded under this part attributable to funds provided 
        by the Federal Government.
    ``(b) Public Availability of State Plan Summary.--The State 
shall make available to the public a summary of any plan 
submitted by the State under this section.

``SEC. 403. GRANTS TO STATES.

    ``(a) Grants.--
            ``(1) Family assistance grant.--
                    ``(A) In general.--Each eligible State 
                shall be entitled to receive from the 
                Secretary, for each of fiscal years 1996, 1997, 
                1998, 1999, 2000, and 2001 a grant in an amount 
                equal to the State family assistance grant.
                    ``(B) State family assistance grant 
                defined.--As used in this part, the term `State 
                family assistance grant' means the greatest 
                of--
                            ``(i) \1/3\ of the total amount 
                        required to be paid to the State under 
                        former section 403 (as in effect on 
                        September 30, 1995) for fiscal years 
                        1992, 1993, and 1994 (other than with 
                        respect to amounts expended by the 
                        State for child care under subsection 
                        (g) or (i) of former section 402 (as so 
                        in effect));
                            ``(ii)(I) the total amount required 
                        to be paid to the State under former 
                        section 403 for fiscal year 1994 (other 
                        than with respect to amounts expended 
                        by the State for child care under 
                        subsection (g) or (i) of former section 
                        402 (as so in effect)); plus
                            ``(II) an amount equal to 85 
                        percent of the amount (if any) by which 
                        the total amount required to be paid to 
                        the State under former section 
                        403(a)(5) for emergency assistance for 
                        fiscal year 1995 exceeds the total 
                        amount required to be paid to the State 
                        under former section 403(a)(5) for 
                        fiscal year 1994, if, during fiscal 
                        year 1994 or 1995, the Secretary 
                        approved under former section 402 an 
                        amendment to the former State plan to 
                        allow the provision of emergency 
                        assistance in the context of family 
                        preservation; or
                            ``(iii) \4/3\ of the total amount 
                        required to be paid to the State under 
                        former section 403 (as in effect on 
                        September 30, 1995) for the 1st 3 
                        quarters of fiscal year 1995 (other 
                        than with respect to amounts expended 
                        by the State under the State plan 
                        approved under part F (as so in effect) 
                        or for child care under subsection (g) 
                        or (i) of former section 402 (as so in 
                        effect)), plus the total amount 
                        required to be paid to the State for 
                        fiscal year 1995 under former section 
                        403(l) (as so in effect).
                    ``(C) Total amount required to be paid to 
                the state under former section 403 defined.--As 
                used in this part, the term `total amount 
                required to be paid to the State under former 
                section 403' means, with respect to a fiscal 
                year--
                            ``(i) in the case of a State to 
                        which section 1108 does not apply, the 
                        sum of--
                                    ``(I) the Federal share of 
                                maintenance assistance 
                                expenditures for the fiscal 
                                year, before reduction pursuant 
                                to subparagraph (B) or (C) of 
                                section 403(b)(2) (as in effect 
                                on September 30, 1995), as 
                                reported by the State on ACF 
                                Form 231;
                                    ``(II) the Federal share of 
                                administrative expenditures 
                                (including administrative 
                                expenditures for the 
                                development of management 
                                information systems) for the 
                                fiscal year, as reported by the 
                                State on ACF Form 231;
                                    ``(III) the Federal share 
                                of emergency assistance 
                                expenditures for the fiscal 
                                year, as reported by the State 
                                on ACF Form 231;
                                    ``(IV) the Federal share of 
                                expenditures for the fiscal 
                                year with respect to child care 
                                pursuant to subsections (g) and 
                                (i) of former section 402 (as 
                                in effect on September 30, 
                                1995), as reported by the State 
                                on ACF Form 231; and
                                    ``(V) the aggregate amount 
                                required to be paid to the 
                                State for the fiscal year with 
                                respect to the State program 
                                operated under part F (as in 
                                effect on September 30, 1995), 
                                as determined by the Secretary, 
                                including additional 
                                obligations or reductions in 
                                obligations made after the 
                                close of the fiscal year; and
                            ``(ii) in the case of a State to 
                        which section 1108 applies, the lesser 
                        of--
                                    ``(I) the sum described in 
                                clause (i); or
                                    ``(II) the total amount 
                                certified by the Secretary 
                                under former section 403 (as in 
                                effect during the fiscal year) 
                                with respect to the territory.
                    ``(D) Information to be used in determining 
                amounts.--
                            ``(i) For fiscal years 1992 and 
                        1993.--
                                    ``(I) In determining the 
                                amounts described in subclauses 
                                (I) through (IV) of 
                                subparagraph (C)(i) for any 
                                State for each of fiscal years 
                                1992 and 1993, the Secretary 
                                shall use information available 
                                as of April 28, 1995.
                                    ``(II) In determining the 
                                amount described in 
                                subparagraph (C)(i)(V) for any 
                                State for each of fiscal years 
                                1992 and 1993, the Secretary 
                                shall use information available 
                                as of January 6, 1995.
                            ``(ii) For fiscal year 1994.--In 
                        determining the amounts described in 
                        subparagraph (C)(i) for any State for 
                        fiscal year 1994, the Secretary shall 
                        use information available as of April 
                        28, 1995.
                            ``(iii) For fiscal year 1995.--
                                    ``(I) In determining the 
                                amount described in 
                                subparagraph (B)(ii)(II) for 
                                any State for fiscal year 1995, 
                                the Secretary shall use the 
                                information which was reported 
                                by the States and estimates 
                                made by the States with respect 
                                to emergency assistance 
                                expenditures and was available 
                                as of August 11, 1995.
                                    ``(II) In determining the 
                                amounts described in subclauses 
                                (I) through (III) of 
                                subparagraph (C)(i) for any 
                                State for fiscal year 1995, the 
                                Secretary shall use information 
                                available as of October 2, 
                                1995.
                                    ``(III) In determining the 
                                amount described in 
                                subparagraph (C)(i)(IV) for any 
                                State for fiscal year 1995, the 
                                Secretary shall use information 
                                available as of February 28, 
                                1996.
                                    ``(IV) In determining the 
                                amount described in 
                                subparagraph (C)(i)(V) for any 
                                State for fiscal year 1995, the 
                                Secretary shall use information 
                                available as of October 5, 
                                1995.
                    ``(E) Appropriation.--Out of any money in 
                the Treasury of the United States not otherwise 
                appropriated, there are appropriated for fiscal 
                years 1996, 1997, 1998, 1999, 2000, and 2001 
                such sums as are necessary for grants under 
                this paragraph.
            ``(2) Grant to reward states that reduce out-of-
        wedlock births.--
                    ``(A) In general.--Each eligible State 
                shall be entitled to receive from the Secretary 
                for fiscal year 1998 or any succeeding fiscal 
                year, a grant in an amount equal to the State 
                family assistance grant multiplied by--
                            ``(i) 5 percent if--
                                    ``(I) the illegitimacy 
                                ratio of the State for the 
                                fiscal year is at least 1 
                                percentage point lower than the 
                                illegitimacy ratio of the State 
                                for fiscal year 1995; and
                                    ``(II) the rate of induced 
                                pregnancy terminations in the 
                                State for the fiscal year is 
                                less than the rate of induced 
                                pregnancy terminations in the 
                                State for fiscal year 1995; or
                            ``(ii) 10 percent if--
                                    ``(I) the illegitimacy 
                                ratio of the State for the 
                                fiscal year is at least 2 
                                percentage points lower than 
                                the illegitimacy ratio of the 
                                State for fiscal year 1995; and
                                    ``(II) the rate of induced 
                                pregnancy terminations in the 
                                State for the fiscal year is 
                                less than the rate of induced 
                                pregnancy terminations in the 
                                State for fiscal year 1995.
                    ``(B) Illegitimacy ratio.--As used in this 
                paragraph, the term `illegitimacy ratio' means, 
                with respect to a State and a fiscal year--
                            ``(i) the number of out-of-wedlock 
                        births that occurred in the State 
                        during the most recent fiscal year for 
                        which such information is available; 
                        divided by
                            ``(ii) the number of births that 
                        occurred in the State during the most 
                        recent fiscal year for which such 
                        information is available.
                    ``(C) Disregard of changes in data due to 
                changed reporting methods.--For purposes of 
                subparagraph (A), the Secretary shall 
                disregard--
                            ``(i) any difference between the 
                        illegitimacy ratio of a State for a 
                        fiscal year and the illegitimacy ratio 
                        of the State for fiscal year 1995 which 
                        is attributable to a change in State 
                        methods of reporting data used to 
                        calculate the illegitimacy ratio; and
                            ``(ii) any difference between the 
                        rate of induced pregnancy terminations 
                        in a State for a fiscal year and such 
                        rate for fiscal year 1995 which is 
                        attributable to a change in State 
                        methods of reporting data used to 
                        calculate such rate.
                    ``(D) Appropriation.--Out of any money in 
                the Treasury of the United States not otherwise 
                appropriated, there are appropriated for fiscal 
                year 1998 and for each succeeding fiscal year 
                such sums as are necessary for grants under 
                this paragraph.
            ``(3) Supplemental grant for population increases 
        in certain states.--
                    ``(A) In general.--Each qualifying State 
                shall, subject to subparagraph (F), be entitled 
                to receive from the Secretary--
                            ``(i) for fiscal year 1997 a grant 
                        in an amount equal to 2.5 percent of 
                        the total amount required to be paid to 
                        the State under former section 403 (as 
                        in effect during fiscal year 1994) for 
                        fiscal year 1994; and
                            ``(ii) for each of fiscal years 
                        1998, 1999, and 2000, a grant in an 
                        amount equal to the sum of--
                                    ``(I) the amount (if any) 
                                required to be paid to the 
                                State under this paragraph for 
                                the immediately preceding 
                                fiscal year; and
                                    ``(II) 2.5 percent of the 
                                sum of--
                                            ``(aa) the total 
                                        amount required to be 
                                        paid to the State under 
                                        former section 403 (as 
                                        in effect during fiscal 
                                        year 1994) for fiscal 
                                        year 1994; and
                                            ``(bb) the amount 
                                        (if any) required to be 
                                        paid to the State under 
                                        this paragraph for the 
                                        fiscal year preceding 
                                        the fiscal year for 
                                        which the grant is to 
                                        be made.
                    ``(B) Preservation of grant without 
                increases for states failing to remain 
                qualifying states.--Each State that is not a 
                qualifying State for a fiscal year specified in 
                subparagraph (A)(ii) but was a qualifying State 
                for a prior fiscal year shall, subject to 
                subparagraph (F), be entitled to receive from 
                the Secretary for the specified fiscal year, a 
                grant in an amount equal to the amount required 
                to be paid to the State under this paragraph 
                for the most recent fiscal year for which the 
                State was a qualifying State.
                    ``(C) Qualifying state.--
                            ``(i) In general.--For purposes of 
                        this paragraph, a State is a qualifying 
                        State for a fiscal year if--
                                    ``(I) the level of welfare 
                                spending per poor person by the 
                                State for the immediately 
                                preceding fiscal year is less 
                                than the national average level 
                                of State welfare spending per 
                                poor person for such preceding 
                                fiscal year; and
                                    ``(II) the population 
                                growth rate of the State (as 
                                determined by the Bureau of the 
                                Census) for the most recent 
                                fiscal year for which 
                                information is available 
                                exceeds the average population 
                                growth rate for all States (as 
                                so determined) for such most 
                                recent fiscal year.
                            ``(ii) State must qualify in fiscal 
                        year 1997.--Notwithstanding clause (i), 
                        a State shall not be a qualifying State 
                        for any fiscal year after 1997 by 
                        reason of clause (i) if the State is 
                        not a qualifying State for fiscal year 
                        1997 by reason of clause (i).
                            ``(iii) Certain states deemed 
                        qualifying states.--For purposes of 
                        this paragraph, a State is deemed to be 
                        a qualifying State for fiscal years 
                        1997, 1998, 1999, and 2000 if--
                                    ``(I) the level of welfare 
                                spending per poor person by the 
                                State for fiscal year 1996 is 
                                less than 35 percent of the 
                                national average level of State 
                                welfare spending per poor 
                                person for fiscal year 1996; or
                                    ``(II) the population of 
                                the State increased by more 
                                than 10 percent from April 1, 
                                1990 to July 1, 1994, according 
                                to the population estimates in 
                                publication CB94-204 of the 
                                Bureau of the Census.
                    ``(D) Definitions.--As used in this 
                paragraph:
                            ``(i) Level of welfare spending per 
                        poor person.--The term `level of State 
                        welfare spending per poor person' 
                        means, with respect to a State and a 
                        fiscal year--
                                    ``(I) the sum of--
                                            ``(aa) the total 
                                        amount required to be 
                                        paid to the State under 
                                        former section 403 (as 
                                        in effect during fiscal 
                                        year 1994) for fiscal 
                                        year 1994; and
                                            ``(bb) the amount 
                                        (if any) paid to the 
                                        State under this 
                                        paragraph for the 
                                        immediately preceding 
                                        fiscal year; divided by
                                    ``(II) the number of 
                                individuals, according to the 
                                1990 decennial census, who were 
                                residents of the State and 
                                whose income was below the 
                                poverty line.
                            ``(ii) National average level of 
                        state welfare spending per poor 
                        person.--The term `national average 
                        level of State welfare spending per 
                        poor person' means, with respect to a 
                        fiscal year, an amount equal to--
                                    ``(I) the total amount 
                                required to be paid to the 
                                States under former section 403 
                                (as in effect during fiscal 
                                year 1994) for fiscal year 
                                1994; divided by
                                    ``(II) the number of 
                                individuals, according to the 
                                1990 decennial census, who were 
                                residents of any State and 
                                whose income was below the 
                                poverty line.
                            ``(iii) State.--The term `State' 
                        means each of the 50 States of the 
                        United States and the District of 
                        Columbia.
                    ``(E) Appropriation.--Out of any money in 
                the Treasury of the United States not otherwise 
                appropriated, there are appropriated for fiscal 
                years 1997, 1998, 1999, and 2000 such sums as 
                are necessary for grants under this paragraph, 
                in a total amount not to exceed $800,000,000.
                    ``(F) Grants reduced pro rata if 
                insufficient appropriations.--If the amount 
                appropriated pursuant to this paragraph for a 
                fiscal year is less than the total amount of 
                payments otherwise required to be made under 
                this paragraph for the fiscal year, then the 
                amount otherwise payable to any State for the 
                fiscal year under this paragraph shall be 
                reduced by a percentage equal to the amount so 
                appropriated divided by such total amount.
                    ``(G) Budget scoring.--Notwithstanding 
                section 257(b)(2) of the Balanced Budget and 
                Emergency Deficit Control Act of 1985, the 
                baseline shall assume that no grant shall be 
                made under this paragraph after fiscal year 
                2000.
            ``(4) Bonus to reward high performance states.--
                    ``(A) In general.--The Secretary shall make 
                a grant pursuant to this paragraph to each 
                State for each bonus year for which the State 
                is a high performing State.
                    ``(B) Amount of grant.--
                            ``(i) In general.--Subject to 
                        clause (ii) of this subparagraph, the 
                        Secretary shall determine the amount of 
                        the grant payable under this paragraph 
                        to a high performing State for a bonus 
                        year, which shall be based on the score 
                        assigned to the State under 
                        subparagraph (D)(i) for the fiscal year 
                        that immediately precedes the bonus 
                        year.
                            ``(ii) Limitation.--The amount 
                        payable to a State under this paragraph 
                        for a bonus year shall not exceed 5 
                        percent of the State family assistance 
                        grant.
                    ``(C) Formula for measuring state 
                performance.--Not later than 1 year after the 
                date of the enactment of the Personal 
                Responsibility and Work Opportunity Act of 
                1996, the Secretary, in consultation with the 
                National Governors' Association and the 
                American Public Welfare Association, shall 
                develop a formula for measuring State 
                performance in operating the State program 
                funded under this part so as to achieve the 
                goals set forth in section 401(a).
                    ``(D) Scoring of state performance; setting 
                of performance thresholds.--For each bonus 
                year, the Secretary shall--
                            ``(i) use the formula developed 
                        under subparagraph (C) to assign a 
                        score to each eligible State for the 
                        fiscal year that immediately precedes 
                        the bonus year; and
                            ``(ii) prescribe a performance 
                        threshold in such a manner so as to 
                        ensure that--
                                    ``(I) the average annual 
                                total amount of grants to be 
                                made under this paragraph for 
                                each bonus year equals 
                                $200,000,000; and
                                    ``(II) the total amount of 
                                grants to be made under this 
                                paragraph for all bonus years 
                                equals $1,000,000,000.
                    ``(E) Definitions.--As used in this 
                paragraph:
                            ``(i) Bonus year.--The term `bonus 
                        year' means fiscal years 1999, 2000, 
                        2001, 2002, and 2003.
                            ``(ii) High performing state.--The 
                        term `high performing State' means, 
                        with respect a bonus year, an eligible 
                        State whose score assigned pursuant to 
                        subparagraph (D)(i) for the fiscal year 
                        immediately preceding the bonus year 
                        equals or exceeds the performance 
                        threshold prescribed under subparagraph 
                        (D)(ii) for such preceding fiscal year.
                    ``(F) Appropriation.--Out of any money in 
                the Treasury of the United States not otherwise 
                appropriated, there are appropriated for fiscal 
                years 1999 through 2003 $1,000,000,000 for 
                grants under this paragraph.
    ``(b) Contingency Fund.--
            ``(1) Establishment.--There is hereby established 
        in the Treasury of the United States a fund which shall 
        be known as the `Contingency Fund for State Welfare 
        Programs' (in this section referred to as the `Fund').
            ``(2) Deposits into fund.--Out of any money in the 
        Treasury of the United States not otherwise 
        appropriated, there are appropriated for fiscal years 
        1997, 1998, 1999, 2000, and 2001 such sums as are 
        necessary for payment to the Fund in a total amount not 
        to exceed $2,000,000,000.
            ``(3) Grants.--
                    ``(A) Provisional payments.--If an eligible 
                State submits to the Secretary a request for 
                funds under this paragraph during an eligible 
                month, the Secretary shall, subject to this 
                paragraph, pay to the State, from amounts 
                appropriated pursuant to paragraph (2), an 
                amount equal to the amount of funds so 
                requested.
                    ``(B) Payment priority.--The Secretary 
                shall make payments under subparagraph (A) in 
                the order in which the Secretary receives 
                requests for such payments.
                    ``(C) Limitations.--
                            ``(i) Monthly payment to a state.--
                        The total amount paid to a single State 
                        under subparagraph (A) during a month 
                        shall not exceed \1/12\ of 20 percent 
                        of the State family assistance grant.
                            ``(ii) Payments to all states.--The 
                        total amount paid to all States under 
                        subparagraph (A) during fiscal years 
                        1997 through 2001 shall not exceed the 
                        total amount appropriated pursuant to 
                        paragraph (2).
            ``(4) Annual reconciliation.--Notwithstanding 
        paragraph (3), at the end of each fiscal year, each 
        State shall remit to the Secretary an amount equal to 
        the amount (if any) by which the total amount paid to 
        the State under paragraph (3) during the fiscal year 
        exceeds--
                    ``(A) the Federal medical assistance 
                percentage for the State for the fiscal year 
                (as defined in section 1905(b), as in effect on 
                September 30, 1995) of the amount (if any) by 
                which the expenditures under the State program 
                funded under this part for the fiscal year 
                exceed historic State expenditures (as defined 
                in section 409(a)(7)(B)(iii)); multiplied by
                    ``(B) \1/12\ times the number of months 
                during the fiscal year for which the Secretary 
                makes a payment to the State under this 
                subsection.
            ``(5) Eligible month.--As used in paragraph (3)(A), 
        the term `eligible month' means, with respect to a 
        State, a month in the 2-month period that begins with 
        any month for which the State is a needy State.
            ``(6) Needy state.--For purposes of paragraph (5), 
        a State is a needy State for a month if--
                    ``(A) the average rate of--
                            ``(i) total unemployment in such 
                        State (seasonally adjusted) for the 
                        period consisting of the most recent 3 
                        months for which data for all States 
                        are published equals or exceeds 6.5 
                        percent; and
                            ``(ii) total unemployment in such 
                        State (seasonally adjusted) for the 3-
                        month period equals or exceeds 110 
                        percent of such average rate for either 
                        (or both) of the corresponding 3-month 
                        periods ending in the 2 preceding 
                        calendar years; or
                    ``(B) as determined by the Secretary of 
                Agriculture (in the discretion of the Secretary 
                of Agriculture), the monthly average number of 
                individuals (as of the last day of each month) 
                participating in the food stamp program in the 
                State in the then most recently concluded 3-
                month period for which data are available 
                exceeds by not less than 10 percent the lesser 
                of--
                            ``(i) the monthly average number of 
                        individuals (as of the last day of each 
                        month) in the State that would have 
                        participated in the food stamp program 
                        in the corresponding 3-month period in 
                        fiscal year 1994 if the amendments made 
                        by subtitles D and J of the Personal 
                        Responsibility and Work Opportunity Act 
                        of 1996 had been in effect throughout 
                        fiscal year 1994; or
                            ``(ii) the monthly average number 
                        of individuals (as of the last day of 
                        each month) in the State that would 
                        have participated in the food stamp 
                        program in the corresponding 3-month 
                        period in fiscal year 1995 if the 
                        amendments made by subtitles D and J of 
                        the Personal Responsibility and Work 
                        Opportunity Act of 1996 had been in 
                        effect throughout fiscal year 1995.
            ``(7) Other terms defined.--As used in this 
        subsection:
                    ``(A) State.--The term `State' means each 
                of the 50 States of the United States and the 
                District of Columbia.
                    ``(B) Secretary.--The term `Secretary' 
                means the Secretary of the Treasury.
            ``(8) Annual reports.--The Secretary shall annually 
        report to the Congress on the status of the Fund.
            ``(9) Budget scoring.--Notwithstanding section 
        257(b)(2) of the Balanced Budget and Emergency Deficit 
        Control Act of 1985, the baseline shall assume that no 
        grant shall be made under this subsection after fiscal 
        year 2001.

``SEC. 404. USE OF GRANTS.

    ``(a) General Rules.--Subject to this part, a State to 
which a grant is made under section 403 may use the grant--
            ``(1) in any manner that is reasonably calculated 
        to accomplish the purpose of this part, including to 
        provide low income households with assistance in 
        meeting home heating and cooling costs; or
            ``(2) in any manner that the State was authorized 
        to use amounts received under part A or F, as such 
        parts were in effect on September 30, 1995.
    ``(b) Limitation on Use of Grant for Administrative 
Purposes.--
            ``(1) Limitation.--A State to which a grant is made 
        under section 403 shall not expend more than 15 percent 
        of the grant for administrative purposes.
            ``(2) Exception.--Paragraph (1) shall not apply to 
        the use of a grant for information technology and 
        computerization needed for tracking or monitoring 
        required by or under this part.
    ``(c) Authority to Treat Interstate Immigrants Under Rules 
of Former State.--A State operating a program funded under this 
part may apply to a family the rules (including benefit 
amounts) of the program funded under this part of another State 
if the family has moved to the State from the other State and 
has resided in the State for less than 12 months.
    ``(d) Authority to Use Portion of Grant for Other 
Purposes.--
            ``(1) In general.--A State may use not more than 30 
        percent of the amount of the grant made to the State 
        under section 403 for a fiscal year to carry out a 
        State program pursuant to any or all of the following 
        provisions of law:
                    ``(A) Part B or E of this title.
                    ``(B) Title XX of this Act.
                    ``(C) The Child Care and Development Block 
                Grant Act of 1990.
            ``(2) Applicable rules.--Any amount paid to the 
        State under this part that is used to carry out a State 
        program pursuant to a provision of law specified or 
        described in paragraph (1) shall not be subject to the 
        requirements of this part, but shall be subject to the 
        requirements that apply to Federal funds provided 
        directly under the provision of law to carry out the 
        program.
    ``(e) Authority to Reserve Certain Amounts for 
Assistance.--A State may reserve amounts paid to the State 
under this part for any fiscal year for the purpose of 
providing, without fiscal year limitation, assistance under the 
State program funded under this part.
    ``(f) Authority to Operate Employment Placement Program.--A 
State to which a grant is made under section 403 may use the 
grant to make payments (or provide job placement vouchers) to 
State-approved public and private job placement agencies that 
provide employment placement services to individuals who 
receive assistance under the State program funded under this 
part.
    ``(g) Implementation of Electronic Benefit Transfer 
System.--A State to which a grant is made under section 403 is 
encouraged to implement an electronic benefit transfer system 
for providing assistance under the State program funded under 
this part, and may use the grant for such purpose.

``SEC. 405. ADMINISTRATIVE PROVISIONS.

    ``(a) Quarterly.--The Secretary shall pay each grant 
payable to a State under section 403 in quarterly installments.
    ``(b) Notification.--Not later than 3 months before the 
payment of any such quarterly installment to a State, the 
Secretary shall notify the State of the amount of any reduction 
determined under section 412(a)(1)(B) with respect to the 
State.
    ``(c) Computation and Certification of Payments to 
States.--
            ``(1) Computation.--The Secretary shall estimate 
        the amount to be paid to each eligible State for each 
        quarter under this part, such estimate to be based on a 
        report filed by the State containing an estimate by the 
        State of the total sum to be expended by the State in 
        the quarter under the State program funded under this 
        part and such other information as the Secretary may 
        find necessary.
            ``(2) Certification.--The Secretary of Health and 
        Human Services shall certify to the Secretary of the 
        Treasury the amount estimated under paragraph (1) with 
        respect to a State, reduced or increased to the extent 
        of any overpayment or underpayment which the Secretary 
        of Health and Human Services determines was made under 
        this part to the State for any prior quarter and with 
        respect to which adjustment has not been made under 
        this paragraph.
    ``(d) Payment Method.--Upon receipt of a certification 
under subsection (c)(2) with respect to a State, the Secretary 
of the Treasury shall, through the Fiscal Service of the 
Department of the Treasury and before audit or settlement by 
the General Accounting Office, pay to the State, at the time or 
times fixed by the Secretary of Health and Human Services, the 
amount so certified.
    ``(e) Collection of State Overpayments to Families From 
Federal Tax Refunds.--
            ``(1) In general.--Upon receiving notice from the 
        Secretary of Health and Human Services that a State 
        agency administering a program funded under this part 
        has notified the Secretary that a named individual has 
        been overpaid under the State program funded under this 
        part, the Secretary of the Treasury shall determine 
        whether any amounts as refunds of Federal taxes paid 
        are payable to such individual, regardless of whether 
        the individual filed a tax return as a married or 
        unmarried individual. If the Secretary of the Treasury 
        finds that any such amount is so payable, the Secretary 
        shall withhold from such refunds an amount equal to the 
        overpayment sought to be collected by the State and pay 
        such amount to the State agency.
            ``(2) Regulations.--The Secretary of the Treasury 
        shall issue regulations, after review by the Secretary 
        of Health and Human services, that provide--
                    ``(A) that a State may only submit under 
                paragraph (1) requests for collection of 
                overpayments with respect to individuals--
                            ``(i) who are no longer receiving 
                        assistance under the State program 
                        funded under this part;
                            ``(ii) with respect to whom the 
                        State has already taken appropriate 
                        action under State law against the 
                        income or resources of the individuals 
                        or families involved to collect the 
                        past-due legally enforceable debt; and
                            ``(iii) to whom the State agency 
                        has given notice of its intent to 
                        request withholding by the Secretary of 
                        the Treasury from the income tax 
                        refunds of such individuals;
                    ``(B) that the Secretary of the Treasury 
                will give a timely and appropriate notice to 
                any other person filing a joint return with the 
                individual whose refund is subject to 
                withholding under paragraph (1); and
                    ``(C) the procedures that the State and the 
                Secretary of the Treasury will follow in 
                carrying out this subsection which, to the 
                maximum extent feasible and consistent with the 
                provisions of this subsection, will be the same 
                as those issued pursuant to section 464(b) 
                applicable to collection of past-due child 
                support.

``SEC. 406. FEDERAL LOANS FOR STATE WELFARE PROGRAMS.

    ``(a) Loan Authority.--
            ``(1) In general.--The Secretary shall make loans 
        to any loan-eligible State, for a period to maturity of 
        not more than 3 years.
            ``(2) Loan-eligible state.--As used in paragraph 
        (1), the term `loan-eligible State' means a State 
        against which a penalty has not been imposed under 
        section 409(a)(1).
    ``(b) Rate of Interest.--The Secretary shall charge and 
collect interest on any loan made under this section at a rate 
equal to the current average market yield on outstanding 
marketable obligations of the United States with remaining 
periods to maturity comparable to the period to maturity of the 
loan.
    ``(c) Use of Loan.--A State shall use a loan made to the 
State under this section only for any purpose for which grant 
amounts received by the State under section 403(a) may be used, 
including--
            ``(1) welfare anti-fraud activities; and
            ``(2) the provision of assistance under the State 
        program to Indian families that have moved from the 
        service area of an Indian tribe with a tribal family 
        assistance plan approved under section 412.
    ``(d) Limitation on Total Amount of Loans to a State.--The 
cumulative dollar amount of all loans made to a State under 
this section during fiscal years 1997 through 2001 shall not 
exceed 10 percent of the State family assistance grant.
    ``(e) Limitation on Total Amount of Outstanding Loans.--The 
total dollar amount of loans outstanding under this section may 
not exceed $1,700,000,000.
    ``(f) Appropriation.--Out of any money in the Treasury of 
the United States not otherwise appropriated, there are 
appropriated such sums as may be necessary for the cost of 
loans under this section.

``SEC. 407. MANDATORY WORK REQUIREMENTS.

    ``(a) Participation Rate Requirements.--
            ``(1) All families.--A State to which a grant is 
        made under section 403 for a fiscal year shall achieve 
        the minimum participation rate specified in the 
        following table for the fiscal year with respect to all 
        families receiving assistance under the State program 
        funded under this part:

                                                             The minimum
                                                           participation
        ``If the fiscal year is:                                rate is:
            1996........................................           15   
            1997........................................           20   
            1998........................................           25   
            1999........................................           30   
            2000........................................           35   
            2001........................................           40   
            2002 or thereafter..........................           50.  

            ``(2) 2-parent families.--A State to which a grant 
        is made under section 403 for a fiscal year shall 
        achieve the minimum participation rate specified in the 
        following table for the fiscal year with respect to 2-
        parent families receiving assistance under the State 
        program funded under this part:

                                                             The minimum
                                                           participation
        ``If the fiscal year is:                                rate is:
            1996........................................           50   
            1997........................................           75   
            1998........................................           75   
            1999 or thereafter..........................           90.  

    ``(b) Calculation of Participation Rates.--
            ``(1) All families.--
                    ``(A) Average monthly rate.--For purposes 
                of subsection (a)(1), the participation rate 
                for all families of a State for a fiscal year 
                is the average of the participation rates for 
                all families of the State for each month in the 
                fiscal year.
                    ``(B) Monthly participation rates.--The 
                participation rate of a State for all families 
                of the State for a month, expressed as a 
                percentage, is--
                            ``(i) the number of families 
                        receiving assistance under the State 
                        program funded under this part that 
                        include an adult who is engaged in work 
                        for the month; divided by
                            ``(ii) the amount by which--
                                    ``(I) the number of 
                                families receiving such 
                                assistance during the month 
                                that include an adult receiving 
                                such assistance; exceeds
                                    ``(II) the number of 
                                families receiving such 
                                assistance that are subject in 
                                such month to a penalty 
                                described in subsection (e)(1) 
                                but have not been subject to 
                                such penalty for more than 3 
                                months within the preceding 12-
                                month period (whether or not 
                                consecutive).
            ``(2) 2-parent families.--
                    ``(A) Average monthly rate.--For purposes 
                of subsection (a)(2), the participation rate 
                for 2-parent families of a State for a fiscal 
                year is the average of the participation rates 
                for 2-parent families of the State for each 
                month in the fiscal year.
                    ``(B) Monthly participation rates.--The 
                participation rate of a State for 2-parent 
                families of the State for a month shall be 
                calculated by use of the formula set forth in 
                paragraph (1)(B), except that in the formula 
                the term `number of 2-parent families' shall be 
                substituted for the term `number of families' 
                each place such latter term appears.
            ``(3) Pro rata reduction of participation rate due 
        to caseload reductions not required by federal law.--
                    ``(A) In general.--The Secretary shall 
                prescribe regulations for reducing the minimum 
                participation rate otherwise required by this 
                section for a fiscal year by the number of 
                percentage points equal to the number of 
                percentage points (if any) by which--
                            ``(i) the average monthly number of 
                        families receiving assistance during 
                        the fiscal year under the State program 
                        funded under this part is less than
                            ``(ii) the average monthly number 
                        of families that received aid under the 
                        State plan approved under part A (as in 
                        effect on September 30, 1995) during 
                        fiscal year 1995.
                The minimum participation rate shall not be 
                reduced to the extent that the Secretary 
                determines that the reduction in the number of 
                families receiving such assistance is required 
                by Federal law.
                    ``(B) Eligibility changes not counted.--The 
                regulations described in subparagraph (A) shall 
                not take into account families that are 
                diverted from a State program funded under this 
                part as a result of differences in eligibility 
                criteria under a State program funded under 
                this part and eligibility criteria under the 
                State program operated under the State plan 
                approved under part A (as such plan and such 
                part were in effect on September 30, 1995). 
                Such regulations shall place the burden on the 
                Secretary to prove that such families were 
                diverted as a direct result of differences in 
                such eligibility criteria.
            ``(4) State option to include individuals receiving 
        assistance under a tribal family assistance plan.--For 
        purposes of paragraphs (1)(B) and (2)(B), a State may, 
        at its option, include families receiving assistance 
        under a tribal family assistance plan approved under 
        section 412.
            ``(5) State option for participation requirement 
        exemptions.--For any fiscal year, a State may, at its 
        option, not require an individual who is a single 
        custodial parent caring for a child who has not 
        attained 12 months of age to engage in work and may 
        disregard such an individual in determining the 
        participation rates under subsection (a).
    ``(c) Engaged in Work.--
            ``(1) All families.--For purposes of subsection 
        (b)(1)(B)(i), a recipient is engaged in work for a 
        month in a fiscal year if the recipient is 
        participating in work activities for at least the 
        minimum average number of hours per week specified in 
        the following table during the month, not fewer than 20 
        hours per week of which are attributable to an activity 
        described in paragraph (1), (2), (3), (4), (5), (6), 
        (7), or (8) of subsection (d):

                                                             The minimum
          ``If the month is                            average number of
            in fiscal year:                           hours per week is:
              1996......................................           20   
              1997......................................           20   
              1998......................................           20   
              1999 or thereafter........................           25.  

            ``(2) 2-parent families.--For purposes of 
        subsection (b)(2)(B)(i), an adult is engaged in work 
        for a month in a fiscal year if the adult is making 
        progress in work activities for at least 35 hours per 
        week during the month, not fewer than 30 hours per week 
        of which are attributable to an activity described in 
        paragraph (1), (2), (3), (4), (5), (6), (7), or (8) of 
        subsection (d).
            ``(3) Limitation on number of weeks for which job 
        search counts as work.--Notwithstanding paragraphs (1) 
        and (2), an individual shall not be considered to be 
        engaged in work by virtue of participation in an 
        activity described in subsection (d)(6), after the 
        individual has participated in such an activity for 12 
        weeks in a fiscal year. An individual shall be 
        considered to be participating in such an activity for 
        a week if the individual participates in such an 
        activity at any time during the week.
            ``(4) Limitation on vocational education activities 
        counted as work.--For purposes of determining monthly 
        participation rates under paragraphs (1)(B)(i) and 
        (2)(B)(i) of subsection (b), not more than 20 percent 
        of adults in all families and in 2-parent families 
        determined to be engaged in work in the State for a 
        month may meet the work activity requirement through 
        participation in vocational educational training.
            ``(5) Single parent with child under age 6 deemed 
        to be meeting work participation requirements if parent 
        is engaged in work for 20 hours per week.--For purposes 
        of determining monthly participation rates under 
        subsection (b)(1)(B)(i), a recipient in a 1-parent 
        family who is the parent of a child who has not 
        attained 6 years of age is deemed to be engaged in work 
        for a month if the recipient is engaged in work for an 
        average of at least 20 hours per week during the month.
            ``(6) Teen head of household who maintains 
        satisfactory school attendance deemed to be meeting 
        work participation requirements.--For purposes of 
        determining monthly participation rates under 
        subsection (b)(1)(B)(i), a recipient who is a single 
        head of household and has not attained 20 years of age 
        is deemed to be engaged in work for a month in a fiscal 
        year if the recipient--
                    ``(A) maintains satisfactory attendance at 
                secondary school or the equivalent during the 
                month; or
                    ``(B) participates in education directly 
                related to employment for at least the minimum 
                average number of hours per week specified in 
                the table set forth in paragraph (1).
    ``(d) Work Activities Defined.--As used in this section, 
the term `work activities' means--
            ``(1) unsubsidized employment;
            ``(2) subsidized private sector employment;
            ``(3) subsidized public sector employment;
            ``(4) work experience (including work associated 
        with the refurbishing of publicly assisted housing) if 
        sufficient private sector employment is not available;
            ``(5) on-the-job training;
            ``(6) job search and job readiness assistance;
            ``(7) community service programs;
            ``(8) vocational educational training (not to 
        exceed 12 months with respect to any individual);
            ``(9) job skills training directly related to 
        employment;
            ``(10) education directly related to employment, in 
        the case of a recipient who has not attained 20 years 
        of age, and has not received a high school diploma or a 
        certificate of high school equivalency; and
            ``(11) satisfactory attendance at secondary school, 
        in the case of a recipient who--
                    ``(A) has not completed secondary school; 
                and
                    ``(B) is a dependent child, or a head of 
                household who has not attained 20 years of age.
    ``(e) Penalties Against Individuals.--
            ``(1) In general.--Except as provided in paragraph 
        (2), if an adult in a family receiving assistance under 
        the State program funded under this part refuses to 
        engage in work required in accordance with this 
        section, the State shall--
                    ``(A) reduce the amount of assistance 
                otherwise payable to the family pro rata (or 
                more, at the option of the State) with respect 
                to any period during a month in which the adult 
                so refuses; or
                    ``(B) terminate such assistance,
        subject to such good cause and other exceptions as the 
        State may establish.
            ``(2) Exception.--Notwithstanding paragraph (1), a 
        State may not reduce or terminate assistance under the 
        State program funded under this part based on a refusal 
        of an adult to work if the adult is a single custodial 
        parent caring for a child who has not attained 6 years 
        of age, and the adult proves that the adult has a 
        demonstrated inability (as determined by the State) to 
        obtain needed child care, for 1 or more of the 
        following reasons:
                    ``(A) Unavailability of appropriate child 
                care within a reasonable distance from the 
                individual's home or work site.
                    ``(B) Unavailability or unsuitability of 
                informal child care by a relative or under 
                other arrangements.
                    ``(C) Unavailability of appropriate and 
                affordable formal child care arrangements.
    ``(f) Nondisplacement in Work Activities.--
            ``(1) In general.--Subject to paragraph (2), an 
        adult in a family receiving assistance under a State 
        program funded under this part attributable to funds 
        provided by the Federal Government may fill a vacant 
        employment position in order to engage in a work 
        activity described in subsection (d).
            ``(2) No filling of certain vacancies.--No adult in 
        a work activity described in subsection (d) which is 
        funded, in whole or in part, by funds provided by the 
        Federal Government shall be employed or assigned--
                    ``(A) when any other individual is on 
                layoff from the same or any substantially 
                equivalent job; or
                    ``(B) if the employer has terminated the 
                employment of any regular employee or otherwise 
                caused an involuntary reduction of its 
                workforce in order to fill the vacancy so 
                created with an adult described in paragraph 
                (1).
            ``(3) No preemption.--Nothing in this subsection 
        shall preempt or supersede any provision of State or 
        local law that provides greater protection for 
        employees from displacement.
    ``(g) Sense of the Congress.--It is the sense of the 
Congress that in complying with this section, each State that 
operates a program funded under this part is encouraged to 
assign the highest priority to requiring adults in 2-parent 
families and adults in single-parent families that include 
older preschool or school-age children to be engaged in work 
activities.
    ``(h) Sense of the Congress That States Should Impose 
Certain Requirements on Noncustodial, Nonsupporting Minor 
Parents.--It is the sense of the Congress that the States 
should require noncustodial, nonsupporting parents who have not 
attained 18 years of age to fulfill community work obligations 
and attend appropriate parenting or money management classes 
after school.

``SEC. 408. PROHIBITIONS; REQUIREMENTS.

    ``(a) In General.--
            ``(1) No assistance for families without a minor 
        child.--A State to which a grant is made under section 
        403 shall not use any part of the grant to provide 
        assistance to a family, unless the family includes--
                    ``(A) a minor child who resides with a 
                custodial parent or other adult caretaker 
                relative of the child; or
                    ``(B) a pregnant individual.
            ``(2) No additional cash assistance for children 
        born to families receiving assistance.--
                    ``(A) General rule.--A State to which a 
                grant is made under section 403 shall not use 
                any part of the grant to provide cash benefits 
                for a minor child who is born to--
                            ``(i) a recipient of assistance 
                        under the program operated under this 
                        part; or
                            ``(ii) a person who received such 
                        assistance at any time during the 10-
                        month period ending with the birth of 
                        the child.
                    ``(B) Exception for children born into 
                families with no other children.--Subparagraph 
                (A) shall not apply to a minor child who is 
                born into a family that does not include any 
                other children.
                    ``(C) Exception for vouchers.--Subparagraph 
                (A) shall not apply to vouchers which are 
                provided in lieu of cash benefits and which may 
                be used only to pay for particular goods and 
                services specified by the State as suitable for 
                the care of the child involved.
                    ``(D) Exception for rape or incest.--
                Subparagraph (A) shall not apply with respect 
                to a child who is born as a result of rape or 
                incest.
                    ``(E) State election to opt out.--
                Subparagraph (A) shall not apply to a State if 
                State law specifically exempts the State 
                program funded under this part from the 
                application of subparagraph (A).
                    ``(F) Substitution of family caps in effect 
                under waivers.--Subparagraph (A) shall not 
                apply to a State--
                            ``(i) if, as of the date of the 
                        enactment of this part, there is in 
                        effect a waiver approved by the 
                        Secretary under section 1115 which 
                        permits the State to deny aid under the 
                        State plan approved under part A of 
                        this title (as in effect without regard 
                        to the amendments made by subtitle A of 
                        the Personal Responsibility and Work 
                        Opportunity Act of 1996) to a family by 
                        reason of the birth of a child to a 
                        family member otherwise eligible for 
                        such aid; and
                            ``(ii) for so long as the State 
                        continues to implement such policy 
                        under the State program funded under 
                        this part, under rules prescribed by 
                        the State.
            ``(3) Reduction or elimination of assistance for 
        noncooperation in establishing paternity or obtaining 
        child support.--If the agency responsible for 
        administering the State plan approved under part D 
        determines that an individual is not cooperating with 
        the State in establishing paternity or in establishing, 
        modifying, or enforcing a support order with respect to 
        a child of the individual, and the individual does not 
        qualify for any good cause or other exception 
        established by the State pursuant to section 454(29), 
        then the State--
                    ``(A) shall deduct from the assistance that 
                would otherwise be provided to the family of 
                the individual under the State program funded 
                under this part the share of such assistance 
                attributable to the individual; and
                    ``(B) may deny the family any assistance 
                under the State program.
            ``(4) No assistance for families not assigning 
        certain support rights to the state.--
                    ``(A) In general.--A State to which a grant 
                is made under section 403 shall require, as a 
                condition of providing assistance to a family 
                under the State program funded under this part, 
                that a member of the family assign to the State 
                any rights the family member may have (on 
                behalf of the family member or of any other 
                person for whom the family member has applied 
                for or is receiving such assistance) to support 
                from any other person, not exceeding the total 
                amount of assistance so provided to the family, 
                which accrue (or have accrued) before the date 
                the family leaves the program, which 
                assignment, on and after the date the family 
                leaves the program, shall not apply with 
                respect to any support (other than support 
                collected pursuant to section 464) which 
                accrued before the family received such 
                assistance and which the State has not 
                collected by--
                            ``(i) September 30, 2000, if the 
                        assignment is executed on or after 
                        October 1, 1997, and before October 1, 
                        2000; or
                            ``(ii) the date the family leaves 
                        the program, if the assignment is 
                        executed on or after October 1, 2000.
                    ``(B) Limitation.--A State to which a grant 
                is made under section 403 shall not require, as 
                a condition of providing assistance to any 
                family under the State program funded under 
                this part, that a member of the family assign 
                to the State any rights to support described in 
                subparagraph (A) which accrue after the date 
                the family leaves the program.
            ``(5) No assistance for teenage parents who do not 
        attend high school or other equivalent training 
        program.--A State to which a grant is made under 
        section 403 shall not use any part of the grant to 
        provide assistance to an individual who has not 
        attained 18 years of age, is not married, has a minor 
        child at least 12 weeks of age in his or her care, and 
        has not successfully completed a high-school education 
        (or its equivalent), if the individual does not 
        participate in--
                    ``(A) educational activities directed 
                toward the attainment of a high school diploma 
                or its equivalent; or
                    ``(B) an alternative educational or 
                training program that has been approved by the 
                State.
            ``(6) No assistance for teenage parents not living 
        in adult-supervised settings.--
                    ``(A) In general.--
                            ``(i) Requirement.--Except as 
                        provided in subparagraph (B), a State 
                        to which a grant is made under section 
                        403 shall not use any part of the grant 
                        to provide assistance to an individual 
                        described in clause (ii) of this 
                        subparagraph if the individual and the 
                        minor child referred to in clause 
                        (ii)(II) do not reside in a place of 
                        residence maintained by a parent, legal 
                        guardian, or other adult relative of 
                        the individual as such parent's, 
                        guardian's, or adult relative's own 
                        home.
                            ``(ii) Individual described.-- For 
                        purposes of clause (i), an individual 
                        described in this clause is an 
                        individual who--
                                    ``(I) has not attained 18 
                                years of age; and
                                    ``(II) is not married, and 
                                has a minor child in his or her 
                                care.
                    ``(B) Exception.--
                            ``(i) Provision of, or assistance 
                        in locating, adult-supervised living 
                        arrangement.--In the case of an 
                        individual who is described in clause 
                        (ii), the State agency referred to in 
                        section 402(a)(4) shall provide, or 
                        assist the individual in locating, a 
                        second chance home, maternity home, or 
                        other appropriate adult-supervised 
                        supportive living arrangement, taking 
                        into consideration the needs and 
                        concerns of the individual, unless the 
                        State agency determines that the 
                        individual's current living arrangement 
                        is appropriate, and thereafter shall 
                        require that the individual and the 
                        minor child referred to in subparagraph 
                        (A)(ii)(II) reside in such living 
                        arrangement as a condition of the 
                        continued receipt of assistance under 
                        the State program funded under this 
                        part attributable to funds provided by 
                        the Federal Government (or in an 
                        alternative appropriate arrangement, 
                        should circumstances change and the 
                        current arrangement cease to be 
                        appropriate).
                            ``(ii) Individual described.--For 
                        purposes of clause (i), an individual 
                        is described in this clause if the 
                        individual is described in subparagraph 
                        (A)(ii), and--
                                    ``(I) the individual has no 
                                parent, legal guardian or other 
                                appropriate adult relative 
                                described in subclause (II) of 
                                his or her own who is living or 
                                whose whereabouts are known;
                                    ``(II) no living parent, 
                                legal guardian, or other 
                                appropriate adult relative, who 
                                would otherwise meet applicable 
                                State criteria to act as the 
                                individual's legal guardian, of 
                                such individual allows the 
                                individual to live in the home 
                                of such parent, guardian, or 
                                relative;
                                    ``(III) the State agency 
                                determines that--
                                            ``(aa) the 
                                        individual or the minor 
                                        child referred to in 
                                        subparagraph 
                                        (A)(ii)(II) is being or 
                                        has been subjected to 
                                        serious physical or 
                                        emotional harm, sexual 
                                        abuse, or exploitation 
                                        in the residence of the 
                                        individual's own parent 
                                        or legal guardian; or
                                            ``(bb) substantial 
                                        evidence exists of an 
                                        act or failure to act 
                                        that presents an 
                                        imminent or serious 
                                        harm if the individual 
                                        and the minor child 
                                        lived in the same 
                                        residence with the 
                                        individual's own parent 
                                        or legal guardian; or
                                    ``(IV) the State agency 
                                otherwise determines that it is 
                                in the best interest of the 
                                minor child to waive the 
                                requirement of subparagraph (A) 
                                with respect to the individual 
                                or the minor child.
                            ``(iii) Second-chance home.--For 
                        purposes of this subparagraph, the term 
                        `second-chance home' means an entity 
                        that provides individuals described in 
                        clause (ii) with a supportive and 
                        supervised living arrangement in which 
                        such individuals are required to learn 
                        parenting skills, including child 
                        development, family budgeting, health 
                        and nutrition, and other skills to 
                        promote their long-term economic 
                        independence and the well-being of 
                        their children.
            ``(7) No medical services.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), a State to which a grant is 
                made under section 403 shall not use any part 
                of the grant to provide medical services.
                    ``(B) Exception for family planning 
                services.--As used in subparagraph (A), the 
                term `medical services' does not include family 
                planning services.
            ``(8) No assistance for more than 5 years.--
                    ``(A) In general.--Except as provided in 
                subparagraphs (B) and (C), a State to which a 
                grant is made under section 403 shall not use 
                any part of the grant to provide assistance to 
                a family that includes an adult who has 
                received assistance under any State program 
                funded under this part attributable to funds 
                provided by the Federal Government, for 60 
                months (whether or not consecutive) after the 
                date the State program funded under this part 
                commences.
                    ``(B) Minor child exception.--In 
                determining the number of months for which an 
                individual who is a parent or pregnant has 
                received assistance under the State program 
                funded under this part, the State shall 
                disregard any month for which such assistance 
                was provided with respect to the individual and 
                during which the individual was--
                            ``(i) a minor child; and
                            ``(ii) not the head of a household 
                        or married to the head of a household.
                    ``(C) Hardship exception.--
                            ``(i) In general.--The State may 
                        exempt a family from the application of 
                        subparagraph (A) by reason of hardship 
                        or if the family includes an individual 
                        who has been battered or subjected to 
                        extreme cruelty.
                            ``(ii) Limitation.--The number of 
                        families with respect to which an 
                        exemption made by a State under clause 
                        (i) is in effect for a fiscal year 
                        shall not exceed 20 percent of the 
                        average monthly number of families to 
                        which assistance is provided under the 
                        State program funded under this part.
                            ``(iii) Battered or subject to 
                        extreme cruelty defined.--For purposes 
                        of clause (i), an individual has been 
                        battered or subjected to extreme 
                        cruelty if the individual has been 
                        subjected to--
                                    ``(I) physical acts that 
                                resulted in, or threatened to 
                                result in, physical injury to 
                                the individual;
                                    ``(II) sexual abuse;
                                    ``(III) sexual activity 
                                involving a dependent child;
                                    ``(IV) being forced as the 
                                caretaker relative of a 
                                dependent child to engage in 
                                nonconsensual sexual acts or 
                                activities;
                                    ``(V) threats of, or 
                                attempts at, physical or sexual 
                                abuse;
                                    ``(VI) mental abuse; or
                                    ``(VII) neglect or 
                                deprivation of medical care.
                    ``(D) Rule of interpretation.--Subparagraph 
                (A) shall not be interpreted to require any 
                State to provide assistance to any individual 
                for any period of time under the State program 
                funded under this part.
            ``(9) Denial of assistance for 10 years to a person 
        found to have fraudulently misrepresented residence in 
        order to obtain assistance in 2 or more states.--A 
        State to which a grant is made under section 403 shall 
        not use any part of the grant to provide cash 
        assistance to an individual during the 10-year period 
        that begins on the date the individual is convicted in 
        Federal or State court of having made a fraudulent 
        statement or representation with respect to the place 
        of residence of the individual in order to receive 
        assistance simultaneously from 2 or more States under 
        programs that are funded under this title, title XV or 
        XIX, or the Food Stamp Act of 1977, or benefits in 2 or 
        more States under the supplemental security income 
        program under title XVI. The preceding sentence shall 
        not apply with respect to a conviction of an 
        individual, for any month beginning after the President 
        of the United States grants a pardon with respect to 
        the conduct which was the subject of the conviction.
            ``(10) Denial of assistance for fugitive felons and 
        probation and parole violators.--
                    ``(A) In general.--A State to which a grant 
                is made under section 403 shall not use any 
                part of the grant to provide assistance to any 
                individual who is--
                            ``(i) fleeing to avoid prosecution, 
                        or custody or confinement after 
                        conviction, under the laws of the place 
                        from which the individual flees, for a 
                        crime, or an attempt to commit a crime, 
                        which is a felony under the laws of the 
                        place from which the individual flees, 
                        or which, in the case of the State of 
                        New Jersey, is a high misdemeanor under 
                        the laws of such State; or
                            ``(ii) violating a condition of 
                        probation or parole imposed under 
                        Federal or State law.
                The preceding sentence shall not apply with 
                respect to conduct of an individual, for any 
                month beginning after the President of the 
                United States grants a pardon with respect to 
                the conduct.
                    ``(B) Exchange of information with law 
                enforcement agencies.--If a State to which a 
                grant is made under section 403 establishes 
                safeguards against the use or disclosure of 
                information about applicants or recipients of 
                assistance under the State program funded under 
                this part, the safeguards shall not prevent the 
                State agency administering the program from 
                furnishing a Federal, State, or local law 
                enforcement officer, upon the request of the 
                officer, with the current address of any 
                recipient if the officer furnishes the agency 
                with the name of the recipient and notifies the 
                agency that--
                            ``(i) the recipient--
                                    ``(I) is described in 
                                subparagraph (A); or
                                    ``(II) has information that 
                                is necessary for the officer to 
                                conduct the official duties of 
                                the officer; and
                            ``(ii) the location or apprehension 
                        of the recipient is within such 
                        official duties.
            ``(11) Denial of assistance for minor children who 
        are absent from the home for a significant period.--
                    ``(A) In general.--A State to which a grant 
                is made under section 403 shall not use any 
                part of the grant to provide assistance for a 
                minor child who has been, or is expected by a 
                parent (or other caretaker relative) of the 
                child to be, absent from the home for a period 
                of 45 consecutive days or, at the option of the 
                State, such period of not less than 30 and not 
                more than 180 consecutive days as the State may 
                provide for in the State plan submitted 
                pursuant to section 402.
                    ``(B) State authority to establish good 
                cause exceptions.--The State may establish such 
                good cause exceptions to subparagraph (A) as 
                the State considers appropriate if such 
                exceptions are provided for in the State plan 
                submitted pursuant to section 402.
                    ``(C) Denial of assistance for relative who 
                fails to notify state agency of absence of 
                child.--A State to which a grant is made under 
                section 403 shall not use any part of the grant 
                to provide assistance for an individual who is 
                a parent (or other caretaker relative) of a 
                minor child and who fails to notify the agency 
                administering the State program funded under 
                this part of the absence of the minor child 
                from the home for the period specified in or 
                provided for pursuant to subparagraph (A), by 
                the end of the 5-day period that begins with 
                the date that it becomes clear to the parent 
                (or relative) that the minor child will be 
                absent for such period so specified or provided 
                for.
            ``(12) Income security payments not to be 
        disregarded in determining the amount of assistance to 
        be provided to a family.--If a State to which a grant 
        is made under section 403 uses any part of the grant to 
        provide assistance for any individual who is receiving 
        benefits, or on behalf of whom benefits are paid, under 
        a State plan for old-age assistance approved under 
        section 2, under section 202, 205(j)(1), 223, or 228, 
        under a State program funded under part E that provides 
        cash payments for foster care, or under the 
        supplemental security income program under title XVI, 
        then the State may disregard the payment in determining 
        the amount of assistance to be provided under the State 
        program funded under this part, from funds provided by 
        the Federal Government, to the family of which the 
        individual is a member.
            ``(13) Medical assistance required to be provided 
        for 1 year for families becoming ineligible for 
        assistance under this part due to increased earnings 
        from employment or collection of child support.--A 
        State to which a grant is made under section 403 shall 
        take such action as may be necessary to ensure that, if 
        any family becomes ineligible to receive assistance 
        under the State program funded under this part as a 
        result of increased earnings from employment or as a 
        result of the collection or increased collection of 
        child or spousal support, or a combination thereof, 
        having received such assistance in at least 3 of the 6 
        months immediately preceding the month in which such 
        ineligibility begins, the family shall be eligible for 
        medical assistance under the State's plan approved 
        under title XIX (or, if applicable, title XV) during 
        the immediately succeeding 12-month period for so long 
        as family income (as defined by the State), excluding 
        any refund of Federal income taxes made by reason of 
        section 32 of the Internal Revenue Code of 1986 
        (relating to earned income tax credit) and any payment 
        made by an employer under section 3507 of such Code 
        (relating to advance payment of earned income credit), 
        is less than the poverty line, and that the family will 
        be appropriately notified of such eligibility.
            ``(14) Medical assistance required to be provided 
        for all recipients of assistance under this part.--A 
        State to which a grant is made under section 403 shall 
        take such action as may be necessary to ensure that 
        each recipient of assistance under the State program 
        funded under this part is eligible for medical 
        assistance under the State's plan approved under title 
        XIX (or, if applicable, title XV) to the extent that 
        the health care costs of the recipient are not covered 
        by other health insurance.
    ``(b) Aliens.--For special rules relating to the treatment 
of aliens, see section 4402 of the Personal Responsibility and 
Work Opportunity Act of 1996.

``SEC. 409. PENALTIES.

    ``(a) In General.--Subject to this section:
            ``(1) Use of grant in violation of this part.--
                    ``(A) General penalty.--If an audit 
                conducted under chapter 75 of title 31, United 
                States Code, finds that an amount paid to a 
                State under section 403 for a fiscal year has 
                been used in violation of this part, the 
                Secretary shall reduce the grant payable to the 
                State under section 403(a)(1) for the 
                immediately succeeding fiscal year quarter by 
                the amount so used.
                    ``(B) Enhanced penalty for intentional 
                violations.--If the State does not prove to the 
                satisfaction of the Secretary that the State 
                did not intend to use the amount in violation 
                of this part, the Secretary shall further 
                reduce the grant payable to the State under 
                section 403(a)(1) for the immediately 
                succeeding fiscal year quarter by an amount 
                equal to 5 percent of the State family 
                assistance grant.
            ``(2) Failure to submit required report.--
                    ``(A) In general.--If the Secretary 
                determines that a State has not, within 1 month 
                after the end of a fiscal quarter, submitted 
                the report required by section 411(a) for the 
                quarter, the Secretary shall reduce the grant 
                payable to the State under section 403(a)(1) 
                for the immediately succeeding fiscal year by 
                an amount equal to 4 percent of the State 
                family assistance grant.
                    ``(B) Rescission of penalty.--The Secretary 
                shall rescind a penalty imposed on a State 
                under subparagraph (A) with respect to a report 
                if the State submits the report before the end 
                of the fiscal quarter that immediately succeeds 
                the fiscal quarter for which the report was 
                required.
            ``(3) Failure to satisfy minimum participation 
        rates.--
                    ``(A) In general.--If the Secretary 
                determines that a State to which a grant is 
                made under section 403 for a fiscal year has 
                failed to comply with section 407(a) for the 
                fiscal year, the Secretary shall reduce the 
                grant payable to the State under section 
                403(a)(1) for the immediately succeeding fiscal 
                year by an amount equal to not more than 5 
                percent of the State family assistance grant.
                    ``(B) Penalty based on severity of 
                failure.--The Secretary shall impose reductions 
                under subparagraph (A) based on the degree of 
                noncompliance.
            ``(4) Failure to participate in the income and 
        eligibility verification system.--If the Secretary 
        determines that a State program funded under this part 
        is not participating during a fiscal year in the income 
        and eligibility verification system required by section 
        1137, the Secretary shall reduce the grant payable to 
        the State under section 403(a)(1) for the immediately 
        succeeding fiscal year by an amount equal to not more 
        than 2 percent of the State family assistance grant.
            ``(5) Failure to comply with paternity 
        establishment and child support enforcement 
        requirements under part d.--Notwithstanding any other 
        provision of this Act, if the Secretary determines that 
        the State agency that administers a program funded 
        under this part does not enforce the penalties 
        requested by the agency administering part D against 
        recipients of assistance under the State program who 
        fail to cooperate in establishing paternity or in 
        establishing, modifying, or enforcing a child support 
        order in accordance with such part and who do not 
        qualify for any good cause or other exception 
        established by the State under section 454(29), the 
        Secretary shall reduce the grant payable to the State 
        under section 403(a)(1) for the immediately succeeding 
        fiscal year (without regard to this section) by not 
        more than 5 percent.
            ``(6) Failure to timely repay a federal loan fund 
        for state welfare programs.--If the Secretary 
        determines that a State has failed to repay any amount 
        borrowed from the Federal Loan Fund for State Welfare 
        Programs established under section 406 within the 
        period of maturity applicable to the loan, plus any 
        interest owed on the loan, the Secretary shall reduce 
        the grant payable to the State under section 403(a)(1) 
        for the immediately succeeding fiscal year quarter 
        (without regard to this section) by the outstanding 
        loan amount, plus the interest owed on the outstanding 
        amount. The Secretary shall not forgive any outstanding 
        loan amount or interest owed on the outstanding amount.
            ``(7) Failure of any state to maintain certain 
        level of historic effort.--
                    ``(A) In general.--The Secretary shall 
                reduce the grant payable to the State under 
                section 403(a)(1) for fiscal year 1998, 1999, 
                2000, 2001, or 2002 by the amount (if any) by 
                which qualified State expenditures for the then 
                immediately preceding fiscal year are less than 
                the applicable percentage of historic State 
                expenditures with respect to such preceding 
                fiscal year.
                    ``(B) Definitions.--As used in this 
                paragraph:
                            ``(i) Qualified state 
                        expenditures.--
                                    ``(I) In general.--The term 
                                `qualified State expenditures' 
                                means, with respect to a State 
                                and a fiscal year, the total 
                                expenditures by the State 
                                during the fiscal year, under 
                                all State programs, for any of 
                                the following with respect to 
                                eligible families:
                                            ``(aa) Cash 
                                        assistance.
                                            ``(bb) Child care 
                                        assistance.
                                            ``(cc) Educational 
                                        activities designed to 
                                        increase self-
                                        sufficiency, job 
                                        training, and work, 
                                        excluding any 
                                        expenditure for public 
                                        education in the State 
                                        except expenditures 
                                        which involve the 
                                        provision of services 
                                        or assistance to a 
                                        member of an eligible 
                                        family which is not 
                                        generally available to 
                                        persons who are not 
                                        members of an eligible 
                                        family.
                                            ``(dd) 
                                        Administrative costs in 
                                        connection with the 
                                        matters described in 
                                        items (aa), (bb), (cc), 
                                        and (ee), but only to 
                                        the extent that such 
                                        costs do not exceed 15 
                                        percent of the total 
                                        amount of qualified 
                                        State expenditures for 
                                        the fiscal year.
                                            ``(ee) Any other 
                                        use of funds allowable 
                                        under section 
                                        404(a)(1).
                                    ``(II) Exclusion of 
                                transfers from other state and 
                                local programs.--Such term does 
                                not include expenditures under 
                                any State or local program 
                                during a fiscal year, except to 
                                the extent that--
                                            ``(aa) the 
                                        expenditures exceed the 
                                        amount expended under 
                                        the State or local 
                                        program in the fiscal 
                                        year most recently 
                                        ending before the date 
                                        of the enactment of 
                                        this part; or
                                            ``(bb) the State is 
                                        entitled to a payment 
                                        under former section 
                                        403 (as in effect 
                                        immediately before such 
                                        date of enactment) with 
                                        respect to the 
                                        expenditures.
                                    ``(III) Eligible 
                                families.--As used in subclause 
                                (I), the term `eligible 
                                families' means families 
                                eligible for assistance under 
                                the State program funded under 
                                this part, and families that 
                                would be eligible for such 
                                assistance but for the 
                                application of section 
                                408(a)(8) of this Act or 
                                section 4402 of the Personal 
                                Responsibility and Work 
                                Opportunity Act of 1996.
                            ``(ii) Applicable percentage.--The 
                        term `applicable percentage' means for 
                        fiscal years 1997 through 2001, 75 
                        percent reduced (if appropriate) in 
                        accordance with subparagraph (C)(ii).
                            ``(iii) Historic state 
                        expenditures.--The term `historic State 
                        expenditures' means, with respect to a 
                        State, the lesser of--
                                    ``(I) the expenditures by 
                                the State under parts A and F 
                                (as in effect during fiscal 
                                year 1994) for fiscal year 
                                1994; or
                                    ``(II) the amount which 
                                bears the same ratio to the 
                                amount described in subclause 
                                (I) as--
                                            ``(aa) the State 
                                        family assistance 
                                        grant, plus the total 
                                        amount required to be 
                                        paid to the State under 
                                        former section 403 for 
                                        fiscal year 1994 with 
                                        respect to amounts 
                                        expended by the State 
                                        for child care under 
                                        subsection (g) or (i) 
                                        of section 402 (as in 
                                        effect during fiscal 
                                        year 1994); bears to
                                            ``(bb) the total 
                                        amount required to be 
                                        paid to the State under 
                                        former section 403 (as 
                                        in effect during fiscal 
                                        year 1994) for fiscal 
                                        year 1994.
                        Such term does not include any 
                        expenditures under the State plan 
                        approved under part A (as so in effect) 
                        on behalf of individuals covered by a 
                        tribal family assistance plan approved 
                        under section 412, as determined by the 
                        Secretary.
                            ``(iv) Expenditures by the state.--
                        The term `expenditures by the State' 
                        does not include--
                                    ``(I) any expenditures from 
                                amounts made available by the 
                                Federal Government;
                                    ``(II) State funds expended 
                                for the medicaid program under 
                                title XV or XIX; or
                                    ``(III) any State funds 
                                which are used to match Federal 
                                funds or are expended as a 
                                condition of receiving Federal 
                                funds under Federal programs 
                                other than under this part.
                    ``(C) Applicable percentage reduced for 
                high performance states.--
                            ``(i) Determination of high 
                        performance states.--The Secretary 
                        shall use the formula developed under 
                        section 403(a)(4)(C) to assign a score 
                        to each eligible State that represents 
                        the performance of the State program 
                        funded under this part for each fiscal 
                        year, and shall prescribe a performance 
                        threshold which the Secretary shall use 
                        to determine whether to reduce the 
                        applicable percentage with respect to 
                        any eligible State for a fiscal year.
                            ``(ii) Reduction proportional to 
                        performance.--The Secretary shall 
                        reduce the applicable percentage for a 
                        fiscal year with respect to each 
                        eligible State by an amount which is 
                        directly proportional to the amount (if 
                        any) by which the score assigned to the 
                        State under clause (i) for the 
                        immediately preceding fiscal year 
                        exceeds the performance threshold 
                        prescribed under clause (i) for such 
                        preceding fiscal year, subject to 
                        clause (iii).
                            ``(iii) Limitation on reduction.--
                        The applicable percentage for a fiscal 
                        year with respect to a State may not be 
                        reduced by more than 8 percentage 
                        points under this subparagraph.
            ``(8) Substantial noncompliance of state child 
        support enforcement program with requirements of part 
        d.--
                    ``(A) In general.--If a State program 
                operated under part D is found as a result of a 
                review conducted under section 452(a)(4) not to 
                have complied substantially with the 
                requirements of such part for any quarter, and 
                the Secretary determines that the program is 
                not complying substantially with such 
                requirements at the time the finding is made, 
                the Secretary shall reduce the grant payable to 
                the State under section 403(a)(1) for the 
                quarter and each subsequent quarter that ends 
                before the 1st quarter throughout which the 
                program is found to be in substantial 
                compliance with such requirements by--
                            ``(i) not less than 1 nor more than 
                        2 percent;
                            ``(ii) not less than 2 nor more 
                        than 3 percent, if the finding is the 
                        2nd consecutive such finding made as a 
                        result of such a review; or
                            ``(iii) not less than 3 nor more 
                        than 5 percent, if the finding is the 
                        3rd or a subsequent consecutive such 
                        finding made as a result of such a 
                        review.
                    ``(B) Disregard of noncompliance which is 
                of a technical nature.--For purposes of 
                subparagraph (A) and section 452(a)(4), a State 
                which is not in full compliance with the 
                requirements of this part shall be determined 
                to be in substantial compliance with such 
                requirements only if the Secretary determines 
                that any noncompliance with such requirements 
                is of a technical nature which does not 
                adversely affect the performance of the State's 
                program operated under part D.
            ``(9) Failure of state receiving amounts from 
        contingency fund to maintain 100 percent of historic 
        effort.--If, at the end of any fiscal year during which 
        amounts from the Contingency Fund for State Welfare 
        Programs have been paid to a State, the Secretary finds 
        that the expenditures under the State program funded 
        under this part for the fiscal year are less than 100 
        percent of historic State expenditures (as defined in 
        paragraph (8)(B)(iii) of this subsection), the 
        Secretary shall reduce the grant payable to the State 
        under section 403(a)(1) for the immediately succeeding 
        fiscal year by the total of the amounts so paid to the 
        State.
            ``(10) Failure to expend additional state funds to 
        replace grant reductions.--If the grant payable to a 
        State under section 403(a)(1) for a fiscal year is 
        reduced by reason of this subsection, the State shall, 
        during the immediately succeeding fiscal year, expend 
        under the State program funded under this part an 
        amount equal to the total amount of such reductions.
            ``(11) Failure to provide medical assistance to 
        families becoming ineligible for assistance under this 
        part due to increased earnings from employment or 
        collection of child support.--
                    ``(A) In general.--If the Secretary 
                determines that a State program funded under 
                this part is not in compliance with section 
                408(a)(13) for a quarter, the Secretary shall 
                reduce the grant payable to the State under 
                section 403(a)(1) for the immediately 
                succeeding fiscal year by an amount equal to 
                not more than 5 percent of the State family 
                assistance grant.
                    ``(B) Penalty based on severity of 
                failure.--The Secretary shall impose reductions 
                under subparagraph (A) based on the degree of 
                noncompliance.
    ``(b) Reasonable Cause Exception.--
            ``(1) In general.--The Secretary may not impose a 
        penalty on a State under subsection (a) with respect to 
        a requirement if the Secretary determines that the 
        State has reasonable cause for failing to comply with 
        the requirement.
            ``(2) Exception.--Paragraph (1) of this subsection 
        shall not apply to any penalty under paragraph (7), 
        (8), or (11) of subsection (a).
    ``(c) Corrective Compliance Plan.--
            ``(1) In general.--
                    ``(A) Notification of violation.--Before 
                imposing a penalty against a State under 
                subsection (a) with respect to a violation of 
                this part, the Secretary shall notify the State 
                of the violation and allow the State the 
                opportunity to enter into a corrective 
                compliance plan in accordance with this 
                subsection which outlines how the State will 
                correct the violation and how the State will 
                insure continuing compliance with this part.
                    ``(B) 60-day period to propose a corrective 
                compliance plan.--During the 60-day period that 
                begins on the date the State receives a notice 
                provided under subparagraph (A) with respect to 
                a violation, the State may submit to the 
                Federal Government a corrective compliance plan 
                to correct the violation.
                    ``(C) Consultation about modifications.--
                During the 60-day period that begins with the 
                date the Secretary receives a corrective 
                compliance plan submitted by a State in 
                accordance with subparagraph (B), the Secretary 
                may consult with the State on modifications to 
                the plan.
                    ``(D) Acceptance of plan.-- A corrective 
                compliance plan submitted by a State in 
                accordance with subparagraph (B) is deemed to 
                be accepted by the Secretary if the Secretary 
                does not accept or reject the plan during 60-
                day period that begins on the date the plan is 
                submitted.
            ``(2) Effect of correcting violation.--The 
        Secretary may not impose any penalty under subsection 
        (a) with respect to any violation covered by a State 
        corrective compliance plan accepted by the Secretary if 
        the State corrects the violation pursuant to the plan.
            ``(3) Effect of failing to correct violation.--The 
        Secretary shall assess some or all of a penalty imposed 
        on a State under subsection (a) with respect to a 
        violation if the State does not, in a timely manner, 
        correct the violation pursuant to a State corrective 
        compliance plan accepted by the Secretary.
            ``(4) Inapplicability to failure to timely repay a 
        federal loan fund for a state welfare program.--This 
        subsection shall not apply to the imposition of a 
        penalty against a State under subsection (a)(6).
    ``(d) Limitation on Amount of Penalty.--
            ``(1) In general.--In imposing the penalties 
        described in subsection (a), the Secretary shall not 
        reduce any quarterly payment to a State by more than 25 
        percent.
            ``(2) Carryforward of unrecovered penalties.--To 
        the extent that paragraph (1) of this subsection 
        prevents the Secretary from recovering during a fiscal 
        year the full amount of penalties imposed on a State 
        under subsection (a) of this section for a prior fiscal 
        year, the Secretary shall apply any remaining amount of 
        such penalties to the grant payable to the State under 
        section 403(a)(1) for the immediately succeeding fiscal 
        year.

``SEC. 410. APPEAL OF ADVERSE DECISION.

    ``(a) In General.--Within 5 days after the date the 
Secretary takes any adverse action under this part with respect 
to a State, the Secretary shall notify the chief executive 
officer of the State of the adverse action, including any 
action with respect to the State plan submitted under section 
402 or the imposition of a penalty under section 409.
    ``(b) Administrative Review.--
            ``(1) In general.--Within 60 days after the date a 
        State receives notice under subsection (a) of an 
        adverse action, the State may appeal the action, in 
        whole or in part, to the Departmental Appeals Board 
        established in the Department of Health and Human 
        Services (in this section referred to as the `Board') 
        by filing an appeal with the Board.
            ``(2) Procedural rules.--The Board shall consider 
        an appeal filed by a State under paragraph (1) on the 
        basis of such documentation as the State may submit and 
        as the Board may require to support the final decision 
        of the Board. In deciding whether to uphold an adverse 
        action or any portion of such an action, the Board 
        shall conduct a thorough review of the issues and take 
        into account all relevant evidence. The Board shall 
        make a final determination with respect to an appeal 
        filed under paragraph (1) not less than 60 days after 
        the date the appeal is filed.
    ``(c) Judicial Review of Adverse Decision.--
            ``(1) In general.--Within 90 days after the date of 
        a final decision by the Board under this section with 
        respect to an adverse action taken against a State, the 
        State may obtain judicial review of the final decision 
        (and the findings incorporated into the final decision) 
        by filing an action in--
                    ``(A) the district court of the United 
                States for the judicial district in which the 
                principal or headquarters office of the State 
                agency is located; or
                    ``(B) the United States District Court for 
                the District of Columbia.
            ``(2) Procedural rules.--The district court in 
        which an action is filed under paragraph (1) shall 
        review the final decision of the Board on the record 
        established in the administrative proceeding, in 
        accordance with the standards of review prescribed by 
        subparagraphs (A) through (E) of section 706(2) of 
        title 5, United States Code. The review shall be on the 
        basis of the documents and supporting data submitted to 
        the Board.

``SEC. 411. DATA COLLECTION AND REPORTING.

    ``(a) Quarterly Reports by States.--
            ``(1) General reporting requirement.--
                    ``(A) Contents of report.--Each eligible 
                State shall collect on a monthly basis, and 
                report to the Secretary on a quarterly basis, 
                the following disaggregated case record 
                information on the families receiving 
                assistance under the State program funded under 
                this part:
                            ``(i) The county of residence of 
                        the family.
                            ``(ii) Whether a child receiving 
                        such assistance or an adult in the 
                        family is disabled.
                            ``(iii) The ages of the members of 
                        such families.
                            ``(iv) The number of individuals in 
                        the family, and the relation of each 
                        family member to the youngest child in 
                        the family.
                            ``(v) The employment status and 
                        earnings of the employed adult in the 
                        family.
                            ``(vi) The marital status of the 
                        adults in the family, including whether 
                        such adults have never married, are 
                        widowed, or are divorced.
                            ``(vii) The race and educational 
                        status of each adult in the family.
                            ``(viii) The race and educational 
                        status of each child in the family.
                            ``(ix) Whether the family received 
                        subsidized housing, medical assistance 
                        under the State plan under title XV or 
                        the State plan approved under title 
                        XIX, food stamps, or subsidized child 
                        care, and if the latter 2, the amount 
                        received.
                            ``(x) The number of months that the 
                        family has received each type of 
                        assistance under the program.
                            ``(xi) If the adults participated 
                        in, and the number of hours per week of 
                        participation in, the following 
                        activities:
                                    ``(I) Education.
                                    ``(II) Subsidized private 
                                sector employment.
                                    ``(III) Unsubsidized 
                                employment.
                                    ``(IV) Public sector 
                                employment, work experience, or 
                                community service.
                                    ``(V) Job search.
                                    ``(VI) Job skills training 
                                or on-the-job training.
                                    ``(VII) Vocational 
                                education.
                            ``(xii) Information necessary to 
                        calculate participation rates under 
                        section 407.
                            ``(xiii) The type and amount of 
                        assistance received under the program, 
                        including the amount of and reason for 
                        any reduction of assistance (including 
                        sanctions).
                            ``(xiv) Any amount of unearned 
                        income received by any member of the 
                        family.
                            ``(xv) The citizenship of the 
                        members of the family.
                            ``(xvi) From a sample of closed 
                        cases, whether the family left the 
                        program, and if so, whether the family 
                        left due to--
                                    ``(I) employment;
                                    ``(II) marriage;
                                    ``(III) the prohibition set 
                                forth in section 408(a)(8);
                                    ``(IV) sanction; or
                                    ``(V) State policy.
                    ``(B) Use of estimates.--
                            ``(i) Authority.--A State may 
                        comply with subparagraph (A) by 
                        submitting an estimate which is 
                        obtained through the use of 
                        scientifically acceptable sampling 
                        methods approved by the Secretary.
                            ``(ii) Sampling and other 
                        methods.--The Secretary shall provide 
                        the States with such case sampling 
                        plans and data collection procedures as 
                        the Secretary deems necessary to 
                        produce statistically valid estimates 
                        of the performance of State programs 
                        funded under this part. The Secretary 
                        may develop and implement procedures 
                        for verifying the quality of data 
                        submitted by the States.
            ``(2) Report on use of federal funds to cover 
        administrative costs and overhead.--The report required 
        by paragraph (1) for a fiscal quarter shall include a 
        statement of the percentage of the funds paid to the 
        State under this part for the quarter that are used to 
        cover administrative costs or overhead.
            ``(3) Report on state expenditures on programs for 
        needy families.--The report required by paragraph (1) 
        for a fiscal quarter shall include a statement of the 
        total amount expended by the State during the quarter 
        on programs for needy families.
            ``(4) Report on noncustodial parents participating 
        in work activities.--The report required by paragraph 
        (1) for a fiscal quarter shall include the number of 
        noncustodial parents in the State who participated in 
        work activities (as defined in section 407(d)) during 
        the quarter.
            ``(5) Report on transitional services.--The report 
        required by paragraph (1) for a fiscal quarter shall 
        include the total amount expended by the State during 
        the quarter to provide transitional services to a 
        family that has ceased to receive assistance under this 
        part because of employment, along with a description of 
        such services.
            ``(6) Regulations.--The Secretary shall prescribe 
        such regulations as may be necessary to define the data 
        elements with respect to which reports are required by 
        this subsection.
    ``(b) Annual Reports to the Congress by the Secretary.--Not 
later than 6 months after the end of fiscal year 1997, and each 
fiscal year thereafter, the Secretary shall transmit to the 
Congress a report describing--
            ``(1) whether the States are meeting--
                    ``(A) the participation rates described in 
                section 407(a); and
                    ``(B) the objectives of--
                            ``(i) increasing employment and 
                        earnings of needy families, and child 
                        support collections; and
                            ``(ii) decreasing out-of-wedlock 
                        pregnancies and child poverty;
            ``(2) the demographic and financial characteristics 
        of families applying for assistance, families receiving 
        assistance, and families that become ineligible to 
        receive assistance;
            ``(3) the characteristics of each State program 
        funded under this part; and
            ``(4) the trends in employment and earnings of 
        needy families with minor children living at home.

``SEC. 412. DIRECT FUNDING AND ADMINISTRATION BY INDIAN TRIBES.

    ``(a) Grants for Indian Tribes.--
            ``(1) Tribal family assistance grant.--
                    ``(A) In general.--For each of fiscal years 
                1997, 1998, 1999, and 2000, the Secretary shall 
                pay to each Indian tribe that has an approved 
                tribal family assistance plan a tribal family 
                assistance grant for the fiscal year in an 
                amount equal to the amount determined under 
                subparagraph (B), and shall reduce the grant 
                payable under section 403(a)(1) to any State in 
                which lies the service area or areas of the 
                Indian tribe by that portion of the amount so 
                determined that is attributable to expenditures 
                by the State.
                    ``(B) Amount determined.--
                            ``(i) In general.--The amount 
                        determined under this subparagraph is 
                        an amount equal to the total amount of 
                        the Federal payments to a State or 
                        States under section 403 (as in effect 
                        during such fiscal year) for fiscal 
                        year 1994 attributable to expenditures 
                        (other than child care expenditures) by 
                        the State or States under parts A and F 
                        (as so in effect) for fiscal year 1994 
                        for Indian families residing in the 
                        service area or areas identified by the 
                        Indian tribe pursuant to subsection 
                        (b)(1)(C) of this section.
                            ``(ii) Use of state submitted 
                        data.--
                                    ``(I) In general.--The 
                                Secretary shall use State 
                                submitted data to make each 
                                determination under clause (i).
                                    ``(II) Disagreement with 
                                determination.--If an Indian 
                                tribe or tribal organization 
                                disagrees with State submitted 
                                data described under subclause 
                                (I), the Indian tribe or tribal 
                                organization may submit to the 
                                Secretary such additional 
                                information as may be relevant 
                                to making the determination 
                                under clause (i) and the 
                                Secretary may consider such 
                                information before making such 
                                determination.
            ``(2) Grants for indian tribes that received jobs 
        funds.--
                    ``(A) In general.--The Secretary shall pay 
                to each eligible Indian tribe for each of 
                fiscal years 1996, 1997, 1998, 1999, 2000, and 
                2001 a grant in an amount equal to the amount 
                received by the Indian tribe in fiscal year 
                1994 under section 482(i) (as in effect during 
                fiscal year 1994).
                    ``(B) Eligible indian tribe.--For purposes 
                of subparagraph (A), the term `eligible Indian 
                tribe' means an Indian tribe or Alaska Native 
                organization that conducted a job opportunities 
                and basic skills training program in fiscal 
                year 1995 under section 482(i) (as in effect 
                during fiscal year 1995).
                    ``(C) Use of grant.--Each Indian tribe to 
                which a grant is made under this paragraph 
                shall use the grant for the purpose of 
                operating a program to make work activities 
                available to members of the Indian tribe.
                    ``(D) Appropriation.--Out of any money in 
                the Treasury of the United States not otherwise 
                appropriated, there are appropriated $7,638,474 
                for each fiscal year specified in subparagraph 
                (A) for grants under subparagraph (A).
    ``(b) 3-Year Tribal Family Assistance Plan.--
            ``(1) In general.--Any Indian tribe that desires to 
        receive a tribal family assistance grant shall submit 
        to the Secretary a 3-year tribal family assistance plan 
        that--
                    ``(A) outlines the Indian tribe's approach 
                to providing welfare-related services for the 
                3-year period, consistent with this section;
                    ``(B) specifies whether the welfare-related 
                services provided under the plan will be 
                provided by the Indian tribe or through 
                agreements, contracts, or compacts with 
                intertribal consortia, States, or other 
                entities;
                    ``(C) identifies the population and service 
                area or areas to be served by such plan;
                    ``(D) provides that a family receiving 
                assistance under the plan may not receive 
                duplicative assistance from other State or 
                tribal programs funded under this part;
                    ``(E) identifies the employment 
                opportunities in or near the service area or 
                areas of the Indian tribe and the manner in 
                which the Indian tribe will cooperate and 
                participate in enhancing such opportunities for 
                recipients of assistance under the plan 
                consistent with any applicable State standards; 
                and
                    ``(F) applies the fiscal accountability 
                provisions of section 5(f)(1) of the Indian 
                Self-Determination and Education Assistance Act 
                (25 U.S.C. 450c(f)(1)), relating to the 
                submission of a single-agency audit report 
                required by chapter 75 of title 31, United 
                States Code.
            ``(2) Approval.--The Secretary shall approve each 
        tribal family assistance plan submitted in accordance 
        with paragraph (1).
            ``(3) Consortium of tribes.--Nothing in this 
        section shall preclude the development and submission 
        of a single tribal family assistance plan by the 
        participating Indian tribes of an intertribal 
        consortium.
    ``(c) Minimum Work Participation Requirements and Time 
Limits.--The Secretary, with the participation of Indian 
tribes, shall establish for each Indian tribe receiving a grant 
under this section minimum work participation requirements, 
appropriate time limits for receipt of welfare-related services 
under the grant, and penalties against individuals--
            ``(1) consistent with the purposes of this section;
            ``(2) consistent with the economic conditions and 
        resources available to each tribe; and
            ``(3) similar to comparable provisions in section 
        407(d).
    ``(d) Emergency Assistance.--Nothing in this section shall 
preclude an Indian tribe from seeking emergency assistance from 
any Federal loan program or emergency fund.
    ``(e) Accountability.--Nothing in this section shall be 
construed to limit the ability of the Secretary to maintain 
program funding accountability consistent with--
            ``(1) generally accepted accounting principles; and
            ``(2) the requirements of the Indian Self-
        Determination and Education Assistance Act (25 U.S.C. 
        450 et seq.).
    ``(f) Penalties.--
            ``(1) Subsections (a)(1), (a)(6), and (b) of 
        section 409, shall apply to an Indian tribe with an 
        approved tribal assistance plan in the same manner as 
        such subsections apply to a State.
            ``(2) Section 409(a)(3) shall apply to an Indian 
        tribe with an approved tribal assistance plan by 
        substituting `meet minimum work participation 
        requirements established under section 412(c)' for 
        `comply with section 407(a)'.
    ``(g) Data Collection and Reporting.--Section 411 shall 
apply to an Indian tribe with an approved tribal family 
assistance plan.
    ``(h) Special Rule for Indian Tribes in Alaska.--
            ``(1) In general.--Notwithstanding any other 
        provision of this section, and except as provided in 
        paragraph (2), an Indian tribe in the State of Alaska 
        that receives a tribal family assistance grant under 
        this section shall use the grant to operate a program 
        in accordance with requirements comparable to the 
        requirements applicable to the program of the State of 
        Alaska funded under this part. Comparability of 
        programs shall be established on the basis of program 
        criteria developed by the Secretary in consultation 
        with the State of Alaska and such Indian tribes.
            ``(2) Waiver.--An Indian tribe described in 
        paragraph (1) may apply to the appropriate State 
        authority to receive a waiver of the requirement of 
        paragraph (1).

``SEC. 413. RESEARCH, EVALUATIONS, AND NATIONAL STUDIES.

    ``(a) Research.--The Secretary shall conduct research on 
the benefits, effects, and costs of operating different State 
programs funded under this part, including time limits relating 
to eligibility for assistance. The research shall include 
studies on the effects of different programs and the operation 
of such programs on welfare dependency, illegitimacy, teen 
pregnancy, employment rates, child well-being, and any other 
area the Secretary deems appropriate. The Secretary shall also 
conduct research on the costs and benefits of State activities 
under section 409.
    ``(b) Development and Evaluation of Innovative Approaches 
To Reducing Welfare Dependency and Increasing Child Well-
Being.--
            ``(1) In general.--The Secretary may assist States 
        in developing, and shall evaluate, innovative 
        approaches for reducing welfare dependency and 
        increasing the well-being of minor children living at 
        home with respect to recipients of assistance under 
        programs funded under this part. The Secretary may 
        provide funds for training and technical assistance to 
        carry out the approaches developed pursuant to this 
        paragraph.
            ``(2) Evaluations.--In performing the evaluations 
        under paragraph (1), the Secretary shall, to the 
        maximum extent feasible, use random assignment as an 
        evaluation methodology.
    ``(c) Dissemination of Information.--The Secretary shall 
develop innovative methods of disseminating information on any 
research, evaluations, and studies conducted under this 
section, including the facilitation of the sharing of 
information and best practices among States and localities 
through the use of computers and other technologies.
    ``(d) Annual Ranking of States and Review of Most and Least 
Successful Work Programs.--
            ``(1) Annual ranking of states.--The Secretary 
        shall rank annually the States to which grants are paid 
        under section 403 in the order of their success in 
        placing recipients of assistance under the State 
        program funded under this part into long-term private 
        sector jobs, reducing the overall welfare caseload, 
        and, when a practicable method for calculating this 
        information becomes available, diverting individuals 
        from formally applying to the State program and 
        receiving assistance. In ranking States under this 
        subsection, the Secretary shall take into account the 
        average number of minor children living at home in 
        families in the State that have incomes below the 
        poverty line and the amount of funding provided each 
        State for such families.
            ``(2) Annual review of most and least successful 
        work programs.--The Secretary shall review the programs 
        of the 3 States most recently ranked highest under 
        paragraph (1) and the 3 States most recently ranked 
        lowest under paragraph (1) that provide parents with 
        work experience, assistance in finding employment, and 
        other work preparation activities and support services 
        to enable the families of such parents to leave the 
        program and become self-sufficient.
    ``(e) Annual Ranking of States and Review of Issues 
Relating to Out-of-Wedlock Births.--
            ``(1) Annual ranking of states.--
                    ``(A) In general.--The Secretary shall 
                annually rank States to which grants are made 
                under section 403 based on the following 
                ranking factors:
                            ``(i) Absolute out-of-wedlock 
                        ratios.--The ratio represented by--
                                    ``(I) the total number of 
                                out-of-wedlock births in 
                                families receiving assistance 
                                under the State program under 
                                this part in the State for the 
                                most recent fiscal year for 
                                which information is available; 
                                over
                                    ``(II) the total number of 
                                births in families receiving 
                                assistance under the State 
                                program under this part in the 
                                State for such year.
                            ``(ii) Net changes in the out-of-
                        wedlock ratio.--The difference between 
                        the ratio described in subparagraph 
                        (A)(i) with respect to a State for the 
                        most recent fiscal year for which such 
                        information is available and the ratio 
                        with respect to the State for the 
                        immediately preceding year.
            ``(2) Annual review.--The Secretary shall review 
        the programs of the 5 States most recently ranked 
        highest under paragraph (1) and the 5 States most 
        recently ranked the lowest under paragraph (1).
    ``(f) State-Initiated Evaluations.--A State shall be 
eligible to receive funding to evaluate the State program 
funded under this part if--
            ``(1) the State submits a proposal to the Secretary 
        for the evaluation;
            ``(2) the Secretary determines that the design and 
        approach of the evaluation is rigorous and is likely to 
        yield information that is credible and will be useful 
        to other States, and
            ``(3) unless otherwise waived by the Secretary, the 
        State contributes to the cost of the evaluation, from 
        non-Federal sources, an amount equal to at least 10 
        percent of the cost of the evaluation.
    ``(g) Report on Circumstances of Certain Children and 
Families.--
            ``(1) In general.--Beginning 3 years after the date 
        of the enactment of this Act, the Secretary of Health 
        and Human Services shall prepare and submit to the 
        Committees on Ways and Means and on Economic and 
        Educational Opportunities of the House of 
        Representatives and to the Committees on Finance and on 
        Labor and Resources of the Senate annual reports that 
        examine in detail the matters described in paragraph 
        (2) with respect to each of the following groups for 
        the period after such enactment:
                    ``(A) Individuals who were children in 
                families that have become ineligible for 
                assistance under a State program funded under 
                this part by reason of having reached a time 
                limit on the provision of such assistance.
                    ``(B) Families that include a child who is 
                ineligible for assistance under a State program 
                funded under this part by reason of section 
                408(a)(2).
                    ``(C) Children born after such date of 
                enactment to parents who, at the time of such 
                birth, had not attained 20 years of age.
                    ``(D) Individuals who, after such date of 
                enactment, became parents before attaining 20 
                years of age.
            ``(2) Matters described.--The matters described in 
        this paragraph are the following:
                    ``(A) The percentage of each group that has 
                dropped out of secondary school (or the 
                equivalent), and the percentage of each group 
                at each level of educational attainment.
                    ``(B) The percentage of each group that is 
                employed.
                    ``(C) The percentage of each group that has 
                been convicted of a crime or has been 
                adjudicated as a delinquent.
                    ``(D) The rate at which the members of each 
                group are born, or have children, out-of-
                wedlock, and the percentage of each group that 
                is married.
                    ``(E) The percentage of each group that 
                continues to participate in State programs 
                funded under this part.
                    ``(F) The percentage of each group that has 
                health insurance provided by a private entity 
                (broken down by whether the insurance is 
                provided through an employer or otherwise), the 
                percentage that has health insurance provided 
                by an agency of government, and the percentage 
                that does not have health insurance.
                    ``(G) The average income of the families of 
                the members of each group.
                    ``(H) Such other matters as the Secretary 
                deems appropriate.
    ``(h) Funding of Studies and Demonstrations.--
            ``(1) In general.--Out of any money in the Treasury 
        of the United States not otherwise appropriated, there 
        are appropriated $15,000,000 for each fiscal year 
        specified in section 403(a)(1) for the purpose of 
        paying--
                    ``(A) the cost of conducting the research 
                described in subsection (a);
                    ``(B) the cost of developing and evaluating 
                innovative approaches for reducing welfare 
                dependency and increasing the well-being of 
                minor children under subsection (b);
                    ``(C) the Federal share of any State-
                initiated study approved under subsection (f); 
                and
                    ``(D) an amount determined by the Secretary 
                to be necessary to operate and evaluate 
                demonstration projects, relating to this part, 
                that are in effect or approved under section 
                1115 as of September 30, 1995, and are 
                continued after such date.
            ``(2) Allocation.--Of the amount appropriated under 
        paragraph (1) for a fiscal year--
                    ``(A) 50 percent shall be allocated for the 
                purposes described in subparagraphs (A) and (B) 
                of paragraph (1), and
                    ``(B) 50 percent shall be allocated for the 
                purposes described in subparagraphs (C) and (D) 
                of paragraph (1).
            ``(3) Demonstrations of innovative strategies.--The 
        Secretary may implement and evaluate demonstrations of 
        innovative and promising strategies which--
                    ``(A) provide one-time capital funds to 
                establish, expand, or replicate programs;
                    ``(B) test performance-based grant-to-loan 
                financing in which programs meeting performance 
                targets receive grants while programs not 
                meeting such targets repay funding on a 
                prorated basis; and
                    ``(C) test strategies in multiple States 
                and types of communities.

``SEC. 414. STUDY BY THE CENSUS BUREAU.

    ``(a) In General.--The Bureau of the Census shall expand 
the Survey of Income and Program Participation as necessary to 
obtain such information as will enable interested persons to 
evaluate the impact of the amendments made by subtitle A of the 
Personal Responsibility and Work Opportunity Act of 1996 on a 
random national sample of recipients of assistance under State 
programs funded under this part and (as appropriate) other low 
income families, and in doing so, shall pay particular 
attention to the issues of out-of-wedlock birth, welfare 
dependency, the beginning and end of welfare spells, and the 
causes of repeat welfare spells.
    ``(b) Appropriation.--Out of any money in the Treasury of 
the United States not otherwise appropriated, there are 
appropriated $10,000,000 for each of fiscal years 1996, 1997, 
1998, 1999, 2000, 2001, and 2002 for payment to the Bureau of 
the Census to carry out subsection (a).

``SEC. 415. WAIVERS.

    ``(a) Continuation of Waivers.--
            ``(1) Waivers in effect on date of enactment of 
        welfare reform.--Except as provided in paragraph (3), 
        if any waiver granted to a State under section 1115 or 
        otherwise which relates to the provision of assistance 
        under a State plan under this part (as in effect on 
        September 30, 1995) is in effect as of the date of the 
        enactment of the Personal Responsibility and Work 
        Opportunity Act of 1996, the amendments made by such 
        Act (other than by section 4103(d) of such Act) shall 
        not apply with respect to the State before the 
        expiration (determined without regard to any 
        extensions) of the waiver to the extent such amendments 
        are inconsistent with the waiver.
            ``(2) Waivers granted subsequently.--Except as 
        provided in paragraph (3), if any waiver granted to a 
        State under section 1115 or otherwise which relates to 
        the provision of assistance under a State plan under 
        this part (as in effect on September 30, 1995) is 
        submitted to the Secretary before the date of the 
        enactment of the Personal Responsibility and Work 
        Opportunity Act of 1996 and approved by the Secretary 
        on or before July 1, 1997, and the State demonstrates 
        to the satisfaction of the Secretary that the waiver 
        will not result in Federal expenditures under title IV 
        of this Act (as in effect without regard to the 
        amendments made by the Personal Responsibility and Work 
        Opportunity Act of 1996) that are greater than would 
        occur in the absence of the waiver, the amendments made 
        by the Personal Responsibility and Work Opportunity Act 
        of 1996 (other than by section 4103(d) of such Act) 
        shall not apply with respect to the State before the 
        expiration (determined without regard to any 
        extensions) of the waiver to the extent the amendments 
        made by the Personal Responsibility and Work 
        Opportunity Act of 1996 are inconsistent with the 
        waiver.
            ``(3) Financing limitation.--Notwithstanding any 
        other provision of law, beginning with fiscal year 
        1996, a State operating under a waiver described in 
        paragraph (1) shall be entitled to payment under 
        section 403 for the fiscal year, in lieu of any other 
        payment provided for in the waiver.
    ``(b) State Option To Terminate Waiver.--
            ``(1) In general.--A State may terminate a waiver 
        described in subsection (a) before the expiration of 
        the waiver.
            ``(2) Report.--A State which terminates a waiver 
        under paragraph (1) shall submit a report to the 
        Secretary summarizing the waiver and any available 
        information concerning the result or effect of the 
        waiver.
            ``(3) Hold harmless provision.--
                    ``(A) In general.--Notwithstanding any 
                other provision of law, a State that, not later 
                than the date described in subparagraph (B), 
                submits a written request to terminate a waiver 
                described in subsection (a) shall be held 
                harmless for accrued cost neutrality 
                liabilities incurred under the waiver.
                    ``(B) Date described.--The date described 
                in this subparagraph is 90 days following the 
                adjournment of the first regular session of the 
                State legislature that begins after the date of 
                the enactment of the Personal Responsibility 
                and Work Opportunity Act of 1996.
    ``(c) Secretarial Encouragement of Current Waivers.--The 
Secretary shall encourage any State operating a waiver 
described in subsection (a) to continue the waiver and to 
evaluate, using random sampling and other characteristics of 
accepted scientific evaluations, the result or effect of the 
waiver.
    ``(d) Continuation of Individual Waivers.--A State may 
elect to continue 1 or more individual waivers described in 
subsection (a).

``SEC. 416. ASSISTANT SECRETARY FOR FAMILY SUPPORT.

    ``The programs under this part and part D shall be 
administered by an Assistant Secretary for Family Support 
within the Department of Health and Human Services, who shall 
be appointed by the President, by and with the advice and 
consent of the Senate, and who shall be in addition to any 
other Assistant Secretary of Health and Human Services provided 
for by law.

``SEC. 417. LIMITATION ON FEDERAL AUTHORITY.

    ``No officer or employee of the Federal Government may 
regulate the conduct of States under this part or enforce any 
provision of this part, except to the extent expressly provided 
in this part.''; and
            (2) by inserting after such section 418 the 
        following:

``SEC. 419. DEFINITIONS.

    ``As used in this part:
            ``(1) Adult.--The term `adult' means an individual 
        who is not a minor child.
            ``(2) Minor child.--The term `minor child' means an 
        individual who--
                    ``(A) has not attained 18 years of age; or
                    ``(B) has not attained 19 years of age and 
                is a full-time student in a secondary school 
                (or in the equivalent level of vocational or 
                technical training).
            ``(3) Fiscal year.--The term `fiscal year' means 
        any 12-month period ending on September 30 of a 
        calendar year.
            ``(4) Indian, indian tribe, and tribal 
        organization.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the terms `Indian', `Indian 
                tribe', and `tribal organization' have the 
                meaning given such terms by section 4 of the 
                Indian Self-Determination and Education 
                Assistance Act (25 U.S.C. 450b).
                    ``(B) Special rule for indian tribes in 
                alaska.--The term `Indian tribe' means, with 
                respect to the State of Alaska, only the 
                Metlakatla Indian Community of the Annette 
                Islands Reserve and the following Alaska Native 
                regional nonprofit corporations:
                            ``(i) Arctic Slope Native 
                        Association.
                            ``(ii) Kawerak, Inc.
                            ``(iii) Maniilaq Association.
                            ``(iv) Association of Village 
                        Council Presidents.
                            ``(v) Tanana Chiefs Conference.
                            ``(vi) Cook Inlet Tribal Council.
                            ``(vii) Bristol Bay Native 
                        Association.
                            ``(viii) Aleutian and Pribilof 
                        Island Association.
                            ``(ix) Chugachmuit.
                            ``(x) Tlingit Haida Central 
                        Council.
                            ``(xi) Kodiak Area Native 
                        Association.
                            ``(xii) Copper River Native 
                        Association.
            ``(5) State.--Except as otherwise specifically 
        provided, the term `State' means the 50 States of the 
        United States, the District of Columbia, the 
        Commonwealth of Puerto Rico, the United States Virgin 
        Islands, Guam, and American Samoa.''.
    (b) Grants to Outlying Areas.--Section 1108 (42 U.S.C. 
1308) is amended--
            (1) by redesignating subsection (c) as subsection 
        (g);
            (2) by striking all that precedes subsection (c) 
        and inserting the following:

``SEC. 1108. ADDITIONAL GRANTS TO PUERTO RICO, THE VIRGIN ISLANDS, 
                    GUAM, AND AMERICAN SAMOA; LIMITATION ON TOTAL 
                    PAYMENTS.

    ``(a) Limitation on Total Payments to Each Territory.--
Notwithstanding any other provision of this Act, the total 
amount certified by the Secretary of Health and Human Services 
under titles I, X, XIV, and XVI, under parts A, B, and E of 
title IV, and under subsection (b) of this section, for payment 
to any territory for a fiscal year shall not exceed the ceiling 
amount for the territory for the fiscal year.
    ``(b) Entitlement to Matching Grant.--
            ``(1) In general.--Each territory shall be entitled 
        to receive from the Secretary for each fiscal year a 
        grant in an amount equal to 75 percent of the amount 
        (if any) by which--
                    ``(A) the total expenditures of the 
                territory during the fiscal year under the 
                territory programs funded under parts A, B, and 
                E of title IV; exceeds
                    ``(B) the sum of--
                            ``(i) the total amount required to 
                        be paid to the territory (other than 
                        with respect to child care) under 
                        former section 403 (as in effect on 
                        September 30, 1995) for fiscal year 
                        1995, which shall be determined by 
                        applying subparagraphs (C) and (D) of 
                        section 403(a)(1) to the territory;
                            ``(ii) the total amount required to 
                        be paid to the territory under former 
                        section 434 (as so in effect) for 
                        fiscal year 1995; and
                            ``(iii) the total amount expended 
                        by the territory during fiscal year 
                        1995 pursuant to parts A, B, and F of 
                        title IV (as so in effect), other than 
                        for child care.
            ``(2) Use of grant.--Any territory to which a grant 
        is made under paragraph (1) may expend the amount under 
        any program operated or funded under any provision of 
        law specified in subsection (a).
    ``(c) Definitions.--As used in this section:
            ``(1) Territory.--The term `territory' means Puerto 
        Rico, the Virgin Islands, Guam, and American Samoa.
            ``(2) Ceiling amount.--The term `ceiling amount' 
        means, with respect to a territory and a fiscal year, 
        the mandatory ceiling amount with respect to the 
        territory plus the discretionary ceiling amount with 
        respect to the territory, reduced for the fiscal year 
        in accordance with subsection (f).
            ``(3) Mandatory ceiling amount.--The term 
        `mandatory ceiling amount' means--
                    ``(A) $105,538,000 with respect to for 
                Puerto Rico;
                    ``(B) $4,902,000 with respect to Guam;
                    ``(C) $3,742,000 with respect to the Virgin 
                Islands; and
                    ``(D) $1,122,000 with respect to American 
                Samoa.
            ``(4) Discretionary ceiling amount.--The term 
        `discretionary ceiling amount' means, with respect to a 
        territory and a fiscal year, the total amount 
        appropriated pursuant to subsection (d)(3) for the 
        fiscal year for payment to the territory.
            ``(5) Total amount expended by the territory.--The 
        term `total amount expended by the territory'--
                    ``(A) does not include expenditures during 
                the fiscal year from amounts made available by 
                the Federal Government; and
                    ``(B) when used with respect to fiscal year 
                1995, also does not include--
                            ``(i) expenditures during fiscal 
                        year 1995 under subsection (g) or (i) 
                        of section 402 (as in effect on 
                        September 30, 1995); or
                            ``(ii) any expenditures during 
                        fiscal year 1995 for which the 
                        territory (but for section 1108, as in 
                        effect on September 30, 1995) would 
                        have received reimbursement from the 
                        Federal Government.
    ``(d) Discretionary Grants.--
            ``(1) In general.--The Secretary shall make a grant 
        to each territory for any fiscal year in the amount 
        appropriated pursuant to paragraph (3) for the fiscal 
        year for payment to the territory.
            ``(2) Use of grant.--Any territory to which a grant 
        is made under paragraph (1) may expend the amount under 
        any program operated or funded under any provision of 
        law specified in subsection (a).
            ``(3) Limitation on authorization of 
        appropriations.--For grants under paragraph (1), there 
        are authorized to be appropriated to the Secretary for 
        each fiscal year--
                    ``(A) $7,951,000 for payment to Puerto 
                Rico;
                    ``(B) $345,000 for payment to Guam;
                    ``(C) $275,000 for payment to the Virgin 
                Islands; and
                    ``(D) $190,000 for payment to American 
                Samoa.
    ``(e) Authority to Transfer Funds Among Programs.--
Notwithstanding any other provision of this Act, any territory 
to which an amount is paid under any provision of law specified 
in subsection (a) may use part or all of the amount to carry 
out any program operated by the territory, or funded, under any 
other such provision of law.
    ``(f) Maintenance of Effort.--The ceiling amount with 
respect to a territory shall be reduced for a fiscal year by an 
amount equal to the amount (if any) by which--
            ``(1) the total amount expended by the territory 
        under all programs of the territory operated pursuant 
        to the provisions of law specified in subsection (a) 
        (as such provisions were in effect for fiscal year 
        1995) for fiscal year 1995; exceeds
            ``(2) the total amount expended by the territory 
        under all programs of the territory that are funded 
        under the provisions of law specified in subsection (a) 
        for the fiscal year that immediately precedes the 
        fiscal year referred to in the matter preceding 
        paragraph (1).''; and
            (3) by striking subsections (d) and (e).
    (c) Repeal of Provisions Requiring Reduction of Medicaid 
Payments to States That Reduce Welfare Payment Levels.--
            (1) Section 1903(i) (42 U.S.C. 1396b(i)) is amended 
        by striking paragraph (9).
            (2) Section 1902 (42 U.S.C. 1396a) is amended by 
        striking subsection (c).
    (d) Elimination of Child Care Programs Under the Social 
Security Act.--
            (1) AFDC and transitional child care programs.--
        Section 402 (42 U.S.C. 602) is amended by striking 
        subsection (g).
            (2) At-risk child care program.--
                    (A) Authorization.--Section 402 (42 U.S.C. 
                602) is amended by striking subsection (i).
                    (B) Funding provisions.--Section 403 (42 
                U.S.C. 603) is amended by striking subsection 
                (n).

SEC. 4104. SERVICES PROVIDED BY CHARITABLE, RELIGIOUS, OR PRIVATE 
                    ORGANIZATIONS.

    (a) In General.--
            (1) State options.--A State may--
                    (A) administer and provide services under 
                the programs described in subparagraphs (A) and 
                (B)(i) of paragraph (2) through contracts with 
                charitable, religious, or private 
                organizations; and
                    (B) provide beneficiaries of assistance 
                under the programs described in subparagraphs 
                (A) and (B)(ii) of paragraph (2) with 
                certificates, vouchers, or other forms of 
                disbursement which are redeemable with such 
                organizations.
            (2) Programs described.--The programs described in 
        this paragraph are the following programs:
                    (A) A State program funded under part A of 
                title IV of the Social Security Act (as amended 
                by section 4103(a) of this Act).
                    (B) Any other program established or 
                modified under subtitle A, B, or F of this 
                title, that--
                            (i) permits contracts with 
                        organizations; or
                            (ii) permits certificates, 
                        vouchers, or other forms of 
                        disbursement to be provided to 
                        beneficiaries, as a means of providing 
                        assistance.
    (b) Religious Organizations.--The purpose of this section 
is to allow States to contract with religious organizations, or 
to allow religious organizations to accept certificates, 
vouchers, or other forms of disbursement under any program 
described in subsection (a)(2), on the same basis as any other 
nongovernmental provider without impairing the religious 
character of such organizations, and without diminishing the 
religious freedom of beneficiaries of assistance funded under 
such program.
    (c) Nondiscrimination Against Religious Organizations.--In 
the event a State exercises its authority under subsection (a), 
religious organizations are eligible, on the same basis as any 
other private organization, as contractors to provide 
assistance, or to accept certificates, vouchers, or other forms 
of disbursement, under any program described in subsection 
(a)(2) so long as the programs are implemented consistent with 
the Establishment Clause of the United States Constitution. 
Except as provided in subsection (k), neither the Federal 
Government nor a State receiving funds under such programs 
shall discriminate against an organization which is or applies 
to be a contractor to provide assistance, or which accepts 
certificates, vouchers, or other forms of disbursement, on the 
basis that the organization has a religious character.
    (d) Religious Character and Freedom.--
            (1) Religious organizations.--A religious 
        organization with a contract described in subsection 
        (a)(1)(A), or which accepts certificates, vouchers, or 
        other forms of disbursement under subsection (a)(1)(B), 
        shall retain its independence from Federal, State, and 
        local governments, including such organization's 
        control over the definition, development, practice, and 
        expression of its religious beliefs.
            (2) Additional safeguards.--Neither the Federal 
        Government nor a State shall require a religious 
        organization to--
                    (A) alter its form of internal governance; 
                or
                    (B) remove religious art, icons, scripture, 
                or other symbols;
        in order to be eligible to contract to provide 
        assistance, or to accept certificates, vouchers, or 
        other forms of disbursement, funded under a program 
        described in subsection (a)(2).
    (e) Rights of Beneficiaries of Assistance.--
            (1) In general.--If an individual described in 
        paragraph (2) has an objection to the religious 
        character of the organization or institution from which 
        the individual receives, or would receive, assistance 
        funded under any program described in subsection 
        (a)(2), the State in which the individual resides shall 
        provide such individual (if otherwise eligible for such 
        assistance) within a reasonable period of time after 
        the date of such objection with assistance from an 
        alternative provider that is accessible to the 
        individual and the value of which is not less than the 
        value of the assistance which the individual would have 
        received from such organization.
            (2) Individual described.--An individual described 
        in this paragraph is an individual who receives, 
        applies for, or requests to apply for, assistance under 
        a program described in subsection (a)(2).
    (f) Employment Practices.--A religious organization's 
exemption provided under section 702 of the Civil Rights Act of 
1964 (42 U.S.C. 2000e-1a) regarding employment practices shall 
not be affected by its participation in, or receipt of funds 
from, programs described in subsection (a)(2).
    (g) Nondiscrimination Against Beneficiaries.--Except as 
otherwise provided in law, a religious organization shall not 
discriminate against an individual in regard to rendering 
assistance funded under any program described in subsection 
(a)(2) on the basis of religion, a religious belief, or refusal 
to actively participate in a religious practice.
    (h) Fiscal Accountability.--
            (1) In general.--Except as provided in paragraph 
        (2), any religious organization contracting to provide 
        assistance funded under any program described in 
        subsection (a)(2) shall be subject to the same 
        regulations as other contractors to account in accord 
        with generally accepted auditing principles for the use 
        of such funds provided under such programs.
            (2) Limited audit.--If such organization segregates 
        Federal funds provided under such programs into 
        separate accounts, then only the financial assistance 
        provided with such funds shall be subject to audit.
    (i) Compliance.--Any party which seeks to enforce its 
rights under this section may assert a civil action for 
injunctive relief exclusively in an appropriate State court 
against the entity or agency that allegedly commits such 
violation.
    (j) Limitations on Use of Funds for Certain Purposes.--No 
funds provided directly to institutions or organizations to 
provide services and administer programs under subsection 
(a)(1)(A) shall be expended for sectarian worship, instruction, 
or proselytization.
    (k) Preemption.--Nothing in this section shall be construed 
to preempt any provision of a State constitution or State 
statute that prohibits or restricts the expenditure of State 
funds in or by religious organizations.

SEC. 4105. CENSUS DATA ON GRANDPARENTS AS PRIMARY CAREGIVERS FOR THEIR 
                    GRANDCHILDREN.

    (a) In General.--Not later than 90 days after the date of 
the enactment of this Act, the Secretary of Commerce, in 
carrying out section 141 of title 13, United States Code, shall 
expand the data collection efforts of the Bureau of the Census 
(in this section referred to as the ``Bureau'') to enable the 
Bureau to collect statistically significant data, in connection 
with its decennial census and its mid-decade census, concerning 
the growing trend of grandparents who are the primary 
caregivers for their grandchildren.
    (b) Expanded Census Question.--In carrying out subsection 
(a), the Secretary of Commerce shall expand the Bureau's census 
question that details households which include both 
grandparents and their grandchildren. The expanded question 
shall be formulated to distinguish between the following 
households:
            (1) A household in which a grandparent temporarily 
        provides a home for a grandchild for a period of weeks 
        or months during periods of parental distress.
            (2) A household in which a grandparent provides a 
        home for a grandchild and serves as the primary 
        caregiver for the grandchild.

SEC. 4106. REPORT ON DATA PROCESSING.

    (a) In General.--Within 6 months after the date of the 
enactment of this Act, the Secretary of Health and Human 
Services shall prepare and submit to the Congress a report on--
            (1) the status of the automated data processing 
        systems operated by the States to assist management in 
        the administration of State programs under part A of 
        title IV of the Social Security Act (whether in effect 
        before or after October 1, 1995); and
            (2) what would be required to establish a system 
        capable of--
                    (A) tracking participants in public 
                programs over time; and
                    (B) checking case records of the States to 
                determine whether individuals are participating 
                in public programs of 2 or more States.
    (b) Preferred Contents.--The report required by subsection 
(a) should include--
            (1) a plan for building on the automated data 
        processing systems of the States to establish a system 
        with the capabilities described in subsection (a)(2); 
        and
            (2) an estimate of the amount of time required to 
        establish such a system and of the cost of establishing 
        such a system.

SEC. 4107. STUDY ON ALTERNATIVE OUTCOMES MEASURES.

    (a) Study.--The Secretary shall, in cooperation with the 
States, study and analyze outcomes measures for evaluating the 
success of the States in moving individuals out of the welfare 
system through employment as an alternative to the minimum 
participation rates described in section 407 of the Social 
Security Act. The study shall include a determination as to 
whether such alternative outcomes measures should be applied on 
a national or a State-by-State basis and a preliminary 
assessment of the effects of section 409(a)(7)(C) of such Act.
    (b) Report.--Not later than September 30, 1998, the 
Secretary shall submit to the Committee on Finance of the 
Senate and the Committee on Ways and Means of the House of 
Representatives a report containing the findings of the study 
required by subsection (a).

SEC. 4108. CONFORMING AMENDMENTS TO THE SOCIAL SECURITY ACT.

    (a) Amendments to Title II.--
            (1) Section 205(c)(2)(C)(vi) (42 U.S.C. 
        405(c)(2)(C)(vi)), as so redesignated by section 
        321(a)(9)(B) of the Social Security Independence and 
        Program Improvements Act of 1994, is amended--
                    (A) by inserting ``an agency administering 
                a program funded under part A of title IV or'' 
                before ``an agency operating''; and
                    (B) by striking ``A or D of title IV of 
                this Act'' and inserting ``D of such title''.
            (2) Section 228(d)(1) (42 U.S.C. 428(d)(1)) is 
        amended by inserting ``under a State program funded 
        under'' before ``part A of title IV''.
    (b) Amendments to Part D of Title IV.--
            (1) Section 451 (42 U.S.C. 651) is amended by 
        striking ``aid'' and inserting ``assistance under a 
        State program funded''.
            (2) Section 452(a)(10)(C) (42 U.S.C. 652(a)(10)(C)) 
        is amended--
                    (A) by striking ``aid to families with 
                dependent children'' and inserting ``assistance 
                under a State program funded under part A'';
                    (B) by striking ``such aid'' and inserting 
                ``such assistance''; and
                    (C) by striking ``under section 402(a)(26) 
                or'' and inserting ``pursuant to section 
                408(a)(4) or under section''.
            (3) Section 452(a)(10)(F) (42 U.S.C. 652(a)(10)(F)) 
        is amended--
                    (A) by striking ``aid under a State plan 
                approved'' and inserting ``assistance under a 
                State program funded''; and
                    (B) by striking ``in accordance with the 
                standards referred to in section 
                402(a)(26)(B)(ii)'' and inserting ``by the 
                State''.
            (4) Section 452(b) (42 U.S.C. 652(b)) is amended in 
        the first sentence by striking ``aid under the State 
        plan approved under part A'' and inserting ``assistance 
        under the State program funded under part A''.
            (5) Section 452(d)(3)(B)(i) (42 U.S.C. 
        652(d)(3)(B)(i)) is amended by striking ``1115(c)'' and 
        inserting ``1115(b)''.
            (6) Section 452(g)(2)(A)(ii)(I) (42 U.S.C. 
        652(g)(2)(A)(ii)(I)) is amended by striking ``aid is 
        being paid under the State's plan approved under part A 
        or E'' and inserting ``assistance is being provided 
        under the State program funded under part A''.
            (7) Section 452(g)(2)(A) (42 U.S.C. 652(g)(2)(A)) 
        is amended in the matter following clause (iii) by 
        striking ``aid was being paid under the State's plan 
        approved under part A or E'' and inserting ``assistance 
        was being provided under the State program funded under 
        part A''.
            (8) Section 452(g)(2) (42 U.S.C. 652(g)(2)) is 
        amended in the matter following subparagraph (B)--
                    (A) by striking ``who is a dependent 
                child'' and inserting ``with respect to whom 
                assistance is being provided under the State 
                program funded under part A'';
                    (B) by inserting ``by the State'' after 
                ``found''; and
                    (C) by striking ``to have good cause for 
                refusing to cooperate under section 
                402(a)(26)'' and inserting ``to qualify for a 
                good cause or other exception to cooperation 
                pursuant to section 454(29)''.
            (9) Section 452(h) (42 U.S.C. 652(h)) is amended by 
        striking ``under section 402(a)(26)'' and inserting 
        ``pursuant to section 408(a)(4)''.
            (10) Section 453(c)(3) (42 U.S.C. 653(c)(3)) is 
        amended by striking ``aid under part A of this title'' 
        and inserting ``assistance under a State program funded 
        under part A''.
            (11) Section 454(5)(A) (42 U.S.C. 654(5)(A))) is 
        amended--
                    (A) by striking ``under section 
                402(a)(26)'' and inserting ``pursuant to 
                section 408(a)(4)''; and
                    (B) by striking ``; except that this 
                paragraph shall not apply to such payments for 
                any month following the first month in which 
                the amount collected is sufficient to make such 
                family ineligible for assistance under the 
                State plan approved under part A;'' and 
                inserting a comma.
            (12) Section 454(6)(D) (42 U.S.C. 654(6)(D)) is 
        amended by striking ``aid under a State plan approved'' 
        and inserting ``assistance under a State program 
        funded''.
            (13) Section 456(a)(1) (42 U.S.C. 656(a)(1)) is 
        amended by striking ``under section 402(a)(26)''.
            (14) Section 466(a)(3)(B) (42 U.S.C. 666(a)(3)(B)) 
        is amended by striking ``402(a)(26)'' and inserting 
        ``408(a)(3)''.
            (15) Section 466(b)(2) (42 U.S.C. 666(b)(2)) is 
        amended by striking ``aid'' and inserting ``assistance 
        under a State program funded''.
            (16) Section 469(a) (42 U.S.C. 669(a)) is amended--
                    (A) by striking ``aid under plans 
                approved'' and inserting ``assistance under 
                State programs funded''; and
                    (B) by striking ``such aid'' and inserting 
                ``such assistance''.
    (c) Repeal of Part F of Title IV.--Part F of title IV (42 
U.S.C. 681-687) is repealed.
    (d) Amendment to Title X.--Section 1002(a)(7) (42 U.S.C. 
1202(a)(7)) is amended by striking ``aid to families with 
dependent children under the State plan approved under section 
402 of this Act'' and inserting ``assistance under a State 
program funded under part A of title IV''.
    (e) Amendments to Title XI.--
            (1) Section 1109 (42 U.S.C. 1309) is amended by 
        striking ``or part A of title IV,''.
            (2) Section 1115 (42 U.S.C. 1315) is amended--
                    (A) in subsection (a)(2)--
                            (i) by inserting ``(A)'' after 
                        ``(2)'';
                            (ii) by striking ``403,'';
                            (iii) by striking the period at the 
                        end and inserting ``, and''; and
                            (iv) by adding at the end the 
                        following new subparagraph:
            ``(B) costs of such project which would not 
        otherwise be a permissible use of funds under part A of 
        title IV and which are not included as part of the 
        costs of projects under section 1110, shall to the 
        extent and for the period prescribed by the Secretary, 
        be regarded as a permissible use of funds under such 
        part.''; and
                    (B) in subsection (c)(3), by striking ``the 
                program of aid to families with dependent 
                children'' and inserting ``part A of such 
                title''.
            (3) Section 1116 (42 U.S.C. 1316) is amended--
                    (A) in each of subsections (a)(1), (b), and 
                (d), by striking ``or part A of title IV,''; 
                and
                    (B) in subsection (a)(3), by striking 
                ``404,''.
            (4) Section 1118 (42 U.S.C. 1318) is amended--
                    (A) by striking ``403(a),'';
                    (B) by striking ``and part A of title 
                IV,''; and
                    (C) by striking ``, and shall, in the case 
                of American Samoa, mean 75 per centum with 
                respect to part A of title IV''.
            (5) Section 1119 (42 U.S.C. 1319) is amended--
                    (A) by striking ``or part A of title IV''; 
                and
                    (B) by striking ``403(a),''.
            (6) Section 1133(a) (42 U.S.C. 1320b-3(a)) is 
        amended by striking ``or part A of title IV,''.
            (7) Section 1136 (42 U.S.C. 1320b-6) is repealed.
            (8) Section 1137 (42 U.S.C. 1320b-7) is amended--
                    (A) in subsection (b), by striking 
                paragraph (1) and inserting the following:
            ``(1) any State program funded under part A of 
        title IV of this Act;''; and
                    (B) in subsection (d)(1)(B)--
                            (i) by striking ``In this 
                        subsection--'' and all that follows 
                        through ``(ii) in'' and inserting ``In 
                        this subsection, in'';
                            (ii) by redesignating subclauses 
                        (I), (II), and (III) as clauses (i), 
                        (ii), and (iii); and
                            (iii) by moving such redesignated 
                        material 2 ems to the left.
    (f) Amendment to Title XIV.--Section 1402(a)(7) (42 U.S.C. 
1352(a)(7)) is amended by striking ``aid to families with 
dependent children under the State plan approved under section 
402 of this Act'' and inserting ``assistance under a State 
program funded under part A of title IV''.
    (g) Amendment to Title XVI as in Effect With Respect to the 
Territories.--Section 1602(a)(11), as in effect without regard 
to the amendment made by section 301 of the Social Security 
Amendments of 1972 (42 U.S.C. 1382 note), is amended by 
striking ``aid under the State plan approved'' and inserting 
``assistance under a State program funded''.
    (h) Amendment to Title XVI as in Effect With Respect to the 
States.--Section 1611(c)(5)(A) (42 U.S.C. 1382(c)(5)(A)) is 
amended to read as follows: ``(A) a State program funded under 
part A of title IV,''.
    (i) Amendment to Title XIX.--Section 1902(j) (42 U.S.C. 
1396a(j)) is amended by striking ``1108(c)'' and inserting 
``1108(g)''.

SEC. 4109. CONFORMING AMENDMENTS TO THE FOOD STAMP ACT OF 1977 AND 
                    RELATED PROVISIONS.

    (a) Section 5 of the Food Stamp Act of 1977 (7 U.S.C. 2014) 
is amended--
            (1) in the second sentence of subsection (a), by 
        striking ``plan approved'' and all that follows through 
        ``title IV of the Social Security Act'' and inserting 
        ``program funded under part A of title IV of the Social 
        Security Act (42 U.S.C. 601 et seq.)'';
            (2) in subsection (d)--
                    (A) in paragraph (5), by striking 
                ``assistance to families with dependent 
                children'' and inserting ``assistance under a 
                State program funded''; and
                    (B) by striking paragraph (13) and 
                redesignating paragraphs (14), (15), and (16) 
                as paragraphs (13), (14), and (15), 
                respectively;
            (3) in subsection (j), by striking ``plan approved 
        under part A of title IV of such Act (42 U.S.C. 601 et 
        seq.)'' and inserting ``program funded under part A of 
        title IV of the Act (42 U.S.C. 601 et seq.)''; and
            (4) by striking subsection (m).
    (b) Section 6 of such Act (7 U.S.C. 2015) is amended--
            (1) in subsection (c)(5), by striking ``the State 
        plan approved'' and inserting ``the State program 
        funded''; and
            (2) in subsection (e)(6), by striking ``aid to 
        families with dependent children'' and inserting 
        ``benefits under a State program funded''.
    (c) Section 16(g)(4) of such Act (7 U.S.C. 2025(g)(4)) is 
amended by striking ``State plans under the Aid to Families 
with Dependent Children Program under'' and inserting ``State 
programs funded under part A of''.
    (d) Section 17 of such Act (7 U.S.C. 2026) is amended--
            (1) in the first sentence of subsection (b)(1)(A), 
        by striking ``to aid to families with dependent 
        children under part A of title IV of the Social 
        Security Act'' and inserting ``or are receiving 
        assistance under a State program funded under part A of 
        title IV of the Social Security Act (42 U.S.C. 601 et 
        seq.)''; and
            (2) in subsection (b)(3), by adding at the end the 
        following new subparagraph:
    ``(I) The Secretary may not grant a waiver under this 
paragraph on or after October 1, 1995. Any reference in this 
paragraph to a provision of title IV of the Social Security Act 
shall be deemed to be a reference to such provision as in 
effect on September 30, 1995.'';
    (e) Section 20 of such Act (7 U.S.C. 2029) is amended--
            (1) in subsection (a)(2)(B) by striking 
        ``operating--'' and all that follows through ``(ii) any 
        other'' and inserting ``operating any''; and
            (2) in subsection (b)--
                    (A) in paragraph (1)--
                            (i) by striking ``(b)(1) A 
                        household'' and inserting ``(b) A 
                        household''; and
                            (ii) in subparagraph (B), by 
                        striking ``training program'' and 
                        inserting ``activity'';
                    (B) by striking paragraph (2); and
                    (C) by redesignating subparagraphs (A) 
                through (F) as paragraphs (1) through (6), 
                respectively.
    (f) Section 5(h)(1) of the Agriculture and Consumer 
Protection Act of 1973 (Public Law 93-186; 7 U.S.C. 612c note) 
is amended by striking ``the program for aid to families with 
dependent children'' and inserting ``the State program 
funded''.
    (g) Section 9 of the National School Lunch Act (42 U.S.C. 
1758) is amended--
            (1) in subsection (b)--
                    (A) in paragraph (2)(C)(ii)(II)--
                            (i) by striking ``program for aid 
                        to families with dependent children'' 
                        and inserting ``State program funded''; 
                        and
                            (ii) by inserting before the period 
                        at the end the following: ``that the 
                        Secretary determines complies with 
                        standards established by the Secretary 
                        that ensure that the standards under 
                        the State program are comparable to or 
                        more restrictive than those in effect 
                        on June 1, 1995''; and
                    (B) in paragraph (6)--
                            (i) in subparagraph (A)(ii)--
                                    (I) by striking ``an AFDC 
                                assistance unit (under the aid 
                                to families with dependent 
                                children program authorized'' 
                                and inserting ``a family (under 
                                the State program funded''; and
                                    (II) by striking ``, in a 
                                State'' and all that follows 
                                through ``9902(2)))'' and 
                                inserting ``that the Secretary 
                                determines complies with 
                                standards established by the 
                                Secretary that ensure that the 
                                standards under the State 
                                program are comparable to or 
                                more restrictive than those in 
                                effect on June 1, 1995''; and
                            (ii) in subparagraph (B), by 
                        striking ``aid to families with 
                        dependent children'' and inserting 
                        ``assistance under the State program 
                        funded under part A of title IV of the 
                        Social Security Act (42 U.S.C. 601 et 
                        seq.) that the Secretary determines 
                        complies with standards established by 
                        the Secretary that ensure that the 
                        standards under the State program are 
                        comparable to or more restrictive than 
                        those in effect on June 1, 1995''; and
            (2) in subsection (d)(2)(C)--
                    (A) by striking ``program for aid to 
                families with dependent children'' and 
                inserting ``State program funded''; and
                    (B) by inserting before the period at the 
                end the following: ``that the Secretary 
                determines complies with standards established 
                by the Secretary that ensure that the standards 
                under the State program are comparable to or 
                more restrictive than those in effect on June 
                1, 1995''.
    (h) Section 17(d)(2)(A)(ii)(II) of the Child Nutrition Act 
of 1966 (42 U.S.C. 1786(d)(2)(A)(ii)(II)) is amended--
            (1) by striking ``program for aid to families with 
        dependent children established'' and inserting ``State 
        program funded''; and
            (2) by inserting before the semicolon the 
        following: ``that the Secretary determines complies 
        with standards established by the Secretary that ensure 
        that the standards under the State program are 
        comparable to or more restrictive than those in effect 
        on June 1, 1995''.

SEC. 4110. CONFORMING AMENDMENTS TO OTHER LAWS.

    (a) Subsection (b) of section 508 of the Unemployment 
Compensation Amendments of 1976 (42 U.S.C. 603a; Public Law 94-
566; 90 Stat. 2689) is amended to read as follows:
    ``(b) Provision for Reimbursement of Expenses.--For 
purposes of section 455 of the Social Security Act, expenses 
incurred to reimburse State employment offices for furnishing 
information requested of such offices--
            ``(1) pursuant to the third sentence of section 
        3(a) of the Act entitled `An Act to provide for the 
        establishment of a national employment system and for 
        cooperation with the States in the promotion of such 
        system, and for other purposes', approved June 6, 1933 
        (29 U.S.C. 49b(a)), or
            ``(2) by a State or local agency charged with the 
        duty of carrying a State plan for child support 
        approved under part D of title IV of the Social 
        Security Act,
shall be considered to constitute expenses incurred in the 
administration of such State plan.''.
    (b) Section 9121 of the Omnibus Budget Reconciliation Act 
of 1987 (42 U.S.C. 602 note) is repealed.
    (c) Section 9122 of the Omnibus Budget Reconciliation Act 
of 1987 (42 U.S.C. 602 note) is repealed.
    (d) Section 221 of the Housing and Urban-Rural Recovery Act 
of 1983 (42 U.S.C. 602 note), relating to treatment under AFDC 
of certain rental payments for federally assisted housing, is 
repealed.
    (e) Section 159 of the Tax Equity and Fiscal Responsibility 
Act of 1982 (42 U.S.C. 602 note) is repealed.
    (f) Section 202(d) of the Social Security Amendments of 
1967 (81 Stat. 882; 42 U.S.C. 602 note) is repealed.
    (g) Section 903 of the Stewart B. McKinney Homeless 
Assistance Amendments Act of 1988 (42 U.S.C. 11381 note), 
relating to demonstration projects to reduce number of AFDC 
families in welfare hotels, is amended--
            (1) in subsection (a), by striking ``aid to 
        families with dependent children under a State plan 
        approved'' and inserting ``assistance under a State 
        program funded''; and
            (2) in subsection (c), by striking ``aid to 
        families with dependent children in the State under a 
        State plan approved'' and inserting ``assistance in the 
        State under a State program funded''.
    (h) The Higher Education Act of 1965 (20 U.S.C. 1001 et 
seq.) is amended--
            (1) in section 404C(c)(3) (20 U.S.C. 1070a-
        23(c)(3)), by striking ``(Aid to Families with 
        Dependent Children)''; and
            (2) in section 480(b)(2) (20 U.S.C. 1087vv(b)(2)), 
        by striking ``aid to families with dependent children 
        under a State plan approved'' and inserting 
        ``assistance under a State program funded''.
    (i) The Carl D. Perkins Vocational and Applied Technology 
Education Act (20 U.S.C. 2301 et seq.) is amended--
            (1) in section 231(d)(3)(A)(ii) (20 U.S.C. 
        2341(d)(3)(A)(ii)), by striking ``The program for aid 
        to dependent children'' and inserting ``The State 
        program funded'';
            (2) in section 232(b)(2)(B) (20 U.S.C. 
        2341a(b)(2)(B)), by striking ``the program for aid to 
        families with dependent children'' and inserting ``the 
        State program funded''; and
            (3) in section 521(14)(B)(iii) (20 U.S.C. 
        2471(14)(B)(iii)), by striking ``the program for aid to 
        families with dependent children'' and inserting ``the 
        State program funded''.
    (j) The Elementary and Secondary Education Act of 1965 (20 
U.S.C. 2701 et seq.) is amended--
            (1) in section 1113(a)(5) (20 U.S.C. 6313(a)(5)), 
        by striking ``Aid to Families with Dependent Children 
        program'' and inserting ``State program funded under 
        part A of title IV of the Social Security Act'';
            (2) in section 1124(c)(5) (20 U.S.C. 6333(c)(5)), 
        by striking ``the program of aid to families with 
        dependent children under a State plan approved under'' 
        and inserting ``a State program funded under part A 
        of''; and
            (3) in section 5203(b)(2) (20 U.S.C. 7233(b)(2))--
                    (A) in subparagraph (A)(xi), by striking 
                ``Aid to Families with Dependent Children 
                benefits'' and inserting ``assistance under a 
                State program funded under part A of title IV 
                of the Social Security Act''; and
                    (B) in subparagraph (B)(viii), by striking 
                ``Aid to Families with Dependent Children'' and 
                inserting ``assistance under the State program 
                funded under part A of title IV of the Social 
                Security Act''.
    (k) The 4th proviso of chapter VII of title I of Public Law 
99-88 (25 U.S.C. 13d-1) is amended to read as follows: 
``Provided further, That general assistance payments made by 
the Bureau of Indian Affairs shall be made--
            ``(1) after April 29, 1985, and before October 1, 
        1995, on the basis of Aid to Families with Dependent 
        Children (AFDC) standards of need; and
            ``(2) on and after October 1, 1995, on the basis of 
        standards of need established under the State program 
        funded under part A of title IV of the Social Security 
        Act,
except that where a State ratably reduces its AFDC or State 
program payments, the Bureau shall reduce general assistance 
payments in such State by the same percentage as the State has 
reduced the AFDC or State program payment.''.
    (l) The Internal Revenue Code of 1986 (26 U.S.C. 1 et seq.) 
is amended--
            (1) in section 51(d)(9) (26 U.S.C. 51(d)(9)), by 
        striking all that follows ``agency as'' and inserting 
        ``being eligible for financial assistance under part A 
        of title IV of the Social Security Act and as having 
        continually received such financial assistance during 
        the 90-day period which immediately precedes the date 
        on which such individual is hired by the employer.'';
            (2) in section 3304(a)(16) (26 U.S.C. 3304(a)(16)), 
        by striking ``eligibility for aid or services,'' and 
        all that follows through ``children approved'' and 
        inserting ``eligibility for assistance, or the amount 
        of such assistance, under a State program funded'';
            (3) in section 6103(l)(7)(D)(i) (26 U.S.C. 
        6103(l)(7)(D)(i)), by striking ``aid to families with 
        dependent children provided under a State plan 
        approved'' and inserting ``a State program funded'';
            (4) in section 6103(l)(10) (26 U.S.C. 
        6103(l)(10))--
                    (A) by striking ``(c) or (d)'' each place 
                it appears and inserting ``(c), (d), or (e)''; 
                and
                    (B) by adding at the end of subparagraph 
                (B) the following new sentence: ``Any return 
                information disclosed with respect to section 
                6402(e) shall only be disclosed to officers and 
                employees of the State agency requesting such 
                information.'';
            (5) in section 6103(p)(4) (26 U.S.C. 6103(p)(4)), 
        in the matter preceding subparagraph (A)--
                    (A) by striking ``(5), (10)'' and inserting 
                ``(5)''; and
                    (B) by striking ``(9), or (12)'' and 
                inserting ``(9), (10), or (12)'';
            (6) in section 6334(a)(11)(A) (26 U.S.C. 
        6334(a)(11)(A)), by striking ``(relating to aid to 
        families with dependent children)'';
            (7) in section 6402 (26 U.S.C. 6402)--
                    (A) in subsection (a), by striking ``(c) 
                and (d)'' and inserting ``(c), (d), and (e)'';
                    (B) by redesignating subsections (e) 
                through (i) as subsections (f) through (j), 
                respectively; and
                    (C) by inserting after subsection (d) the 
                following:
    ``(e) Collection of Overpayments Under Title IV-A of the 
Social Security Act.--The amount of any overpayment to be 
refunded to the person making the overpayment shall be reduced 
(after reductions pursuant to subsections (c) and (d), but 
before a credit against future liability for an internal 
revenue tax) in accordance with section 405(e) of the Social 
Security Act (concerning recovery of overpayments to 
individuals under State plans approved under part A of title IV 
of such Act).''; and
            (8) in section 7523(b)(3)(C) (26 U.S.C. 
        7523(b)(3)(C)), by striking ``aid to families with 
        dependent children'' and inserting ``assistance under a 
        State program funded under part A of title IV of the 
        Social Security Act''.
    (m) Section 3(b) of the Wagner-Peyser Act (29 U.S.C. 
49b(b)) is amended by striking ``State plan approved under part 
A of title IV'' and inserting ``State program funded under part 
A of title IV''.
    (n) The Job Training Partnership Act (29 U.S.C. 1501 et 
seq.) is amended--
            (1) in section 4(29)(A)(i) (29 U.S.C. 
        1503(29)(A)(i)), by striking ``(42 U.S.C. 601 et 
        seq.)'';
            (2) in section 106(b)(6)(C) (29 U.S.C. 
        1516(b)(6)(C)), by striking ``State aid to families 
        with dependent children records,'' and inserting 
        ``records collected under the State program funded 
        under part A of title IV of the Social Security Act,'';
            (3) in section 121(b)(2) (29 U.S.C. 1531(b)(2))--
                    (A) by striking ``the JOBS program'' and 
                inserting ``the work activities required under 
                title IV of the Social Security Act''; and
                    (B) by striking the second sentence;
            (4) in section 123(c) (29 U.S.C. 1533(c))--
                    (A) in paragraph (1)(E), by repealing 
                clause (vi); and
                    (B) in paragraph (2)(D), by repealing 
                clause (v);
            (5) in section 203(b)(3) (29 U.S.C. 1603(b)(3)), by 
        striking ``, including recipients under the JOBS 
        program'';
            (6) in subparagraphs (A) and (B) of section 
        204(a)(1) (29 U.S.C. 1604(a)(1) (A) and (B)), by 
        striking ``(such as the JOBS program)'' each place it 
        appears;
            (7) in section 205(a) (29 U.S.C. 1605(a)), by 
        striking paragraph (4) and inserting the following:
            ``(4) the portions of title IV of the Social 
        Security Act relating to work activities;'';
            (8) in section 253 (29 U.S.C. 1632)--
                    (A) in subsection (b)(2), by repealing 
                subparagraph (C); and
                    (B) in paragraphs (1)(B) and (2)(B) of 
                subsection (c), by striking ``the JOBS program 
                or'' each place it appears;
            (9) in section 264 (29 U.S.C. 1644)--
                    (A) in subparagraphs (A) and (B) of 
                subsection (b)(1), by striking ``(such as the 
                JOBS program)'' each place it appears; and
                    (B) in subparagraphs (A) and (B) of 
                subsection (d)(3), by striking ``and the JOBS 
                program'' each place it appears;
            (10) in section 265(b) (29 U.S.C. 1645(b)), by 
        striking paragraph (6) and inserting the following:
            ``(6) the portion of title IV of the Social 
        Security Act relating to work activities;'';
            (11) in the second sentence of section 429(e) (29 
        U.S.C. 1699(e)), by striking ``and shall be in an 
        amount that does not exceed the maximum amount that may 
        be provided by the State pursuant to section 
        402(g)(1)(C) of the Social Security Act (42 U.S.C. 
        602(g)(1)(C))'';
            (12) in section 454(c) (29 U.S.C. 1734(c)), by 
        striking ``JOBS and'';
            (13) in section 455(b) (29 U.S.C. 1735(b)), by 
        striking ``the JOBS program,'';
            (14) in section 501(1) (29 U.S.C. 1791(1)), by 
        striking ``aid to families with dependent children 
        under part A of title IV of the Social Security Act (42 
        U.S.C. 601 et seq.)'' and inserting ``assistance under 
        the State program funded under part A of title IV of 
        the Social Security Act'';
            (15) in section 506(1)(A) (29 U.S.C. 1791e(1)(A)), 
        by striking ``aid to families with dependent children'' 
        and inserting ``assistance under the State program 
        funded'';
            (16) in section 508(a)(2)(A) (29 U.S.C. 
        1791g(a)(2)(A)), by striking ``aid to families with 
        dependent children'' and inserting ``assistance under 
        the State program funded''; and
            (17) in section 701(b)(2)(A) (29 U.S.C. 
        1792(b)(2)(A))--
                    (A) in clause (v), by striking the 
                semicolon and inserting ``; and''; and
                    (B) by striking clause (vi).
    (o) Section 3803(c)(2)(C)(iv) of title 31, United States 
Code, is amended to read as follows:
            ``(iv) assistance under a State program funded 
        under part A of title IV of the Social Security Act;''.
    (p) Section 2605(b)(2)(A)(i) of the Low-Income Home Energy 
Assistance Act of 1981 (42 U.S.C. 8624(b)(2)(A)(i)) is amended 
to read as follows:
                            ``(i) assistance under the State 
                        program funded under part A of title IV 
                        of the Social Security Act;''.
    (q) Section 303(f)(2) of the Family Support Act of 1988 (42 
U.S.C. 602 note) is amended--
            (1) by striking ``(A)''; and
            (2) by striking subparagraphs (B) and (C).
    (r) The Balanced Budget and Emergency Deficit Control Act 
of 1985 (2 U.S.C. 900 et seq.) is amended--
            (1) in the first section 255(h) (2 U.S.C. 905(h)), 
        by striking ``Aid to families with dependent children 
        (75-0412-0-1-609);'' and inserting ``Block grants to 
        States for temporary assistance for needy families;''; 
        and
            (2) in section 256 (2 U.S.C. 906)--
                    (A) by striking subsection (k); and
                    (B) by redesignating subsection (l) as 
                subsection (k).
    (s) The Immigration and Nationality Act (8 U.S.C. 1101 et 
seq.) is amended--
            (1) in section 210(f) (8 U.S.C. 1160(f)), by 
        striking ``aid under a State plan approved under'' each 
        place it appears and inserting ``assistance under a 
        State program funded under'';
            (2) in section 245A(h) (8 U.S.C. 1255a(h))--
                    (A) in paragraph (1)(A)(i), by striking 
                ``program of aid to families with dependent 
                children'' and inserting ``State program of 
                assistance''; and
                    (B) in paragraph (2)(B), by striking ``aid 
                to families with dependent children'' and 
                inserting ``assistance under a State program 
                funded under part A of title IV of the Social 
                Security Act''; and
            (3) in section 412(e)(4) (8 U.S.C. 1522(e)(4)), by 
        striking ``State plan approved'' and inserting ``State 
        program funded''.
    (t) Section 640(a)(4)(B)(i) of the Head Start Act (42 
U.S.C. 9835(a)(4)(B)(i)) is amended by striking ``program of 
aid to families with dependent children under a State plan 
approved'' and inserting ``State program of assistance 
funded''.
    (u) Section 9 of the Act of April 19, 1950 (64 Stat. 47, 
chapter 92; 25 U.S.C. 639) is repealed.
    (v) Subparagraph (E) of section 213(d)(6) of the School-To-
Work Opportunities Act of 1994 (20 U.S.C. 6143(d)(6)) is 
amended to read as follows:
                    ``(E) part A of title IV of the Social 
                Security Act (42 U.S.C. 601 et seq.) relating 
                to work activities;''.
    (w) Section 552a(a)(8)(B)(iv)(III) of title 5, United 
States Code, is amended by striking ``section 464 or 1137 of 
the Social Security Act'' and inserting ``section 404(e), 464, 
or 1137 of the Social Security Act''.

SEC. 4111. DEVELOPMENT OF PROTOTYPE OF COUNTERFEIT-RESISTANT SOCIAL 
                    SECURITY CARD REQUIRED.

    (a) Development.--
            (1) In general.--The Commissioner of Social 
        Security (in this section referred to as the 
        ``Commissioner'') shall, in accordance with this 
        section, develop a prototype of a counterfeit-resistant 
        social security card. Such prototype card shall--
                    (A) be made of a durable, tamper-resistant 
                material such as plastic or polyester,
                    (B) employ technologies that provide 
                security features, such as magnetic stripes, 
                holograms, and integrated circuits, and
                    (C) be developed so as to provide 
                individuals with reliable proof of citizenship 
                or legal resident alien status.
            (2) Assistance by attorney general.--The Attorney 
        General of the United States shall provide such 
        information and assistance as the Commissioner deems 
        necessary to enable the Commissioner to comply with 
        this section.
    (b) Study and Report.--
            (1) In general.--The Commissioner shall conduct a 
        study and issue a report to Congress which examines 
        different methods of improving the social security card 
        application process.
            (2) Elements of study.--The study shall include an 
        evaluation of the cost and work load implications of 
        issuing a counterfeit-resistant social security card 
        for all individuals over a 3-, 5-, and 10-year period. 
        The study shall also evaluate the feasibility and cost 
        implications of imposing a user fee for replacement 
        cards and cards issued to individuals who apply for 
        such a card prior to the scheduled 3-, 5-, and 10-year 
        phase-in options.
            (3) Distribution of report.--The Commissioner shall 
        submit copies of the report described in this 
        subsection along with a facsimile of the prototype card 
        as described in subsection (a) to the Committees on 
        Ways and Means and Judiciary of the House of 
        Representatives and the Committees on Finance and 
        Judiciary of the Senate within 1 year after the date of 
        the enactment of this Act.

SEC. 4112. DISCLOSURE OF RECEIPT OF FEDERAL FUNDS.

    (a) In General.--Whenever an organization that accepts 
Federal funds under this title or the amendments made by this 
title (other than funds provided under title IV, XVI, or XX of 
the Social Security Act) makes any communication that in any 
way intends to promote public support or opposition to any 
policy of a Federal, State, or local government through any 
broadcasting station, newspaper, magazine, outdoor advertising 
facility, direct mailing, or any other type of general public 
advertising, such communication shall state the following: 
``This was prepared and paid for by an organization that 
accepts taxpayer dollars.''.
    (b) Failure To Comply.--If an organization makes any 
communication described in subsection (a) and fails to provide 
the statement required by that subsection, such organization 
shall be ineligible to receive Federal funds under this title 
or the amendments made by this title.
    (c) Definition.--For purposes of this section, the term 
``organization'' means an organization described in section 
501(c) of the Internal Revenue Code of 1986.
    (d) Effective Dates.--This section shall take effect--
            (1) with respect to printed communications 1 year 
        after the date of enactment of this Act; and
            (2) with respect to any other communication on the 
        date of enactment of this Act.

SEC. 4113. MODIFICATIONS TO THE JOB OPPORTUNITIES FOR CERTAIN LOW-
                    INCOME INDIVIDUALS PROGRAM.

    Section 505 of the Family Support Act of 1988 (42 U.S.C. 
1315 note) is amended--
            (1) in the heading, by striking 
        ``demonstration'';
            (2) by striking ``demonstration'' each place such 
        term appears;
            (3) in subsection (a), by striking ``in each of 
        fiscal years'' and all that follows through ``10'' and 
        inserting ``shall enter into agreements with'';
            (4) in subsection (b)(3), by striking ``aid to 
        families with dependent children under part A of title 
        IV of the Social Security Act'' and inserting 
        ``assistance under the program funded part A of title 
        IV of the Social Security Act of the State in which the 
        individual resides'';
            (5) in subsection (c)--
                    (A) in paragraph (1)(C), by striking ``aid 
                to families with dependent children under title 
                IV of the Social Security Act'' and inserting 
                ``assistance under a State program funded part 
                A of title IV of the Social Security Act'';
                    (B) in paragraph (2), by striking ``aid to 
                families with dependent children under title IV 
                of such Act'' and inserting ``assistance under 
                a State program funded part A of title IV of 
                the Social Security Act'';
            (6) in subsection (d), by striking ``job 
        opportunities and basic skills training program (as 
        provided for under title IV of the Social Security 
        Act)'' and inserting ``the State program funded under 
        part A of title IV of the Social Security Act''; and
            (7) by striking subsections (e) through (g) and 
        inserting the following:
    ``(e) Authorization of Appropriations.--For the purpose of 
conducting projects under this section, there is authorized to 
be appropriated an amount not to exceed $25,000,000 for any 
fiscal year.''.

SEC. 4114. SECRETARIAL SUBMISSION OF LEGISLATIVE PROPOSAL FOR TECHNICAL 
                    AND CONFORMING AMENDMENTS.

    Not later than 90 days after the date of the enactment of 
this Act, the Secretary of Health and Human Services and the 
Commissioner of Social Security, in consultation, as 
appropriate, with the heads of other Federal agencies, shall 
submit to the appropriate committees of Congress a legislative 
proposal proposing such technical and conforming amendments as 
are necessary to bring the law into conformity with the policy 
embodied in this subtitle.

SEC. 4115. EFFECTIVE DATE; TRANSITION RULE.

    (a) Effective Dates.--
            (1) In general.--Except as otherwise provided in 
        this subtitle, this subtitle and the amendments made by 
        this subtitle shall take effect on July 1, 1997.
            (2) Delayed effective date for certain 
        provisions.--Notwithstanding any other provision of 
        this section, paragraphs (2), (3), (4), (5), (8), and 
        (10) of section 409(a) and section 411(a) of the Social 
        Security Act (as added by the amendments made by 
        section 4103(a) of this Act) shall not take effect with 
        respect to a State until, and shall apply only with 
        respect to conduct that occurs on or after, the later 
        of--
                    (A) July 1, 1997; or
                    (B) the date that is 6 months after the 
                date the Secretary of Health and Human Services 
                receives from the State a plan described in 
                section 402(a) of the Social Security Act (as 
                added by such amendment).
            (3) Elimination of child care programs.--The 
        amendments made by section 4103(d) shall take effect on 
        October 1, 1996.
            (4) Definitions applicable to new child care 
        entitlement.--Sections 403(a)(1)(C), 403(a)(1)(D), and 
        419(4) of the Social Security Act, as added by the 
        amendments made by section 4103(a) of this Act, shall 
        take effect on October 1, 1996.
    (b) Transition Rules.--Effective on the date of the 
enactment of this Act:
            (1) State option to accelerate effective date.--
                    (A) In general.--If the Secretary of Health 
                and Human Services receives from a State a plan 
                described in section 402(a) of the Social 
                Security Act (as added by the amendment made by 
                section 4103(a)(1) of this Act), then--
                            (i) on and after the date of such 
                        receipt--
                                    (I) except as provided in 
                                clause (ii), this subtitle and 
                                the amendments made by this 
                                subtitle (other than by section 
                                4103(d) of this Act) shall 
                                apply with respect to the 
                                State; and
                                    (II) the State shall be 
                                considered an eligible State 
                                for purposes of part A of title 
                                IV of the Social Security Act 
                                (as in effect pursuant to the 
                                amendments made by such section 
                                4103(a)); and
                            (ii) during the period that begins 
                        on the date of such receipt and ends on 
                        June 30, 1997, there shall remain in 
                        effect with respect to the State--
                                    (I) section 403(h) of the 
                                Social Security Act (as in 
                                effect on September 30, 1995); 
                                and
                                    (II) all State reporting 
                                requirements under parts A and 
                                F of title IV of the Social 
                                Security Act (as in effect on 
                                September 30, 1995), modified 
                                by the Secretary as 
                                appropriate, taking into 
                                account the State program under 
                                part A of title IV of the 
                                Social Security Act (as in 
                                effect pursuant to the 
                                amendments made by such section 
                                4103(a)).
                    (B) Limitations on federal obligations.--
                            (i) Under afdc program.--The total 
                        obligations of the Federal Government 
                        to a State under part A of title IV of 
                        the Social Security Act (as in effect 
                        on September 30, 1995) with respect to 
                        expenditures in fiscal year 1997 shall 
                        not exceed an amount equal to the State 
                        family assistance grant.
                            (ii) Under temporary family 
                        assistance program.--Notwithstanding 
                        section 403(a)(1) of the Social 
                        Security Act (as in effect pursuant to 
                        the amendments made by section 4103(a) 
                        of this Act), the total obligations of 
                        the Federal Government to a State under 
                        such section 403(a)(1)--
                                    (I) for fiscal year 1996, 
                                shall be an amount equal to--
                                            (aa) the State 
                                        family assistance 
                                        grant; multiplied by
                                            (bb) \1/366\ of the 
                                        number of days during 
                                        the period that begins 
                                        on the date the 
                                        Secretary of Health and 
                                        Human Services first 
                                        receives from the State 
                                        a plan described in 
                                        section 402(a) of the 
                                        Social Security Act (as 
                                        added by the amendment 
                                        made by section 
                                        4103(a)(1) of this Act) 
                                        and ends on September 
                                        30, 1996; and
                                    (II) for fiscal year 1997, 
                                shall be an amount equal to the 
                                lesser of--
                                            (aa) the amount (if 
                                        any) by which the State 
                                        family assistance grant 
                                        exceeds the total 
                                        obligations of the 
                                        Federal Government to 
                                        the State under part A 
                                        of title IV of the 
                                        Social Security Act (as 
                                        in effect on September 
                                        30, 1995) with respect 
                                        to expenditures in 
                                        fiscal year 1997; or
                                            (bb) the State 
                                        family assistance 
                                        grant, multiplied by 
                                        \1/365\ of the number 
                                        of days during the 
                                        period that begins on 
                                        October 1, 1996, or the 
                                        date the Secretary of 
                                        Health and Human 
                                        Services first receives 
                                        from the State a plan 
                                        described in section 
                                        402(a) of the Social 
                                        Security Act (as added 
                                        by the amendment made 
                                        by section 4103(a)(1) 
                                        of this Act), whichever 
                                        is later, and ends on 
                                        September 30, 1997.
                            (iii) Child care obligations 
                        excluded in determining federal afdc 
                        obligations.--As used in this 
                        subparagraph, the term ``obligations of 
                        the Federal Government to the State 
                        under part A of title IV of the Social 
                        Security Act'' does not include any 
                        obligation of the Federal Government 
                        with respect to child care expenditures 
                        by the State.
                    (C) Submission of state plan for fiscal 
                year 1996 or 1997 deemed acceptance of grant 
                limitations and formula and termination of afdc 
                entitlement.--The submission of a plan by a 
                State pursuant to subparagraph (A) is deemed to 
                constitute--
                            (i) the State's acceptance of the 
                        grant reductions under subparagraph (B) 
                        (including the formula for computing 
                        the amount of the reduction); and
                            (ii) the termination of any 
                        entitlement of any individual or family 
                        to benefits or services under the State 
                        AFDC program.
                    (D) Definitions.--As used in this 
                paragraph:
                            (i) State afdc program.--The term 
                        ``State AFDC program'' means the State 
                        program under parts A and F of title IV 
                        of the Social Security Act (as in 
                        effect on September 30, 1995).
                            (ii) State.--The term ``State'' 
                        means the 50 States and the District of 
                        Columbia.
                            (iii) State family assistance 
                        grant.--The term ``State family 
                        assistance grant'' means the State 
                        family assistance grant (as defined in 
                        section 403(a)(1)(B) of the Social 
                        Security Act, as added by the amendment 
                        made by section 4103(a)(1) of this 
                        Act).
            (2) Claims, actions, and proceedings.--The 
        amendments made by this subtitle shall not apply with 
        respect to--
                    (A) powers, duties, functions, rights, 
                claims, penalties, or obligations applicable to 
                aid, assistance, or services provided before 
                the effective date of this subtitle under the 
                provisions amended; and
                    (B) administrative actions and proceedings 
                commenced before such date, or authorized 
                before such date to be commenced, under such 
                provisions.
            (3) Closing out account for those programs 
        terminated or substantially modified by this 
        subtitle.--In closing out accounts, Federal and State 
        officials may use scientifically acceptable statistical 
        sampling techniques. Claims made with respect to State 
        expenditures under a State plan approved under part A 
        of title IV of the Social Security Act (as in effect on 
        September 30, 1995) with respect to assistance or 
        services provided on or before September 30, 1995, 
        shall be treated as claims with respect to expenditures 
        during fiscal year 1995 for purposes of reimbursement 
        even if payment was made by a State on or after October 
        1, 1995. Each State shall complete the filing of all 
        claims under the State plan (as so in effect) within 2 
        years after the date of the enactment of this Act. The 
        head of each Federal department shall--
                    (A) use the single audit procedure to 
                review and resolve any claims in connection 
                with the close out of programs under such State 
                plans; and
                    (B) reimburse States for any payments made 
                for assistance or services provided during a 
                prior fiscal year from funds for fiscal year 
                1995, rather than from funds authorized by this 
                subtitle.
            (4) Continuance in office of assistant secretary 
        for family support.--The individual who, on the day 
        before the effective date of this subtitle, is serving 
        as Assistant Secretary for Family Support within the 
        Department of Health and Human Services shall, until a 
        successor is appointed to such position--
                    (A) continue to serve in such position; and
                    (B) except as otherwise provided by law--
                            (i) continue to perform the 
                        functions of the Assistant Secretary 
                        for Family Support under section 417 of 
                        the Social Security Act (as in effect 
                        before such effective date); and
                            (ii) have the powers and duties of 
                        the Assistant Secretary for Family 
                        Support under section 416 of the Social 
                        Security Act (as in effect pursuant to 
                        the amendment made by section 
                        4103(a)(1) of this Act).
    (c) Termination of Entitlement Under AFDC Program.--
Effective October 1, 1996, no individual or family shall be 
entitled to any benefits or services under any State plan 
approved under part A or F of title IV of the Social Security 
Act (as in effect on September 30, 1995).

                Subtitle B--Supplemental Security Income

SEC. 4200. REFERENCE TO SOCIAL SECURITY ACT.

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

                  CHAPTER 1--ELIGIBILITY RESTRICTIONS

SEC. 4201. DENIAL OF SSI BENEFITS FOR 10 YEARS TO INDIVIDUALS FOUND TO 
                    HAVE FRAUDULENTLY MISREPRESENTED RESIDENCE IN ORDER 
                    TO OBTAIN BENEFITS SIMULTANEOUSLY IN 2 OR MORE 
                    STATES.

    (a) In General.--Section 1611(e) (42 U.S.C. 1382(e)), as 
amended by section 105(b)(4) of the Contract with America 
Advancement Act of 1996, is amended by redesignating paragraph 
(5) as paragraph (3) and by adding at the end the following new 
paragraph:
    ``(4)(A) No person shall be considered an eligible 
individual or eligible spouse for purposes of this title during 
the 10-year period that begins on the date the person is 
convicted in Federal or State court of having made a fraudulent 
statement or representation with respect to the place of 
residence of the person in order to receive assistance 
simultaneously from 2 or more States under programs that are 
funded under title IV, title XV, title XIX, or the Food Stamp 
Act of 1977, or benefits in 2 or more States under the 
supplemental security income program under this title.
    ``(B) As soon as practicable after the conviction of a 
person in a Federal or State court as described in subparagraph 
(A), an official of such court shall notify the Commissioner of 
such conviction.''.
    (b) Effective Date.--The amendment made by this section 
shall take effect on the date of the enactment of this Act.

SEC. 4202. DENIAL OF SSI BENEFITS FOR FUGITIVE FELONS AND PROBATION AND 
                    PAROLE VIOLATORS.

    (a) In General.--Section 1611(e) (42 U.S.C. 1382(e)), as 
amended by section 4201(a) of this Act, is amended by adding at 
the end the following new paragraph:
    ``(5) No person shall be considered an eligible individual 
or eligible spouse for purposes of this title with respect to 
any month if during such month the person is--
            ``(A) fleeing to avoid prosecution, or custody or 
        confinement after conviction, under the laws of the 
        place from which the person flees, for a crime, or an 
        attempt to commit a crime, which is a felony under the 
        laws of the place from which the person flees, or 
        which, in the case of the State of New Jersey, is a 
        high misdemeanor under the laws of such State; or
            ``(B) violating a condition of probation or parole 
        imposed under Federal or State law.''.
    (b) Exchange of Information.--Section 1611(e) (42 U.S.C. 
1382(e)), as amended by section 4201(a) of this Act and 
subsection (a) of this section, is amended by adding at the end 
the following new paragraph:
    ``(6) Notwithstanding any other provision of law (other 
than section 6103 of the Internal Revenue Code of 1986), the 
Commissioner shall furnish any Federal, State, or local law 
enforcement officer, upon the written request of the officer, 
with the current address, Social Security number, and 
photograph (if applicable) of any recipient of benefits under 
this title, if the officer furnishes the Commissioner with the 
name of the recipient, and other identifying information as 
reasonably required by the Commissioner to establish the unique 
identity of the recipient, and notifies the Commissioner that--
            ``(A) the recipient--
                    ``(i) is described in subparagraph (A) or 
                (B) of paragraph (5); or
                    ``(ii) has information that is necessary 
                for the officer to conduct the officer's 
                official duties; and
            ``(B) the location or apprehension of the recipient 
        is within the officer's official duties.''.
    (c) Effective Date.--The amendments made by this section 
shall take effect on the date of the enactment of this Act.

SEC. 4203. TREATMENT OF PRISONERS.

    (a) Implementation of Prohibition Against Payment of 
Benefits to Prisoners.--
            (1) In general.--Section 1611(e)(1) (42 U.S.C. 
        1382(e)(1)) is amended by adding at the end the 
        following new subparagraph:
    ``(I)(i) The Commissioner shall enter into a contract, with 
any interested State or local institution referred to in 
subparagraph (A), under which--
            ``(I) the institution shall provide to the 
        Commissioner, on a monthly basis, the names, social 
        security account numbers, dates of birth, and such 
        other identifying information concerning the inmates of 
        the institution as the Commissioner may require for the 
        purpose of carrying out paragraph (1); and
            ``(II) the Commissioner shall pay to any such 
        institution, with respect to each inmate of the 
        institution who is eligible for a benefit under this 
        title for the month preceding the first month 
        throughout which such inmate is in such institution and 
        becomes ineligible for such benefit (or becomes 
        eligible only for a benefit payable at a reduced rate) 
        as a result of the application of this paragraph, an 
        amount not to exceed $400 if the institution furnishes 
        the information described in subclause (I) to the 
        Commissioner within 30 days after such individual 
        becomes an inmate of such institution, or an amount not 
        to exceed $200 if the institution furnishes such 
        information after 30 days after such date but within 90 
        days after such date.
    ``(ii) The provisions of section 552a of title 5, United 
States Code, shall not apply to any contract entered into under 
clause (i) or to information exchanged pursuant to such 
contract.''.
            (2) Conforming oasdi amendments.--Section 202(x)(3) 
        (42 U.S.C. 402(x)(3)) is amended--
                    (A) by inserting ``(A)'' after ``(3)''; and
                    (B) by adding at the end the following new 
                subparagraph:
    ``(B)(i) The Commissioner shall enter into a contract, with 
any interested State or local institution described in clause 
(i) or (ii) of paragraph (1)(A) the primary purpose of which is 
to confine individuals as described in paragraph (1)(A), under 
which--
            ``(I) the institution shall provide to the 
        Commissioner, on a monthly basis, the names, social 
        security account numbers, dates of birth, and such 
        other identifying information concerning the 
        individuals confined in the institution as the 
        Commissioner may require for the purpose of carrying 
        out paragraph (1); and
            ``(II) the Commissioner shall pay to any such 
        institution, with respect to each individual who is 
        entitled to a benefit under this title for the month 
        preceding the first month throughout which such 
        individual is confined in such institution as described 
        in paragraph (1)(A), an amount not to exceed $400 if 
        the institution furnishes the information described in 
        subclause (I) to the Commissioner within 30 days after 
        the date such individual's confinement in such 
        institution begins, or an amount not to exceed $200 if 
        the institution furnishes such information after 30 
        days after such date but within 90 days after such 
        date.
    ``(ii) The provisions of section 552a of title 5, United 
States Code, shall not apply to any contract entered into under 
clause (i) or to information exchanged pursuant to such 
contract.''.
    (b) Denial of SSI Benefits for 10 Years to a Person Found 
To Have Fraudulently Obtained SSI Benefits While in Prison.--
            (1) In general.--Section 1611(e)(1) (42 U.S.C. 
        1382(e)(1)), as amended by subsection (a)(1) of this 
        section, is amended by adding at the end the following 
        new subparagraph:
    ``(J) In any case in which the Commissioner of Social 
Security finds that a person has made a fraudulent statement or 
representation in order to obtain or to continue to receive 
benefits under this title while being an inmate in a penal 
institution, such person shall not be considered an eligible 
individual or eligible spouse for any month ending during the 
10-year period beginning on the date on which such person 
ceases being such an inmate.''.
            (2) Effective date.--The amendment made by this 
        subsection shall apply with respect to statements or 
        representations made on or after the date of the 
        enactment of this Act.
    (c) Elimination of OASDI Requirement That Confinement Stem 
From Crime Punishable by Imprisonment for More Than 1 Year.--
            (1) In general.--Section 202(x)(1)(A) (42 U.S.C. 
        402(x)(1)(A)) is amended--
                    (A) in the matter preceding clause (i), by 
                striking ``during'' and inserting 
                ``throughout'';
                    (B) in clause (i), by striking ``pursuant'' 
                and all that follows through ``imposed)''; and
                    (C) in clause (ii)(I), by striking ``an 
                offense punishable by imprisonment for more 
                than 1 year'' and inserting ``a criminal 
                offense''.
            (2) Effective date.--The amendments made by this 
        subsection shall be effective with respect to benefits 
        payable for months beginning more than 180 days after 
        the date of the enactment of this Act.
    (d) Study of Other Potential Improvements in the Collection 
of Information Respecting Public Inmates.--
            (1) Study.--The Commissioner of Social Security 
        shall conduct a study of the desirability, feasibility, 
        and cost of--
                    (A) establishing a system under which 
                Federal, State, and local courts would furnish 
                to the Commissioner such information respecting 
                court orders by which individuals are confined 
                in jails, prisons, or other public penal, 
                correctional, or medical facilities as the 
                Commissioner may require for the purpose of 
                carrying out sections 202(x) and 1611(e)(1) of 
                the Social Security Act; and
                    (B) requiring that State and local jails, 
                prisons, and other institutions that enter into 
                contracts with the Commissioner under section 
                202(x)(3)(B) or 1611(e)(1)(I) of the Social 
                Security Act furnish the information required 
                by such contracts to the Commissioner by means 
                of an electronic or other sophisticated data 
                exchange system.
            (2) Report.--Not later than 1 year after the date 
        of the enactment of this Act, the Commissioner of 
        Social Security shall submit a report on the results of 
        the study conducted pursuant to this subsection to the 
        Committee on Finance of the Senate and the Committee on 
        Ways and Means of the House of Representatives.

SEC. 4204. EFFECTIVE DATE OF APPLICATION FOR BENEFITS.

    (a) In General.--Subparagraphs (A) and (B) of section 
1611(c)(7) (42 U.S.C. 1382(c)(7)) are amended to read as 
follows:
            ``(A) the first day of the month following the date 
        such application is filed, or
            ``(B) the first day of the month following the date 
        such individual becomes eligible for such benefits with 
        respect to such application.''.
    (b) Special Rule Relating to Emergency Advance Payments.--
Section 1631(a)(4)(A) (42 U.S.C. 1383(a)(4)(A)) is amended--
            (1) by inserting ``for the month following the date 
        the application is filed'' after ``is presumptively 
        eligible for such benefits''; and
            (2) by inserting ``, which shall be repaid through 
        proportionate reductions in such benefits over a period 
        of not more than 6 months'' before the semicolon.
    (c) Conforming Amendments.--
            (1) Section 1614(b) (42 U.S.C. 1382c(b)) is amended 
        by striking ``at the time the application or request is 
        filed'' and inserting ``on the first day of the month 
        following the date the application or request is 
        filed''.
            (2) Section 1631(g)(3) (42 U.S.C. 1382j(g)(3)) is 
        amended by inserting ``following the month'' after 
        ``beginning with the month''.
    (d) Effective Date.--
            (1) In general.--The amendments made by this 
        section shall apply to applications for benefits under 
        title XVI of the Social Security Act filed on or after 
        the date of the enactment of this Act, without regard 
        to whether regulations have been issued to implement 
        such amendments.
            (2) Benefits under title xvi.--For purposes of this 
        subsection, the term ``benefits under title XVI of the 
        Social Security Act'' includes supplementary payments 
        pursuant to an agreement for Federal administration 
        under section 1616(a) of the Social Security Act, and 
        payments pursuant to an agreement entered into under 
        section 212(b) of Public Law 93-66.

               CHAPTER 2--BENEFITS FOR DISABLED CHILDREN

SEC. 4211. DEFINITION AND ELIGIBILITY RULES.

    (a) Definition of Childhood Disability.--Section 1614(a)(3) 
(42 U.S.C. 1382c(a)(3)), as amended by section 105(b)(1) of the 
Contract with America Advancement Act of 1996, is amended--
            (1) in subparagraph (A), by striking ``An 
        individual'' and inserting ``Except as provided in 
        subparagraph (C), an individual'';
            (2) in subparagraph (A), by striking ``(or, in the 
        case of an individual under the age of 18, if he 
        suffers from any medically determinable physical or 
        mental impairment of comparable severity)'';
            (3) by redesignating subparagraphs (C) through (I) 
        as subparagraphs (D) through (J), respectively;
            (4) by inserting after subparagraph (B) the 
        following new subparagraph:
    ``(C)(i) An individual under the age of 18 shall be 
considered disabled for the purposes of this title if that 
individual has a medically determinable physical or mental 
impairment, which results in marked and severe functional 
limitations, and which can be expected to result in death or 
which has lasted or can be expected to last for a continuous 
period of not less than 12 months.
    ``(ii) The Commissioner shall ensure that the combined 
effects of all physical or mental impairments of an individual 
are taken into account in determining whether an individual is 
disabled in accordance with clause (i).
    ``(iii) The Commissioner shall ensure that the regulations 
prescribed under this subparagraph provide for the evaluation 
of children who cannot be tested because of their young age.
    ``(iv) Notwithstanding the preceding provisions of this 
subparagraph, no individual under the age of 18 who engages in 
substantial gainful activity (determined in accordance with 
regulations prescribed pursuant to subparagraph (E)) may be 
considered to be disabled.''; and
            (5) in subparagraph (F), as redesignated by 
        paragraph (3), by striking ``(D)'' and inserting 
        ``(E)''.
    (b) Changes to Childhood SSI Regulations.--
            (1) Modification to medical criteria for evaluation 
        of mental and emotional disorders.--The Commissioner of 
        Social Security shall modify sections 112.00C.2. and 
        112.02B.2.c.(2) of appendix 1 to subpart P of part 404 
        of title 20, Code of Federal Regulations, to eliminate 
        references to maladaptive behavior in the domain of 
        personal/behavorial function.
            (2) Discontinuance of individualized functional 
        assessment.--The Commissioner of Social Security shall 
        discontinue the individualized functional assessment 
        for children set forth in sections 416.924d and 
        416.924e of title 20, Code of Federal Regulations.
    (c) Medical Improvement Review Standard as it Applies to 
Individuals Under the Age of 18.--Section 1614(a)(4) (42 U.S.C. 
1382(a)(4)) is amended--
            (1) by redesignating subclauses (I) and (II) of 
        clauses (i) and (ii) of subparagraph (B) as items (aa) 
        and (bb), respectively;
            (2) by redesignating clauses (i) and (ii) of 
        subparagraphs (A) and (B) as subclauses (I) and (II), 
        respectively;
            (3) by redesignating subparagraphs (A) through (C) 
        as clauses (i) through (iii), respectively;
            (4) by inserting before clause (i) (as redesignated 
        by paragraph (3)) the following new subparagraph:
            ``(A) in the case of an individual who is age 18 or 
        older--'';
            (5) by inserting after and below subparagraph 
        (A)(iii) (as so redesignated) the following new 
        subparagraph:
            ``(B) in the case of an individual who is under the 
        age of 18--
                    ``(i) substantial evidence which 
                demonstrates that there has been medical 
                improvement in the individual's impairment or 
                combination of impairments, and that such 
                impairment or combination of impairments no 
                longer results in marked and severe functional 
                limitations; or
                    ``(ii) substantial evidence which 
                demonstrates that, as determined on the basis 
                of new or improved diagnostic techniques or 
                evaluations, the individual's impairment or 
                combination of impairments, is not as disabling 
                as it was considered to be at the time of the 
                most recent prior decision that the individual 
                was under a disability or continued to be under 
                a disability, and such impairment or 
                combination of impairments does not result in 
                marked and severe functional limitations; or'';
            (6) by redesignating subparagraph (D) as 
        subparagraph (C) and by inserting in such subparagraph 
        ``in the case of any individual,'' before ``substantial 
        evidence''; and
            (7) in the first sentence following subparagraph 
        (C) (as redesignated by paragraph (6)), by--
                    (A) inserting ``(i)'' before ``to 
                restore''; and
                    (B) inserting ``, or (ii) in the case of an 
                individual under the age of 18, to eliminate or 
                improve the individual's impairment or 
                combination of impairments so that it no longer 
                results in marked and severe functional 
                limitations'' immediately before the period.
    (d) Effective Date, Etc.--
            (1) Effective date.--The provisions of, and 
        amendments made by, this section shall apply to 
        applications for benefits under title XVI of the Social 
        Security Act pending on, or filed on or after, the date 
        of the enactment of this Act, without regard to whether 
        regulations have been issued to implement such 
        provisions and amendments.
            (2) Application to current recipients.--
                    (A) Eligibility redeterminations.--During 
                the period beginning on the date of the 
                enactment of this Act and ending on the date 
                which is 1 year after such date of enactment, 
                the Commissioner of Social Security shall 
                redetermine the eligibility of any individual 
                under age 18 who is eligible for supplemental 
                security income benefits by reason of 
                disability under title XVI of the Social 
                Security Act as of the date of the enactment of 
                this Act and whose eligibility for such 
                benefits may terminate by reason of the 
                provisions of, or amendments made by, this 
                section. With respect to any redetermination 
                under this subparagraph--
                            (i) section 1614(a)(4) of the 
                        Social Security Act (42 U.S.C. 
                        1382c(a)(4)) shall not apply;
                            (ii) the Commissioner of Social 
                        Security shall apply the eligibility 
                        criteria for new applicants for 
                        benefits under title XVI of such Act;
                            (iii) the Commissioner shall give 
                        such redetermination priority over all 
                        continuing eligibility reviews and 
                        other reviews under such title; and
                            (iv) such redetermination shall be 
                        counted as a review or redetermination 
                        otherwise required to be made under 
                        section 208 of the Social Security 
                        Independence and Program Improvements 
                        Act of 1994 or any other provision of 
                        title XVI of the Social Security Act.
                    (B) Grandfather provision.--The provisions 
                of, and amendments made by, this section, and 
                the redetermination under subparagraph (A), 
                shall only apply with respect to the benefits 
                of an individual described in subparagraph (A) 
                for months beginning on or after the date of 
                the redetermination with respect to such 
                individual.
                    (C) Notice.--Not later than January 1, 
                1997, the Commissioner of Social Security shall 
                notify an individual described in subparagraph 
                (A) of the provisions of this paragraph.
            (3) Report.--The Commissioner of Social Security 
        shall report to the Congress regarding the progress 
        made in implementing the provisions of, and amendments 
        made by, this section on child disability evaluations 
        not later than 180 days after the date of the enactment 
        of this Act.
            (4) Regulations.--Notwithstanding any other 
        provision of law, the Commissioner of Social Security 
        shall submit for review to the committees of 
        jurisdiction in the Congress any final regulation 
        pertaining to the eligibility of individuals under age 
        18 for benefits under title XVI of the Social Security 
        Act at least 45 days before the effective date of such 
        regulation. The submission under this paragraph shall 
        include supporting documentation providing a cost 
        analysis, workload impact, and projections as to how 
        the regulation will effect the future number of 
        recipients under such title.
            (5) Appropriations.--
                    (A) In general.--Out of any money in the 
                Treasury not otherwise appropriated, there are 
                authorized to be appropriated and are hereby 
                appropriated, to remain available without 
                fiscal year limitation, $200,000,000 for fiscal 
                year 1997, $75,000,000 for fiscal year 1998, 
                and $25,000,000 for fiscal year 1999, for the 
                Commissioner of Social Security to utilize only 
                for continuing disability reviews and 
                redeterminations under title XVI of the Social 
                Security Act, with reviews and redeterminations 
                for individuals affected by the provisions of 
                subsection (b) given highest priority.
                    (B) Additional funds.--Amounts appropriated 
                under subparagraph (A) shall be in addition to 
                any funds otherwise appropriated for continuing 
                disability reviews and redeterminations under 
                title XVI of the Social Security Act.
            (6) Benefits under title xvi.--For purposes of this 
        subsection, the term ``benefits under title XVI of the 
        Social Security Act'' includes supplementary payments 
        pursuant to an agreement for Federal administration 
        under section 1616(a) of the Social Security Act, and 
        payments pursuant to an agreement entered into under 
        section 212(b) of Public Law 93-66.

SEC. 4212. ELIGIBILITY REDETERMINATIONS AND CONTINUING DISABILITY 
                    REVIEWS.

    (a) Continuing Disability Reviews Relating to Certain 
Children.--Section 1614(a)(3)(H) (42 U.S.C. 1382c(a)(3)(H)), as 
redesignated by section 4211(a)(3) of this Act, is amended--
            (1) by inserting ``(i)'' after ``(H)''; and
            (2) by adding at the end the following new clause:
    ``(ii)(I) Not less frequently than once every 3 years, the 
Commissioner shall review in accordance with paragraph (4) the 
continued eligibility for benefits under this title of each 
individual who has not attained 18 years of age and is eligible 
for such benefits by reason of an impairment (or combination of 
impairments) which is likely to improve (or, at the option of 
the Commissioner, which is unlikely to improve).
    ``(II) A representative payee of a recipient whose case is 
reviewed under this clause shall present, at the time of 
review, evidence demonstrating that the recipient is, and has 
been, receiving treatment, to the extent considered medically 
necessary and available, of the condition which was the basis 
for providing benefits under this title.
    ``(III) If the representative payee refuses to comply 
without good cause with the requirements of subclause (II), the 
Commissioner of Social Security shall, if the Commissioner 
determines it is in the best interest of the individual, 
promptly suspend payment of benefits to the representative 
payee, and provide for payment of benefits to an alternative 
representative payee of the individual or, if the interest of 
the individual under this title would be served thereby, to the 
individual.
    ``(IV) Subclause (II) shall not apply to the representative 
payee of any individual with respect to whom the Commissioner 
determines such application would be inappropriate or 
unnecessary. In making such determination, the Commissioner 
shall take into consideration the nature of the individual's 
impairment (or combination of impairments). Section 1631(c) 
shall not apply to a finding by the Commissioner that the 
requirements of subclause (II) should not apply to an 
individual's representative payee.''.
    (b) Disability Eligibility Redeterminations Required for 
SSI Recipients Who Attain 18 Years of Age.--
            (1) In general.--Section 1614(a)(3)(H) (42 U.S.C. 
        1382c(a)(3)(H)), as amended by subsection (a) of this 
        section, is amended by adding at the end the following 
        new clause:
    ``(iii) If an individual is eligible for benefits under 
this title by reason of disability for the month preceding the 
month in which the individual attains the age of 18 years, the 
Commissioner shall redetermine such eligibility--
            ``(I) during the 1-year period beginning on the 
        individual's 18th birthday; and
            ``(II) by applying the criteria used in determining 
        the initial eligibility for applicants who are age 18 
        or older.
With respect to a redetermination under this clause, paragraph 
(4) shall not apply and such redetermination shall be 
considered a substitute for a review or redetermination 
otherwise required under any other provision of this 
subparagraph during that 1-year period.''.
            (2) Conforming repeal.--Section 207 of the Social 
        Security Independence and Program Improvements Act of 
        1994 (42 U.S.C. 1382 note; 108 Stat. 1516) is hereby 
        repealed.
    (c) Continuing Disability Review Required for Low Birth 
Weight Babies.--Section 1614(a)(3)(H) (42 U.S.C. 
1382c(a)(3)(H)), as amended by subsections (a) and (b) of this 
section, is amended by adding at the end the following new 
clause:
    ``(iv)(I) Not later than 12 months after the birth of an 
individual, the Commissioner shall review in accordance with 
paragraph (4) the continuing eligibility for benefits under 
this title by reason of disability of such individual whose low 
birth weight is a contributing factor material to the 
Commissioner's determination that the individual is disabled.
    ``(II) A review under subclause (I) shall be considered a 
substitute for a review otherwise required under any other 
provision of this subparagraph during that 12-month period.
    ``(III) A representative payee of a recipient whose case is 
reviewed under this clause shall present, at the time of 
review, evidence demonstrating that the recipient is, and has 
been, receiving treatment, to the extent considered medically 
necessary and available, of the condition which was the basis 
for providing benefits under this title.
    ``(IV) If the representative payee refuses to comply 
without good cause with the requirements of subclause (III), 
the Commissioner of Social Security shall, if the Commissioner 
determines it is in the best interest of the individual, 
promptly suspend payment of benefits to the representative 
payee, and provide for payment of benefits to an alternative 
representative payee of the individual or, if the interest of 
the individual under this title would be served thereby, to the 
individual.
    ``(V) Subclause (III) shall not apply to the representative 
payee of any individual with respect to whom the Commissioner 
determines such application would be inappropriate or 
unnecessary. In making such determination, the Commissioner 
shall take into consideration the nature of the individual's 
impairment (or combination of impairments). Section 1631(c) 
shall not apply to a finding by the Commissioner that the 
requirements of subclause (III) should not apply to an 
individual's representative payee.''.
    (d) Effective Date.--The amendments made by this section 
shall apply to benefits for months beginning on or after the 
date of the enactment of this Act, without regard to whether 
regulations have been issued to implement such amendments.

SEC. 4213. ADDITIONAL ACCOUNTABILITY REQUIREMENTS.

    (a) Disposal of Resources for Less Than Fair Market 
Value.--
            (1) In general.--Section 1613(c) (42 U.S.C. 
        1382b(c)) is amended to read as follows:

        ``Disposal of Resources for Less Than Fair Market Value

    ``(c)(1)(A)(i) If an individual who has not attained 18 
years of age (or any person acting on such individual's behalf) 
disposes of resources of the individual for less than fair 
market value on or after the look-back date specified in clause 
(ii)(I), the individual is ineligible for benefits under this 
title for months during the period beginning on the date 
specified in clause (iii) and equal to the number of months 
specified in clause (iv).
    ``(ii)(I) The look-back date specified in this subclause is 
a date that is 36 months before the date specified in subclause 
(II).
    ``(II) The date specified in this subclause is the date on 
which the individual applies for benefits under this title or, 
if later, the date on which the disposal of the individual's 
resources for less than fair market value occurs.
    ``(iii) The date specified in this clause is the first day 
of the first month that follows the month in which the 
individual's resources were disposed of for less than fair 
market value and that does not occur in any other period of 
ineligibility under this paragraph.
    ``(iv) The number of months of ineligibility under this 
clause for an individual shall be equal to--
            ``(I) the total, cumulative uncompensated value of 
        all the individual's resources so disposed of on or 
        after the look-back date specified in clause (ii)(I), 
        divided by
            ``(II) the amount of the maximum monthly benefit 
        payable under section 1611(b) to an eligible individual 
        for the month in which the date specified in clause 
        (ii)(II) occurs.
    ``(B) An individual shall not be ineligible for benefits 
under this title by reason of subparagraph (A) if the 
Commissioner determines that--
            ``(i) the individual intended to dispose of the 
        resources at fair market value;
            ``(ii) the resources were transferred exclusively 
        for a purpose other than to qualify for benefits under 
        this title;
            ``(iii) all resources transferred for less than 
        fair market value have been returned to the individual; 
        or
            ``(iv) the denial of eligibility would work an 
        undue hardship on the individual (as determined on the 
        basis of criteria established by the Commissioner in 
        regulations).
    ``(C) For purposes of this paragraph, in the case of a 
resource held by an individual in common with another person or 
persons in a joint tenancy, tenancy in common, or similar 
arrangement, the resource (or the affected portion of such 
resource) shall be considered to be disposed of by such 
individual when any action is taken, either by such individual 
or by any other person, that reduces or eliminates such 
individual's ownership or control of such resource.
    ``(D)(i) Notwithstanding subparagraph (A), this subsection 
shall not apply to a transfer of a resource to a trust if the 
portion of the trust attributable to such resource is 
considered a resource available to the individual pursuant to 
subsection (e)(3) (or would be so considered, but for the 
application of subsection (e)(4)).
    ``(ii) In the case of a trust established by an individual 
(within the meaning of subsection (e)(2)(A)), if from such 
portion of the trust (if any) that is considered a resource 
available to the individual pursuant to subsection (e)(3) (or 
would be so considered but for the application of subsection 
(e)(2)) or the residue of such portion upon the termination of 
the trust--
            ``(I) there is made a payment other than to or for 
        the benefit of the individual, or
            ``(II) no payment could under any circumstance be 
        made to the individual,
then the payment described in subclause (I) or the foreclosure 
of payment described in subclause (II) shall be considered a 
disposal of resources by the individual subject to this 
subsection, as of the date of such payment or foreclosure, 
respectively.
    ``(2)(A) At the time an individual (and the individual's 
eligible spouse, if any) applies for benefits under this title, 
and at the time the eligibility of an individual (and such 
spouse, if any) for such benefits is redetermined, the 
Commissioner of Social Security shall--
            ``(i) inform such individual of the provisions of 
        paragraph (1) providing for a period of ineligibility 
        for benefits under this title for individuals who make 
        certain dispositions of resources for less than fair 
        market value, and inform such individual that 
        information obtained pursuant to clause (ii) will be 
        made available to the State agency administering a 
        State plan approved under title XV or XIX (as provided 
        in subparagraph (B)); and
            ``(ii) obtain from such individual information 
        which may be used in determining whether or not a 
        period of ineligibility for such benefits would be 
        required by reason of paragraph (1).
    ``(B) The Commissioner of Social Security shall make the 
information obtained under subparagraph (A)(ii) available, on 
request, to any State agency administering a State plan 
approved under title XV or XIX.
    ``(3) For purposes of this subsection--
            ``(A) the term `trust' includes any legal 
        instrument or device that is similar to a trust; and
            ``(B) the term `benefits under this title' includes 
        supplementary payments pursuant to an agreement for 
        Federal administration under section 1616(a), and 
        payments pursuant to an agreement entered into under 
        section 212(b) of Public Law 93-66.''.
            (2) Effective date.--The amendment made by this 
        subsection shall be effective with respect to transfers 
        that occur at least 90 days after the date of the 
        enactment of this Act.
    (b) Treatment of Assets Held in Trust.--
            (1) Treatment as resource.--Section 1613 (42 U.S.C. 
        1382) is amended by adding at the end the following new 
        subsection:

                                ``Trusts

    ``(e)(1) In determining the resources of an individual who 
has not attained 18 years of age, the provisions of paragraph 
(3) shall apply to a trust established by such individual.
    ``(2)(A) For purposes of this subsection, an individual 
shall be considered to have established a trust if any assets 
of the individual were transferred to the trust.
    ``(B) In the case of an irrevocable trust to which the 
assets of an individual and the assets of any other person or 
persons were transferred, the provisions of this subsection 
shall apply to the portion of the trust attributable to the 
assets of the individual.
    ``(C) This subsection shall apply without regard to--
            ``(i) the purposes for which the trust is 
        established;
            ``(ii) whether the trustees have or exercise any 
        discretion under the trust;
            ``(iii) any restrictions on when or whether 
        distributions may be made from the trust; or
            ``(iv) any restrictions on the use of distributions 
        from the trust.
    ``(3)(A) In the case of a revocable trust, the corpus of 
the trust shall be considered a resource available to the 
individual.
    ``(B) In the case of an irrevocable trust, if there are any 
circumstances under which payment from the trust could be made 
to or for the benefit of the individual, the portion of the 
corpus from which payment to or for the benefit of the 
individual could be made shall be considered a resource 
available to the individual.
    ``(4) The Commissioner may waive the application of this 
subsection with respect to any individual if the Commissioner 
determines, on the basis of criteria prescribed in regulations, 
that such application would work an undue hardship on such 
individual.
    ``(5) For purposes of this subsection--
            ``(A) the term `trust' includes any legal 
        instrument or device that is similar to a trust;
            ``(B) the term `corpus' means all property and 
        other interests held by the trust, including 
        accumulated earnings and any other addition to such 
        trust after its establishment (except that such term 
        does not include any such earnings or addition in the 
        month in which such earnings or addition is credited or 
        otherwise transferred to the trust);
            ``(C) the term `asset' includes any income or 
        resource of the individual, including--
                    ``(i) any income otherwise excluded by 
                section 1612(b);
                    ``(ii) any resource otherwise excluded by 
                this section; and
                    ``(iii) any other payment or property that 
                the individual is entitled to but does not 
                receive or have access to because of action 
                by--
                            ``(I) such individual;
                            ``(II) a person or entity 
                        (including a court) with legal 
                        authority to act in place of, or on 
                        behalf of, such individual; or
                            ``(III) a person or entity 
                        (including a court) acting at the 
                        direction of, or upon the request of, 
                        such individual; and
            ``(D) the term `benefits under this title' includes 
        supplementary payments pursuant to an agreement for 
        Federal administration under section 1616(a), and 
        payments pursuant to an agreement entered into under 
        section 212(b) of Public Law 93-66.''.
            (2) Treatment as income.--Section 1612(a)(2) (42 
        U.S.C. 1382a(a)(2)) is amended--
                    (A) by striking ``and'' at the end of 
                subparagraph (E);
                    (B) by striking the period at the end of 
                subparagraph (F) and inserting ``; and''; and
                    (C) by adding at the end the following new 
                subparagraph:
                    ``(G) any earnings of, and additions to, 
                the corpus of a trust (as defined in section 
                1613(f)) established by an individual (within 
                the meaning of section 1613(e)(2)(A)) and of 
                which such individual is a beneficiary (other 
                than a trust to which section 1613(e)(4) 
                applies), except that in the case of an 
                irrevocable trust, there shall exist 
                circumstances under which payment from such 
                earnings or additions could be made to, or for 
                the benefit of, such individual.''.
            (3) Effective date.--The amendments made by this 
        subsection shall take effect on the date which is 90 
        days after the date of the enactment of this Act, and 
        shall apply to trusts established on or after such 
        date.
    (c) Requirement To Establish Account.--
            (1) In general.--Section 1631(a)(2) (42 U.S.C. 
        1383(a)(2)) is amended--
                    (A) by redesignating subparagraphs (F) and 
                (G) as subparagraphs (G) and (H), respectively; 
                and
                    (B) by inserting after subparagraph (E) the 
                following new subparagraph:
    ``(F)(i)(I) Each representative payee of an eligible 
individual under the age of 18 who is eligible for the payment 
of benefits described in subclause (II) shall establish on 
behalf of such individual an account in a financial institution 
into which such benefits shall be paid, and shall thereafter 
maintain such account for use in accordance with clause (ii).
    ``(II) Benefits described in this subclause are past-due 
monthly benefits under this title (which, for purposes of this 
subclause, include State supplementary payments made by the 
Commissioner pursuant to an agreement under section 1616 or 
section 212(b) of Public Law 93-66) in an amount (after any 
withholding by the Commissioner for reimbursement to a State 
for interim assistance under subsection (g)) that exceeds the 
product of--
            ``(aa) 6, and
            ``(bb) the maximum monthly benefit payable under 
        this title to an eligible individual.
    ``(ii)(I) A representative payee shall use funds in the 
account established under clause (i) to pay for allowable 
expenses described in subclause (II).
    ``(II) An allowable expense described in this subclause is 
an expense for--
            ``(aa) education or job skills training;
            ``(bb) personal needs assistance;
            ``(cc) special equipment;
            ``(dd) housing modification;
            ``(ee) medical treatment;
            ``(ff) therapy or rehabilitation; or
            ``(gg) any other item or service that the 
        Commissioner determines to be appropriate;
provided that such expense benefits such individual and, in the 
case of an expense described in item (bb), (cc), (dd), (ff), or 
(gg), is related to the impairment (or combination of 
impairments) of such individual.
    ``(III) The use of funds from an account established under 
clause (i) in any manner not authorized by this clause--
            ``(aa) by a representative payee shall be 
        considered a misapplication of benefits for all 
        purposes of this paragraph, and any representative 
        payee who knowingly misapplies benefits from such an 
        account shall be liable to the Commissioner in an 
        amount equal to the total amount of such benefits; and
            ``(bb) by an eligible individual who is his or her 
        own payee shall be considered a misapplication of 
        benefits for all purposes of this paragraph and the 
        total amount of such benefits so used shall be 
        considered to be the uncompensated value of a disposed 
        resource and shall be subject to the provisions of 
        section 1613(c).
    ``(IV) This clause shall continue to apply to funds in the 
account after the child has reached age 18, regardless of 
whether benefits are paid directly to the beneficiary or 
through a representative payee.
    ``(iii) The representative payee may deposit into the 
account established pursuant to clause (i)--
            ``(I) past-due benefits payable to the eligible 
        individual in an amount less than that specified in 
        clause (i)(II), and
            ``(II) any other funds representing an underpayment 
        under this title to such individual, provided that the 
        amount of such underpayment is equal to or exceeds the 
        maximum monthly benefit payable under this title to an 
        eligible individual.
    ``(iv) The Commissioner of Social Security shall establish 
a system for accountability monitoring whereby such 
representative payee shall report, at such time and in such 
manner as the Commissioner shall require, on activity 
respecting funds in the account established pursuant to clause 
(i).''.
            (2) Exclusion from resources.--Section 1613(a) (42 
        U.S.C. 1382b(a)) is amended--
                    (A) by striking ``and'' at the end of 
                paragraph (10);
                    (B) by striking the period at the end of 
                paragraph (11) and inserting ``; and''; and
                    (D) by inserting after paragraph (11) the 
                following new paragraph:
            ``(12) any account, including accrued interest or 
        other earnings thereon, established and maintained in 
        accordance with section 1631(a)(2)(F).''.
            (3) Exclusion from income.--Section 1612(b) (42 
        U.S.C. 1382a(b)) is amended--
                    (A) by striking ``and'' at the end of 
                paragraph (19);
                    (B) by striking the period at the end of 
                paragraph (20) and inserting ``; and''; and
                    (C) by adding at the end the following new 
                paragraph:
            ``(21) the interest or other earnings on any 
        account established and maintained in accordance with 
        section 1631(a)(2)(F).''.
            (4) Effective date.--The amendments made by this 
        subsection shall apply to payments made after the date 
        of the enactment of this Act.

SEC. 4214. REDUCTION IN CASH BENEFITS PAYABLE TO INSTITUTIONALIZED 
                    INDIVIDUALS WHOSE MEDICAL COSTS ARE COVERED BY 
                    PRIVATE INSURANCE.

    (a) In General.--Section 1611(e)(1)(B) (42 U.S.C. 
1382(e)(1)(B)) is amended--
            (1) by striking ``title XIX, or'' and inserting 
        ``title XV or XIX,''; and
            (2) by inserting ``or, in the case of an eligible 
        individual under the age of 18, receiving payments 
        (with respect to such individual) under any health 
        insurance policy issued by a private provider of such 
        insurance'' after ``section 1614(f)(2)(B),''.
    (b) Effective Date.--The amendment made by this section 
shall apply to benefits for months beginning 90 or more days 
after the date of the enactment of this Act, without regard to 
whether regulations have been issued to implement such 
amendments.

SEC. 4215. REGULATIONS.

    Within 3 months after the date of the enactment of this 
Act, the Commissioner of Social Security shall prescribe such 
regulations as may be necessary to implement the amendments 
made by this chapter.

              CHAPTER 3--ADDITIONAL ENFORCEMENT PROVISIONS

SEC. 4221. INSTALLMENT PAYMENT OF LARGE PAST-DUE SUPPLEMENTAL SECURITY 
                    INCOME BENEFITS.

    (a) In General.--Section 1631(a) (42 U.S.C. 1383) is 
amended by adding at the end the following new paragraph:
    ``(10)(A) If an individual is eligible for past-due monthly 
benefits under this title in an amount that (after any 
withholding for reimbursement to a State for interim assistance 
under subsection (g)) equals or exceeds the product of--
            ``(i) 12, and
            ``(ii) the maximum monthly benefit payable under 
        this title to an eligible individual (or, if 
        appropriate, to an eligible individual and eligible 
        spouse),
then the payment of such past-due benefits (after any such 
reimbursement to a State) shall be made in installments as 
provided in subparagraph (B).
    ``(B)(i) The payment of past-due benefits subject to this 
subparagraph shall be made in not to exceed 3 installments that 
are made at 6-month intervals.
    ``(ii) Except as provided in clause (iii), the amount of 
each of the first and second installments may not exceed an 
amount equal to the product of clauses (i) and (ii) of 
subparagraph (A).
    ``(iii) In the case of an individual who has--
            ``(I) outstanding debt attributable to--
                    ``(aa) food,
                    ``(bb) clothing,
                    ``(cc) shelter, or
                    ``(dd) medically necessary services, 
                supplies or equipment, or medicine; or
            ``(II) current expenses or expenses anticipated in 
        the near term attributable to--
                    ``(aa) medically necessary services, 
                supplies or equipment, or medicine, or
                    ``(bb) the purchase of a home, and
such debt or expenses are not subject to reimbursement by a 
public assistance program, the Secretary under title XVIII, a 
State plan approved under title XV or XIX, or any private 
entity legally liable to provide payment pursuant to an 
insurance policy, pre-paid plan, or other arrangement, the 
limitation specified in clause (ii) may be exceeded by an 
amount equal to the total of such debt and expenses.
    ``(C) This paragraph shall not apply to any individual who, 
at the time of the Commissioner's determination that such 
individual is eligible for the payment of past-due monthly 
benefits under this title--
            ``(i) is afflicted with a medically determinable 
        impairment that is expected to result in death within 
        12 months; or
            ``(ii) is ineligible for benefits under this title 
        and the Commissioner determines that such individual is 
        likely to remain ineligible for the next 12 months.
    ``(D) For purposes of this paragraph, the term `benefits 
under this title' includes supplementary payments pursuant to 
an agreement for Federal administration under section 1616(a), 
and payments pursuant to an agreement entered into under 
section 212(b) of Public Law 93-66.''.
    (b) Conforming Amendment.--Section 1631(a)(1) (42 U.S.C. 
1383(a)(1)) is amended by inserting ``(subject to paragraph 
(10))'' immediately before ``in such installments''.
    (c) Effective Date.--
            (1) In general.--The amendments made by this 
        section are effective with respect to past-due benefits 
        payable under title XVI of the Social Security Act 
        after the third month following the month in which this 
        Act is enacted.
            (2) Benefits payable under title xvi.--For purposes 
        of this subsection, the term ``benefits payable under 
        title XVI of the Social Security Act'' includes 
        supplementary payments pursuant to an agreement for 
        Federal administration under section 1616(a) of the 
        Social Security Act, and payments pursuant to an 
        agreement entered into under section 212(b) of Public 
        Law 93-66.

SEC. 4222. RECOVERY OF SUPPLEMENTAL SECURITY INCOME OVERPAYMENTS FROM 
                    SOCIAL SECURITY BENEFITS.

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

      ``RECOVERY OF SSI OVERPAYMENTS FROM SOCIAL SECURITY BENEFITS

    ``Sec. 1146. (a) In General.--Whenever the Commissioner of 
Social Security determines that more than the correct amount of 
any payment has been made to any person under the supplemental 
security income program authorized by title XVI, and the 
Commissioner is unable to make proper adjustment or recovery of 
the amount so incorrectly paid as provided in section 1631(b), 
the Commissioner (notwithstanding section 207) may recover the 
amount incorrectly paid by decreasing any amount which is 
payable under the Federal Old-Age and Survivors Insurance 
program or the Federal Disability Insurance program authorized 
by title II to that person or that person's estate.
    ``(b) No Effect on SSI Benefit Eligibility or Amount.--
Notwithstanding subsections (a) and (b) of section 1611, in any 
case in which the Commissioner takes action in accordance with 
subsection (a) to recover an overpayment from any person, 
neither that person, nor any individual whose eligibility or 
benefit amount is determined by considering any part of that 
person's income, shall, as a result of such action--
            ``(1) become eligible under the program of 
        supplemental security income benefits under title XVI, 
        or
            ``(2) if such person or individual is already so 
        eligible, become eligible for increased benefits 
        thereunder.
    ``(c) Program Under Title XVI.--For purposes of this 
section, the term `supplemental security income program 
authorized by title XVI' includes supplementary payments 
pursuant to an agreement for Federal administration under 
section 1616(a), and payments pursuant to an agreement entered 
into under section 212(b) of Public Law 93-66.''.
    (b) Conforming Amendments.--
            (1) Section 204 (42 U.S.C. 404) is amended by 
        adding at the end the following new subsection:
    ``(g) For payments which are adjusted or withheld to 
recover an overpayment of supplemental security income benefits 
paid under title XVI (including State supplementary payments 
which were paid under an agreement pursuant to section 1616(a) 
or section 212(b) of Public Law 93-66), see section 1146.''.
            (2) Section 1631(b) is amended by adding at the end 
        the following new paragraph:
    ``(5) For the recovery of overpayments of benefits under 
this title from benefits payable under title II, see section 
1146.''.
    (c) Effective Date.--The amendments made by this section 
shall take effect on the date of the enactment of this Act and 
shall apply to overpayments outstanding on or after such date.

SEC. 4223. REGULATIONS.

    Within 3 months after the date of the enactment of this 
Act, the Commissioner of Social Security shall prescribe such 
regulations as may be necessary to implement the amendments 
made by this chapter.

               CHAPTER 4--STATE SUPPLEMENTATION PROGRAMS

SEC. 4225. REPEAL OF MAINTENANCE OF EFFORT REQUIREMENTS APPLICABLE TO 
                    OPTIONAL STATE PROGRAMS FOR SUPPLEMENTATION OF SSI 
                    BENEFITS.

    Section 1618 (42 U.S.C. 1382g) is hereby repealed.

   CHAPTER 5--STUDIES REGARDING SUPPLEMENTAL SECURITY INCOME PROGRAM

SEC. 4231. ANNUAL REPORT ON THE SUPPLEMENTAL SECURITY INCOME PROGRAM.

    Title XVI (42 U.S.C. 1381 et seq.), as amended by section 
4201(c) of this Act, is amended by adding at the end the 
following new section:

                       ``ANNUAL REPORT ON PROGRAM

    ``Sec. 1637. (a) Not later than May 30 of each year, the 
Commissioner of Social Security shall prepare and deliver a 
report annually to the President and the Congress regarding the 
program under this title, including--
            ``(1) a comprehensive description of the program;
            ``(2) historical and current data on allowances and 
        denials, including number of applications and allowance 
        rates for initial determinations, reconsideration 
        determinations, administrative law judge hearings, 
        appeals council reviews, and Federal court decisions;
            ``(3) historical and current data on 
        characteristics of recipients and program costs, by 
        recipient group (aged, blind, disabled adults, and 
        disabled children);
            ``(4) projections of future number of recipients 
        and program costs, through at least 25 years;
            ``(5) number of redeterminations and continuing 
        disability reviews, and the outcomes of such 
        redeterminations and reviews;
            ``(6) data on the utilization of work incentives;
            ``(7) detailed information on administrative and 
        other program operation costs;
            ``(8) summaries of relevant research undertaken by 
        the Social Security Administration, or by other 
        researchers;
            ``(9) State supplementation program operations;
            ``(10) a historical summary of statutory changes to 
        this title; and
            ``(11) such other information as the Commissioner 
        deems useful.
    ``(b) Each member of the Social Security Advisory Board 
shall be permitted to provide an individual report, or a joint 
report if agreed, of views of the program under this title, to 
be included in the annual report required under this 
section.''.

SEC. 4232. STUDY OF DISABILITY DETERMINATION PROCESS.

    (a) In General.--Not later than 90 days after the date of 
the enactment of this Act, and from funds otherwise 
appropriated, the Commissioner of Social Security shall make 
arrangements with the National Academy of Sciences, or other 
independent entity, to conduct a study of the disability 
determination process under titles II and XVI of the Social 
Security Act. This study shall be undertaken in consultation 
with professionals representing appropriate disciplines.
    (b) Study Components.--The study described in subsection 
(a) shall include--
            (1) an initial phase examining the appropriateness 
        of, and making recommendations regarding--
                    (A) the definitions of disability in effect 
                on the date of the enactment of this Act and 
                the advantages and disadvantages of alternative 
                definitions; and
                    (B) the operation of the disability 
                determination process, including the 
                appropriate method of performing comprehensive 
                assessments of individuals under age 18 with 
                physical and mental impairments;
            (2) a second phase, which may be concurrent with 
        the initial phase, examining the validity, reliability, 
        and consistency with current scientific knowledge of 
        the standards and individual listings in the Listing of 
        Impairments set forth in appendix 1 of subpart P of 
        part 404 of title 20, Code of Federal Regulations, and 
        of related evaluation procedures as promulgated by the 
        Commissioner of Social Security; and
            (3) such other issues as the applicable entity 
        considers appropriate.
    (c) Reports and Regulations.--
            (1) Reports.--The Commissioner of Social Security 
        shall request the applicable entity, to submit an 
        interim report and a final report of the findings and 
        recommendations resulting from the study described in 
        this section to the President and the Congress not 
        later than 18 months and 24 months, respectively, from 
        the date of the contract for such study, and such 
        additional reports as the Commissioner deems 
        appropriate after consultation with the applicable 
        entity.
            (2) Regulations.--The Commissioner of Social 
        Security shall review both the interim and final 
        reports, and shall issue regulations implementing any 
        necessary changes following each report.

SEC. 4233. STUDY BY GENERAL ACCOUNTING OFFICE.

    Not later than January 1, 1999, the Comptroller General of 
the United States shall study and report on--
            (1) the impact of the amendments made by, and the 
        provisions of, this subtitle on the supplemental 
        security income program under title XVI of the Social 
        Security Act; and
            (2) extra expenses incurred by families of children 
        receiving benefits under such title that are not 
        covered by other Federal, State, or local programs.

       CHAPTER 6--NATIONAL COMMISSION ON THE FUTURE OF DISABILITY

SEC. 4241. ESTABLISHMENT.

    There is established a commission to be known as the 
National Commission on the Future of Disability (referred to in 
this chapter as the ``Commission'').

SEC. 4242. DUTIES OF THE COMMISSION.

    (a) In General.--The Commission shall develop and carry out 
a comprehensive study of all matters related to the nature, 
purpose, and adequacy of all Federal programs serving 
individuals with disabilities. In particular, the Commission 
shall study the disability insurance program under title II of 
the Social Security Act and the supplemental security income 
disability program under title XVI of such Act.
    (b) Matters Studied.--The Commission shall prepare an 
inventory of Federal programs serving individuals with 
disabilities, and shall examine--
            (1) trends and projections regarding the size and 
        characteristics of the population of individuals with 
        disabilities, and the implications of such analyses for 
        program planning;
            (2) the feasibility and design of performance 
        standards for the Nation's disability programs;
            (3) the adequacy of Federal efforts in 
        rehabilitation research and training, and opportunities 
        to improve the lives of individuals with disabilities 
        through all manners of scientific and engineering 
        research; and
            (4) the adequacy of policy research available to 
        the Federal Government, and what actions might be 
        undertaken to improve the quality and scope of such 
        research.
    (c) Recommendations.--The Commission shall submit to the 
appropriate committees of the Congress and to the President 
recommendations and, as appropriate, proposals for legislation, 
regarding--
            (1) which (if any) Federal disability programs 
        should be eliminated or augmented;
            (2) what new Federal disability programs (if any) 
        should be established;
            (3) the suitability of the organization and 
        location of disability programs within the Federal 
        Government;
            (4) other actions the Federal Government should 
        take to prevent disabilities and disadvantages 
        associated with disabilities; and
            (5) such other matters as the Commission considers 
        appropriate.

SEC. 4243. MEMBERSHIP.

    (a) Number and Appointment.--
            (1) In general.--The Commission shall be composed 
        of 15 members, of whom--
                    (A) five shall be appointed by the 
                President, of whom not more than 3 shall be of 
                the same major political party;
                    (B) three shall be appointed by the 
                Majority Leader of the Senate;
                    (C) two shall be appointed by the Minority 
                Leader of the Senate;
                    (D) three shall be appointed by the Speaker 
                of the House of Representatives; and
                    (E) two shall be appointed by the Minority 
                Leader of the House of Representatives.
            (2) Representation.--The Commission members shall 
        be chosen based on their education, training, or 
        experience. In appointing individuals as members of the 
        Commission, the President and the Majority and Minority 
        Leaders of the Senate and the Speaker and Minority 
        Leader of the House of Representatives shall seek to 
        ensure that the membership of the Commission reflects 
        the general interests of the business and taxpaying 
        community and the diversity of individuals with 
        disabilities in the United States.
    (b) Comptroller General.--The Comptroller General of the 
United States shall advise the Commission on the methodology 
and approach of the study of the Commission.
    (c) Term of Appointment.--The members shall serve on the 
Commission for the life of the Commission.
    (d) Meetings.--The Commission shall locate its headquarters 
in the District of Columbia, and shall meet at the call of the 
Chairperson, but not less than 4 times each year during the 
life of the Commission.
    (e) Quorum.--Ten members of the Commission shall constitute 
a quorum, but a lesser number may hold hearings.
    (f) Chairperson and Vice Chairperson.--Not later than 15 
days after the members of the Commission are appointed, such 
members shall designate a Chairperson and Vice Chairperson from 
among the members of the Commission.
    (g) Continuation of Membership.--If a member of the 
Commission becomes an officer or employee of any government 
after appointment to the Commission, the individual may 
continue as a member until a successor member is appointed.
    (h) Vacancies.--A vacancy on the Commission shall be filled 
in the manner in which the original appointment was made not 
later than 30 days after the Commission is given notice of the 
vacancy.
    (i) Compensation.--Members of the Commission shall receive 
no additional pay, allowances, or benefits by reason of their 
service on the Commission.
    (j) Travel Expenses.--Each member of the Commission shall 
receive travel expenses, including per diem in lieu of 
subsistence, in accordance with sections 5702 and 5703 of title 
5, United States Code.

SEC. 4244. STAFF AND SUPPORT SERVICES.

    (a) Director.--
            (1) Appointment.--Upon consultation with the 
        members of the Commission, the Chairperson shall 
        appoint a Director of the Commission.
            (2) Compensation.--The Director shall be paid the 
        rate of basic pay for level V of the Executive 
        Schedule.
    (b) Staff.--With the approval of the Commission, the 
Director may appoint such personnel as the Director considers 
appropriate.
    (c) Applicability of Civil Service Laws.--The staff of the 
Commission shall be appointed without regard to the provisions 
of title 5, United States Code, governing appointments in the 
competitive service, and shall be paid without regard to the 
provisions of chapter 51 and subchapter III of chapter 53 of 
such title relating to classification and General Schedule pay 
rates.
    (d) Experts and Consultants.--With the approval of the 
Commission, the Director may procure temporary and intermittent 
services under section 3109(b) of title 5, United States Code.
    (e) Staff of Federal Agencies.--Upon the request of the 
Commission, the head of any Federal agency may detail, on a 
reimbursable basis, any of the personnel of such agency to the 
Commission to assist in carrying out the duties of the 
Commission under this chapter.
    (f) Other Resources.--The Commission shall have reasonable 
access to materials, resources, statistical data, and other 
information from the Library of Congress and agencies and 
elected representatives of the executive and legislative 
branches of the Federal Government. The Chairperson of the 
Commission shall make requests for such access in writing when 
necessary.
    (g) Physical Facilities.--The Administrator of the General 
Services Administration shall locate suitable office space for 
the operation of the Commission. The facilities shall serve as 
the headquarters of the Commission and shall include all 
necessary equipment and incidentals required for proper 
functioning of the Commission.

SEC. 4245. POWERS OF COMMISSION.

    (a) Hearings.--The Commission may conduct public hearings 
or forums at the discretion of the Commission, at any time and 
place the Commission is able to secure facilities and 
witnesses, for the purpose of carrying out the duties of the 
Commission under this chapter.
    (b) Delegation of Authority.--Any member or agent of the 
Commission may, if authorized by the Commission, take any 
action the Commission is authorized to take by this section.
    (c) Information.--The Commission may secure directly from 
any Federal agency information necessary to enable the 
Commission to carry out its duties under this chapter. Upon 
request of the Chairperson or Vice Chairperson of the 
Commission, the head of a Federal agency shall furnish the 
information to the Commission to the extent permitted by law.
    (d) Gifts, Bequests, and Devises.--The Commission may 
accept, use, and dispose of gifts, bequests, or devises of 
services or property, both real and personal, for the purpose 
of aiding or facilitating the work of the Commission. Gifts, 
bequests, or devises of money and proceeds from sales of other 
property received as gifts, bequests, or devises shall be 
deposited in the Treasury and shall be available for 
disbursement upon order of the Commission.
    (e) Mails.--The Commission may use the United States mails 
in the same manner and under the same conditions as other 
Federal agencies.

SEC. 4246. REPORTS.

    (a) Interim Report.--Not later than 1 year prior to the 
date on which the Commission terminates pursuant to section 
4247, the Commission shall submit an interim report to the 
President and to the Congress. The interim report shall contain 
a detailed statement of the findings and conclusions of the 
Commission, together with the Commission's recommendations for 
legislative and administrative action, based on the activities 
of the Commission.
    (b) Final Report.--Not later than the date on which the 
Commission terminates, the Commission shall submit to the 
Congress and to the President a final report containing--
            (1) a detailed statement of final findings, 
        conclusions, and recommendations; and
            (2) an assessment of the extent to which 
        recommendations of the Commission included in the 
        interim report under subsection (a) have been 
        implemented.
    (c) Printing and Public Distribution.--Upon receipt of each 
report of the Commission under this section, the President 
shall--
            (1) order the report to be printed; and
            (2) make the report available to the public upon 
        request.

SEC. 4247. TERMINATION.

    The Commission shall terminate on the date that is 2 years 
after the date on which the members of the Commission have met 
and designated a Chairperson and Vice Chairperson.

SEC. 4248. AUTHORIZATION OF APPROPRIATIONS.

    There are authorized to be appropriated such sums as are 
necessary to carry out the purposes of the Commission.

                       Subtitle C--Child Support

SEC. 4300. REFERENCE TO SOCIAL SECURITY ACT.

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

     CHAPTER 1--ELIGIBILITY FOR SERVICES; DISTRIBUTION OF PAYMENTS

SEC. 4301. STATE OBLIGATION TO PROVIDE CHILD SUPPORT ENFORCEMENT 
                    SERVICES.

    (a) State Plan Requirements.--Section 454 (42 U.S.C. 654) 
is amended--
            (1) by striking paragraph (4) and inserting the 
        following new paragraph:
            ``(4) provide that the State will--
                    ``(A) provide services relating to the 
                establishment of paternity or the 
                establishment, modification, or enforcement of 
                child support obligations, as appropriate, 
                under the plan with respect to--
                            ``(i) each child for whom (I) 
                        assistance is provided under the State 
                        program funded under part A of this 
                        title, (II) benefits or services for 
                        foster care maintenance are provided 
                        under the State program funded under 
                        part E of this title, (III) medical 
                        assistance is provided under the State 
                        plan under title XV, or (IV) medical 
                        assistance is provided under the State 
                        plan approved under title XIX, unless, 
                        in accordance with paragraph (29), good 
                        cause or other exceptions exist;
                            ``(ii) any other child, if an 
                        individual applies for such services 
                        with respect to the child; and
                    ``(B) enforce any support obligation 
                established with respect to--
                            ``(i) a child with respect to whom 
                        the State provides services under the 
                        plan; or
                            ``(ii) the custodial parent of such 
                        a child;''; and
            (2) in paragraph (6)--
                    (A) by striking ``provide that'' and 
                inserting ``provide that--'';
                    (B) by striking subparagraph (A) and 
                inserting the following new subparagraph:
                    ``(A) services under the plan shall be made 
                available to residents of other States on the 
                same terms as to residents of the State 
                submitting the plan;'';
                    (C) in subparagraph (B), by inserting ``on 
                individuals not receiving assistance under any 
                State program funded under part A'' after 
                ``such services shall be imposed'';
                    (D) in each of subparagraphs (B), (C), (D), 
                and (E)--
                            (i) by indenting the subparagraph 
                        in the same manner as, and aligning the 
                        left margin of the subparagraph with 
                        the left margin of, the matter inserted 
                        by subparagraph (B) of this paragraph; 
                        and
                            (ii) by striking the final comma 
                        and inserting a semicolon; and
                    (E) in subparagraph (E), by indenting each 
                of clauses (i) and (ii) 2 additional ems.
    (b) Continuation of Services for Families Ceasing To 
Receive Assistance Under the State Program Funded Under Part 
A.--Section 454 (42 U.S.C. 654) is amended--
            (1) by striking ``and'' at the end of paragraph 
        (23);
            (2) by striking the period at the end of paragraph 
        (24) and inserting ``; and''; and
            (3) by adding after paragraph (24) the following 
        new paragraph:
            ``(25) provide that if a family with respect to 
        which services are provided under the plan ceases to 
        receive assistance under the State program funded under 
        part A, the State shall provide appropriate notice to 
        the family and continue to provide such services, 
        subject to the same conditions and on the same basis as 
        in the case of other individuals to whom services are 
        furnished under the plan, except that an application or 
        other request to continue services shall not be 
        required of such a family and paragraph (6)(B) shall 
        not apply to the family.''.
    (c) Conforming Amendments.--
            (1) Section 452(b) (42 U.S.C. 652(b)) is amended by 
        striking ``454(6)'' and inserting ``454(4)''.
            (2) Section 452(g)(2)(A) (42 U.S.C. 652(g)(2)(A)) 
        is amended by striking ``454(6)'' each place it appears 
        and inserting ``454(4)(A)(ii)''.
            (3) Section 466(a)(3)(B) (42 U.S.C. 666(a)(3)(B)) 
        is amended by striking ``in the case of overdue support 
        which a State has agreed to collect under section 
        454(6)'' and inserting ``in any other case''.
            (4) Section 466(e) (42 U.S.C. 666(e)) is amended by 
        striking ``paragraph (4) or (6) of section 454'' and 
        inserting ``section 454(4)''.

SEC. 4302. DISTRIBUTION OF CHILD SUPPORT COLLECTIONS.

    (a) In General.--Section 457 (42 U.S.C. 657) is amended to 
read as follows:

``SEC. 457. DISTRIBUTION OF COLLECTED SUPPORT.

    ``(a) In General.--Subject to subsection (e), an amount 
collected on behalf of a family as support by a State pursuant 
to a plan approved under this part shall be distributed as 
follows:
            ``(1) Families receiving assistance.--In the case 
        of a family receiving assistance from the State, the 
        State shall--
                    ``(A) pay to the Federal Government the 
                Federal share of the amount so collected; and
                    ``(B) retain, or distribute to the family, 
                the State share of the amount so collected.
            ``(2) Families that formerly received assistance.--
        In the case of a family that formerly received 
        assistance from the State:
                    ``(A) Current support payments.--To the 
                extent that the amount so collected does not 
                exceed the amount required to be paid to the 
                family for the month in which collected, the 
                State shall distribute the amount so collected 
                to the family.
                    ``(B) Payments of arrearages.--To the 
                extent that the amount so collected exceeds the 
                amount required to be paid to the family for 
                the month in which collected, the State shall 
                distribute the amount so collected as follows:
                            ``(i) Distribution of arrearages 
                        that accrued after the family ceased to 
                        receive assistance.--
                                    ``(I) Pre-october 1997.--
                                Except as provided in subclause 
                                (II), the provisions of this 
                                section (other than subsection 
                                (b)(1)) as in effect and 
                                applied on the day before the 
                                date of the enactment of 
                                section 4302 of the Personal 
                                Responsibility and Work 
                                Opportunity Act of 1996 shall 
                                apply with respect to the 
                                distribution of support 
                                arrearages that--
                                            ``(aa) accrued 
                                        after the family ceased 
                                        to receive assistance, 
                                        and
                                            ``(bb) are 
                                        collected before 
                                        October 1, 1997.
                                    ``(II) Post-september 
                                1997.--With respect to the 
                                amount so collected on or after 
                                October 1, 1997 (or before such 
                                date, at the option of the 
                                State)--
                                            ``(aa) In 
                                        general.--The State 
                                        shall first distribute 
                                        the amount so collected 
                                        (other than any amount 
                                        described in clause 
                                        (iv)) to the family to 
                                        the extent necessary to 
                                        satisfy any support 
                                        arrearages with respect 
                                        to the family that 
                                        accrued after the 
                                        family ceased to 
                                        receive assistance from 
                                        the State.
                                            ``(bb) 
                                        Reimbursement of 
                                        governments for 
                                        assistance provided to 
                                        the family.--After the 
                                        application of division 
                                        (aa) and clause 
                                        (ii)(II)(aa) with 
                                        respect to the amount 
                                        so collected, the State 
                                        shall retain the State 
                                        share of the amount so 
                                        collected, and pay to 
                                        the Federal Government 
                                        the Federal share (as 
                                        defined in subsection 
                                        (c)(2)) of the amount 
                                        so collected, but only 
                                        to the extent necessary 
                                        to reimburse amounts 
                                        paid to the family as 
                                        assistance by the 
                                        State.
                                            ``(cc) Distribution 
                                        of the remainder to the 
                                        family.--To the extent 
                                        that neither division 
                                        (aa) nor division (bb) 
                                        applies to the amount 
                                        so collected, the State 
                                        shall distribute the 
                                        amount to the family.
                            ``(ii) Distribution of arrearages 
                        that accrued before the family received 
                        assistance.--
                                    ``(I) Pre-october 2000.--
                                Except as provided in subclause 
                                (II), the provisions of this 
                                section (other than subsection 
                                (b)(1)) as in effect and 
                                applied on the day before the 
                                date of the enactment of 
                                section 4302 of the Personal 
                                Responsibility and Work 
                                Opportunity Act of 1996 shall 
                                apply with respect to the 
                                distribution of support 
                                arrearages that--
                                            ``(aa) accrued 
                                        before the family 
                                        received assistance, 
                                        and
                                            ``(bb) are 
                                        collected before 
                                        October 1, 2000.
                                    ``(II) Post-september 
                                2000.--Unless, based on the 
                                report required by paragraph 
                                (4), the Congress determines 
                                otherwise, with respect to the 
                                amount so collected on or after 
                                October 1, 2000 (or before such 
                                date, at the option of the 
                                State)--
                                            ``(aa) In 
                                        general.--The State 
                                        shall first distribute 
                                        the amount so collected 
                                        (other than any amount 
                                        described in clause 
                                        (iv)) to the family to 
                                        the extent necessary to 
                                        satisfy any support 
                                        arrearages with respect 
                                        to the family that 
                                        accrued before the 
                                        family received 
                                        assistance from the 
                                        State.
                                            ``(bb) 
                                        Reimbursement of 
                                        governments for 
                                        assistance provided to 
                                        the family.--After the 
                                        application of clause 
                                        (i)(II)(aa) and 
                                        division (aa) with 
                                        respect to the amount 
                                        so collected, the State 
                                        shall retain the State 
                                        share of the amount so 
                                        collected, and pay to 
                                        the Federal Government 
                                        the Federal share (as 
                                        defined in subsection 
                                        (c)(2)) of the amount 
                                        so collected, but only 
                                        to the extent necessary 
                                        to reimburse amounts 
                                        paid to the family as 
                                        assistance by the 
                                        State.
                                            ``(cc) Distribution 
                                        of the remainder to the 
                                        family.--To the extent 
                                        that neither division 
                                        (aa) nor division (bb) 
                                        applies to the amount 
                                        so collected, the State 
                                        shall distribute the 
                                        amount to the family.
                            ``(iii) Distribution of arrearages 
                        that accrued while the family received 
                        assistance.--In the case of a family 
                        described in this subparagraph, the 
                        provisions of paragraph (1) shall apply 
                        with respect to the distribution of 
                        support arrearages that accrued while 
                        the family received assistance.
                            ``(iv) Amounts collected pursuant 
                        to section 464.--Notwithstanding any 
                        other provision of this section, any 
                        amount of support collected pursuant to 
                        section 464 shall be retained by the 
                        State to the extent past-due support 
                        has been assigned to the State as a 
                        condition of receiving assistance from 
                        the State, up to the amount necessary 
                        to reimburse the State for amounts paid 
                        to the family as assistance by the 
                        State. The State shall pay to the 
                        Federal Government the Federal share of 
                        the amounts so retained. To the extent 
                        the amount collected pursuant to 
                        section 464 exceeds the amount so 
                        retained, the State shall distribute 
                        the excess to the family.
                            ``(v) Ordering rules for 
                        distributions.--For purposes of this 
                        subparagraph, unless an earlier 
                        effective date is required by this 
                        section, effective October 1, 2000, the 
                        State shall treat any support 
                        arrearages collected, except for 
                        amounts collected pursuant to section 
                        464, as accruing in the following 
                        order:
                                    ``(I) To the period after 
                                the family ceased to receive 
                                assistance.
                                    ``(II) To the period before 
                                the family received assistance.
                                    ``(III) To the period while 
                                the family was receiving 
                                assistance.
            ``(3) Families that never received assistance.--In 
        the case of any other family, the State shall 
        distribute the amount so collected to the family.
            ``(4) Study and report.--Not later than October 1, 
        1998, the Secretary shall report to the Congress the 
        Secretary's findings with respect to--
                    ``(A) whether the distribution of post-
                assistance arrearages to families has been 
                effective in moving people off of welfare and 
                keeping them off of welfare;
                    ``(B) whether early implementation of a 
                pre-assistance arrearage program by some States 
                has been effective in moving people off of 
                welfare and keeping them off of welfare;
                    ``(C) what the overall impact has been of 
                the amendments made by the Personal 
                Responsibility and Work Opportunity Act of 1996 
                with respect to child support enforcement in 
                moving people off of welfare and keeping them 
                off of welfare; and
                    ``(D) based on the information and data the 
                Secretary has obtained, what changes, if any, 
                should be made in the policies related to the 
                distribution of child support arrearages.
    ``(b) Continuation Of Assignments.--Any rights to support 
obligations, which were assigned to a State as a condition of 
receiving assistance from the State under part A and which were 
in effect on the day before the date of the enactment of the 
Personal Responsibility and Work Opportunity Act of 1996, shall 
remain assigned after such date.
    ``(c) Definitions.--As used in subsection (a):
            ``(1) Assistance.--The term `assistance from the 
        State' means--
                    ``(A) assistance under the State program 
                funded under part A or under the State plan 
                approved under part A of this title (as in 
                effect on the day before the date of the 
                enactment of the Personal Responsibility and 
                Work Opportunity Act of 1996); and
                    ``(B) foster care maintenance payments 
                under the State plan approved under part E of 
                this title.
            ``(2) Federal share.--The term `Federal share' 
        means that portion of the amount collected resulting 
        from the application of the Federal medical assistance 
        percentage in effect for the fiscal year in which the 
        amount is collected.
            ``(3) Federal medical assistance percentage.--The 
        term `Federal medical assistance percentage' means--
                    ``(A) the Federal medical assistance 
                percentage (as defined in section 1118), in the 
                case of Puerto Rico, the Virgin Islands, Guam, 
                and American Samoa; or
                    ``(B) the Federal medical assistance 
                percentage (as defined in section 1905(b), as 
                in effect on September 30, 1996) in the case of 
                any other State.
            ``(4) State share.--The term `State share' means 
        100 percent minus the Federal share.
    ``(d) Hold Harmless Provision.--If the amounts collected 
which could be retained by the State in the fiscal year (to the 
extent necessary to reimburse the State for amounts paid to 
families as assistance by the State) are less than the State 
share of the amounts collected in fiscal year 1995 (determined 
in accordance with section 457 as in effect on the day before 
the date of the enactment of the Personal Responsibility and 
Work Opportunity Act of 1996), the State share for the fiscal 
year shall be an amount equal to the State share in fiscal year 
1995.
    ``(e) Gap Payments not Subject to Distribution Under This 
Section.--At State option, this section shall not apply to any 
amount collected on behalf of a family as support by the State 
(and paid to the family in addition to the amount of assistance 
otherwise payable to the family) pursuant to a plan approved 
under this part if such amount would have been paid to the 
family by the State under section 402(a)(28), as in effect and 
applied on the day before the date of the enactment of section 
4302 of the Personal Responsibility and Work Opportunity Act of 
1996. For purposes of subsection (d), the State share of such 
amount paid to the family shall be considered amounts which 
could be retained by the State if such payments were reported 
by the State as part of the State share of amounts collected in 
fiscal year 1995.''.
    (b) Conforming Amendments.--
            (1) Section 464(a)(1) (42 U.S.C. 664(a)(1)) is 
        amended by striking ``section 457(b)(4) or (d)(3)'' and 
        inserting ``section 457''.
            (2) Section 454 (42 U.S.C. 654) is amended--
                    (A) in paragraph (11)--
                            (i) by striking ``(11)'' and 
                        inserting ``(11)(A)''; and
                            (ii) by inserting after the 
                        semicolon ``and''; and
                    (B) by redesignating paragraph (12) as 
                subparagraph (B) of paragraph (11).
    (c) Effective Dates.--
            (1) In General.--Except as provided in paragraph 
        (2), the amendments made by this section shall be 
        effective on October 1, 1996, or earlier at the State's 
        option.
            (2) Conforming amendments.--The amendments made by 
        subsection (b)(2) shall become effective on the date of 
        the enactment of this Act.

SEC. 4303. PRIVACY SAFEGUARDS.

    (a) State Plan Requirement.--Section 454 (42 U.S.C. 654), 
as amended by section 4301(b) of this Act, is amended--
            (1) by striking ``and'' at the end of paragraph 
        (24);
            (2) by striking the period at the end of paragraph 
        (25) and inserting ``; and''; and
            (3) by adding after paragraph (25) the following 
        new paragraph:
            ``(26) will have in effect safeguards, applicable 
        to all confidential information handled by the State 
        agency, that are designed to protect the privacy rights 
        of the parties, including--
                    ``(A) safeguards against unauthorized use 
                or disclosure of information relating to 
                proceedings or actions to establish paternity, 
                or to establish or enforce support;
                    ``(B) prohibitions against the release of 
                information on the whereabouts of 1 party to 
                another party against whom a protective order 
                with respect to the former party has been 
                entered; and
                    ``(C) prohibitions against the release of 
                information on the whereabouts of 1 party to 
                another party if the State has reason to 
                believe that the release of the information may 
                result in physical or emotional harm to the 
                former party.''.
    (b) Effective Date.--The amendment made by subsection (a) 
shall become effective on October 1, 1997.

SEC. 4304. RIGHTS TO NOTIFICATION OF HEARINGS.

    (a) In General.--Section 454 (42 U.S.C. 654), as amended by 
section 4302(b)(2) of this Act, is amended by inserting after 
paragraph (11) the following new paragraph:
            ``(12) provide for the establishment of procedures 
        to require the State to provide individuals who are 
        applying for or receiving services under the State 
        plan, or who are parties to cases in which services are 
        being provided under the State plan--
                    ``(A) with notice of all proceedings in 
                which support obligations might be established 
                or modified; and
                    ``(B) with a copy of any order establishing 
                or modifying a child support obligation, or (in 
                the case of a petition for modification) a 
                notice of determination that there should be no 
                change in the amount of the child support 
                award, within 14 days after issuance of such 
                order or determination;''.
    (b) Effective Date.--The amendment made by subsection (a) 
shall become effective on October 1, 1997.

                  CHAPTER 2--LOCATE AND CASE TRACKING

SEC. 4311. STATE CASE REGISTRY.

    Section 454A, as added by section 4344(a)(2) of this Act, 
is amended by adding at the end the following new subsections:
    ``(e) State Case Registry.--
            ``(1) Contents.--The automated system required by 
        this section shall include a registry (which shall be 
        known as the `State case registry') that contains 
        records with respect to--
                    ``(A) each case in which services are being 
                provided by the State agency under the State 
                plan approved under this part; and
                    ``(B) each support order established or 
                modified in the State on or after October 1, 
                1998.
            ``(2) Linking of local registries.--The State case 
        registry may be established by linking local case 
        registries of support orders through an automated 
        information network, subject to this section.
            ``(3) Use of standardized data elements.--Such 
        records shall use standardized data elements for both 
        parents (such as names, social security numbers and 
        other uniform identification numbers, dates of birth, 
        and case identification numbers), and contain such 
        other information (such as on case status) as the 
        Secretary may require.
            ``(4) Payment records.--Each case record in the 
        State case registry with respect to which services are 
        being provided under the State plan approved under this 
        part and with respect to which a support order has been 
        established shall include a record of--
                    ``(A) the amount of monthly (or other 
                periodic) support owed under the order, and 
                other amounts (including arrearages, interest 
                or late payment penalties, and fees) due or 
                overdue under the order;
                    ``(B) any amount described in subparagraph 
                (A) that has been collected;
                    ``(C) the distribution of such collected 
                amounts;
                    ``(D) the birth date of any child for whom 
                the order requires the provision of support; 
                and
                    ``(E) the amount of any lien imposed with 
                respect to the order pursuant to section 
                466(a)(4).
            ``(5) Updating and monitoring.--The State agency 
        operating the automated system required by this section 
        shall promptly establish and update, maintain, and 
        regularly monitor, case records in the State case 
        registry with respect to which services are being 
        provided under the State plan approved under this part, 
        on the basis of--
                    ``(A) information on administrative actions 
                and administrative and judicial proceedings and 
                orders relating to paternity and support;
                    ``(B) information obtained from comparison 
                with Federal, State, or local sources of 
                information;
                    ``(C) information on support collections 
                and distributions; and
                    ``(D) any other relevant information.
    ``(f) Information Comparisons and Other Disclosures of 
Information.--The State shall use the automated system required 
by this section to extract information from (at such times, and 
in such standardized format or formats, as may be required by 
the Secretary), to share and compare information with, and to 
receive information from, other data bases and information 
comparison services, in order to obtain (or provide) 
information necessary to enable the State agency (or the 
Secretary or other State or Federal agencies) to carry out this 
part, subject to section 6103 of the Internal Revenue Code of 
1986. Such information comparison activities shall include the 
following:
            ``(1) Federal case registry of child support 
        orders.--Furnishing to the Federal Case Registry of 
        Child Support Orders established under section 453(h) 
        (and update as necessary, with information including 
        notice of expiration of orders) the minimum amount of 
        information on child support cases recorded in the 
        State case registry that is necessary to operate the 
        registry (as specified by the Secretary in 
        regulations).
            ``(2) Federal parent locator service.--Exchanging 
        information with the Federal Parent Locator Service for 
        the purposes specified in section 453.
            ``(3) Temporary family assistance and medicaid 
        agencies.--Exchanging information with State agencies 
        (of the State and of other States) administering 
        programs funded under part A, programs operated under a 
        State plan under title XV or a State plan approved 
        under title XIX, and other programs designated by the 
        Secretary, as necessary to perform State agency 
        responsibilities under this part and under such 
        programs.
            ``(4) Intrastate and interstate information 
        comparisons.--Exchanging information with other 
        agencies of the State, agencies of other States, and 
        interstate information networks, as necessary and 
        appropriate to carry out (or assist other States to 
        carry out) the purposes of this part.''.

SEC. 4312. COLLECTION AND DISBURSEMENT OF SUPPORT PAYMENTS.

    (a) State Plan Requirement.--Section 454 (42 U.S.C. 654), 
as amended by sections 4301(b) and 4303(a) of this Act, is 
amended--
            (1) by striking ``and'' at the end of paragraph 
        (25);
            (2) by striking the period at the end of paragraph 
        (26) and inserting ``; and''; and
            (3) by adding after paragraph (26) the following 
        new paragraph:
            ``(27) provide that, on and after October 1, 1998, 
        the State agency will--
                    ``(A) operate a State disbursement unit in 
                accordance with section 454B; and
                    ``(B) have sufficient State staff 
                (consisting of State employees) and (at State 
                option) contractors reporting directly to the 
                State agency to--
                            ``(i) monitor and enforce support 
                        collections through the unit in cases 
                        being enforced by the State pursuant to 
                        section 454(4) (including carrying out 
                        the automated data processing 
                        responsibilities described in section 
                        454A(g)); and
                            ``(ii) take the actions described 
                        in section 466(c)(1) in appropriate 
                        cases.''.
    (b) Establishment of State Disbursement Unit.--Part D of 
title IV (42 U.S.C. 651-669), as amended by section 4344(a)(2) 
of this Act, is amended by inserting after section 454A the 
following new section:

``SEC. 454B. COLLECTION AND DISBURSEMENT OF SUPPORT PAYMENTS.

    ``(a) State Disbursement Unit.--
            ``(1) In general.--In order for a State to meet the 
        requirements of this section, the State agency must 
        establish and operate a unit (which shall be known as 
        the `State disbursement unit') for the collection and 
        disbursement of payments under support orders--
                    ``(A) in all cases being enforced by the 
                State pursuant to section 454(4); and
                    ``(B) in all cases not being enforced by 
                the State under this part in which the support 
                order is initially issued in the State on or 
                after January 1, 1994, and in which the income 
                of the noncustodial parent are subject to 
                withholding pursuant to section 466(a)(8)(B).
            ``(2) Operation.--The State disbursement unit shall 
        be operated--
                    ``(A) directly by the State agency (or 2 or 
                more State agencies under a regional 
                cooperative agreement), or (to the extent 
                appropriate) by a contractor responsible 
                directly to the State agency; and
                    ``(B) except in cases described in 
                paragraph (1)(B), in coordination with the 
                automated system established by the State 
                pursuant to section 454A.
            ``(3) Linking of local disbursement units.--The 
        State disbursement unit may be established by linking 
        local disbursement units through an automated 
        information network, subject to this section, if the 
        Secretary agrees that the system will not cost more nor 
        take more time to establish or operate than a 
        centralized system. In addition, employers shall be 
        given 1 location to which income withholding is sent.
    ``(b) Required Procedures.--The State disbursement unit 
shall use automated procedures, electronic processes, and 
computer-driven technology to the maximum extent feasible, 
efficient, and economical, for the collection and disbursement 
of support payments, including procedures--
            ``(1) for receipt of payments from parents, 
        employers, and other States, and for disbursements to 
        custodial parents and other obligees, the State agency, 
        and the agencies of other States;
            ``(2) for accurate identification of payments;
            ``(3) to ensure prompt disbursement of the 
        custodial parent's share of any payment; and
            ``(4) to furnish to any parent, upon request, 
        timely information on the current status of support 
        payments under an order requiring payments to be made 
        by or to the parent.
    ``(c) Timing of Disbursements.--
            ``(1) In general.--Except as provided in paragraph 
        (2), the State disbursement unit shall distribute all 
        amounts payable under section 457(a) within 2 business 
        days after receipt from the employer or other source of 
        periodic income, if sufficient information identifying 
        the payee is provided.
            ``(2) Permissive retention of arrearages.--The 
        State disbursement unit may delay the distribution of 
        collections toward arrearages until the resolution of 
        any timely appeal with respect to such arrearages.
    ``(d) Business Day Defined.--As used in this section, the 
term `business day' means a day on which State offices are open 
for regular business.''.
    (c) Use of Automated System.--Section 454A, as added by 
section 4344(a)(2) and as amended by section 4311 of this Act, 
is amended by adding at the end the following new subsection:
    ``(g) Collection and Distribution of Support Payments.--
            ``(1) In general.--The State shall use the 
        automated system required by this section, to the 
        maximum extent feasible, to assist and facilitate the 
        collection and disbursement of support payments through 
        the State disbursement unit operated under section 
        454B, through the performance of functions, including, 
        at a minimum--
                    ``(A) transmission of orders and notices to 
                employers (and other debtors) for the 
                withholding of income--
                            ``(i) within 2 business days after 
                        receipt of notice of, and the income 
                        source subject to, such withholding 
                        from a court, another State, an 
                        employer, the Federal Parent Locator 
                        Service, or another source recognized 
                        by the State; and
                            ``(ii) using uniform formats 
                        prescribed by the Secretary;
                    ``(B) ongoing monitoring to promptly 
                identify failures to make timely payment of 
                support; and
                    ``(C) automatic use of enforcement 
                procedures (including procedures authorized 
                pursuant to section 466(c)) if payments are not 
                timely made.
            ``(2) Business day defined.--As used in paragraph 
        (1), the term `business day' means a day on which State 
        offices are open for regular business.''.
    (d) Effective Dates.--
            (1) In general.--Except as provided in paragraph 
        (2), the amendments made by this section shall become 
        effective on October 1, 1998.
            (2) Limited exception to unit handling payments.--
        Notwithstanding section 454B(b)(1) of the Social 
        Security Act, as added by this section, any State 
        which, as of the date of the enactment of this Act, 
        processes the receipt of child support payments through 
        local courts may, at the option of the State, continue 
        to process through September 30, 1999, such payments 
        through such courts as processed such payments on or 
        before such date of enactment.
    (e) Sense of the Congress.--It is the sense of the Congress 
that, in determining whether to comply with section 454B of the 
Social Security Act by establishing a single, centralized unit 
for the collection and disbursement of support payments or by 
linking together through automation local units for the 
collection and disbursement of support payments, a State should 
choose the method of compliance which best meets the needs of 
parents, employers, and children.

SEC. 4313. STATE DIRECTORY OF NEW HIRES.

    (a) State Plan Requirement.--Section 454 (42 U.S.C. 654), 
as amended by sections 4301(b), 4303(a) and 4312(a) of this 
Act, is amended--
            (1) by striking ``and'' at the end of paragraph 
        (26);
            (2) by striking the period at the end of paragraph 
        (27) and inserting ``; and''; and
            (3) by adding after paragraph (27) the following 
        new paragraph:
            ``(28) provide that, on and after October 1, 1997, 
        the State will operate a State Directory of New Hires 
        in accordance with section 453A.''.
    (b) State Directory of New Hires.--Part D of title IV (42 
U.S.C. 651-669) is amended by inserting after section 453 the 
following new section:

``SEC. 453A. STATE DIRECTORY OF NEW HIRES.

    ``(a) Establishment.--
            ``(1) In general.--
                    ``(A) Requirement for States that have no 
                directory.--Except as provided in subparagraph 
                (B), not later than October 1, 1997, each State 
                shall establish an automated directory (to be 
                known as the `State Directory of New Hires') 
                which shall contain information supplied in 
                accordance with subsection (b) by employers on 
                each newly hired employee.
                    ``(B) States with new hire reporting in 
                existence.--A State which has a new hire 
                reporting law in existence on the date of the 
                enactment of this section may continue to 
                operate under the State law, but the State must 
                meet the requirements of subsection (g)(2) not 
                later than October 1, 1997, and the 
                requirements of this section (other than 
                subsection (g)(2)) not later than October 1, 
                1998.
            ``(2) Definitions.--As used in this section:
                    ``(A) Employee.--The term `employee'--
                            ``(i) means an individual who is an 
                        employee within the meaning of chapter 
                        24 of the Internal Revenue Code of 
                        1986; and
                            ``(ii) does not include an employee 
                        of a Federal or State agency performing 
                        intelligence or counterintelligence 
                        functions, if the head of such agency 
                        has determined that reporting pursuant 
                        to paragraph (1) with respect to the 
                        employee could endanger the safety of 
                        the employee or compromise an ongoing 
                        investigation or intelligence mission.
                    ``(B) Employer.--
                            ``(i) In general.--The term 
                        `employer' has the meaning given such 
                        term in section 3401(d) of the Internal 
                        Revenue Code of 1986 and includes any 
                        governmental entity and any labor 
                        organization.
                            ``(ii) Labor organization.--The 
                        term `labor organization' shall have 
                        the meaning given such term in section 
                        2(5) of the National Labor Relations 
                        Act, and includes any entity (also 
                        known as a `hiring hall') which is used 
                        by the organization and an employer to 
                        carry out requirements described in 
                        section 8(f)(3) of such Act of an 
                        agreement between the organization and 
                        the employer.
    ``(b) Employer Information.--
            ``(1) Reporting requirement.--
                    ``(A) In general.--Except as provided in 
                subparagraphs (B) and (C), each employer shall 
                furnish to the Directory of New Hires of the 
                State in which a newly hired employee works, a 
                report that contains the name, address, and 
                social security number of the employee, and the 
                name and address of, and identifying number 
                assigned under section 6109 of the Internal 
                Revenue Code of 1986 to, the employer.
                    ``(B) Multistate employers.--An employer 
                that has employees who are employed in 2 or 
                more States and that transmits reports 
                magnetically or electronically may comply with 
                subparagraph (A) by designating 1 State in 
                which such employer has employees to which the 
                employer will transmit the report described in 
                subparagraph (A), and transmitting such report 
                to such State. Any employer that transmits 
                reports pursuant to this subparagraph shall 
                notify the Secretary in writing as to which 
                State such employer designates for the purpose 
                of sending reports.
                    ``(C) Federal government employers.--Any 
                department, agency, or instrumentality of the 
                United States shall comply with subparagraph 
                (A) by transmitting the report described in 
                subparagraph (A) to the National Directory of 
                New Hires established pursuant to section 453.
            ``(2) Timing of report.--Each State may provide the 
        time within which the report required by paragraph (1) 
        shall be made with respect to an employee, but such 
        report shall be made--
                    ``(A) not later than 20 days after the date 
                the employer hires the employee; or
                    ``(B) in the case of an employer 
                transmitting reports magnetically or 
                electronically, by 2 monthly transmissions (if 
                necessary) not less than 12 days nor more than 
                16 days apart.
    ``(c) Reporting Format and Method.--Each report required by 
subsection (b) shall be made on a W-4 form or, at the option of 
the employer, an equivalent form, and may be transmitted by 1st 
class mail, magnetically, or electronically.
    ``(d) Civil Money Penalties on Noncomplying Employers.--The 
State shall have the option to set a State civil money penalty 
which shall be less than--
            ``(1) $25; or
            ``(2) $500 if, under State law, the failure is the 
        result of a conspiracy between the employer and the 
        employee to not supply the required report or to supply 
        a false or incomplete report.
    ``(e) Entry of Employer Information.--Information shall be 
entered into the data base maintained by the State Directory of 
New Hires within 5 business days of receipt from an employer 
pursuant to subsection (b).
    ``(f) Information Comparisons.--
            ``(1) In general.--Not later than May 1, 1998, an 
        agency designated by the State shall, directly or by 
        contract, conduct automated comparisons of the social 
        security numbers reported by employers pursuant to 
        subsection (b) and the social security numbers 
        appearing in the records of the State case registry for 
        cases being enforced under the State plan.
            ``(2) Notice of match.--When an information 
        comparison conducted under paragraph (1) reveals a 
        match with respect to the social security number of an 
        individual required to provide support under a support 
        order, the State Directory of New Hires shall provide 
        the agency administering the State plan approved under 
        this part of the appropriate State with the name, 
        address, and social security number of the employee to 
        whom the social security number is assigned, and the 
        name and address of, and identifying number assigned 
        under section 6109 of the Internal Revenue Code of 1986 
        to, the employer.
    ``(g) Transmission of Information.--
            ``(1) Transmission of wage withholding notices to 
        employers.--Within 2 business days after the date 
        information regarding a newly hired employee is entered 
        into the State Directory of New Hires, the State agency 
        enforcing the employee's child support obligation shall 
        transmit a notice to the employer of the employee 
        directing the employer to withhold from the income of 
        the employee an amount equal to the monthly (or other 
        periodic) child support obligation (including any past 
        due support obligation) of the employee, unless the 
        employee's income is not subject to withholding 
        pursuant to section 466(b)(3).
            ``(2) Transmissions to the national directory of 
        new hires.--
                    ``(A) New hire information.--Within 3 
                business days after the date information 
                regarding a newly hired employee is entered 
                into the State Directory of New Hires, the 
                State Directory of New Hires shall furnish the 
                information to the National Directory of New 
                Hires.
                    ``(B) Wage and unemployment compensation 
                information.--The State Directory of New Hires 
                shall, on a quarterly basis, furnish to the 
                National Directory of New Hires extracts of the 
                reports required under section 303(a)(6) to be 
                made to the Secretary of Labor concerning the 
                wages and unemployment compensation paid to 
                individuals, by such dates, in such format, and 
                containing such information as the Secretary of 
                Health and Human Services shall specify in 
                regulations.
            ``(3) Business day defined.--As used in this 
        subsection, the term `business day' means a day on 
        which State offices are open for regular business.
    ``(h) Other Uses of New Hire Information.--
            ``(1) Location of child support obligors.--The 
        agency administering the State plan approved under this 
        part shall use information received pursuant to 
        subsection (f)(2) to locate individuals for purposes of 
        establishing paternity and establishing, modifying, and 
        enforcing child support obligations, and may disclose 
        such information to any agent of the agency that is 
        under contract with the agency to carry out such 
        purposes.
            ``(2) Verification of eligibility for certain 
        programs.--A State agency responsible for administering 
        a program specified in section 1137(b) shall have 
        access to information reported by employers pursuant to 
        subsection (b) of this section for purposes of 
        verifying eligibility for the program.
            ``(3) Administration of employment security and 
        workers' compensation.--State agencies operating 
        employment security and workers' compensation programs 
        shall have access to information reported by employers 
        pursuant to subsection (b) for the purposes of 
        administering such programs.''.
    (c) Quarterly Wage Reporting.--Section 1137(a)(3) (42 
U.S.C. 1320b-7(a)(3)) is amended--
            (1) by inserting ``(including State and local 
        governmental entities and labor organizations (as 
        defined in section 453A(a)(2)(B)(iii))'' after 
        ``employers''; and
            (2) by inserting ``, and except that no report 
        shall be filed with respect to an employee of a State 
        or local agency performing intelligence or 
        counterintelligence functions, if the head of such 
        agency has determined that filing such a report could 
        endanger the safety of the employee or compromise an 
        ongoing investigation or intelligence mission'' after 
        ``paragraph (2)''.
    (d) Disclosure to Certain Agents.--Section 303(e) (42 
U.S.C. 503(e)) is amended by adding at the end the following:
    ``(5) A State or local child support enforcement agency may 
disclose to any agent of the agency that is under contract with 
the agency to carry out the purposes described in paragraph 
(1)(B) wage information that is disclosed to an officer or 
employee of the agency under paragraph (1)(A). Any agent of a 
State or local child support agency that receives wage 
information under this paragraph shall comply with the 
safeguards established pursuant to paragraph (1)(B).''.

SEC. 4314. AMENDMENTS CONCERNING INCOME WITHHOLDING.

    (a) Mandatory Income Withholding.--
            (1) In general.--Section 466(a)(1) (42 U.S.C. 
        666(a)(1)) is amended to read as follows:
            ``(1)(A) Procedures described in subsection (b) for 
        the withholding from income of amounts payable as 
        support in cases subject to enforcement under the State 
        plan.
            ``(B) Procedures under which the income of a person 
        with a support obligation imposed by a support order 
        issued (or modified) in the State before October 1, 
        1996, if not otherwise subject to withholding under 
        subsection (b), shall become subject to withholding as 
        provided in subsection (b) if arrearages occur, without 
        the need for a judicial or administrative hearing.''.
            (2) Conforming amendments.--
                    (A) Section 466(b) (42 U.S.C. 666(b)) is 
                amended in the matter preceding paragraph (1), 
                by striking ``subsection (a)(1)'' and inserting 
                ``subsection (a)(1)(A)''.
                    (B) Section 466(b)(4) (42 U.S.C. 666(b)(4)) 
                is amended to read as follows:
            ``(4)(A) Such withholding must be carried out in 
        full compliance with all procedural due process 
        requirements of the State, and the State must send 
        notice to each noncustodial parent to whom paragraph 
        (1) applies--
                    ``(i) that the withholding has commenced; 
                and
                    ``(ii) of the procedures to follow if the 
                noncustodial parent desires to contest such 
                withholding on the grounds that the withholding 
                or the amount withheld is improper due to a 
                mistake of fact.
            ``(B) The notice under subparagraph (A) of this 
        paragraph shall include the information provided to the 
        employer under paragraph (6)(A).''.
                    (C) Section 466(b)(5) (42 U.S.C. 666(b)(5)) 
                is amended by striking all that follows 
                ``administered by'' and inserting ``the State 
                through the State disbursement unit established 
                pursuant to section 454B, in accordance with 
                the requirements of section 454B.''.
                    (D) Section 466(b)(6)(A) (42 U.S.C. 
                666(b)(6)(A)) is amended--
                            (i) in clause (i), by striking ``to 
                        the appropriate agency'' and all that 
                        follows and inserting ``to the State 
                        disbursement unit within 5 business 
                        days after the date the amount would 
                        (but for this subsection) have been 
                        paid or credited to the employee, for 
                        distribution in accordance with this 
                        part. The employer shall withhold funds 
                        as directed in the notice. For terms 
                        and conditions for withholding income 
                        that are not specified in a notice 
                        issued by another State, the employer 
                        shall apply the law of the State in 
                        which the obligor works. An employer 
                        who complies with an income withholding 
                        notice that is regular on its face 
                        shall not be subject to civil liability 
                        to any individual or agency for conduct 
                        in compliance with the notice.''.
                            (ii) in clause (ii), by inserting 
                        ``be in a standard format prescribed by 
                        the Secretary, and'' after ``shall''; 
                        and
                            (iii) by adding at the end the 
                        following new clause:
            ``(iii) As used in this subparagraph, the term 
        `business day' means a day on which State offices are 
        open for regular business.''.
                    (E) Section 466(b)(6)(D) (42 U.S.C. 
                666(b)(6)(D)) is amended by striking ``any 
                employer'' and all that follows and inserting 
                ``any employer who--
                    ``(i) discharges from employment, refuses 
                to employ, or takes disciplinary action against 
                any noncustodial parent subject to income 
                withholding required by this subsection because 
                of the existence of such withholding and the 
                obligations or additional obligations which it 
                imposes upon the employer; or
                    ``(ii) fails to withhold support from 
                income or to pay such amounts to the State 
                disbursement unit in accordance with this 
                subsection.''.
                    (F) Section 466(b) (42 U.S.C. 666(b)) is 
                amended by adding at the end the following new 
                paragraph:
            ``(11) Procedures under which the agency 
        administering the State plan approved under this part 
        may execute a withholding order without advance notice 
        to the obligor, including issuing the withholding order 
        through electronic means.''.
    (b) Definition of Income.--
            (1) In general.--Section 466(b)(8) (42 U.S.C. 
        666(b)(8)) is amended to read as follows:
            ``(8) For purposes of subsection (a) and this 
        subsection, the term `income' means any periodic form 
        of payment due to an individual, regarless of source, 
        including wages, salaries, commissions, bonuses, 
        worker's compensation, disability, payments pursuant to 
        a pension or retirement program, and interest.''.
            (2) Conforming amendments.--
                    (A) Subsections (a)(8)(A), (a)(8)(B)(i), 
                (b)(3)(A), (b)(3)(B), (b)(6)(A)(i), and 
                (b)(6)(C), and (b)(7) of section 466 (42 U.S.C. 
                666(a)(8)(A), (a)(8)(B)(i), (b)(3)(A), 
                (b)(3)(B), (b)(6)(A)(i), and (b)(6)(C), and 
                (b)(7)) are each amended by striking ``wages'' 
                each place such term appears and inserting 
                ``income''.
                    (B) Section 466(b)(1) (42 U.S.C. 666(b)(1)) 
                is amended by striking ``wages (as defined by 
                the State for purposes of this section)'' and 
                inserting ``income''.
    (c) Conforming Amendment.--Section 466(c) (42 U.S.C. 
666(c)) is repealed.

SEC. 4315. LOCATOR INFORMATION FROM INTERSTATE NETWORKS.

    Section 466(a) (42 U.S.C. 666(a)) is amended by inserting 
after paragraph (11) the following new paragraph:
            ``(12) Locator information from interstate 
        networks.--Procedures to ensure that all Federal and 
        State agencies conducting activities under this part 
        have access to any system used by the State to locate 
        an individual for purposes relating to motor vehicles 
        or law enforcement.''.

SEC. 4316. EXPANSION OF THE FEDERAL PARENT LOCATOR SERVICE.

    (a) Expanded Authority To Locate Individuals and Assets.--
Section 453 (42 U.S.C. 653) is amended--
            (1) in subsection (a), by striking all that follows 
        ``subsection (c))'' and inserting ``, for the purpose 
        of establishing parentage, establishing, setting the 
        amount of, modifying, or enforcing child support 
        obligations, or enforcing child custody or visitation 
        orders--
            ``(1) information on, or facilitating the discovery 
        of, the location of any individual--
                    ``(A) who is under an obligation to pay 
                child support or provide child custody or 
                visitation rights;
                    ``(B) against whom such an obligation is 
                sought;
                    ``(C) to whom such an obligation is owed,
        including the individual's social security number (or 
        numbers), most recent address, and the name, address, 
        and employer identification number of the individual's 
        employer;
            ``(2) information on the individual's wages (or 
        other income) from, and benefits of, employment 
        (including rights to or enrollment in group health care 
        coverage); and
            ``(3) information on the type, status, location, 
        and amount of any assets of, or debts owed by or to, 
        any such individual.''; and
            (2) in subsection (b)--
                    (A) in the matter preceding paragraph (1), 
                by striking ``social security'' and all that 
                follows through ``absent parent'' and inserting 
                ``information described in subsection (a)''; 
                and
                    (B) in the flush paragraph at the end, by 
                adding the following: ``No information shall be 
                disclosed to any person if the State has 
                notified the Secretary that the State has 
                reasonable evidence of domestic violence or 
                child abuse and the disclosure of such 
                information could be harmful to the custodial 
                parent or the child of such parent. Information 
                received or transmitted pursuant to this 
                section shall be subject to the safeguard 
                provisions contained in section 454(26).''.
    (b) Authorized Person for Information Regarding Visitation 
Rights.--Section 453(c) (42 U.S.C. 653(c)) is amended--
            (1) in paragraph (1), by striking ``support'' and 
        inserting ``support or to seek to enforce orders 
        providing child custody or visitation rights''; and
            (2) in paragraph (2), by striking ``, or any agent 
        of such court; and'' and inserting ``or to issue an 
        order against a resident parent for child custody or 
        visitation rights, or any agent of such court;''.
    (c) Reimbursement for Information From Federal Agencies.--
Section 453(e)(2) (42 U.S.C. 653(e)(2)) is amended in the 4th 
sentence by inserting ``in an amount which the Secretary 
determines to be reasonable payment for the information 
exchange (which amount shall not include payment for the costs 
of obtaining, compiling, or maintaining the information)'' 
before the period.
    (d) Reimbursement for Reports by State Agencies.--Section 
453 (42 U.S.C. 653) is amended by adding at the end the 
following new subsection:
    ``(g) Reimbursement for Reports by State Agencies.--The 
Secretary may reimburse Federal and State agencies for the 
costs incurred by such entities in furnishing information 
requested by the Secretary under this section in an amount 
which the Secretary determines to be reasonable payment for the 
information exchange (which amount shall not include payment 
for the costs of obtaining, compiling, or maintaining the 
information).''.
    (e) Conforming Amendments.--
            (1) Sections 452(a)(9), 453(a), 453(b), 463(a), 
        463(e), and 463(f) (42 U.S.C. 652(a)(9), 653(a), 
        653(b), 663(a), 663(e), and 663(f)) are each amended by 
        inserting ``Federal'' before ``Parent'' each place such 
        term appears.
            (2) Section 453 (42 U.S.C. 653) is amended in the 
        heading by adding ``federal'' before ``parent''.
    (f) New Components.--Section 453 (42 U.S.C. 653), as 
amended by subsection (d) of this section, is amended by adding 
at the end the following new subsections:
    ``(h) Federal Case Registry of Child Support Orders.--
            ``(1) In general.--Not later than October 1, 1998, 
        in order to assist States in administering programs 
        under State plans approved under this part and programs 
        funded under part A, and for the other purposes 
        specified in this section, the Secretary shall 
        establish and maintain in the Federal Parent Locator 
        Service an automated registry (which shall be known as 
        the `Federal Case Registry of Child Support Orders'), 
        which shall contain abstracts of support orders and 
        other information described in paragraph (2) with 
        respect to each case in each State case registry 
        maintained pursuant to section 454A(e), as furnished 
        (and regularly updated), pursuant to section 454A(f), 
        by State agencies administering programs under this 
        part.
            ``(2) Case information.--The information referred 
        to in paragraph (1) with respect to a case shall be 
        such information as the Secretary may specify in 
        regulations (including the names, social security 
        numbers or other uniform identification numbers, and 
        State case identification numbers) to identify the 
        individuals who owe or are owed support (or with 
        respect to or on behalf of whom support obligations are 
        sought to be established), and the State or States 
        which have the case.
    ``(i) National Directory of New Hires.--
            ``(1) In general.--In order to assist States in 
        administering programs under State plans approved under 
        this part and programs funded under part A, and for the 
        other purposes specified in this section, the Secretary 
        shall, not later than October 1, 1997, establish and 
        maintain in the Federal Parent Locator Service an 
        automated directory to be known as the National 
        Directory of New Hires, which shall contain the 
        information supplied pursuant to section 453A(g)(2).
            ``(2) Entry of data.--Information shall be entered 
        into the data base maintained by the National Directory 
        of New Hires within 2 business days of receipt pursuant 
        to section 453A(g)(2).
            ``(3) Administration of federal tax laws.--The 
        Secretary of the Treasury shall have access to the 
        information in the National Directory of New Hires for 
        purposes of administering section 32 of the Internal 
        Revenue Code of 1986, or the advance payment of the 
        earned income tax credit under section 3507 of such 
        Code, and verifying a claim with respect to employment 
        in a tax return.
            ``(4) List of multistate employers.--The Secretary 
        shall maintain within the National Directory of New 
        Hires a list of multistate employers that report 
        information regarding newly hired employees pursuant to 
        section 453A(b)(1)(B), and the State which each such 
        employer has designated to receive such information.
    ``(j) Information Comparisons and Other Disclosures.--
            ``(1) Verification by social security 
        administration.--
                    ``(A) In general.--The Secretary shall 
                transmit information on individuals and 
                employers maintained under this section to the 
                Social Security Administration to the extent 
                necessary for verification in accordance with 
                subparagraph (B).
                    ``(B) Verification by ssa.--The Social 
                Security Administration shall verify the 
                accuracy of, correct, or supply to the extent 
                possible, and report to the Secretary, the 
                following information supplied by the Secretary 
                pursuant to subparagraph (A):
                            ``(i) The name, social security 
                        number, and birth date of each such 
                        individual.
                            ``(ii) The employer identification 
                        number of each such employer.
            ``(2) Information comparisons.--For the purpose of 
        locating individuals in a paternity establishment case 
        or a case involving the establishment, modification, or 
        enforcement of a support order, the Secretary shall--
                    ``(A) compare information in the National 
                Directory of New Hires against information in 
                the support case abstracts in the Federal Case 
                Registry of Child Support Orders not less often 
                than every 2 business days; and
                    ``(B) within 2 business days after such a 
                comparison reveals a match with respect to an 
                individual, report the information to the State 
                agency responsible for the case.
            ``(3) Information comparisons and disclosures of 
        information in all registries for title iv program 
        purposes.--To the extent and with the frequency that 
        the Secretary determines to be effective in assisting 
        States to carry out their responsibilities under 
        programs operated under this part and programs funded 
        under part A, the Secretary shall--
                    ``(A) compare the information in each 
                component of the Federal Parent Locator Service 
                maintained under this section against the 
                information in each other such component (other 
                than the comparison required by paragraph (2)), 
                and report instances in which such a comparison 
                reveals a match with respect to an individual 
                to State agencies operating such programs; and
                    ``(B) disclose information in such 
                registries to such State agencies.
            ``(4) Provision of new hire information to the 
        social security administration.--The National Directory 
        of New Hires shall provide the Commissioner of Social 
        Security with all information in the National 
        Directory, which shall be used to determine the 
        accuracy of payments under the supplemental security 
        income program under title XVI and in connection with 
        benefits under title II.
            ``(5) Research.--The Secretary may provide access 
        to information reported by employers pursuant to 
        section 453A(b) for research purposes found by the 
        Secretary to be likely to contribute to achieving the 
        purposes of part A or this part, but without personal 
        identifiers.
    ``(k) Fees.--
            ``(1) For ssa verification.--The Secretary shall 
        reimburse the Commissioner of Social Security, at a 
        rate negotiated between the Secretary and the 
        Commissioner, for the costs incurred by the 
        Commissioner in performing the verification services 
        described in subsection (j).
            ``(2) For information from state directories of new 
        hires.--The Secretary shall reimburse costs incurred by 
        State directories of new hires in furnishing 
        information as required by subsection (j)(3), at rates 
        which the Secretary determines to be reasonable (which 
        rates shall not include payment for the costs of 
        obtaining, compiling, or maintaining such information).
            ``(3) For information furnished to state and 
        federal agencies.--A State or Federal agency that 
        receives information from the Secretary pursuant to 
        this section shall reimburse the Secretary for costs 
        incurred by the Secretary in furnishing the 
        information, at rates which the Secretary determines to 
        be reasonable (which rates shall include payment for 
        the costs of obtaining, verifying, maintaining, and 
        comparing the information).
    ``(l) Restriction on Disclosure and Use.--Information in 
the Federal Parent Locator Service, and information resulting 
from comparisons using such information, shall not be used or 
disclosed except as expressly provided in this section, subject 
to section 6103 of the Internal Revenue Code of 1986.
    ``(m) Information Integrity and Security.--The Secretary 
shall establish and implement safeguards with respect to the 
entities established under this section designed to--
            ``(1) ensure the accuracy and completeness of 
        information in the Federal Parent Locator Service; and
            ``(2) restrict access to confidential information 
        in the Federal Parent Locator Service to authorized 
        persons, and restrict use of such information to 
        authorized purposes.
    ``(n) Federal Government Reporting.--Each department, 
agency, and instrumentality of the United States shall on a 
quarterly basis report to the Federal Parent Locator Service 
the name and social security number of each employee and the 
wages paid to the employee during the previous quarter, except 
that such a report shall not be filed with respect to an 
employee of a department, agency, or instrumentality performing 
intelligence or counterintelligence functions, if the head of 
such department, agency, or instrumentality has determined that 
filing such a report could endanger the safety of the employee 
or compromise an ongoing investigation or intelligence 
mission.''.
    (g) Conforming Amendments.--
            (1) To part d of title iv of the social security 
        act.--
                    (A) Section 454(8)(B) (42 U.S.C. 654(8)(B)) 
                is amended to read as follows:
                    ``(B) the Federal Parent Locator Service 
                established under section 453;''.
                    (B) Section 454(13) (42 U.S.C.654(13)) is 
                amended by inserting ``and provide that 
                information requests by parents who are 
                residents of other States be treated with the 
                same priority as requests by parents who are 
                residents of the State submitting the plan'' 
                before the semicolon.
            (2) To federal unemployment tax act.--Section 
        3304(a)(16) of the Internal Revenue Code of 1986 is 
        amended--
                    (A) by striking ``Secretary of Health, 
                Education, and Welfare'' each place such term 
                appears and inserting ``Secretary of Health and 
                Human Services'';
                    (B) in subparagraph (B), by striking ``such 
                information'' and all that follows and 
                inserting ``information furnished under 
                subparagraph (A) or (B) is used only for the 
                purposes authorized under such subparagraph;'';
                    (C) by striking ``and'' at the end of 
                subparagraph (A);
                    (D) by redesignating subparagraph (B) as 
                subparagraph (C); and
                    (E) by inserting after subparagraph (A) the 
                following new subparagraph:
            ``(B) wage and unemployment compensation 
        information contained in the records of such agency 
        shall be furnished to the Secretary of Health and Human 
        Services (in accordance with regulations promulgated by 
        such Secretary) as necessary for the purposes of the 
        National Directory of New Hires established under 
        section 453(i) of the Social Security Act, and''.
            (3) To state grant program under title iii of the 
        social security act.--Subsection (h) of section 303 (42 
        U.S.C. 503) is amended to read as follows:
    ``(h)(1) The State agency charged with the administration 
of the State law shall, on a reimbursable basis--
            ``(A) disclose quarterly, to the Secretary of 
        Health and Human Services, wage and claim information, 
        as required pursuant to section 453(i)(1), contained in 
        the records of such agency;
            ``(B) ensure that information provided pursuant to 
        subparagraph (A) meets such standards relating to 
        correctness and verification as the Secretary of Health 
        and Human Services, with the concurrence of the 
        Secretary of Labor, may find necessary; and
            ``(C) establish such safeguards as the Secretary of 
        Labor determines are necessary to insure that 
        information disclosed under subparagraph (A) is used 
        only for purposes of section 453(i)(1) in carrying out 
        the child support enforcement program under title IV.
    ``(2) Whenever the Secretary of Labor, after reasonable 
notice and opportunity for hearing to the State agency charged 
with the administration of the State law, finds that there is a 
failure to comply substantially with the requirements of 
paragraph (1), the Secretary of Labor shall notify such State 
agency that further payments will not be made to the State 
until the Secretary of Labor is satisfied that there is no 
longer any such failure. Until the Secretary of Labor is so 
satisfied, the Secretary shall make no future certification to 
the Secretary of the Treasury with respect to the State.
    ``(3) For purposes of this subsection--
            ``(A) the term `wage information' means information 
        regarding wages paid to an individual, the social 
        security account number of such individual, and the 
        name, address, State, and the Federal employer 
        identification number of the employer paying such wages 
        to such individual; and
            ``(B) the term `claim information' means 
        information regarding whether an individual is 
        receiving, has received, or has made application for, 
        unemployment compensation, the amount of any such 
        compensation being received (or to be received by such 
        individual), and the individual's current (or most 
        recent) home address.''.
            (4) Disclosure of certain information to agents of 
        child support enforcement agencies.--
                    (A) In general.--Paragraph (6) of section 
                6103(l) of the Internal Revenue Code of 1986 
                (relating to disclosure of return information 
                to Federal, State, and local child support 
                enforcement agencies) is amended by 
                redesignating subparagraph (B) as subparagraph 
                (C) and by inserting after subparagraph (A) the 
                following new subparagraph:
                    ``(B) Disclosure to certain agents.--The 
                following information disclosed to any child 
                support enforcement agency under subparagraph 
                (A) with respect to any individual with respect 
                to whom child support obligations are sought to 
                be established or enforced may be disclosed by 
                such agency to any agent of such agency which 
                is under contract with such agency to carry out 
                the purposes described in subparagraph (C):
                            ``(i) The address and social 
                        security account number (or numbers) of 
                        such individual.
                            ``(ii) The amount of any reduction 
                        under section 6402(c) (relating to 
                        offset of past-due support against 
                        overpayments) in any overpayment 
                        otherwise payable to such individual.''
                    (B) Conforming amendments.--
                            (i) Paragraph (3) of section 
                        6103(a) of such Code is amended by 
                        striking ``(l)(12)'' and inserting 
                        ``paragraph (6) or (12) of subsection 
                        (l)''.
                            (ii) Subparagraph (C) of section 
                        6103(l)(6) of such Code, as 
                        redesignated by subsection (a), is 
                        amended to read as follows:
                    ``(C) Restriction on disclosure.--
                Information may be disclosed under this 
                paragraph only for purposes of, and to the 
                extent necessary in, establishing and 
                collecting child support obligations from, and 
                locating, individuals owing such obligations.''
                            (iii) The material following 
                        subparagraph (F) of section 6103(p)(4) 
                        of such Code is amended by striking 
                        ``subsection (l)(12)(B)'' and inserting 
                        ``paragraph (6)(A) or (12)(B) of 
                        subsection (l)''.
    (h) Requirement for Cooperation.--The Secretary of Labor 
and the Secretary of Health and Human Services shall work 
jointly to develop cost-effective and efficient methods of 
accessing the information in the various State directories of 
new hires and the National Directory of New Hires as 
established pursuant to the amendments made by this chapter. In 
developing these methods the Secretaries shall take into 
account the impact, including costs, on the States, and shall 
also consider the need to insure the proper and authorized use 
of wage record information.

SEC. 4317. COLLECTION AND USE OF SOCIAL SECURITY NUMBERS FOR USE IN 
                    CHILD SUPPORT ENFORCEMENT.

    (a) State Law Requirement.--Section 466(a) (42 U.S.C. 
666(a)), as amended by section 4315 of this Act, is amended by 
inserting after paragraph (12) the following new paragraph:
            ``(13) Recording of social security numbers in 
        certain family matters.--Procedures requiring that the 
        social security number of--
                    ``(A) any applicant for a professional 
                license, commercial driver's license, 
                occupational license, or marriage license be 
                recorded on the application;
                    ``(B) any individual who is subject to a 
                divorce decree, support order, or paternity 
                determination or acknowledgment be placed in 
                the records relating to the matter; and
                    ``(C) any individual who has died be placed 
                in the records relating to the death and be 
                recorded on the death certificate.
        For purposes of subparagraph (A), if a State allows the 
        use of a number other than the social security number, 
        the State shall so advise any applicants.''.
    (b) Conforming Amendments.--Section 205(c)(2)(C) (42 U.S.C. 
405(c)(2)(C)), as amended by section 321(a)(9) of the Social 
Security Independence and Program Improvements Act of 1994, is 
amended--
            (1) in clause (i), by striking ``may require'' and 
        inserting ``shall require'';
            (2) in clause (ii), by inserting after the 1st 
        sentence the following: ``In the administration of any 
        law involving the issuance of a marriage certificate or 
        license, each State shall require each party named in 
        the certificate or license to furnish to the State (or 
        political subdivision thereof), or any State agency 
        having administrative responsibility for the law 
        involved, the social security number of the party.'';
            (3) in clause (ii), by inserting ``or marriage 
        certificate'' after ``Such numbers shall not be 
        recorded on the birth certificate''.
            (4) in clause (vi), by striking ``may'' and 
        inserting ``shall''; and
            (5) by adding at the end the following new clauses:
    ``(x) An agency of a State (or a political subdivision 
thereof) charged with the administration of any law concerning 
the issuance or renewal of a license, certificate, permit, or 
other authorization to engage in a profession, an occupation, 
or a commercial activity shall require all applicants for 
issuance or renewal of the license, certificate, permit, or 
other authorization to provide the applicant's social security 
number to the agency for the purpose of administering such 
laws, and for the purpose of responding to requests for 
information from an agency operating pursuant to part D of 
title IV.
    ``(xi) All divorce decrees, support orders, and paternity 
determinations issued, and all paternity acknowledgments made, 
in each State shall include the social security number of each 
party to the decree, order, determination, or acknowledgment in 
the records relating to the matter, for the purpose of 
responding to requests for information from an agency operating 
pursuant to part D of title IV.''.

          CHAPTER 3--STREAMLINING AND UNIFORMITY OF PROCEDURES

SEC. 4321. ADOPTION OF UNIFORM STATE LAWS.

    Section 466 (42 U.S.C. 666) is amended by adding at the end 
the following new subsection:
    ``(f) Uniform Interstate Family Support Act.--
            ``(1) Enactment and use.--In order to satisfy 
        section 454(20)(A), on and after January 1, 1998, each 
        State must have in effect the Uniform Interstate Family 
        Support Act, as approved by the American Bar 
        Association on February 9, 1993, together with any 
        amendments officially adopted before January 1, 1998 by 
        the National Conference of Commissioners on Uniform 
        State Laws.
            ``(2) Employers to follow procedural rules of State 
        where employee works.--The State law enacted pursuant 
        to paragraph (1) shall provide that an employer that 
        receives an income withholding order or notice pursuant 
        to section 501 of the Uniform Interstate Family Support 
        Act follow the procedural rules that apply with respect 
        to such order or notice under the laws of the State in 
        which the obligor works.''.

SEC. 4322. IMPROVEMENTS TO FULL FAITH AND CREDIT FOR CHILD SUPPORT 
                    ORDERS.

    Section 1738B of title 28, United States Code, is amended--
            (1) in subsection (a)(2), by striking ``subsection 
        (e)'' and inserting ``subsections (e), (f), and (i)'';
            (2) in subsection (b), by inserting after the 2nd 
        undesignated paragraph the following:
    `` `child's home State' means the State in which a child 
lived with a parent or a person acting as parent for at least 6 
consecutive months immediately preceding the time of filing of 
a petition or comparable pleading for support and, if a child 
is less than 6 months old, the State in which the child lived 
from birth with any of them. A period of temporary absence of 
any of them is counted as part of the 6-month period.'';
            (3) in subsection (c), by inserting ``by a court of 
        a State'' before ``is made'';
            (4) in subsection (c)(1), by inserting ``and 
        subsections (e), (f), and (g)'' after ``located'';
            (5) in subsection (d)--
                    (A) by inserting ``individual'' before 
                ``contestant''; and
                    (B) by striking ``subsection (e)'' and 
                inserting ``subsections (e) and (f)'';
            (6) in subsection (e), by striking ``make a 
        modification of a child support order with respect to a 
        child that is made'' and inserting ``modify a child 
        support order issued'';
            (7) in subsection (e)(1), by inserting ``pursuant 
        to subsection (i)'' before the semicolon;
            (8) in subsection (e)(2)--
                    (A) by inserting ``individual'' before 
                ``contestant'' each place such term appears; 
                and
                    (B) by striking ``to that court's making 
                the modification and assuming'' and inserting 
                ``with the State of continuing, exclusive 
                jurisdiction for a court of another State to 
                modify the order and assume'';
            (9) by redesignating subsections (f) and (g) as 
        subsections (g) and (h), respectively;
            (10) by inserting after subsection (e) the 
        following new subsection:
    ``(f) Recognition of Child Support Orders.--If 1 or more 
child support orders have been issued with regard to an obligor 
and a child, a court shall apply the following rules in 
determining which order to recognize for purposes of 
continuing, exclusive jurisdiction and enforcement:
            ``(1) If only 1 court has issued a child support 
        order, the order of that court must be recognized.
            ``(2) If 2 or more courts have issued child support 
        orders for the same obligor and child, and only 1 of 
        the courts would have continuing, exclusive 
        jurisdiction under this section, the order of that 
        court must be recognized.
            ``(3) If 2 or more courts have issued child support 
        orders for the same obligor and child, and more than 1 
        of the courts would have continuing, exclusive 
        jurisdiction under this section, an order issued by a 
        court in the current home State of the child must be 
        recognized, but if an order has not been issued in the 
        current home State of the child, the order most 
        recently issued must be recognized.
            ``(4) If 2 or more courts have issued child support 
        orders for the same obligor and child, and none of the 
        courts would have continuing, exclusive jurisdiction 
        under this section, a court may issue a child support 
        order, which must be recognized.
            ``(5) The court that has issued an order recognized 
        under this subsection is the court having continuing, 
        exclusive jurisdiction.'';
            (11) in subsection (g) (as so redesignated)--
                    (A) by striking ``Prior'' and inserting 
                ``Modified''; and
                    (B) by striking ``subsection (e)'' and 
                inserting ``subsections (e) and (f)'';
            (12) in subsection (h) (as so redesignated)--
                    (A) in paragraph (2), by inserting 
                ``including the duration of current payments 
                and other obligations of support'' before the 
                comma; and
                    (B) in paragraph (3), by inserting 
                ``arrears under'' after ``enforce''; and
            (13) by adding at the end the following new 
        subsection:
    ``(i) Registration for Modification.--If there is no 
individual contestant or child residing in the issuing State, 
the party or support enforcement agency seeking to modify, or 
to modify and enforce, a child support order issued in another 
State shall register that order in a State with jurisdiction 
over the nonmovant for the purpose of modification.''.

SEC. 4323. ADMINISTRATIVE ENFORCEMENT IN INTERSTATE CASES.

    Section 466(a) (42 U.S.C. 666(a)), as amended by sections 
4315 and 4317(a) of this Act, is amended by inserting after 
paragraph (13) the following new paragraph:
            ``(14) Administrative enforcement in interstate 
        cases.--Procedures under which--
                    ``(A)(i) the State shall respond within 5 
                business days to a request made by another 
                State to enforce a support order; and
                    ``(ii) the term `business day' means a day 
                on which State offices are open for regular 
                business;
                    ``(B) the State may, by electronic or other 
                means, transmit to another State a request for 
                assistance in a case involving the enforcement 
                of a support order, which request--
                            ``(i) shall include such 
                        information as will enable the State to 
                        which the request is transmitted to 
                        compare the information about the case 
                        to the information in the data bases of 
                        the State; and
                            ``(ii) shall constitute a 
                        certification by the requesting State--
                                    ``(I) of the amount of 
                                support under the order the 
                                payment of which is in arrears; 
                                and
                                    ``(II) that the requesting 
                                State has complied with all 
                                procedural due process 
                                requirements applicable to the 
                                case;
                    ``(C) if the State provides assistance to 
                another State pursuant to this paragraph with 
                respect to a case, neither State shall consider 
                the case to be transferred to the caseload of 
                such other State; and
                    ``(D) the State shall maintain records of--
                            ``(i) the number of such requests 
                        for assistance received by the State;
                            ``(ii) the number of cases for 
                        which the State collected support in 
                        response to such a request; and
                            ``(iii) the amount of such 
                        collected support.''.

SEC. 4324. USE OF FORMS IN INTERSTATE ENFORCEMENT.

    (a) Promulgation.--Section 452(a) (42 U.S.C. 652(a)) is 
amended--
            (1) by striking ``and'' at the end of paragraph 
        (9);
            (2) by striking the period at the end of paragraph 
        (10) and inserting ``; and''; and
            (3) by adding at the end the following new 
        paragraph:
            ``(11) not later than October 1, 1996, after 
        consulting with the State directors of programs under 
        this part, promulgate forms to be used by States in 
        interstate cases for--
                    ``(A) collection of child support through 
                income withholding;
                    ``(B) imposition of liens; and
                    ``(C) administrative subpoenas.''.
    (b) Use by States.--Section 454(9) (42 U.S.C. 654(9)) is 
amended--
            (1) by striking ``and'' at the end of subparagraph 
        (C);
            (2) by inserting ``and'' at the end of subparagraph 
        (D); and
            (3) by adding at the end the following new 
        subparagraph:
                    ``(E) not later than March 1, 1997, in 
                using the forms promulgated pursuant to section 
                452(a)(11) for income withholding, imposition 
                of liens, and issuance of administrative 
                subpoenas in interstate child support cases;''.

SEC. 4325. STATE LAWS PROVIDING EXPEDITED PROCEDURES.

    (a) State Law Requirements.--Section 466 (42 U.S.C. 666), 
as amended by section 4314 of this Act, is amended--
            (1) in subsection (a)(2), by striking the first 
        sentence and inserting the following: ``Expedited 
        administrative and judicial procedures (including the 
        procedures specified in subsection (c)) for 
        establishing paternity and for establishing, modifying, 
        and enforcing support obligations.''; and
            (2) by inserting after subsection (b) the following 
        new subsection:
    ``(c) Expedited Procedures.--The procedures specified in 
this subsection are the following:
            ``(1) Administrative action by state agency.--
        Procedures which give the State agency the authority to 
        take the following actions relating to establishment of 
        paternity or to establishment, modification, or 
        enforcement of support orders, without the necessity of 
        obtaining an order from any other judicial or 
        administrative tribunal, and to recognize and enforce 
        the authority of State agencies of other States to take 
        the following actions:
                    ``(A) Genetic testing.--To order genetic 
                testing for the purpose of paternity 
                establishment as provided in section 466(a)(5).
                    ``(B) Financial or other information.--To 
                subpoena any financial or other information 
                needed to establish, modify, or enforce a 
                support order, and to impose penalties for 
                failure to respond to such a subpoena.
                    ``(C) Response to state agency request.--To 
                require all entities in the State (including 
                for-profit, nonprofit, and governmental 
                employers) to provide promptly, in response to 
                a request by the State agency of that or any 
                other State administering a program under this 
                part, information on the employment, 
                compensation, and benefits of any individual 
                employed by such entity as an employee or 
                contractor, and to sanction failure to respond 
                to any such request.
                    ``(D) Access to information contained in 
                certain records.--To obtain access, subject to 
                safeguards on privacy and information security, 
                and subject to the nonliability of entities 
                that afford such access under this 
                subparagraph, to information contained in the 
                following records (including automated access, 
                in the case of records maintained in automated 
                data bases):
                            ``(i) Records of other State and 
                        local government agencies, including--
                                    ``(I) vital statistics 
                                (including records of marriage, 
                                birth, and divorce);
                                    ``(II) State and local tax 
                                and revenue records (including 
                                information on residence 
                                address, employer, income and 
                                assets);
                                    ``(III) records concerning 
                                real and titled personal 
                                property;
                                    ``(IV) records of 
                                occupational and professional 
                                licenses, and records 
                                concerning the ownership and 
                                control of corporations, 
                                partnerships, and other 
                                business entities;
                                    ``(V) employment security 
                                records;
                                    ``(VI) records of agencies 
                                administering public assistance 
                                programs;
                                    ``(VII) records of the 
                                motor vehicle department; and
                                    ``(VIII) corrections 
                                records.
                            ``(ii) Certain records held by 
                        private entities with respect to 
                        individuals who owe or are owed support 
                        (or against or with respect to whom a 
                        support obligation is sought), 
                        consisting of--
                                    ``(I) the names and 
                                addresses of such individuals 
                                and the names and addresses of 
                                the employers of such 
                                individuals, as appearing in 
                                customer records of public 
                                utilities and cable television 
                                companies, pursuant to an 
                                administrative subpoena 
                                authorized by subparagraph (B); 
                                and
                                    ``(II) information 
                                (including information on 
                                assets and liabilities) on such 
                                individuals held by financial 
                                institutions.
                    ``(E) Change in payee.--In cases in which 
                support is subject to an assignment in order to 
                comply with a requirement imposed pursuant to 
                part A or section 1912, or to a requirement to 
                pay through the State disbursement unit 
                established pursuant to section 454B, upon 
                providing notice to obligor and obligee, to 
                direct the obligor or other payor to change the 
                payee to the appropriate government entity.
                    ``(F) Income withholding.--To order income 
                withholding in accordance with subsections 
                (a)(1)(A) and (b) of section 466.
                    ``(G) Securing assets.--In cases in which 
                there is a support arrearage, to secure assets 
                to satisfy the arrearage by--
                            ``(i) intercepting or seizing 
                        periodic or lump-sum payments from--
                                    ``(I) a State or local 
                                agency, including unemployment 
                                compensation, workers' 
                                compensation, and other 
                                benefits; and
                                    ``(II) judgments, 
                                settlements, and lotteries;
                            ``(ii) attaching and seizing assets 
                        of the obligor held in financial 
                        institutions;
                            ``(iii) attaching public and 
                        private retirement funds; and
                            ``(iv) imposing liens in accordance 
                        with subsection (a)(4) and, in 
                        appropriate cases, to force sale of 
                        property and distribution of proceeds.
                    ``(H) Increase monthly payments.--For the 
                purpose of securing overdue support, to 
                increase the amount of monthly support payments 
                to include amounts for arrearages, subject to 
                such conditions or limitations as the State may 
                provide.
        Such procedures shall be subject to due process 
        safeguards, including (as appropriate) requirements for 
        notice, opportunity to contest the action, and 
        opportunity for an appeal on the record to an 
        independent administrative or judicial tribunal.
            ``(2) Substantive and procedural rules.--The 
        expedited procedures required under subsection (a)(2) 
        shall include the following rules and authority, 
        applicable with respect to all proceedings to establish 
        paternity or to establish, modify, or enforce support 
        orders:
                    ``(A) Locator information; presumptions 
                concerning notice.--Procedures under which--
                            ``(i) each party to any paternity 
                        or child support proceeding is required 
                        (subject to privacy safeguards) to file 
                        with the tribunal and the State case 
                        registry upon entry of an order, and to 
                        update as appropriate, information on 
                        location and identity of the party, 
                        including social security number, 
                        residential and mailing addresses, 
                        telephone number, driver's license 
                        number, and name, address, and 
                        telephone number of employer; and
                            ``(ii) in any subsequent child 
                        support enforcement action between the 
                        parties, upon sufficient showing that 
                        diligent effort has been made to 
                        ascertain the location of such a party, 
                        the tribunal may deem State due process 
                        requirements for notice and service of 
                        process to be met with respect to the 
                        party, upon delivery of written notice 
                        to the most recent residential or 
                        employer address filed with the 
                        tribunal pursuant to clause (i).
                    ``(B) Statewide jurisdiction.--Procedures 
                under which--
                            ``(i) the State agency and any 
                        administrative or judicial tribunal 
                        with authority to hear child support 
                        and paternity cases exerts statewide 
                        jurisdiction over the parties; and
                            ``(ii) in a State in which orders 
                        are issued by courts or administrative 
                        tribunals, a case may be transferred 
                        between local jurisdictions in the 
                        State without need for any additional 
                        filing by the petitioner, or service of 
                        process upon the respondent, to retain 
                        jurisdiction over the parties.
            ``(3) Coordination with erisa.--Notwithstanding 
        subsection (d) of section 514 of the Employee 
        Retirement Income Security Act of 1974 (relating to 
        effect on other laws), nothing in this subsection shall 
        be construed to alter, amend, modify, invalidate, 
        impair, or supersede subsections (a), (b), and (c) of 
        such section 514 as it applies with respect to any 
        procedure referred to in paragraph (1) and any 
        expedited procedure referred to in paragraph (2), 
        except to the extent that such procedure would be 
        consistent with the requirements of section 206(d)(3) 
        of such Act (relating to qualified domestic relations 
        orders) or the requirements of section 609(a) of such 
        Act (relating to qualified medical child support 
        orders) if the reference in such section 206(d)(3) to a 
        domestic relations order and the reference in such 
        section 609(a) to a medical child support order were a 
        reference to a support order referred to in paragraphs 
        (1) and (2) relating to the same matters, 
        respectively.''.
    (b) Automation of State Agency Functions.--Section 454A, as 
added by section 4344(a)(2) and as amended by sections 4311 and 
4312(c) of this Act, is amended by adding at the end the 
following new subsection:
    ``(h) Expedited Administrative Procedures.--The automated 
system required by this section shall be used, to the maximum 
extent feasible, to implement the expedited administrative 
procedures required by section 466(c).''.

                   CHAPTER 4--PATERNITY ESTABLISHMENT

SEC. 4331. STATE LAWS CONCERNING PATERNITY ESTABLISHMENT.

    (a) State Laws Required.--Section 466(a)(5) (42 U.S.C. 
666(a)(5)) is amended to read as follows:
            ``(5) Procedures concerning paternity 
        establishment.--
                    ``(A) Establishment process available from 
                birth until age 18.--
                            ``(i) Procedures which permit the 
                        establishment of the paternity of a 
                        child at any time before the child 
                        attains 18 years of age.
                            ``(ii) As of August 16, 1984, 
                        clause (i) shall also apply to a child 
                        for whom paternity has not been 
                        established or for whom a paternity 
                        action was brought but dismissed 
                        because a statute of limitations of 
                        less than 18 years was then in effect 
                        in the State.
                    ``(B) Procedures concerning genetic 
                testing.--
                            ``(i) Genetic testing required in 
                        certain contested cases.--Procedures 
                        under which the State is required, in a 
                        contested paternity case (unless 
                        otherwise barred by State law) to 
                        require the child and all other parties 
                        (other than individuals found under 
                        section 454(29) to have good cause and 
                        other exceptions for refusing to 
                        cooperate) to submit to genetic tests 
                        upon the request of any such party, if 
                        the request is supported by a sworn 
                        statement by the party--
                                    ``(I) alleging paternity, 
                                and setting forth facts 
                                establishing a reasonable 
                                possibility of the requisite 
                                sexual contact between the 
                                parties; or
                                    ``(II) denying paternity, 
                                and setting forth facts 
                                establishing a reasonable 
                                possibility of the nonexistence 
                                of sexual contact between the 
                                parties.
                            ``(ii) Other requirements.--
                        Procedures which require the State 
                        agency, in any case in which the agency 
                        orders genetic testing--
                                    ``(I) to pay costs of such 
                                tests, subject to recoupment 
                                (if the State so elects) from 
                                the alleged father if paternity 
                                is established; and
                                    ``(II) to obtain additional 
                                testing in any case if an 
                                original test result is 
                                contested, upon request and 
                                advance payment by the 
                                contestant.
                    ``(C) Voluntary paternity acknowledgment.--
                            ``(i) Simple civil process.--
                        Procedures for a simple civil process 
                        for voluntarily acknowledging paternity 
                        under which the State must provide 
                        that, before a mother and a putative 
                        father can sign an acknowledgment of 
                        paternity, the mother and the putative 
                        father must be given notice, orally and 
                        in writing, of the alternatives to, the 
                        legal consequences of, and the rights 
                        (including, if 1 parent is a minor, any 
                        rights afforded due to minority status) 
                        and responsibilities that arise from, 
                        signing the acknowledgment.
                            ``(ii) Hospital-based program.--
                        Such procedures must include a 
                        hospital-based program for the 
                        voluntary acknowledgment of paternity 
                        focusing on the period immediately 
                        before or after the birth of a child, 
                        unless good cause and other exceptions 
                        exist which--
                                    ``(I) shall be defined, 
                                taking into account the best 
                                interests of the child, and
                                    ``(II) shall be applied in 
                                each case,
                        by, at the option of the State, the 
                        State agency administering the State 
                        program under part A, this part, title 
                        XV, or title XIX.
                            ``(iii) Paternity establishment 
                        services.--
                                    ``(I) State-offered 
                                services.--Such procedures must 
                                require the State agency 
                                responsible for maintaining 
                                birth records to offer 
                                voluntary paternity 
                                establishment services.
                                    ``(II) Regulations.--
                                            ``(aa) Services 
                                        offered by hospitals 
                                        and birth record 
                                        agencies.--The 
                                        Secretary shall 
                                        prescribe regulations 
                                        governing voluntary 
                                        paternity establishment 
                                        services offered by 
                                        hospitals and birth 
                                        record agencies.
                                            ``(bb) Services 
                                        offered by other 
                                        entities.--The 
                                        Secretary shall 
                                        prescribe regulations 
                                        specifying the types of 
                                        other entities that may 
                                        offer voluntary 
                                        paternity establishment 
                                        services, and governing 
                                        the provision of such 
                                        services, which shall 
                                        include a requirement 
                                        that such an entity 
                                        must use the same 
                                        notice provisions used 
                                        by, use the same 
                                        materials used by, 
                                        provide the personnel 
                                        providing such services 
                                        with the same training 
                                        provided by, and 
                                        evaluate the provision 
                                        of such services in the 
                                        same manner as the 
                                        provision of such 
                                        services is evaluated 
                                        by, voluntary paternity 
                                        establishment programs 
                                        of hospitals and birth 
                                        record agencies.
                            ``(iv) Use of paternity 
                        acknowledgment affidavit.--Such 
                        procedures must require the State to 
                        develop and use an affidavit for the 
                        voluntary acknowledgment of paternity 
                        which includes the minimum requirements 
                        of the affidavit specified by the 
                        Secretary under section 452(a)(7) for 
                        the voluntary acknowledgment of 
                        paternity, and to give full faith and 
                        credit to such an affidavit signed in 
                        any other State according to its 
                        procedures.
                    ``(D) Status of signed paternity 
                acknowledgment.--
                            ``(i) Inclusion in birth records.--
                        Procedures under which the name of the 
                        father shall be included on the record 
                        of birth of the child of unmarried 
                        parents only if--
                                    ``(I) the father and mother 
                                have signed a voluntary 
                                acknowledgment of paternity; or
                                    ``(II) a court or an 
                                administrative agency of 
                                competent jurisdiction has 
                                issued an adjudication of 
                                paternity.
                        Nothing in this clause shall preclude a 
                        State agency from obtaining an 
                        admission of paternity from the father 
                        for submission in a judicial or 
                        administrative proceeding, or prohibit 
                        the issuance of an order in a judicial 
                        or administrative proceeding which 
                        bases a legal finding of paternity on 
                        an admission of paternity by the father 
                        and any other additional showing 
                        required by State law.
                            ``(ii) Legal finding of 
                        paternity.--Procedures under which a 
                        signed voluntary acknowledgment of 
                        paternity is considered a legal finding 
                        of paternity, subject to the right of 
                        any signatory to rescind the 
                        acknowledgment within the earlier of--
                                    ``(I) 60 days; or
                                    ``(II) the date of an 
                                administrative or judicial 
                                proceeding relating to the 
                                child (including a proceeding 
                                to establish a support order) 
                                in which the signatory is a 
                                party.
                            ``(iii) Contest.--Procedures under 
                        which, after the 60-day period referred 
                        to in clause (ii), a signed voluntary 
                        acknowledgment of paternity may be 
                        challenged in court only on the basis 
                        of fraud, duress, or material mistake 
                        of fact, with the burden of proof upon 
                        the challenger, and under which the 
                        legal responsibilities (including child 
                        support obligations) of any signatory 
                        arising from the acknowledgment may not 
                        be suspended during the challenge, 
                        except for good cause shown.
                    ``(E) Bar on acknowledgment ratification 
                proceedings.--Procedures under which judicial 
                or administrative proceedings are not required 
                or permitted to ratify an unchallenged 
                acknowledgment of paternity.
                    ``(F) Admissibility of genetic testing 
                results.--Procedures--
                            ``(i) requiring the admission into 
                        evidence, for purposes of establishing 
                        paternity, of the results of any 
                        genetic test that is--
                                    ``(I) of a type generally 
                                acknowledged as reliable by 
                                accreditation bodies designated 
                                by the Secretary; and
                                    ``(II) performed by a 
                                laboratory approved by such an 
                                accreditation body;
                            ``(ii) requiring an objection to 
                        genetic testing results to be made in 
                        writing not later than a specified 
                        number of days before any hearing at 
                        which the results may be introduced 
                        into evidence (or, at State option, not 
                        later than a specified number of days 
                        after receipt of the results); and
                            ``(iii) making the test results 
                        admissible as evidence of paternity 
                        without the need for foundation 
                        testimony or other proof of 
                        authenticity or accuracy, unless 
                        objection is made.
                    ``(G) Presumption of paternity in certain 
                cases.--Procedures which create a rebuttable 
                or, at the option of the State, conclusive 
                presumption of paternity upon genetic testing 
                results indicating a threshold probability that 
                the alleged father is the father of the child.
                    ``(H) Default orders.--Procedures requiring 
                a default order to be entered in a paternity 
                case upon a showing of service of process on 
                the defendant and any additional showing 
                required by State law.
                    ``(I) No right to jury trial.--Procedures 
                providing that the parties to an action to 
                establish paternity are not entitled to a trial 
                by jury.
                    ``(J) Temporary support order based on 
                probable paternity in contested cases.--
                Procedures which require that a temporary order 
                be issued, upon motion by a party, requiring 
                the provision of child support pending an 
                administrative or judicial determination of 
                parentage, if there is clear and convincing 
                evidence of paternity (on the basis of genetic 
                tests or other evidence).
                    ``(K) Proof of certain support and 
                paternity establishment costs.--Procedures 
                under which bills for pregnancy, childbirth, 
                and genetic testing are admissible as evidence 
                without requiring third-party foundation 
                testimony, and shall constitute prima facie 
                evidence of amounts incurred for such services 
                or for testing on behalf of the child.
                    ``(L) Standing of putative fathers.--
                Procedures ensuring that the putative father 
                has a reasonable opportunity to initiate a 
                paternity action.
                    ``(M) Filing of acknowledgments and 
                adjudications in state registry of birth 
                records.--Procedures under which voluntary 
                acknowledgments and adjudications of paternity 
                by judicial or administrative processes are 
                filed with the State registry of birth records 
                for comparison with information in the State 
                case registry.''.
    (b) National Paternity Acknowledgment Affidavit.--Section 
452(a)(7) (42 U.S.C. 652(a)(7)) is amended by inserting ``, and 
specify the minimum requirements of an affidavit to be used for 
the voluntary acknowledgment of paternity which shall include 
the social security number of each parent and, after 
consultation with the States, other common elements as 
determined by such designee'' before the semicolon.
    (c) Conforming Amendment.--Section 468 (42 U.S.C. 668) is 
amended by striking ``a simple civil process for voluntarily 
acknowledging paternity and''.

SEC. 4332. OUTREACH FOR VOLUNTARY PATERNITY ESTABLISHMENT.

    Section 454(23) (42 U.S.C. 654(23)) is amended by inserting 
``and will publicize the availability and encourage the use of 
procedures for voluntary establishment of paternity and child 
support by means the State deems appropriate'' before the 
semicolon.

SEC. 4333. COOPERATION BY APPLICANTS FOR AND RECIPIENTS OF PART A 
                    ASSISTANCE.

    Section 454 (42 U.S.C. 654), as amended by sections 
4301(b), 4303(a), 4312(a), and 4313(a) of this Act, is 
amended--
            (1) by striking ``and'' at the end of paragraph 
        (27);
            (2) by striking the period at the end of paragraph 
        (28) and inserting ``; and''; and
            (3) by inserting after paragraph (28) the following 
        new paragraph:
            ``(29) provide that the State agency responsible 
        for administering the State plan--
                    ``(A) shall make the determination (and 
                redetermination at appropriate intervals) as to 
                whether an individual who has applied for or is 
                receiving assistance under the State program 
                funded under part A, the State program under 
                title XV, or the State program under title XIX 
                is cooperating in good faith with the State in 
                establishing the paternity of, or in 
                establishing, modifying, or enforcing a support 
                order for, any child of the individual by 
                providing the State agency with the name of, 
                and such other information as the State agency 
                may require with respect to, the noncustodial 
                parent of the child, subject to good cause and 
                other exceptions which--
                            ``(i) shall be defined, taking into 
                        account the best interests of the 
                        child, and
                            ``(ii) shall be applied in each 
                        case,
                by, at the option of the State, the State 
                agency administering the State program under 
                part A, this part, title XV, or title XIX;
                    ``(B) shall require the individual to 
                supply additional necessary information and 
                appear at interviews, hearings, and legal 
                proceedings;
                    ``(C) shall require the individual and the 
                child to submit to genetic tests pursuant to 
                judicial or administrative order;
                    ``(D) may request that the individual sign 
                a voluntary acknowledgment of paternity, after 
                notice of the rights and consequences of such 
                an acknowledgment, but may not require the 
                individual to sign an acknowledgment or 
                otherwise relinquish the right to genetic tests 
                as a condition of cooperation and eligibility 
                for assistance under the State program funded 
                under part A, the State program under title XV, 
                or the State program under title XIX; and
                    ``(E) shall promptly notify the individual 
                and the State agency administering the State 
                program funded under part A, the State agency 
                administering the State program under title XV, 
                and the State agency administering the State 
                program under title XIX, of each such 
                determination, and if noncooperation is 
                determined, the basis therefore.''.

             CHAPTER 5--PROGRAM ADMINISTRATION AND FUNDING

SEC. 4341. PERFORMANCE-BASED INCENTIVES AND PENALTIES.

    (a) Development of New System.--The Secretary of Health and 
Human Services, in consultation with State directors of 
programs under part D of title IV of the Social Security Act, 
shall develop a new incentive system to replace, in a revenue 
neutral manner, the system under section 458 of such Act. The 
new system shall provide additional payments to any State based 
on such State's performance under such a program. Not later 
than November 1, 1996, the Secretary shall report on the new 
system to the Committee on Ways and Means of the House of 
Representatives and the Committee on Finance of the Senate.
    (b) Conforming Amendments to Present System.--Section 458 
(42 U.S.C. 658) is amended--
            (1) in subsection (a), by striking ``aid to 
        families with dependent children under a State plan 
        approved under part A of this title'' and inserting 
        ``assistance under a program funded under part A'';
            (2) in subsection (b)(1)(A), by striking ``section 
        402(a)(26)'' and inserting ``section 408(a)(4)'';
            (3) in subsections (b) and (c)--
                    (A) by striking ``AFDC collections'' each 
                place it appears and inserting ``title IV-A 
                collections'', and
                    (B) by striking ``non-AFDC collections'' 
                each place it appears and inserting ``non-title 
                IV-A collections''; and
            (4) in subsection (c), by striking ``combined AFDC/
        non-AFDC administrative costs'' both places it appears 
        and inserting ``combined title IV-A/non-title IV-A 
        administrative costs''.
    (c) Calculation of Paternity Establishment Percentage.--
            (1) Section 452(g)(1)(A) (42 U.S.C. 652(g)(1)(A)) 
        is amended by striking ``75'' and inserting ``90''.
            (2) Section 452(g)(1) (42 U.S.C. 652(g)(1)) is 
        amended--
                    (A) by redesignating subparagraphs (B) 
                through (E) as subparagraphs (C) through (F), 
                respectively, and by inserting after 
                subparagraph (A) the following new 
                subparagraph:
            ``(B) for a State with a paternity establishment 
        percentage of not less than 75 percent but less than 90 
        percent for such fiscal year, the paternity 
        establishment percentage of the State for the 
        immediately preceding fiscal year plus 2 percentage 
        points;''; and
                    (B) by adding at the end the following new 
                flush sentence:
``In determining compliance under this section, a State may use 
as its paternity establishment percentage either the State's 
IV-D paternity establishment percentage (as defined in 
paragraph (2)(A)) or the State's statewide paternity 
establishment percentage (as defined in paragraph (2)(B)).''.
            (3) Section 452(g)(2) (42 U.S.C. 652(g)(2)) is 
        amended--
                    (A) in subparagraph (A)--
                            (i) in the matter preceding clause 
                        (i)--
                                    (I) by striking ``paternity 
                                establishment percentage'' and 
                                inserting ``IV-D paternity 
                                establishment percentage''; and
                                    (II) by striking ``(or all 
                                States, as the case may be)''; 
                                and
                            (ii) by striking ``and'' at the 
                        end; and
                    (B) by redesignating subparagraph (B) as 
                subparagraph (C) and by inserting after 
                subparagraph (A) the following new 
                subparagraph:
            ``(B) the term `statewide paternity establishment 
        percentage' means, with respect to a State for a fiscal 
        year, the ratio (expressed as a percentage) that the 
        total number of minor children--
                    ``(i) who have been born out of wedlock, 
                and
                    ``(ii) the paternity of whom has been 
                established or acknowledged during the fiscal 
                year,
        bears to the total number of children born out of 
        wedlock during the preceding fiscal year; and''.
            (4) Section 452(g)(3) (42 U.S.C. 652(g)(3)) is 
        amended--
                    (A) by striking subparagraph (A) and 
                redesignating subparagraphs (B) and (C) as 
                subparagraphs (A) and (B), respectively; and
                    (B) in subparagraph (A) (as so 
                redesignated), by striking ``the percentage of 
                children born out-of-wedlock in a State'' and 
                inserting ``the percentage of children in a 
                State who are born out of wedlock or for whom 
                support has not been established''.
    (d) Effective Dates.--
            (1) Incentive adjustments.--
            (A) In general.--The system developed under 
        subsection (a) and the amendments made by subsection 
        (b) shall become effective on October 1, 1998, except 
        to the extent provided in subparagraph (B).
            (B) Application of section 458.--Section 458 of the 
        Social Security Act, as in effect on the day before the 
        date of the enactment of this section, shall be 
        effective for purposes of incentive payments to States 
        for fiscal years before fiscal year 1999.
            (2) Penalty reductions.--The amendments made by 
        subsection (c) shall become effective with respect to 
        calendar quarters beginning on or after the date of the 
        enactment of this Act.

SEC. 4342. FEDERAL AND STATE REVIEWS AND AUDITS.

    (a) State Agency Activities.--Section 454 (42 U.S.C. 654) 
is amended--
            (1) in paragraph (14), by striking ``(14)'' and 
        inserting ``(14)(A)'';
            (2) by redesignating paragraph (15) as subparagraph 
        (B) of paragraph (14); and
            (3) by inserting after paragraph (14) the following 
        new paragraph:
            ``(15) provide for--
                    ``(A) a process for annual reviews of and 
                reports to the Secretary on the State program 
                operated under the State plan approved under 
                this part, including such information as may be 
                necessary to measure State compliance with 
                Federal requirements for expedited procedures, 
                using such standards and procedures as are 
                required by the Secretary, under which the 
                State agency will determine the extent to which 
                the program is operated in compliance with this 
                part; and
                    ``(B) a process of extracting from the 
                automated data processing system required by 
                paragraph (16) and transmitting to the 
                Secretary data and calculations concerning the 
                levels of accomplishment (and rates of 
                improvement) with respect to applicable 
                performance indicators (including paternity 
                establishment percentages) to the extent 
                necessary for purposes of sections 452(g) and 
                458;''.
    (b) Federal Activities.--Section 452(a)(4) (42 U.S.C. 
652(a)(4)) is amended to read as follows:
            ``(4)(A) review data and calculations transmitted 
        by State agencies pursuant to section 454(15)(B) on 
        State program accomplishments with respect to 
        performance indicators for purposes of subsection (g) 
        of this section and section 458;
            ``(B) review annual reports submitted pursuant to 
        section 454(15)(A) and, as appropriate, provide to the 
        State comments, recommendations for additional or 
        alternative corrective actions, and technical 
        assistance; and
            ``(C) conduct audits, in accordance with the 
        Government auditing standards of the Comptroller 
        General of the United States--
                    ``(i) at least once every 3 years (or more 
                frequently, in the case of a State which fails 
                to meet the requirements of this part 
                concerning performance standards and 
                reliability of program data) to assess the 
                completeness, reliability, and security of the 
                data and the accuracy of the reporting systems 
                used in calculating performance indicators 
                under subsection (g) of this section and 
                section 458;
                    ``(ii) of the adequacy of financial 
                management of the State program operated under 
                the State plan approved under this part, 
                including assessments of--
                            ``(I) whether Federal and other 
                        funds made available to carry out the 
                        State program are being appropriately 
                        expended, and are properly and fully 
                        accounted for; and
                            ``(II) whether collections and 
                        disbursements of support payments are 
                        carried out correctly and are fully 
                        accounted for; and
                    ``(iii) for such other purposes as the 
                Secretary may find necessary;''.
    (c) Effective Date.--The amendments made by this section 
shall be effective with respect to calendar quarters beginning 
12 months or more after the date of the enactment of this Act.

SEC. 4343. REQUIRED REPORTING PROCEDURES.

    (a) Establishment.--Section 452(a)(5) (42 U.S.C. 652(a)(5)) 
is amended by inserting ``, and establish procedures to be 
followed by States for collecting and reporting information 
required to be provided under this part, and establish uniform 
definitions (including those necessary to enable the 
measurement of State compliance with the requirements of this 
part relating to expedited processes) to be applied in 
following such procedures'' before the semicolon.
    (b) State Plan Requirement.--Section 454 (42 U.S.C. 654), 
as amended by sections 4301(b), 4303(a), 4312(a), 4313(a), and 
4333 of this Act, is amended--
            (1) by striking ``and'' at the end of paragraph 
        (28);
            (2) by striking the period at the end of paragraph 
        (29) and inserting ``; and''; and
            (3) by adding after paragraph (29) the following 
        new paragraph:
            ``(30) provide that the State shall use the 
        definitions established under section 452(a)(5) in 
        collecting and reporting information as required under 
        this part.''.

SEC. 4344. AUTOMATED DATA PROCESSING REQUIREMENTS.

    (a) Revised Requirements.--
            (1) In general.--Section 454(16) (42 U.S.C. 
        654(16)) is amended--
                    (A) by striking ``, at the option of the 
                State,'';
                    (B) by inserting ``and operation by the 
                State agency'' after ``for the establishment'';
                    (C) by inserting ``meeting the requirements 
                of section 454A'' after ``information retrieval 
                system'';
                    (D) by striking ``in the State and 
                localities thereof, so as (A)'' and inserting 
                ``so as'';
                    (E) by striking ``(i)''; and
                    (F) by striking ``(including'' and all that 
                follows and inserting a semicolon.
            (2) Automated data processing.--Part D of title IV 
        (42 U.S.C. 651-669) is amended by inserting after 
        section 454 the following new section:

``SEC. 454A. AUTOMATED DATA PROCESSING.

    ``(a) In General.--In order for a State to meet the 
requirements of this section, the State agency administering 
the State program under this part shall have in operation a 
single statewide automated data processing and information 
retrieval system which has the capability to perform the tasks 
specified in this section with the frequency and in the manner 
required by or under this part.
    ``(b) Program Management.--The automated system required by 
this section shall perform such functions as the Secretary may 
specify relating to management of the State program under this 
part, including--
            ``(1) controlling and accounting for use of 
        Federal, State, and local funds in carrying out the 
        program; and
            ``(2) maintaining the data necessary to meet 
        Federal reporting requirements under this part on a 
        timely basis.
    ``(c) Calculation of Performance Indicators.--In order to 
enable the Secretary to determine the incentive payments and 
penalty adjustments required by sections 452(g) and 458, the 
State agency shall--
            ``(1) use the automated system--
                    ``(A) to maintain the requisite data on 
                State performance with respect to paternity 
                establishment and child support enforcement in 
                the State; and
                    ``(B) to calculate the paternity 
                establishment percentage for the State for each 
                fiscal year; and
            ``(2) have in place systems controls to ensure the 
        completeness and reliability of, and ready access to, 
        the data described in paragraph (1)(A), and the 
        accuracy of the calculations described in paragraph 
        (1)(B).
    ``(d) Information Integrity and Security.--The State agency 
shall have in effect safeguards on the integrity, accuracy, and 
completeness of, access to, and use of data in the automated 
system required by this section, which shall include the 
following (in addition to such other safeguards as the 
Secretary may specify in regulations):
            ``(1) Policies restricting access.--Written 
        policies concerning access to data by State agency 
        personnel, and sharing of data with other persons, 
        which--
                    ``(A) permit access to and use of data only 
                to the extent necessary to carry out the State 
                program under this part; and
                    ``(B) specify the data which may be used 
                for particular program purposes, and the 
                personnel permitted access to such data.
            ``(2) Systems controls.--Systems controls (such as 
        passwords or blocking of fields) to ensure strict 
        adherence to the policies described in paragraph (1).
            ``(3) Monitoring of access.--Routine monitoring of 
        access to and use of the automated system, through 
        methods such as audit trails and feedback mechanisms, 
        to guard against and promptly identify unauthorized 
        access or use.
            ``(4) Training and information.--Procedures to 
        ensure that all personnel (including State and local 
        agency staff and contractors) who may have access to or 
        be required to use confidential program data are 
        informed of applicable requirements and penalties 
        (including those in section 6103 of the Internal 
        Revenue Code of 1986), and are adequately trained in 
        security procedures.
            ``(5) Penalties.--Administrative penalties (up to 
        and including dismissal from employment) for 
        unauthorized access to, or disclosure or use of, 
        confidential data.''.
            (3) Regulations.--The Secretary of Health and Human 
        Services shall prescribe final regulations for 
        implementation of section 454A of the Social Security 
        Act not later than 2 years after the date of the 
        enactment of this Act.
            (4) Implementation timetable.--Section 454(24) (42 
        U.S.C. 654(24)), as amended by section 4303(a)(1) of 
        this Act, is amended to read as follows:
            ``(24) provide that the State will have in effect 
        an automated data processing and information retrieval 
        system--
                    ``(A) by October 1, 1997, which meets all 
                requirements of this part which were enacted on 
                or before the date of enactment of the Family 
                Support Act of 1988, and
                    ``(B) by October 1, 1999, which meets all 
                requirements of this part enacted on or before 
                the date of the enactment of the Personal 
                Responsibility and Work Opportunity Act of 
                1996, except that such deadline shall be 
                extended by 1 day for each day (if any) by 
                which the Secretary fails to meet the deadline 
                imposed by section 4344(a)(3) of the Personal 
                Responsibility and Work Opportunity Act of 
                1996;''.
    (b) Special Federal Matching Rate for Development Costs of 
Automated Systems.--
            (1) In general.--Section 455(a) (42 U.S.C. 655(a)) 
        is amended--
                    (A) in paragraph (1)(B)--
                            (i) by striking ``90 percent'' and 
                        inserting ``the percent specified in 
                        paragraph (3)'';
                            (ii) by striking ``so much of''; 
                        and
                            (iii) by striking ``which the 
                        Secretary'' and all that follows and 
                        inserting ``, and''; and
                    (B) by adding at the end the following new 
                paragraph:
    ``(3)(A) The Secretary shall pay to each State, for each 
quarter in fiscal years 1996 and 1997, 90 percent of so much of 
the State expenditures described in paragraph (1)(B) as the 
Secretary finds are for a system meeting the requirements 
specified in section 454(16) (as in effect on September 30, 
1995) but limited to the amount approved for States in the 
advance planning documents of such States submitted on or 
before September 30, 1995.
    ``(B)(i) The Secretary shall pay to each State, for each 
quarter in fiscal years 1996 through 2001, the percentage 
specified in clause (ii) of so much of the State expenditures 
described in paragraph (1)(B) as the Secretary finds are for a 
system meeting the requirements of sections 454(16) and 454A.
    ``(ii) The percentage specified in this clause is 80 
percent.''.
            (2) Temporary limitation on payments under special 
        federal matching rate.--
                    (A) In general.--The Secretary of Health 
                and Human Services may not pay more than 
                $400,000,000 in the aggregate under section 
                455(a)(3)(B) of the Social Security Act for 
                fiscal years 1996 through 2001.
                    (B) Allocation of limitation among 
                states.--The total amount payable to a State 
                under section 455(a)(3)(B) of such Act for 
                fiscal years 1996 through 2001 shall not exceed 
                the limitation determined for the State by the 
                Secretary of Health and Human Services in 
                regulations.
                    (C) Allocation formula.--The regulations 
                referred to in subparagraph (B) shall prescribe 
                a formula for allocating the amount specified 
                in subparagraph (A) among States with plans 
                approved under part D of title IV of the Social 
                Security Act, which shall take into account--
                            (i) the relative size of State 
                        caseloads under such part; and
                            (ii) the level of automation needed 
                        to meet the automated data processing 
                        requirements of such part.
    (c) Conforming Amendment.--Section 123(c) of the Family 
Support Act of 1988 (102 Stat. 2352; Public Law 100-485) is 
repealed.

SEC. 4345. TECHNICAL ASSISTANCE.

    (a) For Training of Federal and State Staff, Research and 
Demonstration Programs, and Special Projects of Regional or 
National Significance.--Section 452 (42 U.S.C. 652) is amended 
by adding at the end the following new subsection:
    ``(j) Out of any money in the Treasury of the United States 
not otherwise appropriated, there is hereby appropriated to the 
Secretary for each fiscal year an amount equal to 1 percent of 
the total amount paid to the Federal Government pursuant to 
section 457(a) during the immediately preceding fiscal year (as 
determined on the basis of the most recent reliable data 
available to the Secretary as of the end of the 3rd calendar 
quarter following the end of such preceding fiscal year), to 
cover costs incurred by the Secretary for--
            ``(1) information dissemination and technical 
        assistance to States, training of State and Federal 
        staff, staffing studies, and related activities needed 
        to improve programs under this part (including 
        technical assistance concerning State automated systems 
        required by this part); and
            ``(2) research, demonstration, and special projects 
        of regional or national significance relating to the 
        operation of State programs under this part.
The amount appropriated under this subsection shall remain 
available until expended.''.
    (b) Operation of Federal Parent Locator Service.--Section 
453 (42 U.S.C. 653), as amended by section 4316 of this Act, is 
amended by adding at the end the following new subsection:
    ``(o) Recovery of Costs.--Out of any money in the Treasury 
of the United States not otherwise appropriated, there is 
hereby appropriated to the Secretary for each fiscal year an 
amount equal to 2 percent of the total amount paid to the 
Federal Government pursuant to section 457(a) during the 
immediately preceding fiscal year (as determined on the basis 
of the most recent reliable data available to the Secretary as 
of the end of the 3rd calendar quarter following the end of 
such preceding fiscal year), to cover costs incurred by the 
Secretary for operation of the Federal Parent Locator Service 
under this section, to the extent such costs are not recovered 
through user fees.''.

SEC. 4346. REPORTS AND DATA COLLECTION BY THE SECRETARY.

    (a) Annual Report to Congress.--
            (1) Section 452(a)(10)(A) (42 U.S.C. 652(a)(10)(A)) 
        is amended--
                    (A) by striking ``this part;'' and 
                inserting ``this part, including--''; and
                    (B) by adding at the end the following new 
                clauses:
                            ``(i) the total amount of child 
                        support payments collected as a result 
                        of services furnished during the fiscal 
                        year to individuals receiving services 
                        under this part;
                            ``(ii) the cost to the States and 
                        to the Federal Government of so 
                        furnishing the services; and
                            ``(iii) the number of cases 
                        involving families--
                                    ``(I) who became ineligible 
                                for assistance under State 
                                programs funded under part A 
                                during a month in the fiscal 
                                year; and
                                    ``(II) with respect to whom 
                                a child support payment was 
                                received in the month;''.
            (2) Section 452(a)(10)(C) (42 U.S.C. 652(a)(10)(C)) 
        is amended--
                    (A) in the matter preceding clause (i)--
                            (i) by striking ``with the data 
                        required under each clause being 
                        separately stated for cases'' and 
                        inserting ``separately stated for 
                        cases'';
                            (ii) by striking ``cases where the 
                        child was formerly receiving'' and 
                        inserting ``or formerly received'';
                            (iii) by inserting ``or 1912'' 
                        after ``471(a)(17)''; and
                            (iv) by inserting ``for'' before 
                        ``all other'';
                    (B) in each of clauses (i) and (ii), by 
                striking ``, and the total amount of such 
                obligations'';
                    (C) in clause (iii), by striking 
                ``described in'' and all that follows and 
                inserting ``in which support was collected 
                during the fiscal year;'';
                    (D) by striking clause (iv); and
                    (E) by redesignating clause (v) as clause 
                (vii), and inserting after clause (iii) the 
                following new clauses:
                            ``(iv) the total amount of support 
                        collected during such fiscal year and 
                        distributed as current support;
                            ``(v) the total amount of support 
                        collected during such fiscal year and 
                        distributed as arrearages;
                            ``(vi) the total amount of support 
                        due and unpaid for all fiscal years; 
                        and''.
            (3) Section 452(a)(10)(G) (42 U.S.C. 652(a)(10)(G)) 
        is amended by striking ``on the use of Federal courts 
        and''.
            (4) Section 452(a)(10) (42 U.S.C. 652(a)(10)) is 
        amended--
                    (A) in subparagraph (H), by striking 
                ``and'';
                    (B) in subparagraph (I), by striking the 
                period and inserting ``; and''; and
                    (C) by inserting after subparagraph (I) the 
                following new subparagraph:
                    ``(J) compliance, by State, with the 
                standards established pursuant to subsections 
                (h) and (i);''.
            (5) Section 452(a)(10) (42 U.S.C. 652(a)(10)) is 
        amended by striking ``The information contained in any 
        such report under subpargraph (A)'' and all that 
        follows through ``the State plan approved under part 
        A.''.
    (b) Effective Date.--The amendments made by subsection (a) 
shall be effective with respect to fiscal year 1997 and 
succeeding fiscal years.

      CHAPTER 6--ESTABLISHMENT AND MODIFICATION OF SUPPORT ORDERS

SEC. 4351. SIMPLIFIED PROCESS FOR REVIEW AND ADJUSTMENT OF CHILD 
                    SUPPORT ORDERS.

    Section 466(a)(10) (42 U.S.C. 666(a)(10)) is amended to 
read as follows:
            ``(10) Review and adjustment of support orders upon 
        request.--Procedures under which the State shall review 
        and adjust each support order being enforced under this 
        part if there is an assignment under part A or upon the 
        request of either parent, and may review and adjust any 
        other support order being enforced under this part. 
        Such procedures shall provide the following:
                    ``(A) In general.--
                            ``(i) 3-year cycle.--Except as 
                        provided in subparagraphs (B) and (C), 
                        the State shall review and, as 
                        appropriate, adjust the support order 
                        every 3 years, taking into account the 
                        best interests of the child involved.
                            ``(ii) Methods of adjustment.--The 
                        State may elect to review and, if 
                        appropriate, adjust an order pursuant 
                        to clause (i) by--
                                    ``(I) reviewing and, if 
                                appropriate, adjusting the 
                                order in accordance with the 
                                guidelines established pursuant 
                                to section 467(a) if the amount 
                                of the child support award 
                                under the order differs from 
                                the amount that would be 
                                awarded in accordance with the 
                                guidelines; or
                                    ``(II) applying a cost-of-
                                living adjustment to the order 
                                in accordance with a formula 
                                developed by the State and 
                                permit either party to contest 
                                the adjustment, within 30 days 
                                after the date of the notice of 
                                the adjustment, by making a 
                                request for review and, if 
                                appropriate, adjustment of the 
                                order in accordance with the 
                                child support guidelines 
                                established pursuant to section 
                                467(a).
                            ``(iii) No proof of change in 
                        circumstances necessary.--Any 
                        adjustment under this subparagraph (A) 
                        shall be made without a requirement for 
                        proof or showing of a change in 
                        circumstances.
                    ``(B) Automated method.--The State may use 
                automated methods (including automated 
                comparisons with wage or State income tax data) 
                to identify orders eligible for review, conduct 
                the review, identify orders eligible for 
                adjustment, and apply the appropriate 
                adjustment to the orders eligible for 
                adjustment under the threshold established by 
                the State.
                    ``(C) Request upon substantial change in 
                circumstances.--The State shall, at the request 
                of either parent subject to such an order or of 
                any State child support enforcement agency, 
                review and, if appropriate, adjust the order in 
                accordance with the guidelines established 
                pursuant to section 467(a) based upon a 
                substantial change in the circumstances of 
                either parent.
                    ``(D) Notice of right to review.--The State 
                shall provide notice not less than once every 3 
                years to the parents subject to such an order 
                informing them of their right to request the 
                State to review and, if appropriate, adjust the 
                order pursuant to this paragraph. The notice 
                may be included in the order.''.

SEC. 4352. FURNISHING CONSUMER REPORTS FOR CERTAIN PURPOSES RELATING TO 
                    CHILD SUPPORT.

    Section 604 of the Fair Credit Reporting Act (15 U.S.C. 
1681b) is amended by adding at the end the following new 
paragraphs:
    ``(4) In response to a request by the head of a State or 
local child support enforcement agency (or a State or local 
government official authorized by the head of such an agency), 
if the person making the request certifies to the consumer 
reporting agency that--
            ``(A) the consumer report is needed for the purpose 
        of establishing an individual's capacity to make child 
        support payments or determining the appropriate level 
        of such payments;
            ``(B) the paternity of the consumer for the child 
        to which the obligation relates has been established or 
        acknowledged by the consumer in accordance with State 
        laws under which the obligation arises (if required by 
        those laws);
            ``(C) the person has provided at least 10 days' 
        prior notice to the consumer whose report is requested, 
        by certified or registered mail to the last known 
        address of the consumer, that the report will be 
        requested; and
            ``(D) the consumer report will be kept 
        confidential, will be used solely for a purpose 
        described in subparagraph (A), and will not be used in 
        connection with any other civil, administrative, or 
        criminal proceeding, or for any other purpose.
    ``(5) To an agency administering a State plan under section 
454 of the Social Security Act (42 U.S.C. 654) for use to set 
an initial or modified child support award.''.

SEC. 4353. NONLIABILITY FOR FINANCIAL INSTITUTIONS PROVIDING FINANCIAL 
                    RECORDS TO STATE CHILD SUPPORT ENFORCEMENT AGENCIES 
                    IN CHILD SUPPORT CASES.

    Part D of title IV (42 U.S.C. 651-669) is amended by adding 
at the end the following:

``SEC. 469A. NONLIABILITY FOR FINANCIAL INSTITUTIONS PROVIDING 
                    FINANCIAL RECORDS TO STATE CHILD SUPPORT 
                    ENFORCEMENT AGENCIES IN CHILD SUPPORT CASES.

    ``(a) In General.--Notwithstanding any other provision of 
Federal or State law, a financial institution shall not be 
liable under any Federal or State law to any person for 
disclosing any financial record of an individual to a State 
child support enforcement agency attempting to establish, 
modify, or enforce a child support obligation of such 
individual.
    ``(b) Prohibition of Disclosure of Financial Record 
Obtained by State Child Support Enforcement Agency.--A State 
child support enforcement agency which obtains a financial 
record of an individual from a financial institution pursuant 
to subsection (a) may disclose such financial record only for 
the purpose of, and to the extent necessary in, establishing, 
modifying, or enforcing a child support obligation of such 
individual.
    ``(c) Civil Damages for Unauthorized Disclosure.--
            ``(1) Disclosure by state officer or employee.--If 
        any person knowingly, or by reason of negligence, 
        discloses a financial record of an individual in 
        violation of subsection (b), such individual may bring 
        a civil action for damages against such person in a 
        district court of the United States.
            ``(2) No liability for good faith but erroneous 
        interpretation.--No liability shall arise under this 
        subsection with respect to any disclosure which results 
        from a good faith, but erroneous, interpretation of 
        subsection (b).
            ``(3) Damages.--In any action brought under 
        paragraph (1), upon a finding of liability on the part 
        of the defendant, the defendant shall be liable to the 
        plaintiff in an amount equal to the sum of--
                    ``(A) the greater of--
                            ``(i) $1,000 for each act of 
                        unauthorized disclosure of a financial 
                        record with respect to which such 
                        defendant is found liable; or
                            ``(ii) the sum of--
                                    ``(I) the actual damages 
                                sustained by the plaintiff as a 
                                result of such unauthorized 
                                disclosure; plus
                                    ``(II) in the case of a 
                                willful disclosure or a 
                                disclosure which is the result 
                                of gross negligence, punitive 
                                damages; plus
                    ``(B) the costs (including attorney's fees) 
                of the action.
    ``(d) Definitions.--For purposes of this section--
            ``(1) Financial institution.--The term `financial 
        institution' means--
                    ``(A) a depository institution, as defined 
                in section 3(c) of the Federal Deposit 
                Insurance Act (12 U.S.C. 1813(c));
                    ``(B) an institution-affiliated party, as 
                defined in section 3(u) of such Act (12 U.S.C. 
                1813(u));
                    ``(C) any Federal credit union or State 
                credit union, as defined in section 101 of the 
                Federal Credit Union Act (12 U.S.C. 1752), 
                including an institution-affiliated party of 
                such a credit union, as defined in section 
                206(r) of such Act (12 U.S.C. 1786(r)); and
                    ``(D) any benefit association, insurance 
                company, safe deposit company, money-market 
                mutual fund, or similar entity authorized to do 
                business in the State.
            ``(2) Financial record.--The term `financial 
        record' has the meaning given such term in section 1101 
        of the Right to Financial Privacy Act of 1978 (12 
        U.S.C. 3401).''.

                CHAPTER 7--ENFORCEMENT OF SUPPORT ORDERS

SEC. 4361. INTERNAL REVENUE SERVICE COLLECTION OF ARREARAGES.

    (a) Collection of Fees.--Section 6305(a) of the Internal 
Revenue Code of 1986 (relating to collection of certain 
liability) is amended--
            (1) by striking ``and'' at the end of paragraph 
        (3);
            (2) by striking the period at the end of paragraph 
        (4) and inserting ``, and'';
            (3) by adding at the end the following new 
        paragraph:
            ``(5) no additional fee may be assessed for 
        adjustments to an amount previously certified pursuant 
        to such section 452(b) with respect to the same 
        obligor.''; and
            (4) by striking ``Secretary of Health, Education, 
        and Welfare'' each place it appears and inserting 
        ``Secretary of Health and Human Services''.
    (b) Effective Date.--The amendments made by this section 
shall become effective October 1, 1997.

SEC. 4362. AUTHORITY TO COLLECT SUPPORT FROM FEDERAL EMPLOYEES.

    (a) Consolidation and Streamlining of Authorities.--Section 
459 (42 U.S.C. 659) is amended to read as follows:

``SEC. 459. CONSENT BY THE UNITED STATES TO INCOME WITHHOLDING, 
                    GARNISHMENT, AND SIMILAR PROCEEDINGS FOR 
                    ENFORCEMENT OF CHILD SUPPORT AND ALIMONY 
                    OBLIGATIONS.

    ``(a) Consent to Support Enforcement.--Notwithstanding any 
other provision of law (including section 207 of this Act and 
section 5301 of title 38, United States Code), effective 
January 1, 1975, moneys (the entitlement to which is based upon 
remuneration for employment) due from, or payable by, the 
United States or the District of Columbia (including any 
agency, subdivision, or instrumentality thereof) to any 
individual, including members of the Armed Forces of the United 
States, shall be subject, in like manner and to the same extent 
as if the United States or the District of Columbia were a 
private person, to withholding in accordance with State law 
enacted pursuant to subsections (a)(1) and (b) of section 466 
and regulations of the Secretary under such subsections, and to 
any other legal process brought, by a State agency 
administering a program under a State plan approved under this 
part or by an individual obligee, to enforce the legal 
obligation of the individual to provide child support or 
alimony.
    ``(b) Consent to Requirements Applicable to Private 
Person.--With respect to notice to withhold income pursuant to 
subsection (a)(1) or (b) of section 466, or any other order or 
process to enforce support obligations against an individual 
(if the order or process contains or is accompanied by 
sufficient data to permit prompt identification of the 
individual and the moneys involved), each governmental entity 
specified in subsection (a) shall be subject to the same 
requirements as would apply if the entity were a private 
person, except as otherwise provided in this section.
    ``(c) Designation of Agent; Response to Notice or Process--
            ``(1) Designation of agent.--The head of each 
        agency subject to this section shall--
                    ``(A) designate an agent or agents to 
                receive orders and accept service of process in 
                matters relating to child support or alimony; 
                and
                    ``(B) annually publish in the Federal 
                Register the designation of the agent or 
                agents, identified by title or position, 
                mailing address, and telephone number.
            ``(2) Response to notice or process.--If an agent 
        designated pursuant to paragraph (1) of this subsection 
        receives notice pursuant to State procedures in effect 
        pursuant to subsection (a)(1) or (b) of section 466, or 
        is effectively served with any order, process, or 
        interrogatory, with respect to an individual's child 
        support or alimony payment obligations, the agent 
        shall--
                    ``(A) as soon as possible (but not later 
                than 15 days) thereafter, send written notice 
                of the notice or service (together with a copy 
                of the notice or service) to the individual at 
                the duty station or last-known home address of 
                the individual;
                    ``(B) within 30 days (or such longer period 
                as may be prescribed by applicable State law) 
                after receipt of a notice pursuant to such 
                State procedures, comply with all applicable 
                provisions of section 466; and
                    ``(C) within 30 days (or such longer period 
                as may be prescribed by applicable State law) 
                after effective service of any other such 
                order, process, or interrogatory, respond to 
                the order, process, or interrogatory.
    ``(d) Priority of Claims.--If a governmental entity 
specified in subsection (a) receives notice or is served with 
process, as provided in this section, concerning amounts owed 
by an individual to more than 1 person--
            ``(1) support collection under section 466(b) must 
        be given priority over any other process, as provided 
        in section 466(b)(7);
            ``(2) allocation of moneys due or payable to an 
        individual among claimants under section 466(b) shall 
        be governed by section 466(b) and the regulations 
        prescribed under such section; and
            ``(3) such moneys as remain after compliance with 
        paragraphs (1) and (2) shall be available to satisfy 
        any other such processes on a first-come, first-served 
        basis, with any such process being satisfied out of 
        such moneys as remain after the satisfaction of all 
        such processes which have been previously served.
    ``(e) No Requirement to Vary Pay Cycles.--A governmental 
entity that is affected by legal process served for the 
enforcement of an individual's child support or alimony payment 
obligations shall not be required to vary its normal pay and 
disbursement cycle in order to comply with the legal process.
    ``(f) Relief From Liability.--
            ``(1) Neither the United States, nor the government 
        of the District of Columbia, nor any disbursing officer 
        shall be liable with respect to any payment made from 
        moneys due or payable from the United States to any 
        individual pursuant to legal process regular on its 
        face, if the payment is made in accordance with this 
        section and the regulations issued to carry out this 
        section.
            ``(2) No Federal employee whose duties include 
        taking actions necessary to comply with the 
        requirements of subsection (a) with regard to any 
        individual shall be subject under any law to any 
        disciplinary action or civil or criminal liability or 
        penalty for, or on account of, any disclosure of 
        information made by the employee in connection with the 
        carrying out of such actions.
    ``(g) Regulations.--Authority to promulgate regulations for 
the implementation of this section shall, insofar as this 
section applies to moneys due from (or payable by)--
            ``(1) the United States (other than the legislative 
        or judicial branches of the Federal Government) or the 
        government of the District of Columbia, be vested in 
        the President (or the designee of the President);
            ``(2) the legislative branch of the Federal 
        Government, be vested jointly in the President pro 
        tempore of the Senate and the Speaker of the House of 
        Representatives (or their designees), and
            ``(3) the judicial branch of the Federal 
        Government, be vested in the Chief Justice of the 
        United States (or the designee of the Chief Justice).
    ``(h) Moneys Subject to Process.--
            ``(1) In general.--Subject to paragraph (2), moneys 
        paid or payable to an individual which are considered 
        to be based upon remuneration for employment, for 
        purposes of this section--
                    ``(A) consist of--
                            ``(i) compensation paid or payable 
                        for personal services of the 
                        individual, whether the compensation is 
                        denominated as wages, salary, 
                        commission, bonus, pay, allowances, or 
                        otherwise (including severance pay, 
                        sick pay, and incentive pay);
                            ``(ii) periodic benefits (including 
                        a periodic benefit as defined in 
                        section 228(h)(3)) or other payments--
                                    ``(I) under the insurance 
                                system established by title II;
                                    ``(II) under any other 
                                system or fund established by 
                                the United States which 
                                provides for the payment of 
                                pensions, retirement or retired 
                                pay, annuities, dependents' or 
                                survivors' benefits, or similar 
                                amounts payable on account of 
                                personal services performed by 
                                the individual or any other 
                                individual;
                                    ``(III) as compensation for 
                                death under any Federal 
                                program;
                                    ``(IV) under any Federal 
                                program established to provide 
                                `black lung' benefits; or
                                    ``(V) by the Secretary of 
                                Veterans Affairs as 
                                compensation for a service-
                                connected disability paid by 
                                the Secretary to a former 
                                member of the Armed Forces who 
                                is in receipt of retired or 
                                retainer pay if the former 
                                member has waived a portion of 
                                the retired or retainer pay in 
                                order to receive such 
                                compensation; and
                            ``(iii) worker's compensation 
                        benefits paid under Federal or State 
                        law but
                    ``(B) do not include any payment--
                            ``(i) by way of reimbursement or 
                        otherwise, to defray expenses incurred 
                        by the individual in carrying out 
                        duties associated with the employment 
                        of the individual; or
                            ``(ii) as allowances for members of 
                        the uniformed services payable pursuant 
                        to chapter 7 of title 37, United States 
                        Code, as prescribed by the Secretaries 
                        concerned (defined by section 101(5) of 
                        such title) as necessary for the 
                        efficient performance of duty.
            ``(2) Certain amounts excluded.--In determining the 
        amount of any moneys due from, or payable by, the 
        United States to any individual, there shall be 
        excluded amounts which--
                    ``(A) are owed by the individual to the 
                United States;
                    ``(B) are required by law to be, and are, 
                deducted from the remuneration or other payment 
                involved, including Federal employment taxes, 
                and fines and forfeitures ordered by court-
                martial;
                    ``(C) are properly withheld for Federal, 
                State, or local income tax purposes, if the 
                withholding of the amounts is authorized or 
                required by law and if amounts withheld are not 
                greater than would be the case if the 
                individual claimed all dependents to which he 
                was entitled (the withholding of additional 
                amounts pursuant to section 3402(i) of the 
                Internal Revenue Code of 1986 may be permitted 
                only when the individual presents evidence of a 
                tax obligation which supports the additional 
                withholding);
                    ``(D) are deducted as health insurance 
                premiums;
                    ``(E) are deducted as normal retirement 
                contributions (not including amounts deducted 
                for supplementary coverage); or
                    ``(F) are deducted as normal life insurance 
                premiums from salary or other remuneration for 
                employment (not including amounts deducted for 
                supplementary coverage).
    ``(i) Definitions.--For purposes of this section--
            ``(1) United states.--The term `United States' 
        includes any department, agency, or instrumentality of 
        the legislative, judicial, or executive branch of the 
        Federal Government, the United States Postal Service, 
        the Postal Rate Commission, any Federal corporation 
        created by an Act of Congress that is wholly owned by 
        the Federal Government, and the governments of the 
        territories and possessions of the United States.
            ``(2) Child support.--The term `child support', 
        when used in reference to the legal obligations of an 
        individual to provide such support, means amounts 
        required to be paid under a judgment, decree, or order, 
        whether temporary, final, or subject to modification, 
        issued by a court or an administrative agency of 
        competent jurisdiction, for the support and maintenance 
        of a child, including a child who has attained the age 
        of majority under the law of the issuing State, or a 
        child and the parent with whom the child is living, 
        which provides for monetary support, health care, 
        arrearages or reimbursement, and which may include 
        other related costs and fees, interest and penalties, 
        income withholding, attorney's fees, and other relief.
            ``(3) Alimony.--
                    ``(A) In general.--The term `alimony', when 
                used in reference to the legal obligations of 
                an individual to provide the same, means 
                periodic payments of funds for the support and 
                maintenance of the spouse (or former spouse) of 
                the individual, and (subject to and in 
                accordance with State law) includes separate 
                maintenance, alimony pendente lite, 
                maintenance, and spousal support, and includes 
                attorney's fees, interest, and court costs when 
                and to the extent that the same are expressly 
                made recoverable as such pursuant to a decree, 
                order, or judgment issued in accordance with 
                applicable State law by a court of competent 
                jurisdiction.
                    ``(B) Exceptions.--Such term does not 
                include--
                            ``(i) any child support; or
                            ``(ii) any payment or transfer of 
                        property or its value by an individual 
                        to the spouse or a former spouse of the 
                        individual in compliance with any 
                        community property settlement, 
                        equitable distribution of property, or 
                        other division of property between 
                        spouses or former spouses.
            ``(4) Private person.--The term `private person' 
        means a person who does not have sovereign or other 
        special immunity or privilege which causes the person 
        not to be subject to legal process.
            ``(5) Legal process.--The term `legal process' 
        means any writ, order, summons, or other similar 
        process in the nature of garnishment--
                    ``(A) which is issued by--
                            ``(i) a court or an administrative 
                        agency of competent jurisdiction in any 
                        State, territory, or possession of the 
                        United States;
                            ``(ii) a court or an administrative 
                        agency of competent jurisdiction in any 
                        foreign country with which the United 
                        States has entered into an agreement 
                        which requires the United States to 
                        honor the process; or
                            ``(iii) an authorized official 
                        pursuant to an order of such a court or 
                        an administrative agency of competent 
                        jurisdiction or pursuant to State or 
                        local law; and
                    ``(B) which is directed to, and the purpose 
                of which is to compel, a governmental entity 
                which holds moneys which are otherwise payable 
                to an individual to make a payment from the 
                moneys to another party in order to satisfy a 
                legal obligation of the individual to provide 
                child support or make alimony payments.''.
    (b) Conforming Amendments.--
            (1) To part d of title iv.--Sections 461 and 462 
        (42 U.S.C. 661 and 662) are repealed.
            (2) To title 5, united states code.--Section 5520a 
        of title 5, United States Code, is amended, in 
        subsections (h)(2) and (i), by striking ``sections 459, 
        461, and 462 of the Social Security Act (42 U.S.C. 659, 
        661, and 662)'' and inserting ``section 459 of the 
        Social Security Act (42 U.S.C. 659)''.
    (c) Military Retired and Retainer Pay.--
            (1) Definition of court.--Section 1408(a)(1) of 
        title 10, United States Code, is amended--
                    (A) by striking ``and'' at the end of 
                subparagraph (B);
                    (B) by striking the period at the end of 
                subparagraph (C) and inserting ``; and''; and
                    (C) by adding after subparagraph (C) the 
                following new subparagraph:
                    ``(D) any administrative or judicial 
                tribunal of a State competent to enter orders 
                for support or maintenance (including a State 
                agency administering a program under a State 
                plan approved under part D of title IV of the 
                Social Security Act), and, for purposes of this 
                subparagraph, the term `State' includes the 
                District of Columbia, the Commonwealth of 
                Puerto Rico, the Virgin Islands, Guam, and 
                American Samoa.''.
            (2) Definition of court order.--Section 1408(a)(2) 
        of such title is amended--
                    (A) by inserting ``or a support order, as 
                defined in section 453(p) of the Social 
                Security Act (42 U.S.C. 653(p)),'' before 
                ``which--'';
                    (B) in subparagraph (B)(i), by striking 
                ``(as defined in section 462(b) of the Social 
                Security Act (42 U.S.C. 662(b)))'' and 
                inserting ``(as defined in section 459(i)(2) of 
                the Social Security Act (42 U.S.C. 
                659(i)(2)))''; and
                    (C) in subparagraph (B)(ii), by striking 
                ``(as defined in section 462(c) of the Social 
                Security Act (42 U.S.C. 662(c)))'' and 
                inserting ``(as defined in section 459(i)(3) of 
                the Social Security Act (42 U.S.C. 
                659(i)(3)))''.
            (3) Public payee.--Section 1408(d) of such title is 
        amended--
                    (A) in the heading, by inserting ``(or for 
                Benefit of)'' before ``Spouse or''; and
                    (B) in paragraph (1), in the 1st sentence, 
                by inserting ``(or for the benefit of such 
                spouse or former spouse to a State disbursement 
                unit established pursuant to section 454B of 
                the Social Security Act or other public payee 
                designated by a State, in accordance with part 
                D of title IV of the Social Security Act, as 
                directed by court order, or as otherwise 
                directed in accordance with such part D)'' 
                before ``in an amount sufficient''.
            (4) Relationship to part d of title iv.--Section 
        1408 of such title is amended by adding at the end the 
        following new subsection:
    ``(j) Relationship to Other Laws.--In any case involving an 
order providing for payment of child support (as defined in 
section 459(i)(2) of the Social Security Act) by a member who 
has never been married to the other parent of the child, the 
provisions of this section shall not apply, and the case shall 
be subject to the provisions of section 459 of such Act.''.
    (d) Effective Date.--The amendments made by this section 
shall become effective 6 months after the date of the enactment 
of this Act.

SEC. 4363. ENFORCEMENT OF CHILD SUPPORT OBLIGATIONS OF MEMBERS OF THE 
                    ARMED FORCES.

    (a) Availability of Locator Information.--
            (1) Maintenance of address information.--The 
        Secretary of Defense shall establish a centralized 
        personnel locator service that includes the address of 
        each member of the Armed Forces under the jurisdiction 
        of the Secretary. Upon request of the Secretary of 
        Transportation, addresses for members of the Coast 
        Guard shall be included in the centralized personnel 
        locator service.
            (2) Type of address.--
                    (A) Residential address.--Except as 
                provided in subparagraph (B), the address for a 
                member of the Armed Forces shown in the locator 
                service shall be the residential address of 
                that member.
                    (B) Duty address.--The address for a member 
                of the Armed Forces shown in the locator 
                service shall be the duty address of that 
                member in the case of a member--
                            (i) who is permanently assigned 
                        overseas, to a vessel, or to a 
                        routinely deployable unit; or
                            (ii) with respect to whom the 
                        Secretary concerned makes a 
                        determination that the member's 
                        residential address should not be 
                        disclosed due to national security or 
                        safety concerns.
            (3) Updating of locator information.--Within 30 
        days after a member listed in the locator service 
        establishes a new residential address (or a new duty 
        address, in the case of a member covered by paragraph 
        (2)(B)), the Secretary concerned shall update the 
        locator service to indicate the new address of the 
        member.
            (4) Availability of information.--The Secretary of 
        Defense shall make information regarding the address of 
        a member of the Armed Forces listed in the locator 
        service available, on request, to the Federal Parent 
        Locator Service established under section 453 of the 
        Social Security Act.
    (b) Facilitating Granting of Leave for Attendance at 
Hearings.--
            (1) Regulations.--The Secretary of each military 
        department, and the Secretary of Transportation with 
        respect to the Coast Guard when it is not operating as 
        a service in the Navy, shall prescribe regulations to 
        facilitate the granting of leave to a member of the 
        Armed Forces under the jurisdiction of that Secretary 
        in a case in which--
                    (A) the leave is needed for the member to 
                attend a hearing described in paragraph (2);
                    (B) the member is not serving in or with a 
                unit deployed in a contingency operation (as 
                defined in section 101 of title 10, United 
                States Code); and
                    (C) the exigencies of military service (as 
                determined by the Secretary concerned) do not 
                otherwise require that such leave not be 
                granted.
            (2) Covered hearings.--Paragraph (1) applies to a 
        hearing that is conducted by a court or pursuant to an 
        administrative process established under State law, in 
        connection with a civil action--
                    (A) to determine whether a member of the 
                Armed Forces is a natural parent of a child; or
                    (B) to determine an obligation of a member 
                of the Armed Forces to provide child support.
            (3) Definitions.--For purposes of this subsection--
                    (A) The term ``court'' has the meaning 
                given that term in section 1408(a) of title 10, 
                United States Code.
                    (B) The term ``child support'' has the 
                meaning given such term in section 459(i) of 
                the Social Security Act (42 U.S.C. 659(i)).
    (c) Payment of Military Retired Pay in Compliance With 
Child Support Orders.--
            (1) Date of certification of court order.--Section 
        1408 of title 10, United States Code, as amended by 
        section 4362(c)(4) of this Act, is amended--
                    (A) by redesignating subsections (i) and 
                (j) as subsections (j) and (k), respectively; 
                and
                    (B) by inserting after subsection (h) the 
                following new subsection:
    ``(i) Certification Date.--It is not necessary that the 
date of a certification of the authenticity or completeness of 
a copy of a court order for child support received by the 
Secretary concerned for the purposes of this section be recent 
in relation to the date of receipt by the Secretary.''.
            (2) Payments consistent with assignments of rights 
        to states.--Section 1408(d)(1) of such title is amended 
        by inserting after the 1st sentence the following new 
        sentence: ``In the case of a spouse or former spouse 
        who, pursuant to section 408(a)(4) of the Social 
        Security Act (42 U.S.C. 608(a)(4)), assigns to a State 
        the rights of the spouse or former spouse to receive 
        support, the Secretary concerned may make the child 
        support payments referred to in the preceding sentence 
        to that State in amounts consistent with that 
        assignment of rights.''.
            (3) Arrearages owed by members of the uniformed 
        services.--Section 1408(d) of such title is amended by 
        adding at the end the following new paragraph:
    ``(6) In the case of a court order for which effective 
service is made on the Secretary concerned on or after the date 
of the enactment of this paragraph and which provides for 
payments from the disposable retired pay of a member to satisfy 
the amount of child support set forth in the order, the 
authority provided in paragraph (1) to make payments from the 
disposable retired pay of a member to satisfy the amount of 
child support set forth in a court order shall apply to payment 
of any amount of child support arrearages set forth in that 
order as well as to amounts of child support that currently 
become due.''.
            (4) Payroll deductions.--The Secretary of Defense 
        shall begin payroll deductions within 30 days after 
        receiving notice of withholding, or for the 1st pay 
        period that begins after such 30-day period.

SEC. 4364. VOIDING OF FRAUDULENT TRANSFERS.

    Section 466 (42 U.S.C. 666), as amended by section 4321 of 
this Act, is amended by adding at the end the following new 
subsection:
    ``(g) Laws Voiding Fraudulent Transfers.--In order to 
satisfy section 454(20)(A), each State must have in effect--
            ``(1)(A) the Uniform Fraudulent Conveyance Act of 
        1981;
            ``(B) the Uniform Fraudulent Transfer Act of 1984; 
        or
            ``(C) another law, specifying indicia of fraud 
        which create a prima facie case that a debtor 
        transferred income or property to avoid payment to a 
        child support creditor, which the Secretary finds 
        affords comparable rights to child support creditors; 
        and
            ``(2) procedures under which, in any case in which 
        the State knows of a transfer by a child support debtor 
        with respect to which such a prima facie case is 
        established, the State must--
                    ``(A) seek to void such transfer; or
                    ``(B) obtain a settlement in the best 
                interests of the child support creditor.''.

SEC. 4365. WORK REQUIREMENT FOR PERSONS OWING PAST-DUE CHILD SUPPORT.

    (a) In General.--Section 466(a) (42 U.S.C. 666(a)), as 
amended by sections 4315, 4317(a), and 4323 of this Act, is 
amended by inserting after paragraph (14) the following new 
paragraph:
            ``(15) Procedures to ensure that persons owing 
        past-due support work or have a plan for payment of 
        such support.--
                    ``(A) In general.--Procedures under which 
                the State has the authority, in any case in 
                which an individual owes past-due support with 
                respect to a child receiving assistance under a 
                State program funded under part A, to issue an 
                order or to request that a court or an 
                administrative process established pursuant to 
                State law issue an order that requires the 
                individual to--
                            ``(i) pay such support in 
                        accordance with a plan approved by the 
                        court, or, at the option of the State, 
                        a plan approved by the State agency 
                        administering the State program under 
                        this part; or
                            ``(ii) if the individual is subject 
                        to such a plan and is not 
                        incapacitated, participate in such work 
                        activities (as defined in section 
                        407(d)) as the court, or, at the option 
                        of the State, the State agency 
                        administering the State program under 
                        this part, deems appropriate.
                    ``(B) Past-due support defined.--For 
                purposes of subparagraph (A), the term `past-
                due support' means the amount of a delinquency, 
                determined under a court order, or an order of 
                an administrative process established under 
                State law, for support and maintenance of a 
                child, or of a child and the parent with whom 
                the child is living.''.
    (b) Conforming amendment.--The flush paragraph at the end 
of section 466(a) (42 U.S.C.666(a)) is amended by striking 
``and (7)'' and inserting ``(7), and (15)''.

SEC. 4366. DEFINITION OF SUPPORT ORDER.

    Section 453 (42 U.S.C. 653) as amended by sections 4316 and 
4345(b) of this Act, is amended by adding at the end the 
following new subsection:
    ``(p) Support Order Defined.--As used in this part, the 
term `support order' means a judgment, decree, or order, 
whether temporary, final, or subject to modification, issued by 
a court or an administrative agency of competent jurisdiction, 
for the support and maintenance of a child, including a child 
who has attained the age of majority under the law of the 
issuing State, or a child and the parent with whom the child is 
living, which provides for monetary support, health care, 
arrearages, or reimbursement, and which may include related 
costs and fees, interest and penalties, income withholding, 
attorneys' fees, and other relief.''.

SEC. 4367. REPORTING ARREARAGES TO CREDIT BUREAUS.

    Section 466(a)(7) (42 U.S.C. 666(a)(7)) is amended to read 
as follows:
            ``(7) Reporting arrearages to credit bureaus.--
                    ``(A) In general.--Procedures (subject to 
                safeguards pursuant to subparagraph (B)) 
                requiring the State to report periodically to 
                consumer reporting agencies (as defined in 
                section 603(f) of the Fair Credit Reporting Act 
                (15 U.S.C. 1681a(f)) the name of any 
                noncustodial parent who is delinquent in the 
                payment of support, and the amount of overdue 
                support owed by such parent.
                    ``(B) Safeguards.--Procedures ensuring 
                that, in carrying out subparagraph (A), 
                information with respect to a noncustodial 
                parent is reported--
                            ``(i) only after such parent has 
                        been afforded all due process required 
                        under State law, including notice and a 
                        reasonable opportunity to contest the 
                        accuracy of such information; and
                            ``(ii) only to an entity that has 
                        furnished evidence satisfactory to the 
                        State that the entity is a consumer 
                        reporting agency (as so defined).''.

SEC. 4368. LIENS.

    Section 466(a)(4) (42 U.S.C. 666(a)(4)) is amended to read 
as follows:
            ``(4) Liens.--Procedures under which--
                    ``(A) liens arise by operation of law 
                against real and personal property for amounts 
                of overdue support owed by a noncustodial 
                parent who resides or owns property in the 
                State; and
                    ``(B) the State accords full faith and 
                credit to liens described in subparagraph (A) 
                arising in another State, when the State 
                agency, party, or other entity seeking to 
                enforce such a lien complies with the 
                procedural rules relating to recording or 
                serving liens that arise within the State, 
                except that such rules may not require judicial 
                notice or hearing prior to the enforcement of 
                such a lien.''.

SEC. 4369. STATE LAW AUTHORIZING SUSPENSION OF LICENSES.

    Section 466(a) (42 U.S.C. 666(a)), as amended by sections 
4315, 4317(a), 4323, and 4365 of this Act, is amended by 
inserting after paragraph (15) the following:
            ``(16) Authority to withhold or suspend licenses.--
        Procedures under which the State has (and uses in 
        appropriate cases) authority to withhold or suspend, or 
        to restrict the use of driver's licenses, professional 
        and occupational licenses, and recreational licenses of 
        individuals owing overdue support or failing, after 
        receiving appropriate notice, to comply with subpoenas 
        or warrants relating to paternity or child support 
        proceedings.''.

SEC. 4370. DENIAL OF PASSPORTS FOR NONPAYMENT OF CHILD SUPPORT.

    (a) HHS Certification Procedure.--
            (1) Secretarial responsibility.--Section 452 (42 
        U.S.C. 652), as amended by section 4345 of this Act, is 
        amended by adding at the end the following new 
        subsection:
    ``(k)(1) If the Secretary receives a certification by a 
State agency in accordance with the requirements of section 
454(31) that an individual owes arrearages of child support in 
an amount exceeding $5,000, the Secretary shall transmit such 
certification to the Secretary of State for action (with 
respect to denial, revocation, or limitation of passports) 
pursuant to paragraph (2).
    ``(2) The Secretary of State shall, upon certification by 
the Secretary transmitted under paragraph (1), refuse to issue 
a passport to such individual, and may revoke, restrict, or 
limit a passport issued previously to such individual.
    ``(3) The Secretary and the Secretary of State shall not be 
liable to an individual for any action with respect to a 
certification by a State agency under this section.''.
            (2) State agency responsibility.--Section 454 (42 
        U.S.C. 654), as amended by sections 4301(b), 4303(a), 
        4312(b), 4313(a), 4333, and 4343(b) of this Act, is 
        amended--
                    (A) by striking ``and'' at the end of 
                paragraph (29);
                    (B) by striking the period at the end of 
                paragraph (30) and inserting ``; and''; and
                    (C) by adding after paragraph (30) the 
                following new paragraph:
            ``(31) provide that the State agency will have in 
        effect a procedure for certifying to the Secretary, for 
        purposes of the procedure under section 452(k), 
        determinations that individuals owe arrearages of child 
        support in an amount exceeding $5,000, under which 
        procedure--
                    ``(A) each individual concerned is afforded 
                notice of such determination and the 
                consequences thereof, and an opportunity to 
                contest the determination; and
                    ``(B) the certification by the State agency 
                is furnished to the Secretary in such format, 
                and accompanied by such supporting 
                documentation, as the Secretary may require.''.
    (b) Effective Date.--This section and the amendments made 
by this section shall become effective October 1, 1997.

SEC. 4371. INTERNATIONAL SUPPORT ENFORCEMENT.

    (a) Authority for International Agreements.--Part D of 
title IV, as amended by section 4362(a) of this Act, is amended 
by adding after section 459 the following new section:

``SEC. 459A. INTERNATIONAL SUPPORT ENFORCEMENT.

    ``(a) Authority for Declarations.--
            ``(1) Declaration.--The Secretary of State, with 
        the concurrence of the Secretary of Health and Human 
        Services, is authorized to declare any foreign country 
        (or a political subdivision thereof) to be a foreign 
        reciprocating country if the foreign country has 
        established, or undertakes to establish, procedures for 
        the establishment and enforcement of duties of support 
        owed to obligees who are residents of the United 
        States, and such procedures are substantially in 
        conformity with the standards prescribed under 
        subsection (b).
            ``(2) Revocation.--A declaration with respect to a 
        foreign country made pursuant to paragraph (1) may be 
        revoked if the Secretaries of State and Health and 
        Human Services determine that--
                    ``(A) the procedures established by the 
                foreign country regarding the establishment and 
                enforcement of duties of support have been so 
                changed, or the foreign country's 
                implementation of such procedures is so 
                unsatisfactory, that such procedures do not 
                meet the criteria for such a declaration; or
                    ``(B) continued operation of the 
                declaration is not consistent with the purposes 
                of this part.
            ``(3) Form of declaration.--A declaration under 
        paragraph (1) may be made in the form of an 
        international agreement, in connection with an 
        international agreement or corresponding foreign 
        declaration, or on a unilateral basis.
    ``(b) Standards for Foreign Support Enforcement 
Procedures.--
            ``(1) Mandatory elements.--Support enforcement 
        procedures of a foreign country which may be the 
        subject of a declaration pursuant to subsection (a)(1) 
        shall include the following elements:
                    ``(A) The foreign country (or political 
                subdivision thereof) has in effect procedures, 
                available to residents of the United States--
                            ``(i) for establishment of 
                        paternity, and for establishment of 
                        orders of support for children and 
                        custodial parents; and
                            ``(ii) for enforcement of orders to 
                        provide support to children and 
                        custodial parents, including procedures 
                        for collection and appropriate 
                        distribution of support payments under 
                        such orders.
                    ``(B) The procedures described in 
                subparagraph (A), including legal and 
                administrative assistance, are provided to 
                residents of the United States at no cost.
                    ``(C) An agency of the foreign country is 
                designated as a Central Authority responsible 
                for--
                            ``(i) facilitating support 
                        enforcement in cases involving 
                        residents of the foreign country and 
                        residents of the United States; and
                            ``(ii) ensuring compliance with the 
                        standards established pursuant to this 
                        subsection.
            ``(2) Additional elements.--The Secretary of Health 
        and Human Services and the Secretary of State, in 
        consultation with the States, may establish such 
        additional standards as may be considered necessary to 
        further the purposes of this section.
    ``(c) Designation of United States Central Authority.--It 
shall be the responsibility of the Secretary of Health and 
Human Services to facilitate support enforcement in cases 
involving residents of the United States and residents of 
foreign countries that are the subject of a declaration under 
this section, by activities including--
            ``(1) development of uniform forms and procedures 
        for use in such cases;
            ``(2) notification of foreign reciprocating 
        countries of the State of residence of individuals 
        sought for support enforcement purposes, on the basis 
        of information provided by the Federal Parent Locator 
        Service; and
            ``(3) such other oversight, assistance, and 
        coordination activities as the Secretary may find 
        necessary and appropriate.
    ``(d) Effect on Other Laws.--States may enter into 
reciprocal arrangements for the establishment and enforcement 
of support obligations with foreign countries that are not the 
subject of a declaration pursuant to subsection (a), to the 
extent consistent with Federal law.''.
    (b) State Plan Requirement.--Section 454 (42 U.S.C. 654), 
as amended by sections 4301(b), 4303(a), 4312(b), 4313(a), 
4333, 4343(b), and 4370(a)(2) of this Act, is amended--
            (1) by striking ``and'' at the end of paragraph 
        (30);
            (2) by striking the period at the end of paragraph 
        (31) and inserting ``; and''; and
            (3) by adding after paragraph (31) the following 
        new paragraph:
            ``(32)(A) provide that any request for services 
        under this part by a foreign reciprocating country or a 
        foreign country with which the State has an arrangement 
        described in section 459A(d)(2) shall be treated as a 
        request by a State;
            ``(B) provide, at State option, notwithstanding 
        paragraph (4) or any other provision of this part, for 
        services under the plan for enforcement of a spousal 
        support order not described in paragraph (4)(B) entered 
        by such a country (or subdivision); and
            ``(C) provide that no applications will be required 
        from, and no costs will be assessed for such services 
        against, the foreign reciprocating country or foreign 
        obligee (but costs may at State option be assessed 
        against the obligor).''.

SEC. 4372. FINANCIAL INSTITUTION DATA MATCHES.

    Section 466(a) (42 U.S.C. 666(a)), as amended by sections 
4315, 4317(a), 4323, 4365, and 4369 of this Act, is amended by 
inserting after paragraph (16) the following new paragraph:
            ``(17) Financial institution data matches.--
                    ``(A) In general.--Procedures under which 
                the State agency shall enter into agreements 
                with financial institutions doing business in 
                the State--
                            ``(i) to develop and operate, in 
                        coordination with such financial 
                        institutions, a data match system, 
                        using automated data exchanges to the 
                        maximum extent feasible, in which each 
                        such financial institution is required 
                        to provide for each calendar quarter 
                        the name, record address, social 
                        security number or other taxpayer 
                        identification number, and other 
                        identifying information for each 
                        noncustodial parent who maintains an 
                        account at such institution and who 
                        owes past-due support, as identified by 
                        the State by name and social security 
                        number or other taxpayer identification 
                        number; and
                            ``(ii) in response to a notice of 
                        lien or levy, encumber or surrender, as 
                        the case may be, assets held by such 
                        institution on behalf of any 
                        noncustodial parent who is subject to a 
                        child support lien pursuant to 
                        paragraph (4).
                    ``(B) Reasonable fees.--The State agency 
                may pay a reasonable fee to a financial 
                institution for conducting the data match 
                provided for in subparagraph (A)(i), not to 
                exceed the actual costs incurred by such 
                financial institution.
                    ``(C) Liability.--A financial institution 
                shall not be liable under any Federal or State 
                law to any person--
                            ``(i) for any disclosure of 
                        information to the State agency under 
                        subparagraph (A)(i);
                            ``(ii) for encumbering or 
                        surrendering any assets held by such 
                        financial institution in response to a 
                        notice of lien or levy issued by the 
                        State agency as provided for in 
                        subparagraph (A)(ii); or
                            ``(iii) for any other action taken 
                        in good faith to comply with the 
                        requirements of subparagraph (A).
                    ``(D) Definitions.--For purposes of this 
                paragraph--
                            ``(i) Financial institution.--The 
                        term `financial institution' has the 
                        meaning given to such term by section 
                        469A(d)(1).
                            ``(ii) Account.--The term `account' 
                        means a demand deposit account, 
                        checking or negotiable withdrawal order 
                        account, savings account, time deposit 
                        account, or money-market mutual fund 
                        account.''.

SEC. 4373. ENFORCEMENT OF ORDERS AGAINST PATERNAL OR MATERNAL 
                    GRANDPARENTS IN CASES OF MINOR PARENTS.

    Section 466(a) (42 U.S.C. 666(a)), as amended by sections 
4315, 4317(a), 4323, 4365, 4369, and 4372 of this Act, is 
amended by inserting after paragraph (17) the following new 
paragraph:
            ``(18) Enforcement of orders against paternal or 
        maternal grandparents.--Procedures under which, at the 
        State's option, any child support order enforced under 
        this part with respect to a child of minor parents, if 
        the custodial parent of such child is receiving 
        assistance under the State program under part A, shall 
        be enforceable, jointly and severally, against the 
        parents of the noncustodial parent of such child.''.

SEC. 4374. NONDISCHARGEABILITY IN BANKRUPTCY OF CERTAIN DEBTS FOR THE 
                    SUPPORT OF A CHILD.

    (a) Amendment to Title 11 of the United States Code.--
Section 523(a) of title 11, United States Code, is amended--
            (1) by striking ``or'' at the end of paragraph 
        (16);
            (2) by striking the period at the end of paragraph 
        (17) and inserting ``; or'';
            (3) by adding at the end the following:
            ``(18) owed under State law to a State or 
        municipality that is--
                    ``(A) in the nature of support, and
                    ``(B) enforceable under part D of title IV 
                of the Social Security Act (42 U.S.C. 601 et 
                seq.).''; and
            (4) in paragraph (5), by striking ``section 
        402(a)(26)'' and inserting ``section 408(a)(4)''.
    (b) Amendment to the Social Security Act.--Section 456(b) 
(42 U.S.C. 656(b)) is amended to read as follows:
    ``(b) Nondischargeability.--A debt (as defined in section 
101 of title 11 of the United States Code) owed under State law 
to a State (as defined in such section) or municipality (as 
defined in such section) that is in the nature of support and 
that is enforceable under this part is not released by a 
discharge in bankruptcy under title 11 of the United States 
Code.''.
    (c) Application of Amendments.--The amendments made by this 
section shall apply only with respect to cases commenced under 
title 11 of the United States Code after the date of the 
enactment of this Act.

                       CHAPTER 8--MEDICAL SUPPORT

SEC. 4376. CORRECTION TO ERISA DEFINITION OF MEDICAL CHILD SUPPORT 
                    ORDER.

    (a) In General.--Section 609(a)(2)(B) of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 
1169(a)(2)(B)) is amended--
            (1) by striking ``issued by a court of competent 
        jurisdiction'';
            (2) by striking the period at the end of clause 
        (ii) and inserting a comma; and
            (3) by adding, after and below clause (ii), the 
        following:
                ``if such judgment, decree, or order (I) is 
                issued by a court of competent jurisdiction or 
                (II) is issued through an administrative 
                process established under State law and has the 
                force and effect of law under applicable State 
                law.''.
    (b) Effective Date.--
            (1) In general.--The amendments made by this 
        section shall take effect on the date of the enactment 
        of this Act.
            (2) Plan amendments not required until january 1, 
        1997.--Any amendment to a plan required to be made by 
        an amendment made by this section shall not be required 
        to be made before the 1st plan year beginning on or 
        after January 1, 1997, if--
                    (A) during the period after the date before 
                the date of the enactment of this Act and 
                before such 1st plan year, the plan is operated 
                in accordance with the requirements of the 
                amendments made by this section; and
                    (B) such plan amendment applies 
                retroactively to the period after the date 
                before the date of the enactment of this Act 
                and before such 1st plan year.
        A plan shall not be treated as failing to be operated 
        in accordance with the provisions of the plan merely 
        because it operates in accordance with this paragraph.

SEC. 4377. ENFORCEMENT OF ORDERS FOR HEALTH CARE COVERAGE.

    Section 466(a) (42 U.S.C. 666(a)), as amended by sections 
4315, 4317(a), 4323, 4365, 4369, 4372, and 4373 of this Act, is 
amended by inserting after paragraph (18) the following new 
paragraph:
            ``(19) Health care coverage.--Procedures under 
        which all child support orders enforced pursuant to 
        this part shall include a provision for the health care 
        coverage of the child, and in the case in which a 
        noncustodial parent provides such coverage and changes 
        employment, and the new employer provides health care 
        coverage, the State agency shall transfer notice of the 
        provision to the employer, which notice shall operate 
        to enroll the child in the noncustodial parent's health 
        plan, unless the noncustodial parent contests the 
        notice.''.

CHAPTER 9--ENHANCING RESPONSIBILITY AND OPPORTUNITY FOR NON-RESIDENTIAL 
                                PARENTS

SEC. 4381. GRANTS TO STATES FOR ACCESS AND VISITATION PROGRAMS.

    Part D of title IV (42 U.S.C. 651-669), as amended by 
section 4353 of this Act, is amended by adding at the end the 
following new section:

``SEC. 469B. GRANTS TO STATES FOR ACCESS AND VISITATION PROGRAMS.

    ``(a) In General.--The Administration for Children and 
Families shall make grants under this section to enable States 
to establish and administer programs to support and facilitate 
noncustodial parents' access to and visitation of their 
children, by means of activities including mediation (both 
voluntary and mandatory), counseling, education, development of 
parenting plans, visitation enforcement (including monitoring, 
supervision and neutral drop-off and pickup), and development 
of guidelines for visitation and alternative custody 
arrangements.
    ``(b) Amount of Grant.--The amount of the grant to be made 
to a State under this section for a fiscal year shall be an 
amount equal to the lesser of--
            ``(1) 90 percent of State expenditures during the 
        fiscal year for activities described in subsection (a); 
        or
            ``(2) the allotment of the State under subsection 
        (c) for the fiscal year.
    ``(c) Allotments to States.--
            ``(1) In general.--The allotment of a State for a 
        fiscal year is the amount that bears the same ratio to 
        $10,000,000 for grants under this section for the 
        fiscal year as the number of children in the State 
        living with only 1 biological parent bears to the total 
        number of such children in all States.
            ``(2) Minimum allotment.--The Administration for 
        Children and Families shall adjust allotments to States 
        under paragraph (1) as necessary to ensure that no 
        State is allotted less than--
                    ``(A) $50,000 for fiscal year 1997 or 1998; 
                or
                    ``(B) $100,000 for any succeeding fiscal 
                year.
    ``(d) No Supplantation of State Expenditures for Similar 
Activities.--A State to which a grant is made under this 
section may not use the grant to supplant expenditures by the 
State for activities specified in subsection (a), but shall use 
the grant to supplement such expenditures at a level at least 
equal to the level of such expenditures for fiscal year 1995.
    ``(e) State Administration.--Each State to which a grant is 
made under this section--
            ``(1) may administer State programs funded with the 
        grant, directly or through grants to or contracts with 
        courts, local public agencies, or nonprofit private 
        entities;
            ``(2) shall not be required to operate such 
        programs on a statewide basis; and
            ``(3) shall monitor, evaluate, and report on such 
        programs in accordance with regulations prescribed by 
        the Secretary.''.

         CHAPTER 10--EFFECTIVE DATES AND CONFORMING AMENDMENTS

SEC. 4391. EFFECTIVE DATES AND CONFORMING AMENDMENTS.

    (a) In General.--Except as otherwise specifically provided 
(but subject to subsections (b) and (c))--
            (1) the provisions of this subtitle requiring the 
        enactment or amendment of State laws under section 466 
        of the Social Security Act, or revision of State plans 
        under section 454 of such Act, shall be effective with 
        respect to periods beginning on and after October 1, 
        1996; and
            (2) all other provisions of this subtitle shall 
        become effective upon the date of the enactment of this 
        Act.
    (b) Grace Period for State Law Changes.--The provisions of 
this subtitle shall become effective with respect to a State on 
the later of--
            (1) the date specified in this subtitle, or
            (2) the effective date of laws enacted by the 
        legislature of such State implementing such provisions,
but in no event later than the 1st day of the 1st calendar 
quarter beginning after the close of the 1st regular session of 
the State legislature that begins after the date of the 
enactment of this Act. For purposes of the previous sentence, 
in the case of a State that has a 2-year legislative session, 
each year of such session shall be deemed to be a separate 
regular session of the State legislature.
    (c) Grace Period for State Constitutional Amendment.--A 
State shall not be found out of compliance with any requirement 
enacted by this subtitle if the State is unable to so comply 
without amending the State constitution until the earlier of--
            (1) 1 year after the effective date of the 
        necessary State constitutional amendment; or
            (2) 5 years after the date of the enactment of this 
        Act.
    (d) Conforming Amendments.--
            (1) The following provisions are amended by 
        striking ``absent'' each place it appears and inserting 
        ``noncustodial'':
                    (A) Section 451 (42 U.S.C. 651).
                    (B) Subsections (a)(1), (a)(8), (a)(10)(E), 
                (a)(10)(F), (f), and (h) of section 452 (42 
                U.S.C. 652).
                    (C) Section 453(f) (42 U.S.C. 653(f)).
                    (D) Paragraphs (8), (13), and (21)(A) of 
                section 454 (42 U.S.C. 654).
                    (E) Section 455(e)(1) (42 U.S.C. 
                655(e)(1)).
                    (F) Section 458(a) (42 U.S.C. 658(a)).
                    (G) Subsections (a), (b), and (c) of 
                section 463 (42 U.S.C. 663).
                    (H) Subsections (a)(3)(A), (a)(3)(C), 
                (a)(6), and (a)(8)(B)(ii), the last sentence of 
                subsection (a), and subsections (b)(1), 
                (b)(3)(B), (b)(3)(B)(i), (b)(6)(A)(i), (b)(9), 
                and (e) of section 466 (42 U.S.C. 666).
            (2) The following provisions are amended by 
        striking ``an absent'' each place it appears and 
        inserting ``a noncustodial'':
                    (A) Paragraphs (2) and (3) of section 
                453(c) (42 U.S.C. 653(c)).
                    (B) Subparagraphs (B) and (C) of section 
                454(9) (42 U.S.C. 654(9)).
                    (C) Section 456(a)(3) (42 U.S.C. 
                656(a)(3)).
                    (D) Subsections (a)(3)(A), (a)(6), 
                (a)(8)(B)(i), (b)(3)(A), and (b)(3)(B) of 
                section 466 (42 U.S.C. 666).
                    (E) Paragraphs (2) and (4) of section 
                469(b) (42 U.S.C. 669(b)).

     Subtitle D--Restricting Welfare and Public Benefits for Aliens

SEC. 4400. STATEMENTS OF NATIONAL POLICY CONCERNING WELFARE AND 
                    IMMIGRATION.

    The Congress makes the following statements concerning 
national policy with respect to welfare and immigration:
            (1) Self-sufficiency has been a basic principle of 
        United States immigration law since this country's 
        earliest immigration statutes.
            (2) It continues to be the immigration policy of 
        the United States that--
                    (A) aliens within the Nation's borders not 
                depend on public resources to meet their needs, 
                but rather rely on their own capabilities and 
                the resources of their families, their 
                sponsors, and private organizations, and
                    (B) the availability of public benefits not 
                constitute an incentive for immigration to the 
                United States.
            (3) Despite the principle of self-sufficiency, 
        aliens have been applying for and receiving public 
        benefits from Federal, State, and local governments at 
        increasing rates.
            (4) Current eligibility rules for public assistance 
        and unenforceable financial support agreements have 
        proved wholly incapable of assuring that individual 
        aliens not burden the public benefits system.
            (5) It is a compelling government interest to enact 
        new rules for eligibility and sponsorship agreements in 
        order to assure that aliens be self-reliant in 
        accordance with national immigration policy.
            (6) It is a compelling government interest to 
        remove the incentive for illegal immigration provided 
        by the availability of public benefits.
            (7) With respect to the State authority to make 
        determinations concerning the eligibility of qualified 
        aliens for public benefits in this subtitle, a State 
        that chooses to follow the Federal classification in 
        determining the eligibility of such aliens for public 
        assistance shall be considered to have chosen the least 
        restrictive means available for achieving the 
        compelling governmental interest of assuring that 
        aliens be self-reliant in accordance with national 
        immigration policy.

              CHAPTER 1--ELIGIBILITY FOR FEDERAL BENEFITS

SEC. 4401. ALIENS WHO ARE NOT QUALIFIED ALIENS INELIGIBLE FOR FEDERAL 
                    PUBLIC BENEFITS.

    (a) In General.--Notwithstanding any other provision of law 
and except as provided in subsection (b), an alien who is not a 
qualified alien (as defined in section 4431) is not eligible 
for any Federal public benefit (as defined in subsection (c)).
    (b) Exceptions.--
            (1) Subsection (a) shall not apply with respect to 
        the following Federal public benefits:
                    (A) Emergency medical services under title 
                XV or XIX of the Social Security Act.
                    (B) Short-term, non-cash, in-kind emergency 
                disaster relief.
                    (C)(i) Public health assistance for 
                immunizations.
                    (ii) Public health assistance for testing 
                and treatment of a serious communicable disease 
                if the Secretary of Health and Human Services 
                determines that it is necessary to prevent the 
                spread of such disease.
                    (D) Programs, services, or assistance (such 
                as soup kitchens, crisis counseling and 
                intervention, and short-term shelter) specified 
                by the Attorney General, in the Attorney 
                General's sole and unreviewable discretion 
                after consultation with appropriate Federal 
                agencies and departments, which (i) deliver in-
                kind services at the community level, including 
                through public or private nonprofit agencies; 
                (ii) do not condition the provision of 
                assistance, the amount of assistance provided, 
                or the cost of assistance provided on the 
                individual recipient's income or resources; and 
                (iii) are necessary for the protection of life 
                or safety.
                    (E) Programs for housing or community 
                development assistance or financial assistance 
                administered by the Secretary of Housing and 
                Urban Development, any program under title V of 
                the Housing Act of 1949, or any assistance 
                under section 306C of the Consolidated Farm and 
                Rural Development Act, to the extent that the 
                alien is receiving such a benefit on the date 
                of the enactment of this Act.
            (2) Subsection (a) shall not apply to any benefit 
        payable under title II of the Social Security Act to an 
        alien who is lawfully present in the United States as 
        determined by the Attorney General, to any benefit if 
        nonpayment of such benefit would contravene an 
        international agreement described in section 233 of the 
        Social Security Act, to any benefit if nonpayment would 
        be contrary to section 202(t) of the Social Security 
        Act, or to any benefit payable under title II of the 
        Social Security Act to which entitlement is based on an 
        application filed in or before the month in which this 
        Act becomes law.
    (c) Federal Public Benefit Defined.--
            (1) Except as provided in paragraph (2), for 
        purposes of this subtitle the term ``Federal public 
        benefit'' means--
                    (A) any grant, contract, loan, professional 
                license, or commercial license provided by an 
                agency of the United States or by appropriated 
                funds of the United States; and
                    (B) any retirement, welfare, health, 
                disability, public or assisted housing, 
                postsecondary education, food assistance, 
                unemployment benefit, or any other similar 
                benefit for which payments or assistance are 
                provided to an individual, household, or family 
                eligibility unit by an agency of the United 
                States or by appropriated funds of the United 
                States.
            (2) Such term shall not apply--
                    (A) to any contract, professional license, 
                or commercial license for a nonimmigrant whose 
                visa for entry is related to such employment in 
                the United States; or
                    (B) with respect to benefits for an alien 
                who as a work authorized nonimmigrant or as an 
                alien lawfully admitted for permanent residence 
                under the Immigration and Nationality Act 
                qualified for such benefits and for whom the 
                United States under reciprocal treaty 
                agreements is required to pay benefits, as 
                determined by the Attorney General, after 
                consultation with the Secretary of State.

SEC. 4402. LIMITED ELIGIBILITY OF QUALIFIED ALIENS FOR CERTAIN FEDERAL 
                    PROGRAMS.

    (a) Limited Eligibility for Specified Federal Programs.--
            (1) In general.--Notwithstanding any other 
        provision of law and except as provided in paragraph 
        (2), an alien who is a qualified alien (as defined in 
        section 4431) is not eligible for any specified Federal 
        program (as defined in paragraph (3)).
            (2) Exceptions.--
                    (A) Time-limited exception for refugees and 
                asylees.--Paragraph (1) shall not apply to an 
                alien until 5 years after the date--
                            (i) an alien is admitted to the 
                        United States as a refugee under 
                        section 207 of the Immigration and 
                        Nationality Act;
                            (ii) an alien is granted asylum 
                        under section 208 of such Act; or
                            (iii) an alien's deportation is 
                        withheld under section 243(h) of such 
                        Act.
                    (B) Certain permanent resident aliens.--
                Paragraph (1) shall not apply to an alien who--
                            (i) is lawfully admitted to the 
                        United States for permanent residence 
                        under the Immigration and Nationality 
                        Act; and
                            (ii)(I) has worked 40 qualifying 
                        quarters of coverage as defined under 
                        title II of the Social Security Act or 
                        can be credited with such qualifying 
                        quarters as provided under section 435, 
                        and (II) did not receive any Federal 
                        means-tested public benefit (as defined 
                        in section 4403(c)) during any such 
                        quarter.
                    (C) Veteran and active duty exception.--
                Paragraph (1) shall not apply to an alien who 
                is lawfully residing in any State and is--
                            (i) a veteran (as defined in 
                        section 101 of title 38, United States 
                        Code) with a discharge characterized as 
                        an honorable discharge and not on 
                        account of alienage,
                            (ii) on active duty (other than 
                        active duty for training) in the Armed 
                        Forces of the United States, or
                            (iii) the spouse or unmarried 
                        dependent child of an individual 
                        described in clause (i) or (ii).
                    (D) Transition for aliens currently 
                receiving benefits.--
                            (i) SSI.--
                                    (I) In general.--With 
                                respect to the specified 
                                Federal program described in 
                                paragraph (3)(A), during the 
                                period beginning on the date of 
                                the enactment of this Act and 
                                ending on the date which is 1 
                                year after such date of 
                                enactment, the Commissioner of 
                                Social Security shall 
                                redetermine the eligibility of 
                                any individual who is receiving 
                                benefits under such program as 
                                of the date of the enactment of 
                                this Act and whose eligibility 
                                for such benefits may terminate 
                                by reason of the provisions of 
                                this subsection.
                                    (II) Redetermination 
                                criteria.-- With respect to any 
                                redetermination under subclause 
                                (I), the Commissioner of Social 
                                Security shall apply the 
                                eligibility criteria for new 
                                applicants for benefits under 
                                such program.
                                    (III) Grandfather 
                                provision.--The provisions of 
                                this subsection and the 
                                redetermination under subclause 
                                (I), shall only apply with 
                                respect to the benefits of an 
                                individual described in 
                                subclause (I) for months 
                                beginning on or after the date 
                                of the redetermination with 
                                respect to such individual.
                                    (IV) Notice.--Not later 
                                than January 1, 1997, the 
                                Commissioner of Social Security 
                                shall notify an individual 
                                described in subclause (I) of 
                                the provisions of this clause.
                            (ii) Food stamps.--
                                    (I) In general.--With 
                                respect to the specified 
                                Federal program described in 
                                paragraph (3)(B), during the 
                                period beginning on the date of 
                                enactment of this Act and 
                                ending on the date which is 1 
                                year after the date of 
                                enactment, the State agency 
                                shall, at the time of the 
                                recertification, recertify the 
                                eligibility of any individual 
                                who is receiving benefits under 
                                such program as of the date of 
                                enactment of this Act and whose 
                                eligibility for such benefits 
                                may terminate by reason of the 
                                provisions of this subsection.
                                    (II) Recertification 
                                criteria.--With respect to any 
                                recertification under subclause 
                                (I), the State agency shall 
                                apply the eligibility criteria 
                                for applicants for benefits 
                                under such program.
                                    (III) Grandfather 
                                provision.--The provisions of 
                                this subsection and the 
                                recertification under subclause 
                                (I) shall only apply with 
                                respect to the eligibility of 
                                an alien for a program for 
                                months beginning on or after 
                                the date of recertification, if 
                                on the date of enactment of 
                                this Act the alien is lawfully 
                                residing in any State and is 
                                receiving benefits under such 
                                program on such date of 
                                enactment.
            (3) Specified federal program defined.--For 
        purposes of this subtitle, the term ``specified Federal 
        program'' means any of the following:
                    (A) SSI.--The supplemental security income 
                program under title XVI of the Social Security 
                Act, including supplementary payments pursuant 
                to an agreement for Federal administration 
                under section 1616(a) of the Social Security 
                Act and payments pursuant to an agreement 
                entered into under section 212(b) of Public Law 
                93-66.
                    (B) Food stamps.--The food stamp program as 
                defined in section 3(h) of the Food Stamp Act 
                of 1977.
    (b) Limited Eligibility for Designated Federal Programs.--
            (1) In general.--Notwithstanding any other 
        provision of law and except as provided in section 4403 
        and paragraph (2), a State is authorized to determine 
        the eligibility of an alien who is a qualified alien 
        (as defined in section 4431) for any designated Federal 
        program (as defined in paragraph (3)).
            (2) Exceptions.--Qualified aliens under this 
        paragraph shall be eligible for any designated Federal 
        program.
                    (A) Time-limited exception for refugees and 
                asylees.--
                            (i) An alien who is admitted to the 
                        United States as a refugee under 
                        section 207 of the Immigration and 
                        Nationality Act until 5 years after the 
                        date of an alien's entry into the 
                        United States.
                            (ii) An alien who is granted asylum 
                        under section 208 of such Act until 5 
                        years after the date of such grant of 
                        asylum.
                            (iii) An alien whose deportation is 
                        being withheld under section 243(h) of 
                        such Act until 5 years after such 
                        withholding.
                    (B) Certain permanent resident aliens.--An 
                alien who--
                            (i) is lawfully admitted to the 
                        United States for permanent residence 
                        under the Immigration and Nationality 
                        Act; and
                            (ii)(I) has worked 40 qualifying 
                        quarters of coverage as defined under 
                        title II of the Social Security Act or 
                        can be credited with such qualifying 
                        quarters as provided under section 
                        4435, and (II) did not receive any 
                        Federal means-tested public benefit (as 
                        defined in section 4403(c)) during any 
                        such quarter.
                    (C) Veteran and active duty exception.--An 
                alien who is lawfully residing in any State and 
                is--
                            (i) a veteran (as defined in 
                        section 101 of title 38, United States 
                        Code) with a discharge characterized as 
                        an honorable discharge and not on 
                        account of alienage,
                            (ii) on active duty (other than 
                        active duty for training) in the Armed 
                        Forces of the United States, or
                            (iii) the spouse or unmarried 
                        dependent child of an individual 
                        described in clause (i) or (ii).
                    (D) Transition for those currently 
                receiving benefits.--An alien who on the date 
                of the enactment of this Act is lawfully 
                residing in any State and is receiving benefits 
                under such program on the date of the enactment 
                of this Act shall continue to be eligible to 
                receive such benefits until January 1, 1997.
            (3) Designated federal program defined.--For 
        purposes of this subtitle, the term ``designated 
        Federal program'' means any of the following:
                    (A) Temporary assistance for needy 
                families.--The program of block grants to 
                States for temporary assistance for needy 
                families under part A of title IV of the Social 
                Security Act.
                    (B) Social services block grant.--The 
                program of block grants to States for social 
                services under title XX of the Social Security 
                Act.
                    (C) Medicaid.--The program of medical 
                assistance under title XV and XIX of the Social 
                Security Act.

SEC. 4403. FIVE-YEAR LIMITED ELIGIBILITY OF QUALIFIED ALIENS FOR 
                    FEDERAL MEANS-TESTED PUBLIC BENEFIT.

    (a) In General.--Notwithstanding any other provision of law 
and except as provided in subsection (b), an alien who is a 
qualified alien (as defined in section 4431) and who enters the 
United States on or after the date of the enactment of this Act 
is not eligible for any Federal means-tested public benefit (as 
defined in subsection (c)) for a period of five years beginning 
on the date of the alien's entry into the United States with a 
status within the meaning of the term ``qualified alien''.
    (b) Exceptions.--The limitation under subsection (a) shall 
not apply to the following aliens:
            (1) Exception for refugees and asylees.--
                    (A) An alien who is admitted to the United 
                States as a refugee under section 207 of the 
                Immigration and Nationality Act.
                    (B) An alien who is granted asylum under 
                section 208 of such Act.
                    (C) An alien whose deportation is being 
                withheld under section 243(h) of such Act.
            (2) Veteran and active duty exception.--An alien 
        who is lawfully residing in any State and is--
                    (A) a veteran (as defined in section 101 of 
                title 38, United States Code) with a discharge 
                characterized as an honorable discharge and not 
                on account of alienage,
                    (B) on active duty (other than active duty 
                for training) in the Armed Forces of the United 
                States, or
                    (C) the spouse or unmarried dependent child 
                of an individual described in subparagraph (A) 
                or (B).
    (c) Federal Means-tested Public Benefit Defined.--
            (1) Except as provided in paragraph (2), for 
        purposes of this subtitle, the term ``Federal means-
        tested public benefit'' means a public benefit 
        (including cash, medical, housing, and food assistance 
        and social services) of the Federal Government in which 
        the eligibility of an individual, household, or family 
        eligibility unit for benefits, or the amount of such 
        benefits, or both are determined on the basis of 
        income, resources, or financial need of the individual, 
        household, or unit.
            (2) Such term does not include the following:
                    (A) Emergency medical services under title 
                XV or XIX of the Social Security Act.
                    (B) Short-term, non-cash, in-kind emergency 
                disaster relief.
                    (C) Assistance or benefits under the 
                National School Lunch Act.
                    (D) Assistance or benefits under the Child 
                Nutrition Act of 1966.
                    (E)(i) Public health assistance for 
                immunizations.
                    (ii) Public health assistance for testing 
                and treatment of a serious communicable disease 
                if the Secretary of Health and Human Services 
                determines that it is necessary to prevent the 
                spread of such disease.
                    (F) Payments for foster care and adoption 
                assistance under parts B and E of title IV of 
                the Social Security Act for a child who would, 
                in the absence of subsection (a), be eligible 
                to have such payments made on the child's 
                behalf under such part, but only if the foster 
                or adoptive parent or parents of such child are 
                not described under subsection (a).
                    (G) Programs, services, or assistance (such 
                as soup kitchens, crisis counseling and 
                intervention, and short-term shelter) specified 
                by the Attorney General, in the Attorney 
                General's sole and unreviewable discretion 
                after consultation with appropriate Federal 
                agencies and departments, which (i) deliver in-
                kind services at the community level, including 
                through public or private nonprofit agencies; 
                (ii) do not condition the provision of 
                assistance, the amount of assistance provided, 
                or the cost of assistance provided on the 
                individual recipient's income or resources; and 
                (iii) are necessary for the protection of life 
                or safety.
                    (H) Programs of student assistance under 
                titles IV, V, IX, and X of the Higher Education 
                Act of 1965.
                    (I) Means-tested programs under the 
                Elementary and Secondary Education Act of 1965.

SEC. 4404. NOTIFICATION AND INFORMATION REPORTING.

    (a) Notification.--Each Federal agency that administers a 
program to which section 4401, 4402, or 4403 applies shall, 
directly or through the States, post information and provide 
general notification to the public and to program recipients of 
the changes regarding eligibility for any such program pursuant 
to this chapter.
    (b) Information Reporting Under Title IV of the Social 
Security Act.--Part A of title IV of the Social Security Act, 
as amended by section 4103(a) of this Act, is amended by 
inserting the following new section after section 411:

``SEC. 411A. STATE REQUIRED TO PROVIDE CERTAIN INFORMATION.

    ``Each State to which a grant is made under section 403 
shall, at least 4 times annually and upon request of the 
Immigration and Naturalization Service, furnish the Immigration 
and Naturalization Service with the name and address of, and 
other identifying information on, any individual who the State 
knows is unlawfully in the United States.''.
    (c) SSI.--Section 1631(e) of such Act (42 U.S.C. 1383(e)) 
is amended--
            (1) by redesignating the paragraphs (6) and (7) 
        inserted by sections 206(d)(2) and 206(f)(1) of the 
        Social Security Independence and Programs Improvement 
        Act of 1994 (Public Law 103-296; 108 Stat. 1514, 1515) 
        as paragraphs (7) and (8), respectively; and
            (2) by adding at the end the following new 
        paragraph:
    ``(9) Notwithstanding any other provision of law, the 
Commissioner shall, at least 4 times annually and upon request 
of the Immigration and Naturalization Service (hereafter in 
this paragraph referred to as the `Service'), furnish the 
Service with the name and address of, and other identifying 
information on, any individual who the Commissioner knows is 
unlawfully in the United States, and shall ensure that each 
agreement entered into under section 1616(a) with a State 
provides that the State shall furnish such information at such 
times with respect to any individual who the State knows is 
unlawfully in the United States.''.
    (d) Information Reporting for Housing Programs.--Title I of 
the United States Housing Act of 1937 (42 U.S.C. 1437 et seq.) 
is amended by adding at the end the following new section:

``SEC. 27. PROVISION OF INFORMATION TO LAW ENFORCEMENT AND OTHER 
                    AGENCIES.

    ``Notwithstanding any other provision of law, the Secretary 
shall, at least 4 times annually and upon request of the 
Immigration and Naturalization Service (hereafter in this 
section referred to as the `Service'), furnish the Service with 
the name and address of, and other identifying information on, 
any individual who the Secretary knows is unlawfully in the 
United States, and shall ensure that each contract for 
assistance entered into under section 6 or 8 of this Act with a 
public housing agency provides that the public housing agency 
shall furnish such information at such times with respect to 
any individual who the public housing agency knows is 
unlawfully in the United States.''.

  CHAPTER 2--ELIGIBILITY FOR STATE AND LOCAL PUBLIC BENEFITS PROGRAMS

SEC. 4411. ALIENS WHO ARE NOT QUALIFIED ALIENS OR NONIMMIGRANTS 
                    INELIGIBLE FOR STATE AND LOCAL PUBLIC BENEFITS.

    (a) In General.--Notwithstanding any other provision of law 
and except as provided in subsections (b) and (d), an alien who 
is not--
            (1) a qualified alien (as defined in section 4431),
            (2) a nonimmigrant under the Immigration and 
        Nationality Act, or
            (3) an alien who is paroled into the United States 
        under section 212(d)(5) of such Act for less than one 
        year,
is not eligible for any State or local public benefit (as 
defined in subsection (c)).
    (b) Exceptions.--Subsection (a) shall not apply with 
respect to the following State or local public benefits:
            (1) Emergency medical services under title XV or 
        XIX of the Social Security Act.
            (2) Short-term, non-cash, in-kind emergency 
        disaster relief.
            (3)(A) Public health assistance for immunizations.
            (B) Public health assistance for testing and 
        treatment of a serious communicable disease if the 
        Secretary of Health and Human Services determines that 
        it is necessary to prevent the spread of such disease.
            (4) Programs, services, or assistance (such as soup 
        kitchens, crisis counseling and intervention, and 
        short-term shelter) specified by the Attorney General, 
        in the Attorney General's sole and unreviewable 
        discretion after consultation with appropriate Federal 
        agencies and departments, which (A) deliver in-kind 
        services at the community level, including through 
        public or private nonprofit agencies; (B) do not 
        condition the provision of assistance, the amount of 
        assistance provided, or the cost of assistance provided 
        on the individual recipient's income or resources; and 
        (C) are necessary for the protection of life or safety.
    (c) State or Local Public Benefit Defined.--
            (1) Except as provided in paragraph (2), for 
        purposes of this chapter the term ``State or local 
        public benefit'' means--
                    (A) any grant, contract, loan, professional 
                license, or commercial license provided by an 
                agency of a State or local government or by 
                appropriated funds of a State or local 
                government; and
                    (B) any retirement, welfare, health, 
                disability, public or assisted housing, 
                postsecondary education, food assistance, 
                unemployment benefit, or any other similar 
                benefit for which payments or assistance are 
                provided to an individual, household, or family 
                eligibility unit by an agency of a State or 
                local government or by appropriated funds of a 
                State or local government.
            (2) Such term shall not apply--
                    (A) to any contract, professional license, 
                or commercial license for a nonimmigrant whose 
                visa for entry is related to such employment in 
                the United States; or
                    (B) with respect to benefits for an alien 
                who as a work authorized nonimmigrant or as an 
                alien lawfully admitted for permanent residence 
                under the Immigration and Nationality Act 
                qualified for such benefits and for whom the 
                United States under reciprocal treaty 
                agreements is required to pay benefits, as 
                determined by the Secretary of State, after 
                consultation with the Attorney General.
    (d) State Authority to Provide for Eligibility of Illegal 
Aliens for State and Local Public Benefits.--A State may 
provide that an alien who is not lawfully present in the United 
States is eligible for any State or local public benefit for 
which such alien would otherwise be ineligible under subsection 
(a) only through the enactment of a State law after the date of 
the enactment of this Act which affirmatively provides for such 
eligibility.

SEC. 4412. STATE AUTHORITY TO LIMIT ELIGIBILITY OF QUALIFIED ALIENS FOR 
                    STATE PUBLIC BENEFITS.

    (a) In General.--Notwithstanding any other provision of law 
and except as provided in subsection (b), a State is authorized 
to determine the eligibility for any State public benefits (as 
defined in subsection (c) of an alien who is a qualified alien 
(as defined in section 4431), a nonimmigrant under the 
Immigration and Nationality Act, or an alien who is paroled 
into the United States under section 212(d)(5) of such Act for 
less than one year.
    (b) Exceptions.--Qualified aliens under this subsection 
shall be eligible for any State public benefits.
            (1) Time-limited exception for refugees and 
        asylees.--
                    (A) An alien who is admitted to the United 
                States as a refugee under section 207 of the 
                Immigration and Nationality Act until 5 years 
                after the date of an alien's entry into the 
                United States.
                    (B) An alien who is granted asylum under 
                section 208 of such Act until 5 years after the 
                date of such grant of asylum.
                    (C) An alien whose deportation is being 
                withheld under section 243(h) of such Act until 
                5 years after such withholding.
            (2) Certain permanent resident aliens.--An alien 
        who--
                    (A) is lawfully admitted to the United 
                States for permanent residence under the 
                Immigration and Nationality Act; and
                    (B)(i) has worked 40 qualifying quarters of 
                coverage as defined under title II of the 
                Social Security Act or can be credited with 
                such qualifying quarters as provided under 
                section 4435, and (ii) did not receive any 
                Federal means-tested public benefit (as defined 
                in section 4403(c)) during any such quarter.
            (3) Veteran and active duty exception.--An alien 
        who is lawfully residing in any State and is--
                    (A) a veteran (as defined in section 101 of 
                title 38, United States Code) with a discharge 
                characterized as an honorable discharge and not 
                on account of alienage,
                    (B) on active duty (other than active duty 
                for training) in the Armed Forces of the United 
                States, or
                    (C) the spouse or unmarried dependent child 
                of an individual described in subparagraph (A) 
                or (B).
            (4) Transition for those currently receiving 
        benefits.--An alien who on the date of the enactment of 
        this Act is lawfully residing in any State and is 
        receiving benefits on the date of the enactment of this 
        Act shall continue to be eligible to receive such 
        benefits until January 1, 1997.
    (c) State Public Benefits Defined.--The term ``State public 
benefits'' means any means-tested public benefit of a State or 
political subdivision of a State under which the State or 
political subdivision specifies the standards for eligibility, 
and does not include any Federal public benefit.

       CHAPTER 3--ATTRIBUTION OF INCOME AND AFFIDAVITS OF SUPPORT

SEC. 4421. FEDERAL ATTRIBUTION OF SPONSOR'S INCOME AND RESOURCES TO 
                    ALIEN.

    (a) In General.--Notwithstanding any other provision of 
law, in determining the eligibility and the amount of benefits 
of an alien for any Federal means-tested public benefits 
program (as defined in section 4403(c)), the income and 
resources of the alien shall be deemed to include the 
following:
            (1) The income and resources of any person who 
        executed an affidavit of support pursuant to section 
        213A of the Immigration and Nationality Act (as added 
        by section 4423) on behalf of such alien.
            (2) The income and resources of the spouse (if any) 
        of the person.
    (b) Application.--Subsection (a) shall apply with respect 
to an alien until such time as the alien--
            (1) achieves United States citizenship through 
        naturalization pursuant to chapter 2 of title III of 
        the Immigration and Nationality Act; or
            (2)(A) has worked 40 qualifying quarters of 
        coverage as defined under title II of the Social 
        Security Act or can be credited with such qualifying 
        quarters as provided under section 4435, and (B) did 
        not receive any Federal means-tested public benefit (as 
        defined in section 4403(c)) during any such quarter.
    (c) Review of Income and Resources of Alien Upon 
Reapplication.--Whenever an alien is required to reapply for 
benefits under any Federal means-tested public benefits 
program, the applicable agency shall review the income and 
resources attributed to the alien under subsection (a).
    (d) Application.--
            (1) If on the date of the enactment of this Act, a 
        Federal means-tested public benefits program attributes 
        a sponsor's income and resources to an alien in 
        determining the alien's eligibility and the amount of 
        benefits for an alien, this section shall apply to any 
        such determination beginning on the day after the date 
        of the enactment of this Act.
            (2) If on the date of the enactment of this Act, a 
        Federal means-tested public benefits program does not 
        attribute a sponsor's income and resources to an alien 
        in determining the alien's eligibility and the amount 
        of benefits for an alien, this section shall apply to 
        any such determination beginning 180 days after the 
        date of the enactment of this Act.

SEC. 4422. AUTHORITY FOR STATES TO PROVIDE FOR ATTRIBUTION OF SPONSORS 
                    INCOME AND RESOURCES TO THE ALIEN WITH RESPECT TO 
                    STATE PROGRAMS.

    (a) Optional Application to State Programs.--Except as 
provided in subsection (b), in determining the eligibility and 
the amount of benefits of an alien for any State public 
benefits (as defined in section 4412(c)), the State or 
political subdivision that offers the benefits is authorized to 
provide that the income and resources of the alien shall be 
deemed to include--
            (1) the income and resources of any individual who 
        executed an affidavit of support pursuant to section 
        213A of the Immigration and Nationality Act (as added 
        by section 4423) on behalf of such alien, and
            (2) the income and resources of the spouse (if any) 
        of the individual.
    (b) Exceptions.--Subsection (a) shall not apply with 
respect to the following State public benefits:
            (1) Emergency medical services.
            (2) Short-term, non-cash, in-kind emergency 
        disaster relief.
            (3) Programs comparable to assistance or benefits 
        under the National School Lunch Act.
            (4) Programs comparable to assistance or benefits 
        under the Child Nutrition Act of 1966.
            (5)(A) Public health assistance for immunizations.
            (B) Public health assistance for testing and 
        treatment of a serious communicable disease if the 
        appropriate chief State health official determines that 
        it is necessary to prevent the spread of such disease.
            (6) Payments for foster care and adoption 
        assistance.
            (7) Programs, services, or assistance (such as soup 
        kitchens, crisis counseling and intervention, and 
        short-term shelter) specified by the Attorney General 
        of a State, after consultation with appropriate 
        agencies and departments, which (A) deliver in-kind 
        services at the community level, including through 
        public or private nonprofit agencies; (B) do not 
        condition the provision of assistance, the amount of 
        assistance provided, or the cost of assistance provided 
        on the individual recipient's income or resources; and 
        (C) are necessary for the protection of life or safety.

SEC. 4423. REQUIREMENTS FOR SPONSOR'S AFFIDAVIT OF SUPPORT.

    (a) In General.--Title II of the Immigration and 
Nationality Act is amended by inserting after section 213 the 
following new section:

           ``requirements for sponsor's affidavit of support

    ``Sec. 213A. (a) Enforceability.--(1) No affidavit of 
support may be accepted by the Attorney General or by any 
consular officer to establish that an alien is not excludable 
as a public charge under section 212(a)(4) unless such 
affidavit is executed as a contract--
            ``(A) which is legally enforceable against the 
        sponsor by the sponsored alien, the Federal Government, 
        and by any State (or any political subdivision of such 
        State) which provides any means-tested public benefits 
        program, but not later than 10 years after the alien 
        last receives any such benefit;
            ``(B) in which the sponsor agrees to financially 
        support the alien, so that the alien will not become a 
        public charge; and
            ``(C) in which the sponsor agrees to submit to the 
        jurisdiction of any Federal or State court for the 
        purpose of actions brought under subsection (e)(2).
    ``(2) A contract under paragraph (1) shall be enforceable 
with respect to benefits provided to the alien until such time 
as the alien achieves United States citizenship through 
naturalization pursuant to chapter 2 of title III.
    ``(b) Forms.--Not later than 90 days after the date of 
enactment of this section, the Attorney General, in 
consultation with the Secretary of State and the Secretary of 
Health and Human Services, shall formulate an affidavit of 
support consistent with the provisions of this section.
    ``(c) Remedies.--Remedies available to enforce an affidavit 
of support under this section include any or all of the 
remedies described in section 3201, 3203, 3204, or 3205 of 
title 28, United States Code, as well as an order for specific 
performance and payment of legal fees and other costs of 
collection, and include corresponding remedies available under 
State law. A Federal agency may seek to collect amounts owed 
under this section in accordance with the provisions of 
subchapter II of chapter 37 of title 31, United States Code.
    ``(d) Notification of Change of Address.--
            ``(1) In general.--The sponsor shall notify the 
        Attorney General and the State in which the sponsored 
        alien is currently resident within 30 days of any 
        change of address of the sponsor during the period 
        specified in subsection (a)(2).
            ``(2) Penalty.--Any person subject to the 
        requirement of paragraph (1) who fails to satisfy such 
        requirement shall be subject to a civil penalty of--
                    ``(A) not less than $250 or more than 
                $2,000, or
                    ``(B) if such failure occurs with knowledge 
                that the alien has received any means-tested 
                public benefit, not less than $2,000 or more 
                than $5,000.
    ``(e) Reimbursement of Government Expenses.--(1)(A) Upon 
notification that a sponsored alien has received any benefit 
under any means-tested public benefits program, the appropriate 
Federal, State, or local official shall request reimbursement 
by the sponsor in the amount of such assistance.
    ``(B) The Attorney General, in consultation with the 
Secretary of Health and Human Services, shall prescribe such 
regulations as may be necessary to carry out subparagraph (A).
    ``(2) If within 45 days after requesting reimbursement, the 
appropriate Federal, State, or local agency has not received a 
response from the sponsor indicating a willingness to commence 
payments, an action may be brought against the sponsor pursuant 
to the affidavit of support.
    ``(3) If the sponsor fails to abide by the repayment terms 
established by such agency, the agency may, within 60 days of 
such failure, bring an action against the sponsor pursuant to 
the affidavit of support.
    ``(4) No cause of action may be brought under this 
subsection later than 10 years after the alien last received 
any benefit under any means-tested public benefits program.
    ``(5) If, pursuant to the terms of this subsection, a 
Federal, State, or local agency requests reimbursement from the 
sponsor in the amount of assistance provided, or brings an 
action against the sponsor pursuant to the affidavit of 
support, the appropriate agency may appoint or hire an 
individual or other person to act on behalf of such agency 
acting under the authority of law for purposes of collecting 
any moneys owed. Nothing in this subsection shall preclude any 
appropriate Federal, State, or local agency from directly 
requesting reimbursement from a sponsor for the amount of 
assistance provided, or from bringing an action against a 
sponsor pursuant to an affidavit of support.
    ``(f) Definitions.--For the purposes of this section--
            ``(1) Sponsor.--The term `sponsor' means an 
        individual who--
                    ``(A) is a citizen or national of the 
                United States or an alien who is lawfully 
                admitted to the United States for permanent 
                residence;
                    ``(B) is 18 years of age or over;
                    ``(C) is domiciled in any of the 50 States 
                or the District of Columbia; and
                    ``(D) is the person petitioning for the 
                admission of the alien under section 204.
            ``(2) Means-tested public benefits program.--The 
        term `means-tested public benefits program' means a 
        program of public benefits (including cash, medical, 
        housing, and food assistance and social services) of 
        the Federal Government or of a State or political 
        subdivision of a State in which the eligibility of an 
        individual, household, or family eligibility unit for 
        benefits under the program, or the amount of such 
        benefits, or both are determined on the basis of 
        income, resources, or financial need of the individual, 
        household, or unit.''.
    (b) Clerical Amendment.--The table of contents of such Act 
is amended by inserting after the item relating to section 213 
the following:

``Sec. 213A. Requirements for sponsor's affidavit of support.''.
    (c) Effective Date.--Subsection (a) of section 213A of the 
Immigration and Nationality Act, as inserted by subsection (a) 
of this section, shall apply to affidavits of support executed 
on or after a date specified by the Attorney General, which 
date shall be not earlier than 60 days (and not later than 90 
days) after the date the Attorney General formulates the form 
for such affidavits under subsection (b) of such section.
    (d) Benefits Not Subject to Reimbursement.--Requirements 
for reimbursement by a sponsor for benefits provided to a 
sponsored alien pursuant to an affidavit of support under 
section 213A of the Immigration and Nationality Act shall not 
apply with respect to the following:
            (1) Emergency medical services under title XV or 
        XIX of the Social Security Act.
            (2) Short-term, non-cash, in-kind emergency 
        disaster relief.
            (3) Assistance or benefits under the National 
        School Lunch Act.
            (4) Assistance or benefits under the Child 
        Nutrition Act of 1966.
            (5)(A) Public health assistance for immunizations.
            (B) Public health assistance for testing and 
        treatment of a serious communicable disease if the 
        Secretary of Health and Human Services determines that 
        it is necessary to prevent the spread of such disease.
            (6) Payments for foster care and adoption 
        assistance under part B of title IV of the Social 
        Security Act for a child, but only if the foster or 
        adoptive parent or parents of such child are not 
        otherwise ineligible pursuant to section 4403 of this 
        Act.
            (7) Programs, services, or assistance (such as soup 
        kitchens, crisis counseling and intervention, and 
        short-term shelter) specified by the Attorney General, 
        in the Attorney General's sole and unreviewable 
        discretion after consultation with appropriate Federal 
        agencies and departments, which (A) deliver in-kind 
        services at the community level, including through 
        public or private nonprofit agencies; (B) do not 
        condition the provision of assistance, the amount of 
        assistance provided, or the cost of assistance provided 
        on the individual recipient's income or resources; and 
        (C) are necessary for the protection of life or safety.
            (8) Programs of student assistance under titles IV, 
        V, IX, and X of the Higher Education Act of 1965.

SEC. 4424. COSIGNATURE OF ALIEN STUDENT LOANS.

    Section 484(b) of the Higher Education Act of 1965 (20 
U.S.C. 1091(b)) is amended by adding at the end the following 
new paragraph:
    ``(6) Notwithstanding sections 427(a)(2)(A), 428B(a), 
428C(b)(4)(A), and 464(c)(1)(E), or any other provision of this 
title, a student who is an alien lawfully admitted for 
permanent residence under the Immigration and Nationality Act 
shall not be eligible for a loan under this title unless the 
loan is endorsed and cosigned by the alien's sponsor under 
section 213A of the Immigration and Nationality Act or by 
another creditworthy individual who is a United States 
citizen.''.

                     CHAPTER 4--GENERAL PROVISIONS

SEC. 4431. DEFINITIONS.

    (a) In General.--Except as otherwise provided in this 
subtitle, the terms used in this subtitle have the same meaning 
given such terms in section 101(a) of the Immigration and 
Nationality Act.
    (b) Qualified Alien.--For purposes of this subtitle, the 
term ``qualified alien'' means an alien who, at the time the 
alien applies for, receives, or attempts to receive a Federal 
public benefit, is--
            (1) an alien who is lawfully admitted for permanent 
        residence under the Immigration and Nationality Act,
            (2) an alien who is granted asylum under section 
        208 of such Act,
            (3) a refugee who is admitted to the United States 
        under section 207 of such Act,
            (4) an alien who is paroled into the United States 
        under section 212(d)(5) of such Act for a period of at 
        least 1 year,
            (5) an alien whose deportation is being withheld 
        under section 243(h) of such Act, or
            (6) an alien who is granted conditional entry 
        pursuant to section 203(a)(7) of such Act as in effect 
        prior to April 1, 1980.

SEC. 4432. VERIFICATION OF ELIGIBILITY FOR FEDERAL PUBLIC BENEFITS.

    (a) In General.--Not later than 18 months after the date of 
the enactment of this Act, the Attorney General of the United 
States, after consultation with the Secretary of Health and 
Human Services, shall promulgate regulations requiring 
verification that a person applying for a Federal public 
benefit (as defined in section 4401(c)), to which the 
limitation under section 4401 applies, is a qualified alien and 
is eligible to receive such benefit. Such regulations shall, to 
the extent feasible, require that information requested and 
exchanged be similar in form and manner to information 
requested and exchanged under section 1137 of the Social 
Security Act.
    (b) State Compliance.--Not later than 24 months after the 
date the regulations described in subsection (a) are adopted, a 
State that administers a program that provides a Federal public 
benefit shall have in effect a verification system that 
complies with the regulations.
    (c) Authorization of Appropriations.--There are authorized 
to be appropriated such sums as may be necessary to carry out 
the purpose of this section.

SEC. 4433. STATUTORY CONSTRUCTION.

    (a) Limitation.--
            (1) Nothing in this subtitle may be construed as an 
        entitlement or a determination of an individual's 
        eligibility or fulfillment of the requisite 
        requirements for any Federal, State, or local 
        governmental program, assistance, or benefits. For 
        purposes of this subtitle, eligibility relates only to 
        the general issue of eligibility or ineligibility on 
        the basis of alienage.
            (2) Nothing in this subtitle may be construed as 
        addressing alien eligibility for a basic public 
        education as determined by the Supreme Court of the 
        United States under Plyler v. Doe (457 U.S. 202)(1982).
    (b) Not Applicable to Foreign Assistance.--This subtitle 
does not apply to any Federal, State, or local governmental 
program, assistance, or benefits provided to an alien under any 
program of foreign assistance as determined by the Secretary of 
State in consultation with the Attorney General.
    (c) Severability.--If any provision of this subtitle or the 
application of such provision to any person or circumstance is 
held to be unconstitutional, the remainder of this subtitle and 
the application of the provisions of such to any person or 
circumstance shall not be affected thereby.

SEC. 4434. COMMUNICATION BETWEEN STATE AND LOCAL GOVERNMENT AGENCIES 
                    AND THE IMMIGRATION AND NATURALIZATION SERVICE.

    Notwithstanding any other provision of Federal, State, or 
local law, no State or local government entity may be 
prohibited, or in any way restricted, from sending to or 
receiving from the Immigration and Naturalization Service 
information regarding the immigration status, lawful or 
unlawful, of an alien in the United States.

SEC. 4435. QUALIFYING QUARTERS.

    For purposes of this subtitle, in determining the number of 
qualifying quarters of coverage under title II of the Social 
Security Act an alien shall be credited with--
            (1) all of the qualifying quarters of coverage as 
        defined under title II of the Social Security Act 
        worked by a parent of such alien while the alien was 
        under age 18 if the parent did not receive any Federal 
        means-tested public benefit (as defined in section 
        4403(c)) during any such quarter, and
            (2) all of the qualifying quarters worked by a 
        spouse of such alien during their marriage if the 
        spouse did not receive any Federal means-tested public 
        benefit (as defined in section 4403(c)) during any such 
        quarter and the alien remains married to such spouse or 
        such spouse is deceased.

     CHAPTER 5--CONFORMING AMENDMENTS RELATING TO ASSISTED HOUSING

SEC. 4441. CONFORMING AMENDMENTS RELATING TO ASSISTED HOUSING.

    (a) Limitations on Assistance.--Section 214 of the Housing 
and Community Development Act of 1980 (42 U.S.C. 1436a) is 
amended--
            (1) by striking ``Secretary of Housing and Urban 
        Development'' each place it appears and inserting 
        ``applicable Secretary'';
            (2) in subsection (b), by inserting after 
        ``National Housing Act,'' the following: ``the direct 
        loan program under section 502 of the Housing Act of 
        1949 or section 502(c)(5)(D), 504, 521(a)(2)(A), or 542 
        of such Act, subtitle A of title III of the Cranston-
        Gonzalez National Affordable Housing Act,'';
            (3) in paragraphs (2) through (6) of subsection 
        (d), by striking ``Secretary'' each place it appears 
        and inserting ``applicable Secretary'';
            (4) in subsection (d), in the matter following 
        paragraph (6), by striking ``the term `Secretary''' and 
        inserting ``the term `applicable Secretary'''; and
            (5) by adding at the end the following new 
        subsection:
    ``(h) For purposes of this section, the term `applicable 
Secretary' means--
            ``(1) the Secretary of Housing and Urban 
        Development, with respect to financial assistance 
        administered by such Secretary and financial assistance 
        under subtitle A of title III of the Cranston-Gonzalez 
        National Affordable Housing Act; and
            ``(2) the Secretary of Agriculture, with respect to 
        financial assistance administered by such Secretary.''.
    (b) Conforming Amendments.--Section 501(h) of the Housing 
Act of 1949 (42 U.S.C. 1471(h)) is amended--
            (1) by striking ``(1)'';
            (2) by striking ``by the Secretary of Housing and 
        Urban Development''; and
            (3) by striking paragraph (2).

    CHAPTER 6--EARNED INCOME CREDIT DENIED TO UNAUTHORIZED EMPLOYEES

SEC. 4451. EARNED INCOME CREDIT DENIED TO INDIVIDUALS NOT AUTHORIZED TO 
                    BE EMPLOYED IN THE UNITED STATES.

    (a) In General.--Section 32(c)(1) of the Internal Revenue 
Code of 1986 (relating to individuals eligible to claim the 
earned income credit) is amended by adding at the end the 
following new subparagraph:
                    ``(F) Identification number requirement.--
                The term `eligible individual' does not include 
                any individual who does not include on the 
                return of tax for the taxable year--
                            ``(i) such individual's taxpayer 
                        identification number, and
                            ``(ii) if the individual is married 
                        (within the meaning of section 7703), 
                        the taxpayer identification number of 
                        such individual's spouse.''.
    (b) Special Identification Number.--Section 32 of such Code 
is amended by adding at the end the following new subsection:
    ``(l) Identification Numbers.--Solely for purposes of 
subsections (c)(1)(F) and (c)(3)(D), a taxpayer identification 
number means a social security number issued to an individual 
by the Social Security Administration (other than a social 
security number issued pursuant to clause (II) (or that portion 
of clause (III) that relates to clause (II)) of section 
205(c)(2)(B)(i) of the Social Security Act).''.
    (c) Extension of Procedures Applicable to Mathematical or 
Clerical Errors.--Section 6213(g)(2) of such Code (relating to 
the definition of mathematical or clerical errors) is amended 
by striking ``and' at the end of subparagraph (D), by striking 
the period at the end of subparagraph (E) and inserting a 
comma, and by inserting after subparagraph (E) the following 
new subparagraphs:
                    ``(F) an omission of a correct taxpayer 
                identification number required under section 32 
                (relating to the earned income tax credit) to 
                be included on a return, and
                    ``(G) an entry on a return claiming the 
                credit under section 32 with respect to net 
                earnings from self-employment described in 
                section 32(c)(2)(A) to the extent the tax 
                imposed by section 1401 (relating to self-
                employment tax) on such net earnings has not 
                been paid.''
    (d) Effective Date.--The amendments made by this section 
shall apply to taxable years beginning after December 31, 1995.

                  Subtitle E--Reform of Public Housing

SEC. 4601. FRAUD UNDER MEANS-TESTED WELFARE AND PUBLIC ASSISTANCE 
                    PROGRAMS.

    (a) In General.--If an individual's benefits under a 
Federal, State, or local law relating to a means-tested welfare 
or a public assistance program are reduced because of an act of 
fraud by the individual under the law or program, the 
individual may not, for the duration of the reduction, receive 
an increased benefit under any other means-tested welfare or 
public assistance program for which Federal funds are 
appropriated as a result of a decrease in the income of the 
individual (determined under the applicable program) 
attributable to such reduction.
    (b) Welfare or Public Assistance Programs for Which Federal 
Funds Are Appropriated.--For purposes of subsection (a), the 
term ``means-tested welfare or public assistance program for 
which Federal funds are appropriated'' includes the food stamp 
program under the Food Stamp Act of 1977 (7 U.S.C. 2011 et 
seq.), any program of public or assisted housing under title I 
of the United States Housing Act of 1937 (42 U.S.C. 1437 et 
seq.), and State programs funded under part A of title IV of 
the Social Security Act (42 U.S.C. 601 et seq.).

  Subtitle F--Child Protection Block Grant Programs and Foster Care, 
          Adoption Assistance, and Independent Living Programs

   CHAPTER 1--CHILD PROTECTION BLOCK GRANT PROGRAM AND FOSTER CARE, 
          ADOPTION ASSISTANCE, AND INDEPENDENT LIVING PROGRAMS

  Subchapter A--Block Grants to States for the Protection of Children

SEC. 4701. ESTABLISHMENT OF PROGRAM.

    Title IV of the Social Security Act (42 U.S.C. 601 et seq.) 
is amended by striking part B and inserting the following:

    ``PART B--BLOCK GRANTS TO STATES FOR THE PROTECTION OF CHILDREN

``SEC. 421. PURPOSE.

    ``The purpose of this part is to enable eligible States to 
carry out a child protection program to--
            ``(1) identify and assist families at risk of 
        abusing or neglecting their children;
            ``(2) operate a system for receiving reports of 
        abuse or neglect of children;
            ``(3) improve the intake, assessment, screening, 
        and investigation of reports of abuse and neglect;
            ``(4) enhance the general child protective system 
        by improving risk and safety assessment tools and 
        protocols;
            ``(5) improve legal preparation and representation, 
        including procedures for appealing and responding to 
        appeals of substantiated reports of abuse and neglect;
            ``(6) provide support, treatment, and family 
        preservation services to families which are, or are at 
        risk of, abusing or neglecting their children;
            ``(7) support children who must be removed from or 
        who cannot live with their families;
            ``(8) make timely decisions about permanent living 
        arrangements for children who must be removed from or 
        who cannot live with their families;
            ``(9) provide for continuing evaluation and 
        improvement of child protection laws, regulations, and 
        services;
            ``(10) develop and facilitate training protocols 
        for individuals mandated to report child abuse or 
        neglect; and
            ``(11) develop and enhance the capacity of 
        community-based programs to integrate shared leadership 
        strategies between parents and professionals to prevent 
        and treat child abuse and neglect at the neighborhood 
        level.

``SEC. 422. ELIGIBLE STATES.

    ``(a) In General.--As used in this part, the term `eligible 
State' means a State that has submitted to the Secretary, not 
later than October 1, 1996, and every 3 years thereafter, a 
plan which has been signed by the chief executive officer of 
the State and that includes the following:
            ``(1) Outline of child protection program.--A 
        written document that outlines the activities the State 
        intends to conduct to achieve the purpose of this part, 
        including the procedures to be used for--
                    ``(A) receiving and assessing reports of 
                child abuse or neglect;
                    ``(B) investigating such reports;
                    ``(C) with respect to families in which 
                abuse or neglect has been confirmed, providing 
                services or referral for services for families 
                and children where the State makes a 
                determination that the child may safely remain 
                with the family;
                    ``(D) protecting children by removing them 
                from dangerous settings and ensuring their 
                placement in a safe environment;
                    ``(E) providing training for individuals 
                mandated to report suspected cases of child 
                abuse or neglect;
                    ``(F) protecting children in foster care;
                    ``(G) promoting timely adoptions;
                    ``(H) protecting the rights of families, 
                using adult relatives as the preferred 
                placement for children separated from their 
                parents where such relatives meet the relevant 
                State child protection standards; and
                    ``(I) providing services to individuals, 
                families, or communities, either directly or 
                through referral, that are aimed at preventing 
                the occurrence of child abuse and neglect.
            ``(2) Certification of state law requiring the 
        reporting of child abuse and neglect.--A certification 
        that the State has in effect laws that require public 
        officials and other professionals to report, in good 
        faith, actual or suspected instances of child abuse or 
        neglect.
            ``(3) Certification of procedures for screening, 
        safety assessment, and prompt investigation.--A 
        certification that the State has in effect procedures 
        for receiving and responding to reports of child abuse 
        or neglect, including the reports described in 
        paragraph (2), and for the immediate screening, safety 
        assessment, and prompt investigation of such reports.
            ``(4) Certification of state procedures for removal 
        and placement of abused or neglected children.--A 
        certification that the State has in effect procedures 
        for the removal from families and placement of abused 
        or neglected children and of any other child in the 
        same household who may also be in danger of abuse or 
        neglect.
            ``(5) Certification of provisions for immunity from 
        prosecution.--A certification that the State has in 
        effect laws requiring immunity from prosecution under 
        State and local laws and regulations for individuals 
        making good faith reports of suspected or known 
        instances of child abuse or neglect.
            ``(6) Certification of provisions and procedures 
        relating to appeals.--A certification that not later 
        than 2 years after the date of the enactment of this 
        part, the State shall have laws and procedures in 
        effect affording individuals an opportunity to appeal 
        an official finding of abuse or neglect.
            ``(7) Certification of state procedures for 
        developing and reviewing written plans for permanent 
        placement of removed children.--A certification that 
        the State has in effect procedures for ensuring that a 
        written plan is prepared for children who have been 
        removed from their families. Such plan shall specify 
        the goals for achieving a permanent placement for the 
        child in a timely fashion, for ensuring that the 
        written plan is reviewed every 6 months (until such 
        placement is achieved), and for ensuring that 
        information about such children is collected regularly 
        and recorded in case records, and include a description 
        of such procedures.
            ``(8) Certification of state program to provide 
        independent living services.--A certification that the 
        State has in effect a program to provide independent 
        living services, for assistance in making the 
        transition to self-sufficient adulthood, to individuals 
        in the child protection program of the State who are 
        16, but who are not 20 (or, at the option of the State, 
        22), years of age, and who do not have a family to 
        which to be returned.
            ``(9) Certification of state procedures to respond 
        to reporting of medical neglect of disabled infants.--
                    ``(A) In general.--A certification that the 
                State has in place for the purpose of 
                responding to the reporting of medical neglect 
                of infants (including instances of withholding 
                of medically indicated treatment from disabled 
                infants with life-threatening conditions), 
                procedures or programs, or both (within the 
                State child protective services system), to 
                provide for--
                            ``(i) coordination and consultation 
                        with individuals designated by and 
                        within appropriate health-care 
                        facilities;
                            ``(ii) prompt notification by 
                        individuals designated by and within 
                        appropriate health-care facilities of 
                        cases of suspected medical neglect 
                        (including instances of withholding of 
                        medically indicated treatment from 
                        disabled infants with life-threatening 
                        conditions); and
                            ``(iii) authority, under State law, 
                        for the State child protective service 
                        to pursue any legal remedies, including 
                        the authority to initiate legal 
                        proceedings in a court of competent 
                        jurisdiction, as may be necessary to 
                        prevent the withholding of medically 
                        indicated treatment from disabled 
                        infants with life-threatening 
                        conditions.
                    ``(B) Withholding of medically indicated 
                treatment.--As used in subparagraph (A), the 
                term `withholding of medically indicated 
                treatment' means the failure to respond to the 
                infant's life-threatening conditions by 
                providing treatment (including appropriate 
                nutrition, hydration, and medication) which, in 
                the treating physician's or physicians' 
                reasonable medical judgment, will be most 
                likely to be effective in ameliorating or 
                correcting all such conditions, except that 
                such term does not include the failure to 
                provide treatment (other than appropriate 
                nutrition, hydration, or medication) to an 
                infant when, in the treating physician's or 
                physicians' reasonable medical judgment--
                            ``(i) the infant is chronically and 
                        irreversibly comatose;
                            ``(ii) the provision of such 
                        treatment would--
                                    ``(I) merely prolong dying;
                                    ``(II) not be effective in 
                                ameliorating or correcting all 
                                of the infant's life-
                                threatening conditions; or
                                    ``(III) otherwise be futile 
                                in terms of the survival of the 
                                infant; or
                            ``(iii) the provision of such 
                        treatment would be virtually futile in 
                        terms of the survival of the infant and 
                        the treatment itself under such 
                        circumstances would be inhumane.
            ``(10) Identification of child protection goals.--
        The quantitative goals of the State child protection 
        program.
            ``(11) Certification of child protection 
        standards.--With respect to fiscal years beginning on 
        or after April 1, 1996, a certification that the 
        State--
                    ``(A) has completed an inventory of all 
                children who, before the inventory, had been in 
                foster care under the responsibility of the 
                State for 6 months or more, which determined--
                            ``(i) the appropriateness of, and 
                        necessity for, the foster care 
                        placement;
                            ``(ii) whether the child could or 
                        should be returned to the parents of 
                        the child or should be freed for 
                        adoption or other permanent placement; 
                        and
                            ``(iii) the services necessary to 
                        facilitate the return of the child or 
                        the placement of the child for adoption 
                        or legal guardianship;
                    ``(B) is operating, to the satisfaction of 
                the Secretary--
                            ``(i) a statewide information 
                        system from which can be readily 
                        determined the status, demographic 
                        characteristics, location, and goals 
                        for the placement of every child who is 
                        (or, within the immediately preceding 
                        12 months, has been) in foster care;
                            ``(ii) a case review system for 
                        each child receiving foster care under 
                        the supervision of the State;
                            ``(iii) a service program designed 
                        to help children--
                                    ``(I) where appropriate, 
                                return to families from which 
                                they have been removed; or
                                    ``(II) be placed for 
                                adoption, with a legal 
                                guardian, or if adoption or 
                                legal guardianship is 
                                determined not to be 
                                appropriate for a child, in 
                                some other planned, permanent 
                                living arrangement; and
                            ``(iv) a preplacement preventive 
                        services program designed to help 
                        children at risk for foster care 
                        placement remain with their families; 
                        and
                    ``(C)(i) has reviewed (or not later than 
                October 1, 1997, will review) State policies 
                and administrative and judicial procedures in 
                effect for children abandoned at or shortly 
                after birth (including policies and procedures 
                providing for legal representation of such 
                children); and
                    ``(ii) is implementing (or not later than 
                October 1, 1997, will implement) such policies 
                and procedures as the State determines, on the 
                basis of the review described in clause (i), to 
                be necessary to enable permanent decisions to 
                be made expeditiously with respect to the 
                placement of such children.
            ``(12) Certification of reasonable efforts before 
        placement of children in foster care.--A certification 
        that the State in each case will--
                    ``(A) make reasonable efforts prior to the 
                placement of a child in foster care, to prevent 
                or eliminate the need for removal of the child 
                from the child's home, and to make it possible 
                for the child to return home; and
                    ``(B) with respect to families in which 
                abuse or neglect has been confirmed, provide 
                services or referral for services for families 
                and children where the State makes a 
                determination that the child may safely remain 
                with the family.
            ``(13) Certification of cooperative efforts.--A 
        certification by the State, where appropriate, that all 
        steps will be taken, including cooperative efforts with 
        the State agencies administering the plans approved 
        under parts A and D, to secure an assignment to the 
        State of any rights to support on behalf of each child 
        receiving foster care maintenance payments under part 
        E.
            ``(14) Certification of confidentiality and 
        requirements for information disclosure.--
                    ``(A) In general.--A certification that the 
                State has in effect and operational--
                            ``(i) requirements ensuring that 
                        reports and records made and maintained 
                        pursuant to the purposes of this part 
                        shall only be made available to--
                                    ``(I) individuals who are 
                                the subject of the report;
                                    ``(II) Federal, State, or 
                                local government entities, or 
                                any agent of such entities, 
                                having a need for such 
                                information in order to carry 
                                out their responsibilities 
                                under law to protect children 
                                from abuse and neglect;
                                    ``(III) child abuse citizen 
                                review panels;
                                    ``(IV) child fatality 
                                review panels;
                                    ``(V) a grand jury or 
                                court, upon a finding that 
                                information in the record is 
                                necessary for the determination 
                                of an issue before the court or 
                                grand jury; and
                                    ``(VI) other entities or 
                                classes of individuals 
                                statutorily authorized by the 
                                State to receive such 
                                information pursuant to a 
                                legitimate State purpose; and
                            ``(ii) provisions that allow for 
                        public disclosure of the findings or 
                        information about cases of child abuse 
                        or neglect that have resulted in a 
                        child fatality or near fatality.
                    ``(B) Limitation.--Disclosures made 
                pursuant to clause (i) or (ii) shall not 
                include the identifying information concerning 
                the individual initiating a report or complaint 
                alleging suspected instances of child abuse or 
                neglect.
                    ``(C) Definition.--For purposes of this 
                paragraph, the term `near fatality' means an 
                act that, as certified by a physician, places 
                the child in serious or critical condition.
    ``(b) Determinations.--The Secretary shall determine 
whether a plan submitted pursuant to subsection (a) contains 
the material required by subsection (a), other than the 
material described in paragraph (9) of such subsection. The 
Secretary may not require a State to include in such a plan any 
material not described in subsection (a).

``SEC. 423. GRANTS TO STATES FOR CHILD PROTECTION.

    ``(a) Funding of Block Grants.--
            ``(1) Entitlement component.--
                    ``(A) Eligible states.--Each eligible State 
                shall be entitled to receive from the Secretary 
                for each fiscal year specified in subsection 
                (b)(1) a grant in an amount equal to the State 
                share of 99 percent of the child protection 
                amount for the fiscal year.
                    ``(B) Indian tribes and tribal 
                organizations.--The Secretary shall reserve for 
                payments to Indian tribes (as defined in 
                section 658P(7) of the Child Care and 
                Development Block Grant Act of 1990) and tribal 
                organizations (as defined in section 658P(14) 
                of such Act) for each fiscal year specified in 
                subsection (b)(1) an amount equal to 1 percent 
                of the child protection amount for the fiscal 
                year.
            ``(2) Authorization component.--
                    ``(A) In general.--
                            ``(i) Eligible states.--For each 
                        eligible State for each fiscal year 
                        specified in subsection (b)(1), the 
                        Secretary shall supplement the grant 
                        under paragraph (1)(A) of this 
                        subsection by an amount equal to the 
                        State share of 99.64 percent of the 
                        amount (if any) appropriated pursuant 
                        to subparagraph (B) of this paragraph 
                        for the fiscal year.
                            ``(ii) Indian tribes and tribal 
                        organizations.--The Secretary shall 
                        supplement the amount reserved for 
                        payments pursuant to paragraph (1)(B) 
                        of this subsection for each fiscal year 
                        specified in subsection (b)(1), by an 
                        amount equal to 0.36 percent of the 
                        amount (if any) appropriated pursuant 
                        to subparagraph (B) of this paragraph 
                        for the fiscal year.
                    ``(B) Limitation on authorization of 
                appropriations.--For grants under subparagraph 
                (A), there are authorized to be appropriated to 
                the Secretary an amount not to exceed 
                $325,000,000 for each fiscal year specified in 
                subsection (b)(1).
    ``(b) Definitions.--As used in this section:
            ``(1) Child protection amount.--The term `child 
        protection amount' means--
                    ``(A) $240,000,000 for fiscal year 1997;
                    ``(B) $255,000,000 for fiscal year 1998;
                    ``(C) $262,000,000 for fiscal year 1999;
                    ``(D) $270,000,000 for fiscal year 2000;
                    ``(E) $278,000,000 for fiscal year 2001; 
                and
                    ``(F) $286,000,000 for fiscal year 2002;
            ``(2) State share.--
                    ``(A) In general.--The term `State share' 
                means the qualified child protection expenses 
                of the State divided by the sum of the 
                qualified child protection expenses of all of 
                the States.
                    ``(B) Qualified child protection 
                expenses.--The term `qualified child protection 
                expenses' means, with respect to a State the 
                greater of--
                            ``(i) the total amount of one-third 
                        of the Federal grant amounts to the 
                        State under the provisions of law 
                        specified in clauses (i) and (ii) of 
                        subparagraph (C) for fiscal years 1992, 
                        1993, and 1994; or
                            ``(ii) the total amount of the 
                        Federal grant amounts to the State 
                        under the provisions of law specified 
                        in clauses (i) and (ii) of subparagraph 
                        (C) for fiscal year 1994.
                    ``(C) Provisions of law.--The provisions of 
                law specified in this subparagraph are the 
                following (as in effect with respect to each of 
                the fiscal years referred to in subparagraph 
                (B)):
                            ``(i) Section 423 of this Act.
                            ``(ii) Section 434 of this Act.
                    ``(D) Determination of information.--In 
                determining amounts for fiscal years 1992, 
                1993, and 1994 under clauses (i) and (ii) of 
                subparagraph (B), the Secretary shall use 
                information listed as actual amounts in the 
                Justification for Estimates for Appropriation 
                Committees of the Administration for Children 
                and Families for fiscal years 1994, 1995, and 
                1996, respectively.
    ``(c) Use of Grant.--
            ``(1) In general.--A State to which a grant is made 
        under this section may use the grant in any manner that 
        the State deems appropriate to accomplish the purpose 
        of this part.
            ``(2) Timing of expenditures.--A State to which a 
        grant is made under this section for a fiscal year 
        shall expend the total amount of the grant not later 
        than the end of the immediately succeeding fiscal year.
            ``(3) Rule of interpretation.--This part shall not 
        be interpreted to prohibit short- and long-term foster 
        care facilities operated for profit from receiving 
        funds provided under this part or part E.
    ``(d) Timing of Payments.--The Secretary shall pay each 
eligible State the amount of the grant payable to the State 
under this section in quarterly installments.
    ``(e) Penalties.--
            ``(1) For use of grant in violation of this part.--
        If an audit conducted pursuant to chapter 75 of title 
        31, United States Code, finds that an amount paid to a 
        State under this section for a fiscal year has been 
        used in violation of this part, then the Secretary 
        shall reduce the amount of the grant that would (in the 
        absence of this paragraph) be payable to the State 
        under this section for the immediately succeeding 
        fiscal year by the amount so used, plus 5 percent of 
        the grant paid under this section to the State for such 
        fiscal year.
            ``(2) For failure to maintain effort.--
                    ``(A) In general.--If an audit conducted 
                pursuant to chapter 75 of title 31, United 
                States Code, finds that the amount expended by 
                a State (other than from amounts provided by 
                the Federal Government) during the fiscal years 
                specified in subparagraph (B), to carry out the 
                State program funded under this part is less 
                than the applicable percentage specified in 
                such subparagraph of the total amount expended 
                by the State (other than from amounts provided 
                by the Federal Government) during fiscal year 
                1994 under part B of this title (as in effect 
                on the day before the date of the enactment of 
                this part), then the Secretary shall reduce the 
                amount of the grant that would (in the absence 
                of this paragraph) be payable to the State 
                under this section for the immediately 
                succeeding fiscal year by the amount of the 
                difference, plus 5 percent of the grant paid 
                under this section to the State for such fiscal 
                year.
                    ``(B) Specification of fiscal years and 
                applicable percentages.--The fiscal years and 
                applicable percentages specified in this 
                subparagraph are as follows:
                            ``(i) For fiscal years 1997 and 
                        1998, 100 percent.
                            ``(ii) For fiscal years 1999 
                        through 2002, 75 percent.
            ``(3) For failure to submit required report.--
                    ``(A) In general.--The Secretary shall 
                reduce by 3 percent the amount of the grant 
                that would (in the absence of this paragraph) 
                be payable to a State under this section for a 
                fiscal year if the Secretary determines that 
                the State has not submitted the report required 
                by section 424 for the immediately preceding 
                fiscal year, within 6 months after the end of 
                the immediately preceding fiscal year.
                    ``(B) Rescission of penalty.--The Secretary 
                shall rescind a penalty imposed on a State 
                under subparagraph (A) with respect to a report 
                for a fiscal year if the State submits the 
                report before the end of the immediately 
                succeeding fiscal year.
            ``(4) State funds to replace reductions in grant.--
        A State which has a penalty imposed against it under 
        this subsection for a fiscal year shall expend 
        additional State funds in an amount equal to the amount 
        of the penalty for the purpose of carrying out the 
        State program under this part during the immediately 
        succeeding fiscal year.
            ``(5) Reasonable cause exception.--Except in the 
        case of the penalty described in paragraph (2), the 
        Secretary may not impose a penalty on a State under 
        this subsection with respect to a requirement if the 
        Secretary determines that the State has reasonable 
        cause for failing to comply with the requirement.
            ``(6) Corrective compliance plan.--
                    ``(A) In general.--
                            ``(i) Notification of violation.--
                        Before imposing a penalty against a 
                        State under this subsection with 
                        respect to a violation of this part, 
                        the Secretary shall notify the State of 
                        the violation and allow the State the 
                        opportunity to enter into a corrective 
                        compliance plan in accordance with this 
                        paragraph which outlines how the State 
                        will correct the violation and how the 
                        State will insure continuing compliance 
                        with this part.
                            ``(ii) 60-day period to propose a 
                        corrective compliance plan.--During the 
                        60-day period that begins on the date 
                        the State receives a notice provided 
                        under clause (i) with respect to a 
                        violation, the State may submit to the 
                        Federal Government a corrective 
                        compliance plan to correct the 
                        violation.
                            ``(iii) Consultation about 
                        modifications.--During the 60-day 
                        period that begins with the date the 
                        Secretary receives a corrective 
                        compliance plan submitted by a State in 
                        accordance with clause (ii), the 
                        Secretary may consult with the State on 
                        modifications to the plan.
                            ``(iv) Acceptance of plan.--A 
                        corrective compliance plan submitted by 
                        a State in accordance with clause (ii) 
                        is deemed to be accepted by the 
                        Secretary if the Secretary does not 
                        accept or reject the plan during the 
                        60-day period that begins on the date 
                        the plan is submitted.
                    ``(B) Effect of correcting violation.--The 
                Secretary may not impose any penalty under this 
                subsection with respect to any violation 
                covered by a State corrective compliance plan 
                accepted by the Secretary if the State corrects 
                the violation pursuant to the plan.
                    ``(C) Effect of failing to correct 
                violation.--The Secretary shall assess some or 
                all of a penalty imposed on a State under this 
                subsection with respect to a violation if the 
                State does not, in a timely manner, correct the 
                violation pursuant to a State corrective 
                compliance plan accepted by the Secretary.
            ``(7) Limitation on amount of penalty.--
                    ``(A) In general.--In imposing the 
                penalties described in this subsection, the 
                Secretary shall not reduce any quarterly 
                payment to a State by more than 25 percent.
                    ``(B) Carryforward of unrecovered 
                penalties.--To the extent that subparagraph (A) 
                prevents the Secretary from recovering during a 
                fiscal year the full amount of all penalties 
                imposed on a State under this subsection for a 
                prior fiscal year, the Secretary shall apply 
                any remaining amount of such penalties to the 
                grant payable to the State under subsection (a) 
                for the immediately succeeding fiscal year.
    ``(f) Treatment of Territories.--
            ``(1) In general.--A territory, as defined in 
        section 1108(b)(1), shall carry out a child protection 
        program in accordance with the provisions of this part.
            ``(2) Payments.--Subject to the mandatory ceiling 
        amounts specified in section 1108, each territory, as 
        so defined, shall be entitled to receive from the 
        Secretary for any fiscal year an amount equal to the 
        total obligations to the territory under section 434 
        (as in effect on the day before the date of the 
        enactment of this part) for fiscal year 1995.
    ``(g) Limitation on Federal Authority.--Except as expressly 
provided in this Act, the Secretary may not regulate the 
conduct of States under this part or enforce any provision of 
this part.

``SEC. 424. DATA COLLECTION AND REPORTING.

    ``(a) National Child Abuse and Neglect Data System.--The 
Secretary shall establish a national data collection and 
analysis program--
            ``(1) which, to the extent practicable, coordinates 
        existing State child abuse and neglect reports and 
        which shall include--
                    ``(A) standardized data on substantiated, 
                as well as false, unfounded, or unsubstantiated 
                reports; and
                    ``(B) information on the number of deaths 
                due to child abuse and neglect; and
            ``(2) which shall collect, compile, analyze, and 
        make available State child abuse and neglect reporting 
        information which, to the extent practical, is 
        universal and case-specific and integrated with other 
        case-based foster care and adoption data collected by 
        the Secretary.
    ``(b) Adoption and Foster Care and Analysis and Reporting 
Systems.--The Secretary shall implement a system for the 
collection of data relating to adoption and foster care in the 
United States. Such data collection system shall--
            ``(1) avoid unnecessary diversion of resources from 
        agencies responsible for adoption and foster care;
            ``(2) assure that any data that is collected is 
        reliable and consistent over time and among 
        jurisdictions through the use of uniform definitions 
        and methodologies;
            ``(3) provide comprehensive national information 
        with respect to--
                    ``(A) the demographic characteristics of 
                adoptive and foster children and their 
                biological and adoptive or foster parents;
                    ``(B) the status of the foster care 
                population (including the number of children in 
                foster care, length of placement, type of 
                placement, availability for adoption, and goals 
                for ending or continuing foster care);
                    ``(C) the number and characteristics of--
                            ``(i) children placed in or removed 
                        from foster care;
                            ``(ii) children adopted or with 
                        respect to whom adoptions have been 
                        terminated; and
                            ``(iii) children placed in foster 
                        care outside the State which has 
                        placement and care responsibility; and
                    ``(D) the extent and nature of assistance 
                provided by Federal, State, and local adoption 
                and foster care programs and the 
                characteristics of the children with respect to 
                whom such assistance is provided; and
            ``(4) utilize appropriate requirements and 
        incentives to ensure that the system functions reliably 
        throughout the United States.
    ``(c) Additional Information.--The Secretary may require 
the provision of additional information under the data 
collection system established under subsection (b) if the 
addition of such information is agreed to by a majority of the 
States.
    ``(d) Annual Report by the Secretary.--Not later than 6 
months after the end of each fiscal year, the Secretary shall 
prepare a report based on information provided by the States 
for the fiscal year pursuant to this section, and shall make 
the report and such information available to the Congress and 
the public.

``SEC. 425. FUNDING FOR STUDIES OF CHILD WELFARE.

    ``(a) National Random Sample Study of Child Welfare.--There 
are authorized to be appropriated and there are appropriated to 
the Secretary for each of fiscal years 1996 through 2002--
            ``(1) $6,000,000 to conduct a national study based 
        on random samples of children who are at risk of child 
        abuse or neglect, or are determined by States to have 
        been abused or neglected under section 208 of the Child 
        and Family Services Block Grant Act of 1996; and
            ``(2) $10,000,000 for such other research as may be 
        necessary under such section.
    ``(b) Assessment of State Courts Improvement of Handling of 
Proceedings Relating to Foster Care and Adoption.--There are 
authorized to be appropriated and there are appropriated to the 
Secretary for each of fiscal years 1996 through 1998 
$10,000,000 for the purpose of carrying out section 13712 of 
the Omnibus Budget Reconciliation Act of 1993 (42 U.S.C. 670 
note). All funds appropriated under this subsection shall be 
expended not later than September 30, 1999.

``SEC. 426. DEFINITIONS.

    ``For purposes of this part and part E, the following 
definitions shall apply:
            ``(1) Administrative review.--The term 
        `administrative review' means a review open to the 
        participation of the parents of the child, conducted by 
        a panel of appropriate persons at least one of whom is 
        not responsible for the case management of, or the 
        delivery of services to, either the child or the 
        parents who are the subject of the review.
            ``(2) Adoption assistance agreement.--The term 
        `adoption assistance agreement' means a written 
        agreement, binding on the parties to the agreement, 
        between the State, other relevant agencies, and the 
        prospective adoptive parents of a minor child which at 
        a minimum--
                    ``(A) specifies the nature and amount of 
                any payments, services, and assistance to be 
                provided under such agreement; and
                    ``(B) stipulates that the agreement shall 
                remain in effect regardless of the State of 
                which the adoptive parents are residents at any 
                given time.
        The agreement shall contain provisions for the 
        protection (under an interstate compact approved by the 
        Secretary or otherwise) of the interests of the child 
        in cases where the adoptive parents and child move to 
        another State while the agreement is effective.
            ``(3) Case plan.--The term `case plan' means a 
        written document which includes at least the following:
                    ``(A) A description of the type of home or 
                institution in which a child is to be placed, 
                including a discussion of the appropriateness 
                of the placement and how the agency which is 
                responsible for the child plans to carry out 
                the voluntary placement agreement entered into 
                or judicial determination made with respect to 
                the child in accordance with section 472(a)(1).
                    ``(B) A plan for assuring that the child 
                receives proper care and that services are 
                provided to the parents, child, and foster 
                parents in order to improve the conditions in 
                the parents' home, facilitate return of the 
                child to his or her own home or the permanent 
                placement of the child, and address the needs 
                of the child while in foster care, including a 
                discussion of the appropriateness of the 
                services that have been provided to the child 
                under the plan.
                    ``(C) To the extent available and 
                accessible, the health and education records of 
                the child, including--
                            ``(i) the names and addresses of 
                        the child's health and educational 
                        providers;
                            ``(ii) the child's grade level 
                        performance;
                            ``(iii) the child's school record;
                            ``(iv) assurances that the child's 
                        placement in foster care takes into 
                        account proximity to the school in 
                        which the child is enrolled at the time 
                        of placement;
                            ``(v) a record of the child's 
                        immunizations;
                            ``(vi) the child's known medical 
                        problems;
                            ``(vii) the child's medications; 
                        and
                            ``(viii) any other relevant health 
                        and education information concerning 
                        the child determined to be appropriate 
                        by the State.
                Where appropriate, for a child age 16 or over, 
                the case plan must also include a written 
                description of the programs and services which 
                will help such child prepare for the transition 
                from foster care to independent living.
            ``(4) Case review system.--The term `case review 
        system' means a procedure for assuring that--
                    ``(A) each child has a case plan designed 
                to achieve placement in the least restrictive 
                (most family-like) and most appropriate setting 
                available and in close proximity to the 
                parents' home, consistent with the best 
                interests and special needs of the child, 
                which--
                            ``(i) if the child has been placed 
                        in a foster family home or child-care 
                        institution a substantial distance from 
                        the home of the parents of the child, 
                        or in a State different from the State 
                        in which such home is located, sets 
                        forth the reasons why such placement is 
                        in the best interests of the child; and
                            ``(ii) if the child has been placed 
                        in foster care outside the State in 
                        which the home of the parents of the 
                        child is located, requires that, 
                        periodically, but not less frequently 
                        than every 12 months, a caseworker on 
                        the staff of the State in which the 
                        home of the parents of the child is 
                        located, or of the State in which the 
                        child has been placed, visit such child 
                        in such home or institution and submit 
                        a report on such visit to the State in 
                        which the home of the parents of the 
                        child is located;
                    ``(B) the status of each child is reviewed 
                periodically but no less frequently than once 
                every 6 months by either a court or by 
                administrative review (as defined in paragraph 
                (1)) in order to determine the continuing 
                necessity for and appropriateness of the 
                placement, the extent of compliance with the 
                case plan, and the extent of progress which has 
                been made toward alleviating or mitigating the 
                causes necessitating placement in foster care, 
                and to project a likely date by which the child 
                may be returned to the home or placed for 
                adoption or legal guardianship;
                    ``(C) with respect to each such child, 
                procedural safeguards will be applied, among 
                other things, to assure each child in foster 
                care under the supervision of the State of a 
                dispositional hearing to be held, in a family 
                or juvenile court or another court (including a 
                tribal court) of competent jurisdiction, or by 
                an administrative body appointed or approved by 
                the court, no later than 18 months after the 
                original placement (and not less frequently 
                than every 12 months thereafter during the 
                continuation of foster care), which hearing 
                shall determine the future status of the child 
                (including whether the child should be returned 
                to the parent, should be continued in foster 
                care for a specified period, should be placed 
                for adoption, or should (because of the child's 
                special needs or circumstances) be continued in 
                foster care on a permanent or long-term basis) 
                and, in the case of a child described in 
                subparagraph (A)(ii), whether the out-of-State 
                placement continues to be appropriate and in 
                the best interests of the child, and, in the 
                case of a child who has attained age 16, the 
                services needed to assist the child to make the 
                transition from foster care to independent 
                living; and procedural safeguards shall also be 
                applied with respect to parental rights 
                pertaining to the removal of the child from the 
                home of his parents, to a change in the child's 
                placement, and to any determination affecting 
                visitation privileges of parents; and
                    ``(D) a child's health and education record 
                (as described in paragraph (3)(C)) is reviewed 
                and updated, and supplied to the foster parent 
                or foster care provider with whom the child is 
                placed, at the time of each placement of the 
                child in foster care.
            ``(5) Child-care institution.--The term `child-care 
        institution' means a private child-care institution, or 
        a public child-care institution which accommodates no 
        more than 25 children, which is licensed by the State 
        in which it is situated or has been approved, by the 
        agency of such State responsible for licensing or 
        approval of institutions of this type, as meeting the 
        standards established for such licensing, but the term 
        shall not include detention facilities, forestry camps, 
        training schools, or any other facility operated 
        primarily for the detention of children who are 
        determined to be delinquent.
            ``(6) Foster care maintenance payments.--
                    ``(A) In general.--The term `foster care 
                maintenance payments' means payments to cover 
                the cost of (and the cost of providing) food, 
                clothing, shelter, daily supervision, school 
                supplies, a child's personal incidentals, 
                liability insurance with respect to a child, 
                and reasonable travel to the child's home for 
                visitation. In the case of institutional care, 
                such term shall include the reasonable costs of 
                administration and operation of such 
                institution as are necessarily required to 
                provide the items described in the preceding 
                sentence.
                    ``(B) Special rule.--In cases where--
                            ``(i) a child placed in a foster 
                        family home or child-care institution 
                        is the parent of a son or daughter who 
                        is in the same home or institution; and
                            ``(ii) payments described in 
                        subparagraph (A) are being made under 
                        this part with respect to such child,
                the foster care maintenance payments made with 
                respect to such child as otherwise determined 
                under subparagraph (A) shall also include such 
                amounts as may be necessary to cover the cost 
                of the items described in that subparagraph 
                with respect to such son or daughter.
            ``(7) Foster family home.--The term `foster family 
        home' means a foster family home for children which is 
        licensed by the State in which it is situated or has 
        been approved, by the agency of such State having 
        responsibility for licensing homes of this type, as 
        meeting the standards established for such licensing.
            ``(8) Parents.--The term `parents' means biological 
        or adoptive parents or legal guardians, as determined 
        by applicable State law.
            ``(9) State.--The term `State' means the 50 States 
        and the District of Columbia.
            ``(10) Voluntary placement.--The term `voluntary 
        placement' means an out-of-home placement of a minor, 
        by or with participation of the State, after the 
        parents or guardians of the minor have requested the 
        assistance of the State and signed a voluntary 
        placement agreement.
            ``(11) Voluntary placement agreement.--The term 
        `voluntary placement agreement' means a written 
        agreement, binding on the parties to the agreement, 
        between the State, any other agency acting on its 
        behalf, and the parents or guardians of a minor child 
        which specifies, at a minimum, the legal status of the 
        child and the rights and obligations of the parents or 
        guardians, the child, and the agency while the child is 
        in placement.''.

SEC. 4702. CONFORMING AMENDMENTS.

    (a) Amendments to Part D of Title IV of the Social Security 
Act.--
            (1) Section 452(a)(10)(C) of the Social Security 
        Act (42 U.S.C. 652(a)(10)(C)), as amended by section 
        4108(b)(2) of this Act, is amended by striking ``or 
        under section 471(a)(17),''.
            (2) Section 452(g)(2)(A) of such Act (42 U.S.C. 
        652(g)(2)(A)), as amended by paragraphs (6) and (7) of 
        section 4108(b) of this Act, is amended by inserting 
        ``or benefits or services for foster care maintenance 
        were being provided under the State program funded 
        under part E'' after ``part A'' each place it appears.
            (3) Section 466(a)(3)(B) of such Act (42 U.S.C. 
        666(a)(3)(B)), as amended by section 4108(b)(14) of 
        this Act, is amended by striking ``or 471(a)(17)''.
    (b) Amendment to Section 9442 of the Omnibus Budget 
Reconciliation Act of 1986.--Section 9442(4) of the Omnibus 
Budget Reconciliation Act of 1986 (42 U.S.C. 679a(4)) is 
amended by inserting ``(as in effect before October 1, 1995)'' 
after ``Act''.
    (c) Redesignation and Amendments of Section 1123.--
            (1) Redesignation.--The Social Security Act is 
        amended by redesignating section 1123, the second place 
        it appears (42 U.S.C. 1320a-1a), as section 1123A.
            (2) Amendments.--Section 1123A of such Act, as so 
        redesignated, is amended in subsection (a)--
                    (A) by striking ``The Secretary'' and 
                inserting ``Notwithstanding section 423(g), the 
                Secretary''; and
                    (B) in paragraph (2), by inserting ``under 
                this section'' after ``promulgated''.

Subchapter B--Foster Care, Adoption Assistance, and Independent Living 
                                Programs

SEC. 4711. CONFORMING AMENDMENTS TO PART E OF TITLE IV.

    (a) Purpose; Appropriation.--Section 470 of the Social 
Security Act (42 U.S.C 670) is amended--
            (1) by amending the heading to read as follows:

``SEC. 470. PURPOSE; APPROPRIATION.''; and

            (2) in the second sentence, by striking ``this 
        part'' and inserting ``section 422''.
    (b) State Plan For Foster Care and Adoption Assistance.--
Section 471 of such Act (42 U.S.C. 671) is amended to read as 
follows:

``SEC. 471. ELIGIBLE STATES.

    ``In order for a State to be eligible for payments under 
this part, the State shall have submitted to the Secretary a 
plan which satisfies the requirements of section 422.''.
    (c) Foster Care Maintenance Payments Program.--Section 472 
of such Act (42 U.S.C. 672) is amended to read as follows:

``SEC. 472. REQUIREMENTS FOR FOSTER CARE MAINTENANCE PAYMENTS.

    ``(a) In General.--Each State operating a program under 
this part shall make foster care maintenance payments, as 
defined in section 426(6) with respect to a child who would 
meet the requirements of section 406(a) (as in effect on the 
day before the date of the enactment of the Personal 
Responsibility and Work Opportunity Act of 1996) or of section 
407 (as so in effect) but for the removal of the child from the 
home of a relative (specified in section 406(a) (as so in 
effect)), if--
            ``(1) the removal from the home occurred pursuant 
        to a voluntary placement agreement entered into by the 
        child's parent or legal guardian, or was the result of 
        a judicial determination to the effect that 
        continuation therein would be contrary to the welfare 
        of such child and that reasonable efforts of the type 
        described in section 422(a)(12) have been made;
            ``(2) such child's placement and care are the 
        responsibility of--
                    ``(A) the State; or
                    ``(B) any other public agency with which 
                the State has made an agreement for the 
                administration of the State program under this 
                part which is still in effect;
            ``(3) such child has been placed in a foster family 
        home or child-care institution as a result of the 
        voluntary placement agreement or judicial determination 
        referred to in paragraph (1); and
            ``(4) such child--
                    ``(A) would have been eligible to receive 
                aid under the eligibility standards under the 
                State plan approved under section 402 (as in 
                effect on the day before the date of the 
                enactment of this part and adjusted for 
                inflation, in accordance with regulations 
                issued by the Secretary) in or for the month in 
                which such agreement was entered into or court 
                proceedings leading to the removal of such 
                child from the home were initiated; or
                    ``(B) would have received such aid in or 
                for such month if application had been made 
                therefor, or the child had been living with a 
                relative specified in section 406(a) (as so in 
                effect) within 6 months prior to the month in 
                which such agreement was entered into or such 
                proceedings were initiated, and would have 
                received such aid in or for such month if in 
                such month such child had been living with such 
                a relative and application therefor had been 
                made.
    ``(b) Limitation on Foster Care Payments.--Foster care 
maintenance payments may be made under this part only on behalf 
of a child described in subsection (a) of this section who is--
            ``(1) in the foster family home of an individual, 
        whether the payments therefore are made to such 
        individual or to a public or private child placement or 
        child-care agency; or
            ``(2) in a child-care institution, whether the 
        payments therefore are made to such institution or to a 
        public or private child-placement or child-care agency, 
        which payments shall be limited so as to include in 
        such payments only those items which are included in 
        the term `foster care maintenance payments' (as defined 
        in section 426(6)).
    ``(c) Voluntary Placements.--
            ``(1) Satisfaction of child protection standards.--
        Notwithstanding any other provision of this section, 
        Federal payments may be made under this part with 
        respect to amounts expended by any State as foster care 
        maintenance payments under this part, in the case of 
        children removed from their homes pursuant to voluntary 
        placement agreements as described in subsection (a), 
        only if (at the time such amounts were expended) the 
        State has fulfilled all of the requirements of section 
        422(a)(11).
            ``(2) Removal in excess of 180 days.--No Federal 
        payment may be made under this part with respect to 
        amounts expended by any State as foster care 
        maintenance payments, in the case of any child who was 
        removed from such child's home pursuant to a voluntary 
        placement agreement as described in subsection (a) and 
        has remained in voluntary placement for a period in 
        excess of 180 days, unless there has been a judicial 
        determination by a court of competent jurisdiction 
        (within the first 180 days of such placement) that such 
        placement is in the best interests of the child.
            ``(3) Deemed revocation of agreements.--In any case 
        where--
                    ``(A) the placement of a minor child in 
                foster care occurred pursuant to a voluntary 
                placement agreement entered into by the parents 
                or guardians of such child as provided in 
                subsection (a); and
                    ``(B) such parents or guardians request (in 
                such manner and form as the Secretary may 
                prescribe) that the child be returned to their 
                home or to the home of a relative,
        the voluntary placement agreement shall be deemed to be 
        revoked unless the State opposes such request and 
        obtains a judicial determination, by a court of 
        competent jurisdiction, that the return of the child to 
        such home would be contrary to the child's best 
        interests.
    ``(d) Eligibility for Medical Assistance.--For purposes of 
title XIX (or, if applicable, title XV) and title XX, any child 
with respect to whom foster care maintenance payments are made 
under this section is deemed to be a recipient of cash 
assistance under part A of this title. For the purposes of the 
preceding sentence, a child whose costs in a foster family home 
or child-care institution are covered by the foster care 
maintenance payments being made with respect to his or her 
minor parent, as provided in section 426(6)(B), shall be 
considered a child with respect to whom foster care maintenance 
payments are made under this section.''.
    (d) Adoption Assistance Program.--Section 473 of such Act 
(42 U.S.C. 673) is amended to read as follows:

``SEC. 473. REQUIREMENTS FOR ADOPTION ASSISTANCE PAYMENTS.

    ``(a) In General.--A State operating a program under this 
part shall enter into adoption assistance agreements with the 
adoptive parents of children with special needs.
    ``(b) Payments Under Agreements.--
            ``(1) In general.--Under any adoption assistance 
        agreement entered into by a State with parents who 
        adopt a child with special needs, the State--
                    ``(A) shall make payments of nonrecurring 
                adoption expenses incurred by or on behalf of 
                such parents in connection with the adoption of 
                such child, directly through the State agency 
                or through another public or nonprofit private 
                agency, in amounts determined under subsection 
                (e), and
                    ``(B) in any case where the child meets the 
                requirements of subsection (d), may make 
                adoption assistance payments to such parents, 
                directly through the State agency or through 
                another public or nonprofit private agency, in 
                amounts so determined.
            ``(2) Definition of nonrecurring adoption 
        expenses.--
                    ``(A) In general.--For purposes of 
                paragraph (1)(A), the term `nonrecurring 
                adoption expenses' means reasonable and 
                necessary adoption fees, court costs, attorney 
                fees, and other expenses which are directly 
                related to the legal adoption of a child with 
                special needs and which are not incurred in 
                violation of State or Federal law.
                    ``(B) Treatment as an administrative 
                expense.--A State's payment of nonrecurring 
                adoption expenses under an adoption assistance 
                agreement shall be treated as an expenditure 
                made for the proper and efficient 
                administration of the State plan for purposes 
                of section 474(a)(3)(E).
    ``(c) Eligibility for Medical Assistance.--For purposes of 
title XIX (or, if applicable, title XV) and title XX, any 
child--
            ``(1)(A) who is a child described in subsection 
        (b), and
            ``(B) with respect to whom an adoption assistance 
        agreement is in effect under this section (whether or 
        not adoption assistance payments are provided under the 
        agreement or are being made under this section), 
        including any such child who has been placed for 
        adoption in accordance with applicable State and local 
        law (whether or not an interlocutory or other judicial 
        decree of adoption has been issued), or
            ``(2) with respect to whom foster care maintenance 
        payments are being made under section 472,
is deemed to be a recipient of cash assistance under part A of 
this title in the State where such child resides. For purposes 
of the preceding sentence, a child whose costs in a foster 
family home or child-care institution are covered by the foster 
care maintenance payments being made with respect to his or her 
minor parent, as provided in section 426(6)(B), shall be 
considered a child with respect to whom foster care maintenance 
payments are being made under section 472.
    ``(d) Children With Special Needs.--For purposes of 
subsection (b)(1)(B), a child meets the requirements of this 
subsection if such child--
            ``(1)(A) at the time adoption proceedings were 
        initiated, met the requirements of section 406(a) (as 
        in effect on the day before the date of the enactment 
        of the Personal Responsibility and Work Opportunity Act 
        of 1996) or section 407 (as so in effect) or would have 
        met such requirements except for such child's removal 
        from the home of a relative (specified in section 
        406(a) (as so in effect)), either pursuant to a 
        voluntary placement agreement with respect to which 
        Federal payments are provided under section 474 (or 403 
        (as so in effect)) or as a result of a judicial 
        determination to the effect that continuation therein 
        would be contrary to the welfare of such child;
            ``(B) meets all of the requirements of title XVI 
        with respect to eligibility for supplemental security 
        income benefits; or
            ``(C) is a child whose costs in a foster family 
        home or child-care institution are covered by the 
        foster care maintenance payments being made with 
        respect to his or her minor parent;
            ``(2)(A) would have received aid under the 
        eligibility standards under the State plan approved 
        under section 402 (as in effect on the day before the 
        date of the enactment of this part, adjusted for 
        inflation, in accordance with regulations issued by the 
        Secretary) in or for the month in which such agreement 
        was entered into or court proceedings leading to the 
        removal of such child from the home were initiated;
            ``(B) would have received such aid in or for such 
        month if application had been made therefor, or had 
        been living with a relative specified in section 406(a) 
        (as so in effect) within 6 months prior to the month in 
        which such agreement was entered into or such 
        proceedings were initiated, and would have received 
        such aid in or for such month if in such month such 
        child had been living with such a relative and 
        application therefor had been made; or
            ``(C) is a child described in subparagraph (A) or 
        (B); and
            ``(3) has been determined by the State, pursuant to 
        subsection (h) of this section, to be a child with 
        special needs.
    ``(e) Determination of Payments.--The amount of the 
payments to be made in any case under subsection (b) shall be 
determined through agreement between the adoptive parents and 
the State or a public or nonprofit private agency administering 
the program under this part, which shall take into 
consideration the circumstances of the adopting parents and the 
needs of the child being adopted, and may be readjusted 
periodically, with the concurrence of the adopting parents 
(which may be specified in the adoption assistance agreement), 
depending upon changes in such circumstances. However, in no 
case may the amount of the adoption assistance payment exceed 
the foster care maintenance payment which would have been paid 
during the period if the child with respect to whom the 
adoption assistance payment is made had been in a foster family 
home.
    ``(f) Payment Exception.--Notwithstanding subsection (e), 
no payment may be made to parents with respect to any child who 
has attained the age of 18 (or, where the State determines that 
the child has a mental or physical disability which warrants 
the continuation of assistance, the age of 21), and no payment 
may be made to parents with respect to any child if the State 
determines that the parents are no longer legally responsible 
for the support of the child or if the State determines that 
the child is no longer receiving any support from such parents. 
Parents who have been receiving adoption assistance payments 
under this part shall keep the State or public or nonprofit 
private agency administering the program under this part 
informed of circumstances which would, pursuant to this 
section, make them ineligible for such assistance payments, or 
eligible for assistance payments in a different amount.
    ``(g) Preadoption Payments.--For purposes of this part, 
individuals with whom a child who has been determined by the 
State, pursuant to subsection (h), to be a child with special 
needs is placed for adoption in accordance with applicable 
State and local law shall be eligible for adoption assistance 
payments during the period of the placement, on the same terms 
and subject to the same conditions as if such individuals had 
adopted such child.
    ``(h) Determination of Child With Special Needs.--For 
purposes of this section, a child shall not be considered a 
child with special needs unless--
            ``(1) the State has determined that the child 
        cannot or should not be returned to the home of the 
        child's parents; and
            ``(2) the State had first determined--
                    ``(A) that there exists with respect to the 
                child a specific factor or condition such as 
                the child's ethnic background, age, or 
                membership in a minority or sibling group, or 
                the presence of factors such as medical 
                conditions or physical, mental, or emotional 
                handicaps because of which it is reasonable to 
                conclude that such child cannot be placed with 
                adoptive parents without providing adoption 
                assistance under this part or medical 
                assistance under title XV or XIX; and
                    ``(B) that, except where it would be 
                against the best interests of the child because 
                of such factors as the existence of significant 
                emotional ties with prospective adoptive 
                parents while in the care of such parents as a 
                foster child, a reasonable, but unsuccessful, 
                effort has been made to place the child with 
                appropriate adoptive parents without providing 
                adoption assistance under this section or 
                medical assistance under title XV or XIX.''.
    (e) Payments to States; Allotments to States.--Section 474 
of such Act (42 U.S.C. 674) is amended to read as follows:

``SEC. 474. PAYMENTS TO STATES; ALLOTMENTS TO STATES.

    ``(a) Foster Care, Adoption Assistance, and Independent 
Living Programs Payments.--Each eligible State, as determined 
under section 471, shall be entitled to receive from the 
Secretary for each quarter of each fiscal year a payment equal 
to the sum of--
            ``(1) an amount equal to the Federal medical 
        assistance percentage (as defined in section 1905(b) of 
        this Act as in effect on the day before the date of the 
        enactment of the Personal Responsibility and Work 
        Opportunity Act of 1996) of the total amount expended 
        during such quarter as foster care maintenance payments 
        under the child protection program under this part for 
        children in foster family homes or child-care 
        institutions; plus
            ``(2) an amount equal to the Federal medical 
        assistance percentage (as defined in section 1905(b) of 
        this Act (as so in effect)) of the total amount 
        expended during such quarter as adoption assistance 
        payments under the child protection program under this 
        part pursuant to adoption assistance agreements; plus
            ``(3) an amount equal to the sum of the following 
        proportions of the total amounts expended during such 
        quarter as found necessary by the Secretary for the 
        provision of child placement services and for the 
        proper and efficient administration of the State foster 
        care and adoption assistance program--
                    ``(A) 75 percent of so much of such 
                expenditures as are for the training (including 
                both short and long-term training at 
                educational institutions through grants to such 
                institutions or by direct financial assistance 
                to students enrolled in such institutions) of 
                personnel employed or preparing for employment 
                by the State agency or by the local agency 
                administering the plan in the political 
                subdivision;
                    ``(B) 75 percent of so much of such 
                expenditures (including travel and per diem 
                expenses) as are for the short-term training of 
                current or prospective foster or adoptive 
                parents and the members of the staff of State-
                licensed or State-approved child care 
                institutions providing care to foster and 
                adopted children receiving assistance under 
                this part, in ways that increase the ability of 
                such current or prospective parents, staff 
                members, and institutions to provide support 
                and assistance to foster and adopted children, 
                whether incurred directly by the State or by 
                contract;
                    ``(C) 50 percent (or, if the quarter is in 
                fiscal year 1997, 75 percent) of so much of 
                such expenditures as are for the planning, 
                design, development, or installation of 
                statewide mechanized data collection and 
                information retrieval systems (including 50 
                percent (or, if the quarter is in fiscal year 
                1997, 75 percent) of the full amount of 
                expenditures for hardware components for such 
                systems) but only to the extent that such 
                systems--
                            ``(i) meet the requirements imposed 
                        by regulations;
                            ``(ii) to the extent practicable, 
                        are capable of interfacing with the 
                        State data collection system that 
                        collects information relating to child 
                        abuse and neglect;
                            ``(iii) to the extent practicable, 
                        have the capability of interfacing 
                        with, and retrieving information from, 
                        the State data collection system that 
                        collects information relating to the 
                        eligibility of individuals under part A 
                        (for the purposes of facilitating 
                        verification of eligibility of foster 
                        children); and
                            ``(iv) are determined by the 
                        Secretary to be likely to provide more 
                        efficient, economical, and effective 
                        administration of the programs carried 
                        out under a State plan approved under 
                        this part;
                    ``(D) 50 percent of so much of such 
                expenditures as are for the operation of the 
                statewide mechanized data collection and 
                information retrieval systems referred to in 
                subparagraph (C); and
                    ``(E) one-half of the remainder of such 
                expenditures; plus
            ``(4) an amount equal to the sum of--
                    ``(A) so much of the amounts expended by 
                such State to carry out a program under section 
                476, as do not exceed the basic amount for such 
                State determined under subsection (e)(1) of 
                such section; and
                    ``(B) the lesser of--
                            ``(i) one-half of any additional 
                        amounts expended by such State for such 
                        programs; or
                            ``(ii) the maximum additional 
                        amount for such State under subsection 
                        (e)(1) of such section.
    ``(b) Automated Data Collection Expenditures.--The 
Secretary shall treat as necessary for the proper and efficient 
administration of the State plan all expenditures of a State 
necessary in order for the State to plan, design, develop, 
install, and operate data collection and information retrieval 
systems, without regard to whether the systems may be used with 
respect to foster or adoptive children other than those on 
behalf of whom foster care maintenance payments or adoption 
assistance payments may be made under this part.
    ``(c) Estimates by the Secretary.--
            ``(1) In general.--The Secretary shall, prior to 
        the beginning of each quarter, estimate the amount 
        which a State will be entitled to receive under 
        subsection (a) for such quarter, such estimates to be 
        based on--
                    ``(A) a report filed by the State 
                containing its estimate of the total sum to be 
                expended in such quarter in accordance with 
                subsection (a), and stating the amount 
                appropriated or made available by the State and 
                its political subdivisions for such 
                expenditures in such quarter, and if such 
                amount is less than the State's proportionate 
                share of the total sum of such estimated 
                expenditures, the source or sources from which 
                the difference is expected to be derived;
                    ``(B) records showing the number of 
                children in the State receiving assistance 
                under this part; and
                    ``(C) such other information as the 
                Secretary may find necessary.
            ``(2) Payments.--The Secretary shall pay to the 
        States the amounts so estimated under paragraph (1), 
        reduced or increased to the extent of any overpayment 
        or underpayment which the Secretary determines was made 
        under this subsection to such State for any prior 
        quarter and with respect to which adjustment has not 
        already been made under this subsection.
            ``(3) Pro rata share.-- The pro rata share to which 
        the United States is equitably entitled, as determined 
        by the Secretary, of the net amount recovered during 
        any quarter by the State or any political subdivision 
        thereof with respect to foster care and adoption 
        assistance furnished under this part shall be 
        considered an overpayment to be adjusted under this 
        subsection.
    ``(d) Allowance or Disallowance of Claim.--
            ``(1) In general.--Within 60 days after receipt of 
        a State claim for expenditures pursuant to subsection 
        (b)(1), the Secretary shall allow, disallow, or defer 
        such claim.
            ``(2) Notice.--Within 15 days after a decision to 
        defer a State claim, the Secretary shall notify the 
        State of the reasons for the deferral and of the 
        additional information necessary to determine the 
        allowability of the claim.
            ``(3) Decision.--Within 90 days after receiving 
        such necessary information (in readily reviewable 
        form), the Secretary shall--
                    ``(A) disallow the claim, if able to 
                complete the review and determine that the 
                claim is not allowable; or
                    ``(B) in any other case, allow the claim, 
                subject to disallowance (as necessary)--
                            ``(i) upon completion of the 
                        review, if it is determined that the 
                        claim is not allowable; or
                            ``(ii) on the basis of findings of 
                        an audit or financial management 
                        review.''.
    (f) Definitions.--Section 475 of such Act (42 U.S.C. 675) 
is amended to read as follows:

``SEC. 475. DEFINITIONS.

    For definitions of terms used in this part, see section 
426.''.
    (g) Technical Assistance; Data Collection and Evaluation.--
Part E of title IV of such Act is amended by striking section 
476.
    (h) Independent Living Initiatives.--Part E of title IV of 
such Act (42 U.S.C. 670 et seq.), as amended by subsection (g) 
of this section, is amended--
            (1) by redesignating section 477 as section 476; 
        and
            (2) by amending section 476, as so redesignated, to 
        read as follows:

``SEC. 476. REQUIREMENTS FOR INDEPENDENT LIVING PROGRAMS.

    ``(a) Payments for Independent Living Programs.--
            ``(1) In general.--Payments shall be made in 
        accordance with this section for the purpose of 
        assisting States and localities in establishing and 
        carrying out programs designed to assist children 
        described in paragraph (2) who have attained age 16 in 
        making the transition from foster care to independent 
        living. Any State which provides for the establishment 
        and carrying out of one or more such programs in 
        accordance with this section for a fiscal year shall be 
        entitled to receive payments under this section for 
        such fiscal year, in an amount determined under 
        subsection (e).
            ``(2) Program requirements.--A program established 
        and carried out under paragraph (1)--
                    ``(A) shall be designed to assist children 
                with respect to whom foster care maintenance 
                payments are being made by the State under this 
                part;
                    ``(B) may at the option of the State also 
                include any or all other children in foster 
                care under the responsibility of the State; and
                    ``(C) may at the option of the State also 
                include any child who has not attained age 21 
                to whom foster care maintenance payments were 
                previously made by a State under this part and 
                whose payments were discontinued on or after 
                the date such child attained age 16, and any 
                child who previously was in foster care 
                described in subparagraph (B) and for whom such 
                care was discontinued on or after the date such 
                child attained age 16; and a written 
                transitional independent living plan of the 
                type described in subsection (d)(6) shall be 
                developed for such child as a part of such 
                program.
    ``(b) Use of Funds.--Payment under this section shall be 
made to the State, and shall be used for the purpose of 
conducting and providing in accordance with this section 
(directly or under contracts with local governmental entities 
or private nonprofit organizations) the activities and services 
required to carry out the program or programs involved.
    ``(c) Submission of Program Description and Assurances.--In 
order for a State to receive payments under this section for 
any fiscal year, the State, prior to February 1 of such fiscal 
year, must submit to the Secretary, in such manner and form as 
the Secretary may prescribe, a description of the program 
together with satisfactory assurances that the program will be 
operated in an effective and efficient manner and will 
otherwise meet the requirements of this section.
    ``(d) Program Objectives.--In carrying out the purpose 
described in subsection (a), it shall be the objective of each 
program established under this section to help the individuals 
participating in such program to prepare to live independently 
upon leaving foster care. Such programs may include (subject to 
the availability of funds) programs to--
            ``(1) enable participants to seek a high school 
        diploma or its equivalent or to take part in 
        appropriate vocational training;
            ``(2) provide training in daily living skills, 
        budgeting, locating and maintaining housing, and career 
        planning;
            ``(3) provide for individual and group counseling;
            ``(4) integrate and coordinate services otherwise 
        available to participants;
            ``(5) provide for the establishment of outreach 
        programs designed to attract individuals who are 
        eligible to participate in the program;
            ``(6) provide each participant a written 
        transitional independent living plan which shall be 
        based on an assessment of his needs, and which shall be 
        incorporated into his case plan, as defined in section 
        426(3); and
            ``(7) provide participants with other services and 
        assistance designed to improve their transition to 
        independent living.
    ``(e) Determination of Payments.--
            ``(1) Basic amount.--
                    ``(A) In general.--The basic amount to 
                which a State shall be entitled under section 
                474(a)(4) for a fiscal year shall be an amount 
                which bears the same ratio to the basic ceiling 
                for such fiscal year as such State's average 
                number of children receiving foster care 
                maintenance payments under part E in fiscal 
                year 1984 bore to the total of the average 
                number of children receiving such payments 
                under such part for all States for fiscal year 
                1984.
                    ``(B) Maximum additional amount.--The 
                maximum additional amount to which a State 
                shall be entitled under section 474(a)(4) for a 
                fiscal year shall be an amount which bears the 
                same ratio to the additional ceiling for such 
                fiscal year as the basic amount of such State 
                bears to $45,000,000.
                    ``(C) Definitions.--For purposes of this 
                section:
                            ``(i) Basic ceiling.--The term 
                        `basic ceiling' means, for any fiscal 
                        year, $45,000,000.
                            ``(ii) Additional ceiling.--The 
                        term `additional ceiling' means, for 
                        any fiscal year, $25,000,000.
            ``(2) Reallocation of funds.--If any State does not 
        apply for funds under this section for any fiscal year 
        within the time provided in subsection (c), the funds 
        to which such State would have been entitled for such 
        fiscal year shall be reallocated to one or more other 
        States on the basis of their relative need for 
        additional payments under this section (as determined 
        by the Secretary).
            ``(3) Supplement to other funds.--Any amounts 
        payable to States under this section shall be in 
        addition to amounts payable to States under paragraphs 
        (1), (2), and (3) of section 474(a), and shall 
        supplement and not replace any other funds which may be 
        available for the same general purposes in the 
        localities involved.
    ``(f) Limitation on Use of Funds.--Payments made to a State 
under this section for any fiscal year--
            ``(1) shall be used only for the specific purposes 
        described in this section;
            ``(2) may not be used for the provision of room or 
        board;
            ``(3) may be made on an estimated basis in advance 
        of the determination of the exact amount, with 
        appropriate subsequent adjustments to take account of 
        any error in the estimates; and
            ``(4) shall be expended by such State in such 
        fiscal year or in the succeeding fiscal year.
    ``(g) Reporting Requirements.--Not later than the first 
January 1 following the end of each fiscal year, each State 
shall submit to the Secretary a report on the programs carried 
out during such fiscal year with the amounts received under 
this section. Such report shall be in such form and contain 
such information as may be necessary to provide an accurate 
description of such activities, to provide a complete record of 
the purposes for which the funds were spent, and to indicate 
the extent to which the expenditure of such funds succeeded in 
accomplishing the purpose described in subsection (a).
    ``(h) Assistance Not Considered Income or Resources.--
Notwithstanding any other provision of this title, payments 
made and services provided to participants in a program under 
this section, as a direct consequence of their participation in 
such program, shall not be considered as income or resources 
for purposes of determining eligibility (or the eligibility of 
any other persons) for assistance under the State's plan 
approved under this part or part A, or for purposes of 
determining the level of such assistance.''.
    (i) Collection of Data Relating to Adoption and Foster 
Care.--Part E of title IV of such Act (42 U.S.C. 670 et seq.) 
is amended--
            (1) by redesignating section 479 as section 477; 
        and
            (2) by amending section 477, as so redesignated, to 
        read as follows:

``SEC. 477. COLLECTION OF DATA RELATING TO ADOPTION AND FOSTER CARE.

    ``For requirements with respect to the collection of data 
relating to adoption and foster care, see section 424.''.

                      Subchapter C--Miscellaneous

SEC. 4721. SECRETARIAL SUBMISSION OF LEGISLATIVE PROPOSAL FOR TECHNICAL 
                    AND CONFORMING AMENDMENTS.

    Not later than 90 days after the date of the enactment of 
this chapter, the Secretary of Health and Human Services, in 
consultation, as appropriate, with the heads of other Federal 
agencies, shall submit to the appropriate committees of 
Congress a legislative proposal providing for such technical 
and conforming amendments in the law as are required by the 
provisions of this chapter.

SEC. 4722. SENSE OF THE CONGRESS REGARDING TIMELY ADOPTION OF CHILDREN.

    It is the sense of the Congress that--
            (1) too many children who wish to be adopted are 
        spending inordinate amounts of time in foster care;
            (2) there is an urgent need for States to increase 
        the number of waiting children being adopted in a 
        timely and lawful manner;
            (3) studies have shown that States spend an excess 
        of $15,000 each year on each special needs child in 
        foster care, and would save significant amounts of 
        money if they offered incentives to families to adopt 
        special needs children;
            (4) States should allocate sufficient funds under 
        this subtitle for adoption assistance and medical 
        assistance to encourage more families to adopt children 
        who otherwise would languish in the foster care system 
        for a period that many experts consider detrimental to 
        their development;
            (5) States should offer incentives for families 
        that adopt special needs children to make adoption more 
        affordable for middle-class families;
            (6) when it is necessary for a State to remove a 
        child from the home of the child's biological parents, 
        the State should strive--
                    (A) to provide the child with a single 
                foster care placement and a single coordinated 
                case team; and
                    (B) to conclude an adoption of the child, 
                when adoption is the goal of the child and the 
                State, within one year of the child's placement 
                in foster care; and
            (7) States should participate in local, regional, 
        or national programs to enable maximum visibility of 
        waiting children to potential parents. Such programs 
        should include a nationwide, interactive computer 
        network to disseminate information on children eligible 
        for adoption to help match them with families around 
        the country.

SEC. 4723. EFFECTIVE DATE; TRANSITION RULES.

    (a) Effective Date.--
            (1) In general.--Except as provided in paragraph 
        (2), this chapter and the amendments made by this 
        chapter shall be effective on and after October 1, 
        1996.
            (2) Exception.--Section 425 of the Social Security 
        Act, as added by section 4701 of this Act, shall take 
        effect on the date of the enactment of this chapter.
            (3) Temporary redesignation of section 425.--During 
        the period beginning on the date of the enactment of 
        this chapter and ending on October 1, 1996, section 425 
        of the Social Security Act, as added by section 4701 of 
        this Act, is redesignated as section 425A.
    (b) Transition Rules.--
            (1) Claims, actions, and proceedings.--The 
        amendments made by this chapter shall not apply with 
        respect to--
                    (A) powers, duties, functions, rights, 
                claims, penalties, or obligations applicable to 
                aid, assistance, or services provided before 
                the effective date of this chapter under the 
                provisions amended; and
                    (B) administrative actions and proceedings 
                commenced before such date, or authorized 
                before such date to be commenced, under such 
                provisions.
            (2) Closing out account for those programs 
        terminated or substantially modified by this chapter.--
        In closing out accounts, Federal and State officials 
        may use scientifically acceptable statistical sampling 
        techniques. Claims made under programs which are 
        repealed or substantially amended in this chapter and 
        which involve State expenditures in cases where 
        assistance or services were provided during a prior 
        fiscal year, shall be treated as expenditures during 
        fiscal year 1995 for purposes of reimbursement even if 
        payment was made by a State on or after October 1, 
        1995. States shall complete the filing of all claims no 
        later than September 30, 1997. Federal department heads 
        shall--
                    (A) use the single audit procedure to 
                review and resolve any claims in connection 
                with the closeout of programs; and
                    (B) reimburse States for any payments made 
                for assistance or services provided during a 
                prior fiscal year from funds for fiscal year 
                1995, rather than the funds authorized by this 
                chapter.

            CHAPTER 2--CHILD AND FAMILY SERVICES BLOCK GRANT

SEC. 4751. CHILD AND FAMILY SERVICES BLOCK GRANT.

    The Child Abuse Prevention and Treatment Act (42 U.S.C. 
5101 et seq.) is amended to read as follows:

``SECTION 1. SHORT TITLE.

    ``This Act may be cited as the `Child and Family Services 
Block Grant Act of 1996'.

``SEC. 2. FINDINGS.

    ``The Congress finds the following:
            ``(1) Each year, close to 1,000,000 American 
        children are victims of abuse and neglect.
            ``(2) Many of these children and their families 
        fail to receive adequate protection or treatment.
            ``(3) The problem of child abuse and neglect 
        requires a comprehensive approach that--
                    ``(A) integrates the work of social 
                service, legal, health, mental health, 
                education, and substance abuse agencies and 
                organizations;
                    ``(B) strengthens coordination among all 
                levels of government, and with private 
                agencies, civic, religious, and professional 
                organizations, and individual volunteers;
                    ``(C) emphasizes the need for abuse and 
                neglect prevention, assessment, investigation, 
                and treatment at the neighborhood level;
                    ``(D) ensures properly trained and support 
                staff with specialized knowledge, to carry out 
                their child protection duties; and
                    ``(E) is sensitive to ethnic and cultural 
                diversity.
            ``(4) The child protection system should be 
        comprehensive, child-centered, family-focused, and 
        community-based, should incorporate all appropriate 
        measures to prevent the occurrence or recurrence of 
        child abuse and neglect, and should promote physical 
        and psychological recovery and social reintegration in 
        an environment that fosters the health, safety, self-
        respect, and dignity of the child.
            ``(5) The Federal Government should provide 
        leadership and assist communities in their child and 
        family protection efforts by--
                    ``(A) generating and sharing knowledge 
                relevant to child and family protection, 
                including the development of models for service 
                delivery;
                    ``(B) strengthening the capacity of States 
                to assist communities;
                    ``(C) helping communities to carry out 
                their child and family protection plans by 
                promoting the competence of professional, 
                paraprofessional, and volunteer resources; and
                    ``(D) providing leadership to end the abuse 
                and neglect of the Nation's children and youth.

``SEC. 3. PURPOSES.

    ``The purposes of this Act are the following:
            ``(1) To assist each State in improving the child 
        protective service systems of such State by--
                    ``(A) improving risk and safety assessment 
                tools and protocols;
                    ``(B) developing, strengthening, and 
                facilitating training opportunities for 
                individuals who are mandated to report child 
                abuse or neglect or otherwise overseeing, 
                investigating, prosecuting, or providing 
                services to children and families who are at 
                risk of abusing or neglecting their children; 
                and
                    ``(C) developing, implementing, or 
                operating information, education, training, or 
                other programs designed to assist and provide 
                services for families of disabled infants with 
                life-threatening conditions.
            ``(2) To support State efforts to develop, operate, 
        expand and enhance a network of community-based, 
        prevention-focused, family resource and support 
        programs that are culturally competent and that 
        coordinate resources among existing education, 
        vocational rehabilitation, disability, respite, health, 
        mental health, job readiness, self-sufficiency, child 
        and family development, community action, Head Start, 
        child care, child abuse and neglect prevention, 
        juvenile justice, domestic violence prevention and 
        intervention, housing, and other human service 
        organizations within the State.
            ``(3) To facilitate the elimination of barriers to 
        adoption and to provide permanent and loving home 
        environments for children who would benefit from 
        adoption, particularly children with special needs, 
        including disabled infants with life-threatening 
        conditions, by--
                    ``(A) promoting model adoption legislation 
                and procedures in the States and territories of 
                the United States in order to eliminate 
                jurisdictional and legal obstacles to adoption;
                    ``(B) providing a mechanism for the 
                Department of Health and Human Services to--
                            ``(i) promote quality standards for 
                        adoption services, preplacement, post-
                        placement, and post-legal adoption 
                        counseling, and standards to protect 
                        the rights of children in need of 
                        adoption;
                            ``(ii) maintain a national adoption 
                        information exchange system to bring 
                        together children who would benefit 
                        from adoption and qualified prospective 
                        adoptive parents who are seeking such 
                        children, and conduct national 
                        recruitment efforts in order to reach 
                        prospective parents for children 
                        awaiting adoption; and
                            ``(iii) demonstrate expeditious 
                        ways to free children for adoption for 
                        whom it has been determined that 
                        adoption is the appropriate plan; and
                    ``(C) facilitating the identification and 
                recruitment of foster and adoptive families 
                that can meet children's needs.
            ``(4) To respond to the needs of children, in 
        particular those who are drug exposed or afflicted with 
        Acquired Immune Deficiency Syndrome (AIDS), by 
        supporting activities aimed at preventing the 
        abandonment of children, providing support to children 
        and their families, and facilitating the recruitment 
        and training of health and social service personnel.
            ``(5) To carry out any other activities as the 
        Secretary determines are consistent with this Act.

``SEC. 4. DEFINITIONS.

    ``As used in this Act:
            ``(1) Child.--The term `child' means a person who 
        has not attained the lesser of--
                    ``(A) the age of 18; or
                    ``(B) except in the case of sexual abuse, 
                the age specified by the child protection law 
                of the State in which the child resides.
            ``(2) Child abuse and neglect.--The term `child 
        abuse and neglect' means, at a minimum, any recent act 
        or failure to act on the part of a parent or caretaker, 
        which results in death, serious physical or emotional 
        harm, sexual abuse or exploitation, or an act or 
        failure to act which presents an imminent risk of 
        serious harm.
            ``(3) Family resource and support programs.--The 
        term `family resource and support program' means a 
        community-based, prevention-focused entity that--
                    ``(A) provides, through direct service, the 
                core services required under this Act, 
                including--
                            ``(i) parent education, support and 
                        leadership services, together with 
                        services characterized by relationships 
                        between parents and professionals that 
                        are based on equality and respect, and 
                        designed to assist parents in acquiring 
                        parenting skills, learning about child 
                        development, and responding 
                        appropriately to the behavior of their 
                        children;
                            ``(ii) services to facilitate the 
                        ability of parents to serve as 
                        resources to one another (such as 
                        through mutual support and parent self-
                        help groups);
                            ``(iii) early developmental 
                        screening of children to assess any 
                        needs of children, and to identify 
                        types of support that may be provided;
                            ``(iv) outreach services provided 
                        through voluntary home visits and other 
                        methods to assist parents in becoming 
                        aware of and able to participate in 
                        family resources and support program 
                        activities;
                            ``(v) community and social services 
                        to assist families in obtaining 
                        community resources; and
                            ``(vi) followup services;
                    ``(B) provides, or arranges for the 
                provision of, other core services through 
                contracts or agreements with other local 
                agencies; and
                    ``(C) provides access to optional services, 
                directly or by contract, purchase of service, 
                or interagency agreement, including--
                            ``(i) child care, early childhood 
                        development and early intervention 
                        services;
                            ``(ii) self-sufficiency and life 
                        management skills training;
                            ``(iii) education services, such as 
                        scholastic tutoring, literacy training, 
                        and General Educational Degree 
                        services;
                            ``(iv) job readiness skills;
                            ``(v) child abuse and neglect 
                        prevention activities;
                            ``(vi) services that families with 
                        children with disabilities or special 
                        needs may require;
                            ``(vii) community and social 
                        service referral;
                            ``(viii) peer counseling;
                            ``(ix) referral for substance abuse 
                        counseling and treatment; and
                            ``(x) help line services.
            ``(4) Indian tribe and tribal organization.--The 
        terms `Indian tribe' and `tribal organization' shall 
        have the same meanings given such terms in subsections 
        (e) and (l), respectively, of section 4 of the Indian 
        Self-Determination and Education Assistance Act (25 
        U.S.C. 450b(e) and (l)).
            ``(5) Respite services.--The term `respite 
        services' means short-term care services provided in 
        the temporary absence of the regular caregiver (parent, 
        other relative, foster parent, adoptive parent, or 
        guardian) to children who--
                    ``(A) are in danger of abuse or neglect;
                    ``(B) have experienced abuse or neglect; or
                    ``(C) have disabilities, chronic, or 
                terminal illnesses.
        Such services shall be provided within or outside the 
        home of the child, be short-term care (ranging from a 
        few hours to a few weeks of time, per year), and be 
        intended to enable the family to stay together and to 
        keep the child living in the home and community of the 
        child.
            ``(6) Secretary.--The term `Secretary' means the 
        Secretary of Health and Human Services.
            ``(7) Sexual abuse.--The term `sexual abuse' 
        includes--
                    ``(A) the employment, use, persuasion, 
                inducement, enticement, or coercion of any 
                child to engage in, or assist any other person 
                to engage in, any sexually explicit conduct or 
                simulation of such conduct for the purpose of 
                producing a visual depiction of such conduct; 
                or
                    ``(B) the rape, molestation, prostitution, 
                or other form of sexual exploitation of 
                children, or incest with children.
            ``(8) State.--The term `State' means each of the 
        several States, the District of Columbia, the 
        Commonwealth of Puerto Rico, the Virgin Islands, Guam, 
        American Samoa, the Commonwealth of the Northern 
        Mariana Islands, and the Trust Territory of the Pacific 
        Islands.
            ``(9) Withholding of medically indicated 
        treatment.--The term `withholding of medically 
        indicated treatment' means the failure to respond to 
        the infant's life-threatening conditions by providing 
        treatment (including appropriate nutrition, hydration, 
        and medication) which, in the treating physician's or 
        physicians' reasonable medical judgment, will be most 
        likely to be effective in ameliorating or correcting 
        all such conditions, except that the term does not 
        include the failure to provide treatment (other than 
        appropriate nutrition, hydration, or medication) to an 
        infant when, in the treating physician's or physicians' 
        reasonable medical judgment--
                    ``(A) the infant is chronically and 
                irreversibly comatose;
                    ``(B) the provision of such treatment 
                would--
                            ``(i) merely prolong dying;
                            ``(ii) not be effective in 
                        ameliorating or correcting all of the 
                        infant's life-threatening conditions; 
                        or
                            ``(iii) otherwise be futile in 
                        terms of the survival of the infant; or
                    ``(C) the provision of such treatment would 
                be virtually futile in terms of the survival of 
                the infant and the treatment itself under such 
                circumstances would be inhumane.

                     ``TITLE I--GENERAL BLOCK GRANT

``SEC. 101. CHILD AND FAMILY SERVICES BLOCK GRANTS.

    ``(a) Eligibility.--The Secretary shall award grants to 
eligible States that file a State plan that is approved under 
section 102 and that otherwise meet the eligibility 
requirements for grants under this title.
    ``(b) Amount of Grant.--The amount of a grant made to each 
State under subsection (a) for a fiscal year shall be based on 
the population of children under the age of 18 residing in each 
State that applies for a grant under this section.
    ``(c) Use of Amounts.--Amounts received by a State under a 
grant awarded under subsection (a) shall be used to carry out 
the purposes described in section 3.

``SEC. 102. ELIGIBLE STATES.

    ``(a) In General.--As used in this title, the term 
`eligible State' means a State that has submitted to the 
Secretary, not later than October 1, 1996, and every 3 years 
thereafter, a plan which has been signed by the chief executive 
officer of the State and that includes the following:
            ``(1) Outline of child protection program.--A 
        written document that outlines the activities the State 
        intends to conduct to achieve the purpose of this 
        title, including the procedures to be used for--
                    ``(A) receiving and assessing reports of 
                child abuse or neglect;
                    ``(B) investigating such reports;
                    ``(C) with respect to families in which 
                abuse or neglect has been confirmed, providing 
                services or referral for services for families 
                and children where the State makes a 
                determination that the child may safely remain 
                with the family;
                    ``(D) protecting children by removing them 
                from dangerous settings and ensuring their 
                placement in a safe environment;
                    ``(E) providing training for individuals 
                mandated to report suspected cases of child 
                abuse or neglect;
                    ``(F) protecting children in foster care;
                    ``(G) promoting timely adoptions;
                    ``(H) protecting the rights of families, 
                using adult relatives as the preferred 
                placement for children separated from their 
                parents where such relatives meet the relevant 
                State child protection standards; and
                    ``(I) providing services to individuals, 
                families, or communities, either directly or 
                through referral, that are aimed at preventing 
                the occurrence of child abuse and neglect.
            ``(2) Certification of state law requiring the 
        reporting of child abuse and neglect.--A certification 
        that the State has in effect laws that require public 
        officials and other professionals to report, in good 
        faith, actual or suspected instances of child abuse or 
        neglect.
            ``(3) Certification of procedures for screening, 
        safety assessment, and prompt investigation.--A 
        certification that the State has in effect procedures 
        for receiving and responding to reports of child abuse 
        or neglect, including the reports described in 
        paragraph (2), and for the immediate screening, safety 
        assessment, and prompt investigation of such reports.
            ``(4) Certification of state procedures for removal 
        and placement of abused or neglected children.--A 
        certification that the State has in effect procedures 
        for the removal from families and placement of abused 
        or neglected children and of any other child in the 
        same household who may also be in danger of abuse or 
        neglect.
            ``(5) Certification of provisions for immunity from 
        prosecution.--A certification that the State has in 
        effect laws requiring immunity from prosecution under 
        State and local laws and regulations for individuals 
        making good faith reports of suspected or known 
        instances of child abuse or neglect.
            ``(6) Certification of provisions and procedures 
        relating to appeals.--A certification that not later 
        than 2 years after the date of the enactment of this 
        Act, the State shall have laws and procedures in effect 
        affording individuals an opportunity to appeal an 
        official finding of abuse or neglect.
            ``(7) Certification of state procedures for 
        developing and reviewing written plans for permanent 
        placement of removed children.--A certification that 
        the State has in effect procedures for ensuring that a 
        written plan is prepared for children who have been 
        removed from their families. Such plan shall specify 
        the goals for achieving a permanent placement for the 
        child in a timely fashion, for ensuring that the 
        written plan is reviewed every 6 months (until such 
        placement is achieved), and for ensuring that 
        information about such children is collected regularly 
        and recorded in case records, and include a description 
        of such procedures.
            ``(8) Certification of state program to provide 
        independent living services.--A certification that the 
        State has in effect a program to provide independent 
        living services, for assistance in making the 
        transition to self-sufficient adulthood, to individuals 
        in the child protection program of the State who are 
        16, but who are not 20 (or, at the option of the State, 
        22), years of age, and who do not have a family to 
        which to be returned.
            ``(9) Certification of state procedures to respond 
        to reporting of medical neglect of disabled infants.--
                    ``(A) In general.--A certification that the 
                State has in place for the purpose of 
                responding to the reporting of medical neglect 
                of infants (including instances of withholding 
                of medically indicated treatment from disabled 
                infants with life-threatening conditions), 
                procedures or programs, or both (within the 
                State child protective services system), to 
                provide for--
                            ``(i) coordination and consultation 
                        with individuals designated by and 
                        within appropriate health-care 
                        facilities;
                            ``(ii) prompt notification by 
                        individuals designated by and within 
                        appropriate health-care facilities of 
                        cases of suspected medical neglect 
                        (including instances of withholding of 
                        medically indicated treatment from 
                        disabled infants with life-threatening 
                        conditions); and
                            ``(iii) authority, under State law, 
                        for the State child protective service 
                        to pursue any legal remedies, including 
                        the authority to initiate legal 
                        proceedings in a court of competent 
                        jurisdiction, as may be necessary to 
                        prevent the withholding of medically 
                        indicated treatment from disabled 
                        infants with life-threatening 
                        conditions.
                    ``(B) Withholding of medically indicated 
                treatment.--As used in subparagraph (A), the 
                term `withholding of medically indicated 
                treatment' means the failure to respond to the 
                infant's life-threatening conditions by 
                providing treatment (including appropriate 
                nutrition, hydration, and medication) which, in 
                the treating physician's or physicians' 
                reasonable medical judgment, will be most 
                likely to be effective in ameliorating or 
                correcting all such conditions, except that 
                such term does not include the failure to 
                provide treatment (other than appropriate 
                nutrition, hydration, or medication) to an 
                infant when, in the treating physician's or 
                physicians' reasonable medical judgment--
                            ``(i) the infant is chronically and 
                        irreversibly comatose;
                            ``(ii) the provision of such 
                        treatment would--
                                    ``(I) merely prolong dying;
                                    ``(II) not be effective in 
                                ameliorating or correcting all 
                                of the infant's life-
                                threatening conditions; or
                                    ``(III) otherwise be futile 
                                in terms of the survival of the 
                                infant; or
                            ``(iii) the provision of such 
                        treatment would be virtually futile in 
                        terms of the survival of the infant and 
                        the treatment itself under such 
                        circumstances would be inhumane.
            ``(10) Identification of child protection goals.--
        The quantitative goals of the State child protection 
        program.
            ``(11) Certification of child protection 
        standards.--With respect to fiscal years beginning on 
        or after April 1, 1996, a certification that the 
        State--
                    ``(A) has completed an inventory of all 
                children who, before the inventory, had been in 
                foster care under the responsibility of the 
                State for 6 months or more, which determined--
                            ``(i) the appropriateness of, and 
                        necessity for, the foster care 
                        placement;
                            ``(ii) whether the child could or 
                        should be returned to the parents of 
                        the child or should be freed for 
                        adoption or other permanent placement; 
                        and
                            ``(iii) the services necessary to 
                        facilitate the return of the child or 
                        the placement of the child for adoption 
                        or legal guardianship;
                    ``(B) is operating, to the satisfaction of 
                the Secretary--
                            ``(i) a statewide information 
                        system from which can be readily 
                        determined the status, demographic 
                        characteristics, location, and goals 
                        for the placement of every child who is 
                        (or, within the immediately preceding 
                        12 months, has been) in foster care;
                            ``(ii) a case review system for 
                        each child receiving foster care under 
                        the supervision of the State;
                            ``(iii) a service program designed 
                        to help children--
                                    ``(I) where appropriate, 
                                return to families from which 
                                they have been removed; or
                                    ``(II) be placed for 
                                adoption, with a legal 
                                guardian, or if adoption or 
                                legal guardianship is 
                                determined not to be 
                                appropriate for a child, in 
                                some other planned, permanent 
                                living arrangement; and
                            ``(iv) a preplacement preventive 
                        services program designed to help 
                        children at risk for foster care 
                        placement remain with their families; 
                        and
                    ``(C)(i) has reviewed (or not later than 
                October 1, 1997, will review) State policies 
                and administrative and judicial procedures in 
                effect for children abandoned at or shortly 
                after birth (including policies and procedures 
                providing for legal representation of such 
                children); and
                    ``(ii) is implementing (or not later than 
                October 1, 1997, will implement) such policies 
                and procedures as the State determines, on the 
                basis of the review described in clause (i), to 
                be necessary to enable permanent decisions to 
                be made expeditiously with respect to the 
                placement of such children.
            ``(12) Certification of reasonable efforts before 
        placement of children in foster care.--A certification 
        that the State in each case will--
                    ``(A) make reasonable efforts prior to the 
                placement of a child in foster care, to prevent 
                or eliminate the need for removal of the child 
                from the child's home, and to make it possible 
                for the child to return home; and
                    ``(B) with respect to families in which 
                abuse or neglect has been confirmed, provide 
                services or referral for services for families 
                and children where the State makes a 
                determination that the child may safely remain 
                with the family.
            ``(13) Certification of confidentiality and 
        requirements for information disclosure.--
                    ``(A) In general.--A certification that the 
                State has in effect and operational--
                            ``(i) requirements ensuring that 
                        reports and records made and maintained 
                        pursuant to the purposes of this part 
                        shall only be made available to--
                                    ``(I) individuals who are 
                                the subject of the report;
                                    ``(II) Federal, State, or 
                                local government entities, or 
                                any agent of such entities, 
                                having a need for such 
                                information in order to carry 
                                out their responsibilities 
                                under law to protect children 
                                from abuse and neglect;
                                    ``(III) child abuse citizen 
                                review panels;
                                    ``(IV) child fatality 
                                review panels;
                                    ``(V) a grand jury or 
                                court, upon a finding that 
                                information in the record is 
                                necessary for the determination 
                                of an issue before the court or 
                                grand jury; and
                                    ``(VI) other entities or 
                                classes of individuals 
                                statutorily authorized by the 
                                State to receive such 
                                information pursuant to a 
                                legitimate State purpose; and
                            ``(ii) provisions that allow for 
                        public disclosure of the findings or 
                        information about cases of child abuse 
                        or neglect that have resulted in a 
                        child fatality or near fatality.
                    ``(B) Limitation.--Disclosures made 
                pursuant to clause (i) or (ii) shall not 
                include the identifying information concerning 
                the individual initiating a report or complaint 
                alleging suspected instances of child abuse or 
                neglect.
                    ``(C) Definition.--For purposes of this 
                paragraph, the term `near fatality' means an 
                act that, as certified by a physician, places 
                the child in serious or critical condition.
    ``(b) Determinations.--The Secretary shall determine 
whether a plan submitted pursuant to subsection (a) contains 
the material required by subsection (a), other than the 
material described in paragraph (9) of such subsection. The 
Secretary may not require a State to include in such a plan any 
material not described in subsection (a).

``SEC. 103. DATA COLLECTION AND REPORTING.

    ``(a) National Child Abuse and Neglect Data System.--The 
Secretary shall establish a national data collection and 
analysis program--
            ``(1) which, to the extent practicable, coordinates 
        existing State child abuse and neglect reports and 
        which shall include--
                    ``(A) standardized data on substantiated, 
                as well as false, unfounded, or unsubstantiated 
                reports; and
                    ``(B) information on the number of deaths 
                due to child abuse and neglect; and
            ``(2) which shall collect, compile, analyze, and 
        make available State child abuse and neglect reporting 
        information which, to the extent practical, is 
        universal and case-specific and integrated with other 
        case-based foster care and adoption data collected by 
        the Secretary.
    ``(b) Adoption and Foster Care and Analysis and Reporting 
Systems.--The Secretary shall implement a system for the 
collection of data relating to adoption and foster care in the 
United States. Such data collection system shall--
            ``(1) avoid unnecessary diversion of resources from 
        agencies responsible for adoption and foster care;
            ``(2) assure that any data that is collected is 
        reliable and consistent over time and among 
        jurisdictions through the use of uniform definitions 
        and methodologies;
            ``(3) provide comprehensive national information 
        with respect to--
                    ``(A) the demographic characteristics of 
                adoptive and foster children and their 
                biological and adoptive or foster parents;
                    ``(B) the status of the foster care 
                population (including the number of children in 
                foster care, length of placement, type of 
                placement, availability for adoption, and goals 
                for ending or continuing foster care);
                    ``(C) the number and characteristics of--
                            ``(i) children placed in or removed 
                        from foster care;
                            ``(ii) children adopted or with 
                        respect to whom adoptions have been 
                        terminated; and
                            ``(iii) children placed in foster 
                        care outside the State which has 
                        placement and care responsibility; and
                    ``(D) the extent and nature of assistance 
                provided by Federal, State, and local adoption 
                and foster care programs and the 
                characteristics of the children with respect to 
                whom such assistance is provided; and
            ``(4) utilize appropriate requirements and 
        incentives to ensure that the system functions reliably 
        throughout the United States.
    ``(c) Additional Information.--The Secretary may require 
the provision of additional information under the data 
collection system established under subsection (b) if the 
addition of such information is agreed to by a majority of the 
States.
    ``(d) Annual Report by the Secretary.--Within 6 months 
after the end of each fiscal year, the Secretary shall prepare 
a report based on information provided by the States for the 
fiscal year pursuant to this section, and shall make the report 
and such information available to the Congress and the public.

     ``TITLE II--RESEARCH, DEMONSTRATIONS, TRAINING, AND TECHNICAL 
                               ASSISTANCE

``SEC. 201. RESEARCH GRANTS.

    ``(a) In General.--The Secretary, in consultation with 
appropriate Federal officials and recognized experts in the 
field, shall award grants or contracts for the conduct of 
research in accordance with subsection (b).
    ``(b) Research.--Research projects to be conducted using 
amounts received under this section--
            ``(1) shall be designed to provide information to 
        better protect children from abuse or neglect and to 
        improve the well-being of abused or neglected children, 
        with at least a portion of any such research conducted 
        under a project being field initiated;
            ``(2) shall at a minimum, focus on--
                    ``(A) the nature and scope of child abuse 
                and neglect;
                    ``(B) the causes, prevention, assessment, 
                identification, treatment, cultural and 
                socioeconomic distinctions, and the 
                consequences of child abuse and neglect;
                    ``(C) appropriate, effective and culturally 
                sensitive investigative, administrative, and 
                judicial procedures with respect to cases of 
                child abuse; and
                    ``(D) the national incidence of child abuse 
                and neglect, including--
                            ``(i) the extent to which incidents 
                        of child abuse are increasing or 
                        decreasing in number and severity;
                            ``(ii) the incidence of 
                        substantiated and unsubstantiated 
                        reported child abuse cases;
                            ``(iii) the number of substantiated 
                        cases that result in a judicial finding 
                        of child abuse or neglect or related 
                        criminal court convictions;
                            ``(iv) the extent to which the 
                        number of unsubstantiated, unfounded 
                        and false reported cases of child abuse 
                        or neglect have contributed to the 
                        inability of a State to respond 
                        effectively to serious cases of child 
                        abuse or neglect;
                            ``(v) the extent to which the lack 
                        of adequate resources and the lack of 
                        adequate training of reporters have 
                        contributed to the inability of a State 
                        to respond effectively to serious cases 
                        of child abuse and neglect;
                            ``(vi) the number of 
                        unsubstantiated, false, or unfounded 
                        reports that have resulted in a child 
                        being placed in substitute care, and 
                        the duration of such placement;
                            ``(vii) the extent to which 
                        unsubstantiated reports return as more 
                        serious cases of child abuse or 
                        neglect;
                            ``(viii) the incidence and 
                        prevalence of physical, sexual, and 
                        emotional abuse and physical and 
                        emotional neglect in substitute care;
                            ``(ix) the incidence and outcomes 
                        of abuse allegations reported within 
                        the context of divorce, custody, or 
                        other family court proceedings, and the 
                        interaction between this venue and the 
                        child protective services system; and
                            ``(x) the cases of children 
                        reunited with their families or 
                        receiving family preservation services 
                        that result in subsequent substantiated 
                        reports of child abuse and neglect, 
                        including the death of the child; and
            ``(3) may include the appointment of an advisory 
        board to--
                    ``(A) provide recommendations on 
                coordinating Federal, State, and local child 
                abuse and neglect activities at the State level 
                with similar activities at the State and local 
                level pertaining to family violence prevention;
                    ``(B) consider specific modifications 
                needed in State laws and programs to reduce the 
                number of unfounded or unsubstantiated reports 
                of child abuse or neglect while enhancing the 
                ability to identify and substantiate legitimate 
                cases of abuse or neglect which place a child 
                in danger; and
                    ``(C) provide recommendations for 
                modifications needed to facilitate coordinated 
                national and Statewide data collection with 
                respect to child protection and child welfare.

``SEC. 202. NATIONAL CLEARINGHOUSE FOR INFORMATION RELATING TO CHILD 
                    ABUSE.

    ``(a) Establishment.--The Secretary shall, through the 
Department of Health and Human Services, or by one or more 
contracts of not less than 3 years duration provided through a 
competition, establish a national clearinghouse for information 
relating to child abuse.
    ``(b) Functions.--The Secretary shall, through the 
clearinghouse established by subsection (a)--
            ``(1) maintain, coordinate, and disseminate 
        information on all programs, including private 
        programs, that show promise of success with respect to 
        the prevention, assessment, identification, and 
        treatment of child abuse and neglect;
            ``(2) maintain and disseminate information relating 
        to--
                    ``(A) the incidence of cases of child abuse 
                and neglect in the United States;
                    ``(B) the incidence of such cases in 
                populations determined by the Secretary under 
                section 105(a)(1) of the Child Abuse 
                Prevention, Adoption, and Family Services Act 
                of 1988 (as such section was in effect on the 
                day before the date of enactment of this Act); 
                and
                    ``(C) the incidence of any such cases 
                related to alcohol or drug abuse;
            ``(3) disseminate information related to data 
        collected and reported by States pursuant to section 
        103;
            ``(4) compile, analyze, and publish a summary of 
        the research conducted under section 201; and
            ``(5) solicit public comment on the components of 
        such clearinghouse.

``SEC. 203. GRANTS FOR DEMONSTRATION PROJECTS.

    ``(a) Awarding of General Grants.--The Secretary may make 
grants to, and enter into contracts with, public and nonprofit 
private agencies or organizations (or combinations of such 
agencies or organizations) for the purpose of developing, 
implementing, and operating time limited, demonstration 
programs and projects for the following purposes:
            ``(1) Innovative programs and projects.--The 
        Secretary may award grants to public agencies that 
        demonstrate innovation in responding to reports of 
        child abuse and neglect including programs of 
        collaborative partnerships between the State child 
        protective service agency, community social service 
        agencies and family support programs, schools, churches 
        and synagogues, and other community agencies to allow 
        for the establishment of a triage system that--
                    ``(A) accepts, screens and assesses reports 
                received to determine which such reports 
                require an intensive intervention and which 
                require voluntary referral to another agency, 
                program or project;
                    ``(B) provides, either directly or through 
                referral, a variety of community-linked 
                services to assist families in preventing child 
                abuse and neglect; and
                    ``(C) provides further investigation and 
                intensive intervention where the child's safety 
                is in jeopardy.
            ``(2) Kinship care programs and projects.--The 
        Secretary may award grants to public entities to assist 
        such entities in developing or implementing procedures 
        using adult relatives as the preferred placement for 
        children removed from their home, where such relatives 
        are determined to be capable of providing a safe 
        nurturing environment for the child and where, to the 
        maximum extent practicable, such relatives comply with 
        relevant State child protection standards.
            ``(3) Adoption opportunities.--The Secretary may 
        award grants to public entities to assist such entities 
        in developing or implementing programs to expand 
        opportunities for the adoption of children with special 
        needs.
            ``(4) Family resource centers.--The Secretary may 
        award grants to public or nonprofit private entities to 
        provide for the establishment of family resource 
        programs and support services that--
                    ``(A) develop, expand, and enhance 
                statewide networks of community-based, 
                prevention-focused centers, programs, or 
                services that provide comprehensive support for 
                families;
                    ``(B) promote the development of parental 
                competencies and capacities in order to 
                increase family stability;
                    ``(C) support the additional needs of 
                families with children with disabilities;
                    ``(D) foster the development of a continuum 
                of preventive services for children and 
                families through State and community-based 
                collaborations and partnerships (both public 
                and private); and
                    ``(E) maximize funding for the financing, 
                planning, community mobilization, 
                collaboration, assessment, information and 
                referral, startup, training and technical 
                assistance, information management, reporting, 
                and evaluation costs for establishing, 
                operating, or expanding a statewide network of 
                community-based, prevention-focused family 
                resource and support services.
            ``(5) Other innovative programs.--The Secretary may 
        award grants to public or private nonprofit 
        organizations to assist such entities in developing or 
        implementing innovative programs and projects that show 
        promise of preventing and treating cases of child abuse 
        and neglect (such as Parents Anonymous).
    ``(b) Grants for Abandoned Infant Programs.--The Secretary 
may award grants to public and nonprofit private entities to 
assist such entities in developing or implementing procedures--
            ``(1) to prevent the abandonment of infants and 
        young children, including the provision of services to 
        members of the natural family for any condition that 
        increases the probability of abandonment of an infant 
        or young child;
            ``(2) to identify and address the needs of 
        abandoned infants and young children;
            ``(3) to assist abandoned infants and young 
        children to reside with their natural families or in 
        foster care, as appropriate;
            ``(4) to recruit, train, and retain foster families 
        for abandoned infants and young children;
            ``(5) to carry out residential care programs for 
        abandoned infants and young children who are unable to 
        reside with their families or to be placed in foster 
        care;
            ``(6) to carry out programs of respite care for 
        families and foster families of infants and young 
        children; and
            ``(7) to recruit and train health and social 
        services personnel to work with families, foster care 
        families, and residential care programs for abandoned 
        infants and young children.
    ``(c) Evaluation.--In making grants for demonstration 
projects under this section, the Secretary shall require all 
such projects to be evaluated for their effectiveness. Funding 
for such evaluations shall be provided either as a stated 
percentage of a demonstration grant or as a separate grant 
entered into by the Secretary for the purpose of evaluating a 
particular demonstration project or group of projects.

``SEC. 204. TECHNICAL ASSISTANCE.

    ``(a) Child Abuse and Neglect.--
            ``(1) In general.--The Secretary shall provide 
        technical assistance under this title to States to 
        assist such States in planning, improving, developing, 
        and carrying out programs and activities relating to 
        the prevention, assessment identification, and 
        treatment of child abuse and neglect.
            ``(2) Evaluation.--Technical assistance provided 
        under paragraph (1) may include an evaluation or 
        identification of--
                    ``(A) various methods and procedures for 
                the investigation, assessment, and prosecution 
                of child physical and sexual abuse cases;
                    ``(B) ways to mitigate psychological trauma 
                to the child victim; and
                    ``(C) effective programs carried out by the 
                States under this Act.
    ``(b) Adoption Opportunities.--The Secretary shall provide, 
directly or by grant to or contract with public or private 
nonprofit agencies or organizations--
            ``(1) technical assistance and resource and 
        referral information to assist State or local 
        governments with termination of parental rights issues, 
        in recruiting and retaining adoptive families, in the 
        successful placement of children with special needs, 
        and in the provision of pre- and post-placement 
        services, including post-legal adoption services; and
            ``(2) other assistance to help State and local 
        governments replicate successful adoption-related 
        projects from other areas in the United States.

``SEC. 205. TRAINING RESOURCES.

    ``(a) Training Programs.--The Secretary may award grants to 
public or private nonprofit organizations--
            ``(1) for the training of professional and 
        paraprofessional personnel in the fields of medicine, 
        law, education, law enforcement, social work, and other 
        relevant fields who are engaged in, or intend to work 
        in, the field of prevention, identification, and 
        treatment of child abuse and neglect, including the 
        links between domestic violence and child abuse;
            ``(2) to provide culturally specific instruction in 
        methods of protecting children from child abuse and 
        neglect to children and to persons responsible for the 
        welfare of children, including parents of and persons 
        who work with children with disabilities; and
            ``(3) to improve the recruitment, selection, and 
        training of volunteers serving in private and public 
        nonprofit children, youth and family service 
        organizations in order to prevent child abuse and 
        neglect through collaborative analysis of current 
        recruitment, selection, and training programs and 
        development of model programs for dissemination and 
        replication nationally.
    ``(b) Dissemination of Information.--The Secretary may 
provide for and disseminate information relating to various 
training resources available at the State and local level to--
            ``(1) individuals who are engaged, or who intend to 
        engage, in the prevention, identification, assessment, 
        and treatment of child abuse and neglect; and
            ``(2) appropriate State and local officials, 
        including prosecutors, to assist in training law 
        enforcement, legal, judicial, medical, mental health, 
        education, and child welfare personnel in appropriate 
        methods of interacting during investigative, 
        administrative, and judicial proceedings with children 
        who have been subjected to abuse.

``SEC. 206. APPLICATIONS AND AMOUNTS OF GRANTS.

    ``(a) Requirement of Application.--The Secretary may not 
make a grant to a State or other entity under this title 
unless--
            ``(1) an application for the grant is submitted to 
        the Secretary;
            ``(2) with respect to carrying out the purpose for 
        which the grant is to be made, the application provides 
        assurances of compliance satisfactory to the Secretary; 
        and
            ``(3) the application otherwise is in such form, is 
        made in such manner, and contains such agreements, 
        assurances, and information as the Secretary determines 
        to be necessary to carry out this title.
    ``(b) Amount of Grant.--The Secretary shall determine the 
amount of a grant to be awarded under this title.

``SEC. 207. PEER REVIEW FOR GRANTS.

    ``(a) Establishment of Peer Review Process.--
            ``(1) In general.--The Secretary shall, in 
        consultation with experts in the field and other 
        Federal agencies, establish a formal, rigorous, and 
        meritorious peer review process for purposes of 
        evaluating and reviewing applications for grants under 
        this title and determining the relative merits of the 
        projects for which such assistance is requested. The 
        purpose of this process is to enhance the quality and 
        usefulness of research in the field of child abuse and 
        neglect.
            ``(2) Requirements for members.--In establishing 
        the process required by paragraph (1), the Secretary 
        shall appoint to the peer review panels only members 
        who are experts in the field of child abuse and neglect 
        or related disciplines, with appropriate expertise in 
        the application to be reviewed, and who are not 
        individuals who are officers or employees of the 
        Administration for Children and Families. The panels 
        shall meet as often as is necessary to facilitate the 
        expeditious review of applications for grants and 
        contracts under this title, but may not meet less than 
        once a year. The Secretary shall ensure that the peer 
        review panel utilizes scientifically valid review 
        criteria and scoring guidelines for review committees.
    ``(b) Review of Applications for Assistance.--Each peer 
review panel established under subsection (a)(1) that reviews 
any application for a grant shall--
            ``(1) determine and evaluate the merit of each 
        project described in such application;
            ``(2) rank such application with respect to all 
        other applications it reviews in the same priority area 
        for the fiscal year involved, according to the relative 
        merit of all of the projects that are described in such 
        application and for which financial assistance is 
        requested; and
            ``(3) make recommendations to the Secretary 
        concerning whether the application for the project 
        shall be approved.
The Secretary shall award grants under this title on the basis 
of competitive review.
    ``(c) Notice of Approval.--
            ``(1) In general.--The Secretary shall provide 
        grants under this title from among the projects which 
        the peer review panels established under subsection 
        (a)(1) have determined to have merit.
            ``(2) Requirement of explanation.--In the instance 
        in which the Secretary approves an application for a 
        program under this title without having approved all 
        applications ranked above such application, the 
        Secretary shall append to the approved application a 
        detailed explanation of the reasons relied on for 
        approving the application and for failing to approve 
        each pending application that is superior in merit.

``SEC. 208. NATIONAL RANDOM SAMPLE STUDY OF CHILD WELFARE.

    ``(a) In General.--The Secretary shall conduct a national 
study based on random samples of children who are at risk of 
child abuse or neglect, or are determined by States to have 
been abused or neglected, and such other research as may be 
necessary.
    ``(b) Requirements.--The study required by subsection (a) 
shall--
            ``(1) have a longitudinal component; and
            ``(2) yield data reliable at the State level for as 
        many States as the Secretary determines is feasible.
    ``(c) Preferred Contents.--In conducting the study required 
by subsection (a), the Secretary should--
            ``(1) collect data on the child protection programs 
        of different small States (or different groups of such 
        States) in different years to yield an occasional 
        picture of the child protection programs of such 
        States;
            ``(2) carefully consider selecting the sample from 
        cases of confirmed abuse or neglect; and
            ``(3) follow each case for several years while 
        obtaining information on, among other things--
                    ``(A) the type of abuse or neglect 
                involved;
                    ``(B) the frequency of contact with State 
                or local agencies;
                    ``(C) whether the child involved has been 
                separated from the family, and, if so, under 
                what circumstances;
                    ``(D) the number, type, and characteristics 
                of out-of-home placements of the child; and
                    ``(E) the average duration of each 
                placement.
    ``(d) Reports.--
            ``(1) In general.--From time to time, the Secretary 
        shall prepare reports summarizing the results of the 
        study required by subsection (a).
            ``(2) Availability.--The Secretary shall make 
        available to the public any report prepared under 
        paragraph (1), in writing or in the form of an 
        electronic data tape.
            ``(3) Authority to charge fee.--The Secretary may 
        charge and collect a fee for the furnishing of reports 
        under paragraph (2).
            ``(4) Funding.--The Secretary shall carry out this 
        section using amounts made available under section 425 
        of the Social Security Act.

                    ``TITLE III--GENERAL PROVISIONS

``SEC. 301. AUTHORIZATION OF APPROPRIATIONS.

    ``(a) Title I.--There are authorized to be appropriated to 
carry out title I, $230,000,000 for fiscal year 1996, and such 
sums as may be necessary for each of the fiscal years 1997 
through 2002.
    ``(b) Title II.--
            ``(1) In general.--Of the amount appropriated under 
        subsection (a) for a fiscal year, the Secretary shall 
        make available 12 percent of such amount to carry out 
        title II (except for sections 203 and 208).
            ``(2) Grants for demonstration projects.--Of the 
        amount made available under paragraph (1) for a fiscal 
        year, the Secretary shall make available not less than 
        40 percent of such amount to carry out section 203.
    ``(c) Indian Tribes.--Of the amount appropriated under 
subsection (a) for a fiscal year, the Secretary shall make 
available 1 percent of such amount to provide grants and 
contracts to Indian tribes and Tribal Organizations.
    ``(d) Availability of Appropriations.--Amounts appropriated 
under subsection (a) shall remain available until expended.

``SEC. 302. GRANTS TO STATES FOR PROGRAMS RELATING TO THE INVESTIGATION 
                    AND PROSECUTION OF CHILD ABUSE AND NEGLECT CASES.

    ``(a) Grants to States.--The Secretary, in consultation 
with the Attorney General, is authorized to make grants to the 
States for the purpose of assisting States in developing, 
establishing, and operating programs designed to improve--
            ``(1) the handling of child abuse and neglect 
        cases, particularly cases of child sexual abuse and 
        exploitation, in a manner which limits additional 
        trauma to the child victim;
            ``(2) the handling of cases of suspected child 
        abuse or neglect related fatalities; and
            ``(3) the investigation and prosecution of cases of 
        child abuse and neglect, particularly child sexual 
        abuse and exploitation.
    ``(b) Eligibility Requirements.--In order for a State to 
qualify for assistance under this section, such State shall--
            ``(1) be an eligible State under section 102;
            ``(2) establish a task force as provided in 
        subsection (c);
            ``(3) fulfill the requirements of subsection (d);
            ``(4) submit annually an application to the 
        Secretary at such time and containing such information 
        and assurances as the Secretary considers necessary, 
        including an assurance that the State will--
                    ``(A) make such reports to the Secretary as 
                may reasonably be required; and
                    ``(B) maintain and provide access to 
                records relating to activities under subsection 
                (a); and
            ``(5) submit annually to the Secretary a report on 
        the manner in which assistance received under this 
        program was expended throughout the State, with 
        particular attention focused on the areas described in 
        paragraphs (1) through (3) of subsection (a).
    ``(c) State Task Forces.--
            ``(1) General rule.--Except as provided in 
        paragraph (2), a State requesting assistance under this 
        section shall establish or designate, and maintain, a 
        State multidisciplinary task force on children's 
        justice (hereafter in this section referred to as 
        `State task force') composed of professionals with 
        knowledge and experience relating to the criminal 
        justice system and issues of child physical abuse, 
        child neglect, child sexual abuse and exploitation, and 
        child maltreatment related fatalities. The State task 
        force shall include--
                    ``(A) individuals representing the law 
                enforcement community;
                    ``(B) judges and attorneys involved in both 
                civil and criminal court proceedings related to 
                child abuse and neglect (including individuals 
                involved with the defense as well as the 
                prosecution of such cases);
                    ``(C) child advocates, including both 
                attorneys for children and, where such programs 
                are in operation, court appointed special 
                advocates;
                    ``(D) health and mental health 
                professionals;
                    ``(E) individuals representing child 
                protective service agencies;
                    ``(F) individuals experienced in working 
                with children with disabilities;
                    ``(G) parents; and
                    ``(H) representatives of parents' groups.
            ``(2) Existing task force.--As determined by the 
        Secretary, a State commission or task force established 
        after January 1, 1983, with substantially comparable 
        membership and functions, may be considered the State 
        task force for purposes of this subsection.
    ``(d) State Task Force Study.--Before a State receives 
assistance under this section, and at 3-year intervals 
thereafter, the State task force shall comprehensively--
            ``(1) review and evaluate State investigative, 
        administrative and both civil and criminal judicial 
        handling of cases of child abuse and neglect, 
        particularly child sexual abuse and exploitation, as 
        well as cases involving suspected child maltreatment 
        related fatalities and cases involving a potential 
        combination of jurisdictions, such as interstate, 
        Federal-State, and State-Tribal; and
            ``(2) make policy and training recommendations in 
        each of the categories described in subsection (e).
The task force may make such other comments and recommendations 
as are considered relevant and useful.
    ``(e) Adoption of State Task Force Recommendations.--
            ``(1) General rule.--Subject to the provisions of 
        paragraph (2), before a State receives assistance under 
        this section, a State shall adopt recommendations of 
        the State task force in each of the following 
        categories--
                    ``(A) investigative, administrative, and 
                judicial handling of cases of child abuse and 
                neglect, particularly child sexual abuse and 
                exploitation, as well as cases involving 
                suspected child maltreatment related fatalities 
                and cases involving a potential combination of 
                jurisdictions, such as interstate, Federal-
                State, and State-Tribal, in a manner which 
                reduces the additional trauma to the child 
                victim and the victim's family and which also 
                ensures procedural fairness to the accused;
                    ``(B) experimental, model and demonstration 
                programs for testing innovative approaches and 
                techniques which may improve the prompt and 
                successful resolution of civil and criminal 
                court proceedings or enhance the effectiveness 
                of judicial and administrative action in child 
                abuse and neglect cases, particularly child 
                sexual abuse and exploitation cases, including 
                the enhancement of performance of court-
                appointed attorneys and guardians ad litem for 
                children; and
                    ``(C) reform of State laws, ordinances, 
                regulations, protocols and procedures to 
                provide comprehensive protection for children 
                from abuse, particularly child sexual abuse and 
                exploitation, while ensuring fairness to all 
                affected persons.
            ``(2) Exemption.--As determined by the Secretary, a 
        State shall be considered to be in fulfillment of the 
        requirements of this subsection if--
                    ``(A) the State adopts an alternative to 
                the recommendations of the State task force, 
                which carries out the purpose of this section, 
                in each of the categories under paragraph (1) 
                for which the State task force's 
                recommendations are not adopted; or
                    ``(B) the State is making substantial 
                progress toward adopting recommendations of the 
                State task force or a comparable alternative to 
                such recommendations.
    ``(f) Funds Available.--For grants under this section, the 
Secretary shall use the amount authorized by section 1404A of 
the Victims of Crime Act of 1984.

``SEC. 303. TRANSITIONAL PROVISION.

    ``A State or other entity that has a grant, contract, or 
cooperative agreement in effect, on the date of enactment of 
this Act, under the Family Resource and Support Program, the 
Community-Based Family Resource Program, the Family Support 
Center Program, the Emergency Child Abuse Prevention Grant 
Program, or the Temporary Child Care for Children with 
Disabilities and Crisis Nurseries Programs shall continue to 
receive funds under such grant, contract, or cooperative 
agreement, subject to the original terms under which such funds 
were provided, through the end of the applicable grant, 
contract, or agreement cycle.

``SEC. 304. RULE OF CONSTRUCTION.

    ``(a) In General.--Nothing in this Act, or in part B or E 
of title IV of the Social Security Act, shall be construed--
            ``(1) as establishing a Federal requirement that a 
        parent or legal guardian provide a child any medical 
        service or treatment against the religious beliefs of 
        the parent or legal guardian; and
            ``(2) to require that a State find, or to prohibit 
        a State from finding, abuse or neglect in cases in 
        which a parent or legal guardian relies solely or 
        partially upon spiritual means rather than medical 
        treatment, in accordance with the religious beliefs of 
        the parent or legal guardian.
    ``(b) State Requirement.--Notwithstanding subsection (a), a 
State shall have in place authority under State law to permit 
the child protective service system of the State to pursue any 
legal remedies, including the authority to initiate legal 
proceedings in a court of competent jurisdiction, to provide 
medical care or treatment for a child when such care or 
treatment is necessary to prevent or remedy serious harm to the 
child, or to prevent the withholding of medically indicated 
treatment from children with life threatening conditions. 
Except with respect to the withholding of medically indicated 
treatments from disabled infants with life threatening 
conditions, case by case determinations concerning the exercise 
of the authority of this subsection shall be within the sole 
discretion of the State.''.

SEC. 4752. REAUTHORIZATIONS.

    (a) Missing Children's Assistance Act.--Section 408 of the 
Missing Children's Assistance Act (42 U.S.C. 5777) is amended--
            (1) by striking ``To'' and inserting ``(a) In 
        General.--To''
            (2) by striking ``and 1996'' and inserting ``1996, 
        and 1997''; and
            (3) by adding at the end thereof the following new 
        subsection:
    ``(b) Evaluation.--The Administrator shall use not more 
than 5 percent of the amount appropriated for a fiscal year 
under subsection (a) to conduct an evaluation of the 
effectiveness of the programs and activities established and 
operated under this title.''.
    (b) Victims of Child Abuse Act of 1990.--Section 214B of 
the Victims of Child Abuse Act of 1990 (42 U.S.C. 13004) is 
amended--
            (1) in subsection (a)(2), by striking ``and 1996'' 
        and inserting ``1996, and 1997''; and
            (2) in subsection (b)(2), by striking ``and 1996'' 
        and inserting ``1996, and 1997''.

SEC. 4753. REPEALS.

    (a) In General.--The following provisions of law are 
repealed:
            (1) Title II of the Child Abuse Prevention and 
        Treatment and Adoption Reform Act of 1978 (42 U.S.C. 
        5111 et seq.).
            (2) The Abandoned Infants Assistance Act of 1988 
        (42 U.S.C. 670 note).
            (3) The Temporary Child Care for Children with 
        Disabilities and Crisis Nurseries Act of 1986 (42 
        U.S.C. 5117 et seq.).
            (4) Subtitle F of title VII of the Stewart B. 
        McKinney Homeless Assistance Act (42 U.S.C. 11481 et 
        seq.).
    (b) Conforming Amendments.--
            (1) Recommended legislation.--After consultation 
        with the appropriate committees of the Congress and the 
        Director of the Office of Management and Budget, the 
        Secretary of Health and Human Services shall prepare 
        and submit to the Congress a legislative proposal in 
        the form of an implementing bill containing technical 
        and conforming amendments to reflect the repeals made 
        by this section.
            (2) Submission to congress.--Not later than 6 
        months after the date of enactment of this subchapter, 
        the Secretary of Health and Human Services shall submit 
        the implementing bill referred to under paragraph (1).

                         Subtitle G--Child Care

SEC. 4801. SHORT TITLE AND REFERENCES.

    (a) Short Title.--This subtitle may be cited as the ``Child 
Care and Development Block Grant Amendments of 1996''.
    (b) References.--Except as otherwise expressly provided, 
whenever in this subtitle an amendment or repeal is expressed 
in terms of an amendment to, or repeal of, a section or other 
provision, the reference shall be considered to be made to a 
section or other provision of the Child Care and Development 
Block Grant Act of 1990 (42 U.S.C. 9858 et seq.).

SEC. 4802. GOALS.

    (a) Goals.--Section 658A (42 U.S.C. 9801 note) is amended--
            (1) in the section heading by inserting ``and 
        goals'' after ``title'';
            (2) by inserting ``(a) Short Title.--'' before 
        ``This''; and
            (3) by adding at the end the following:
    ``(b) Goals.--The goals of this subchapter are--
            ``(1) to allow each State maximum flexibility in 
        developing child care programs and policies that best 
        suit the needs of children and parents within such 
        State;
            ``(2) to promote parental choice to empower working 
        parents to make their own decisions on the child care 
        that best suits their family's needs;
            ``(3) to encourage States to provide consumer 
        education information to help parents make informed 
        choices about child care;
            ``(4) to assist States to provide child care to 
        parents trying to achieve independence from public 
        assistance; and
            ``(5) to assist States in implementing the health, 
        safety, licensing, and registration standards 
        established in State regulations.''.

SEC. 4803. AUTHORIZATION OF APPROPRIATIONS AND ENTITLEMENT AUTHORITY.

    (a) In General.--Section 658B (42 U.S.C. 9858) is amended 
to read as follows:

``SEC. 658B. AUTHORIZATION OF APPROPRIATIONS.

    ``There is authorized to be appropriated to carry out this 
subchapter $1,000,000,000 for each of the fiscal years 1996 
through 2002.''.
    (b) Social Security Act.--Part A of title IV of the Social 
Security Act (42 U.S.C. 601 et seq.) is amended by adding at 
the end the following:

``SEC. 418. FUNDING FOR CHILD CARE.

    ``(a) General Child Care Entitlement.--
            ``(1) General entitlement.--Subject to the amount 
        appropriated under paragraph (3), each State shall, for 
        the purpose of providing child care assistance, be 
        entitled to payments under a grant under this 
        subsection for a fiscal year in an amount equal to--
                    ``(A) the sum of the total amount required 
                to be paid to the State under former section 
                403 for fiscal year 1994 or 1995 (whichever is 
                greater) with respect to amounts expended for 
                child care under section--
                            ``(i) 402(g) of this Act (as such 
                        section was in effect before October 1, 
                        1995); and
                            ``(ii) 402(i) of this Act (as so in 
                        effect); or
                    ``(B) the average of the total amounts 
                required to be paid to the State for fiscal 
                years 1992 through 1994 under the sections 
                referred to in subparagraph (A);
        whichever is greater.
            ``(2) Remainder.--
                    ``(A) Grants.--The Secretary shall use any 
                amounts appropriated for a fiscal year under 
                paragraph (3), and remaining after the 
                reservation described in paragraph (4) and 
                after grants are awarded under paragraph (1), 
                to make grants to States under this paragraph.
                    ``(B) Amount.--Subject to subparagraph (C), 
                the amount of a grant awarded to a State for a 
                fiscal year under this paragraph shall be based 
                on the formula used for determining the amount 
                of Federal payments to the State under section 
                403(n) (as such section was in effect before 
                October 1, 1995).
                    ``(C) Matching requirement.--The Secretary 
                shall pay to each eligible State in a fiscal 
                year an amount, under a grant under 
                subparagraph (A), equal to the Federal medical 
                assistance percentage for such State for fiscal 
                year 1995 (as defined in section 1905(b)) of so 
                much of the expenditures by the State for child 
                care in such year as exceed the State set-aside 
                for such State under paragraph (1)(A) for such 
                year and the amount of State expenditures in 
                fiscal year 1994 that equal the non-Federal 
                share for the programs described in 
                subparagraph (A) of paragraph (1).
                    ``(D) Redistribution.--
                            ``(i) In general.--With respect to 
                        any fiscal year, if the Secretary 
                        determines (in accordance with clause 
                        (ii)) that amounts under any grant 
                        awarded to a State under this paragraph 
                        for such fiscal year will not be used 
                        by such State during such fiscal year 
                        for carrying out the purpose for which 
                        the grant is made, the Secretary shall 
                        make such amounts available in the 
                        subsequent fiscal year for carrying out 
                        such purpose to 1 or more States which 
                        apply for such funds to the extent the 
                        Secretary determines that such States 
                        will be able to use such additional 
                        amounts for carrying out such purpose. 
                        Such available amounts shall be 
                        redistributed to a State pursuant to 
                        section 402(i) (as such section was in 
                        effect before October 1, 1995) by 
                        substituting `the number of children 
                        residing in all States applying for 
                        such funds' for `the number of children 
                        residing in the United States in the 
                        second preceding fiscal year'.
                            ``(ii) Time of determination and 
                        distribution.--The determination of the 
                        Secretary under clause (i) for a fiscal 
                        year shall be made not later than the 
                        end of the first quarter of the 
                        subsequent fiscal year. The 
                        redistribution of amounts under clause 
                        (i) shall be made as close as 
                        practicable to the date on which such 
                        determination is made. Any amount made 
                        available to a State from an 
                        appropriation for a fiscal year in 
                        accordance with this subparagraph 
                        shall, for purposes of this part, be 
                        regarded as part of such State's 
                        payment (as determined under this 
                        subsection) for the fiscal year in 
                        which the redistribution is made.
            ``(3) Appropriation.--There are authorized to be 
        appropriated, and there are appropriated, to carry out 
        this section--
                    ``(A) $1,967,000,000 for fiscal year 1997;
                    ``(B) $2,067,000,000 for fiscal year 1998;
                    ``(C) $2,167,000,000 for fiscal year 1999;
                    ``(D) $2,367,000,000 for fiscal year 2000;
                    ``(E) $2,567,000,000 for fiscal year 2001; 
                and
                    ``(F) $2,717,000,000 for fiscal year 2002.
            ``(4) Indian tribes.--The Secretary shall reserve 
        not more than 1 percent of the aggregate amount 
        appropriated to carry out this section in each fiscal 
        year for payments to Indian tribes and tribal 
        organizations.
    ``(b) Use of Funds.--
            ``(1) In general.--Amounts received by a State 
        under this section shall only be used to provide child 
        care assistance. Amounts received by a State under a 
        grant under subsection (a)(1) shall be available for 
        use by the State without fiscal year limitation.
            ``(2) Use for certain populations.--A State shall 
        ensure that not less than 70 percent of the total 
        amount of funds received by the State in a fiscal year 
        under this section are used to provide child care 
        assistance to families who are receiving assistance 
        under a State program under this part, families who are 
        attempting through work activities to transition off of 
        such assistance program, and families who are at risk 
        of becoming dependent on such assistance program.
    ``(c) Application of Child Care and Development Block Grant 
Act of 1990.--Notwithstanding any other provision of law, 
amounts provided to a State under this section shall be 
transferred to the lead agency under the Child Care and 
Development Block Grant Act of 1990, integrated by the State 
into the programs established by the State under such Act, and 
be subject to requirements and limitations of such Act.
    ``(d) Definition.--As used in this section, the term 
`State' means each of the 50 States or the District of 
Columbia.''.

SEC. 4804. LEAD AGENCY.

    Section 658D(b) (42 U.S.C. 9858b(b)) is amended--
            (1) in paragraph (1)--
                    (A) in subparagraph (A), by striking 
                ``State'' the first place that such appears and 
                inserting ``governmental or nongovernmental''; 
                and
                    (B) in subparagraph (C), by inserting 
                ``with sufficient time and Statewide 
                distribution of the notice of such hearing,'' 
                after ``hearing in the State''; and
            (2) in paragraph (2), by striking the second 
        sentence.

SEC. 4805. APPLICATION AND PLAN.

    Section 658E (42 U.S.C. 9858c) is amended--
            (1) in subsection (b)--
                    (A) by striking ``implemented--'' and all 
                that follows through ``(2)'' and inserting 
                ``implemented''; and
                    (B) by striking ``for subsequent State 
                plans'';
            (2) in subsection (c)--
                    (A) in paragraph (2)--
                            (i) in subparagraph (A)--
                                    (I) in clause (i) by 
                                striking ``, other than through 
                                assistance provided under 
                                paragraph (3)(C),''; and
                                    (II) by striking ``except'' 
                                and all that follows through 
                                ``1992'', and inserting ``and 
                                provide a detailed description 
                                of the procedures the State 
                                will implement to carry out the 
                                requirements of this 
                                subparagraph'';
                            (ii) in subparagraph (B)--
                                    (I) by striking ``Provide 
                                assurances'' and inserting 
                                ``Certify''; and
                                    (II) by inserting before 
                                the period at the end ``and 
                                provide a detailed description 
                                of such procedures'';
                            (iii) in subparagraph (C)--
                                    (I) by striking ``Provide 
                                assurances'' and inserting 
                                ``Certify''; and
                                    (II) by inserting before 
                                the period at the end ``and 
                                provide a detailed description 
                                of how such record is 
                                maintained and is made 
                                available'';
                            (iv) by amending subparagraph (D) 
                        to read as follows:
                    ``(D) Consumer education information.--
                Certify that the State will collect and 
                disseminate to parents of eligible children and 
                the general public, consumer education 
                information that will promote informed child 
                care choices.'';
                            (v) by amending subparagraph (E) to 
                        read as follows:
                    ``(E) Compliance with state licensing 
                requirements.--
                            ``(i) In general.--Certify that the 
                        State has in effect licensing 
                        requirements applicable to child care 
                        services provided within the State, and 
                        provide a detailed description of such 
                        requirements and of how such 
                        requirements are effectively enforced. 
                        Nothing in the preceding sentence shall 
                        be construed to require that licensing 
                        requirements be applied to specific 
                        types of providers of child care 
                        services.
                            ``(ii) Indian tribes and tribal 
                        organizations.--In lieu of any 
                        licensing and regulatory requirements 
                        applicable under State and local law, 
                        the Secretary, in consultation with 
                        Indian tribes and tribal organizations, 
                        shall develop minimum child care 
                        standards (that appropriately reflect 
                        tribal needs and available resources) 
                        that shall be applicable to Indian 
                        tribes and tribal organization 
                        receiving assistance under this 
                        subchapter.'';
                            (vi) in subparagraph (G), by 
                        striking ``Provide assurances'' and 
                        inserting ``Certify''; and
                            (vii) by striking subparagraphs 
                        (H), (I), and (J) and inserting the 
                        following:
                    ``(H) Meeting the needs of certain 
                populations.--Demonstrate the manner in which 
                the State will meet the specific child care 
                needs of families who are receiving assistance 
                under a State program under part A of title IV 
                of the Social Security Act, families who are 
                attempting through work activities to 
                transition off of such assistance program, and 
                families that are at risk of becoming dependent 
                on such assistance program.'';
                    (B) in paragraph (3)--
                            (i) in subparagraph (A), by 
                        striking ``(B) and (C)'' and inserting 
                        ``(B) through (D)'';
                            (ii) in subparagraph (B)--
                                    (I) by striking ``.--
                                Subject to the reservation 
                                contained in subparagraph (C), 
                                the'' and inserting ``and 
                                related activities.--The'';
                                    (II) in clause (i) by 
                                striking ``; and'' at the end 
                                and inserting a period;
                                    (III) by striking ``for--'' 
                                and all that follows through 
                                ``section 658E(c)(2)(A)'' and 
                                inserting ``for child care 
                                services on sliding fee scale 
                                basis, activities that improve 
                                the quality or availability of 
                                such services, and any other 
                                activity that the State deems 
                                appropriate to realize any of 
                                the goals specified in 
                                paragraphs (2) through (5) of 
                                section 658A(b)''; and
                                    (IV) by striking clause 
                                (ii);
                            (iii) by amending subparagraph (C) 
                        to read as follows:
                    ``(C) Limitation on administrative costs.--
                Not more than 5 percent of the aggregate amount 
                of funds available to the State to carry out 
                this subchapter by a State in each fiscal year 
                may be expended for administrative costs 
                incurred by such State to carry out all of its 
                functions and duties under this subchapter. As 
                used in the preceding sentence, the term 
                `administrative costs' shall not include the 
                costs of providing direct services.''; and
                            (iv) by adding at the end thereof 
                        the following:
                    ``(D) Assistance for certain families.--A 
                State shall ensure that a substantial portion 
                of the amounts available (after the State has 
                complied with the requirement of section 
                418(b)(2) of the Social Security Act with 
                respect to each of the fiscal years 1997 
                through 2002) to the State to carry out 
                activities under this subchapter in each fiscal 
                year is used to provide assistance to low-
                income working families other than families 
                described in paragraph (2)(F).''; and
                    (C) in paragraph (4)(A)--
                            (i) by striking ``provide 
                        assurances'' and inserting ``certify'';
                            (ii) in the first sentence by 
                        inserting ``and shall provide a summary 
                        of the facts relied on by the State to 
                        determine that such rates are 
                        sufficient to ensure such access'' 
                        before the period; and
                            (iii) by striking the last 
                        sentence.

SEC. 4806. LIMITATION ON STATE ALLOTMENTS.

    Section 658F(b)(1) (42 U.S.C. 9858d(b)(1)) is amended by 
striking ``No'' and inserting ``Except as provided for in 
section 658O(c)(6), no''.

SEC. 4807. ACTIVITIES TO IMPROVE THE QUALITY OF CHILD CARE.

    Section 658G (42 U.S.C. 9858e) is amended to read as 
follows:

``SEC. 658G. ACTIVITIES TO IMPROVE THE QUALITY OF CHILD CARE.

    ``A State that receives funds to carry out this subchapter 
for a fiscal year, shall use not less than 3 percent of the 
amount of such funds for activities that are designed to 
provide comprehensive consumer education to parents and the 
public, activities that increase parental choice, and 
activities designed to improve the quality and availability of 
child care (such as resource and referral services).''.

SEC. 4808. REPEAL OF EARLY CHILDHOOD DEVELOPMENT AND BEFORE- AND AFTER-
                    SCHOOL CARE REQUIREMENT.

    Section 658H (42 U.S.C. 9858f) is repealed.

SEC. 4809. ADMINISTRATION AND ENFORCEMENT.

    Section 658I(b) (42 U.S.C. 9858g(b)) is amended--
            (1) in paragraph (1), by striking ``, and shall 
        have'' and all that follows through ``(2)''; and
            (2) in the matter following clause (ii) of 
        paragraph (2)(A), by striking ``finding and that'' and 
        all that follows through the period and inserting 
        ``finding and shall require that the State reimburse 
        the Secretary for any funds that were improperly 
        expended for purposes prohibited or not authorized by 
        this subchapter, that the Secretary deduct from the 
        administrative portion of the State allotment for the 
        following fiscal year an amount that is less than or 
        equal to any improperly expended funds, or a 
        combination of such options.''.

SEC. 4810. PAYMENTS.

    Section 658J(c) (42 U.S.C. 9858h(c)) is amended by striking 
``expended'' and inserting ``obligated''.

SEC. 4811. ANNUAL REPORT AND AUDITS.

    Section 658K (42 U.S.C. 9858i) is amended--
            (1) in the section heading by striking ``annual 
        report'' and inserting ``reports'';
            (2) in subsection (a), to read as follows:
    ``(a) Reports.--
            ``(1) Collection of information by states.--
                    ``(A) In general.--A State that receives 
                funds to carry out this subchapter shall 
                collect the information described in 
                subparagraph (B) on a monthly basis.
                    ``(B) Required information.--The 
                information required under this subparagraph 
                shall include, with respect to a family unit 
                receiving assistance under this subchapter 
                information concerning--
                            ``(i) family income;
                            ``(ii) county of residence;
                            ``(iii) the gender, race, and age 
                        of children receiving such assistance;
                            ``(iv) whether the family includes 
                        only 1 parent;
                            ``(v) the sources of family income, 
                        including the amount obtained from (and 
                        separately identified)--
                                    ``(I) employment, including 
                                self-employment;
                                    ``(II) cash or other 
                                assistance under part A of 
                                title IV of the Social Security 
                                Act;
                                    ``(III) housing assistance;
                                    ``(IV) assistance under the 
                                Food Stamp Act of 1977; and
                                    ``(V) other assistance 
                                programs;
                            ``(vi) the number of months the 
                        family has received benefits;
                            ``(vii) the type of child care in 
                        which the child was enrolled (such as 
                        family child care, home care, or 
                        center-based child care);
                            ``(viii) whether the child care 
                        provider involved was a relative;
                            ``(ix) the cost of child care for 
                        such families; and
                            ``(x) the average hours per week of 
                        such care;
                during the period for which such information is 
                required to be submitted.
                    ``(C) Submission to secretary.--A State 
                described in subparagraph (A) shall, on a 
                quarterly basis, submit the information 
                required to be collected under subparagraph (B) 
                to the Secretary.
                    ``(D) Sampling.--The Secretary may 
                disapprove the information collected by a State 
                under this paragraph if the State uses sampling 
                methods to collect such information.
            ``(2) Biannual reports.--Not later than December 
        31, 1997, and every 6 months thereafter, a State 
        described in paragraph (1)(A) shall prepare and submit 
        to the Secretary a report that includes aggregate data 
        concerning--
                    ``(A) the number of child care providers 
                that received funding under this subchapter as 
                separately identified based on the types of 
                providers listed in section 658P(5);
                    ``(B) the monthly cost of child care 
                services, and the portion of such cost that is 
                paid for with assistance provided under this 
                subchapter, listed by the type of child care 
                services provided;
                    ``(C) the number of payments made by the 
                State through vouchers, contracts, cash, and 
                disregards under public benefit programs, 
                listed by the type of child care services 
                provided;
                    ``(D) the manner in which consumer 
                education information was provided to parents 
                and the number of parents to whom such 
                information was provided; and
                    ``(E) the total number (without 
                duplication) of children and families served 
                under this subchapter;
        during the period for which such report is required to 
        be submitted.''; and
            (2) in subsection (b)--
                    (A) in paragraph (1) by striking ``a 
                application'' and inserting ``an application'';
                    (B) in paragraph (2) by striking ``any 
                agency administering activities that receive'' 
                and inserting ``the State that receives''; and
                    (C) in paragraph (4) by striking 
                ``entitles'' and inserting ``entitled''.

SEC. 4812. REPORT BY THE SECRETARY.

    Section 658L (42 U.S.C. 9858j) is amended--
            (1) by striking ``1993'' and inserting ``1997'';
            (2) by striking ``annually'' and inserting 
        ``biennially''; and
            (3) by striking ``Education and Labor'' and 
        inserting ``Economic and Educational Opportunities''.

SEC. 4813. ALLOTMENTS.

    Section 658O (42 U.S.C. 9858m) is amended--
            (1) in subsection (a)--
                    (A) in paragraph (1)
                            (i) by striking ``Possessions'' and 
                        inserting ``possessions'';
                            (ii) by inserting ``and'' after 
                        ``States,''; and
                            (iii) by striking ``, and the Trust 
                        Territory of the Pacific Islands''; and
                    (B) in paragraph (2), by striking ``3 
                percent'' and inserting ``1 percent'';
            (2) in subsection (c)--
                    (A) in paragraph (5) by striking ``our'' 
                and inserting ``out''; and
                    (B) by adding at the end thereof the 
                following new paragraph:
            ``(6) Construction or renovation of facilities.--
                    ``(A) Request for use of funds.--An Indian 
                tribe or tribal organization may submit to the 
                Secretary a request to use amounts provided 
                under this subsection for construction or 
                renovation purposes.
                    ``(B) Determination.--With respect to a 
                request submitted under subparagraph (A), and 
                except as provided in subparagraph (C), upon a 
                determination by the Secretary that adequate 
                facilities are not otherwise available to an 
                Indian tribe or tribal organization to enable 
                such tribe or organization to carry out child 
                care programs in accordance with this 
                subchapter, and that the lack of such 
                facilities will inhibit the operation of such 
                programs in the future, the Secretary may 
                permit the tribe or organization to use 
                assistance provided under this subsection to 
                make payments for the construction or 
                renovation of facilities that will be used to 
                carry out such programs.
                    ``(C) Limitation.--The Secretary may not 
                permit an Indian tribe or tribal organization 
                to use amounts provided under this subsection 
                for construction or renovation if such use will 
                result in a decrease in the level of child care 
                services provided by the tribe or organization 
                as compared to the level of such services 
                provided by the tribe or organization in the 
                fiscal year preceding the year for which the 
                determination under subparagraph (A) is being 
                made.
                    ``(D) Uniform procedures.--The Secretary 
                shall develop and implement uniform procedures 
                for the solicitation and consideration of 
                requests under this paragraph.''; and
            (3) in subsection (e), by adding at the end thereof 
        the following new paragraph:
            ``(4) Indian tribes or tribal organizations.--Any 
        portion of a grant or contract made to an Indian tribe 
        or tribal organization under subsection (c) that the 
        Secretary determines is not being used in a manner 
        consistent with the provision of this subchapter in the 
        period for which the grant or contract is made 
        available, shall be allotted by the Secretary to other 
        tribes or organizations that have submitted 
        applications under subsection (c) in accordance with 
        their respective needs.''.

SEC. 4814. DEFINITIONS.

    Section 658P (42 U.S.C. 9858n) is amended--
            (1) in paragraph (2), in the first sentence by 
        inserting ``or as a deposit for child care services if 
        such a deposit is required of other children being 
        cared for by the provider'' after ``child care 
        services''; and
            (2) by striking paragraph (3);
            (3) in paragraph (4)(B), by striking ``75 percent'' 
        and inserting ``85 percent'';
            (4) in paragraph (5)(B)--
                    (A) by inserting ``great grandchild, 
                sibling (if such provider lives in a separate 
                residence),'' after ``grandchild,'';
                    (B) by striking ``is registered and''; and
                    (C) by striking ``State'' and inserting 
                ``applicable''.
            (5) by striking paragraph (10);
            (6) in paragraph (13)--
                    (A) by inserting ``or'' after ``Samoa,''; 
                and
                    (B) by striking ``, and the Trust Territory 
                of the Pacific Islands'';
            (7) in paragraph (14)--
                    (A) by striking ``The term'' and inserting 
                the following:
                    ``(A) In general.--The term''; and
                    (B) by adding at the end thereof the 
                following new subparagraph:
                    ``(B) Other organizations.--Such term 
                includes a Native Hawaiian Organization, as 
                defined in section 4009(4) of the Augustus F. 
                Hawkins-Robert T. Stafford Elementary and 
                Secondary School Improvement Amendments of 1988 
                (20 U.S.C. 4909(4)) and a private nonprofit 
                organization established for the purpose of 
                serving youth who are Indians or Native 
                Hawaiians.''.

SEC. 4815. REPEALS.

    (a) Child Development Associate Scholarship Assistance Act 
of 1985.--Title VI of the Human Services Reauthorization Act of 
1986 (42 U.S.C. 10901-10905) is repealed.
    (b) State Dependent Care Development Grants Act.--
Subchapter E of chapter 8 of subtitle A of title VI of the 
Omnibus Budget Reconciliation Act of 1981 (42 U.S.C. 9871-9877) 
is repealed.
    (c) Programs of National Significance.--Title X of the 
Elementary and Secondary Education Act of 1965, as amended by 
Public Law 103-382 (108 Stat. 3809 et seq.), is amended--
            (1) in section 10413(a) by striking paragraph (4),
            (2) in section 10963(b)(2) by striking subparagraph 
        (G), and
            (3) in section 10974(a)(6) by striking subparagraph 
        (G).
    (d) Native Hawaiian Family-Based Education Centers.--
Section 9205 of the Native Hawaiian Education Act, as amended 
by section 101 of Public Law 103-382, (108 Stat. 3794) is 
repealed.

SEC. 4816. EFFECTIVE DATE.

    (a) In General.--Except as provided in subsection (b), this 
subtitle and the amendments made by this subtitle shall take 
effect on October 1, 1996.
    (b) Exception.--The amendment made by section 803(a) shall 
take effect on the date of enactment of this Act.

                       Subtitle H--Miscellaneous

SEC. 4901. APPROPRIATION BY STATE LEGISLATURES.

    (a) In General.--Any funds received by a State under the 
provisions of law specified in subsection (b) shall be subject 
to appropriation by the State legislature, consistent with the 
terms and conditions required under such provisions of law.
    (b) Provisions of Law.--The provisions of law specified in 
this subsection are the following:
            (1) Part A of title IV of the Social Security Act 
        (relating to block grants for temporary assistance for 
        needy families).
            (2) Section 25 of the Food Stamp Act of 1977 
        (relating to the optional State food assistance block 
        grant).
            (3) The Child Care and Development Block Grant Act 
        of 1990 (relating to block grants for child care).

SEC. 4902. SANCTIONING FOR TESTING POSITIVE FOR CONTROLLED SUBSTANCES.

    Notwithstanding any other provision of law, States shall 
not be prohibited by the Federal Government from testing 
welfare recipients for use of controlled substances nor from 
sanctioning welfare recipients who test positive for use of 
controlled substances.

SEC. 4903. REDUCTION IN BLOCK GRANTS TO STATES FOR SOCIAL SERVICES.

    Section 2003(c) of the Social Security Act (42 U.S.C. 
1397b(c)) is amended--
            (1) by striking ``and'' at the end of paragraph 
        (4); and
            (2) by striking paragraph (5) and inserting the 
        following:
            ``(5) $2,800,000,000 for each of the fiscal years 
        1990 through 1995;
            ``(6) $2,520,000,000 for each of the fiscal years 
        1997 through 2002; and
            ``(7) $2,380,000,000 for the fiscal year 2003 and 
        each succeeding fiscal year.''.

SEC. 4904. RULES RELATING TO DENIAL OF EARNED INCOME CREDIT ON BASIS OF 
                    DISQUALIFIED INCOME.

    (a) Reduction in Disqualified Income Threshold.--
            (1) In general.--Paragraph (1) of section 32(i) of 
        the Internal Revenue Code of 1986 (relating to denial 
        of credit for individuals having excessive investment 
        income) is amended by striking ``$2,350'' and inserting 
        ``$2,250''.
            (2) Adjustment for inflation.--Subsection (j) of 
        section 32 of such Code is amended to read as follows:
    ``(j) Inflation Adjustments.--
            ``(1) In general.--In the case of any taxable year 
        beginning after 1997, each of the dollar amounts in 
        subsections (b)(2) and (i)(1) shall be increased by an 
        amount equal to--
                    ``(A) such dollar amount, multiplied by
                    ``(B) the cost-of-living adjustment 
                determined under section 1(f)(3) for the 
                calendar year in which the taxable year begins, 
                determined by substituting `calendar year 1996' 
                for `calendar year 1992' in subparagraph (B) 
                thereof.
            ``(2) Rounding.--
                    ``(A) In general.--If any dollar amount in 
                subsection (b)(2), after being increased under 
                paragraph (1), is not a multiple of $10, such 
                dollar amount shall be rounded to the nearest 
                multiple of $10.
                    ``(B) Disqualified income threshold 
                amount.--If the dollar amount in subsection 
                (i)(1), after being increased under paragraph 
                (1), is not a multiple of $50, such amount 
                shall be rounded to the next lowest multiple of 
                $50.''
    (b) Definition of Disqualified Income.--Paragraph (2) of 
section 32(i) of such Code (defining disqualified income) is 
amended by striking ``and'' at the end of subparagraph (B), by 
striking the period at the end of subparagraph (C) and 
inserting a comma, and by adding at the end the following new 
subparagraphs:
                    ``(D) the capital gain net income (as 
                defined in section 1222) of the taxpayer for 
                such taxable year, and
                    ``(E) the excess (if any) of--
                            ``(i) the aggregate income from all 
                        passive activities for the taxable year 
                        (determined without regard to any 
                        amount included in earned income under 
                        subsection (c)(2) or described in a 
                        preceding subparagraph), over
                            ``(ii) the aggregate losses from 
                        all passive activities for the taxable 
                        year (as so determined).
        For purposes of subparagraph (E), the term `passive 
        activity' has the meaning given such term by section 
        469.''
    (c) Effective Date.--The amendments made by this section 
shall apply to taxable years beginning after December 31, 1996.

SEC. 4905. MODIFICATION OF ADJUSTED GROSS INCOME DEFINITION FOR EARNED 
                    INCOME CREDIT.

    (a) In General.--Subsections (a)(2)(B), (c)(1)(C), and 
(f)(2)(B) of section 32 of the Internal Revenue Code of 1986 
are each amended by striking ``adjusted gross income'' each 
place it appears and inserting ``modified adjusted gross 
income''.
    (b) Modified Adjusted Gross Income Defined.--Section 32(c) 
of such Code (relating to definitions and special rules) is 
amended by adding at the end the following new paragraph:
            ``(5) Modified adjusted gross income.--
                    ``(A) In general.--The term `modified 
                adjusted gross income' means adjusted gross 
                income determined without regard to the amounts 
                described in subparagraph (B).
                    ``(B) Certain amounts disregarded.--An 
                amount is described in this subparagraph if it 
                is--
                            ``(i) the amount of losses from 
                        sales or exchanges of capital assets in 
                        excess of gains from such sales or 
                        exchanges to the extent such amount 
                        does not exceed the amount under 
                        section 1211(b)(1),
                            ``(ii) the net loss from estates 
                        and trusts,
                            ``(iii) the excess (if any) of 
                        amounts described in subsection 
                        (i)(2)(C)(ii) over the amounts 
                        described in subsection (i)(2)(C)(i) 
                        (relating to nonbusiness rents and 
                        royalties), and
                            ``(iv) 50 percent of the net loss 
                        from the carrying on of trades or 
                        businesses, computed separately with 
                        respect to--
                                    ``(I) trades or businesses 
                                (other than farming) conducted 
                                as sole proprietorships,
                                    ``(II) trades or businesses 
                                of farming conducted as sole 
                                proprietorships, and
                                    ``(III) other trades or 
                                businesses.
                For purposes of clause (iv), there shall not be 
                taken into account items which are attributable 
                to a trade or business which consists of the 
                performance of services by the taxpayer as an 
                employee.''
    (c) Effective Date.--The amendments made by this section 
shall apply to taxable years beginning after December 31, 1996.

SEC. 4906. MODIFICATION OF EARNED INCOME CREDIT AMOUNT AND PHASEOUT.

    (a) Modification of Phaseout.--Subparagraph (B) of section 
32(a)(2) of the Internal Revenue Code of 1986, as amended by 
section 4905 of this Act, is amended to read as follows:
                    ``(B) the sum of--
                            ``(i) the initial phaseout 
                        percentage of so much of the modified 
                        adjusted gross income (or, if greater, 
                        the earned income) of the taxpayer for 
                        the taxable year as exceeds the initial 
                        phaseout amount but does not exceed the 
                        final phaseout amount, plus
                            ``(ii) the final phaseout 
                        percentage of so much of the modified 
                        adjusted gross income (or, if greater, 
                        the earned income) of the taxpayer for 
                        the taxable year as exceeds the final 
                        phaseout amount.''
    (b) Percentages and Amounts.--Subsection (b) of section 32 
of such Code is amended to read as follows:
    ``(b) Percentages and Amounts.--For purposes of subsection 
(a)--
            ``(1) Percentages.--The credit percentage, the 
        initial phaseout percentage, and the final phaseout 
        percentage shall be determined as follows:



                                                                                                                
   ``In the case of an eligible                                 The initial phaseout       The final phaseout   
         individual with:          The credit percentage is:       percentage is:            percentage is:     
                                                                                                                
1 qualifying child...............              34                       15.98                      18           
2 or more qualifying children....              40                       21.06                      23           
No qualifying children...........             7.65                      7.65                        0           
                                                                                                                

      
            ``(2) Amounts.--The earned income amount, the 
        initial phaseout amount, and the final phaseout amount 
        shall be determined as follows:



                                                                                                                
   ``In the case of an eligible     The earned income amount    The initial phaseout       The final phaseout   
         individual with:                     is:                    amount is:                amount is:       
                                                                                                                
1 qualifying child...............            $6,500                    $11,910                   $17,340        
2 or more qualifying children....            $9,120                    $11,910                   $21,360        
No qualifying children...........            $4,330                    $5,420                     $0''.         
                                                                                                                

      
    (c) Effective Date.--The amendments made by this section 
shall apply to taxable years beginning after December 31, 1996.
                 TITLE IV--COMMITTEE ON WAYS AND MEANS

                       Committee on Ways and Means,
                                  House of Representatives,
                                     Washington, DC, June 13, 1996.
Hon. John R. Kasich,
Chairman, Committee on the Budget,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: On June 12, 1996, the Committee on Ways 
and Means, pursuant to H.Con.Res. 178, the Concurrent 
Resolution on the Budget for Fiscal Year 1997, ordered 
favorably reported, as amended, its budget reconciliation 
welfare recommendations to the Committee on Budget by a 
recorded vote of 23-14. Accordingly, I am now transmitting 
these recommendations to you.
    Pursuant to your letter dated June 12, enclosed are the 
legislative language and explanatory report language.
    Please feel free to contact me or Phil Moseley if you have 
any questions. With best personal regards.
            Sincerely,
                                             Bill Archer, Chairman.
    Enclosures.

                                CONTENTS

                                                                   Page
Introduction: Description of Budget Reconciliation Welfare 
  Recommendations as Approved....................................  1321
Subtitle A--Block Grant for Temporary Assistance for Needy 
  Families.......................................................  1327
Subtitle B--Supplemental Security Income.........................  1380
Subtitle C--Child Support Enforcement............................  1396
Subtitle D--Restricting Welfare and Public Benefits for Aliens...  1441
Subtitle E--Reform of Public Housing.............................  1455
Subtitle F--Child Protection Block Grant Programs and Foster 
  Care, Adoption Assistance, and Independent Living Programs.....  1456
Subtitle G--Child Care...........................................  1469
Subtitle H--Miscellaneous Provisions.............................  1482
Votes of the Committee...........................................  1486
Congressional Budget Office Estimate.............................  1493
Changes in Existing Law..........................................  1493
Other Matters Required To Be Discussed Under the Rules of the 
  House..........................................................  1937

                              INTRODUCTION

    Description of Budget Reconciliation Welfare Recommendations as 
                                Approved

       A. block grant for temporary assistance for needy families

    The welfare reform proposal approved by the committee would 
create a single cash welfare block grant for the purposes of: 
providing assistance to needy families with children; ending 
dependence on government benefits by promoting job preparation; 
work and marriage; preventing and reducing the incidence of 
out-of-wedlock pregnancies; and encouraging the formation and 
maintenance of two-parent families. The block grant would 
replace four current cash welfare and related programs: Aid to 
Families with Dependent Children (AFDC), AFDC Administration, 
the Job Opportunities and Basic Skills (JOBS) Program, and the 
Emergency Assistance Program.
    Spending through the block grant would be capped and level-
funded at prior levels for these programs. A total of $16.35 
billion each year for fiscal years 1996 through 2001 would be 
provided to States through the block grant. Each State would 
receive the highest of Federal payments to the State for AFDC 
benefits, AFDC Administration, Emergency Assistance, and JOBS 
for: (1) fiscal years 1992 through 1994, on average; (2) fiscal 
year 1994; or (3) fiscal year 1995; plus, under certain 
circumstances, 85 percent of increased fiscal year 1995 
spending for emergency assistance.
    In addition to the basic block grant, States would be 
provided with additional funding through a $1 billion fund that 
rewards effective performance in preserving 2-parent families 
and getting parents into the work force in the following ways: 
through an incentive grant that provides cash rewards of up to 
10 percent of the basic State grant amount to States that 
reduce their nonmarital birthrate while decreasing their 
abortion rate; through a fund of $0.8 billion for poor States 
with high population growth rates; and through a $2 billion 
contingency fund that helps States with high levels of economic 
distress (see below).
    States would be required to conduct welfare-to-work 
programs, and individuals receiving cash benefits through the 
block grant would be required to work after 2 years or their 
cash payments would end. According to the Congressional Budget 
Office, States would be required to have 1.3 million cash 
welfare recipients in work programs by 2002.
    States would be required to ensure that cash welfare 
recipients are eligible for Medicaid coverage. In addition, 
States would be required to provide transitional Medicaid 
benefits for 1 year for families that leave welfare due to 
increased earnings or child support as long as their income 
remains below the poverty level; however, earned income credit 
(EIC) benefits would be disregarded from a family's income in 
determining eligibility for transitional Medicaid benefits.
    The individual entitlement to cash welfare payments 
(currently provided under the AFDC program) would be ended. 
Block grant funds would guarantee payments to States for 6 
years, but States would be penalized by losing Federal funds if 
they fail to meet requirements set forth in the legislation, 
such as providing data to the Federal Government and ensuring 
that funds are spent on children and families. States that 
misuse block grant funds would have to repay the amount 
misspent, plus pay a penalty using State funds.
    States would be prohibited from using block grant funds to 
provide cash welfare to:
          (1) Families with no minor children;
          (2) Families that have an additional child while on 
        welfare (States can ``opt-out'' of this prohibition);
          (3) Parents that do not cooperate on child support;
          (4) Families that have not assigned support rights to 
        the State;
          (5) Mothers under 18 who have a child out-of-wedlock 
        and fail to live with an adult and stay in school;
          (6) Provide medical services (except for family 
        planning services)
          (7) Parents not working after 2 years of receiving 
        cash welfare;
          (8) Families receiving cash welfare for more than 5 
        years with hardship exceptions for up to 20 percent of 
        families on welfare;
          (9) Individuals who fraudulently attempt to obtain 
        benefits in two or more States; and
          (10) Fugitive felons.
Subject to State determinations, individuals in each of the 
above categories would generally continue to be eligible for 
certain other means-tested benefit programs.
    States would be given flexibility in developing anti-
poverty programs, and would be able to transfer up to 30 
percent of block grant funds to child care, child welfare, and 
social service block grants. States could reserve block grant 
funds to provide for increased need for cash welfare assistance 
during a recession or other emergencies. New Federal ``rainy 
day'' loan and grant funds would provide a total of $3.7 
billion in added funding, from which States could draw in times 
of financial need.
    States would be audited and required to report a broad 
range of data so the Federal Government can assess the success 
of block grant programs, determine that needy children and 
families are being protected, and ensure that taxpayers' 
interests are being served.

                 B. supplemental security income (ssi)

    Prisoners would be made ineligible for Federal disability 
benefits by reforms that provide new financial incentives for 
local institutions to report inmate lists for matching with SSI 
and Old-Aged, Survivors, and Disability Insurance beneficiary 
rolls.
    In order to better target benefits for children who are 
disabled and also to combat increased abuse of the SSI program, 
the eligibility of children for SSI benefits would change. 
Children currently found to be disabled due to a functional 
assessment and who do not meet a criterion of physical or 
mental impairment which results in marked and severe functional 
limitations would no longer be eligible for cash SSI payments. 
Children who exhibit so-called ``age-inappropriate'' behavior, 
which the committee and other expert groups have found to be 
particularly prone to abuse, would no longer qualify for 
benefits. In applying the new test of childhood disability, the 
Commissioner of Social Security would have to take into account 
the combined effects of all physical or mental impairments to 
be taken into account when determining whether a child is 
disabled. Regulations would have to be provided for the 
evaluation of children who cannot be tested because of their 
young age.
    At least once every 3 years, States would have to conduct 
continuing disability reviews for children eligible for SSI 
benefits, except those whose condition is permanent and cannot 
improve. Reviews would also be conducted for children who turn 
18 to determine continuing eligibility under the adult 
criteria.

                      C. child support enforcement

    The proposal is designed to ensure that children receive 
the support they are due on time and in full by achieving three 
major goals: establishing uniform State tracking procedures; 
taking strong measures to establish paternity and funding; and 
ensuring tough child support enforcement.
    To establish uniform State tracking of delinquent parents, 
and especially those fleeing across States lines, a common 
State registry for recording child support orders would be 
created. States would be given flexibility in distributing 
collections, and centralized collection and disbursement of 
payments would be encouraged. The proposal would express the 
sense of Congress that States may choose the method of 
compliance which best meets the needs of parents, employers, 
and children in establishing centralized collection and 
disbursement units. States would be required to create State 
Directories of New Hires, with information used to establish 
paternity, modify and enforce support orders, and reduce fraud 
involving Federal benefit programs. State hire information also 
would be transmitted to the Federal Parent Locator Service for 
data matches with other States.
    States would be required to adopt the Uniform Interstate 
Family Support Act to achieve uniformity in interstate cases, 
and also to recognize other States' uncontested child support 
orders and to create procedures to quickly establish paternity 
and enforce orders.
    In the absence of paternity establishment, taxpayers are 
left to pay literally billions of dollars in welfare expenses 
that are the obligation of delinquent parents. To improve 
paternity establishment and funding. States would be required 
to have laws or procedures that provide for medical 
verification in cases of contested paternity, would strengthen 
cooperation requirements for paternity establishment for public 
assistance applicants and recipients, and would simplify 
voluntary paternity establishment. Signed acknowledgements of 
paternity would be made final judgments after 60 days, 
voluntary establishment of paternity would be encouraged 
through outreach programs, and the Federal matching payments 
would be funded at a rate of 66 percent. States would be 
provided with additional funding to improve their automated 
data management systems.
    The proposal would provide needed enforcement tools in key 
areas and work to reduce future delinquency on the part of 
parents by: requiring Federal, State and local governments, and 
Federal and military employees and retirees to comply with the 
same child support laws that apply to the private sector. The 
proposal would make grants to States for access and visitation 
programs to encourage participation in the life of the child by 
the noncustodial parent.

                             D. noncitizens

    After the date of enactment, most noncitizens would no 
longer be eligible for SSI and food stamp benefits and, at 
State option, cash welfare, social services, and Medicaid. Most 
noncitizens arriving after the date of enactment would be 
ineligible for most Federal welfare benefits during their first 
5 years in the United States.
    Noncitizens would remain eligible for the earned income tax 
credit (if they are authorized to work), emergency medical 
services and immunizations, foster care and adoption benefits, 
and education benefits, among other benefits.
    Exceptions would be made for refugees during their first 5 
years in the United States, veterans, and persons who have 
worked in the United States for 10 or more years, among others. 
Noncitizens currently receiving SSI and food stamp benefits 
would remain eligible either until a review determines that 
they do not qualify under the new standards or 1 year after 
enactment, whichever occurs first.
    Sponsorship agreements, by which family members and others 
agree to help noncitizens who would otherwise qualify for 
welfare, would be made legally binding and would apply until 
the immigrant becomes a citizen. The agreements are not now 
legally binding and last for only 3 or 5 years. A sponsor's 
income would be ``deemed'' or added to the noncitizen's income 
in determining the noncitizen's eligibility for most Federal 
welfare benefits (with certain individuals and programs 
excepted as above). Noncitizens illegally in the United States 
would be barred from almost all Federal welfare benefits; 
illegals would be similarly barred from State and local welfare 
benefits, but States could ``optout'' of this prohibition with 
regard to specific programs. States would be given the option 
to follow the Federal classification of U.S. citizens and legal 
noncitizens in determining eligibility for any State, local or 
municipal means-tested public assistance program.

                           E. Public Housing

    If a person's means-tested benefits from a Federal, State, 
or local welfare program are reduced because of an act of 
fraud, their benefits from public or assisted housing may not 
be increased in response to the income loss caused by the 
penalty.

                          F. child protection

    The proposal would retain the open-ended entitlement 
funding for foster care and adoption assistance maintenance 
payments, training, and administration. The proposal would 
clarify that Medicaid coverage is guaranteed for children in 
foster care or children covered by adoption assistance 
agreements. The provision also would preserve the existing 
capped entitlement for Independent Living services. States 
would be provided with 1 year of enhanced funding to complete 
implementation of their Statewide Automated Child Welfare 
Information Systems.
    While retaining both the unlimited entitlement money for 
foster care and adoption as well as the child protection 
standards in current law, the provision would cap other 
programs and consolidate most of them into a Child Protection 
Block Grant that States can use to protect abused and neglected 
children. The purpose of this block grant would be to help 
States identify and assist families at risk of abusing or 
neglecting their children, to support children who must be 
removed from or who cannot live with their families, to support 
children in foster care or placed for adoption, and to provide 
for continuing evaluation and improvement of child protection 
laws, and to provide for continuing evaluation and improvement 
of child protection laws, regulations and services. By 
consolidating 11 existing child welfare programs into block 
grants, the provision would streamline 4 different State plans 
and applications into a single requirement.
    The Child Protection Block Grant would contain two streams 
of funding. The first would be a stream of guaranteed 
(entitlement) funding that rises from $240 million in 1997 to 
$286 million in 2002. The second would be a discretionary 
stream with an annual authorization level of $325 million.

                             G. child care

    This provision would consolidate seven child care programs 
into a single program to assist low-income working parents in 
paying for child care. Consolidation of programs would 
eliminate conflicting income requirements, time limits, and 
work requirements between and among programs, and facilitate 
efficient use of Federal money by both States and parents.
    While the entitlement to child care would end, this block 
grant would provide Federal funds that are allowed to follow 
the parent whether the parent is receiving public cash 
assistance while participating in a work-related activity or 
education program, has recently left public assistance, or is 
otherwise employed but meets the State's criteria for ``very 
low income.'' This approach would be intended to eliminate the 
gaps, disruptions, and excessive paperwork caused by the fact 
that current law establishes separate programs for each of 
these groups of parents.
    The block grant contains provisions which would promote 
parental choice and would give parents authority to decide 
where to send their child for day care services, and would 
include the option of receiving assistance through vouchers or 
cash.
    In addition to establishing a single child care block 
grant, the provision would add mandatory funds to the existing 
Child Care and Development Block Grant. Total child care funds 
under this provision would equal $22 billion over 7 years, $15 
billion in mandatory funds and $7 billion in discretionary 
funds. States would be able to transfer up to 30 percent of 
their cash welfare block grant funds into the Child Care Block 
Grant, but would not be able to transfer child care funds to 
other purposes.

                            H. miscellaneous

    The proposal would stipulate that funds from certain 
Federal block grants to the States are to be expended in 
accordance with the laws and procedures applicable to the 
expenditure of the State's own resources. This provision would 
apply to the following block grants: temporary assistance to 
needy families block grant; the optional State food assistance 
block grant; and the child care block grant. Thus, in the 
States in which the Governor previously had control over 
Federal block grant funds, the State legislatures now would 
share control through the State appropriations process; 
however, States would have to continue to spend Federal funds 
in accordance with Federal law.
    States would not be prohibited by the Federal Government 
from sanctioning welfare recipients who test positive for the 
use of controlled substances.
    For fiscal years 1997 through 2002, the Social Services 
Block Grant would be reduced by 10 percent each year.
    In addition to two EIC changes made under Title IV, the 
proposal would require taxpayers to include interest, dividends 
and net rent and royalty income in determining whether they are 
disqualified from EIC benefits; expand the definition of income 
used in phasing out the credit; and provide for swifter 
phaseout of the EIC for families with 1 child with earnings 
above $17,340 and for families with 2 or more children with 
earnings above $21,360. Each change is designed to target EIC 
benefits to lower-income workers, especially those leaving 
welfare for work.

  SUBTITLE A--BLOCK GRANT FOR TEMPORARY ASSISTANCE FOR NEEDY FAMILIES

                              1. Findings

Present law

    No provision.

Explanation of provision

    Congress finds that marriage is the foundation of a 
successful society and an essential institution that promotes 
the interests of children. Promotion of responsible fatherhood 
and motherhood is integral to successful child-rearing and the 
well-being of children. It is the sense of Congress that 
prevention of out-of-wedlock pregnancy and reduction in out-of-
wedlock birth are very important government interests and that 
the policy outlined in the provisions of this title is intended 
to address the crisis.

Reason for change

    These findings underscore the need for policy changes, 
referred to below, that reinforce marriage and family for a 
successful society.

Effective date

    Does not apply.

                2. Reference to the Social Security Act

Present law

    No provision.

Explanation of provision

    Unless otherwise specified, any reference in this title to 
an amendment to or repeal of a section or other provision is to 
the Social Security Act.

Reason for change

    This is a technical provision for clarification purposes 
only.

Effective date

    Upon enactment (October 1, 1996).

                   3. Block Grant to States; Purpose

Present law

    Title IV-A of the Social Security Act, which provides 
grants to States for aid and services to needy families with 
children (AFDC), is designed to encourage care of dependent 
children in their own homes by enabling States to provide cash 
aid and services, maintain and strengthen family life, and help 
parents attain maximum self-support consistent with maintaining 
parental care and protection.

Explanation of provision

    Block grants for temporary assistance for needy families 
(TANF), which replace Title IV-A of the Social Security Act, 
are established to increase the flexibility of States in 
operating a program designed to provide assistance to needy 
families; end dependence on government benefits by promoting 
job preparation, work and marriage; prevent and reduce the 
incidence of out-of-wedlock pregnancies; and encourage the 
formation and maintenance of two-parent families.
    This part shall not be interpreted to entitle any 
individual or family to assistance under any State program 
funded under this part.

Reason for change

    Converting the Aid to Families with Dependent Children 
(AFDC) program and associated programs into a block grant 
provides States with great flexibility in the use of Federal 
funds to help needy children and their families. In addition, a 
major problem with current welfare programs is that millions of 
families remain on welfare for many years. About 65 percent of 
the families now on welfare will be on the rolls for 8 years or 
more. Removing the individual entitlement to cash benefits, 
which is a critical aspect of the block grant approach to 
social policy, sends a clear message to recipients that 
benefits are temporary and are not intended to keep families 
dependent on public benefits year after year.

Effective date

    July 1, 1997 (or earlier at State option).

              4. Eligible States--State Plan Requirements

Present law

    A State must have an approved State plan for aid and 
services to needy families containing 43 provisions, ranging 
from single-agency administration to overpayment recovery 
rules. State plans explain the aid and services that are 
offered by the State. Aid is defined as money payments. For 
most parents without a child under age 3, States must provide 
education, work, or training under the JOBS program to help 
needy families with children avoid long-term welfare 
dependence. Note: work and education requirements of JOBS are 
subject to two conditions--State resources must permit them and 
the program must be available in the recipient's political 
subdivision. To receive Federal funds, States must share in 
program costs. The Federal share of costs (matching rate) 
varies among States and is inversely related to the square of 
State per capita income. For AFDC benefits and child care, the 
Medicaid matching rate is used. This rate now ranges from 50 
percent to 78 percent among States and averages about 55 
percent. For JOBS activities, the rate averages 60 percent; for 
administrative costs, 50 percent. The general JOBS 
participation rate, which expired September 30, 1995, required 
20 percent of employable (nonexempt) adult recipients to 
participate in education, work, or training under JOBS, in 
fiscal year 1995. In fiscal year 1996, at least one parent in 
60 percent of unemployed-parent families must participate at 
least 16 hours weekly in an unpaid work experience or other 
work program. States must restrict disclosure of information to 
purposes directly connected to administration of the program 
and to any connected investigation, prosecution, legal 
proceeding or audit. Each State must offer family planning 
services to all ``appropriate'' cases, including minors 
considered sexually active. States may not require acceptance 
of these services.

Explanation of provision

    An ``eligible State'' is a State that, during the 2-year 
period immediately preceding the fiscal year, has submitted a 
plan to the Secretary of HHS that the Secretary has found 
includes a written document describing how the State will:
          1. conduct a program, designed to serve all political 
        subdivisions in the State, that provides cash 
        assistance to needy families with (or expecting) 
        children, and that provides parents with work and 
        support services to enable them to become self-
        sufficient;
          2. require a parent or a caretaker receiving 
        assistance to engage in work as defined by the State 
        once the parent or caretaker has received assistance 
        for 24 months (whether or not consecutive) or earlier;
          3. ensure that parents and caretakers engage in work 
        activities as described below;
          4. take such reasonable steps as the State deems 
        necessary to restrict the use and disclosure of 
        information about recipients of assistance attributable 
        to funds provided by the Federal Government;
          5. establish goals and take action (including 
        providing education and counseling (including 
        abstinence-based programs) and pre-pregnancy health 
        services) to prevent and reduce the incidence of out-
        of-wedlock pregnancies, with special emphasis on 
        teenage pregnancies;
          6. treat families moving into the State from another 
        State;
          7. treat noncitizens of the United States; and
          8. provide opportunities for adversely affected 
        recipients to be heard in a State administrative or 
        appeal process.

Reason for change

    Under current law, State plans suffer from two major flaws. 
First, they are too detailed and cumbersome. States wind up 
wasting time reporting minute details of their programs to the 
Secretary. Second, and more important, the elaborate State plan 
is based on the philosophy that the Federal Government knows 
best what States should do. The leaner requirements for State 
plans in the committee proposal reflect a balance between the 
need of Federal policymakers to ensure that funds are being 
appropriately spent and States' need to invest their resources 
in delivering services and in responding to needs in a flexible 
manner.

Effective date

    July 1, 1997 (or earlier at State option).

            5. Eligible States--Fair and Equitable Treatment

Present law

    Regulations require that States determine need and amount 
of eligibility on an objective and equitable basis.

Explanation of provision

    The State plan must set forth objective criteria for the 
delivery of benefits, for the determination of eligibility, and 
for fair and equitable treatment.

Reason for change

    The committee, while granting new flexibility to States to 
operate block grant programs, is determined that the delivery 
of benefits for needy families is provided for in a fair and 
equitable manner. Consequently, States must establish as part 
of their State plan that determinations of eligibility, and the 
provision of benefits, will be conducted according to these 
standards.

Effective date

    July 1, 1997 (or earlier at State option).

                   6. Eligible States--Certifications

Present law

    States must have in effect an approved child support 
program. States must also have an approved plan for foster care 
and adoption assistance. States must have an income and 
verification system covering AFDC, Medicaid, unemployment 
compensation, food stamps, and--in outlying areas--adult cash 
aid.

Explanation of provision

    State plans must include the following certifications:
          1. that the State will operate a child support 
        enforcement program;
          2. that the State will operate a child protection 
        program;
          3. specifying which State agency or agencies will 
        administer and supervise the State plan, and assurances 
        that local governments and private sector organizations 
        have been consulted and have had an opportunity to 
        submit comments on the plan; and
          4. that the State will provide Indians with equitable 
        access to assistance.

Reason for change

    As described above, a major objective of the block grant 
approach followed by the committee is to reduce Federal rules 
and regulations. However, the committee felt that several 
provisions of Title IV-A should be retained. Thus, the 
committee proposal continues the current law requirements 
ensuring that States operate a child support enforcement 
program and a child protection program. In addition, States 
must specify which agency will administer the State plan, and 
must certify that the State will provide Indians with equitable 
access to assistance.

Effective date

    July 1, 1997 (or earlier at State option).

     7. Eligible States--Public Availability of State Plan Summary

Present law

    Federal regulations require that State program manuals and 
other policy issuances, which reflect the State plan, be 
maintained in the State office and in each local and district 
office for examination on regular workdays.

Explanation of provision

    The State shall make available to the public a summary of 
the State plan.

Reason for change

    In keeping with the committee goal of restoring control 
over welfare programs to States, communities, and individuals, 
the committee proposal requires the public availability of 
information about States' block grant programs.

Effective date

    July 1, 1997 (or earlier at State option).

              8. Grants to States--Family Assistance Grant

Present law

    AFDC entitles States to Federal matching funds. Current law 
provides permanent authority for appropriations without limit 
for grants to States for AFDC benefits, administration, and 
AFDC-related child care. Over the years, because of court 
rulings, AFDC has evolved into an entitlement for qualified 
individuals to receive cash benefits. In general, States must 
give AFDC to all persons whose income and resources are below 
State-set limits if they are in a class or category eligible 
under Federal rules.

Explanation of provision

    Each eligible State and Territory is entitled to receive a 
grant from the Secretary for each of 6 fiscal years (1996 
through 2001) in the amount equal to the State family 
assistance grant for the fiscal year.
    A State's family assistance grant is equal to the highest 
of former Federal payments to the State for AFDC benefits, AFDC 
Administration, Emergency Assistance, and JOBS during (1) 
fiscal years 1992 through 1994, on average; (2) fiscal year 
1994, or (3) fiscal year 1995 plus, under certain 
circumstances, 85 percent of increased fiscal year 1995 
spending for emergency assistance.
    If a State fails to make qualified State expenditures for 
eligible families under all State programs equal to at least 75 
percent of its fiscal year 1994 spending level for AFDC 
benefits, AFDC Administration, Emergency Assistance, JOBS, 
AFDC-related child care, and at-risk child care, its family 
assistance grant is reduced by the shortfall (see the 
discussion of penalties below).

Reason for change

    States are given guaranteed funding for 6 years so they can 
make long-term plans without concern that Federal funds will be 
reduced. Fixed State funding also provides States with an 
incentive to help recipients leave welfare because, unlike 
current law, States do not get more money for having more 
recipients on the welfare rolls.
    States are guaranteed a high level of Federal support 
(equal to recent levels), and States that have been successful 
at moving families off welfare in recent years are not 
disadvantaged by the continuation of only 1995 funding levels. 
For example, by allowing States to receive the average funding 
granted in 1992 through 1994 or in 1994, States that have 
already reduced welfare caseloads will have sufficient funding 
to continue and expand reforms.
    States are required to maintain at least 75 percent of 
recent State spending on welfare programs in order to receive 
full Federal block grant funds. States that are successful in 
moving families off welfare and into work are eligible to 
further reduce State spending, to as low as 67 percent of prior 
levels.

Effective date

    States may begin their block grant program as late as July 
1, 1997. States may begin prior to that time, and would receive 
block grant payments in proportion to the number of days 
remaining in the fiscal year.

9. Grants to States--Grant to Reward States that Reduce Out-of-wedlock 
                                 Births

Present law

    No provision.

Explanation of provision

    For each fiscal year beginning with 1998, a State's grant 
amount is increased by 5 or 10 percent if the State 
``illegitimacy ratio'' is 1 or 2 percentage points, 
respectively, lower in that year than its 1995 illegitimacy 
ratio. Only States in which the rate of abortion falls below 
the 1995 level are eligible for these additional grants.
    The term ``illegitimacy ratio'' means, during a fiscal 
year, the number of out-of-wedlock births that occurred in the 
State divided by the number of births. In calculating grants, 
the Secretary must disregard any difference in illegitimacy 
ratios or abortion rates attributable to a change in State 
methods of reporting data.

Reason for change

    Given that one of the major goals of the block grant is to 
reduce out-of-wedlock births that are directly related to long-
term welfare dependence, the committee proposal establishes a 
fund to reward States that are successful in achieving this 
policy goal. Because of concern about the impact this provision 
might have on State policy regarding abortion, the committee 
proposal disqualifies States whose rate of abortion does not 
fall, even if the State would otherwise qualify under the above 
criteria.

Effective date

    States become eligible for additional funds based on these 
criteria beginning in fiscal year 1998.

 10. Grants to States--Supplemental Grant for Population Increases in 
                             Certain States

Present law

    There is no adjustment for population growth. Instead, 
current law provides unlimited matching funds. When AFDC 
enrollment climbs, Federal funding automatically rises.

Explanation of provision

    Subject to the eligibility criteria below, each qualifying 
State (for purposes of this section, the term ``State'' is 
limited to the 50 States and the District of Columbia) is 
entitled to receive from the Secretary supplemental grants to 
assist in making cash welfare payments. For fiscal year 1997 
the supplemental grant equals 2.5 percent of Federal payments 
to the qualifying State during fiscal year 1994 for AFDC 
benefits, AFDC Administration, Emergency Assistance, JOBS and 
AFDC-related child care. For fiscal years 1998 through 2000, 
each qualifying State is entitled to receive an amount equal to 
the supplemental grant for the immediately preceding year plus, 
if it continues to meet the eligibility criteria below, an 
annual increase. States that no longer meet the qualification 
criteria are entitled to receive the prior year's grant without 
increase. A State is a qualifying State for a fiscal year if 
average Federal welfare spending per poor person is less than 
the national average and State population growth exceeds the 
average for all States. States must qualify during fiscal year 
1997 in order to qualify during later years. Certain States 
(i.e. those in which Federal welfare spending per poor person 
is less than 35 percent of the national average or in which 
population has increased by 10 percent or more) are deemed to 
qualify for supplemental grants in each year between fiscal 
year 1997 and 2000. A total of $800 million is appropriated for 
this purpose. If this sum is insufficient for full supplemental 
grants for all qualifying States, pro rata reductions will be 
made.

Reason for change

    In response to concerns that States with growing 
populations would experience hardship under fixed block grant 
funding, the committee establishes a special $800 million fund 
for certain States. Also qualifying would be States with 
historically low benefit levels, because such States would 
generally receive less in per capita Federal funds due to the 
direct connection between the States' block grant amount and 
prior welfare benefit levels and recipiency. This fund is 
another of several specific proposals the committee has adopted 
to respond to concerns about special State circumstances under 
the block grant program.

Effective date

    These supplemental grants become available beginning in 
fiscal year 1997.

     11. Grants to States--Bonus to Reward High Performance States

Present law

    No provision.

Explanation of provision

    Certain ``high performing'' States (i.e. those most 
successful in achieving the purposes of the block grant 
program) are entitled to receive additional payments of up to 5 
percent of their State family assistance grant. The formula for 
measuring State performance shall be developed by the Secretary 
in consultation with the National Governors' Association and 
the American Public Welfare Association. A total of $1 billion 
is appropriated for high performance bonuses to States during 5 
fiscal years, 1999 through 2003, and average annual performance 
bonuses are to equal $200 million.
    Note.--In addition, required maintenance-of-effort spending 
is to be reduced for States that achieve performance scores 
above a threshold set by the Secretary.

Reason for change

    One of the major problems with the current welfare system 
is its perverse incentive structure: because of the open-ended 
entitlement nature of the current system, States that operate 
welfare programs that result in large numbers of families being 
dependent for long periods of time receive the greatest Federal 
funding. The committee proposal overturns this misguided policy 
in several ways, starting with the provision of fixed block 
grant funding to all States. In addition, the committee 
proposal offers added cash ``bonuses'' totaling up to $1 
billion for States that are the most successful in achieving 
national welfare goals, such as moving families into work, 
encouraging marriage, and ending long-term dependence.

Effective date

    The bonuses for high performance become available beginning 
in fiscal year 1999.

   12. Grants to States--Contingency Fund for State Welfare Programs

Present law

    No provision. Current law provides unlimited matching 
funds.

Explanation of provision

    To assist States (for purposes of this section, the term 
``State'' is limited to the 50 States and the District of 
Columbia) with increased welfare needs, the committee proposal 
establishes a contingency fund and appropriates up to $2 
billion over a total of 5 fiscal years (1997 through 2001) for 
the fund. Eligible States may receive contingency fund payments 
totaling up to 20 percent of their annual family assistance 
grant in any single year (in any single month, States cannot 
receive more than one-twelfth of 20 percent of the annual 
family assistance grant). States are to submit requests for 
payment of contingency funds, and the Secretary of the Treasury 
must make payments to eligible States in the order in which 
requests are received.
    States are eligible to receive payments if State 
unemployment is high (at or above 6.5 percent in the most 
recent 3-month period) and rising relative to previous years 
(at least 10 percent above the comparable level in either or 
both of 2 preceding years). States also are eligible to receive 
payments if food stamp participation in the State in the most 
recent 3-month period has risen at least 10 percent from the 
average monthly number of recipients who would have 
participated in the comparable quarter of fiscal year 1994 or 
fiscal year 1995, as determined by the Secretary of 
Agriculture, if amendments made by this proposal to the Food 
Stamp Program (including optional food stamp block grant 
provisions) had been in effect throughout fiscal year 1994 and 
1995. States must maintain 100 percent of historic State 
welfare spending (generally, the amount of State funds spent in 
fiscal year 1994 for AFDC benefits and administration, AFDC-
related child care, at-risk child care, Emergency Assistance, 
and JOBS) during years in which contingency fund payments are 
made, or repay an amount reflecting the shortfall. To smooth 
the transition to recovery for States in need, States that have 
been receiving contingency fund payments will continue to 
receive payments for 1 month after they no longer meet the 
criteria described above.

Reason for change

    Some observers have been concerned that, given the bill's 
fixed funding level, States may have trouble paying benefits 
during recessions and other financial emergencies. Thus the 
committee proposal provides up to $2 billion in new funding for 
States that experience economic downturns, and includes 
flexible ``triggers'' allowing such States to access this fund 
whenever unemployment or food stamp recipiency rise 
significantly.

Effective date

    Contingency funds are available to States beginning in 
fiscal year 1997.

                     13. Use of Grants--In General

Present law

    AFDC and JOBS funds are to be used in conformity with State 
plans. A State may replace a caretaker relative with a 
protective payee or a guardian or legal representative.

Explanation of provision

    Grants may be used in any manner reasonably calculated to 
accomplish the purposes of this title, including activities now 
authorized under Titles IV-A and IV-F of the Social Security 
Act, or to provide low-income households with assistance in 
meeting home heating and cooling costs. This part shall not be 
interpreted to prohibit a State from making payments to a third 
party for goods and services provided by the party to or for an 
individual or family eligible for assistance under the State 
program funded under this part, from the assistance that would 
otherwise be provided to the individual or family under the 
program.

Reason for change

    States are permitted to use Federal dollars only in a 
manner consistent with the purpose of the Federal legislation 
and not in ways that are specifically proscribed by the 
proposal. However, given the fact that Federal and State 
policymakers sometimes disagree on welfare policy, the policy 
followed by the committee proposal is to place some 
restrictions on how States use Federal dollars but clarify that 
it is generally not Federal policy to dictate how States will 
spend their own money.

Effective date

    July 1, 1997 (or earlier at State option).

        14. Use of Grants--Limitation on Administrative Spending

Present law

    No provision.

Explanation of provision

    States may not use more than 15 percent of the family 
assistance grant for administrative purposes. However, this cap 
does not apply to spending for information technology and 
computerization needed to implement the tracking and monitoring 
required by this title.

Reason for change

    In order to ensure that the maximum amount of Federal 
funding is used to provide assistance to families, the 
committee proposal limits the amount of block grant funding 
that may be used for administering the program.

Effective date

    July 1, 1997 (or earlier at State option).

 15. Use of Grants--Recipients Moving into the State from Another State

Present law

    The Social Security Act forbids the Secretary to approve a 
plan that denies AFDC eligibility to a child unless he has 
resided in the State for 1 year. The U.S. Supreme Court has 
invalidated some State laws that withheld aid from persons who 
had not resided there for at least 1 year. It has not ruled on 
the question of paying lower amounts of aid for incoming 
residents.

Explanation of provision

    States may impose program rules and benefit levels of the 
State from which a family moved if the family has lived in the 
State for fewer than 12 months.

Reason for change

    States are allowed to pay families who have moved from 
another State in the previous 12 months the cash benefit they 
would have received in the State from which they moved because 
research shows that some families move across State lines to 
maximize welfare benefits. Furthermore, States that want to pay 
higher benefits should not be deterred from doing so by the 
fear that they will attract large numbers of recipients from 
bordering States.

Effective date

    July 1, 1997 (or earlier at State option).

                  16. Use of Grants--Transfer of Funds

Present law

    No provision.

Explanation of provision

    States may transfer up to 30 percent of funds paid under 
this section to carry out activities under the new child 
protection block grant, the social services block grant, and 
the child care and development block grant.

Reason for change

    Given that a major purpose of the proposal is to allow 
States maximum flexibility in the use of Federal funds, the 
proposal includes a provision that would allow States to 
transfer up to 30 percent of the funds from the cash welfare 
block grant into the child protection, child care, and social 
services block grants.

Effective date

    July 1, 1997 (or earlier at State option).

                17. Use of Grants--Reservation of Funds

Present law

    No provision.

Explanation of provision

    A State may reserve amounts paid to the State for any 
fiscal year for the purpose of providing assistance under this 
part. Reserve funds can be used in any fiscal year.

Reason for change

    This provision is another way the committee proposal allows 
States to redesign welfare as a transitional program for use in 
times of economic distress, instead of a program offering 
families a lifetime of guaranteed benefits and dependence on 
taxpayer support.

Effective date

    July 1, 1997 (or earlier at State option).

18. Use of Grants--Authority to Operate an Employment Placement Program

Present law

    Required JOBS services include job development and job 
placement. The State agency may provide services directly or 
through arrangements or under contracts with public agencies or 
private organizations.

Explanation of provision

    States may use a portion of the family assistance grant to 
make payments (or provide job placement vouchers) to State-
approved agencies that provide employment services to 
recipients of cash aid.

Reason for change

    In keeping with the overall goal of stressing work and 
providing for State flexibility, States may use block grant 
funds to operate employment services or provide job placement 
vouchers.

Effective date

    July 1, 1997 (or earlier at State option).

19. Use of Grants--Implementation of Electronic Benefit Transfer System

Present law

    Regulations permit States to receive Federal reimbursement 
funds (50 percent administrative cost-sharing rate) for 
operation of electronic benefit systems. To do so, States must 
receive advance approval from HHS and must comply with 
automatic data processing rules.

Explanation of provision

    States are encouraged to implement an electronic benefit 
transfer system for providing assistance under the State 
program funded under this part, and may use the grant for such 
purpose. In general, the proposal exempts State and local 
government electronic transfers of need-based benefits from 
certain rules issued by the Federal Reserve Board regarding 
electronic fund transfers, including Regulation E, which limits 
liability of cardholders.

Reason for change

    In keeping with the goal of providing major flexibility to 
States, States may use block grant funds to operate electronic 
benefit transfer (EBT) systems. An increasing number of States 
have turned to EBT systems as a means of increasing efficiency, 
achieving savings, and preventing fraud. The committee 
encourages States to employ such innovations, and strips away 
regulatory obstacles that might prevent States from operating 
effective EBT systems.

Effective date

    July 1, 1997 (or earlier at State option).

                     20. Administrative Provisions

Present law

    The Secretary pays AFDC funds to the State on a quarterly 
basis.

Explanation of provision

    The Secretary shall make each grant payable to a State in 
quarterly installments. The Secretary must notify States not 
later than 3 months in advance of any quarterly payment that 
will be reduced to reflect payments made to Indian tribes in 
the State. Under certain circumstances, overpayments to 
individuals no longer receiving temporary family assistance 
will be collected from Federal income tax refunds and repaid to 
affected States.

Reason for change

    Quarterly payments to States continue, but the committee 
takes account of the fact that Indian tribes within States may 
receive separate funding, and that overpayments may be 
collected from tax refunds and repaid to States directly.

Effective date

    July 1, 1997 (or earlier at State option).

              21. Federal Loans for State Welfare Programs

Present law

    No provision. Instead, current law provides unlimited 
matching funds.

Explanation of provision

    The proposal establishes a $1.7 billion revolving loan fund 
from which eligible States may borrow funds to meet the 
purposes of this title. States that have been penalized for 
misspending block grant funds as determined by an audit are 
ineligible for loans. Loans are to mature in 3 years, at the 
latest, and the maximum amount loaned to a State cannot exceed 
10 percent of its basic block grant. The interest rate shall 
equal the current average market yield on outstanding U.S. 
securities with a comparable remaining maturity length. States 
face penalties for failing to make timely payments on their 
loan.

Reason for change

    During recessions and other fiscal emergencies, States may 
have difficulty making payments and conducting programs for 
needy children and their families. To help States meet these 
contingencies, in addition to the authority to save State 
funds, transfer block grant funds, and reserve Federal funds as 
outlined above, the proposal also includes a Federal loan fund 
of $1.7 billion from which States can borrow on roughly the 
same terms as they now borrow from the Federal Unemployment 
Account that is part of the Unemployment Compensation program.

Effective date

    July 1, 1997 (or earlier at State option).

    22. Mandatory Work Requirements--Participation Rate Requirements

Present law

    The following minimum percentage of nonexempt AFDC families 
must participate in JOBS:

                                                      Minimum percentage
Fiscal year:
    1995..........................................................    20
    1996 and thereafter (no requirement)..........................     0

    The following minimum percentages of two-parent families 
receiving cash assistance must participate in specified work 
activities:

                                                      Minimum percentage
Fiscal year:
    1995..........................................................    50
    1996..........................................................    60
    1997..........................................................    75
    1998 (last year)..............................................    75
    1999 and thereafter (no requirement)..........................     0

Explanation of provision

    The following minimum percentages of all families receiving 
assistance funded by the family assistance grant (except those 
with a child under 1, if exempted by the State) must 
participate in work activities:

Fiscal year:                                          Minimum percentage
    1996..........................................................    15
    1997..........................................................    20
    1998..........................................................    25
    1999..........................................................    30
    2000..........................................................    35
    2001..........................................................    40
    2002 or thereafter............................................    50

    The following minimum percentages of two-parent families 
receiving cash assistance must participate in specified work 
activities:

                                                      Minimum Percentage
Fiscal year:
    1996..........................................................    50
    1997..........................................................    75
    1998..........................................................    75
    1999 and thereafter...........................................    90

Reason for change

    In addition to requirements that individuals work after 
receiving at most 2 years of welfare benefits, States are 
required to place a rising number of welfare recipients in work 
activities, reaching half of the overall State welfare caseload 
in fiscal year 2002. In contrast to the current system of 
guaranteed benefits in the absence of work, the revised 
standards hold States accountable for achieving the national 
goal of converting welfare into a program emphasizing work and 
personal responsibility. Higher standards apply to families 
with both parents present, in keeping with the understanding 
that in almost every case one parent should work if another 
parent is available to provide child care.

Effective date

    July 1, 1997 (or earlier at State option).

  23. Mandatory Work Requirements--Calculation of Participation Rates

Present law

    Participation rates for all families are calculated for 
each month. A State's rate, expressed as a percentage, equals 
the number of actual JOBS participants divided by the number of 
AFDC recipients required to participate (nonexempt from JOBS). 
In calculating a State's overall JOBS participation rate, a 
standard of 20 hours per week is used. The welfare agency is to 
count as participants the largest number of persons whose 
combined and averaged hours in JOBS activities during the month 
equal 20 per week.
    Participation rates for two-parent families for a month 
equal the number of parents who participate divided by the 
number of principal earners in AFDC-UP families (but excluding 
families who received aid for 2 months or less, if one parent 
engaged in intensive job search).

Explanation of provision

    The participation rate (for all families and for two-parent 
families) for a State for the fiscal year is the average of the 
participation rates for each month in the fiscal year. The 
monthly participation rate for a State is a percentage obtained 
by dividing the number of families receiving assistance that 
include an adult who is engaged in work by the number of 
families receiving assistance (not counting those subject to a 
recent sanction for refusal to work).
    The required participation rate for a year is to be 
adjusted down 1 percentage point for each percentage point that 
the average monthly caseload is below fiscal year 1995 levels, 
unless the Secretary finds that the decrease was required by 
Federal law or results from changes in State eligibility 
criteria (which must be proved by the Secretary). The Secretary 
is to prescribe regulations for this adjustment.
    States have the option of counting individuals receiving 
assistance under a tribal family assistance plan towards the 
State work participation requirement.
    States have the option of not requiring parents of children 
under age 1 to engage in work and may disregard these parents 
in determining work participation rates.

Reason for change

    In contrast to the current system characterized by broad 
expectations from work requirements, State participation rates, 
which increase annually as described above, are calculated 
based on the State's entire welfare caseload (with the single 
general exception of the small number of families experiencing 
a State sanction for their refusal to work). The committee 
proposal rewards States that achieve caseload reductions for 
reasons including work, marriage, or diversion, allowing 
required participation rates to be lowered in keeping with 
caseload reduction. Other current welfare reform proposals 
credit States with families who have left welfare for work 
(counting so-called ``leavers'') as still on welfare and 
working in meeting required participation rates. The committee 
specifically rejects this approach, which would allow States to 
count as working and on welfare the approximately 20 percent of 
welfare caseloads that currently leave welfare for work (most 
in the absence of dedicated State programs designed to move 
families into work).

Effective date

    July 1, 1997 (or earlier at State option).

            24. Mandatory Work Requirements--Engaged in Work

Present law

    Not relevant. (As discussed below, required activities in 
State JOBS programs are education, jobs skills training, job 
readiness, job development and job placement and two of these 
four: job search, on-the-job training, work supplementation, 
and community work experience, or other approved work 
experience. In general, to be counted as a JOBS participant, a 
person must be engaged in a JOBS activity for an average of 20 
hours weekly.)

Explanation of provision

    To be counted as engaged in work for a month, an adult must 
be participating for at least the minimum average number of 
hours per week shown in the table below in one or more of these 
activities: unsubsidized employment, subsidized (private or 
public) employment, work experience, on-the-job training, job 
search and job readiness assistance, community service 
programs, and vocational educational training (12 months 
maximum).

                                            Minimum average hours weekly
Fiscal year:
    1996..........................................................    20
    1997..........................................................    20
    1998..........................................................    20
    1999 or thereafter............................................    25

    There are five exceptions to the above table: (1) an adult 
in a two-parent family is considered engaged in work if the 
adult works at least 35 hours per week, with not fewer than 30 
hours attributable to the work activities cited above for 
single parents; (2) an individual in job search may be counted 
as engaged in work for up to 12 weeks only; (3) a State may 
count a single parent with a child under age 6 as engaged in 
work for a month if the parent works an average of 20 hours 
weekly in 1999 and later; (4) not more than 20 percent of 
adults in all families and in two-parent families determined to 
be engaged in work in the State for a month may meet the work 
requirement through participation in vocational educational 
training; and (5) teen parents are considered to be engaged in 
work if they attend secondary school or participate in work-
related education.

Reason for change

    In carrying out their program, States must ensure that 
adults participate in qualified work activities, allowing 
reasonable exceptions for teens and families with young 
children and placing certain restrictions on States' their 
ability to count certain activities (such as job search) for 
extended periods.

Effective date

    July 1, 1997 (or earlier at State option).

        25. Mandatory Work Requirements--Work Activities Defined

Present law

    JOBS programs must include specified educational activities 
(high school or equivalent education, basic and remedial 
education, and education for those with limited English 
proficiency); job skills training, job readiness activities, 
and job development and placement. In addition, States must 
offer at least two of these four items: group and individual 
job search; on-the-job training; work supplementation or 
community work experience program (or another work experience 
program approved by the HHS Secretary). The State also may 
offer postsecondary education in ``appropriate'' cases.

Explanation of provision

    ``Work activities'' are defined as unsubsidized employment, 
subsidized private sector employment, subsidized public sector 
employment, work experience if sufficient private sector 
employment is not available, on-the-job training, job search 
and job readiness assistance, community service programs, 
vocational educational training (one year maximum), jobs skills 
training directly related to employment, education directly 
related to employment in the case of a recipient under age 20 
who lacks a high school diploma or equivalency, and 
satisfactory attendance at secondary school for a dependent 
child or household head under 20 who has not completed high 
school.

Reason for change

    In operating their work programs, States are given broad 
flexibility in determining work activities in which parents 
must engage.

Effective date

    July 1, 1997 (or earlier at State option).

     26. Mandatory Work Requirements--Penalties Against Individuals

Present law

    For failure to meet JOBS requirements without good cause, 
AFDC benefits are denied to the offending parent and payments 
for the children are made to a third party. In a two-parent 
family, failure of one parent to meet JOBS requirements without 
good cause results in denial of benefits for both parents 
(unless the other parent participates) and third-party payment 
on behalf of the children. Repeated failures to comply bring 
potentially longer penalty periods.

Explanation of provision

    If an adult recipient refuses to engage in required work, 
the State shall reduce the amount of assistance to the family 
pro rata (or more, at State option) with respect to the period 
of work refusal, or shall discontinue aid, subject to good 
cause and other exceptions that the State may establish. A 
State may not penalize a single parent caring for a child under 
age 6 for refusal to work if the parent proves that there is a 
demonstrated inability to obtain needed child care for 
specified reasons.

Reason for change

    One of the major goals of the committee proposal is that 
families on welfare must work for benefits just as other 
families must work for their paychecks. In keeping with this 
principle, families that refuse to engage in work are subject 
to penalties reducing their benefits accordingly, with the 
exception of single parents with young children, at State 
option.

Effective date

    July 1, 1997 (or earlier at State option).

  27. Mandatory Work Requirements--Nondisplacement in Work Activities

Present law

    Under JOBS law, no work assignment may displace any 
currently employed worker or position (including partial 
displacement such as a reduction in hours of nonovertime work, 
wages, or employment benefits). Nor may a JOBS participant fill 
a position vacant because of layoff or because the employer has 
reduced the workforce with the effect of creating a position to 
be subsidized.

Explanation of provision

    No adult in a Title IV-A work activity shall be employed or 
assigned when another person is on layoff from the same or a 
substantially equivalent job, or when the employer has 
terminated the employment of a regular worker or otherwise 
caused an involuntary reduction of its workforce in order to 
fill the vacancy thus created with a subsidized worker. This 
provision does not preempt or supersede any State or local law 
providing greater protection from displacement.

Reason for change

    This provision is intended to continue Federal protections 
that bar States or employers from replacing current workers 
with individuals required to work under the revised welfare 
program.

Effective date

    July 1, 1997 (or earlier at State option).

   28. Mandatory Work Requirements--Sense of the Congress that State 
       Should Place a Priority on Placing Certain Parents in Work

Present law

    As a condition of receiving full matching funds, a State 
must use 55 percent of its JOBS spending for these target 
groups: persons who have received aid for any 36 of the 60 
preceding months, parents under age 24 who failed to complete 
high school, and parents whose youngest child is within 2 years 
of becoming ineligible for aid (i.e., whose youngest child is, 
usually, at least 16).

Explanation of provision

    It is the sense of Congress that States should give highest 
priority to requiring adults in two-parent families and adults 
in single-parent families with children that are older than 
preschool age to engage in work activities.

Reason for change

    Because families with older children who are in school and 
families with a second parent present do not require large day 
care expenses to permit a parent to work, States are encouraged 
to place a priority on placing such families in work in 
operating their revised welfare programs.

Effective date

    July 1, 1997 (or earlier at State option).

  29. Mandatory Work Requirements--Sense of the Congress that States 
Should Impose Certain Requirements on Noncustodial, Nonsupporting Minor 
                                Parents

Present law

    No provision.

Explanation of provision

    It is the sense of the Congress that States should require 
noncustodial, nonsupporting parents who have not attained 18 
years of age to fulfill community work obligations and attend 
appropriate parenting or money management classes after school.

Reason for change

    The committee stresses that young fathers must also be held 
responsible for their actions. Accordingly, the committee 
encourages States to require community work and attendance in 
parenting classes in addition to continued school attendance 
for such minor parents.

Effective date

    July 1, 1997 (or earlier at State option).

    30. Prohibitions; Requirements--Families with No Minor Children

Present law

    Only families with dependent children (under age 18, or 19 
at State option if the child is still in secondary school or in 
the equivalent level of vocational or technical training) can 
participate in the program.

Explanation of provision

    Only families with a minor child (who resides with a 
custodial parent or other adult caretaker relative of the 
child) or a pregnant individual may receive assistance under 
this part.

Reason for change

    Although the major purpose of the block grant approach 
taken in this proposal is to maximize State flexibility, there 
are specific issues over which the Federal Government should 
maintain a major interest either because the Federal Government 
is responsible for deciding in a general way how Federal 
dollars should be spent or because there are overriding policy 
concerns to which all States should respond. For example, it is 
the intent of the committee to ensure that only families with 
or expecting children receive benefits under this block grant; 
any money spent on other purposes must be repaid to the Federal 
Government.

Effective date

    July 1, 1997 (or earlier at State option).

   31. Prohibitions; Requirements--No Additional Cash Assistance for 
             Children Born to Families Receiving Assistance

Present law

    No provision.

Explanation of provision

    Block grant funds may not be used to provide cash benefits 
for a child born to a recipient of cash welfare benefits or an 
individual who received cash benefits at any time during the 
10-month period ending with the birth of the child. This 
prohibition does not apply to children born as a result of rape 
or incest. Block grant funds can be used to provide noncash 
(voucher) assistance for particular goods and services suitable 
for the care of the child.
    States that pass a law specifically exempting their own 
programs from this national rule may use Federal funds to 
increase cash benefits for families that have additional 
children while on welfare.

Reason for change

    The committee believes the Nation has an overriding 
interest in reducing illegitimacy rates and preventing families 
on welfare from becoming even more dependent on taxpayer 
support. Thus, the proposal establishes a national policy 
proscribing the use of Federal funds to pay additional cash 
benefits to families already on welfare who choose to have 
additional children. (See below for prohibitions affecting 
certain minors and families not cooperating on child support.)

Effective date

    July 1, 1997 (or earlier at State option).

    32. Prohibitions; Requirements--Noncooperation in Child Support

Present law

    As a condition of eligibility, applicants or recipients 
must cooperate in establishing paternity of a child born out-
of-wedlock, in obtaining support payments, and in identifying 
any third party who may be liable to pay for medical care and 
services for the child.

Explanation of provision

    The State must stop paying the parent's share of the family 
welfare benefit if the parent fails to cooperate in 
establishing, modifying or enforcing a child support order; the 
State may deny benefits to the entire family for the parent's 
failure to cooperate.

Reason for change

    The committee believes it is irresponsible for Federal 
benefits to be available to parents (and, at State option, 
families) that do not cooperate in attempting to obtain proper 
child support. In thousands of cases, if child support were 
collected as ordered, families would not have to depend on 
taxpayer-funded welfare benefits.

Effective date

    July 1, 1997 (or earlier at State option).

   33. Prohibitions; Requirements--Failure to Assign Certain Support 
                          Rights to the State

Present law

    As a condition of AFDC eligibility, applicants must assign 
child support and spousal support rights to the State.

Explanation of provision

    Block grant funds may not be used to provide cash benefits 
to a family with an adult who has not assigned to the State 
rights to child support or spousal support.

Reason for change

    The committee proposal continues this current law 
requirement in the context of the new block grant program.

Effective date

    July 1, 1997 (or earlier at State option).

   34. Prohibitions; Requirements--Teenage Parent Not Attending High 
                   School or Not Living with an Adult

Present law

    States may require unwed parents under age 18 to live with 
an adult in order to receive AFDC. They must require a 
custodial parent who is under 20 years old and who has not 
completed high school to participate in an educational activity 
under the JOBS program.

Explanation of provision

    States have the option of using Federal funds to provide 
cash welfare payments to unmarried teens only under specified 
conditions. States may not use Federal family assistance grant 
funds to provide assistance to parents under age 18 who have a 
child at least 12 weeks of age unless they attend high school 
or an alternative educational or training program. States may 
not use Federal funds to provide assistance to unmarried 
parents under age 18 unless they live with a parent or in 
another adult-supervised setting; States may, under certain 
circumstances, use Federal funds to assist teen parents in 
locating and providing payment for a second chance home or 
other adult-supervised living arrangement.

Reason for change

    One of the major goals of the committee proposal is to 
combat illegitimacy, which is one of the key causes of poverty 
and long-term welfare dependence. The consequences are 
especially severe for teens who give birth outside marriage, so 
the committee provides States the flexibility to end the 
inducement of guaranteed cash welfare benefits for teens who 
have children outside marriage they are not equipped to support 
by themselves. In order to receive benefits in any State, teens 
must stay in school and live with an adult.

Effective date

    July 1, 1997 (or earlier at State option).

            35. Prohibitions; Requirements--Medical Services

Present law

    States must assure that family planning services are 
offered to all AFDC recipients who request them. (The Secretary 
is to reduce AFDC payments by 1 percent for failure to offer 
and provide family planning services to those requesting them.)

Explanation of provision

    Federal family assistance grants may not be used to provide 
medical services; Federal funds may, however, be used to 
provide family planning services.

Reason for change

    The committee proposal makes clear that Federal funds are 
for the cash welfare, not medical, needs of poor families. 
However, States may use Federal funds to provide family 
planning services so that families can prevent their falling 
deeper into government dependence.

Effective date

    July 1, 1997 (or earlier at State option).

         36. Prohibitions; Requirements--Time-Limited Benefits

Present law

    No provision.

Explanation of provision

    Federal family assistance grants may not be used to provide 
assistance for the family of a person who has received block 
grant aid for 60 months (or fewer, at State option), whether or 
not consecutive. States may give hardship exemptions in a 
fiscal year to up to 20 percent of their average monthly 
caseload, including individuals who have been battered or 
subjected to sexual abuse (but States are not required to 
exempt these persons). When considering an individual's length 
of stay on welfare, States are to count only time during which 
the individual received assistance as the head of household. 
Any State funds spent to aid persons no longer eligible for 
TANF after 5 years of benefits may be counted toward the 
maintenance-of-effort requirement.

Reason for change

    Because breaking long-term dependency is a central 
objective of the legislation, the proposal disallows 
expenditure of Federal dollars on families that have been on 
welfare for more than 5 years. The committee notes that, of 
families now on welfare, almost two-thirds will be dependent 
for a total of 8 years or more, establishing that long-term 
dependency is a major problem of the current system. States are 
permitted to make exceptions for hardship, but it is the clear 
intent of the committee that welfare benefits under the 
reformed system are to be temporary for families, not 
guaranteed lifetime benefits in lieu of work.

Effective date

    July 1, 1997 (or earlier at State option).

    37. Prohibitions; Requirements--Fraudulent Misrepresentation of 
                        Residence in Two States

Present law

    No provision.

Explanation of provision

    Any person convicted in Federal court or State court of 
having fraudulently misrepresented residence in order to obtain 
benefits or services in two or more States from the family 
assistance grant, Medicaid, Food Stamps, or Supplemental 
Security Income programs is ineligible for family assistance 
grant aid for 10 years.

Reason for change

    The committee is intent on eradicating welfare fraud. 
Accordingly, stern penalties are applied against those who 
attempt to exploit State programs by collecting benefits in 
more than one State.

Effective date

    July 1, 1997 (or earlier at State option).

   38. Prohibitions; Requirements--Fugitive Felons and Probation and 
                            Parole Violators

Present law

    States may provide a recipient's address to a State or 
local law enforcement officer who furnishes the recipient's 
name and social security number and demonstrates that the 
recipient is a fugitive felon and that the officer's official 
duties include locating or apprehending the felon.

Explanation of provision

    No assistance may be provided to an individual who is 
fleeing to avoid prosecution, custody or confinement after 
conviction for a crime (or an attempt to commit a crime) that 
is a felony (or, in New Jersey, a high misdemeanor), or who 
violates probation or parole imposed under Federal or State 
law.
    Any safeguards established by the State against use or 
disclosure of information about individual recipients shall not 
prevent the agency, under certain conditions, from providing 
the address of a recipient to a law enforcement officer who is 
pursuing a fugitive felon or parole or probation violator. This 
provision applies also to a recipient sought by an officer not 
because he is a fugitive but because he has information that 
the officer says is necessary for his official duties. In both 
cases the officer must notify the State that location or 
apprehension of the recipient is within his official duties.

Reason for change

    The committee believes that Federal cash welfare funds 
should be reserved to families in need only, and that State 
officials including law enforcement officers should have the 
appropriate tools to see that this mandate is fulfilled. Thus 
individuals who should not receive taxpayer-provided benefits, 
including fugitive felons, are ineligible for block grant 
funds.

Effective date

    July 1, 1997 (or earlier at State option).

 39. Prohibitions; Requirements--Minor Children Absent From Home for a 
                           Significant Period

Present law

    Regulations allow benefits to continue for children who are 
``temporarily absent'' from home.

Explanation of provision

    No assistance may be provided for a minor child who has 
been absent from the home for 45 consecutive days or, at State 
option, between 30 and 180 consecutive days. States may 
establish a good cause exemption as long as it is detailed in 
the State report to the Secretary. No assistance can be given 
to a parent or caretaker who fails to report a missing minor 
child within 5 days of the time when it is clear (to the 
parent) that the child will be absent for the specified time.

Reason for change

    As described above, block grant benefits are designed to 
assist families with children only. Thus, the committee 
proposal provides that families from whom minor children are 
absent for extended periods are not eligible for benefits.

Effective date

    July 1, 1997 (or earlier at State option).

   40. Prohibitions; Requirements--Medical Assistance Required to be 
Provided for 1 Year for Families Becoming Ineligible for Assistance Due 
          to Increased Earnings or Collection of Child Support

Present law

    States must continue Medicaid (or pay premiums for 
employer-provided health insurance) for 6 months to a family 
that loses AFDC eligibility because of hours of, or income 
from, work of the caretaker relative, or because of loss of the 
earned income disregard after 4 months of work. States must 
offer an additional 6 months of medical assistance, for which 
it may require a premium payment if the family's income after 
child care expenses is above the poverty guideline. For 
extended medical aid, families must submit specified reports. 
States must continue Medicaid for 4 months to those who lose 
AFDC because of increased child or spousal support.

Explanation of provision

    States must provide medical assistance for families that 
become ineligible for block grant assistance due to increased 
earnings or child support collections and whose income falls 
below the poverty level. In order to qualify for this extended 
medical coverage, such families must have received block grant 
assistance in at least 3 of the 6 months prior to the month in 
which they became ineligible. For purposes of determining 
family income to compare with the Federal poverty line, States 
have the authority to reach their own definition of income 
except that income from the Earned Income Tax Credit must be 
entirely disregarded.

Reason for change

    Both program administrators and researchers have informed 
the committee that if single parents have health insurance, 
they are more willing to leave welfare and are more successful 
in remaining off welfare. In order to help parents have the 
confidence that they can escape welfare dependency, the 
committee wants to ensure that for at least 1 year after 
leaving the welfare rolls the health care for both parents and 
children will be guaranteed. Thus, the committee provision 
mandates that States provide at least 1 year of coverage for 
families that leave welfare because of increased earnings or 
child support unless family income exceeds the poverty level. 
To ensure that parents with modest incomes remain eligible for 
health coverage, States are barred from including income from 
the Earned Income Tax Credit in the definition of income.

Effective date

    July 1, 1997 (or earlier at State option).

                41. Prohibitions; Requirements--Medicaid

Present law

    States must provide Medicaid to all AFDC recipients and to 
some AFDC-related groups who do not receive cash aid. Examples 
include persons who do not receive a monthly payment because 
the amount would be below $10 (Federal law prohibits payments 
this small) and persons whose payments are reduced to zero in 
order to recover previous overpayments.
    States must continue Medicaid for specified periods for 
certain families who lose AFDC benefits. If the family loses 
AFDC benefits because of increased earnings or hours of 
employment, Medicaid coverage must be extended for 12 months. 
(During the second 6 months a premium may be imposed, the scope 
of benefits may be limited, or alternate delivery systems may 
be used.) If the family loses AFDC because of increased child 
or spousal support, coverage must be extended for 4 months. 
States are also required to furnish Medicaid to certain two-
parent families whose principal earner is unemployed and who 
are not receiving cash assistance because the State has set a 
time limit on their AFDC coverage.

Explanation of provision

    States must provide medical assistance to all recipients of 
the Temporary Assistance for Needy Families Block Grant (TANF), 
to the extent that the health care costs of the recipients are 
not covered by other health insurance.

Reason for change

    The provision continues the current law requirement that 
States provide Medicaid coverage (or its successor) for all 
families receiving cash welfare benefits funded under the block 
grant. However, if families on welfare are eligible for other 
health insurance coverage, that coverage--not Medicaid--would 
be the primary insurance.

Effective date

    July 1, 1997 (or earlier at State option).

  42. Prohibitions; Requirements--State Disregard of Income Security 
                                Payments

Present law

    AFDC benefits may not be paid to a recipient of old-age 
assistance (predecessor to Supplemental Security Income (SSI) 
and now available only in Puerto Rico, Guam, and the U.S. 
Virgin Islands), SSI, or AFDC foster care payments.

Explanation of provision

    This provision allows States to disregard income security 
payments such as old-age assistance, payments for foster care, 
and Supplemental Security Income, in determining the amount of 
assistance to be provided to a family.

Reason for change

    The committee proposal allows States flexibility in setting 
welfare benefits by allowing States to disregard other 
government income security payments.

Effective date

    July 1, 1997 (or earlier at State option).

         43. Penalties--Use of Grant in Violation of This Part

Present law

    If the Secretary finds that a State has failed to comply 
with the State plan, she is to withhold all payments from the 
State (or limit payments to categories not affected by 
noncompliance).

Explanation of provision

    Note.--Before imposing any of the penalties below, the 
Secretary shall notify the State of the violation and allow the 
State to enter into a corrective action plan. Also, except for 
items 47 and 48, the Secretary may not impose a penalty if she 
finds that the State has reasonable cause for its failure to 
comply.
    If an audit finds that a State has used Federal funds in 
violation of the purposes of this title, the Secretary shall 
reduce the following quarter's payment by the amount misused. 
If the State cannot prove that the misuse was unintentional, 
the State's following quarter payment will be reduced by an 
additional 5 percent.

Reason for change

    States are required to spend block grant funds to achieve 
the purposes of the program. States that do not spend Federal 
funds for these purposes are penalized by having to repay the 
amounts misspent, plus may face the added penalty of losing up 
to 5 percent of the State block grant amount if the misspending 
is judged to be intentional.

Effective date

    July 1, 1997 (or earlier at State option).

            44. Penalties--Failure to Submit Required Report

Present law

    There is no specific penalty for failure to submit a 
report, although the general noncompliance penalty could apply.

Explanation of provision

    If a State fails to submit a required quarterly report 
within 1 month after the end of a fiscal quarter, the Secretary 
shall reduce by 4 percent the block grant amount otherwise 
payable to the State for the next fiscal year. However, the 
penalty shall be rescinded if the State submits the report 
before the end of the fiscal quarter succeeding the one for 
which the report was due.

Reason for change

    This penalty is designed to ensure State compliance with 
Federal reporting requirements.

Effective date

    July 1, 1997.

     45. Penalties--Failure to Satisfy Minimum Participation Rates

Present law

    If a State fails to achieve the JOBS participation rate 
specified in law, the Secretary is to reduce to 50 percent the 
Federal matching rate for JOBS activities and for full-time 
personnel costs, which now ranges from 60 percent to 78 percent 
among States. (However, see item 54, ``Corrective Compliance,'' 
for penalty waiver authority.)

Explanation of provision

    If a State fails to achieve its required work participation 
rate for the fiscal year, the Secretary shall reduce the 
following year's block grant by up to 5 percent, with the 
percentage cut based on the ``degree of noncompliance.''

Reason for change

    It is essential to the success of welfare reform that 
States convert welfare into a program that emphasizes work. 
Thus States are required to place specified percentages of 
their welfare caseload in work activities, rising to 50 percent 
in 2002; States that fail to meet these objective requirements 
lose a portion of their annual block grant. This penalty works 
in tandem with other provisions of the block grant program 
(such as the additional grants and the ability to further 
reduce State spending for ``high performance'') to provide 
strong incentives for States to achieve the work-related goals 
of the new program.

Effective date

    July 1, 1997.

 46. Failure to Participate in the Income and Eligibility Verification 
                                 System

Present law

    States must have in effect an Income and Eligibility 
Verification System covering AFDC, Medicaid, unemployment 
compensation, the Food Stamp program, and adult cash aid in the 
outlying areas. There is no specific penalty for failure to 
comply.

Explanation of provision

    If the State fails to participate in the Income and 
Eligibility Verification System (IEVS) designed to reduce 
welfare fraud, the Secretary shall reduce by up to 2 percent 
the annual family assistance grant of the State.

Reason for change

    States should participate in the IEVS system to ensure that 
recipients of block grant benefits do not receive duplicate 
benefits from other programs.

Effective date

    July 1, 1997.

 47. Failure to Comply With Paternity Establishment and Child Support 
                        Enforcement Requirements

Present law

    The penalty against a State for noncompliance with child 
support enforcement rules--loss of AFDC matching funds--shall 
be suspended if a State submits and implements a corrective 
action plan.

Explanation of provision

    If the Secretary determines that a State does not enforce 
penalties requested by the Title IV-D child support enforcement 
agency against recipients of cash aid who fail to cooperate in 
establishing paternity or in establishing, modifying, or 
enforcing a child support order under Title IV-D (and who do 
not qualify for any good cause or other exception), the 
Secretary shall reduce the cash assistance block grant by up to 
5 percent.

Reason for change

    It is important to the integrity of the national child 
support enforcement system (and for the protection of taxpayers 
who support Federal cash welfare benefits) for every State to 
enforce penalties against recipients who fail to cooperate on 
child support. Thus States that fail to enforce such penalties 
against individuals are penalized through the loss of Federal 
block grant funds.

Effective date

    July 1, 1997.

   48. Failure to Timely Repay a Federal Loan Fund for State Welfare 
                                Programs

Present law

    No provision.

Explanation of provision

    If a State fails to pay any amount borrowed from the 
Federal Loan Fund for State Welfare Programs within the 
maturity period, plus any interest owed, the Secretary shall 
reduce the State's family assistance block grant for the 
immediately succeeding fiscal year quarter by the outstanding 
loan amount, plus the interest owed on it. The Secretary may 
not forgive these overdue debts.

Reason for change

    States must promptly repay loans from the new $1.7 billion 
``rainy day'' loan fund, or their subsequent block grant funds 
will be reduced by the outstanding loan amount and any interest 
owed.

Effective date

    July 1, 1997.

 49. Failure of Any State to Maintain Certain Level of Historic Effort

Present law

    No provision.

Explanation of provision

    If in fiscal years 1997 through 2001 a State fails to spend 
a sum equal to at least 75 percent of its ``historic level'' 
(generally fiscal year 1994 expenditures for AFDC, JOBS, 
Emergency Assistance, AFDC-related child care and ``at-risk'' 
child care) of State spending on specified programs, the 
Secretary shall reduce the following year's family assistance 
grant (that is, in fiscal years 1998 through 2002) by the 
difference between the 75 percent requirement and what the 
State actually spent.
    Qualified State expenditures that count toward the 75 
percent spending requirement are all expenditures under all 
State programs that provide any of the following assistance to 
families eligible for family assistance benefits (and those no 
longer eligible because of the 5-year time limit): cash and 
child care assistance; educational activities designed to 
increase self-sufficiency, job training and work (excluding any 
expenditure for public education in the State except 
expenditures which involve the provision of services or 
assistance to a member of an eligible family which is not 
generally available to persons who are not members of eligible 
families); administrative costs not to exceed 15 percent of the 
total amount of qualified State expenditures; and any other use 
of funds reasonably calculated to accomplish purposes of the 
temporary family assistance. Expenditures from any State or 
local program are excluded from transfers except those 
expenditures that exceed the amount expended in 1996 or the 
State is entitled to the expenditure under a former provision.
    The Secretary is to reduce the 75 percent maintenance of 
effort spending requirement by up to 8 percentage points (i.e., 
to no lower than 67 percent) for States that achieve ``high 
performance'' scores, based on a threshold to be set by the 
Secretary, for achieving the goals of the program of Temporary 
Assistance for Needy Families (TANF).

Reason for change

    The family assistance block grant program provides States 
with broad new flexibility in the use of Federal funds to 
operate their statewide welfare programs. In general, there are 
few restrictions on the use of State funds. However, because 
the current welfare system requires State matching of Federal 
funds, some have expressed the concern that States should be 
forced to maintain a certain level of spending in order to 
receive full Federal funding. Thus the committee proposal 
requires States to maintain 75 percent of prior funding levels 
on related welfare programs over the early years of the block 
grant program. This level is designed to allow States that are 
successful in reforming welfare and moving families into work 
to achieve considerable savings, while also guaranteeing that a 
basic national safety net remains in place in every State. With 
the exception of certain ``high performing'' States, States 
that fall below the 75 percent maintenance of effort level 
required would lose the equivalent in Federal block grant 
funds.

Effective date

    July 1, 1997.

   50. Substantial Noncompliance of State Child Support Enforcement 
                          Program Requirements

Present law

    If a State child support program is found not to be in 
substantial compliance with Federal requirements, the Secretary 
is to reduce AFDC matching funds: by 1-2 percent for first 
finding of noncompliance, by 2-3 percent for second consecutive 
finding, and by 3-5 percent for third or subsequent finding. 
(See ``corrective compliance'' item 54.) Note: State child 
support plans must undertake to establish paternity of children 
born out-of-wedlock for whom AFDC is sought, and AFDC law 
requires the parent to cooperate in establishing paternity. 
Failure to cooperate makes the parent ineligible for AFDC.

Explanation of provision

    If a State child support enforcement program is found by 
review not to have complied with Title IV-D requirements, and 
the Secretary determines that the program is not in compliance 
at the time the finding is made, then the Secretary will reduce 
the State's quarterly block grant payment for each quarter 
during which the State is not in compliance. For the first 
finding of noncompliance, the reduction will be between 1 and 2 
percent; for the second consecutive finding, between 2 and 3 
percent; for the third or subsequent findings, between 3 and 5 
percent. Noncompliance of a technical nature is to be 
disregarded.

Reason for change

    As described above, it is important to the integrity of the 
national child support enforcement system (and for the 
protection of taxpayers who support Federal cash welfare 
benefits) for every State to operate an effective child support 
enforcement program in compliance with the revised standards in 
this proposal. Thus States that fail to meet this basic 
requirement are subject to penalties that can reach 5 percent 
of the block grant amount.

Effective date

    July 1, 1997.

    51. Failure of State Receiving Amounts from Contingency Fund to 
                Maintain 100 Percent of Historic Effort

Present law

    Not relevant.

Explanation of provision

    If the Secretary determines that a State failed to maintain 
100 percent of historic State spending, as required during a 
year in which contingency funds are paid to the State, the 
following year's block grant payment to the State is to be 
reduced by the amount of contingency funds paid.

Reason for change

    The committee proposal establishes a new contingency fund 
to provide for increased welfare needs of certain States during 
times of economic distress. One of the conditions of State 
eligibility for these added funds is that States must maintain 
100 percent of prior spending levels during periods in which 
they receive contingency funds. If a later audit finds that a 
State has failed to meet this requirement, the State must repay 
the contingency funds.

Effective date

    July 1, 1997.

     52. Failure to Expend Additional State Funds to Replace Grant 
                               Reductions

Present law

    Not applicable.

Explanation of provision

    If a State's block grant is reduced as a result of one of 
the above penalties, the State must, during the following 
fiscal year, replace the penalized funds using State funds.

Reason for change

    This change is designed to ensure that States, not welfare 
recipients in need of assistance, lose funding as a result of 
State failure to meet the requirements of the committee 
proposal.

Effective date

    July 1, 1997.

   53. Penalties--Failure to Provide Medical Assistance to Families 
  Becoming Ineligible for Assistance under this Part Due to Increased 
        Earnings from Employment or Collection of Child Support

Present law

    If the Secretary finds that a State fails to comply 
substantially with any required provision of its Medicaid plan 
(including transitional benefits for former AFDC families), she 
shall withhold all payments to the State (or limit payments to 
categories not affected by the noncompliance).

Explanation of provision

    If the Secretary determines that a State does not comply 
with the requirement to provide medical assistance for 1 year 
for certain families that become ineligible for block grant 
assistance due to increased earnings or the collection of child 
support, the Secretary must reduce the State's block grant by 
up to 5 percent (depending on the severity of the violation).

Reason for change

    This provision is designed to ensure compliance with the 
requirement that States provide transitional Medicaid benefits 
for certain families.

Effective date

    July 1, 1997.

               54. Penalties--Reasonable Cause Exception

Present law

    Not applicable. (States are eligible for unlimited funds, 
but must match every dollar at a prescribed rate.)

Explanation of provision

    The Secretary may (except for failure to timely repay the 
loan fund or failure to meet the 75 percent maintenance-of-
effort requirement) withhold any of the above penalties against 
a State if she determines that the State had reasonable cause 
for failing to comply with the requirement.

Reason for change

    The Secretary is granted flexibility in setting most 
penalties against States.

Effective date

    July 1, 1997.

               55. Penalties--Corrective Compliance Plan

Present law

    The penalty against a State for substantial noncompliance 
with child support rules is loss of AFDC matching funds. That 
penalty shall be suspended if a State submits and implements a 
corrective action plan. Also, if a State fails to achieve the 
JOBS participation rate specified in law, the Secretary may 
waive, in whole or part, the reduction in matching funds, 
provided the State has submitted a proposal likely to achieve 
the applicable participation rate for the current year.

Explanation of provision

    Before assessing a penalty against a State under any 
program established or modified by this Act, the Secretary must 
notify the State of the violation and allow the State an 
opportunity to enter into a corrective compliance plan within 
60 days of the notification. The Federal Government will have 
60 days within which to accept or reject the plan; if it 
accepts the plan, and if the State corrects the violation, no 
penalty will be assessed. A plan submitted by a State is deemed 
to be accepted if the Secretary does not accept or reject the 
plan during the 60-day period after the plan is submitted.

Reason for change

    States are allowed a mechanism by which to avoid penalties 
through cooperation with Federal officials in correcting 
violations of specific provisions in the committee proposal.

                             Effective date

    July 1, 1997.

             56. Penalties--Limitation on Amount of Penalty

Present law

    If the Secretary finds that a State has failed to comply 
with the State AFDC plan, he is to withhold all AFDC payments 
from the State (or limit payments to categories not affected by 
the noncompliance.)

Explanation of provision

    In imposing the penalties described above, a State's 
quarterly family assistance grant cannot be reduced by more 
than a total of 25 percent; if necessary, penalties in excess 
of 25 percent will be carried forward to the immediate 
following fiscal year.

Reason for change

    Total penalties in any single quarter are limited to 
protect the interests of families who depend on State 
assistance through the block grant program.

Effective date

    July 1, 1997.

                     57. Appeal of Adverse Decision

Present law

    Current law (sec. 1116 of the Social Security Act) entitles 
a State to a reconsideration, which HHS must grant upon 
request, of any disallowed reimbursement claim for an item or 
class of items. The section also provides for administrative 
and judicial review, upon petition of a State, of HHS decisions 
about approval of State plans. At the option of a State, any 
plan amendment may be treated as the submission of a new plan.

Explanation of provision

    The Secretary is required to notify the Governor of a State 
within 5 days of any adverse decision or action under Title IV-
A, including any decision about the State's plan or imposition 
of a penalty. This section provides for administrative review 
by a Departmental Appeals Board within HHS, requires a Board 
decision within 60 days after an appeal is filed, and provides 
for judicial review (by a United States district court) within 
90 days after a final decision by the Board. The proposal also 
repeals the reference to Title IV-A in section 1116.

Reason for change

    This is a technical provision setting the terms of notice 
given to States about the imposition of penalties for failure 
to comply with provisions of the committee proposal.

Effective date

    July 1, 1997.

    58. Data Collection and Reporting--General Reporting Requirement

Present law

    States are required to report the average monthly number of 
families in each JOBS activity, their types, amounts spent per 
family, length of JOBS participation and the number of families 
aided with AFDC/JOBS child care services, the kinds of child 
care services provided, and sliding fee schedules. States that 
disallow AFDC for minor mothers in their own living quarters 
are required to report the number living in their parent's home 
or in another supervised arrangement. States also must report 
data (including numbers aided, types of families, how long 
aided, payments made) for families who receive transitional 
Medicaid benefits.
    The National Integrated Quality Control System draws 
monthly samples of AFDC cases and reports extensive background 
information about each case in the sample. JOBS regulations 
require States to submit a sample of monthly unaggregated case 
record data.

Explanation of provision

    Each eligible State must collect on a monthly basis, and 
report to the Secretary on a quarterly basis, the following 
information on individual families receiving assistance:
          1. the county of residence of the family;
          2. whether a child receiving assistance or an adult 
        in the family is disabled;
          3. the ages of family members;
          4. the number of individuals in the family, and the 
        relationship of each member to the youngest child;
          5. the employment status and earnings of the employed 
        adult;
          6. the marital status of adults, including whether 
        they are never married, widowed, or divorced;
          7. the race and educational status of each adult;
          8. the race and educational status of each child;
          9. whether the family received subsidized housing, 
        Medicaid, food stamps, or subsidized child care, and if 
        the latter two, the amount received;
          10. the number of months the family has received each 
        type of assistance under the program;
          11. if the adults participated in, and the number of 
        hours per week of participation in, the following 
        activities: education; subsidized private sector 
        employment; unsubsidized employment; public sector 
        employment, work experience, or community service; job 
        search; job skills training or on-the-job training; and 
        vocational education;
          12. information necessary to calculate the State work 
        participation rates;
          13. the type and amount of assistance received under 
        the program, including the amount of and reason for any 
        reduction of assistance (including sanctions);
          14. any amount of unearned income received by any 
        family member; and
          15. the citizenship of family members.
    In addition to data on individual cases, States must 
report, on a sample of cases closed during the quarter, whether 
families left welfare because of employment, marriage, the 
five-year time limit on benefits, sanction, or State policy.
    States may use scientifically acceptable sampling methods 
approved by the Secretary to estimate the data elements 
required for annual reports. The Secretary shall provide States 
with case sampling plans and data collection procedures deemed 
necessary for statistically valid estimates.

Reason for change

    The committee proposal is based on the philosophy that the 
role of the Federal Government is to establish the broad 
guidelines of social policy, to provide States with money to 
create quality programs, and then to ensure that information on 
the effectiveness of State programs is publicly available. 
Thus, States are required to report both quarterly and annual 
data that can be used both to describe their program and to 
measure the outcomes of the program. In addition, provisions 
are made in the proposal for nationally representative data to 
examine program outcomes (see below).

Effective date

    July 1, 1997.

                 59. Other State Reporting Requirements

Present law

    Regulations require each State to submit quarterly 
estimates of the total amount (and the Federal share) of 
expenditures for AFDC benefits and administration. Required 
quarterly reports include estimates of the Federal share of 
child support collections made by the State.

Explanation of provision

    The above report submitted by the State must also include:
          1. a statement of the percentage of the funds paid to 
        the State that is used to cover administrative costs or 
        overhead;
          2. a statement of the total amount expended by the 
        State during the fiscal year on programs for needy 
        families;
          3. the number of noncustodial parents in the State 
        who participated in work activities as defined in the 
        proposal during the fiscal year;
          4. the total amount spent by the State for providing 
        transitional services to a family that no longer 
        receives assistance because of employment, along with a 
        description of those services; and
          5. information necessary for the Secretary to verify 
        that those who have become ineligible for assistance 
        because of work have not received cash assistance 
        during the fiscal year.
    The Secretary shall prescribe regulations necessary to 
define the data elements.

Reason for change

    See above. This provision requires State reporting of 
additional information that will help Federal officials 
determine the impact and results of block grant programs 
nationwide.

Effective Date

    July 1, 1997.

 60. Data Collection and Reporting--Annual Reports to the Congress by 
                             the Secretary

Present law

    The law requires the HHS Secretary to report promptly to 
Congress the results of State reevaluations of AFDC need 
standards and payment standards required at least every 3 
years. The Secretary is to annually compile and submit to 
Congress annual State reports on at-risk child care. The Family 
Support Act requires the Secretary to submit recommendations 
regarding JOBS performance standards by a deadline that was 
extended.

Explanation of provision

    Not later than 6 months after the end of fiscal year 1997, 
and each fiscal year thereafter, the Secretary shall send 
Congress a report describing:
          1. whether States are meeting minimum participation 
        rates and whether they are meeting objectives of 
        increasing employment and earnings of needy families, 
        increasing child support collections, and decreasing 
        out-of-wedlock pregnancies and child poverty;
          2. demographic and financial characteristics of 
        applicant families, recipient families, and those no 
        longer eligible for temporary family assistance;
          3. characteristics of each State program funded under 
        this part; and
          4. trends in employment and earnings of needy 
        families with minor children.

Reason for change

    To assist in evaluating whether State programs are 
achieving their purposes, the Secretary is to report this 
information directly to Congress.

Effective date

    Not later than 6 months after the end of fiscal year 1997, 
and each fiscal year thereafter.

  61. Direct Funding and Administration by Indian Tribes--Grants for 
                             Indian Tribes

Present law

    No provision for AFDC administration by Indian tribes. 
Indian and Alaska families with children receive AFDC benefits 
on the same terms as other families in their States, from State 
or local AFDC agencies.
    More than 80 tribes and native organizations in 24 States 
are JOBS grantees, having applied to conduct JOBS within 6 
months of enactment of the law establishing it. Their JOBS 
allocation of funds is deducted from that of their State.

Explanation of provision

    For each fiscal year 1997 through 2000, the Secretary shall 
pay tribal family assistance grants to eligible Indian tribes 
(and shall reduce the family assistance grant for the State(s) 
in which the tribe's service area lies accordingly). The tribal 
family assistance grant is equal to the total amount of Federal 
payments to the State for fiscal year 1994 in AFDC benefits, 
AFDC Administration, Emergency Assistance, and JOBS funds for 
Indian families residing in the tribal service area. The 
Secretary shall pay tribes that participated in the JOBS 
program in fiscal year 1995 a grant equal to their fiscal year 
1994 JOBS funding ($7.6 million). This sum is appropriated for 
each of 6 fiscal years, 1996 through 2001.

Reason for change

    Like States, Indian tribes are given new authority and 
flexibility in operating reformed welfare programs. Eligible 
tribes receive guaranteed funding for this purpose.

Effective date

    July 1, 1997.

  62. Direct Funding and Administration by Indian Tribes--Three-year 
                     Tribal Family Assistance Plan

Present law

    Not applicable.

Explanation of provision

    Indian tribes must submit a tribal family assistance plan 
to be eligible to receive a tribal family assistance grant. The 
plan must outline the tribe's approach to providing welfare 
services during the 3-year period, specify how services will be 
provided, identify populations and areas served, provide that 
families will not receive duplicate assistance from a State or 
other tribal assistance plan, identify employment opportunities 
in the service area, and apply fiscal accountability provisions 
of the Indian Self-Determination and Education Assistance Act 
relating to the submission of a single-agency audit report 
required under current law.
    The Secretary must approve tribal family assistance plans 
that meet the above requirements. For each tribe receiving a 
family assistance grant and with the participation of the 
tribe, the Secretary shall establish minimum work requirements, 
time limits, and penalties that are consistent with provisions 
of this Act and the economic conditions and resources of the 
tribe. Tribes will be subject to the same penalties as States 
for misusing funds, failing to pay back Federal loan funds, and 
failing to meet work participation rates. Tribes will also be 
required to abide by the same data collection and reporting 
requirements as States.
    Unless excepted through a waiver, tribes in Alaska that 
receive tribal family assistance grants must operate a program 
comparable to the temporary family assistance program of the 
State of Alaska.

Reason for change

    Like States, tribes must submit family assistance plans 
describing the nature and operation of their welfare programs 
in order to be eligible for block grant funding.

Effective date

    July 1, 1997.

       63. Research, Evaluations, and National Studies--Research

Present law

    Section 1110 of the Social Security Act authorizes $5 
million annually for cooperative research or demonstration 
projects, such as those relating to the prevention and 
reduction of dependency.

Explanation of provision

    The Secretary shall conduct research on the effects, 
benefits, and costs of operating State programs of Temporary 
Assistance for Needy Families, including time limits for 
eligibility. The research shall include studies on the effects 
of different programs and the impacts of the programs on 
welfare dependency, illegitimacy, teen pregnancy, employment 
rates, child well-being, and other appropriate issues.

Reason for change

    As with the requirement that States must report program 
data, the purpose of these studies is to provide Congress and 
the Nation with reliable information about the effectiveness of 
State Temporary Family Assistance programs in helping people 
leave and remain independent of welfare. The studies will be 
conducted so that Congress can get information that represents 
both national performance and the performance of most States.

Effective date

    Upon enactment (October 1, 1996).

   64. Research, Evaluations, and National Studies--Development and 
Evaluation of Innovative Approaches to Reducing Welfare Dependency and 
                      Increasing Child Well-Being

Present law

    Section 1115 of the Social Security Act authorizes waiver 
of specified provisions of AFDC law for State experimental, 
pilot or demonstration projects to promote objectives of the 
law, including self-support of parents and stronger family 
life.

Explanation of provision

    The Secretary may assist States in developing, and shall 
evaluate, innovative approaches for reducing welfare dependency 
and increasing the well-being of minor children, using random 
assignments in these evaluations to the maximum extent 
feasible.

Reason for change

    Consistent with the overall goals of providing enhanced 
State flexibility and encouraging innovative reforms, the 
Secretary is authorized to assist States in evaluating new 
methods of reducing welfare dependency and increasing child 
well-being.

Effective date

    Upon enactment (October 1, 1996).

   65. Research, Evaluations, and National Studies--Dissemination of 
                              Information

Present law

    No provision.

Explanation of provision

    The Secretary shall develop innovative methods of 
disseminating information on research, evaluations, and 
studies, including ways to facilitate sharing of information 
via computers and other technologies.

Reason for change

    A major role of the Secretary will be to assist States in 
evaluating and becoming familiar with promising welfare reform 
programs operating in other States.

Effective date

    October 1, 1996.

  66. Research, Evaluations, and National Studies--Annual Rankings of 
      States and Review of Most and Least Successful Work Programs

Present law

    No provision.

Explanation of provision

    The Secretary shall rank annually States receiving family 
assistance grants in the order of their success in moving 
families off welfare and into work. The Secretary shall review 
annually the three most and three least successful programs 
under these criteria.

Reason for change

    See above.

Effective date

    October 1, 1996.

  67. Research, Evaluations, and National Studies--Annual Rankings of 
     States and Review of Issues Relating to Out-of-Wedlock Births

Present law

    No provision.

Explanation of provision

    The Secretary shall rank States annually on the percentage 
of births to families on welfare that are out-of-wedlock and on 
net changes in the percentage of out-of-wedlock births to 
families on welfare. The Secretary must review the programs of 
the five highest and five lowest ranking States under these 
criteria.

Reason for change

    See above.

Effective date

    October 1, 1996.

   68. Research, Evaluations, and National Studies--State-Initiated 
                              Evaluations

Present law

    In a 1994 public notice, HHS stated that it is committed to 
a broad range of evaluation strategies, including true 
experimental, quasi-experimental, and qualitative designs, for 
demonstrations operating under waivers. Section 1115(d) of the 
Social Security Act required the Secretary to enter into 
agreements with up to 8 applicant States to conduct 
demonstration projects testing more liberal treatment of 
unemployed 2-parent families. The law stipulated that the 
States must evaluate costs and work effort results by use of 
experimental and control groups.

Explanation of provision

    A State is eligible to receive funding to evaluate its 
family assistance program if it submits an evaluation design 
determined by the Secretary to be rigorous and likely to yield 
credible and useful information. The State must pay 10 percent 
of the study's cost, unless the Secretary waives this rule.

Reason for change

    In addition to familiarizing States with other State reform 
programs, the Secretary is charged with helping States evaluate 
the effects of their own programs, and is authorized to provide 
Federal funding.

Effective date

    October 1, 1996.

 69. Research, Evaluations, and National Studies--Requirement that the 
               Secretary of HHS Prepare an Annual Report

Present law

    No provision.

Explanation of provision

    This provision requires the Secretary of HHS to prepare an 
annual report, beginning 3 years after enactment, which would 
examine the impact of welfare reform on various subgroups of 
families and children.

Reason for change

    In order to better understand the effects of welfare reform 
on families, including those made ineligible or whose benefits 
would be limited under requirements in the proposal, the 
Secretary is required to prepare and submit annual reports to 
Congress.

Effective date

    The Secretary must submit the first report 3 years after 
the date of enactment, and annually thereafter.

70. Research, Evaluations, and National Studies--Funding of Studies and 
                             Demonstrations

Present law

    See ``Research'' above. For Section 1115(a) ``waiver'' 
projects (``Innovative Approaches'' above) Federal cost 
neutrality over the life of a demonstration project is 
required.
    Note.--The annual budgets of HHS request funds for policy 
research. The fiscal year 1997 budget seeks $9 million and 
lists these priority issues: issues related to welfare reform, 
health care, family support and independence, poverty, at-risk 
children and youth, aging and disability, science policy, and 
improved access to health care and support services.

Explanation of provision

    For research, development and evaluation of innovative 
approaches, State-initiated evaluation studies of the family 
assistance program, and for costs of operating and evaluating 
demonstration projects begun under the AFDC waiver process, 
this section authorizes to be appropriated, and appropriates, a 
total of $15 million annually for 6 fiscal years, 1996 through 
2001. Half of this sum is allocated to the purposes described 
above in ``Research'' and ``Innovative Approaches'' and half to 
the other purposes.

Reason for change

    Federal funds are guaranteed to ensure that adequate 
resources are available to evaluate family assistance programs 
and determine that the purposes of this block grant are being 
achieved. In addition to the broad authority to carry out 
studies under this section, the Secretary is given specific 
authorization to implement and evaluate demonstrations of a 
variety of innovative and promising strategies such as those 
currently operated in a number of States by Goodwill 
Industries. Such programs are examples of efforts that have 
been successful in moving families off welfare and into work; 
providing for the evaluation of and dissemination of 
information about innovative, private-sector programs is an 
important part of nationwide reform.

Effective date

    October 1, 1996.

                     71. Study by the Census Bureau

Present law

    No provision.

Explanation of provision

    The Census Bureau must expand the Survey of Income and 
Program Participation (SIPP) to evaluate the impact of welfare 
reforms made by this title on a random national sample of 
recipients and, as appropriate, other low-income families. The 
study should focus on the impact of welfare reform on children 
and families, and should pay particular attention to the issues 
of out-of-wedlock birth, welfare dependency, the beginning and 
end of welfare spells, and the causes of repeat welfare spells. 
$10 million per year for 7 years (1996-2002) is appropriated 
for this study.

Reason for change

    The committee wishes to ensure that data about the results 
of welfare reform are known, in particular on major issues 
addressed by the proposal: illegitimacy, welfare dependency, 
the causes of poverty, and the reasons families return to 
welfare.

Effective date

    October 1, 1996.

                              72. Waivers

Present law

    Section 1115 of the Social Security Act authorizes the HHS 
Secretary to waive specified requirements of State AFDC plans 
in order to enable a State to carry out any experimental, 
pilot, or demonstration project that the Secretary judges 
likely to assist in promoting the program's objectives. Some 38 
States have received waivers from the Clinton administration 
for welfare reforms, as of late May 1996.

Explanation of provision

    This section provides that terms of AFDC waivers in effect, 
or approved, as of September 30, 1995, will continue until 
their expiration, except that beginning with fiscal year 1996 a 
State operating under a waiver shall receive the block grant 
described under Section 403 in lieu of any other payment 
provided for in the waiver. The section also allows for 
continuation, under certain conditions of waivers on or 
approved before July 1, 1997, on the basis of applications made 
before enactment of the new program.
    States have the option to terminate waivers before their 
expiration, but projects that are ended prematurely must be 
summarized in written reports. A State that submits a request 
to end a waiver within 90 days after the adjournment of the 
first regular session of the State legislature that begins 
after the date of enactment will be held harmless for accrued 
cost neutrality liabilities incurred under the waiver.
    The Secretary is directed to encourage any State now 
operating a waiver to continue the project and to evaluate its 
result or effect. A State may elect to continue one or more 
individual waivers.

Reason for change

    The provision is designed to allow States flexibility to 
continue or under certain conditions terminate current waiver 
projects.

Effective date

    July 1, 1997 (or earlier at State option).

               73. Assistant Secretary for Family Support

Present law

    An Assistant Secretary for Family Support, appointed by the 
President by and with consent of the Senate, is to administer 
AFDC, child support enforcement, and the Jobs Opportunities and 
Basic Skills (JOBS) program.

Explanation of provision

    The provision for an Assistant Secretary for Family Support 
now found in section 417 of Part A of the Social Security Act 
is retained but modified to remove the reference to the JOBS 
program, which is repealed.

Reason for change

    This is a technical change.

Effective date

    October 1, 1996.

                  74. Limitation on Federal Authority

Present law

    No provision.

Explanation of provision

    No officer or employee of the Federal Government may 
regulate the conduct of States under this part or enforce any 
provision of this part, except to the extent expressly provided 
in this part.

Reason for change

    Many States are highly critical of the current welfare 
system's lack of flexibility and high degree of Federal 
regulation. This provision is designed to explicitly restrict 
the ability of Federal officials to regulate State block grant 
programs, except as specifically provided under the committee 
proposal.

Effective date

    October 1, 1996.

                         75. Definitions--Adult

Present law

    No provision.

Explanation of provision

    An individual who is not a minor child.

Reason for change

    This is a technical change.

Effective date

    October 1, 1996.

                      76. Definitions--Minor Child

Present law

    No provision. A dependent child is defined as a needy child 
who is under age 18 (19, at State option, if a full time 
student in a secondary school or equivalent level of vocational 
and technical training and expected to complete school before 
age 19).

Explanation of provision

    An individual who has not attained 18 years of age or has 
not attained 19 years of age and is a full-time student in a 
secondary school (or in the equivalent level of vocational or 
technical training).

Reason for change

    This is a technical change.

Effective date

    October 1, 1996.

                      77. Definitions--Fiscal Year

Present law

    No provision.

Explanation of provision

    Any 12-month period ending on September 30 of a calendar 
year.

Reason for change

    This is a technical change.

Effective date

    October 1, 1996.

     78. Definitions--Indian, Indian Tribe, and Tribal Organization

Present law

    For JOBS purposes, an Indian tribe is defined as any tribe, 
band, nation, or other organized group of Indians that is 
recognized as eligible for special programs and services of the 
U.S. because of their status as Indians. An Alaska native 
organization is any organized group of Alaska natives eligible 
to operate a Federal program under P.L. 93-638 or that group's 
designee.

Explanation of provision

    With the exception of specified Indian tribes in Alaska, 
these terms have the meaning given in the Indian Self-
Determination and Education Assistance Act.

Reason for change

    This is a technical change.

Effective date

    October 1, 1996.

                         79. Definitions--State

Present law

    For purposes of AFDC, the term ``State'' means the 50 
States, the District of Columbia, the Commonwealth of Puerto 
Rico, the U.S. Virgin Islands, Guam, and American Samoa. The 
last jurisdiction has not implemented AFDC.

Explanation of provision

    Except as otherwise specifically provided (e.g., regarding 
the provision of population growth funds and contingency 
funds), the term ``State'' means the 50 States of the United 
States, the District of Columbia, the Commonwealth of Puerto 
Rico, the United States Virgin Islands, Guam, and American 
Samoa.

Reason for change

    This is a technical change.

Effective date

    October 1, 1996.

  80. Additional Grants to Puerto Rico, the Virgin Islands, Guam, and 
              American Samoa; Limitation on Total Payments

Present law

    Under current law, the territories are eligible for 75 
percent matching grants for their expenditures on cash welfare 
for adult assistance (i.e., assistance for needy persons who 
are aged, blind, or disabled), Aid to Families with Dependent 
Children (AFDC), Emergency Assistance (EA), Foster Care and 
Adoption Assistance, the Job Opportunities and Basic Skills 
(JOBS) program, and the Family Preservation program (Title IV-
B, subpart 2). These matching grants are limited by caps on 
Federal payments. The territories also receive grants under the 
child welfare services (Title IV-B, subpart 1) program.
    The law places a ceiling on total payments for AFDC, aid to 
needy aged, blind or disabled adults, and foster care and 
adoption assistance to Puerto Rico--$82 million, the Virgin 
Islands--$2.8 million, Guam--$3.8 million, and American Samoa 
(AFDC, foster care, and adoption assistance)--$1 million.

Explanation of provision

    The proposal retains but increases aggregate welfare 
ceilings in each of the territories and combines the individual 
programs into a single block grant. The new ceilings would 
apply to aggregate spending for cash aid for needy families 
(temporary family assistance program), cash aid to needy aged, 
blind or disabled adults, and child protection. Maximum 
potential fiscal year payments (including both the capped 
mandatory payments listed below and the authorization of 
discretionary grants) are as follows: Puerto Rico--$113.5 
million; Guam--$5.2 million; U.S. Virgin Islands--$4.0 million; 
and American Samoa--$1.3 million.
    To receive mandatory ceiling amounts (capped entitlements), 
territories must spend from their own funds in a fiscal year as 
much as they did in fiscal year 1995 for cash aid to needy 
families, and cash aid to needy aged, blind, or disabled 
adults. Federal matching funds, at a 75 percent rate, would 
reimburse territories for expenditures above their fiscal year 
1995 base level, but below the Federal cap. Mandatory ceiling 
amounts: Puerto Rico, $105.5 million; Guam, $4.9 million; 
Virgin Islands, $3.7 million; and American Samoa, $1.1 million.

Reason for change

    The provision updates Federal grants for U.S. territories 
in keeping with revisions in the national welfare system.

Effective date

    October 1, 1996.

 81. Repeal of Provisions Requiring Reduction of Medicaid Payments to 
               States that Reduce Welfare Payment Levels

Present law

    If a State reduces AFDC ``payment levels'' below those of 
May 1, 1988, the Secretary shall not approve the State's 
Medicaid plan.
    If a State reduces AFDC payment levels below those of July 
1, 1987, Medicaid matching funds shall be disallowed for 
services to certain pregnant women and children not enrolled in 
AFDC but eligible for Medicaid on grounds of low income.

Explanation of provision

    The committee proposal repeals provisions that impose 
Medicaid sanctions upon States that reduce AFDC payment levels.

Reason for change

    States currently must maintain a high level of welfare 
benefits or suffer the loss of Federal medical assistance 
funding that would amount in many cases to millions of dollars 
in lost Federal funds. As a result, this requirement forces 
many States to maintain benefit levels that may be at odds with 
the overall goal of the committee proposal of reforming welfare 
to discourage welfare dependency and encourage family self-
reliance. The committee proposal increases State flexibility in 
operating reformed welfare programs by removing the restrictive 
current law requirement on benefit levels.

Effective date

    July 1, 1997 (or earlier at State option).

      82. Services Provided by Charitable, Religious, and Private 
                             Organizations

Present law

    The Child Care and Development Block Grant (CCDBG) Act 
prohibits use of any financial assistance provided through any 
grant or contract for any sectarian purpose or activity. In 
general, the CCDBG requires religious nondiscrimination, but it 
does allow a sectarian organization to require employees to 
adhere to its religious tenets and teachings.

Explanation of provision

    The committee proposal authorizes States to administer and 
provide family assistance services (and services under SSI and 
public housing) through contracts with charitable, religious, 
or private organizations. Under this provision, religious 
organizations would be eligible, on the same basis as any other 
private organization, to provide assistance as contractors or 
to accept certificates and vouchers so long as their programs 
are implemented consistent with the Establishment Clause of the 
Constitution. States may pay recipients by means of 
certificates, vouchers, or other forms of disbursement that are 
redeemable with such private organizations.
    The proposal provides that, except as otherwise allowed by 
law, a religious organization administering the program may not 
discriminate against beneficiaries on the basis of religious 
belief or refusal to participate in a religious practice. 
States must provide an alternative provider for a beneficiary 
who objects to the religious character of the designated 
organization.
    Nothing in this section shall be construed to preempt any 
provision of a State constitution or State statute that 
prohibits or restricts the expenditure of State funds in or by 
religious organizations.

Reason for change

    Consistent with the intent of the committee proposal to 
restore flexibility and control over welfare programs to 
States, communities, and individuals, this provision authorizes 
States to involve charitable, religious, and private 
organizations in the operation of their revised welfare 
programs. The provision encourages participation by religious 
organizations in the effort to help welfare recipients reach 
self-sufficiency, while assuring such organizations that they 
are not required to give up their religious identities and 
commitments in doing so. The provision also contains language 
that assures protection of the religious liberties of 
recipients of welfare services.

Effective date

    July 1, 1997 (or earlier at State option).

    83. Census Data on Grandparents as Primary Caregivers for Their 
                             Grandchildren

    (This provision is not under jurisdiction of the Committee 
on Ways and Means but is included here for the sake of 
completeness.)

Present law

    No provision.

Explanation of provision

    The Secretary of Commerce shall expand the Census Bureau's 
question (for the decennial census and the mid-decade census) 
concerning households with both grandparents and their 
grandchildren so as to distinguish between households in which 
a grandparent temporarily provides a home and those where the 
grandparent serves as primary caregiver.

                     84. Report on Data Processing

Present law

    No provision. (State child support plans may provide for 
establishment of a statewide automated data processing and 
information retrieval system.)

Explanation of provision

    The Secretary must report to Congress within 6 months on 
the status of automatic data processing systems in the States 
and on what would be required to produce a system capable of 
tracking participants in public programs over time and checking 
case records across States to determine whether some 
individuals are participating in public programs in more than 
one State. The report should include a plan for building on the 
current automatic data processing system to produce a system 
capable of performing these functions as well as an estimate of 
the time required to put the system in place and the cost of 
the system.

Reason for change

    The revised welfare program provided for in the committee 
proposal requires a number of major changes in the ways States 
track participants (such as for purposes of the five-year time 
limit, interstate movement, work requirements, and child 
support enforcement). This provision requires the Secretary to 
report to Congress on current State tracking programs and 
capabilities and changes needed to allow for the success of 
revised State programs.

Effective date

    The Secretary is to report within 6 months of the date of 
enactment (October 1, 1996).

               85. Study on Alternative Outcomes Measures

Present law

    The Family Support Act required the Secretary to submit to 
Congress recommendations for JOBS performance standards 
regarding ``specific measures of outcomes.'' It said the 
standards should not be measured solely by levels of activity 
or participation. (The report, due Oct. 1, 1993, was submitted 
1 year late.)

Explanation of provision

    The Secretary must, in cooperation with the States, study 
and analyze measures of program outcomes (as an alternative to 
minimum participation rates) for evaluating the success of 
State block grant programs in helping recipients leave welfare. 
The study must include a determination of whether outcomes 
measures should be applied on a State or national basis and a 
preliminary assessment of the job placement performance bonus 
established in the Act. The Secretary must report findings to 
the Committee on Finance and the Committee on Ways and Means 
not later than September 30, 1998.

Reason for change

    The Secretary must consider whether outcomes would be a 
better measure of State performance than minimum participation 
rates, and report to Congress on her findings.

Effective date

    October 1, 1996 (with the Secretary reporting to Congress 
by September 30, 1998).

          86. Conforming Amendments to the Social Security Act

Present law

    No provision.

Explanation of provision

    This section makes a series of technical amendments, 
including the repeal of the JOBS program, that conform 
provisions of the proposal with various titles of the Social 
Security Act.

Reason for change

    Technical changes.

Effective date

    October 1, 1996.

  87. Conforming Amendments to the Food Stamp Act of 1977 and Related 
                               Provisions

    (This provision is not under jurisdiction of the Committee 
on Ways and Means but is included here for sake of 
completeness.)

Present law

    No provision.

Explanation of provision

    This section makes a series of technical amendments that 
conform provisions of the proposal with various titles of the 
Food Stamp Act and other related provisions.

                88. Conforming Amendments to Other Laws

Present law

    No provision.

Explanation of provision

    This section makes a series of amendments that conform 
provisions of the proposal to the Unemployment Compensation 
Amendments of 1976, the Omnibus Budget Reconciliation Act of 
1987, the Housing and Urban-Rural Recovery Act of 1983, the Tax 
Equity and Fiscal Responsibility Act of 1982, the Social 
Security Amendments of 1967, the Stewart B. McKinney Homeless 
Assistance Amendments Act of 1988, the Higher Education Act of 
1965, the Carl D. Perkins Vocational and Applied Technology 
Education Act, the Elementary and Secondary Education Act of 
1965, Public Law 99-88, the Internal Revenue Code of 1986, the 
Wagner-Peyser Act, the Job Training Partnership Act, the Low-
Income Home Energy Assistance Act of 1981, the Family Support 
Act of 1988, the Balanced Budget and Emergency Deficit Control 
Act of 1985, the Immigration and Nationality Act, the Head 
Start Act, and the School-to-Work Opportunities Act of 1994.

Reason for change

    Technical changes.

Effective date

    October 1, 1996.

 89. Development of Prototype of Counterfeit-Resistant Social Security 
                             Card Required

Present law

    No provision.

Explanation of provision

    The Commissioner of Social Security is required to develop 
a prototype of a counterfeit-resistant Social Security card. 
The Commissioner must report to Congress on the cost of issuing 
a tamper-proof card for all persons over a 3-, 5-, and 10-year 
period.

Reason for change

    This provision is designed to determine the possible 
efficacy of a counterfeit-resistant Social Security card in 
preventing fraud and abuse in the administration of public 
welfare programs.

Effective date

    The Commissioner is to submit her report within 1 year 
after the date of enactment.

               90. Disclosure of Receipt of Federal Funds

    (This provision is not under jurisdiction of the Committee 
on Ways and Means but is included here for sake of 
completeness.)

Present law

    No provision.

Explanation of provision

    Specified public funds (except those provided under Titles 
IV, XVI, and XX of the Social Security Act) received by 
nonprofit, tax-exempt 501(c) organizations, must be publicly 
disclosed. When a 501(c) organization that accepts Federal 
funds under the Work Opportunity Act makes any communication 
intended to promote public support or opposition to any 
governmental policy (Federal, State or local) through any 
broadcasting station, newspaper, magazine, outdoor advertising 
facility, direct mailing, or any other type of general public 
advertising, the communication must state: ``This was prepared 
and paid for by an organization that accepts taxpayer 
dollars.''

   91. Modifications to the Job Opportunities for Certain Low-Income 
                          Individuals Programs

Present law

    The Family Support Act of 1988 (Sec. 505) directed the 
Secretary to enter into agreement with between 5 and 10 
nonprofit organizations to conduct demonstrations to create job 
opportunities for AFDC recipients and other low-income persons. 
For these projects, $6.5 million was authorized to be 
appropriated for each fiscal year, 1990-1992.

Explanation of provision

    The word ``demonstration'' is struck from the description 
of these projects; the projects are converted to grant status. 
The provision requires the Secretary to enter into agreements 
with nonprofit organizations to conduct projects that create 
job opportunities for recipients of family assistance and other 
persons with income below the poverty guideline. $25 million 
annually is authorized for these projects.

Reason for change

    Technical changes.

Effective date

    October 1, 1996.

 92. Secretarial Submission of Legislative Proposal for Technical and 
                         Conforming Amendments

Present law

    No provision.

Explanation of provision

    Not later than 90 days after the date of enactment, the 
Secretary must submit to the appropriate committees of Congress 
a legislative proposal providing for technical and conforming 
amendments.

Reason for change

    Technical change.

Effective date

    The Secretary must submit proposals within 90 days after 
the date of enactment.

                  93. Effective Date; Transition Rule

Present law

    No provision.

Explanation of provision

    Except as otherwise provided, this title and the amendments 
made by it take effect on July 1, 1997. Penalties (with the 
major exception of penalties for misuse of Federal family 
assistance grant funds) will not take effect until July 1, 
1997, or 6 months after the State plan is received by the 
Secretary, whichever is later.
    States may opt to begin their block grant program before 
July 1, 1997, in which case the State is entitled to receive no 
more than the State family assistance grant for the entire 
fiscal year; block grant payments will be made pro rata based 
on the number of days remaining in the fiscal year after the 
Secretary first received the State plan. The submission of a 
State plan is deemed to constitute the State's acceptance of 
the family assistance grant (including pro rata reductions for 
a partial fiscal year) and the termination of the individual 
entitlement to benefits under the AFDC program. Effective 
October 1, 1996, no individual or family shall be entitled to 
any benefits or services under any State plan under part A or F 
of Title IV of the Social Security Act (as in effect on 
September 30, 1995).
    The amendments made do not apply with respect to powers, 
duties, penalties and other considerations applicable to aid, 
assistance or services provided before the effective date, or 
with respect to administrative actions and proceedings that 
commenced before the effective date. Federal and State 
officials may use scientifically acceptable statistical 
sampling techniques in closing out accounts. Each State shall 
complete the filing of all claims within 2 years after the date 
of enactment. The person serving as Assistant Secretary for 
Family Support within HHS on the day before the effective date 
of this title will continue to serve in that position until a 
successor is named, performing functions provided under current 
law and having powers and duties provided in Section 103 of 
this bill.

Reason for change

    This provision allows States the flexibility to begin their 
block grant programs until as late as July 1, 1997; penalties 
are generally delayed until that date to allow for the orderly 
transition to the revised program.

Effective date

    July 1, 1997 (or earlier at State option).

                SUBTITLE B--SUPPLEMENTAL SECURITY INCOME

                1. Reference to the Social Security Act

Present law

    No provision.

Explanation of provision

    Any reference in this title expressed in terms of an 
amendment to or repeal of a section or other provision is made 
to the Social Security Act.

Reason for change

    The purpose of this section is to indicate that all 
references (to amend or repeal a section or other provision) in 
this title are made to the Social Security Act.

Effective date

    Date of enactment.

                  Chapter 1--Eligibility Restrictions

  2. Denial of SSI Benefits to Individuals Found to Have Fraudulently 
Misrepresented Residence In Order to Obtain Benefits Simultaneously in 
                            2 or More States

Present law

    Current law states that persons who knowingly and willfully 
make or cause to be made any false statements or 
misrepresentations in applying for or continuing to receive 
Supplemental Security Income (SSI) payments shall be fined 
under title 18, U.S. Code, imprisoned for not more than 5 
years, or both.

Explanation of provision

    Any person convicted in Federal court or State court of 
having fraudulently misrepresented residence in order to obtain 
benefits or services from two or more States from the SSI 
program is ineligible for SSI benefits for 10 years. In 
addition, an official of the court in which the individual was 
convicted is required to notify the Commissioner of such 
conviction.

Reason for change

    The committee has determined that stricter penalties are 
needed to reduce fraud in the SSI program. This provision 
imposes a stricter penalty than under current law, ending 
eligibility for 10 years for individuals who attempt to receive 
benefits in more than one State.

Effective date

    Date of enactment.

3. Denial of SSI Benefits for Fugitive Felons and Probation and Parole 
                               Violators

Present law

    Current law provides safeguards which restrict the use or 
disclosure of information concerning SSI applicants or 
recipients to purposes directly connected with the 
administration of the SSI program or other federally-funded 
programs. However, such safeguards must not prevent the State 
or local agency from furnishing a law enforcement officer, upon 
his request, with the address of any recipient if the officer 
(1) provides the agency with the recipient's name and Social 
Security account number, and (2) demonstrates that the 
recipient is a fugitive felon, that the apprehension of the 
person is within the officer's official duties, and the request 
is made in the proper exercise of those duties.

Explanation of provision

    No assistance may be provided to an individual who is 
fleeing to avoid prosecution, custody or confinement after 
conviction for a crime (or an attempt to commit a crime) that 
is a felony (or, in New Jersey, a high misdemeanor), or who 
violates probation or parole imposed under Federal or State 
law.
    Any safeguards established by the State against use or 
disclosure of information about individual recipients shall not 
prevent the agency, under certain conditions, from providing 
the address, Social Security account number, and photograph (if 
applicable) of a recipient to a law enforcement officer who is 
pursuing a fugitive felon or parole or probation violator. This 
provision applies also to a recipient sought by an officer not 
because he is a fugitive but because he has information that 
the officer says is necessary for his official duties. In both 
cases the officer must notify the State that location or 
apprehension of the recipient is within his official duties.

Reason for change

    The committee proposal emphasizes that assistance through 
the SSI program is intended for the aged, blind, and disabled. 
Fleeing convicts or probation or parole violators should not be 
supported through Federal benefits. Measures to improve 
cooperation between States, SSA, and law enforcement officials 
are intended to assist in locating and apprehending these 
individuals.

Effective Date

    Date of enactment.

                       4. Treatment of Prisoners

   (1) Implementation of Prohibition Against Payment of Benefits to 
                               Prisoners

Present law

    Current law prohibits prisoners from receiving benefits 
while incarcerated. Federal, State, or county or local prisons 
are required to make available, upon written request, the name 
and Social Security account number of any individual who is 
confined in a penal institution or correctional facility and 
convicted of any crime punishable by imprisonment of more than 
1 year.

Explanation of provision

    The Commissioner shall enter into a contract with any 
interested State or local institution under which the 
institution shall provide monthly the names, Social Security 
account numbers, dates of birth, and other identifying 
information. The Commissioner shall pay to the institution for 
each eligible individual who becomes ineligible an amount not 
to exceed $400 if the information is provided within 30 days of 
the individual becoming an inmate. The payment is not to exceed 
$200 if the information is furnished after 30 days but within 
90 days.
    In addition, the Computer Matching and Privacy Protection 
Act of 1988 shall not apply to the information exchanged 
pursuant to this contract.

Reason for change

    This provision provides new financial incentives for State 
and local institutions to report information on inmates to the 
Social Security Administration so SSI and Social Security 
retirement and disability benefits fraudulently received by 
prisoners can be stopped.
    The Privacy Act's procedural requirements to computer 
matching agreements between the Commissioner and the 
institutions imposes an excessively costly administrative 
burden that could hamper the administration of the prisoner 
payment provisions. Therefore, the Computer Matching and 
Privacy Protection Act shall not apply to the information 
exchanged under these provisions.

Effective date

    Date of enactment.

   (2) Denial of SSI Benefits for 10 Years to a Person Found to Have 
           Fraudulently Obtained SSI Benefits While in Prison

Present law

    No provision.

Explanation of provision

    Denies benefits for 10 years (beginning the date of release 
from prison) to a person found to have fraudulently obtained 
SSI benefits while in prison.

Reason for change

    The committee strongly believes that there must be a severe 
penalty for those found to have fraudulently obtained SSI 
benefits while in prison.

Effective date

    Date of enactment.

(3) Elimination of OASDI Requirement that Confinement Stem from Crimes 
            Punishable by Imprisonment for More Than 1 Year

Present law

    Bars Social Security benefits from prisoners convicted of 
any crime punishable by imprisonment of more than a year, not 
just felonies.

Explanation of provision

    Replaces ``an offense punishable by imprisonment for more 
than 1 year'' with ``a criminal offense'' and deletes other 
language. Effective for benefits payable more than 180 days 
after the date of enactment. The provision bars Social Security 
benefits from persons confined throughout a month to a penal 
institution or another institution if the person is found 
guilty but insane.

Reason for change

    This change was a result of preliminary audit findings by 
SSA's Office of the Inspector General, which found that the 
language in existing law creates administrative barriers to the 
effective administration of SSA's suspension activities by 
requiring the expenditure of scarce resources to determine the 
maximum sentence for inmates nationwide. This data is not 
obtainable from the correction agencies and must be obtained 
from the courts.

Effective date

    Effective for benefits payable more than 180 days after 
enactment.

    (4) Study of Other Potential Improvements in the Collection of 
                 Information Respecting Public Inmates

Present law

    No provision.

Explanation of provision

    The Commissioner shall conduct a study of the desirability, 
feasibility, and cost of establishing a system for courts to 
furnish the Commissioner information regarding court orders and 
requiring that State and local jails, prisons, and other 
institutions enter into contracts with the Commissioner by 
means of an electronic or similar data exchange system. The 
report of this study shall be submitted to the responsible 
committees not later than 1 year after enactment.

Reason for change

    The Social Security Administration must find better ways to 
interface directly with courts and State and local prisons and 
other institutions so that prisoners do not receive federal 
benefits.

Effective date

    Date of enactment.

             5. Effective Date of Application for Benefits

Present law

    Application of an individual for SSI benefits is effective 
on the later of the date the application is filed or the date 
the individual first becomes eligible for such benefits.

Explanation of provision

    Changes the effective date of application to the later of 
the first day of the month following the date the application 
is filed or the date the individual first becomes eligible for 
such benefits. The provision retains the Social Security 
Administration's authority to issue immediate cash advance 
against the first month's SSI benefit to individuals faced with 
financial emergencies. Effective for applications filed on or 
after the date of enactment.

Reason for change

    The committee proposal ends the administrative burden of 
prorating benefits based on the date of application. In 
addition, the provision retains SSA's authority to provide 
immediate assistance to individuals faced with emergencies. The 
committee notes that in the Social Security disability program, 
once an individual is determined to be eligible to receive 
Social Security disability benefits, there is a five-month 
waiting period during which the individual is not entitled to 
benefits.

Effective date

    Date of enactment.

               Chapter 2--Benefits for Disabled Children

                  6. Definition and Eligibility Rules

                 (1) Definition of Childhood Disability

Present law

    There is no definition of childhood disability in the 
statute. Under current disability evaluation procedures, to be 
found disabled a child must have a medically determinable 
physical or mental impairment that substantially reduces the 
ability to independently and effectively engage in age-
appropriate activities. This impairment must be expected to 
result in death or to last for a continuous period of not less 
than 12 months.

Explanation of provision

    This section adds a new statutory definition of childhood 
disability: An individual under the age of 18 is considered as 
disabled if the individual has a medically determinable 
physical or mental impairment, which results in marked and 
severe functional limitations, and which can be expected to 
result in death or which has lasted or can be expected to last 
for at least a continuous period of not less than 12 months. 
The Commissioner shall ensure that the combined effects of all 
physical or mental impairments of an individual are taken into 
account in determining whether an individual is disabled. In 
addition, the Commissioner shall ensure that the regulations 
prescribed by these provisions provide for the evaluation of 
children who cannot be tested because of their young age.

Reason for change

    The committee intends that only needy children with severe 
disabilities be eligible for SSI and that the Listings and 
other disability determination regulations as modified by these 
provisions properly reflect the severity of disability 
contemplated by the statutory definition. In those areas of the 
Listings that involve domains of functioning, the committee 
expects no less than marked limitations in no fewer than two 
domains or extreme limitations in at least one domain as the 
standard for qualification. The committee is also aware that 
the Social Security Administration uses the term ``severe'' to 
often mean ``other than minor'' in an initial screening 
procedure for disability determination and in other places. The 
committee, however, uses the term ``severe'' in its common 
sense meaning.
    The committee does not intend to suggest by this definition 
of childhood disability that every child need be especially 
evaluated for functional limitations, or that this definition 
creates a supposition for any such examination. Under current 
procedures for writing individual listings, level of 
functioning is an explicit consideration in deciding which 
impairment, with certain medical or other findings, is of 
sufficient severity to be included in the Listings. 
Nonetheless, the committee does not intend to limit the use of 
functional information, if reflecting sufficient severity and 
is otherwise appropriate.

Effective date

    This provision shall apply to applications pending on or 
filed on or after the date of enactment; this provision shall 
apply to current recipients upon redetermination.

                     (2) Changes to SSI Regulations

Present law

    Under the disability determination process for children, 
the Social Security Administration first determines if a child 
meets or equals the ``Listing of Impairments'' in Federal 
regulations. Under the Listings that relate to mental 
disorders, maladaptive behavior may be scored twice, in domains 
of social functioning and of personal/behavior functioning.
    Under the disability determination process for children, 
individuals who do not meet or equal the Listing of Impairments 
are subject to an ``Individualized Functional Assessment'' 
(IFA). This assessment examines whether the child can engage in 
age-appropriate activities effectively. If the child cannot, 
the child is determined disabled.

Explanation of provision

    The Commissioner of Social Security must eliminate 
references in the Listing of Impairments to maladaptive 
behavior among medical criteria for evaluation of mental and 
emotional disorders in the domain of personal/behavioral 
function.
    The Commissioner of Social Security must discontinue use of 
the Individualized Functional Assessment for children set forth 
in the Code of Federal Regulations.

Reason for change

    The committee received extensive testimony about the 
inducement that cash payments present to some poor families 
with children who are not severely disabled. Particularly 
troubling are reports of ``coaching'' on the part of parents 
and generally broadened eligibility criteria that have resulted 
in a program characterized by explosive growth in enrollment 
and mounting costs to taxpayers. As a result of these and 
similar problems, the number of children on SSI grew from 
300,000 in 1989 to 914,000 in 1995, while children's benefit 
spending grew from $1.2 billion to $4.8 billion. The SSI 
changes in the committee proposal are designed to maintain 
adequate disability benefits for families in need, while 
protecting against continued uncontrolled growth in program 
cost and enrollment.

Effective date

    These provisions shall apply to applications pending on or 
filed on or after the date of enactment; and shall apply to 
current recipients upon redetermination.

 (3) Medical Improvement Review Standard as it Applies to Individuals 
                          Under the Age of 18

Present law

    No provision.

Explanation of provision

    This section contains technical modifications to the 
medical improvement review standard based on the new definition 
of childhood disability.

Reason for change

    Incorporates the new definition of childhood disability in 
the medical improvement standard.

Effective date

    This provision shall apply to applications pending or filed 
on or after the date of enactment and shall apply to current 
recipients upon redetermination.

                          (4) Effective Dates

Present law

    No provision.

Explanation of provision

    Changes apply to applicants and pending claims on or after 
the date of enactment, without regard to whether regulations 
have been issued.
    No later than 1 year after the date of enactment, the 
Commissioner shall redetermine the eligibility of any child 
receiving benefits on the date of enactment who would lose 
eligibility under these provisions.
    Benefits of current recipients will continue until their 
redetermination. Should a child be found ineligible, their 
benefits will end following redetermination.
    No later than January 1, 1997, the Commissioner must notify 
individuals whose eligibility for SSI benefits will terminate.
    The Commissioner must report to Congress within 180 days 
regarding progress made in implementing the SSI children's 
provisions.
    The Commissioner shall submit final regulations to the 
committees of jurisdiction of Congress for their review at 
least 45 days before they become effective.
    Additional funding of $300 million is provided to SSA to 
assist the agency in conducting the required redeterminations 
and continuing disability reviews.

Reason for change

    The importance of these provisions is emphasized by their 
immediate effective date for all pending and new applications. 
The committee allows 1 year for the Commissioner to redetermine 
the eligibility of those currently receiving benefits whose 
eligibility may end due to these provisions. Recognizing the 
impact these redeterminations will have on SSA resources, the 
committee proposal provides an additional $300 million for this 
purpose over the next 3 years.
    Individuals currently receiving benefits must be notified 
of possible changes in eligibility no later than January 1, 
1997, in an effort to provide SSA additional time to execute 
the notification process. In addition, due to the importance of 
these provisions, the committee is requesting review of 
implementing regulations in advance and a progress report 
within 6 months.

Effective date

    Date of enactment.

   7. Eligibility Redeterminations and Continuing Disability Reviews

Present law

    Federal law requires that SSI recipients be subject to a 
continuing disability review (CDR) at least once every 3 years, 
except for recipients whose impairments are judged to be 
permanent. The Commissioner is required to conduct periodic 
CDRs of at least 100,000 disabled SSI recipients per year for a 
period of 3 years (i.e., fiscal years 1996-1998) and report to 
Congress on CDRs for disabled SSI recipients no later than 
October 1, 1998.
    Current law specifies that the Commissioner must reevaluate 
under adult disability criteria, the eligibility of at least 
one-third of SSI children who turn age 18 in each of the fiscal 
years 1996, 1997, and 1998 (the CDR must be completed before 
these children reach age 19) and report to Congress no later 
than October 1, 1998, on CDRs for disabled children.

Explanation of provision

     (1) Continuing Disability Reviews Relating to Certain Children

    In addition to the provisions of current law, at least once 
every 3 years the Commissioner must conduct CDRs of children 
receiving SSI benefits. For children who are eligible for 
benefits and whose medical condition is not expected to 
improve, the requirement to perform such reviews does not apply 
(unless the Commissioner decides otherwise). At the time of 
review the parent or guardian must present evidence 
demonstrating that the recipient is and has been receiving 
appropriate treatment for his/her disability.

(2) Disability Eligibility Redeterminations Required for SSI Recipients 
                       Who Attain 18 Years of Age

    The eligibility for all children qualifying for SSI 
benefits must be redetermined using the adult criteria within 1 
year after turning 18 years of age. The review will be 
considered a substitute for any other review required under the 
changes made in this section. The ``minimum number of reviews'' 
and the ``sunset'' provisions of section 207 of the Social 
Security Independence and Program Improvements Act of 1994 are 
eliminated.

 (3) Continuing Disability Review Required for Low Birth Weight Babies

    A review must be conducted 12 months after the birth of a 
child whose low birth weight is a contributing factor to the 
child's disability. At the time of review, the parent or 
guardian must present evidence demonstrating that the recipient 
is and has been receiving appropriate treatment for his/her 
disability.

Reason for change

    To protect taxpayers against abuse and also to encourage 
children whose condition improves to become free of government 
dependence, the Commissioner is required to review the 
eligibility of certain children already receiving SSI benefits 
to continue receiving benefits. Experience has shown that many 
children with disabilities do improve and that disability 
reviews can be cost beneficial.

Effective date

    Changes involving redeterminations and CDRs apply to 
benefits for months beginning on or after the date of 
enactment, regardless of whether regulations have been issued.

               8. Additional Accountability Requirements

       (1) Disposal of Resources for Less Than Fair Market Value

Present law

    No provision. There is a transfer of assets provision in 
Medicaid law that is similar to the committee proposal (Sec. 
1917(c) of the Social Security Act).

Explanation of provision

    The committee proposal delays eligibility for any child 
applicant whose parents or guardians, in order to qualify a 
child for benefits, dispose of assets for less than fair market 
value within 36 months of the date of application. The 
provision stipulates that any assets in a trust in which the 
child (i.e., parent or representative payee) has control shall 
be considered assets of the child and subject to the 36-month 
``look-back'' rule. The delay (in months) is equal to the 
amount of assets divided by the SSI standard benefit. This 
provision is effective 90 days after the date of enactment.

Reason for change

    The intention of the SSI program for children is to provide 
benefits to low-income young people who are severely disabled. 
Families should not be allowed to evade financial deeming 
levels by divesting assets or placing them in trusts over which 
the recipient has ultimate control.

Effective date

    This provision shall be effective with respect to transfers 
that occur at least 90 days after the date of enactment.

                  (2) Requirement to Establish Account

Present law

    No provision.

Explanation of provision

    This section requires the representative payee (i.e., the 
parent) of an individual under age 18 to establish an account 
in a financial institution for the receipt of past-due SSI 
payments if the lump-sum payment amounts to more than 6 times 
the maximum monthly SSI payment (including any State 
supplement). A representative payee shall use the funds in the 
account for the following allowable expenses: education or job 
skills training; personal needs assistance; special equipment 
or housing modifications related to the child's disability; 
medical treatment; appropriate therapy or rehabilitation; or 
any other item or service that the Commissioner determines is 
appropriate.
    Once the account is established the representative payee 
may deposit any past-due benefits owed to the recipient and any 
other funds representing an SSI underpayment provided the 
amount is more than the maximum monthly SSI benefit payment.
    The funds in these accounts would not be counted as a 
resource and the interest and other earnings on the account 
would not be considered income in determining SSI eligibility.

Reason for change

    The committee has found that large lump-sum payments have 
been subject to misuse. Requiring the establishment of special 
accounts is designed to increase the likelihood that benefits 
will be spent on the needs of the child.

Effective date

    These provisions apply to benefit payments made after the 
date of enactment.

9. Reduction in Cash Benefits Payable to Institutionalized Individuals 
          Whose Medical Costs are Covered by Private Insurance

Present law

    Federal law stipulates that when individuals enter a 
hospital or other medical institution in which more than half 
of the bill is paid by the Medicaid program, their monthly SSI 
benefit standard is reduced to $30 per month. This personal 
needs allowance is intended to pay for small personal expenses, 
with the cost of maintenance and medical care provided by the 
Medicaid program.

Explanation of provision

    Children in medical institutions whose medical costs are 
covered by private insurance would be treated the same as 
children whose bills are currently paid by Medicaid (that is, 
their monthly SSI cash benefit would be reduced to $30 per 
month).

Reason for change

    This provision is intended to provide for equal treatment 
of children who are institutionalized, regardless of whether 
their stay is being paid for by Medicaid or by private 
insurance.

Effective date

    The provision would apply to benefits for months beginning 
90 or more days after the date of enactment, regardless of 
whether regulations have been issued.

                            10. Regulations

Present law

    No provision.

Explanation of provision

    The Commissioner of Social Security and the Secretary of 
HHS will prescribe necessary regulations within 3 months after 
enactment.

Reason for change

    The provision would require prompt issuance of regulations 
and operating procedures.

Effective date

    Date of enactment.

              Chapter 3--Additional Enforcement Provisions

         11. Installment Payment of Large Past-Due SSI Benefits

Present law

    No provision.

Explanation of provision

    If an individual is eligible for past-due benefits (after 
any withholding for reimbursement to a State for interim 
assistance) in an amount which exceeds 12 times the maximum 
monthly benefit payable to an eligible individual (currently 
$470) or couple (currently $705) (plus any State supplementary 
payments), benefits will be paid in 3 installments made at 6-
month intervals. The first and second installments may not 
exceed 12 times the maximum monthly benefit payable. 
Installment caps may be extended by certain debt (food, 
clothing, shelter, or medically necessary services, supplies, 
or equipment, or medicine) or the purchase of a home. 
Installment payments shall not apply to individuals whose 
medical impairment is expected to result in death in 12 months 
or for an individual who is ineligible and is likely to remain 
ineligible for the next 12 months.

Reason for change

    The proposal would enhance individuals' ability to use 
retroactive benefits they receive in a more controlled and 
rational way, making it more likely that benefits will be used 
to address needs caused by the disability and less likely that 
funds will be quickly ``spent down'' in order to meet program 
income eligibility standards. By receiving retroactive payments 
in installments, each of which would be excluded from resources 
for 6 months, individuals would be able to arrange for 
purchases of items and services that they need over a longer 
term.

Effective date

    This provision is effective for benefits payable after the 
third month following the date of enactment.

     12. Recovery of SSI Overpayments from Social Security Benefits

Present law

    Generally, when an overpayment is made, recovery shall be 
made by adjusting future payments or by recovering the 
overpayment from the individual.

Explanation of provision

    If the Commissioner is unable to recover the overpayment 
through future payment adjustments or direct recovery, the 
Commissioner may decrease any OASI or SSDI payment to the 
individual or their estate. As a result of this action, no 
individual may become eligible for SSI or eligible for 
increased SSI benefits.

Reason for change

    The effectiveness of the recovery process is limited. Many 
SSI overpayments cannot be recovered through withholding from 
SSI benefits because the overpaid individual no longer receives 
SSI benefits. Nearly half of these individuals, however, 
continue to receive Social Security benefits from which the 
overpayment could be recovered. Individuals affected by this 
proposal would be protected by current Social Security law and 
policy, which provide for waiver of overpayments under certain 
circumstances and for a gradual repayment schedule that takes 
into account the individual's financial situation.

Effective date

    Date of enactment.

                            13. Regulations

Present law

    No provision.

Explanation of provision

    The Commissioner of Social Security and the Secretary of 
HHS will prescribe necessary regulations within 3 months after 
enactment.

Reason for change

    This provision would require the prompt issuance of 
regulations and operating procedures.

Effective date

    Date of enactment.

               Chapter 4--State Supplementation Programs

14. Repeal of Maintenance of Effort Requirements Applicable to Optional 
               State Programs for Supplementation of SSI

Present law

    Since the beginning of the SSI program, States have had the 
option to supplement (with State funds) the Federal SSI 
payment. The purpose of section 1618 of the Social Security Act 
was to encourage States to pass along to SSI recipients the 
amount of any Federal SSI benefit increase. Under section 1618, 
a State that is found to be out of compliance with the ``pass 
along/maintenance of effort provision'' is subject to loss of 
its Medicaid reimbursements. Section 1618 allows States to 
comply with the ``pass along/maintenance of effort'' provision 
by either maintaining their State supplementary payment levels 
at or above March 1983, levels or by maintaining their 
supplementary payment spending so that total annual federal and 
State expenditures will be at least equal to what they were in 
the prior 12-month period, plus any federal cost-of-living 
increase, provided the State was in compliance for that period. 
In effect, section 1618 requires that once a State elects to 
provide supplementary payments, it must continue to do so.

Explanation of provision

    This section repeals the maintenance of effort requirements 
in Section 1618 applicable to optional State programs for 
supplementation of SSI benefits, effective on the date of 
enactment.

Reason for change

    This provision broadens States' ability to manage their 
supplemental benefit programs which provide State-funded 
benefits to SSI recipients. It is the intent of the committee 
that the Federal Government should not have the power to 
deprive States of their right to manage a program that is 
optional under federal law.

Effective date

    Date of enactment.

   Chapter 5--Studies Regarding Supplemental Security Income Program

            15. Annual Report on the Supplemental Security Income 
                    Program

Present law

    To date, the Department of Health and Human Services and 
now the Social Security Administration have collected, 
compiled, and published annual and monthly SSI data, but 
federal law does not require an annual report on the SSI 
program.

Explanation of provision

    The Commissioner of Social Security must prepare and 
provide to the President and the Congress an annual report on 
the SSI program, which includes specified information and data. 
The report is due May 30 of each year.

Reason for change

    The committee intends for Congress and the President to 
receive a comprehensive report each year to better promote 
effective oversight of the SSI program. Under current law, the 
drafting of such a focused, complete report is not required.

Effective date

    Date of enactment.

             16. Study of Disability Determination Process

Present law

    No provision.

Explanation of provision

    Within 90 days of enactment, the Commissioner must contract 
with the National Academy of Sciences or another independent 
entity to conduct a comprehensive study of the disability 
determination process for SSI and SSDI. The study must examine 
the validity, reliability and consistency with current 
scientific standards of the Listings of Impairments cited 
above. The study must also examine the appropriateness of the 
definitions of disability (and possible alternatives) used in 
connection with SSI and SSDI, and the operation of the 
disability determination process, including the appropriate 
method of performing comprehensive assessments of individuals 
under age 18 with physical or mental impairments. The 
Commissioner must issue interim and final reports of the 
findings and recommendations of the study within 18 months and 
24 months, respectively, from the date of contract for the 
study.

Reason for change

    Both the SSI and SSDI program have experienced tremendous 
growth, particularly over the last 5 years. The Listings, as 
defined in regulation, have served as the chosen method to 
determine disability, yet they have never been validated. This 
study will better enable Congress to assess current federal 
disability determination policy and make any legislative 
changes that may be necessary.

Effective date

    Date of enactment.

                 17. Study by General Accounting Office

Present law

    No provision.

Explanation of provision

    No later than January 1, 1999, the Comptroller General of 
the United States must study and report on the impact of the 
amendments and provisions made by this bill, and extra expenses 
incurred by families of children receiving benefits not covered 
by other federal, State, or local programs.

Reason for change

    Many families of disabled children incur expenses beyond 
those experienced by families of children who are not disabled. 
However, the extra expenses related to a child's disability 
vary widely, depending on the nature and degree of disability 
and the availability of federal, State, and local health care 
and/or disability programs. Congress should investigate whether 
the unmet needs of families of disabled children could be 
better and more efficiently met through services, such as 
mental health treatment or the purchase of items of assistive 
technology, rather than through cash payments. In the 24 years 
since the SSI program was created, substantial new federal 
programs have been authorized to assist children with 
disabilities, including federal, State, and local funding of 
special education and the rapid expansion of Medicaid benefits. 
The impact of these programs on the cash needs of children with 
disabilities merits further investigation by Congress.

Effective date

    Date of enactment.

       Chapter 6--National Commission on the Future of Disability

Present law

    No provision.

Explanation of provision

    This section establishes a new Commission on the future of 
disability.
    The Commission must study all matters related to the 
nature, purpose and adequacy of all federal programs for the 
disabled (and especially SSI and SSDI), including: projected 
growth in the number of individuals with disabilities; possible 
performance standards for disability programs; the adequacy of 
federal rehabilitation research and training; and the adequacy 
of policy research available to the Federal Government and 
possible improvements. The Commission must submit to the 
President and the proper congressional committees 
recommendations and possible legislative proposals effecting 
needed program changes.
    The Commission is to be composed of 15 members who are 
appointed by the President and congressional leadership and who 
serve for the life of the Commission. Members are to be chosen 
based on their education, training or experience, with 
consideration for representing the diversity of individuals 
with disabilities in the U.S. The Commission membership will 
also reflect the general interests of the business and 
taxpaying community.
    The Commission will have a director, appointed by the 
Chair, and appropriate staff, resources, and facilities.
    The Commission may conduct public hearings and obtain 
information from federal agencies necessary to perform its 
duties.
    The Commission must issue an interim report to Congress and 
the President not later than 1 year prior to terminating. A 
final public report must be submitted prior to termination.
    The Commission will terminate 2 years after first having 
met and named a chair and vice chair.
    This section authorizes the appropriation of such funds as 
are necessary to carry out the purposes of the Commission.

Reason for change

    The committee creates this Commission to examine growth in 
the SSI and SSDI programs and reported barriers to employment 
and independence created by these programs. The Commission is 
to make appropriate recommendations to the President and the 
Congress.

Effective date

    Date of enactment.

                 SUBTITLE C--CHILD SUPPORT ENFORCEMENT

     Chapter 1--Eligibility for Services; Distribution of Payments

   1. State Obligation to Provide Child Support Enforcement Services

Present law

    States are required to establish paternity for children 
born out of wedlock if they are recipients of AFDC or Medicaid, 
and to obtain child and spousal support payments from 
noncustodial parents of children receiving AFDC, Medicaid 
benefits, or foster care maintenance payments. States must 
provide child support collection or paternity determination 
services to persons not otherwise eligible if the person 
applies for services. Federal law requires States to cooperate 
with other States in establishing paternity (if necessary), 
locating absent parents, collecting child support payments, and 
carrying out other child support enforcement functions. In 
cases in which a family ceases to receive AFDC, States are 
required to provide appropriate notice to the family and 
continue to provide child support enforcement services without 
requiring the family to apply for services or charging an 
application fee.

Explanation of provision

    States must provide services, including paternity 
establishment and establishment, modification, or enforcement 
of support obligations, for children receiving benefits from 
the Temporary Assistance for Needy Families block grant (TANF), 
foster care maintenance payments, Medicaid, and any child of an 
individual who applies for services. States must enforce 
support obligations with respect to children in their caseload 
and the custodial parents of such children. States must also 
make child support enforcement services available to 
individuals not residing within the State on the same terms as 
to individuals residing within the State. States are not 
required to provide services to families if the State 
determines, taking into account the best interests of the 
child, that good cause and other exceptions exist. The 
provision also makes minor technical amendments to section 454 
of the Social Security Act.
    When a family ceases to receive benefits from the TANF 
block grant, States are required to provide appropriate notice 
to the family and continue to provide child support enforcement 
services without requiring the family to apply for services or 
charging an application fee.

Reason for change

    The provision simply clarifies the current statute 
regarding which particular families must receive child support 
enforcement services from States. Given the Federal 
Government's investment of taxpayer dollars in the cash 
provided to families by the TANF block grant, the new Medicaid 
block grant established by this legislation, and foster care, 
the Congress has always required States to capture as much 
money as possible from parents to repay taxpayers for their 
investment. Indeed, perhaps the major reason Congress 
established the child support program in 1975 was to do 
everything possible to ensure that parents, especially parents 
who did not live with their children, repaid taxpayers for 
supporting these children. Thus, Congress requires States to 
try to obtain support from noncustodial parents whose children 
are receiving cash assistance under either the TANF or foster 
care programs or medical coverage under the Medicaid block 
grant. Further, because millions of families are at risk of 
needing public welfare unless noncustodial parents provide 
child support, and because additional millions of families are 
not receiving the financial support that is their legal right 
from noncustodial parents, States must provide child support 
services to nonwelfare families that request such services.

Effective date

    October 1, 1996.

              2. Distribution of Child Support Collections

Present law

    Federal law requires that child support collections be 
distributed as follows: First, up to the first $50 in current 
support is paid to the AFDC family (a ``disregard'' that does 
not affect the family's AFDC benefit or eligibility status). 
Second, the Federal and State governments are reimbursed for 
the AFDC benefit paid to the family in that month. Third, if 
there is money left, the family receives it up to the amount of 
the current month's child support obligation. Fourth, if there 
is still money left, the State keeps it to reimburse itself for 
any arrearages owed to it under the AFDC assignment (with 
appropriate reimbursement of the Federal share of the 
collection to the Federal Government). If no arrearages are 
owed the State, the money is used to pay arrearages to the 
family; such moneys are considered income under the AFDC 
program and would reduce the family's AFDC benefit.
    To receive AFDC benefits, a custodial parent must assign to 
the State any right to collect child support payments. This 
assignment covers current support and any arrearages that 
accumulated before the family began receiving public 
assistance, and lasts as long as the family receives AFDC.
    Some States are required to provide monthly supplemental 
payments to AFDC recipients who have less disposable income now 
than they would have had in July 1975 because child support is 
paid to the child support agency instead of directly to the 
family. States required to make these supplemental payments are 
often referred to as ``fill-the-gap'' States. These States pay 
less assistance than their full need standard, and allow 
recipients to use child support income to make up all or part 
of the difference between the payment made by the State and the 
State's need standard. In addition, States with a need standard 
that is higher than its actual welfare payments are allowed to 
use child support to ``fill the gap.''

Explanation of provision

    Several changes in the distribution rules under current law 
are made by this section. The $50 passthrough to families on 
AFDC is ended. In addition, distribution law is changed so 
that, beginning October 1, 1997, collections on arrearages that 
accumulated during the period after the family leaves welfare 
are paid to the State if the money was collected through the 
tax intercept and to the family if collected by any other 
method. Distribution law is also changed so that beginning on 
October 1, 2000, arrearages that accumulated during the period 
before the family went on welfare are paid to the State if the 
money was collected through the tax intercept and to the family 
if collected by any other method. (Note: These new distribution 
rules require the assignment rules for pre-welfare arrearages 
to be changed so that families can be paid before States if the 
money was collected by a method other than the tax intercept; 
this change in assignment rules was made in Title I and will 
appear in Section 408(a)(3)(B) of the revised Social Security 
Act.)
    By October 1, 1998, the Secretary must present a report to 
the Congress concerning whether post-assistance arrearages have 
helped mothers avoid welfare and about the effectiveness of the 
new distribution rules.
    All assignments of support in effect when this proposal is 
enacted must remain in effect.
    Several terms, including ``assistance from the State,'' 
``Federal share,'' and ``State share'' are defined.
    If States retain less money from collections than they 
retained in fiscal year 1995, States are allowed to retain the 
amount retained in fiscal year 1995.
    If a State follows a ``fill-the-gap'' policy as outlined 
above, that State can continue to distribute funds to the 
family up to the amount needed to fill the gap. The provision 
also clarifies the relationship between gap payments and both 
the $50 passthrough and the State hold harmless provision.

Reason for change

    The $50 passthrough of child support collections to 
families receiving public assistance poses a significant 
administrative expense for overburdened State child support 
agencies. In addition, providing additional funds to families 
while they remain on welfare provides incentive to stay on 
welfare. Thus, the committee proposal ends the $50 passthrough. 
However, to maintain the link between payments by nonresident 
parents and the support of their children, States are given the 
option of sending the entire child support payment, minus the 
Federal share, to the custodial parent and children. If States 
follow this option, the payments must count as income against 
welfare benefits.
    The major intent of the changes contained in this section 
is to provide more money to families that leave welfare and 
thereby increase the odds that such families will be able to 
maintain their independence from public benefits. The key 
feature of this section of the proposal is the change in rules 
governing distribution of collections in the case of mothers 
who leave welfare. Under current law, collections above the 
amount of current child support are usually kept by the State 
and Federal Governments as repayment for tax dollars that were 
given to the custodial parent and children in the form of 
public aid. Under the new proposal, which would be phased in 
between the date of passage and 2000, arrearages obtained from 
noncustodial parents through any method other than the Federal 
tax intercept, are provided directly to the custodial parent 
and children until all the unpaid support that accumulated both 
before and after the family went on welfare is paid. Research 
shows that about 75 percent of the mothers who leave welfare 
come back on the rolls within 5 years. This feature of the 
proposal will provide a new source of income for mothers trying 
to work to support their children without relying on public 
aid. Similarly, the requirement that States continue providing 
these mothers with child support enforcement services is 
intended to maintain this new source of income and thereby 
increase the odds that mothers will be able to support their 
children without relying on welfare.
    The committee proposal includes a rule requiring States to 
continue paying to the Federal Government a portion of child 
support collections for parents receiving benefits from the 
Temporary Family Assistance program. Under current law, States 
are directly reimbursed by the Federal Government for a portion 
of their payments to families under the Aid to Families with 
Dependent Children program. But the Federal funding provided to 
States under the new block grant format requires a change in 
the method of sharing child support collections. The 
requirement that States provide the Federal Government with the 
percentage of collections that equals the Medicaid matching 
rate is intended simply to create a mechanism to ensure that 
both the Federal and State governments continue receiving 
roughly the same share of collections they receive under 
current law.

Effective date

    October 1, 1996, or earlier at State option.

                         3. privacy safeguards

Present law

    Federal law limits the use or disclosure of information 
concerning recipients of Child Support Enforcement Services to 
purposes connected with administering specified Federal welfare 
programs.

Explanation of provision

    States must implement safeguards against unauthorized use 
or disclosure of information related to proceedings or actions 
to establish paternity or to establish or enforce child 
support. These safeguards must include prohibitions on release 
of information where there is a protective order or where the 
State has reason to believe a party is at risk of physical or 
emotional harm from the other party. This provision is 
effective October 1, 1997.

Reason for change

    The committee proposal contains numerous safeguards on 
privacy, several of which will be described below. Much of the 
information discovered in court proceedings and contained in 
child support records is confidential. States must therefore 
have laws and administrative procedures that protect this 
information from public disclosure.
    States must take every precaution to ensure against 
mistaken identification of nonresident parents, and to ensure 
that erroneous information is corrected in cases where mistakes 
in identify have occurred.

Effective date

    October 1, 1996.

                  4. right to notification of hearing

Present law

    Most States have procedural due process requirements with 
respect to wage withholding. Federal law requires States to 
carry out withholding in full compliance with all procedural 
due process requirements of the State.

Explanation of provision

    Parties to child support cases under Title IV-D must 
receive notice of proceedings in which child support might be 
established or modified and must receive a copy of orders 
establishing or modifying child support (or a notice that 
modification was denied) within 14 days of issuance.

Reason for change

    The basic purpose of Federal due process requirements is to 
ensure that no citizen has her rights infringed by government 
action without the right to present evidence and arguments to 
defend against such infringement. The purpose of child support 
judicial and administrative hearings is to establish paternity, 
to establish child support obligations, or to set or adjust the 
amount of a child support obligation. All of these government 
actions substantially effect the interests of both custodial 
and noncustodial parents. This provision requires States to 
inform all parties about these hearings. Further, all parties, 
even those who do not appear at the hearing, must be informed 
of the results of the proceedings.

Effective date

    October 1, 1997.

                  Chapter 2--Locate and Case Tracking

                         5. state case registry

Present law

    Federal law requires that wage withholding be administered 
by a public agency capable of documenting payments of support 
and tracking and monitoring such payments.
    Federal law requires that child support orders be reviewed 
and adjusted, as appropriate, at least once every 3 years.

Explanation of provision

    States must establish an automated State Case Registry that 
contains a record on each case in which services are being 
provided by the State agency, as well as each support order 
established or modified in the State on or after October 1, 
1998.
    The Registry may be established by linking local case 
registries of support orders through an automated information 
network.
    The registry record will contain data elements on both 
parents, such as names, Social Security numbers and other 
uniform identification numbers, dates of birth, case 
identification numbers, and any other data the Secretary may 
require.
    Each case record will contain the amount of support owed 
under the order and other amounts due or overdue (including 
interest or late payment penalties and fees), any amounts that 
have been collected and distributed, the birth date of any 
child for whom the order requires the provision of support, and 
the amount of any lien imposed by the State.
    The State agency operating the registry will promptly 
establish, maintain, update and regularly monitor case records 
in the registry with respect to which services are being 
provided under the State plan. Establishing and updating 
support orders will be based on administrative actions and 
administrative and judicial proceedings and orders relating to 
paternity and support, as well as on information obtained from 
comparisons with Federal, State, and local sources of 
information, information on support collections and 
distributions, and any other relevant information.
    The State automated system will be used to extract data for 
purposes of sharing and matching with Federal and State data 
bases and locator services, including the Federal Case Registry 
of Child Support Orders, the Federal Parent Locator Service, 
and Temporary Assistance for Needy Families and Medicaid 
agencies, as well as for conducting intrastate and interstate 
information comparisons.

Reason for change

    The State Case Registry and the State Disbursement Unit 
(see below) are essential components of the expanded and 
automated child support enforcement system envisioned by the 
committee proposal. Given the importance of mass processing of 
records and information received from many sources, the details 
on data processing outlined in this section of the proposal are 
essential to the overall functioning of the new system. A major 
theme of the committee proposal is automation and mass 
processing of records. The committee view is that as long as 
the child support enforcement program functions on a case-by-
case basis, the program will continue to be inefficient and 
ineffective. Thus, in this and other sections of the proposal, 
States are required to establish and maintain, with appropriate 
Federal matching payments, information networks that will 
increase the efficacy and efficiency of the child support 
system.

Effective date

    October 1, 1996.

           6. Collection and Disbursement of Support Payments

Present law

    No provision, but States may provide that, at the request 
of either parent, child support payments be made through the 
child support enforcement agency or the agency that administers 
the State's income withholding system regardless of whether 
there is an arrearage. States must charge the parent who 
requests child support services a fee equal to the cost 
incurred by the State for these services, up to a maximum of 
$25 per year.

Explanation of provision

    By October 1, 1998, State child support agencies are 
required to operate a centralized, automated unit for 
collection and disbursement of payments on child support orders 
enforced by the child support agency and payments on orders 
issued after December 31, 1993 which are not enforced by the 
State agency but for which wages are subject to withholding. 
The specifics of how States will establish and operate their 
State Disbursement Unit must be outlined in the State plan.
    The State Disbursement Unit must be operated directly by 
the State agency, by two or more State agencies under a 
regional cooperative agreement, or by a contractor responsible 
directly to the State agency. The State Disbursement Unit may 
be established by linking local disbursement units through an 
automated information network if the Secretary agrees that the 
system will not cost more, take more time to establish, nor 
take more time to operate than a single State system. All 
States, including those that operate a linked system, must give 
employers one and only one location for submitting withheld 
income.
    The Disbursement Unit must be used to collect and disburse 
support payments, to generate orders and notices of withholding 
to employers, to keep an accurate identification of payments, 
to promptly distribute money to custodial parents or other 
States, and to furnish parents with a record of the current 
status of support payments. The Unit shall use automated 
procedures, electronic processes, and computer-driven 
technology to the maximum extent feasible, efficient, and 
economical.
    The Disbursement Unit must distribute all amounts payable 
within 2 business days after receiving money and identifying 
information from the employer or other source of periodic 
income, if sufficient information identifying the payee is 
provided. The Unit may retain arrearages in the case of appeals 
until they are resolved.
    States must use their automated system to facilitate 
collection and disbursement including at least:
          (1) transmission of orders and notices to employers 
        within 2 days after receipt of the withholding notice;
          (2) monitoring to identify missed payments of 
        support; and
          (3) automatic use of enforcement procedures when 
        payments are missed.
    It is the sense of Congress that in establishing a 
centralized unit for the collection of support payments, a 
State should choose the method of compliance which best meets 
the needs of parents, employers, and children.
    This section of the proposal will go into effect on October 
1, 1998. States that process child support payments through 
local courts can continue court payments until September 30, 
1999.

Reason for change

    The State Disbursement Unit is and essential component, 
along with the Registry of Support Orders and the Directory of 
New Hires (see below), that form the core of the reformed child 
support system. The Disbursement Unit will enable States to 
locate parents who owe support, issue withholding orders soon 
after the obligor is hired, process the payment and keep 
records at a central location, and then distribute the support 
payments in a timely manner.
    The committee provision requires only that cases being 
handled by the State agency be processed through the State 
Disbursement Unit. Here as elsewhere, the committee intends to 
interfere with private, nonsubsidized child support 
arrangements only when the obligated parent fails to pay 
support promptly.

Effective date

    October 1, 1998.

                    7. State Directory of New Hires

Present law

    In general, no provision. Section 1128 of the Social 
Security Act is an antifraud provision which excludes 
individuals and entities that have committed fraud from 
participation in medicare and State health care programs. 
Section 1128A pertains to civil monetary penalties and 
describes the appropriate procedures and proceedings for such 
penalties.

Explanation of provision

    State plans must include the provision that by October 1, 
1997 States will operate a Directory of New Hires.
    Establishment. States are required to establish a State 
Directory of New Hires to which employers and labor 
organizations in the State must furnish a report for each newly 
hired employee, unless reporting could endanger the safety of 
the employee or compromise an ongoing investigation or 
intelligence mission as determined by the head of an agency. 
States that already have new hire reporting laws may continue 
to follow the provisions of their own law until October 1, 
1998, at which time States must conform to Federal law.
    Employer Information. Employers must furnish to the State 
Directory of New Hires the name, address, and Social Security 
number of every new employee and the name, address, and 
identification number of the employer. Multistate employers 
that report electronically or magnetically may report to the 
single State they designate; such employers must notify the 
Secretary of the name of the designated State. Agencies of the 
U.S. Government must report directly to the National Directory 
of New Hires (see below).
    Timing of Report. Employers must report new hire 
information within 20 days of the date of hire. Employers that 
report new hires electronically or by magnetic tape must file 
twice per month; reports must be separated by not less than 12 
days and not more than 16 days.
    Reporting Format and Method. The report required in this 
section will be made on a W-4 form or the equivalent, and can 
be transmitted magnetically, electronically, or by first class 
mail. The decision of which reporting method to use is up to 
employers.
    Civil Money Penalties on Noncomplying Employers. States 
have the option of setting a civil money penalty which shall be 
not less than $25 or $500 if, under State law, the failure is 
the result of a conspiracy between the employer and employee.
    Entry of Employer Information. New hire information must be 
entered in the State data base within 5 business days of 
receipt from employer.
    Information Comparisons. By May 1, 1998, each State 
Directory of New Hires must conduct automated matches of the 
Social Security numbers of reported employees against the 
Social Security numbers of records in the State Case Registry 
being enforced by the State agency and report the name, 
address, Social Security number, and the employer name, 
address, and identification number on matches to the State 
child support agency.
    Transmission of Information. Within 2 business days of the 
entry of data in the registry, the State must transmit a 
withholding order directing the employer to withhold wages in 
accord with the child support order. Within 3 days, the State 
Directory of New Hires must furnish employee information to the 
National Directory of New Hires for matching with the records 
of other State case registries. The State Directory of New 
Hires must also report quarterly to the National Directory of 
New Hires information on wages and unemployment compensation 
taken from the quarterly report to the Secretary of Labor now 
required by Title III of the Social Security Act.
    Other Uses of New Hire Information. The State child support 
agency must use the new hire information to locate individuals 
for purposes of establishing paternity as well as establishing, 
modifying, and enforcing child support obligations. New hire 
information must also be disclosed to the State agency 
administering the Temporary Assistance for Needy Families, 
Medicaid, Unemployment Compensation, Food Stamp, SSI, and 
territorial cash assistance programs for income eligibility 
verification, and to State agencies administering unemployment 
and workers' compensation programs to assist determinations of 
the allowability of claims. State and local government agencies 
must participate in quarterly wage reporting to the State 
employment security agency unless the agency performs 
intelligence or counterintelligence functions and it is 
determined that wage reporting could endanger the safety of the 
employee or compromise an ongoing investigation or intelligence 
mission.
    Disclosure to Certain Agents. States using private 
contractors are allowed to share information obtained from the 
Directory of New Hires with private entities working under 
contract with the State agency. Private contractors must comply 
with privacy safeguards.

Reason for change

    The State Case Registry, the State Disbursement Unit, and 
the State Directory of New Hires comprise the guts of the new 
child support system envisioned by the committee proposal. 
Although New Hire reporting imposes a slight burden on 
employers, the committee has attempted to minimize this burden 
by enabling employers to submit a form (the W-4 form) they must 
already complete and by allowing them to submit the form at the 
time of their regular payroll cycle. In addition, the committee 
proposal contains a much smaller fine on employers that fail to 
report new hire information than the fine imposed by previous 
bills that have been introduced in Congress. Given the 
importance of quick reporting of employment and the equally 
quick issuance of the child support withholding order for the 
collection of child support payments, the committee felt it was 
necessary to impose this small additional burden on employers.
    The formation of the National Directory of New Hires will 
extend the benefits of rapid new hire reporting and wage 
withholding to interstate cases. The committee has received 
extensive information through letters and testimony that the 
current system of pursuing child support across State lines is 
far too sluggish to be effective. Here and elsewhere in the 
proposal, the committee takes strong and innovative action to 
repair a system that is universally regarded as broken. Data 
from the Federal Office of Child Support Enforcement show that 
whereas about 30 percent of child support cases are interstate 
cases, only 10 percent of collections are from interstate 
cases. Once the State and National Directories of New Hires are 
established, the Nation will, for the first time, have a rapid 
response and automated mechanism in place to locate and 
withhold wages legally obligated for child support payments.
    The committee proposal also includes requirements to share 
income information across programs within the State and with 
several national agencies in order to reduce fraud in these 
benefit programs including Temporary Family Assistance, 
Unemployment Compensation, Supplemental Security Income, and 
the Earned Income Credit. The Committee on Ways and Means has 
received extensive information on fraud in the Earned Income 
Credit; this new source of information on employees may help 
reduce such fraud.

Effective date

    October 1, 1996, except where otherwise noted.

              8. Amendments Concerning Income Withholding

Present law

    Since November 1, 1990, all new or modified child support 
orders that were being enforced by the State's child support 
enforcement agency have been subject to immediate income 
withholding. If the noncustodial parent's wages are not subject 
to income withholding (pursuant to the November 1, 1990 
provision), such parent's wages would become subject to 
withholding on the date when support payments are 30 days past 
due. Since January 1, 1994, the law has required States to use 
immediate income withholding for nearly all new or modified 
support orders, regardless of whether a parent has applied for 
child support enforcement services. There are two circumstances 
in which income withholding does not apply: (1) one of the 
parents argues, and the court or administrative agency agrees, 
that there is good cause not to do so, or (2) a written 
agreement is reached between both parents which provides for an 
alternative arrangement. States must implement procedures under 
which income withholding for child support can occur without 
the need for any amendment to the support order or for any 
further action by the court or administrative entity that 
issued the order. States are also required to implement income 
withholding in full compliance with all procedural due process 
requirements of the State, and States must send advance notice 
to each nonresident parent to whom income withholding applies 
(with an exception for some States that had income withholding 
before enactment of this provision that met State due process 
requirements). States must extend their income withholding 
systems to include out-of-State support orders.

Explanation of provision

    States must have laws providing that all child support 
orders issued or modified before October 1, 1996, which are not 
otherwise subject to income withholding, will become subject to 
income withholding immediately if arrearages occur, without the 
need for judicial or administrative hearing. State law must 
also allow the child support agency to execute a withholding 
order through electronic means and without advance notice to 
the obligor. Employers must remit to the State Disbursement 
Unit, in a format prescribed by the Secretary, income withheld 
within 5 working days after the date such amount would have 
been paid to the employee. Employers cannot take disciplinary 
action against employees subject to wage withholding. All child 
support orders subject to income withholding, including those 
which are not part of the State IV-D program, must be processed 
through the State Disbursement Unit. In addition, States must 
notify noncustodial parents that income withholding has 
commenced and inform them of procedures for contesting income 
withholding. Employers must follow the withholding terms and 
conditions stated in the order; if the terms and conditions are 
not specified employers should follow those of the State in 
which the obligor lives. The section includes a definition of 
income to be used in interstate withholding and several 
conforming amendments to section 466 of the Social Security 
Act.

Reason for change

    Under present law, most support orders are automatically 
subject to income withholding. This provision ensures that 
every child support order, regardless of when it was issued or 
modified, would be subject to withholding if arrearages occur. 
This provision is based on the assumption that a key component 
of successful child support collection is immediate response 
when obligors begin to miss payments. At the same time, 
however, the committee proposal continues to provide an 
exception for a parent who can convince the court that payments 
will be forthcoming without State involvement and parents who 
reach cooperative agreement on child support and maintain good 
payment records. The Federal-State child support program 
intervenes when private arrangements fail.
    The provision also addresses a serious problem of current 
interstate law. The Committee on Ways and Means has received 
abundant information that interstate enforcement is a problem 
because, among other reasons, employers have difficulty knowing 
how to respond to orders received from another State. 
Responding to this problem, the committee provision establishes 
a definition of income so employers will know exactly which 
payments are subject to income withholding and allows employers 
to follow the laws of their own State if an order received from 
another State is unclear on its face.

Effective date

    October 1, 1996.

            9. Locator Information from Interstate Networks

Present law

    No provision.

Explanation of provision

    All State and the Federal Child Support Enforcement 
agencies must have access to the motor vehicle and law 
enforcement locator systems of all States.

Reason for change

    Child support enforcement programs are dependent on current 
information on the Social Security number and address of 
parents who owe or could owe child support. Most adults have 
drivers' licenses and many, especially those who owe past-due 
child support, have had involvement with law enforcement. Thus, 
the committee proposal requires States to make both sources of 
child support information available to the child support 
agencies of all States and the Federal Government.

Effective date

    October 1, 1996.

          10. Expansion of the Federal Parent Locator Service

Present law

    The law requires that the Federal Parent Locator Service 
(FPLS) be used to obtain and transmit information about the 
location of any absent parent when that information is to be 
used for the purpose of enforcing child support. Federal law 
also requires departments or agencies of the United States to 
be reimbursed for costs incurred in providing requested 
information to the FPLS.
    Information Comparisons and Other Disclosures. Upon 
request, the Secretary must provide to an ``authorized person'' 
(i.e., an employee or attorney of a child support agency, a 
court with jurisdiction over the parties involved, the 
custodial parent, the legal guardian, or the child's attorney) 
the most recent address and place of employment of any 
nonresident parent if the information is contained in the 
records of the Department of Health and Human Services or can 
be obtained from any other department or agency of the United 
States or of any State. The FPLS also can be used in connection 
with the enforcement or determination of child custody, 
visitation, and parental kidnapping. Federal law requires the 
Secretary of Labor and the Secretary of Health and Human 
Services to enter into an agreement to give the FPLS prompt 
access to wage and unemployment compensation claims information 
useful in locating a noncustodial parent or his employer.
    Fees. ``Authorized persons'' who request information from 
FPLS must be charged a fee.
    Restriction on Disclosure and Use. Federal law stipulates 
that no information shall be disclosed if the disclosure would 
contravene the national policy or security interests of the 
United States or the confidentiality of Census data.
    Quarterly Wage Reporting. The Secretary of Labor must 
provide prompt access by the Secretary of HHS to wage and 
unemployment compensation claims information and data 
maintained by the Labor Department or State employment security 
agencies.

Explanation of provision

    The purposes of the Federal Parent Locator Service are 
expanded. For the purposes of establishing parentage, 
establishing support orders or modifying them, or enforcing 
support orders, the Federal Parent Locator Service will provide 
information to locate individuals who owe child support or 
against whom an obligation is sought or to whom such an 
obligation is owed. Information in the FPLS includes Social 
Security number, address, name and address of employer, wages 
and employee benefits (including information about health care 
coverage), and information about assets and debts. The 
provision also clarifies the statute so that parents with 
orders providing child custody or visitation rights are given 
access to information from the FPLS unless the State has 
notified the Secretary that there is reasonable evidence of 
domestic violence or child abuse or that the information could 
be harmful to the custodial parent or child.
    The Secretary is authorized to set reasonable rates for 
reimbursing Federal and State agencies for the costs of 
providing information to the FPLS and to set reimbursement 
rates that State and Federal agencies that use information from 
the FPLS must pay to the Secretary.
    Federal Case Registry of Child Support Orders. Establishes 
within the FPLS an automated registry known as the Federal Case 
Registry of Child Support Orders. The Federal Case Registry 
contains abstracts of child support orders and other 
information specified by the Secretary (such as names, Social 
Security numbers or other uniform identification numbers, and 
State case identification numbers) to identify individuals who 
owe or are owed support, or for or against whom support is 
sought to be established, and the State which has the case. 
States must begin reporting this information in accord with 
regulations issued by the Secretary by October 1, 1998.
    National Directory of New Hires. This provision establishes 
within the FPLS a National Directory of New Hires containing 
information supplied by State Directories of New Hires. When 
fully implemented, the Federal Directory of New Hires will 
contain identifying information on virtually every person who 
is hired in the United States. In addition, the FPLS will 
contain quarterly data supplied by the State Directory of New 
Hires on wages and Unemployment Compensation paid. The 
Secretary of the Treasury must have access to information in 
the Federal Directory of New Hires for the purpose of 
administering section 32 of the Internal Revenue Code and the 
Earned Income Credit. The information for the National 
Directory of New Hires must be entered within 2 days of 
receipt, and requires the Secretary to maintain within the 
National Directory of New Hires a list of multistate employers 
that choose to send their report to one State and the name of 
the State so elected.
    Information Comparisons and Other Disclosures. The 
Secretary must verify the accuracy of the name, Social Security 
number, birth date, and employer identification number of 
individuals in the Federal Parent Locator Service with the 
Social Security Administration. The Secretary is required to 
match data in the National Directory of New Hires against the 
child support order abstracts in the Federal Case Registry at 
least every 2 working days and to report information obtained 
from matches to the State child support agency responsible for 
the case within 2 days. The information is to be used for 
purposes of locating individuals to establish paternity, and to 
establish, modify, or enforce child support orders. The 
Secretary may also compare information across all components of 
the FPLS to the extent and with the frequency that the 
Secretary determines will be effective. The Secretary will 
share information from the FPLS with several potential users 
including State agencies administering the Temporary Assistance 
for Needy Families program, the Commissioner of Social Security 
(to determine the accuracy of Social Security and Supplemental 
Security Income), and researchers under some circumstances.
    Fees. The Secretary must reimburse the Commissioner of 
Social Security for costs incurred in performing verification 
of Social Security information and States for submitting 
information on New Hires. States or Federal agencies that use 
information from FPLS must pay fees established by the 
Secretary.
    Restriction on Disclosure and Use. Information from the 
FPLS cannot be used for purposes other than those provided in 
this section, subject to section 6103 of the Internal Revenue 
Code (confidentiality and disclosure of returns and return 
information).
    Information Integrity and Security. The Secretary must 
establish and use safeguards to ensure the accuracy and 
completeness of information from the FPLS and restrict access 
to confidential information in the FPLS to authorized persons 
and purposes.
    Federal Government Reporting. Each department of the U.S. 
must submit the name, Social Security number, and wages paid 
the employee on a quarterly basis to the FPLS. Quarterly wage 
reporting must not be filed for a Federal or State employee 
performing intelligence or counter-intelligence functions if it 
is determined that filing such a report could endanger the 
employee or compromise an ongoing investigation.
    Conforming Amendments. This section makes several 
conforming amendments to titles III and IV of the Social 
Security Act, to the Federal Unemployment Tax Act, and to the 
Internal Revenue Code. Among the more important are that: State 
employment security agencies are required to report quarterly 
wage information to the Secretary of HHS or suffer financial 
penalties and that private agencies working under contract to 
State child support agencies can have access to certain 
specified information from IRS records under some 
circumstances.
    Requirement for Cooperation. The Secretaries of HHS and 
Labor must work together to develop cost-effective and 
efficient methods of accessing information in the various 
directories required by this title; they must also consider the 
need to ensure the proper and authorized use of wage record 
information.

Reason for change

    Since the Commission on Interstate Child Support 
Enforcement published its report nearly 3 years ago, a national 
directory of information on child support cases and on new 
hires has been widely viewed as one of the keys to child 
support reform. The committee proposal contains both of these 
mechanisms as well as a directory of every child support order 
in the Nation. With this new information, the FPLS will become 
the hub of information in a vitalized system for improving 
interstate child support enforcement. Given that interstate 
cases constitute about 30 percent of the child support caseload 
but only about 10 percent of collections, the expanded FPLS 
should greatly improve child support collections. Moreover, 
better child support collections will enable more mothers to 
leave and remain off the welfare rolls, thereby fulfilling the 
most important goal of the committee proposal. Information from 
the FPLS, especially that on wages and income, may also prove 
quite useful in reducing fraud in several large and rapidly 
growing programs under jurisdiction of the Committee on Ways 
and Means.

Effective date

    October 1, 1996.

  11. Collection and Use of Social Security Numbers for Use in Child 
                          Support Enforcement

Present law

    Federal law requires that in the administration of any law 
involving the issuance of a birth certificate, States must 
require each parent to furnish their Social Security number for 
the birth records. The State is required to make such numbers 
available to child support agencies in accordance with Federal 
or State law. States may not place Social Security numbers 
directly on birth certificates.

Explanation of provision

    States must have procedures for recording the Social 
Security numbers of applicants on the application for 
professional licenses, commercial driver's licenses, 
occupational licenses, or marriage licenses. States must also 
record Social Security numbers in the records of divorce 
decrees, child support orders, and paternity determination or 
acknowledgment orders. Individuals who die will have their 
Social Security number placed in the records relating to the 
death and recorded on the death certificate. There are several 
conforming amendments to title II of the Social Security Act.

Reason for change

    The Social Security number is the key piece of information 
around which the child support information system is 
constructed. Not only are new hire and support order matches at 
the State and Federal level based on Social Security numbers, 
but so too are most data searches aimed at locating nonpaying 
parents. Thus, giving child support offices access to new 
sources for obtaining Social Security numbers is important to 
successful functioning of several other components of the 
committee proposal. To promote privacy in keeping Social 
Security numbers confidential, the provision does not require 
States to place the numbers directly on the face of the 
licenses, decrees, or orders. Rather, the number must simply be 
kept in applications and records that, in most cases, are 
stored in computer files.
    In requiring use of Social Security numbers, the committee 
does not intend to alter current law concerning confidentiality 
of records containing such numbers. Present law provides that 
Social Security numbers can be used in nonconfidential, public 
records if those records were nonconfidential and public under 
State law prior to October 1, 1990.

Effective date

    October 1, 1996.

          Chapter 3--Streamlining and Uniformity of Procedures

                   12. Adoption of Uniform State Laws

Present law

    States have several options available for pursuing 
interstate child support cases including direct income 
withholding, interstate income withholding, and long-arm 
statutes which require the use of the court system in the State 
of the custodial parent. In addition, States use the Uniform 
Reciprocal Enforcement of Support Act (URESA) and the Revised 
Uniform Reciprocal Enforcement of Support Act (RURESA) to 
conduct interstate cases. Federal law imposes a Federal 
criminal penalty for the willful failure to pay past-due child 
support to a child who resides in a State other than the State 
of the obligor. In 1992, the National Conference of 
Commissioners on State Uniform Laws approved a new model State 
law for handling interstate child support cases. The new 
Uniform Interstate Family Support Act (UIFSA) is designed to 
deal with desertion and nonsupport by instituting uniform laws 
in all 50 States that limit control of a child support case to 
a single State. This approach ensures that only one child 
support order from one court or child support agency will be in 
effect at any given time. It also helps to eliminate 
jurisdictional disputes between States that are impediments to 
locating parents and enforcing child support orders across 
State lines. As of February 1996, 26 States and the District of 
Columbia had enacted UIFSA.

Explanation of provision

    By January 1, 1998, all States must have enacted the 
Uniform Interstate Family Support Act (UIFSA) and any 
amendments officially adopted by the National Conference of 
Commissioners of Uniform State Laws before January 1, 1998, and 
have the procedures required for its implementation in effect. 
States are allowed flexibility in deciding which specific 
interstate cases are pursued by using UIFSA and which cases are 
pursued using other methods of interstate enforcement. States 
must provide that an employer that receives an income 
withholding order follow the procedural rules that apply to the 
order under the laws of the State in which the noncustodial 
parent works.

Reason for change

    Mandatory passage and use of UIFSA is a cornerstone of a 
major purpose of the committee proposal--improved child support 
enforcement in interstate cases. Without uniform laws and 
procedures governing child support, the success of interstate 
cases will continue to be severely constrained. Virtually every 
witness that testified on interstate enforcement before the 
committee recommended that UIFSA be made mandatory.

Effective date

    October 1, 1996, except where otherwise noted.

   13. Improvements to Full Faith and Credit for Child Support Orders

    (This provision is not under jurisdiction of the Committee 
on Ways and Means but is included here for sake of 
completeness.)

Present law

    Federal law requires States to treat past-due support 
obligations as final judgments that are entitled to full faith 
and credit in every State. This means that a person who has a 
support order in one State does not have to obtain a second 
order in another State to obtain support due should the debtor 
parent move from the issuing court's jurisdiction. P.L. 103-383 
restricts a State court's ability to modify a support order 
issued by another State unless the child and the custodial 
parent have moved to the State where the modification is sought 
or have agreed to the modification.

Explanation of provision

    The provision clarifies the definition of a child's home 
State, makes several revisions to ensure that full faith and 
credit laws can be applied consistently with UIFSA, and 
clarifies the rules regarding which child support orders States 
must honor when there is more than one order.

           14. Administrative Enforcement in Interstate Cases

Present law

    No provision.

Explanation of provision

    States are required to have laws that permit them to send 
orders to and receive orders from other States. The 
transmission of the order itself serves as certification to the 
responding State of the arrears amount and of the fact that the 
initiating State met all procedural due process requirements. 
In addition, each responding State must, without requiring the 
case to be transferred to their State, match the case against 
its data bases, take appropriate action if a match occurs, and 
send the collections, if any, to the initiating State. States 
must keep records of the number of requests they receive, the 
number of cases that result in a collection, and the amount 
collected. States must respond to interstate requests within 5 
days.

Reason for change

    This provision is simply an additional measure to pursue 
the goal of improved interstate collection. Strengthening the 
laws on nonjudicial enforcement across State lines will greatly 
improve the speed and reduce the expense of enforcing orders in 
interstate cases. If States do a good job of enacting and then 
implementing the routine administrative procedures required by 
the committee proposal, interstate child support collections 
will improve.

Effective date

    October 1, 1996.

               15. Use of Forms in Interstate Enforcement

Present law

    No provision.

Explanation of provision

    The Secretary of HHS, in consultation with State child 
support directors and not later than October 1, 1996, must 
issue forms that States must use for income withholding, for 
imposing liens, and for issuing administrative subpoenas in 
interstate cases. States must be using the forms by March 1, 
1997.

Reason for change

    One reason interstate cases are difficult to work is that 
States use different legal forms for the same transactions. 
This provision will ensure that all States are using identical 
forms for income withholding, lien imposition, and 
administrative subpoenas, thereby reducing confusion and 
promoting rapid execution of legal procedures.

Effective date

    October 1, 1996.

             16. State Laws Providing Expedited Procedures

Present law

     States must have procedures under which expedited 
processes are in effect under the State judicial system or 
under State administrative processes for obtaining and 
enforcing support orders and for establishing paternity.
    Federal regulations provide a number of safeguards in 
expedited cases, such as requiring that the due process rights 
of the parties involved be protected.
    The Employee Retirement Income Security Act (ERISA) of 1974 
supersedes any and all State laws. Under ERISA a noncustodial 
parent's pension benefits can only be garnished or withheld if 
the custodial parent has a qualified domestic relations order. 
Similarly, a pension plan administrator is obligated to adhere 
to medical support requirements only if the custodial parent 
has a qualified medical child support order.

Explanation of provision

    States must adopt a series of procedures to expedite both 
the establishment of paternity and the establishment, 
enforcement, and modification of support. These procedures must 
give the State agency the authority to take the following 
actions, subject to due process safeguards, without the 
necessity of obtaining an order from any other judicial or 
administrative tribunal:
          (1) ordering genetic testing in appropriate cases;
          (2) issuing subpoenas to obtain information necessary 
        to establish, modify or enforce an order, with 
        appropriate sanctions for failure to respond to the 
        subpoena;
          (3) requiring all entities in the State (including 
        for-profit, nonprofit, and governmental employers) to 
        provide information on employment, compensation and 
        benefits of any employee or contractor in response to a 
        request from the State IV-D agency or the IV-D agency 
        of any other State, and to sanction failure to respond 
        to such request;
          (4) obtaining access to a variety of public and 
        private records including: vital statistics, State and 
        local tax records, real and personal property, 
        occupational and professional licenses and records 
        concerning ownership and control of corporations, 
        partnerships and other business entities, employment 
        security records, public assistance records, motor 
        vehicle records, corrections records, and, subject to 
        the nonliability of these private entities and the 
        issuance of an administrative subpoena, information in 
        the customer records of public utilities and cable TV 
        companies, and records of financial institutions;
          (5) directing the obligor or other payor to change 
        the payee to the appropriate government entity in cases 
        in which support is subject to an assignment or to a 
        requirement to pay through the State Disbursement Unit;
          (6) ordering income withholding in certain IV-D 
        cases;
          (7) securing assets to satisfy arrearages: by 
        intercepting or seizing periodic or lump sum payments 
        from States or local agencies including unemployment 
        compensation, workers' compensation, judgments, 
        settlements, lottery winnings, assets held by financial 
        institutions, and public and private retirement funds; 
        by attaching and seizing assets held in financial 
        institutions; by attaching public and private 
        retirement funds; and by imposing liens to force the 
        sale of property; and
          (8) increasing automatically the monthly support due 
        to include amounts to offset arrears.
    Expedited procedures must include the following rules and 
authority applicable with respect to proceedings to establish 
paternity or to establish, modify, or enforce support orders:
          (1) Locator Information and Notice. Parties in 
        paternity and child support actions must file and 
        update information about identity, address, and 
        employer with the tribunal and with the State Case 
        Registry upon entry of the order. The tribunal can deem 
        due process requirements for notice and service of 
        process to be met in any subsequent action upon 
        delivery of written notice to the most recent 
        residential or employer address filed with the 
        tribunal.
          (2) Statewide Jurisdiction. The child support agency 
        and any administrative or judicial tribunal have the 
        authority to hear child support and paternity cases, to 
        exert Statewide jurisdiction over the parties, and to 
        grant orders that have Statewide effect; cases can also 
        be transferred between local jurisdictions without 
        additional filing or service of process.
    Except to the extent that the provisions related to 
expedited procedures are consistent with requirements of the 
ERISA qualified domestic relations orders and the qualified 
medical child support orders, the expedited procedures do not 
alter, amend, modify, invalidate, impair or supersede ERISA 
requirements.
    The automated systems being developed by States are to be 
used, to the maximum extent possible, to implement expedited 
procedures.

Reason for change

    Cumbersome court procedures have been a major impediment to 
the efficient operation of child support systems. Along with 
automation, expanded sources of information, and the State and 
national registries and directories, providing child support 
officials with the authority to bypass court procedures in some 
cases is a central feature of the committee proposal. If child 
support agencies can order genetic testing, enter default 
orders, issue subpoenas for information needed to establish or 
modify orders, obtain access to financial information, issue 
income withholding notices, secure assets, and increase monthly 
payments to secure overdue child support, their ability to 
quickly and efficiently obtain support payments will be greatly 
improved.

Effective date

    October 1, 1996.

                   Chapter 4--Paternity Establishment

           17. State Laws Concerning Paternity Establishment

Present law

    Establishment Process Available from Birth Until Age 18. 
Federal law requires States to have laws that permit the 
establishment of paternity until the child reaches age 18. As 
of August 16, 1984, these procedures would apply to a child for 
whom paternity has not been established or for whom a paternity 
action was brought but dismissed because of statute of 
limitations of less than 18 years was then in effect in the 
State.
    Procedures Concerning Genetic Testing. Federal law requires 
States to implement laws under which the child and all other 
parties must undergo genetic testing upon the request of a 
party in contested cases.
    Voluntary Paternity Acknowledgement. Federal law requires 
States to implement procedures for a simple civil process for 
voluntary paternity acknowledgment, including hospital-based 
programs.
    Status of Signed Paternity Acknowledgement. Federal law 
requires States to implement procedures under which the 
voluntary acknowledgment of paternity creates a rebuttable 
presumption, or at State option, a conclusive presumption of 
paternity.
    Bar on Acknowledgement Ratification Proceedings. Federal 
law requires States to implement procedures under which 
voluntary acknowledgment is admissible as evidence of paternity 
and the voluntary acknowledgment of paternity must be 
recognized as a basis for seeking a support order without 
requiring any further proceedings to establish paternity.
    Admissibility of Genetic Testing Results. Federal law 
requires States to implement procedures which provide that any 
objection to genetic testing results must be made in writing 
within a specified number of days before any hearing at which 
such results may be introduced into evidence. If no objection 
is made, the test results must be admissible as evidence of 
paternity without the need for foundation testimony or other 
proof of authenticity or accuracy.
    Presumption of Paternity in Certain Cases. Federal law 
requires States to implement procedures which create a 
rebuttable or, at State option, conclusive presumption of 
paternity based on genetic testing results indicating a 
threshold probability that the alleged father is the father of 
the child.
    Default Orders. Federal law requires States to implement 
procedures that require a default order to be entered in a 
paternity case upon a showing of service of process on the 
defendant and any additional showing required by State law.

Explanation of provision

    Establishment Process Available from Birth Until Age 18. 
States are required to have laws that permit paternity 
establishment until at least age 18 (or a higher limit at State 
option) even in cases that were previously dismissed because a 
statute of limitations of less than 18 years was then in 
effect.
    Procedures Concerning Genetic Testing. The child and all 
other parties, unless good cause provisions are met, must 
undergo genetic testing upon the request of a party if the 
request is supported by a sworn statement establishing a 
reasonable possibility of parentage or nonparentage. When the 
tests are ordered by the State agency, States must pay the 
costs, subject to recoupment at State option from the father if 
paternity is established. Upon the request and advance payment 
by the contestant, States must seek additional testing if the 
original test result is contested.
    Voluntary Paternity Acknowledgement. (1) Simple Civil 
Process. States must have procedures that create a simple civil 
process for voluntary acknowledging paternity under which 
benefits, rights, and responsibilities of acknowledgement are 
explained to unwed parents before the acknowledgement is 
signed.
    (2) Hospital Program. States must have procedures, 
including good cause exemptions established by the State, that 
establish a paternity acknowledgement program through 
hospitals.
    (3) Paternity Services. States must have procedures that 
require the agency responsible for maintaining birth records to 
offer voluntary paternity establishment services. The Secretary 
must issue regulations governing voluntary paternity 
establishment services, including regulations on State agencies 
that may offer voluntary paternity acknowledgement services and 
the conditions such agencies must meet.
    (4) Affidavit. States must develop their own voluntary 
acknowledgment form but the form must contain all the basic 
elements of a form developed by the Secretary. States must give 
full faith and credit to the forms of other States.
    Status of Signed Paternity Acknowledgement. (1) Inclusion 
in Birth Records. States must include the name of the father in 
the record of births to unmarried parents only if the father 
and mother have signed a voluntary acknowledgement of paternity 
or a court or administrative agency has issued an adjudication 
of paternity.
    (2) Legal Finding. States must have procedures under which 
a signed acknowledgement of paternity is considered a legal 
finding of paternity unless rescinded within 60 days or the 
date of a judicial or administrative proceeding to establish a 
support order.
    (3) Contest. States must have procedures under which a 
paternity acknowledgment can be challenged in court only on the 
basis of fraud, duress, or material mistake of fact, with the 
burden of proof on the challenger.
    Bar on Acknowledgement Ratification Proceedings. No 
judicial or administrative proceedings are required or 
permitted to ratify a paternity acknowledgement which is not 
challenged by the parents.
    Admissibility of Genetic Testing Results. States must have 
procedures for admitting into evidence accredited genetic 
tests, unless any objection is made in writing within a 
specified number of days, and if no objection is made, 
clarifying that test results are admissible without the need 
for foundation or other testimony.
    Presumption of Paternity in Certain Cases. States must have 
laws that create a rebuttable or, at State option, conclusive 
presumption of paternity when results from genetic testing 
indicate a threshold probability that the alleged father is the 
father of the child.
    Default Orders. A default order must be entered in a 
paternity case upon a showing of service of process on the 
defendant and any additional showing required by the State law.
    No Right to Jury Trial. State laws must state that parties 
in a contested paternity action are not entitled to a jury 
trial.
    In addition to all the above provisions that strengthen 
similar provisions of current law, the committee report 
contains a number of new provisions that have no direct 
parallel in current law. These include:
    Temporary Support Based on Probable Paternity. Upon motion 
of a party, State law must require issuance of a temporary 
support order pending an administrative or judicial 
determination of parentage if paternity is indicated by genetic 
testing or other clear and convincing evidence.
    Proof of Certain Support and Paternity Establishment Costs. 
Bills for pregnancy, childbirth, and genetic testing must be 
admissible in judicial proceedings without foundation testimony 
and must constitute prima facie evidence of the cost incurred 
for such services.
    Standing of Putative Fathers. Putative fathers must have a 
reasonable opportunity to initiate a paternity action.
    Filing of Acknowledgement and Adjudications in State 
Registry of Birth Records. Both voluntary acknowledgements and 
adjudications of paternity must be filed with the State 
registry of birth records for data matches with the central 
Case Registry of Child Support Orders.
    National Paternity Acknowledgement Affidavit. The Secretary 
is required to develop, in consultation with the States, the 
minimum requirements of an affidavit which includes the Social 
Security number of each parent to be used by States for 
voluntary acknowledgement of paternity.

Reason for change

    Like interstate enforcement, paternity establishment is one 
of the major weaknesses of the current child support system. A 
significant fraction, perhaps as many as half, of the children 
on the Aid to Families with Dependent Children program do not 
have paternity established. Obviously, until paternity is 
established, child support enforcement cannot even begin. Thus, 
the committee proposal includes a host of provisions that will 
result in improved paternity establishment performance by 
States. These provisions, most of which have already proven 
effective in one or more States, include procedures that make 
maximum use of blood tests, encourage early and voluntary 
establishment of paternity, and avoid formal and time-consuming 
court procedures.

Effective date

    October 1, 1996.

           18. Outreach for Voluntary Paternity Establishment

Present law

    States are required to regularly and frequently publicize, 
through public service announcements, the availability of child 
support enforcement services.

Explanation of provision

    States must publicize the availability and encourage the 
use of procedures for voluntary establishment of paternity and 
child support.

Reason for change

    Several recent studies of innovative State programs 
indicate that around the time of an out-of-wedlock birth, many 
fathers are present in the hospital or their location is well-
known to mothers. If the putative father is approached at this 
time and asked to voluntarily acknowledge paternity, he will 
often do so. Based on these studies of current State programs, 
the committee feels it would be well worth the effort for 
States to make the availability of voluntary paternity 
acknowledgment procedures as widely known as possible, 
especially since voluntary establishment of paternity is less 
time consuming, less expensive, and more effective in the long 
run than court-established paternity.

Effective date

    October 1, 1996.

 19. cooperation by applicants for and recipients of temporary family 
                               assistance

Present law

    AFDC applicants and recipients are required to cooperate 
with the State in establishing the paternity of a child and in 
obtaining child support payments unless the applicant or 
recipient is found to have good cause for refusing to 
cooperate. Under the ``good cause'' regulations, the child 
support agency may determine that it is against the best 
interests of the child to seek to establish paternity in cases 
involving incest, rape, or pending procedures for adoption. 
Moreover, the agency may determine that it is against the best 
interest of the child to require the mother to cooperate if it 
is anticipated that such cooperation will result in the 
physical or emotional harm of the child, parent, or caretaker 
relative.

Explanation of provision

    Individuals or their children who apply for or receive 
public assistance under the Temporary Assistance for Needy 
Families (TANF) program or the Medicaid program must cooperate, 
as determined by the State child support agency, with State 
efforts to establish paternity and establish, modify, or 
enforce a support order. State procedures must require both 
that applicants and recipients provide specific identifying 
information about the other parent and that applicants appear 
at interviews, hearings, and legal proceedings, unless the 
applicant or recipient is found to have good cause for refusing 
to cooperate. States must have ``good cause'' exceptions and 
they must take into account the best interests of the child. 
The definition of good cause, and the determination of good 
cause in specific cases, can be accomplished by the State 
agency administering TANF, child support enforcement, or 
Medicaid. States also must require the custodial parent and 
child to submit to genetic testing. States may not require the 
noncustodial parent to sign an acknowledgement of paternity or 
relinquish the right to genetic testing as a condition of 
cooperation. The State child support agency must notify the 
agencies administering the TANF Block Grant and Medicaid 
programs if noncooperation is determined.

Reason for change

    Given the central importance of paternity establishment, 
the committee wanted to clarify that unless mothers cooperate 
with child support officials, they and their children will be 
refused cash benefits under the Temporary Family Assistance 
program. The committee has received testimony that the agency 
administering the Aid to Families with Dependent Children 
program may be somewhat lax in ensuring that mothers cooperate 
with child support officials. For this reason, responsibility 
for determining whether the mother is cooperating fully is 
moved from the welfare agency to the child support agency. By 
contrast, States are given great flexibility in deciding which 
agency should establish the definition and application of good 
cause. The committee wants to clarify its intent to require 
States to have exceptionally clear and strong measures that, if 
necessary, force applicants for public aid to do all in their 
power to help establish paternity.

Effective date

    October 1, 1996.

             Chapter 5--Program Administration and Funding

             20. performance-based incentives and penalties

Present law

    Incentive Adjustments to Federal Matching Rate. The Federal 
Government reimburses approved administrative expenditures of 
States at a rate of 66 percent. In addition, the Federal 
Government pays States an incentive amount ranging from 6 
percent to 10 percent of both AFDC and non-AFDC collections.
    Conforming Amendments. No provision.
    Calculation of IV-D Paternity Establishment Percentage. 
States are required to meet Federal standards for the 
establishment of paternity. The major standard relates to the 
percentage obtained by dividing the number of children in the 
State who are born out of wedlock, are receiving AFDC or child 
support enforcement services, and for whom paternity has been 
established by the number of children who are born out of 
wedlock and are receiving AFDC or child support enforcement 
services. To meet Federal requirements, this percentage in a 
State must be at least 75 percent or meet the following 
standards of improvement from the preceding year: (1) if the 
State paternity establishment ratio is between 50 and 75 
percent, the State ratio must increase by 3 or more percentage 
points from the ratio of the preceding year; (2) if the State 
ratio is between 45 and 50, the ratio must increase at least 4 
percentage points; (3) if the State ratio is between 40 and 45 
percent, it must increase at least 5 percentage points; and (4) 
if the State ratio is below 40 percent, it must increase at 
least 6 percentage points. If an audit finds that the State's 
child support enforcement program has not substantially 
complied with the requirements of its State plan, the State is 
subject to a penalty. In accord with this penalty, the 
Secretary must reduce a State's AFDC benefit payment by not 
less than 1 percent nor more than 2 percent for the first 
failure to comply; by not less than 2 percent nor more than 3 
percent for the second consecutive failure to comply; and by 
not less than 3 percent nor more than 5 percent for third or 
subsequent consecutive failure to comply.

Explanation of provision

    Incentive Adjustments to Federal Matching Rate. The 
Secretary, in consultation with State child support directors, 
must develop a proposal for a new incentive system that 
provides additional payments to States (i.e., above the base 
matching rate of 66 percent) based on performance and report 
details of the new system to the Committees on Ways and Means 
and Finance by November 1, 1996. The Secretary's new system 
must be revenue neutral. The current incentive system remains 
effective for fiscal years beginning before 1999.
    Conforming Amendments. Conforming amendments are made in 
Sections 458 of the Social Security Act. The effective date is 
October 1, 1997.
    Calculation of IV-D Paternity Establishment Percentage. 
States have the option of calculating the paternity 
establishment rate by either counting only unwed births in the 
State IV-D caseload or by counting all unwed births in the 
State. The IV-D paternity establishment percentage for a fiscal 
year is equal to: (1) the total number of children in the State 
who were born out-of-wedlock, and who receive services under 
Part A or, at State option, Part D, and for whom paternity is 
acknowledged or established during the fiscal year, divided by 
(2) the total number of children born out-of-wedlock who 
receive services under Part A or E or, at State option, Part D. 
The Statewide paternity establishment percentage is similar 
except that all out-of-wedlock births in the fiscal year in the 
State are in the denominator and all paternities established 
are in the numerator. The requirements for meeting the standard 
are the same as current law except the 75 percent rule is 
increased to 90 percent. States with a paternity establishment 
percentage of between 75 percent and 90 percent must improve 
their performance by at least 2 percentage points per year. The 
noncompliance provisions of the child support program are 
modified so that the Secretary must take overall program 
performance into account.

Reason for change

    Because paternity establishment is the ground upon which 
child support enforcement is constructed, the committee wanted 
to provide States with both a positive incentive to improve 
performance as well as a penalty for bad performance. The 
positive incentive is the 12 percentage point increase in the 
basic Federal matching rate for good performance; the penalty 
is a reduction of State TANF payments of up to 5 percent. The 
committee proposal sets 90 percent as the standard, although 
States are given several years to reach this standard. Once 
States reach this level of paternity performance, millions of 
additional children will enjoy the advantages of having their 
paternity established as well as the improved financial 
security that will follow from increased child support payments 
by nonresident parents.

Effective date

    The new performance based system will become effective on 
October 1, 1998; meanwhile, the current incentive system 
remains in place. The requirement that the Secretary develop a 
proposal for a new incentive system becomes effective upon the 
date of enactment.

                 21. Federal and State Review and Audits

Present law

    States are required to maintain a full record of child 
support collections and disbursements and to maintain an 
adequate reporting system. The Secretary must collect and 
maintain, on a fiscal year basis, up-to-date State-by-State 
statistics on each of the services provided under the child 
support enforcement program. The Secretary is also required to 
evaluate the implementation of State child support enforcement 
programs and conduct audits of these programs as necessary, but 
not less often than once every 3 years (or annually if a State 
has been found to be out of compliance with program rules).

Explanation of provision

    States are required to annually review and report to the 
Secretary, using data from their automatic data processing 
system, both information adequate to determine the State's 
compliance with Federal requirements for expedited procedures 
and timely case processing as well as the information necessary 
to calculate their levels of accomplishment and rates of 
improvement on the performance indicators in the proposal.
    The Secretary is required to determine the amount (if any) 
of incentives or penalties. The Secretary must also review 
State reports on compliance with Federal requirements and 
provide States with recommendations for corrective action. 
Audits must be conducted at least once every 3 years, or more 
often in the case of States that fail to meet Federal 
requirements. The purpose of the audits is to assess the 
completeness, reliability, and security of data reported for 
use in calculating the performance indicators and to assess the 
adequacy of financial management of the State program.

Reason for change

    The current audit system, like the current incentive 
system, is ineffective because both are based on process 
indicators. The flaw in process indicators is that they are 
only indirect measures of performance--they measure the means 
by which good performance should be achieved, but not the 
performance itself. The fundamental change in the committee 
proposal is to base both incentive payments and audit penalties 
on actual performance indicators such as paternity 
establishment ratios, number of child support orders 
established, and actual child support collected. As a result, 
States will be able to maximize their incentive payments and 
avoid penalties only by actually performing well. The overall 
impact should be increases in child support collections and 
payments to families.

Effective date

    These provisions take effect beginning with the calendar 
quarter that begins 12 months after enactment.

                   22. Required Reporting Procedures

Present law

    The Secretary is required to assist States in establishing 
adequate reporting procedures and must maintain records of 
child support enforcement operations and of amounts collected 
and disbursed, including costs incurred in collecting support 
payments.

Explanation of provision

    The Secretary is required to establish procedures and 
uniform definitions for State collection and reporting of 
information necessary to measure State compliance with 
expedited processes.

Reason for change

    The committee wants to ensure that Congress will be able to 
conduct oversight on implementation of the rules on expedited 
process and timely case processing, two central features of a 
successful child support system. In addition, the committee 
wants to promote the reporting of accurate information that can 
be used both for reliable calculation of incentive payments and 
audit penalties and for review by congressional committees and 
others interested in the performance of State child support 
programs.

Effective date

    October 1, 1996.

               23. Automated Data Processing Requirements

Present law

    Federal law (P.L. 104-35) requires that by October 1, 1997, 
States have an operational automated data processing and 
information retrieval system designed to control, account for, 
and monitor all factors in the support enforcement and 
paternity determination process, the collection and 
distribution of support payments, and the costs of all services 
rendered.
    The automated data processing system must be capable of 
providing management information on all IV-D cases from initial 
referral or application through collection and enforcement. The 
automated data processing system must also be capable of 
providing security against unauthorized access to, or use of, 
the data in such system. To establish these automated data 
systems, the Federal Government provided States with a 90 
percent matching rate for the costs of development. This 
enhanced matching money expired on October 1, 1995.

Explanation of provision

    States are required to have a single Statewide automated 
data processing and information retrieval system which has the 
capacity to perform the necessary functions and with the 
required frequency, as described in this section. The State 
data system must be used to perform functions the Secretary 
specifies, including controlling and accounting for the use of 
Federal, State, and local funds and maintaining the data 
necessary to meet Federal reporting requirements in carrying 
out the program. The system must maintain the requisite data 
for Federal reporting, calculate the State's performance for 
purposes of the incentive and penalty provisions, and have in 
place systems controls to ensure the completeness, reliability, 
and accuracy of the data.
    To promote security of information, the State agency must 
have safeguards to protect the integrity, accuracy, and 
completeness of, and access to and use of, data in the 
automated systems including restricting access to passwords, 
monitoring of access to and use of the system, conducting 
automated systems training, and imposing penalties for 
unauthorized use or disclosure of confidential data. The 
Secretary must prescribe final regulations for implementation 
of this section no later than 2 years after the date of the 
enactment of this Act.
    The statutory provisions for State implementation of 
Federal automatic data processing requirements are revised to 
provide that, first, all requirements enacted on or before the 
date of enactment of the Family Support Act of 1988 are to be 
met by October 1, 1997. The requirements enacted on or before 
the date of enactment of this proposal must be met by October 
1, 1999. The October 1, 1999 deadline will be extended by 1 day 
for each day by which the Secretary fails to meet the 2-year 
deadline for regulations. The Federal Government will continue 
the 90 percent matching rate for 1996 and 1997 in the case of 
provisions outlined in advanced planning documents submitted 
before September 30, 1995; the enhanced match is also provided 
retroactively for funds expended since expiration of the 
enhanced rate on October 1, 1995. For fiscal years 1996 through 
2001, the matching rate for the provisions of this section will 
be 80 percent.
    The Secretary must create procedures to cap payments to 
States to meet the new requirements at $400,000,000 over 6 
years (fiscal years 1996-2001) 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 automatic data processing 
requirements.

Reason for change

    States appear to be having difficulty implementing the 
automatic data processing requirements of both the 1988 Family 
Support Act and the 1993 OBRA legislation. Even so, a number of 
States with effective data processing systems have shown that 
remarkable improvements in both total collections and 
efficiency are possible if the procedures established in the 
committee proposal are implemented. Although States have a 
spotty record of implementing the data processing requirements 
of previous legislation, the potential improvements that could 
come with effective data processing are worth the risk of 
imposing the new requirements. As in the past, Congress is 
offering funding at a high Federal matching rate so that States 
will develop high quality systems.
    It is the intent of the committee to conduct hearings in 
the future to determine whether the new automatic data 
processing requirements are being effectively implemented. The 
committee will also pay careful attention to the timeliness of 
regulations published by the Secretary.

Effective date

    October 1, 1996, except where otherwise noted.

    24. Technical Assistance (and Funding of Parent Locator Service)

Present law

    Annual appropriations are made to cover the expenses of the 
Administration for Children and Families, which includes the 
Federal Office of Child Support Enforcement (OCSE). Among 
OCSE's administrative expenses are the costs of providing 
technical assistance to the States.

Explanation of provision

    The Secretary can use 1 percent of the Federal share of 
child support collections on behalf of families in the 
Temporary Assistance for Needy Families program the preceding 
year to provide technical assistance to the States. Technical 
assistance can include training of State and Federal staff, 
research and demonstration programs, special projects of 
regional or national significance, and similar activities. The 
Secretary will receive 2 percent of the Federal share of 
collections on behalf of TANF recipients the preceding year for 
operation of the Federal Parent Locator Service to the extent 
that costs of the Parent Locator Service are not recovered by 
user fees.

Reason for change

    These changes in current law are intended to provide 
funding to continue activities that already occur but are 
expected to expand under the committee proposal.

Effective date

    October 1, 1996.

            25. Report and Data Collection by the Secretary

Present law

    The Secretary is required to submit to Congress, not later 
than 3 months after the end of the fiscal year, a complete 
report on all child support enforcement activities.

Explanation of provision

    In addition to current reporting requirements, the 
Secretary is required to report the following data to Congress 
in her annual report each fiscal year:
          (1) the total amount of child support payments 
        collected;
          (2) the cost to the State and Federal Governments of 
        furnishing child support services;
          (3) the number of cases involving families that 
        became ineligible for aid under part A with respect to 
        whom a child support payment was received;
          (4) the total amount of current support collected and 
        distributed;
          (5) the total amount of past due support collected 
        and distributed; and
          (6) the total amount of support due and unpaid for 
        all fiscal years.
    The Secretary also must report the compliance, by State, 
with IV-D standards for responding to requests for child 
support assistance from other States and standards for 
distributing child support collections.

Reason for change

    This provision streamlines data reporting requirements and 
keeps data reporting by States to a minimum. Each piece of 
information is necessary for effective operation of the child 
support program or to provide the administration, Congress, and 
other interested parties with information about program 
performance.

Effective date

    October 1, 1996.

      Chapter 6--Establishment and Modification of Support Orders

   26. Simplified Process for Review and Adjustment of Child Support 
                                 Orders

Present law

    A child support order legally obligates noncustodial 
parents to provide financial support for their child and 
stipulates the amount of the obligation and how it is to be 
paid. In 1984, P.L. 98-378 required States to establish 
guidelines for establishing child support orders. In 1988, P.L. 
100-485 made the guidelines binding on judges and other 
officials who had authority to establish support orders. P.L. 
100-485 also required States to review and adjust individual 
child support orders once every 3 years under some 
circumstances. States are required to notify both resident and 
nonresident parents of their right to a review.

Explanation of provision

    Every 3 years, States must review and, as appropriate, 
adjust support orders being enforced under the TANF block grant 
and other orders at the request of the parent or at State 
option. No proof of change or circumstances is needed to 
initiate the review. States may adjust child support orders by 
either applying the State guidelines and updating the award 
amount or by applying a cost of living increase to the order. 
In the latter case, both parties must be given 30 days after 
notice of adjustment to contest the results. States may use 
automated methods to identify orders eligible for review, 
conduct the review, identify orders eligible for adjustment, 
and apply the appropriate adjustment to the orders based on the 
threshold established by the State. States must also review 
and, upon a showing of a change in circumstances, adjust orders 
pursuant to the child support guidelines upon request of either 
parent or the State. States are required to give parties one 
notice of their right to request review and adjustment, which 
may be included in the order establishing the support amount. 
If neither parent requests a review, States have the option of 
avoiding the 3-year review requirement.

Reason for change

    This provision streamlines data reporting requirements and 
keeps data reporting by States to a minimum. Each piece of 
information is necessary for effective operation of the child 
support program or to provide the administration, Congress, and 
other interested parties with information about program 
performance.

Effective date

    October 1, 1996.

27. Furnishing Consumer Reports for Certain Purposes Relating to Child 
                                Support

    (This provision is not under jurisdiction of the Committee 
on Ways and Means but is included here for sake of 
completeness.)

Present law

    The Fair Credit Act requires consumer reporting agencies to 
include in any consumer report information on child support 
delinquencies provided by or verified by a child support 
enforcement agency, which antedates the report by 7 years.

Explanation of provision

    This section amends the Fair Credit Reporting Act. In 
response to a request by the head of a State or local child 
support agency (or a State or local government official 
authorized by the head of such an agency), consumer credit 
agencies must release information if the person making the 
request makes all of the following certifications: that the 
consumer report is needed to establish an individual's capacity 
to make child support payments or determine the level of 
payments; that paternity has been established or acknowledged; 
that the consumer has been given at least 10 days notice by 
certified or registered mail that the report is being 
requested; and that the consumer report will be kept 
confidential, will be used solely for child support purposes, 
and will not be used in connection with any other civil, 
administrative, or criminal proceeding or for any other 
purpose. Consumer reporting agencies must also give reports to 
a child support agency for use in setting an initial or 
modified award.

28. Nonliability for Financial Institutions Providing Financial Records

Present law

    No provision.

Explanation of provision

    Financial institutions are not liable to any person for 
information provided to child support agencies. Child support 
agencies can disclose information obtained from depository 
institutions only for child support purposes. There is no 
liability for disclosures that result from good faith but 
erroneous interpretation of this statute. However, individuals 
who knowingly disclose information from financial records can 
have civil actions brought against them in Federal district 
court; the maximum penalty is $1,000 for each disclosure or 
actual damages plus, in the case of willful disclosure 
resulting from gross negligence, punitive damages, plus the 
costs of the action. Definitions of ``financial institution'' 
and ``financial record'' are included in this section.

Reason for change

    Depository institutions are one of the best sources of 
information about the resources of parents who owe child 
support. The intent of this provision is to protect this source 
by requiring that States provide immunity from prosecution for 
depository institutions providing information to State agencies 
in accord with State law. To ensure that this information is 
not misused, States must also have laws that provide civil 
penalties against employees who knowingly disclose financial 
information to unauthorized persons or agencies.

Effective date

    October 1, 1996.

                Chapter 7--Enforcement of Support Orders

         29. Internal Revenue Service Collection of Arrearages

Present law

    If the amount of overdue child support is at least $750, 
the Internal Revenue Service (IRS) can enforce the child 
support obligation through its regular collection process, 
which may include seizure of property, freezing accounts, or 
use of other procedures if child support agencies request 
assistance according to prescribed rules (e.g., certifying that 
the delinquency is at least $750, et cetera.)

Explanation of provision

    The Internal Revenue Code is amended so that no additional 
fees can be assessed for adjustment to previously certified 
amounts for the same obligor.

Reason for change

    This provision is designed to encourage States to use the 
IRS as an additional tool of child support collection by 
ensuring that the cost of this IRS service remains moderate.

Effective date

    October 1, 1997.

        30. Authority to Collect Support From Federal Employees

Present law

    Federal law allows the wages of Federal employees to be 
garnished to enforce legal obligations for child support or 
alimony. Federal law provides that moneys payable by the United 
States to any individual are subject to being garnished in 
order to meet an individual's legal obligation to provide child 
support or make alimony payments. An executive order issued on 
February 27, 1995 establishes the Federal Government as a model 
employer in promoting and facilitating the establishment and 
enforcement of child support. Under the terms of the Executive 
Order, all Federal agencies, including the Uniformed Services, 
are required to cooperate fully in efforts to establish 
paternity and child support and to enforce the collection of 
child and medical support. All Federal agencies are to review 
their wage withholding procedures to ensure that they are in 
full compliance. Beginning no later than July 1, 1995, the 
Director of the Office of Personal Management must publish 
annually in the Federal Register the list of agents (and their 
addresses) designated to receive service of withholding notices 
for Federal employees. Federal law states that neither the 
United States nor any disbursing officer or government entity 
shall be liable with respect to any payment made from moneys 
due or payable from the United States pursuant to the legal 
process. Federal law provides that money that may be garnished 
includes compensation for personal services, whether such 
compensation is denominated as wages, salary, commission, 
bonus, pay, or otherwise, and includes but is not limited to, 
severance pay, sick pay, incentive payments, and periodic 
payments. Includes definitions of ``United States,'' ``child 
support,'' ``alimony,'' ``private person,'' and ``legal 
process.''

Explanation of provision

    Consolidation and Streamlining of Authorities. (1) Federal 
employees are subject to wage withholding and other actions 
taken against them by State child support enforcement agencies.
    (2) Federal agencies are responsible for the same wage 
withholding and other child support actions taken by the State 
as if they were a private employer.
    (3) The head of each Federal agency must designate an agent 
and place the agent's name, title, address, and telephone 
number in the Federal Register annually. The agent must, upon 
receipt of process, send written notice to the individual 
involved as soon as possible, but no later than 15 days, and to 
comply with any notice of wage withholding or respond to other 
process within 30 days. The agent also must respond to any 
order, process, or interrogatory about child support or alimony 
within 30 days after effective service of such requests.
    (4) Current law governing allocation of moneys owed by a 
Federal employee is amended to give priority to child support, 
to require allocation of available funds, up to the amount 
owed, among child support claimants, and to allocate remaining 
funds to other claimants on a first-come, first-served basis.
    (5) A government entity served with notice of process for 
enforcement of child support is not required to change its 
normal pay and disbursement cycle to comply with the legal 
process.
    (6) Similar to current law, the U.S., the government of the 
District of Columbia, and disbursing officers are not liable 
for child support payments made in accord with this section; 
nor is any Federal employee subject to disciplinary action or 
civil or criminal liability for disclosing information while 
carrying out the provisions of this section.
    (7) The President has the authority to promulgate 
regulations to implement this section as it applies to Federal 
employees of the Administrative branch of government; the 
President Pro Tempore of the Senate and Speaker of the House 
can issue regulations governing their employees; and the Chief 
Justice can issue regulations applicable to the Judicial 
branch.
    (8) This section broadens the definition of income to 
include, in addition to wages, salary, commissions, bonus pay, 
allowances, severance pay, sick pay, and incentive pay, funds 
such as insurance benefits, retirement and pension pay 
(including disability pay if the veteran has waived a portion 
of retirement pay to receive disability pay), survivor's 
benefits, compensation for death and black lung disease, 
veterans' benefits, and workers' compensation; but to exclude 
from income funds paid to defray expenses incurred in carrying 
out job duties; amounts owed to the U.S. or used to pay Federal 
employment taxes, fines, or forfeitures ordered by court 
martial; and amounts withheld for tax purposes, for health 
insurance or life insurance premiums, for retirement 
contributions, or for life insurance premiums.
    (9) This section includes definitions of ``United States,'' 
``child support,'' ``alimony,'' ``private person,'' and ``legal 
process.''
    Conforming Amendments. The committee provision makes 
several conforming amendments to Title IV-D of the Social 
Security Act and Title 5 of the United States Code.
    Military Retired and Retainer Pay. The definition of 
``court'' in the Armed Forces title of the U.S. Code (title 10) 
is amended to include an administrative or judicial tribunal of 
a State which is competent to enter child support orders, and 
clarifies the definition of ``court order.'' The Secretary of 
Defense is required to send withheld amounts for child support 
to the appropriate State Disbursement Unit. The provision also 
clarifies that military personnel who have never been married 
to the parent of their child are under jurisdiction of the 
State child support program and the terms of section 459 of the 
Social Security Act.

Reason for change

    The Federal Government employs nearly 3 million people. 
These employees work in offices all over the United States. Yet 
the current procedures for ensuring that these employees 
participate fully in the Nation's child support system are 
weak. The committee proposal completely revamps the Federal 
system of responding to child support requests, especially wage 
withholding. Once these provisions are implemented, the Federal 
child support system should function more smoothly and 
efficiently while recovering additional dollars for child 
support.

Effective date

    This section goes into effect 6 months after the date of 
enactment.

 31. ENFORCEMENT OF CHILD SUPPORT OBLIGATIONS OF MEMBERS OF THE ARMED 
                                 FORCES

    (This provision is not under jurisdiction of the Committee 
on Ways and Means but is included here for sake of 
completeness.)

Present law

    Availability of Locator Information. The Executive Order 
issued February 27, 1995 requires a study which would include 
recommendations on how to improve service of process for 
civilian employees and members of the Uniformed Services 
stationed outside the United States.
    Facilitating Granting of Leave for Attendance at Hearings. 
No provision.
    Payment of Military Retired Pay in Compliance with Child 
Support Orders. Federal law requires allotments from the pay 
and allowances of any member of the uniformed service when the 
member fails to pay child (or child and spousal) support 
payments.

Explanation of provision

    Availability of Locator Information. The Secretary of 
Defense must establish a central personnel locator service that 
contains residential or, in specified instances, duty addresses 
of every member of the Armed Services (including members of the 
Coast Guard, if requested). The locator service must be updated 
within 30 days of the time an individual establishes a new 
address. Information from the locator service must be made 
available upon request to the Federal Parent Locator Service.
    Facilitating Granting of Leave for Attendance at Hearings. 
The Secretary of each military department must issue 
regulations to facilitate granting of leave for members of the 
Armed Services to attend hearings to establish paternity or to 
establish child support orders. The terms ``court'' and ``child 
support'' are defined.
    Payment of Military Retired Pay in Compliance with Child 
Support Orders. Child support orders received by the Secretary 
do not have to have been recently issued. The Secretary of each 
branch of the Armed Forces (including retirees, the Coast 
Guard, the National Guard, and the Reserves) is required to 
make child support payments from military retirement pay 
directly to any State to which a custodial parent has assigned 
support rights as a condition of receiving public assistance. 
Payments to satisfy current support or child support arrears 
must be made from disposable retirement pay. Payroll deductions 
must begin within 30 days or the first pay period after 30 days 
of receiving a wage withholding order.

                  32. Voiding of Fraudulent Transfers

Present law

    No provision.

Explanation of provision

    States must have in effect the Uniform Fraudulent 
Conveyance Act of 1981, the Uniform Fraudulent Transfer Act of 
1984, or an equivalent law providing for voiding transfers of 
income or property that were made to avoid payment of child 
support. States also must have in effect procedures under which 
the State must seek to void a fraudulent transfer or obtain a 
settlement in the best interest of the child support creditor.

Reason for change

    Some noncustodial parents liquidate their property in order 
to avoid paying child support. Under the committee proposal, 
such fraudulent transfer of property for the purpose of 
avoiding child support would become illegal. Even more 
important, such transfers would be voided, thereby increasing 
the amount of income or property that could be attached for 
payment of child support.

Effective date

    October 1, 1996.

     33. Work Requirement for Persons Owing Past-Due Child Support

Present law

    P.L. 100-485 required the Secretary to grant waivers to up 
to five States allowing them to provide JOBS services on a 
voluntary or mandatory basis to noncustodial parents who are 
unemployed and unable to meet their child support obligations. 
(In their report the conferees noted that the demonstrations 
would not grant any new powers to the States to require 
participation by noncustodial parents. The demonstrations were 
to be evaluated.)

Explanation of provision

    States must have procedures under which the State has the 
authority to issue an order or request that a court or 
administrative process issue an order that requires individuals 
owing past-due child support for a child receiving assistance 
under the Temporary Family Assistance program either to pay the 
support due, to have and be in compliance with a plan to pay 
child support, or to participate in work activities as deemed 
appropriate by the court or the child support agency. ``Past-
due support'' is defined and a conforming amendment is made to 
section 466 of the Social Security Act.

Reason for change

    States must require custodial parents on welfare to fulfill 
work requirements as a condition of receiving public benefits. 
If the custodial parent refuses to participate, her benefits 
can be reduced or even terminated. The obligation of 
noncustodial parents to work for public benefits that support 
their children is equal to the obligation of custodial parents. 
However, because noncustodial parents generally do not receive 
the welfare payment, it is difficult for States to effectively 
require them to participate in work programs. The committee 
intends to at least partially rectify this imbalance in the 
expectations placed on custodial and noncustodial parents by 
encouraging judges to make noncustodial parents either pay the 
child support they owe or participate in work programs.

Effective date

    October 1, 1996.

                    34. Definition of Support Order

Present law

    No provision.

Explanation of provision

    A support order is defined as a judgement, decree, or order 
(whether temporary, final, or subject to modification) issued 
by a court or an administrative agency for the support 
(monetary support, health care, arrearages, or reimbursement) 
of a child (including a child who has reached the age of 
majority under State law) or of a child and the parent with 
whom the child lives, and which may include costs and fees, 
interest and penalties, income withholding, attorney's fees, 
and other relief.

Reason for change

    The term ``support order'' is used throughout Title IV-D of 
the Social Security Act but is never defined. The committee 
definition includes spousal support if the original child 
support order includes spousal support.

Effective date

    October 1, 1996.

               35. Reporting Arrearages to Credit Bureaus

Present law

    Federal law requires States to implement procedures which 
require them to periodically report to consumer reporting 
agencies the name of debtor parents owing at least 2 months of 
overdue child support and the amount of child support overdue. 
However, if the amount overdue is less than $1,000, information 
regarding it shall be made available only at the option of the 
State. Moreover, information may only be made available after 
the noncustodial parent has been notified of the proposed 
action and has been given reasonable opportunity to contest the 
accuracy of the claim against him. States are permitted to 
charge consumer reporting agencies that request child support 
arrearage information a fee that does not exceed actual costs.

Explanation of provision

    States are required to periodically report to consumer 
credit reporting agencies the name of any noncustodial parent 
who is delinquent in the payment of support and the amount of 
overdue support owed by the parent. Before such a report can be 
sent, the obligor must have been afforded all due process 
rights, including notice and reasonable opportunity to contest 
the claim of child support delinquency.

Reason for change

    A good credit history is an important part of modern 
economic life. Most people will go to great lengths to avoid 
damaging their credit history. Thus, child support agencies 
should acquire a reputation for notifying credit reporting 
agencies of delinquent child support. Such reports must become 
systematic and immediate if they are to gain widespread 
credibility. An additional reason for this provision, along 
with several others that will be described below, is to develop 
enforcement tools that can be used against self-employed 
individuals. Wage withholding is perhaps the single most 
effective tool in collecting child support. Unfortunately, this 
tool is usually not available in the case of self-employed 
individuals. However, the self-employed need to maintain a good 
credit rating, so the threat of reporting to credit bureaus can 
be expected to have a positive impact.

Effective date

    October 1, 1996.

                               36. Liens

Present law

    Federal law requires States to implement procedures under 
which liens are imposed against real and personal property for 
amounts of overdue support owed by a noncustodial parent who 
resides or owns property in the State.

Explanation of provision

    States must have procedures under which liens arise by 
operation of law against property for the amount of overdue 
support. States must grant full faith and credit to liens of 
other States if the originating State agency or party has 
complied with procedural rules relating to the recording or 
serving of liens, except such rules cannot require judicial 
notice or hearing prior to enforcement of the lien.

Reason for change

    Many noncustodial parents, including those who claim to 
have little cash, own property that can be used to make child 
support payments. Equally important, the knowledge that 
property will be seized and, if necessary, liquidated to obtain 
payment on past-due child support is often enough to force 
noncustodial parents to locate the cash necessary to make 
payment on arrearages. In order to be fully effective, seizure 
of property must be done quickly and efficiently. Thus, the 
committee provision would require States to have laws that 
enable them to place liens on property in anticipation of new 
arrearages. Then, when arrearages occur, child support agencies 
can immediately seize the property without the need to engage 
in court proceedings. These laws must also require States to 
honor the liens of other States if all procedural rules of the 
State in which the lien is registered. Liens are also an 
effective collection tool in the case of self-employed 
individuals.

Effective date

    October 1, 1996.

            37. State Law Authorizing Suspension of Licenses

Present law

    No provision.

Explanation of provision

    States must have the authority to withhold, suspend, or 
restrict the use of drivers' licenses, professional and 
occupational licenses, and recreational licenses of individuals 
owing past-due support or failing, after receiving appropriate 
notice, to comply with subpoenas or warrants relating to 
paternity or child support proceedings.

Reason for change

    Drivers' licenses, professional and occupational licenses, 
and recreational licenses are all essential features of life in 
America. Without them, individuals have serious restrictions on 
their ability to pursue a livelihood, to get from one place to 
another, and to engage in recreational activity. Placing 
licenses to these vital activities in jeopardy is an 
exceptionally effective way to ensure that noncustodial parents 
pay child support in a timely fashion. License suspension is 
often an effective tool against noncustodial parents who are 
self employed. Not surprisingly, the Committee on Ways and 
Means has received testimony, including documentary evidence, 
that States already using license suspension have enjoyed 
substantial increases in child support collections. The goal of 
the committee provision is to spread these benefits to the 
entire Nation.

Effective date

    October 1, 1996.

        38. Denial of Passports for Nonpayment of Child Support

    (This section is not under jurisdiction of the Committee on 
Ways and Means but is included here for sake of completeness.)

Present law

    No provision.

Explanation of provision

    If an individual owes arrearages in excess of $5,000 of 
child support, the Secretary of HHS must request that the State 
Department deny, revoke, restrict, or limit the individual's 
passport. State child support agencies must have procedures for 
certifying to the Secretary arrearages in excess of $5,000 and 
for notifying individuals who are in arrears and providing them 
with an opportunity to contest. These provisions become 
effective on October 1, 1997.

              39. International Child Support Enforcement

Present law

    No provision.

Explanation of provision

    (1) The Secretary of State, with concurrence of the 
Secretary of HHS, is authorized to declare reciprocity with 
foreign countries having requisite procedures for establishing 
and enforcing support orders. The Secretary may revoke 
reciprocity if she determines that the enforcement procedures 
do not continue to meet the requisite criteria.
    (2) The requirements for reciprocity include procedures in 
the foreign country for U.S. residents--available at no cost--
to establish parentage, to establish and enforce support orders 
for children and custodial parents, and to distribute payments.
    (3) An agency of the foreign country must be designated a 
central authority responsible for facilitating support 
enforcement and ensuring compliance with standards by both U.S. 
residents and residents of the foreign country.
    (4) The Secretary in consultation with the States, may 
establish additional standards that she judges necessary to 
promote effective international support enforcement.
    (5) The Secretary of HHS is required to facilitate 
enforcement services in international cases involving residents 
of the U.S. and of foreign reciprocating countries, including 
developing uniform forms and procedures, providing information 
from the FPLS on the State of residence of the obligor, and 
providing such other oversight, assistance, or coordination as 
she finds necessary and appropriate.
    (6) Where there is no Federal reciprocity agreement, States 
are permitted to enter into reciprocal agreements with foreign 
countries.
    (7) The State plan must provide that request for services 
in international cases be treated the same as interstate cases, 
except that no application will be required and no costs will 
be assessed against the foreign country or the obligee (costs 
may be assessed at State option against the obligor).

Reason for change

    The ever increasing frequency of international travel has 
led to an increase in international support cases. To date, 
efforts to pursue support across national boundaries has proven 
difficult. Thus, in consultation with the State Department and 
with State child support leaders, the committee has developed a 
provision that will allow and encourage the Secretary of State 
to pursue reciprocal support agreements with other nations. In 
this way, the U.S. and selected foreign nations may be able to 
help each other deal with the problem of parents and former 
spouses crossing boundaries to avoid support payments.

Effective date

    October 1, 1996.

                 40. Financial Institution Data Matches

Present law

    No provision.

Explanation of provision

    States are required to implement procedures under which the 
State child support agency must enter into agreements with 
financial institutions doing business within the State to 
develop and operate a data match system, using automated data 
exchanges to the maximum extent feasible, in which such 
financial institutions are required to provide for each 
calendar quarter the name, address, Social Security number, and 
other identifying information for each noncustodial parent 
identified by the State who has an account at the institution 
and owes past-due child support. In response to a notice of 
lien or levy, the financial institution must encumber or 
surrender assets held by the institution on behalf of the 
noncustodial parent who is subject to the child support lien. 
The State agency may pay a fee to the financial institution. 
The financial institution is not liable for activities taken to 
implement the provisions of this section. Definitions of the 
terms ``financial institution'' and ``account'' are included.

Reason for change

    Collecting child support payments, especially from 
reluctant noncustodial parents, is one of the major problems in 
child support enforcement. Thus, several provisions of the 
committee provision are designed to provide States with 
additional collection tools. One of the most important is 
requiring States to have access to the financial assets of 
noncustodial parents who fall behind in paying child support. 
This provision will enable States to discover on a routine 
basis whether obligors have resources in financial institutions 
and then provide them with the means to gain access to such 
resources. Several States have been implementing these 
provisions with great success. In testimony before our 
committee this year, a witness from one State informed us that 
after the State legislature enacted this provision, there was 
an immediate boost in collections directly attributable to the 
State's ability to gain access to resources held in financial 
institutions.

                             Effective Date

    October 1, 1996.

41. Enforcement of Orders Against Paternal or Maternal Grandparents in 
                         Cases of Minor Parents

Present law

    No provision. However, Wisconsin and Hawaii have State laws 
that make grandparents financially responsible for their minor 
children's dependents.

Explanation of provision

    With respect to a child of minor parents receiving support 
from the Temporary Assistance for Needy Families Block Grant, 
States have the option to enforce a child support order against 
the parents of the minor noncustodial parent.

Reason for change

    States have an obligation to taxpayers to make certain that 
every reasonable step is taken to either recover from parents 
the welfare money spent on their children or avoid payments in 
the first place. Parents, of course, are responsible for the 
behavior of their minor children. If minors cause a nonmarital 
pregnancy, their parents should be help accountable. This 
provision ensures that they will be.

Effective date

    October 1, 1996.

42. Nondischargeability in Bankruptcy of Certain Debts for the Support 
                               of a Child

    (This provision is not under jurisdiction of the Committee 
on Ways and Means but is included here for sake of 
completeness.)

Present Law

    Although child support payments may not be discharged in a 
filing of bankruptcy (i.e., the debtor parent cannot escape her 
child support obligation by filing a bankruptcy petition), a 
bankruptcy filing may cause long delays in securing child 
support payments. Pursuant to P.L. 103-394, a filing of 
bankruptcy will not stay a paternity, child support, or alimony 
proceeding. In addition, child support and alimony payments 
will be priority claims and custodial parents will be able to 
appear in bankruptcy court to protect their interests without 
paying a fee or meeting any local rules for attorney 
appearances.

Explanation of provision

    Title 11 of the U.S. Code and Title IV-D of the Social 
Security Act are amended to ensure that a debt owed to the 
State ``that is in the nature of support and that is 
enforceable under this part'' cannot be discharged in 
bankruptcy proceedings. This amendment applies only to cases 
initiated under Title 11 after enactment of this Act.

                       Chapter 8--Medical Support

43. Correction to ERISA Definition of Medical Child Support Order (This 
provision is not under jurisdiction of the Committee on Ways and Means 
            but is included here for sake of completeness.)

Present law

    P.L. 103-66 requires States to adopt laws that require 
health insurers and employers to enforce orders for medical and 
child support and that forbid health insurers from denying 
coverage to children who are not living with the covered 
individual or who were born outside of marriage. Under P.L. 
103-66, group health plans are required to honor ``qualified 
medical child support orders.''

Explanation of provision

    This provision expands the definition of medical child 
support order in ERISA to clarify that any judgement, decree, 
or order that is issued by a court of competent jurisdiction or 
by an administrative process has the force and effect of law.

           44. Enforcement of Orders for Health Care Coverage

Present law

    Federal law requires the Secretary to require IV-D agencies 
to petition for the inclusion of medical support as part of 
child support whenever health care coverage is available to the 
noncustodial parent at reasonable cost.

Explanation of provision

    All orders enforced under this part must include a 
provision for health care coverage. If the noncustodial parent 
changes jobs and the new employer provides health coverage, the 
State must send notice of coverage, which shall operate to 
enroll the child in the health plan, to the new employer.

Reason for change

    Health coverage is a vital aspect of child support 
enforcement. This is especially the case since the alternative 
is often taxpayer-provided Medicaid coverage, which is 
expensive. In recent years, States have gained experience in 
learning new ways to help promote health coverage by 
noncustodial parents. One result has been laws requiring that 
insurance companies cover a worker's children, even if the 
worker does not live with his children. States have now 
discovered that even when covered by the noncustodial parent's 
employer-based health insurance, children can experience gaps 
in coverage if their parent moves to a different job. The 
committee provision therefore requires States to immediately 
notify new employers of the coverage without any judicial or 
administrative proceedings.

Effective date

    October 1, 1996.

Chapter 9--Enhancing Responsibility and Opportunity for Non-Residential 
                                Parents

        45. Grants to States for Access and Visitation Programs

Present law

    In 1988, Congress authorized the Secretary to fund for 
fiscal year 1990 and fiscal year 1991 demonstration projects by 
States to help divorcing or never-married parents cooperate 
with each other, especially in arranging for visits between the 
child and the nonresident parent.

Explanation of provision

    This proposal authorizes grants to States for access and 
visitation programs including mediation, counseling, education, 
development of parenting plans, and visitation enforcement. 
Visitation enforcement can include monitoring, supervision, 
neutral drop-off and pick-up, and development of guidelines for 
visitation and alternative custody agreements. An annual 
entitlement of $10 million is appropriated for these grants.
    The amount of the grant to a State is equal to either 90 
percent of the State expenditures during the year for access 
and visitation programs or the allotment for the State for the 
fiscal year. The allotment to the State bears the same ratio to 
the amount appropriated for the fiscal year as the number of 
children in the State living with one biological parent divided 
by the national number of children living with one biological 
parent. The Administration for Children and Families must 
adjust allotments to ensure that no State is allotted less than 
$50,000 for fiscal years 1997 or 1998 or less than $100,000 for 
any year after 1998. Projects are required to supplement rather 
than supplant State funds. States may use the money to create 
their own programs or to fund grant programs with courts, local 
public agencies, or nonprofit organizations. The programs do 
not need to be Statewide. States must monitor, evaluate, and 
report on their programs in accord with regulations issued by 
the Secretary.

Reason for change

    For more than two decades, the Federal Government has 
played a leading role in requiring States to establish and 
conduct strong child support enforcement programs. The 
fundamental goal of these programs, of course, is to increase 
the financial security of children who live with one parent. 
This goal enjoys nearly universal support among members of 
Congress and among the American public. However, in addition to 
using government power to enforcement child support, many 
members of Congress believe there is an important role for 
government in assisting the children of divorced or never-
married parents to maintain contact with their noncustodial 
parent. Thus, in 1988 Congress authorized the first 
demonstration programs to promote visitation between children 
and nonresident parents. The committee provision on access and 
visitation is an extension and expansion of this original 
provision. Entitlement funding was provided to be certain that 
the money would be available for these important grants.

Effective date

    October 1, 1996.

                    Chapter 10--Effect of Enactment

                          46. Effective Dates

Present law

    No provision.

Explanation of provision

    Except as noted in the text of the committee proposal for 
specific provisions, the general effective date for provisions 
in the proposal is October 1, 1996. However, given that many of 
the changes required by this proposal must be approved by State 
Legislatures, the proposal contains a grace period tied to the 
meeting schedule of State Legislatures. In any given State, the 
proposal becomes effective either on October 1, 1996 or on the 
first day of the first calendar quarter after the close of the 
first regular session of the State Legislature that begins 
after the date of enactment of the proposal. In the case of 
States that require a constitutional amendment to comply with 
the requirements of the proposal, the grace period is extended 
either for 1 year after the effective date of the necessary 
State constitutional amendment or 5 years after the date of 
enactment of the proposal. This section contains several 
conforming amendments to title IV-D of the Social Security Act. 
This section also replaces the term ``absent parent'' with 
``noncustodial parent'' each place it occurs in title IV-D.

Reason for change

    If Congress requires States to change their laws, it is 
standard practice for Congress to accommodate effective dates 
to the meeting schedule of State legislative bodies. The 
committee provision is consistent with this practice.

Effective date

    Upon enactment.

               SUBTITLE D: RESTRICTING WELFARE TO ALIENS

  1. STATEMENTS OF NATIONAL POLICY CONCERNING WELFARE AND IMMIGRATION

    Present law. No provision.

    Explanation of provision. The Congress makes several 
statements concerning national policy with respect to welfare 
and immigration. These include the affirmation that it 
continues to be the immigration policy of the U.S. that 
noncitizens within the nation's borders not depend on public 
resources, that noncitizens nonetheless have been applying for 
and receiving public benefits at increasing rates, and that it 
is a compelling government interest to enact new eligibility 
and sponsorship rules to assure that noncitizens become self 
reliant and to remove any incentive for illegal immigration.

    Reason for change. It is the intent of the Committee to 
make clear that the reduction of welfare for aliens supports 
our national traditions and values regarding work, opportunity 
and self reliance for those who immigrate to the U.S.

    Effective date. Date of enactment.

               Chapter 1--Eligibility for Federal Benefit

 2. ALIENS WHO ARE NOT QUALIFIED ALIENS INELIGIBLE FOR FEDERAL PUBLIC 
                                BENEFITS

    Present law. Current law limits alien eligibility for most 
major Federal assistance programs, including restrictions on, 
among other programs, Supplemental Security Income, Aid to 
Families with Dependent Children, housing assistance, and Food 
Stamps programs. Current law is silent on alienage under, among 
other programs, school lunch and nutrition, the Special 
Supplemental Food Program for Women, Infants, and Children 
(WIC), Head Start, migrant health centers, and the earned 
income credit.
    Under the programs with restrictions, benefits are 
generally allowed for permanent resident aliens (also referred 
to as immigrants and green card holders), refugees, asylees, 
and parolees, but benefits (other than emergency Medicaid) are 
denied to nonimmigrants (or aliens lawfully admitted 
temporarily as, for example, tourists, students, or temporary 
workers) and illegal aliens. Benefits are permitted under AFDC, 
SSI, unemployment compensation, and nonemergency Medicaid to 
other aliens permanently residing in the U.S. under color of 
law (PRUCOL).

    Explanation of provision. Noncitizens who are ``not 
qualified aliens'' (generally, illegal immigrants and 
nonimmigrants such as students) are ineligible for all Federal 
public benefits, with limited exceptions for emergency medical 
services, emergency disaster relief, immunizations and testing 
and treatment of communicable diseases, community programs 
necessary for the protection of life or safety, certain housing 
benefits (only for current recipients), licenses and benefits 
directly related to work for which a nonimmigrant has been 
authorized to enter the U.S, and certain Social Security 
retirement benefits protected by treaty or statute.
    Federal public benefits include: any grant, contract, loan, 
professional license or commercial license, and any retirement, 
welfare, health, disability, food assistance, unemployment or 
similar benefit provided by an agency or appropriated funds of 
the United States.

    Reason for change. It is the intent of the Committee that 
individuals who are illegally present in the U.S. or here for a 
temporary purpose such as to attend school should not receive 
public welfare benefits. Accordingly, the Committee proposal 
restricts the availability of Federal public welfare benefits 
for such ``non-qualified aliens'' with only very limited 
exceptions such as for emergency medical services, 
immunizations, and non-cash emergency disaster relief.

    Effective date. October 1, 1996.

           3. LIMITED ELIGIBILITY OF CERTAIN QUALIFIED ALIENS

    Present law. With the exception of certain buy-in rights 
under Medicare, immigrants (or aliens) lawfully admitted for 
permanent residence are eligible for major Federal benefits, 
but the ability of some immigrants to meet the needs tests for 
SSI, AFDC, and food stamps may be affected by the sponsor-to-
alien deeming provisions discussed below. Refugees, asylees, 
and parolees also generally are eligible. Benefits are 
permitted under AFDC, SSI, unemployment compensation, and 
nonemergency Medicaid to other aliens permanently residing in 
the U.S. under color of law (PRUCOL).

    Explanation of provision. Legal noncitizens who are 
``qualified aliens'' (i.e., permanent resident aliens, 
refugees, asylees, aliens paroled into the U.S. for a period of 
at least 1 year, and aliens whose deportation has been 
withheld) are ineligible for SSI and food stamp benefits until 
they attain citizenship, with exceptions noted below. States 
are given the option of similarly restricting Federal cash 
welfare, Medicaid and Title XX benefits for qualified aliens, 
with the exception of those who are receiving benefits on the 
date of enactment as described below.
    Refugees, asylees, and aliens whose deportation has been 
withheld are excepted for 5 years after being granted their 
respective statuses. Also excepted are legal permanent 
residents who have worked (in combination with their spouse and 
parents) for at least 10 years, and noncitizens who are 
veterans or on active duty or their spouse or unmarried child.
    To allow individuals time to adjust to the revised policy, 
otherwise restricted aliens who are receiving SSI, food stamps, 
cash welfare, Medicaid or Title XX benefits on the date of 
enactment would remain eligible for at most 1 year after 
enactment. However, if a review determines the noncitizen would 
be ineligible if enrolling under the revised standards for SSI 
and food stamps (for example, because the noncitizen failed to 
qualify under the refugee or work exemptions) such benefits 
would cease immediately. States have the option of ending cash 
welfare, Medicaid, and social services benefits for current 
recipients after January 1, 1997.

    Reason for change. Since Congress first passed legislation 
on immigration in the 1880's, it has been a fundamental tenet 
of American immigration policy that aliens should not receive 
public welfare benefits. Yet today there are well over 2.8 
million noncitizens receiving Aid to Families with Dependent 
Children, Supplemental Security Income, Medicaid, and Food 
Stamps. Studies indicate that total Federal spending on welfare 
for noncitizens exceeds $20 billion per year.
    The Committee proposal is based on the principle that 
immigration is essentially a reciprocal compact between the 
nation and each immigrant who requests permission to enter the 
country: Aliens are allowed to enter the U.S. and join our 
economy; in return, the nation asks that immigrants obey our 
laws, pay taxes if they earn sufficient income, and avoid 
welfare until they become citizens. The Committee proposal is 
designed to uphold this bargain. In addition, the proposal 
reduces Federal spending by billions of dollars by withholding 
welfare payments to aliens.

    Effective date. The restrictions in this section generally 
apply beginning on the date of enactment. For noncitizens who 
are receiving SSI and food stamp benefits on the date of 
enactment, eligibility would continue for 1 year; however, if a 
review or recertification during the year after enactment finds 
that the noncitizen would not meet the revised eligibility 
standards (such as by qualifying for exceptions for refugees or 
for having worked ten or more years), eligibility would end 
upon the review or recertification. Noncitizens receiving cash 
welfare, Medicaid, and social services benefits (which States 
would have the option to restrict) would remain eligible until 
at least January 1, 1997.

4. FIVE-YEAR LIMITED ELIGIBILITY OF QUALIFIED ALIENS FOR FEDERAL MEANS-
                         TESTED PUBLIC BENEFIT

    Present law. See above.

    Explanation of provision. The proposal restricts most 
Federal means-tested benefits (including SSI, food stamps, cash 
welfare, Medicaid, and title XX social services benefits) for 
permanent resident aliens who arrive after the date of 
enactment for their first 5 years in the U.S. Programs that are 
not restricted to legal noncitizens arriving in the future 
include emergency medical services, non-cash emergency disaster 
relief, school lunch and child nutrition benefits, 
immunizations and testing and treatment of communicable 
diseases, foster care and adoption payments, community programs 
for the protection of life or safety, certain elementary and 
secondary education programs, and higher education grants and 
loans.
    Exceptions are made for refugees, asylees, aliens whose 
deportation is being withheld, and noncitizens who are 
veterans, on active duty, or the spouse or unmarried child of 
such an individual.

    Reason for change. See above. In addition to the 
restrictions on the receipt of SSI and food stamp benefits 
(and, at State option, cash welfare, Medicaid and social 
services) for all noncitizens, this provision provides a 
broader restriction on the availability of Federal welfare 
benefits for most noncitizens who arrive in the U.S. after the 
date of enactment (this restriction would apply during the 
noncitizen's first 5 years in the U.S.). The purpose is to send 
a clear signal that immigrants are expected to uphold pledges 
that have been required under U.S. immigration law for 
generations that they will not become dependent on public 
welfare benefits prior to obtaining citizenship.

    Effective date. The above changes in eligibility apply to 
most noncitizens arriving in the U.S. after the date of 
enactment during their first 5 years in the U.S.

               5. NOTIFICATION AND INFORMATION REPORTING

(1) Notification

    Present law. Under regulation, individual advance written 
notice must be given of an intent to suspend, reduce, or 
terminate SSI benefits.

    Explanation of provision. Each Federal agency that 
administers an affected program shall post information and 
provide general notification to the public and to program 
recipients of changes regarding eligibility.

    Reason for change. Agencies now providing welfare benefits 
to noncitizens should take reasonable steps to notify aliens of 
impending program changes in order to help aliens make 
arrangements for replacing welfare income with earned income or 
assistance from relatives, friends, sponsoring organizations, 
or private charities.

    Effective date. October 1, 1996.

(2) Information reporting

    Present law. AFDC and SSI restrict the use or disclosure of 
information concerning applicants and recipients to purposes 
connected to the administration of needs-based Federal 
programs.

    Explanation of provision. Agencies that administer SSI, 
housing assistance programs under the United States Housing Act 
of 1937, or block grants for temporary assistance for needy 
families (the successor program to AFDC) are required to 
furnish information about aliens they know to be unlawfully in 
the United States to the Immigration and Naturalization Service 
(INS) at least four times annually and upon INS request.

    Reason for change. As public benefits are a magnet for 
illegal aliens to come to and stay in the U.S., welfare 
agencies should assist INS in its mandate to identify and 
remove illegal aliens from the country.

    Effective date. October 1, 1996.

  Chapter 2--Eligibility for State and Local Public Benefits Programs

 6. ALIENS WHO ARE NOT QUALIFIED ALIENS OR NONIMMIGRANTS NOT ELIGIBLE 
                  FOR STATE AND LOCAL PUBLIC BENEFITS

    (This provision is not under jurisdiction of the Committee 
on Ways and Means but is included here for sake of 
completeness.)

    Present law. Under Plyler v. Doe (457 U.S. 202 (1982)), 
States may not deny illegal alien children access to a public 
elementary education without authorization from Congress. 
However, the narrow 5-4 Supreme Court decision may imply that 
illegal aliens may be denied at least some State benefits and 
that Congress may influence the eligibility of illegal aliens 
for State benefits. Many, but not all, State general assistance 
laws currently deny illegal aliens means-tested general 
assistance.

    Explanation of provision. Illegal aliens are ineligible for 
all State and local public benefits, with limited exceptions 
for emergency medical services, emergency disaster relief, 
immunizations and testing and treatment of communicable 
diseases, and programs necessary for the protection of life or 
safety. States may, however, pass laws after the date of 
enactment that specify that illegal aliens may be eligible for 
certain State or local benefits that otherwise would be denied 
under this section.

 7. STATE AUTHORITY TO LIMIT ELIGIBILITY OF QUALIFIED ALIENS FOR STATE 
                            PUBLIC BENEFITS

    (This provision is not under jurisdiction of the Committee 
on Ways and Means but is included here for sake of 
completeness.)

    Present law. Under Graham v. Richardson (403 U.S. 365 
(1971)), States may not deny legal permanent residents State-
funded assistance that is provided to equally needy citizens 
without authorization from Congress.
    Currently, there is no Federal law barring legal temporary 
residents (i.e., nonimmigrants) from State and local needs-
based programs. In general, States are restricted in denying 
assistance to nonimmigrants where the denial is inconsistent 
with the terms under which the nonimmigrants were admitted. 
Where a denial of benefits is not inconsistent with Federal 
immigration law, however, States have broader authority to deny 
benefits and States often do deny certain benefits to 
nonimmigrants. Also, aliens in most nonimmigrant categories 
generally may have difficulty qualifying for many State and 
local benefits because of requirements that they be State 
``residents.''

    Explanation of provision. States are authorized to 
determine the eligibility of ``qualified aliens,'' 
nonimmigrants, and aliens paroled into the U.S. for less than 1 
year for any State or local means-tested public benefit 
program. Noncitizens receiving State and local benefits on the 
date of enactment would remain eligible for benefits until 
January 1, 1997.
    Exceptions to State authority to deny benefits are made for 
refugees, asylees and aliens whose deportation has been 
withheld (for 5 years), permanent resident aliens who have 
worked in the U.S. (in combination with their spouse or 
parents) for at least 10 years, and noncitizens who are 
veterans or on active duty or their spouse or unmarried child.

       Chapter 3--Attribution of Income and Affidavits of Support

   8. FEDERAL ATTRIBUTION OF SPONSOR'S INCOME AND RESOURCES TO ALIEN

(1) Federal benefits

    Present law. In determining whether an alien meets the 
means test for AFDC, SSI (except in cases of blindness or 
disability occurring after entry), and food stamps, the 
resources and income of an individual who filed an affidavit of 
support (``sponsor'') for the alien (and the income and 
resources of the individual's spouse) are taken into account 
during a designated period after entry. Sponsor-to-alien 
deeming provisions were added to these three programs in part 
because several courts have found that affidavits of support, 
under current practice, do not obligate sponsors to reimburse 
government agencies for benefits provided to sponsored aliens. 
See below.

    Explanation of provision. During the applicable deeming 
period (see ``Length of Deeming Period'' below), the income and 
resources of a sponsor and the sponsor's spouse are to be taken 
into account under all Federally-funded means-tested programs 
(with the exception of the programs below) in determining the 
sponsored individual's neediness. Excepted programs are 
emergency medical services, emergency disaster relief, school 
lunch and child nutrition assistance, immunizations and testing 
for and treatment of communicable diseases, certain programs 
that protect life, safety, or public health, certain foster 
care and adoption assistance, certain elementary and secondary 
education programs, and higher education grants and loans.

    Reason for change. Sponsorship agreements reflect a 
willingness on the part of the sponsor to assume responsibility 
for the alien while in the U.S. By deeming the income of the 
sponsor to the alien when determining the alien's eligibility 
for means-tested public assistance, the importance of 
sponsorship agreements--including needed financial support- is 
underscored. In addition, deeming sponsors' income to aliens 
means it is less likely that taxpayers (including State and 
local taxpayers) will be called on to pay for public assistance 
for aliens, in keeping with the purposes of this title.

    Effective date. October 1, 1996.

(2) Amount of income and resources deemed

    Present law. While the offset formulas vary among the 
programs, the amount of income and resources deemed under AFDC, 
SSI, and Food Stamps is reduced by certain offsets to provide 
for some of the sponsor's own needs.

    Explanation of provision. The full income and resources of 
the sponsor and the sponsor's spouse are deemed to be that of 
the sponsored alien.

    Reason for change. The Committee proposal provides for the 
deeming of the sponsor's full income to the sponsored 
noncitizen for two reasons. First, deeming the sponsor's full 
income reinforces that it is the responsibility of the sponsor, 
not taxpayers, to provide for the public welfare needs of the 
noncitizen he or she has sponsored to enter the U.S. 
Accordingly the sponsor's full resources should be presumed to 
be available to help support the sponsored noncitizen during 
times of need. Second, deeming the full amount of the sponsor's 
income to the sponsored noncitizen reinforces the central theme 
of the Committee proposal that noncitizens, except in very 
limited circumstances, should not depend on public welfare 
benefits prior to obtaining citizenship.

    Effective date. October 1, 1996.

(3) Length of deeming period

    Present law. For AFDC and Food Stamps, sponsor-to-alien 
deeming applies to a sponsored alien seeking assistance within 
3 years of entry. Through September 1996, sponsor-to-alien 
deeming applies to a sponsored alien seeking SSI within 5 years 
of entry, after which the deeming period reverts to 3 years.

    Explanation of provision. Deeming extends until 
citizenship, unless the noncitizen has worked for at least 10 
years in the U.S. (either individually or in combination with 
the noncitizen's spouse and parents).

    Reason for change. The current system of deeming for only 
several years has resulted in taxpayers, not sponsors who 
promised to support noncitizens as a condition of their entry, 
providing years of public welfare benefits to thousands of 
noncitizens This problem has been particularly pervasive in the 
SSI and Medicaid programs. For example, the Committee has 
received reports of sponsors assisting and encouraging 
sponsored noncitizens, in some cases their own parents, to 
apply for Federal benefits immediately upon the expiration of 
the relevant deeming period.

    Effective date. October 1, 1996.

(4) Review upon reapplication

    Present law. Regulations implementing the food stamp 
program expressly require providing information on a sponsor's 
resources as part of recertification.

    Explanation of provision. Whenever a sponsored noncitizen 
is required to reapply for benefits under any Federal means-
tested public benefits program, the agency must review the 
income and resources deemed to the sponsored noncitizen.

    Reason for change. Especially as the deeming period is 
extended to last until citizenship, it is important that any 
changes in a sponsor's income are considered each time a 
sponsored noncitizen applies for Federal welfare benefits. A 
sponsor's income may have increased or decreased over time, 
significantly affecting the sponsored noncitizen's eligibility 
for public benefits.

    Effective date. October 1, 1996.

(5) Application

    Present law. No provision.

    Explanation of provision. For programs that already deem 
income and resources on the date of enactment, the changes in 
this section apply immediately; other programs must implement 
changes required within 180 days after the date of enactment.

    Reason for change. This provision allows for a transition 
period for programs that do not currently require sponsor-to-
alien deeming.

    Effective date. For programs that currently provide for 
deeming, this provision takes effect on the date of enactment. 
Other programs must implement changes within 180 days of 
enactment.

9. AUTHORITY FOR STATES TO PROVIDE FOR ATTRIBUTION OF SPONSOR'S INCOME 
       AND RESOURCES TO THE ALIEN WITH RESPECT TO STATE PROGRAMS

    Present law. The highest courts of at least two States have 
held that the Supreme Court decision barring State 
discrimination against legal aliens in providing State benefits 
without Federal authorization (Graham v. Richardson, 403 U.S. 
365 (1971)) prohibits State sponsor-to-alien deeming 
requirements for State benefits.

    Explanation of provision. State and local governments may, 
for the deeming period that applies to Federal benefits, deem a 
sponsor's income and resources (and those of the sponsor's 
spouse) to a sponsored individual in determining eligibility 
for and the amount of needs-based benefits. State and local 
governments may not require deeming for the following State 
public benefits: emergency medical services, emergency disaster 
relief, school lunch and child nutrition assistance, 
immunizations and testing and treatment of communicable 
diseases, foster care and adoption payments, and certain 
programs to protect life and safety.

    Reason for change. See explanations regarding deeming for 
Federal programs, above. It is the Committee's intent that 
States that choose to follow Federal deeming restrictions are 
acting pursuant to congressional authorization and as part of a 
comprehensive national immigration policy.

    Effective date. October 1, 1996.

          10. REQUIREMENTS FOR SPONSOR'S AFFIDAVIT OF SUPPORT

    (This provision is not under jurisdiction of the Committee 
on Ways and Means but is included here for sake of 
completeness.)

(1) In general

    Present law. Administrative authorities may request an 
affidavit of support on behalf of an alien seeking permanent 
residency pursuant to regulation. Requirements for affidavits 
of support are not specified by statute.
    Under the Immigration and Nationality Act, an alien who is 
likely to become a public charge may be excluded from entry 
unless this restriction is waived, as is the case for refugees. 
By regulation and administrative practice, the State Department 
and the Immigration and Naturalization Service permit a 
prospective permanent resident alien (also immigrant or green 
card holder) who otherwise would be excluded as a public charge 
(i.e., because of insufficient means or prospective income) to 
overcome exclusion through an affidavit of support or similar 
document executed by an individual in the U.S. commonly called 
a ``sponsor.'' It has been reported that roughly one-half of 
the aliens who obtain legal permanent resident status have had 
affidavits of support filed on their behalf.
    Various State court decisions and decisions by immigration 
courts have held that the affidavits of support, as currently 
constituted, do not impose a binding obligation on the sponsor 
to reimburse State agencies providing aid to the sponsored 
alien.

    Explanation of provision. The proposal provides that when 
affidavits of support are required, they must comply with the 
following:
          1. Affidavits of support must be executed as 
        contracts that are legally enforceable against sponsors 
        by Federal, State, and local agencies with respect to 
        any means-tested benefits (with exceptions noted below) 
        paid to sponsored aliens before they become citizens.
          2. Affidavits of support must be enforceable against 
        the sponsor by the sponsored alien.
          3. Reimbursement shall be requested for all Federal, 
        State or local need-based programs with the exceptions 
        noted below.
          4. To qualify to execute an affidavit of support, an 
        individual must meet the revised definition of sponsor 
        below.
          5. Governmental entities that provide benefits may 
        seek reimbursement up to 10 years after a sponsored 
        alien last receives benefits.
          6. Sponsorship extends until the alien becomes a 
        citizen.

(2) Forms

    Present law. No statutory provision. The Department of 
Justice issues a form (Form I-134) that complies with current 
sponsorship guidelines.

    Explanation of provision. The Attorney General, in 
consultation with the Secretary of State and the Secretary of 
HHS, shall formulate an affidavit of support within 90 days 
after enactment, consistent with this section.

(3) Notification of change of address

    Present law. There is no express requirement under current 
administrative practice that sponsors inform welfare agencies 
of a change in address. However, a sponsored alien who applies 
for benefits for which deeming is required must provide various 
information regarding the alien's sponsor.

    Explanation of provision. Until they no longer are 
potentially liable for reimbursement of benefits paid to 
sponsored individuals, sponsors must notify the Attorney 
General and the State, district, territory or possession in 
which the sponsored individual resides of any change of their 
address within 30 days of moving. Failure to notify may result 
in a civil penalty of up to $2,000 or, if the failure occurs 
after knowledge that the sponsored individual has received a 
reimbursable benefit, of up to $5,000.

(4) Reimbursement of government expenses

    Present law. Various State court decisions and decisions by 
immigration courts have held that these affidavits, as 
currently constituted, do not impose a binding obligation on 
the sponsor to reimburse State agencies providing aid to the 
sponsored alien.

    Explanation of provision. If a sponsored alien receives any 
benefit under any means-tested public assistance program, the 
appropriate Federal, State, or local official shall request 
reimbursement by the sponsor in the amount of such assistance. 
Thereafter the official may seek reimbursement in court if the 
sponsor fails to respond within 45 days of the request that the 
sponsor is willing to begin repayments. The official also may 
seek reimbursement through the courts within 60 days after a 
sponsor fails to comply with the terms of repayment. The 
Attorney General in consultation with the Secretary of HHS, 
shall prescribe regulations on requesting reimbursement. No 
action may be brought later than 10 years after the alien last 
received benefits.

(5) Definitions--sponsor

    Present law. There are no firm administrative restrictions 
on eligibility to execute an affidavit of support.

    Explanation of provision. A ``sponsor'' is a citizen or an 
alien lawfully admitted to the U.S. for permanent residence who 
petitioned for immigration preference for the sponsored alien, 
is at least 18 years of age, and resides in any State.

(6) Definitions--means-tested public benefits program

    Present law. No provision.

    Explanation of provision. A ``Means-Tested Public Benefits 
Program'' is a program of public benefits of the Federal, State 
or local government in which eligibility for or the amount of, 
benefits or both are determined on the basis of income, 
resources, or financial need.

(7) Effective date

    Present law. No provision.

    Explanation of provision. The changes regarding affidavits 
of support shall apply to affidavits of support executed no 
earlier than 60 days or later than 90 days after the Attorney 
General promulgates the form.

(8) Benefits not subject to reimbursement

    Present law. No provision.
    Governmental entities cannot seek reimbursement with 
respect to:
          1. emergency medical services;
          2. emergency disaster relief;
          3. school lunch and child nutrition assistance;
          4. payments for foster care and adoption assistance;
          5. immunizations and testing for and treatment of 
        communicable diseases;
          6. certain programs that protect life, safety, or 
        public health; and
          7. postsecondary education benefits.

                 11. COSIGNATURE OF ALIEN STUDENT LOANS

    (This provision is not under jurisdiction of the Committee 
on Ways and Means but is included here for sake of 
completeness.)

    Present law. No provision.

    Explanation of provision. A student who is an alien 
lawfully admitted for permanent residence shall not be eligible 
for a loan unless the loan is endorsed and cosigned by the 
alien's sponsor or by another creditworthy individual who is a 
United States citizen.

                     Chapter 4--General Provisions

                            12. DEFINITIONS

(1) In general

    Federal assistance programs that have alien eligibility 
restrictions generally reference specific classes defined in 
the Immigration and Nationality Act.

    Explanation of provision. Unless otherwise provided, the 
terms used in this title have the same meaning as defined in 
Section 101(a) of the Immigration and Nationality Act.

    Reason for change. Technical provision.

    Effective date. October 1, 1996.

(2) Qualified alien

    Present law. Some programs allow benefits for otherwise 
eligible aliens who are ``permanently residing under color of 
law (PRUCOL).'' This term is not defined under the Immigration 
and Nationality Act, and there has been some inconsistency in 
determining which classes of aliens fit within the PRUCOL 
standard.

    Explanation of provision. An alien who is a lawful 
permanent resident, refugee, asylee, or an alien who has been 
paroled into the U.S. for at least 1 year.

    Reason for change. The Committee believes that making 
illegal aliens, short-term parolees, PRUCOL aliens, and 
nonimmigrants ineligible for public benefits will reduce the 
incentive for aliens to illegally enter and remain in the U.S.

    Effective date. October 1, 1996.

      13. VERIFICATION OF ELIGIBILITY FOR FEDERAL PUBLIC BENEFITS

    (This provision is not under jurisdiction of the Committee 
on Ways and Means but is included here for sake of 
completeness.)

    Present law. State agencies that administer most major 
Federal programs with alienage restrictions generally use the 
SAVE (Systematic Alien Verification for Entitlements) system to 
verify the immigration status of aliens applying for benefits.

    Explanation of provision. The Attorney General must adopt 
regulations to verify the lawful presence of applicants for 
Federal benefits no later than 18 months after enactment. 
States must have a verification system that complies with these 
regulations within 24 months of their adoption, and must 
authorize necessary appropriations.

                       14. STATUTORY CONSTRUCTION

    (This provision is not under jurisdiction of the Committee 
on Ways and Means but is included here for sake of 
completeness.)

    Present law. No provision.

    Explanation of provision. This title addresses only program 
eligibility based on alienage and does not address whether any 
individual meets other eligibility criteria. This title does 
not address alien eligibility for basic education or for any 
program of foreign assistance.

 15. COMMUNICATION BETWEEN STATE AND LOCAL GOVERNMENT AGENCIES AND THE 
                 IMMIGRATION AND NATURALIZATION SERVICE

    (This provision is not under jurisdiction of the Committee 
on Ways and Means but is included here for sake of 
completeness.)

    Present law. The confidentiality provisions of various 
State statutes may prohibit disclosure of immigration status 
obtained under them. Some Federal laws, including the Family 
Education Rights and Protection Act, may deny funds to certain 
State and local agencies that disclose a protected individual's 
immigration status. Various localities have enacted laws 
preventing local officials from disclosing the immigration 
status of individuals to INS.

    Explanation of provision. No State or local government 
entity may be prohibited, or in any way restricted, from 
sending to or receiving from the Immigration and Naturalization 
Service information regarding the immigration status, lawful or 
unlawful, of an alien in the United States.

                        16. QUALIFYING QUARTERS

    Present law. No provision.

    Explanation of provision. In determining whether an alien 
may qualify for benefits under the exception for individuals 
who have worked at least 40 quarters while in the U.S. (see 
sections 402 and 421 above), work performed by parents and 
spouses may be credited to aliens under certain circumstances. 
Each quarter of work performed by the parent while an alien was 
under the age of 18 is credited to the alien, provided the 
parent did not receive any Federal public benefits during the 
quarter. Similarly, each quarter of work performed by a spouse 
of an alien during their marriage is credited to the alien, if 
the spouse did not receive any Federal public benefits during 
the quarter.

    Reason for change. Millions of noncitizens have worked in 
the U.S. for long periods without collecting welfare benefits. 
The Committee proposal recognizes this fact by including 
general exemptions from the restrictions on eligibility and 
sponsorship and deeming provisions described above for 
individuals who have a long history of work without collecting 
welfare benefits.

    Effective date. Individuals can be credited with quarters 
of work performed either before or after the date of enactment.

                    Chapter 5--Conforming Amendments

         17. CONFORMING AMENDMENTS RELATED TO ASSISTED HOUSING

    (This provision is not under jurisdiction of the Committee 
on Ways and Means but is included here for sake of 
completeness.)

    Present law. No provision.

    Explanation of provision. This section consists of a series 
of technical and conforming amendments.

    Chapter 6--Earned Income Credit Denied to Unauthorized Employees

  18. EARNED INCOME CREDIT DENIED TO INDIVIDUALS NOT AUTHORIZED TO BE 
                     EMPLOYED IN THE UNITED STATES

    Present law. Certain eligible low-income workers are 
entitled to claim a refundable credit on their income tax 
return. The amount of the credit an eligible individual may 
claim depends upon whether the individual has one, more than 
one, or no qualifying children and is determined by multiplying 
the credit rate by the taxpayer's earned income up to an earned 
income amount. The maximum amount of the credit is the product 
of the credit rate and the earned income amount. For taxpayers 
with earned income (or adjusted gross income (AGI), if greater) 
in excess of the beginning of the phaseout range, the maximum 
credit amount is reduced by the phaseout rate multiplied by the 
amount of earned income (or AGI, if greater) in excess of the 
beginning of the phaseout range. For taxpayers with earned 
income (or AGI, if greater) in excess of the end of the 
phaseout range, no credit is allowed.
    The parameters for the credit depend upon the number of 
qualifying children the individual claims. For 1996, the 
parameters are given in the following table:

------------------------------------------------------------------------
                                   Two or more      One           No    
                                    qualifying   qualifying   qualifying
                                     children      child       children 
------------------------------------------------------------------------
Credit rate (percent)............        40.00        34.00         7.65
Earned income amount.............       $8,890       $6,330       $4,220
Maximum credit...................       $3,556       $2,152         $323
Phaseout begins..................      $11,610      $11,610       $5,280
Phaseout rate (percent)..........        21.06        15.98         7.65
Phaseout ends....................      $28,495      $25,078       $9,500
------------------------------------------------------------------------

    For years after 1996, the credit rates and the phaseout 
rates will be the same as in the preceding table. The earned 
income amount and the beginning of the phaseout range are 
indexed for inflation; because the end of the phaseout range 
depends on those amounts as well as the phaseout rate and the 
credit rate, the end of the phaseout range will also increase 
if there is inflation.
    Thus, for 1997 the parameters are projected to be as 
follows:

------------------------------------------------------------------------
                                   Two or more      One           No    
                                    qualifying   qualifying   qualifying
                                     children      child       children 
------------------------------------------------------------------------
Credit rate (percent)............        40.00        34.00         7.65
Earned income amount.............       $9,120       $6,500       $4,330
Maximum credit...................       $3,648       $2,210         $331
Phaseout threshold...............      $11,910      $11,910       $5,420
Phaseout rate (percent)..........        21.06        15.98         7.65
Phaseout ends....................      $29,232      $25,740       $9,750
------------------------------------------------------------------------

    In order to claim the credit, an individual must either 
have a qualifying child or meet other requirements. A 
qualifying child must meet a relationship test, an age test, an 
identification test, and a residence test. In order to claim 
the credit without a qualifying child, an individual must not 
be a dependent and must be over age 24 and under age 65.
    To satisfy the identification test, individuals must 
include on their tax return the name and age of each qualifying 
child. For returns filed with respect to tax year 1996, 
individuals must provide a taxpayer identification number (TIN) 
for all qualifying children born on or before November 30, 
1996. For returns filed with respect to tax year 1997 and all 
subsequent years, individuals must provide TINs for all 
qualifying children, regardless of their age. An individual's 
TIN is generally that individual's Social Security number.
    The Internal Revenue Service may summarily assess 
additional tax due as a result of a mathematical or clerical 
error without sending the taxpayer a notice of deficiency and 
giving the taxpayer an opportunity to petition the Tax Court. 
Where the IRS uses the summary assessment procedure for 
mathematical or clerical errors, taxpayer must be given an 
explanation of the asserted error and a period of 60 days to 
request that the IRS abate its assessment. The IRS may not 
proceed to collect the amount of the assessment until the 
taxpayer has agreed to it or has allowed the 60-day period for 
objecting to expire. If the taxpayer files a request for 
abatement of the assessment specified in the notice, the IRS 
must abate the assessment. Any reassessment of the abated 
amount is subject to the ordinary deficiency procedures. The 
request for abatement of the assessment is the only procedure a 
taxpayer may use prior to paying the assessed amount in order 
to contest an assessment arising out of a mathematical or 
clerical error. Once the assessment is satisfied, however, the 
taxpayer may file a claim for refund if he or she believes the 
assessment was made in error.

    Explanation of provision. Individuals are not eligible for 
the credit if they do not include their taxpayer identification 
number (and, if married, their spouse's taxpayer identification 
number) on their tax return. Solely for these purposes and for 
purposes of the present-law identification test for a 
qualifying child, a taxpayer identification number is defined 
as a Social Security number issued to an individual by the 
Social Security Administration other than a number issued under 
section 205(c)(2)(B)(i)(II) (or that portion of sec. 
205(c)(2)(B)(i)(III) relating to it) of the Social Security Act 
(regarding the issuance of a number to an individual applying 
for or receiving Federally funded benefits).
    If an individual fails to provide a correct taxpayer 
identification number, such omission will be treated as a 
mathematical or clerical error. If an individual who claims the 
credit with respect to net earnings from self-employment fails 
to pay the proper amount of self-employment tax on such net 
earnings, the failure will be treated as a mathematical or 
clerical error for purposes of the amount of credit allowed.

    Reason for change. The Committee does not believe that 
individuals who are not authorized to work in the United States 
should be able to claim the credit. To enforce the requirement 
that credit claimants and their qualifying children have proper 
Social Security numbers and to insure that credit claimants 
have paid self-employment taxes on any self employment income 
used to qualify for the credit, the Committee believes the IRS 
should be able to use the streamlined procedures it currently 
uses for mathematical or clerical errors.

    Effective date. The provision is effective for taxable 
years beginning after December 31, 1995.
    For additional changes regarding the Earned Income Credit, 
see Subtitle H: Miscellaneous Provisions.

                  SUBTITLE E--REFORM OF PUBLIC HOUSING

   1. Fraud under Means-Tested Welfare and Public Assistance Programs

Present law

    No provision.

Explanation of provision

    If a person's means-tested benefits from a Federal, State, 
or local welfare program are reduced because of an act of 
fraud, their benefits from public or assisted housing may not 
be increased in response to the income loss caused by the 
penalty.

Reason for change

    Most welfare recipients receive benefits from more than one 
program. As a result, a major problem with imposing penalties 
in a given program is that in many cases this decline in income 
from the penalty is made up in part by an increase in benefits 
from another program. This interaction minimizes the impact of 
the penalty on correcting the client's behavior. By ensuring 
that housing benefits are not adjusted as a result of penalties 
imposed on benefits from another welfare program, this 
provision corrects the interaction problem and helps to 
maintain the behavioral impact of penalties.

Effective date

    October 1, 1996.

  SUBTITLE F--CHILD PROTECTION BLOCK GRANT PROGRAMS AND FOSTER CARE, 
          ADOPTION ASSISTANCE, AND INDEPENDENT LIVING PROGRAMS

   Chapter 1--Child Protection Block Grant Program and Foster Care, 
          Adoption Assistance, and Independent Living Programs

    Note. Under current law, there are at least 36 programs 
designed to help children who are victims of abuse or neglect. 
These programs address the child protection issue by supporting 
abuse reporting and investigation; abuse prevention; child and 
family assessment, preservation, and support; foster care; 
adoption; and training of social workers, foster parents, 
judges, and others. These programs can be divided into two 
general categories. The first is entitlement programs, all 
under jurisdiction of the Committee on Ways and Means, nearly 
all of which provide unlimited funding for foster and adoption 
maintenance payments, administrative costs, and training. The 
Family Preservation and Support Program provides capped 
entitlement funds to help States provide services that keep 
families together and prevent abuse; the Independent Living 
program provides capped entitlement funds to help children in 
foster care make the transition to living on their own. The 
second group of programs are appropriated programs. These 
programs are smaller and, except the Child Welfare Services 
Program, are generally under the jurisdiction of the Economic 
and Educational Opportunities Committee. The committee 
provision retains all the open-ended entitlement programs to 
ensure that States have adequate resources to help abused 
children that must be removed from their homes. The provision 
also combines the two capped entitlement programs and many of 
the smaller programs into a block grant that will simplify 
administration, promote flexibility, and increase efficiency. 
Working in conjunction with the Committee on Economic and 
Educational Opportunity, the committee has created a block 
grant that is identical to a block grant created by the 
Opportunities Committee. Across the two committees, a total of 
11 programs are combined into the new block grant structure. 
Programs under jurisdiction of the Opportunities Committee are 
mentioned briefly below to clarify the structure of the overall 
Federal program for helping abused children and their families.

  Subchapter A--Block Grants to States for the Protection of Children

                               1. Purpose

Present law

    Child Welfare Services, now provided for in Title IV-B of 
the Social Security Act, are designed to help States provide 
child welfare services, family preservation, and community-
based family support services.

Explanation of provision

    The proposed Child Protection Block Grant would replace 
current law under Title IV-B. The purpose of the Child 
Protection Block Grant is to:
          (1) identify and assist families at risk of abusing 
        or neglecting their children;
          (2) operate a system for receiving reports of abuse 
        or neglect of children;
          (3) improve the intake, assessment, screening, and 
        investigation of reports of abuse and neglect;
          (4) enhance the general child protective system by 
        improving risk and safety assessment tools and 
        protocols;
          (5) improve legal preparation and representation, 
        including procedures for appealing and responding to 
        appeals of substantiated reports of abuse and neglect;
          (6) provide support, treatment, and family 
        preservation services to families which are, or are at 
        risk of, abusing or neglecting their children;
          (7) support children who must be removed from or who 
        cannot live with their families;
          (8) make timely decisions about permanent living 
        arrangements for children who must be removed from or 
        who cannot live with their families;
          (9) provide for continuing evaluation and improvement 
        of child protection laws, regulations, and services;
          (10) develop and facilitate training protocols for 
        individuals mandated to report child abuse or neglect; 
        and
          (11) develop and enhance the capacity of community-
        based programs to integrate shared leadership 
        strategies between parents and professionals to prevent 
        and treat child abuse and neglect at the neighborhood 
        level.

Reason for change

    Under current law, Congress has created numerous programs 
to help States provide a range of services designed to help 
children at risk of abuse or neglect or already the victims of 
abuse and neglect. The purpose of the block grant is to allow 
States to have one pool of Federal funds from which to draw in 
order to implement the particular child welfare activities that 
best meet the needs of children and families in each State. By 
simplifying the administrative burden placed on States by 
multiple programs, the committee intends to reduce paperwork, 
to allow professionals to focus on providing services to 
children and families, and to allow States to apply resources 
where they are most needed.
    The committee has received testimony from numerous 
witnesses in recent years that States could better protect 
children and save money if they were not burdened by rigid 
federal mandates. Thus, the approach taken by the committee is 
to retain the open-ended entitlements under Title IV-E of the 
Social Security Act while simultaneously creating a large block 
grant to provide States with the flexibility needed to reduce 
paperwork and provide funds where they are most needed.

Effective date

    October 1, 1996.

                           2. Eligible States

Present law

    To be eligible for funding under Title IV-B and IV-E, 
States must have State plans, developed jointly with the 
Secretary under Title IV-B, and approved by the Secretary under 
Title IV-E. In addition, to receive funds under the Child Abuse 
Prevention and Treatment Act (CAPTA), States must comply with 
certain requirements including submission of a State plan.
    States must have a child welfare services plan developed 
jointly by the Secretary and the relevant State agency which 
provides for single agency administration and which describes 
services to be provided and geographic areas where services 
will be available. The State plan also must meet many other 
requirements, such as setting forth a 5-year statement of goals 
for family preservation and family support and assuring the 
review of progress toward those goals. For foster care and 
adoption assistance, States must submit for approval a Title 
IV-E plan providing for a foster care and adoption assistance 
program and satisfying numerous requirements. The Child Abuse 
Prevention and Treatment Act (CAPTA) requires States to have in 
effect a law for reporting known and suspected child abuse and 
neglect as well as providing for prompt investigation of child 
abuse and neglect reports, among many other requirements.
    To receive funding under Title IV-B and IV-E of the Social 
Security Act, States must comply with certain procedures for 
removal of children from their families when necessary, must 
develop case plans for each child that are reviewed at least 
every 6 months and contain specified information, and must 
establish specific goals for the maximum number of eligible 
children who will remain in foster care for more than 24 
months.
    Under Title IV-B, for fiscal years beginning on or after 
April 1, 1996, State plans must provide assurances that:
          (1) the State has completed an inventory of all 
        children who, before the inventory, had been in foster 
        care under the responsibility of the State for 6 months 
        or more, which determined: (i) the appropriateness of, 
        and necessity for, the foster care placement; (ii) 
        whether the child could or should be returned to the 
        parents of the child or should be freed for adoption or 
        other permanent placement; and (iii) the services 
        necessary to facilitate the return of the child or the 
        placement of the child for adoption or legal 
        guardianship;
          (2) the State is operating to the satisfaction of the 
        Secretary: (i) a statewide information system on 
        children who are or have been in foster care in the 
        last year; (ii) a case review system for each child 
        receiving foster care under the supervision of the 
        State; (iii) a service program designed to help 
        children return to families from which they have been 
        removed; or be placed for adoption; (iv) a preplacement 
        preventive service program designed to help children at 
        risk remain with their families; and
          (3) the State has reviewed State policies and 
        procedures in effect for children abandoned at birth; 
        and is implementing (or, will implement by October 31, 
        1996) such policies or procedures to enable permanent 
        decisions with respect to the placement of such 
        children to be made expeditiously. (For fiscal years 
        beginning before April 1, 1996, these standards were 
        incentive funding requirements that States had to meet 
        to receive their full Title IV-B allotment, and were 
        known as section 427 protections.)
    Title IV-E State plans must provide that reasonable efforts 
will be made prior to the placement of a child in foster care 
to prevent or eliminate the need for removal of the child from 
her home and to make it possible for the child to return to her 
home.
    Title IV-E State plans must provide that, where 
appropriate, all steps will be taken, including cooperative 
efforts with State AFDC and child support enforcement agencies, 
to secure an assignment of any rights to support of a child 
receiving foster care maintenance payments under Title IV-E.

Explanation of provision

    An ``Eligible State'' is one that has submitted to the 
Secretary, not later than October 1, 1996 and every 3 years 
thereafter, a plan which has been signed by the Chief Executive 
Officer of the State. The plan must outline the State's Child 
Protection Program and provide several certifications regarding 
the nature of its child protection program.
    A State plan must thoroughly describe the State Child 
Protection Program by describing State activities and 
procedures to be used for:
          (1) receiving and assessing reports of child abuse or 
        neglect;
          (2) investigating such reports;
          (3) with respect to families in which abuse or 
        neglect has been confirmed, providing services or 
        referral for services for families and children where 
        the State makes a determination that the child may 
        safely remain with the family;
          (4) protecting children by removing them from 
        dangerous settings and ensuring their placement in a 
        safe environment;
          (5) providing training for individuals mandated to 
        report suspected cases of child abuse or neglect;
          (6) protecting children in foster care;
          (7) promoting timely adoptions;
          (8) protecting the rights of families, using adult 
        relatives as the preferred placement for children 
        separated from their parents if such relatives meet all 
        relevant standards; and
          (9) providing services aimed at preventing child 
        abuse and neglect.
    The State plan must also certify that the State:
          (1) has in effect laws that require reporting of 
        child abuse and neglect;
          (2) has in effect procedures for the immediate 
        screening, safety assessment, and prompt investigation 
        of child abuse or neglect reports;
          (3) has in effect procedures for the removal and 
        placement of abused or neglected children;
          (4) has in effect laws requiring immunity from 
        prosecution under State and local laws for individuals 
        making good faith reports of suspected or known cases 
        of child abuse or neglect;
          (5) has in effect no later than 2 years after 
        enactment, laws and procedures affording individuals an 
        opportunity to appeal an official finding of abuse or 
        neglect;
          (6) has in effect procedures for developing and 
        reviewing written plans for the permanent placement of 
        each child removed from the family that: specify the 
        goal for achieving a permanent placement for the child 
        in a timely fashion; ensure that the plan is reviewed 
        every 6 months; and ensure that information about the 
        child is gathered regularly and placed in the case 
        record.
          (7) has in effect a program to provide independent 
        living services to 16-19 year old youths (and, at State 
        option, youths up to age 22) who are in the foster care 
        system but have no family to support them. (Under the 
        proposal, States also will continue to receive capped 
        entitlement grants for Independent Living services as 
        under current law.)
          (8) has in effect procedures or programs (or both) to 
        respond to reports of medical neglect of disabled 
        infants;
          (9) has quantitative goals of the State child 
        protection program;
          (10) will comply with respect to fiscal years 
        beginning on or after April 1, 1996, with the same 
        child protection standards as under current law. 
        Standards related to abandoned children must be met by 
        October 1, 1997;
          (11) will make reasonable efforts to prevent the 
        placement of children in foster care and to make it 
        possible for the child to return home. Each State must 
        also certify that it provides services for children and 
        families where maltreatment has been confirmed but the 
        child remained with the family;
          (12) will take all appropriate steps, including 
        cooperative efforts, to secure an assignment to the 
        State of any rights to support on behalf of each child 
        receiving foster care maintenance payments; and
          (13) has in effect requirements for disclosure of 
        records only to specified individuals and entities, and 
        provisions that allow for public disclosure of findings 
        or information about cases of child abuse or neglect 
        that have resulted in a child fatality or near fatality 
        (except that such disclosure shall not include 
        identifying information about the individual initiating 
        a report of suspected child abuse or neglect).
    The Secretary of HHS must determine whether the State plan 
includes the required materials and certifications (except 
material related to the certification of State procedures to 
respond to reporting of medical neglect of disabled infants). 
The Secretary cannot add new elements beyond those listed 
above.

Reason for change

    The revised State plan consolidates four different State 
plans and applications into a single requirement. The new plan 
requirement is designed to ensure that States are responsible 
for planning and implementing the essential elements of an 
effective and efficient child welfare system without placing 
undue administrative burdens on States. To ensure continual 
improvement of their child protection system, States are 
required to identify quantifiable goals. The role of the 
Federal Government is to ensure that States have a child 
protection system in place, that Federal money is actually 
spent on permissible child protection activities, and that 
information about the effectiveness of the system is made 
public. The committee provision is similar to the requirement 
of current law that States must submit a written plan outlining 
their child welfare program before they are eligible for 
benefits.

Effective date

    October 1, 1996.

                3. Grants to States for Child Protection

Present law

    Title IV-B of the Social Security Act contains both 
discretionary and capped entitlement funding for helping States 
provide assistance to troubled families and their children. Of 
capped entitlement funding for family preservation and support, 
1 percent is reserved for Indians. For child welfare services 
under Title IV-B, $325 million is authorized annually. For 
family preservation and support services, $225 million is 
authorized in fiscal year 1996; $240 million in fiscal year 
1997; and $255 million in fiscal year 1998. State allotments 
for child welfare services are based on the State's child 
population and per capita income. State allotments for family 
preservation and support are based on the number of children in 
the State receiving Food Stamps. Funds must be used for: 
``protecting and promoting the welfare of children * * * 
preventing unnecessary separation of children from their 
families * * * restoring children to their families if they 
have been removed * * * family preservation services * * * 
community-based family support services to promote the well-
being of children and families and to increase parents' 
confidence and competence.'' For-profit foster care providers 
are not eligible for Federal funding under Title IV-E. Section 
1123 of the Social Security Act requires the Secretary to 
establish by regulation a new Federal review system for child 
welfare which would allow penalties for misuse of funds. 
Regulations are expected to be published during the summer of 
1996. (This provision would not be affected by the committee 
proposal.)

Explanation of provision

    The block grant contains both entitlement and appropriated 
funds. From the entitlement funds, each eligible State must 
receive from the Secretary an amount equal to the State share 
of the Child Protection Block Grant amount for the fiscal year 
(see below). A set-aside is provided for Indians equal to 1 
percent of the entitlement money flowing into the block grant.
    Each eligible State is also given funds equal to the State 
share of the authorization component of the block grant that is 
appropriated each year. Indians are given 0.36 percent of the 
appropriated money flowing into the block grant. Funds for the 
authorization component of the block grant under this section 
are not to exceed $325 million each year.
    The term ``child protection amount'' means: $240 million 
for fiscal year 1997; $255 million for fiscal year 1998; $262 
million for fiscal year 1999; $270 million for fiscal year 
2000; $278 million for fiscal year 2001; $286 million for 
fiscal year 2002.
    The term ``State share'' means the qualified child 
protection expenses of a State divided by the sum of the 
qualified child protection expenses of all of the States. The 
term ``qualified State expenditure'' means Federal grants to 
the State under the Child Welfare Services Grant and the Family 
Preservation and Support Services Grant in fiscal year 1994 or 
the average of 1992-94, whichever is greater. In determining 
amounts for fiscal years 1992 through 1994, the Secretary shall 
use information listed as actual amounts in the Justification 
for Estimates for Appropriation Committees of the 
Administration for Children and Families for fiscal years 1994 
through 1996.
    A State to which funds are paid under this section may use 
the money in any manner the State deems appropriate to 
accomplish the purposes of this part, but the funds must be 
expended not later than the end of the immediately succeeding 
fiscal year. For-profit, foster care facilities are eligible to 
receive funds from the block grant.
    Under the terms and conditions of the block grant, States 
are subject to several penalties:
    (1) For misuse of funds. If an audit determines that any 
amounts provided to a State have been spent in violation of 
this part, the Secretary must reduce the grant otherwise 
payable for the next fiscal year by the amount of the misspent 
funds, plus 5 percent of the grant;
    (2) For failure to maintain effort. If States fail to 
maintain State spending equal to State expenditures under Part 
B of Title IV in fiscal year 1994, the Secretary must reduce 
the grant payable under this section by an amount equal to the 
previous year's shortfall in maintenance of effort. A penalty 
of 5 percent of the State grant must also be imposed. States 
must maintain 100 percent of prior effort in fiscal years 1997 
and 1998; and 75 percent in fiscal years 1999 through 2002;
    (3) For failure to submit report. If the Secretary 
determines that the State has not submitted mandatory adoption 
and foster care data reports within 6 months of the end of the 
fiscal year, the Secretary must reduce by 3 percent the amount 
of the State's block grant. If the report is submitted before 
the end of the immediately succeeding fiscal year, the 
Secretary shall rescind the penalty.
    Except in the case of failure to maintain effort, the 
Secretary may not impose a penalty if the determination is made 
that the State has reasonable cause for failing to comply with 
the requirement. Further, a State must be informed before any 
penalty is imposed and be given an opportunity to enter into a 
corrective compliance plan. The provision includes a series of 
deadlines for submission of such corrective compliance plans 
and review by the Federal Government. No quarterly payment can 
be reduced by more than 25 percent; penalty amounts above 25 
percent must be carried forward to subsequent quarters.
    Each territory is entitled to receive from the Secretary 
for any fiscal year an amount equal to the total obligations 
due to the territory under the Social Security Act for fiscal 
year 1995.
    Except as expressly provided in this Act, the Secretary may 
not regulate the conduct of States under this part or enforce 
any provision of this Act.

Reason for change

    The major purpose of creating the Child Protection Block 
Grant is to ensure that States have maximum flexibility in 
their use of Federal resources to meet the needs of abused 
children and their families.
    After consulting with several States, the committee decided 
that the fairest way to divide Child Protection Block Grant 
funds among the States was to give each State the same 
proportion of block grant funds each year as it received of 
several programs that are included in the block grant for the 
year 1994 or for the average of the years 1992-1994, whichever 
is greater.
    States are given great latitude in the use of funds because 
the proposal is based on the understanding that States know 
best how to help children in troubled families that reside in 
their State. In the continuum of services that extends from the 
identification of children who may be victims of abuse or 
neglect to the treatment of families and the placement of 
children in foster as well as adoptive families, States have 
the flexibility to decide where Federal dollars will do the 
most good.
    Given the Federal responsibility to ensure that funds are 
spent in accord with Federal purposes, States will lose any 
expenditures on purposes other than child protection and 
experience a 3 percent reduction in annual funding if they fail 
to report mandatory adoption and foster care data that will 
help Congress and the public evaluate program performance.

Effective date

    October 1, 1996.

                    4. Data Collection and Reporting

Present law

    In 1986, Congress established the National Advisory 
Committee on Adoption and Foster Care Information to assist HHS 
in designing a new comprehensive nationwide data collection 
system with full system implementation expected to be completed 
by October 1991. However, final regulations were not issued 
until December 1993 with the first transmission of data due May 
1995. All States are now participating in the Adoption and 
Foster Care Analysis and Reporting System (AFCARS). HHS is 
currently analyzing the first datasets transmitted from the 
States. The final rules require semi-annual reporting on all 
children in foster care. The data collection is child and case 
specific and is intended to yield a semi-annual snapshot of 
child welfare trends. It is also intended to yield information 
that will enable policymakers to ``track'' children in care and 
find out the reasons why children enter foster care, how long 
children stay in foster care, and what happens to children 
while in foster care as well as after they leave foster care.
    In 1993, Congress authorized enhanced funding of 75 percent 
for both the AFCARS system and for several additional functions 
not originally envisioned as part of AFCARS capability. These 
new functions included electronic data exchange within the 
State, automated data collection on all children in foster 
care, collection and management of information necessary to 
facilitate delivery of child welfare services and to determine 
eligibility for such services, case management, case plan 
development and monitoring, and information security. Enhanced 
funding of 75 percent for this second data system, which HHS 
calls the Statewide Automated Child Welfare Information System 
(SACWIS), expires on October 1, 1996.

Explanation of provision

    The committee provision leaves unaltered the current State 
data reporting system on child protection. The enhanced funding 
rate of 75 percent for the SACWIS system is extended for 1 
additional year.

Reason for change

    HHS has informed the committee that the first wave of data 
from the AFCARS system has now been reported and that analysts 
at the Department are confident that the data requirements are 
being met by States. As a result, Congress and the public will 
soon have reliable national information about foster care and 
adoption. Given the progress that seems to be taking place, the 
committee is leaving the data reporting requirements of current 
law intact.
    The committee has received extensive testimony about the 
administrative complexity of child protection programs and 
about its inefficiencies and huge paperwork burden. The SACWIS 
system was designed to improve efficiency by developing world 
class data management systems tailored specifically to the 
needs of child protection. Based on testimony received and 
inquiries made by the committee, most States have been working 
effectively to implement their SACWIS systems. However, given 
the newness of the technology involved, especially the computer 
software, and the short time limits established by Congress, 
States are behind in implementation. Because there is nearly 
universal agreement that the SACWIS system is vital to improved 
effectiveness and efficiency of child protection programs, the 
committee provision extends the enhanced funding for an 
additional year.

Effective date

    October 1, 1996.

                5. Funding for Studies of Child Welfare

Present law

    No provision.

Explanation of provision

    The Secretary is entitled to receive, for each of fiscal 
years 1996 through 2002, $6 million to conduct a national study 
based on random samples of children who are at risk of child 
abuse or neglect, and $10 million for other research.

Reason for change

    The committee proposal provides the Secretary with funds to 
support a major new scientific study that will collect 
information on the treatment and outcomes of a national sample 
of children entering the child welfare system. This information 
will provide Congress and the American public with the first 
nationally representative information about the condition and 
performance of the Nation's child welfare system, about the 
number of children in foster care, about the type of care they 
receive, about the length of spells in foster care, about the 
number of placements, and about the effects of various foster 
care arrangements on children. In addition, the Secretary is 
provided with $10 million annually to conduct other studies of 
child protection to increase our knowledge about the causes and 
treatment of child abuse and neglect.

Effective date

    This provision is effective upon enactment.

                             6. Definitions

Present law

    The term ``child care institution'' means a licensed 
nonprofit private or public facility which accommodates no more 
than 25 children. The term does not apply to detention 
facilities, forestry camps, training schools, or centers for 
delinquent children.

Explanation of provision

    Same as present law, except the word ``nonprofit'' is 
deleted.

Reason for change

    Since 1980, public and nonprofit agencies have been the 
only providers eligible to participate in child protection 
activities. The committee provision allows the private, for-
profit providers to participate in providing services to 
troubled children under Parts B or E if States determine that 
the services they provide are appropriate.

Effective date

    October 1, 1996.

                        7. Conforming Amendments

Present law

    No provision.

Explanation of provision

    This section of the provision makes a series of technical 
and conforming amendments to the Social Security Act and the 
Omnibus Budget Reconciliation Act of 1986.

Reason for change

    These amendments simply bring current law into conformity 
with the provisions recommended by the committee.

Effective date

    October 1, 1996.

Subchapter B--Foster Care, Adoption Assistance, and Independent Living 
                                Programs

          8. Changes in Title IV-E of the Social Security Act

    The committee proposal retains the policy of current law 
with regard to the foster care, adoption assistance, and 
independent living programs under Title IV-E. Thus, open-ended 
entitlement matching funds will continue to be available for 
maintenance payments, administrative and child placement costs, 
and training expenses for both foster care and adoption 
assistance. The independent living program will continue as a 
capped entitlement. Medicaid eligibility is guaranteed for 
children in foster care and those covered under adoption 
assistance agreements. However, the State plan required for 
Title IV-E under current law is consolidated into the single 
State plan required for the proposed Child Protection Block 
Grant. In addition, the proposal deletes a current law 
provision requiring that a single State agency administer both 
Title IV-B and Title IV-E. Statutory references to ``State 
agency'' are changed to ``State.''
    Rather than making numerous technical amendments to current 
law, section 711 of the proposal restates the statutory 
provisions authorizing the foster care, adoption assistance, 
and independent living programs. These provisions establish the 
purpose of Title IV-E, and define eligible States as those that 
have submitted plans meeting the requirements of the Child 
Protection Block Grant. Current law provisions governing the 
operation of foster care, adoption assistance, and independent 
living, with necessary technical changes, are re-established in 
the proposal. Definitions currently found in Title IV-E are 
moved to the definitions section in the Child Protection Block 
Grant (see above). Likewise, data collection provisions 
currently in Title IV-E are moved to the Child Protection Block 
Grant.
    There are three substantive differences between current law 
and the proposal with regard to foster care, adoption 
assistance, and independent living. First, Title I of the 
proposal replaces the AFDC program with a block grant for 
Temporary Assistance for Needy Families, which affects 
eligibility for Title IV-E. Under current law, children must 
have been removed from AFDC-eligible families to be eligible 
for Title IV-E assistance. The proposal establishes that 
children must be removed from families that would have met 
eligibility standards for AFDC, as in effect on the day before 
enactment of these amendments and adjusted for inflation in 
accordance with regulations issued by the Secretary.
    Second, the term ``nonprofit'' is deleted from references 
to private child care institutions, including in the definition 
of such institutions. This change is consistent with the rule 
of interpretation under the Child Protection Block Grant, which 
states that this part shall not be interpreted to prohibit 
short- and long-term foster care facilities operated for profit 
from receiving funds under Part B or Part E.
    Third, the committee proposal provides States with 1 year 
of enhanced funding (at 75 percent rather than 50 percent) to 
complete implementation of their Statewide Automated Child 
Welfare Information Systems (SACWIS).

Reason for change

    The most notable feature of committee action on Title IV-E 
is that all the entitlement programs remain intact. In 
addition, the committee retains the guaranteed Medicaid 
coverage for children who receive maintenance payments from 
either the foster care or adoption programs. On the other hand, 
the committee provision does change current law in three ways.
    First, the current law guarantee of eligibility for foster 
care and adoption maintenance payments for children eligible 
for the Aid to Families with Dependent Children (AFDC) program 
was disrupted because the AFDC statute was completely rewritten 
to give States the authority to establish their own welfare 
programs. To ensure that the eligibility of poor children for 
maintenance payments continues, the committee provision 
guarantees eligibility for all children from families that 
would have been eligible for the AFDC program as it existed in 
each State on the day before enactment of this legislation.
    Second, the committee provision allows States to use 
private foster care facilities. The committee believes that 
States should be allowed to use private child care 
organizations because they are fully capable of providing 
quality services. States are responsible for ensuring that 
children are in safe and reliable care whether it is provided 
by public or private entities. The committee can see no reason 
to automatically refuse participation by an entire sector of 
the child caring community.
    Third, the committee provided enhanced funding for the 
SACWIS system because automation is a vital part of providing 
quality child protection services. The committee has 
investigated progress in the States in creating SACWIS and has 
found that several States are now ready to begin actual 
implementation and that as many as half the States can be 
expected to have operational systems by next year if funding 
remains available. Thus, the committee is extending the 
enhanced funding rate of 75 percent to encourage States to 
invest money in these important systems.

Effective date

    October 1, 1996.

                      Subchapter C--Miscellaneous

  9. Secretarial Submission of Legislative Proposal for Technical and 
                         Conforming Amendments

Present law

    No provision.

Explanation of provision

    Not later than 90 days after the date of enactment, the 
Secretary of Health and Human Services must submit to Congress 
a legislative proposal providing for technical and conforming 
amendments required by the changes made in this subtitle of the 
proposal.

Reason for change

    Given the substantial nature of changes in Subtitle IV-B of 
the Social Security Act, the committee wants to provide the 
Secretary with an opportunity to introduce appropriate 
technical and conforming amendments to make the statute more 
workable.

Effective date

    Upon enactment.

    10. Sense of the Congress Regarding Timely Adoption of Children

Present law

    No provision.

Explanation of provision

    This section expresses the sense of Congress that too many 
adoptable children are spending too much time in foster care, 
that States must take steps to increase the number of children 
who are adopted in a timely manner, and that States could 
achieve savings if they offered incentives for the adoption of 
special needs children, among other provisions.

Reason for change

    By passing a new adoption tax credit and by enacting strong 
anti-discrimination measures in adoption, the Committee on Ways 
and Means has already taken major actions to promote adoption 
in the 104th Congress. This statement is intended to herald, in 
the strongest possible terms, the congressional consensus that 
Federal legislators, States, professionals participating in the 
Nation's child protection system, and individual citizens 
should do everything possible to promote removing children from 
foster care and, if appropriate, placing them with adoptive 
families. Stays in foster care should be as short as possible, 
and the move from foster care to adoptive placements should be 
made as quickly as possible.

Effective date

    Upon enactment.

                  11. Effective Date; Transition Rules

Present law

    No provision.

Explanation of provision

    The changes made in this subtitle will be effective on or 
after October 1, 1996. Provisions that authorize and 
appropriate funds in fiscal year 1996 for research and court 
improvements, and certain technical and conforming amendments 
are effective upon enactment. The proposal establishes 
transition rules for pending claims, actions and proceedings, 
and closing out accounts for programs that are terminated or 
substantially modified.

Reason for change

    The effective date of October 1, 1996 was selected so that 
States could begin enjoying the benefits of the revised and 
expanded Child Care and Development Block Grant as soon as 
possible.

Effective date

    Upon enactment.

            Chapter 2--Child and Family Services Block Grant

    The block grant and associated activities under Subtitle B 
are not under the jurisdiction of the Committee on Ways and 
Means. The committees with jurisdiction are the House Economic 
and Educational Opportunities Committee and the Senate Labor 
and Human Resources Committee. The Child and Family Services 
Block Grant created by Subtitle B consolidates the following 
programs into a single block grant: The Child Abuse Prevention 
and Treatment Act, the Abandoned Infants Assistance Act, 
adoption opportunities under the Child Abuse Prevention and 
Treatment and Adoption Reform Act, the family support centers 
under the McKinney Homeless Assistance Act, and the Temporary 
Child Care and Crisis Nurseries Act. The Child and Family 
Services Block Grant has the same State plan and certification 
requirements as the Child Protection Block Grant created by 
Subtitle A. The two Block Grants also have the same data 
collection and reporting requirements for child abuse incidence 
data and for the implementation of foster care and adoption 
tracking systems. The Child and Family Services Block Grant is 
authorized at $230 million for fiscal year 1996 and ``such sums 
as may be necessary'' are authorized for fiscal year 1997 
through fiscal year 2002. Title II of the Child and Family 
Services Block Grant provides that funds be available for 
research, demonstrations, training and technical assistance to 
better protect children from maltreatment. Funds under this 
block grant also will establish a National Clearinghouse for 
Information Relating to Child Abuse, provide demonstration 
grants for the development of innovative programs, provide 
technical assistance to States to assist with child abuse 
investigation and the termination of parental rights 
proceedings, and provide training for professionals in related 
fields. For these Title II activities, 12 percent of the $230 
million provided for this Block Grant is authorized. The 
Missing Children's Assistance Act and the Victims of Child 
Abuse Act of 1990 are both reauthorized.

                         SUBTITLE G--CHILD CARE

                     1. Short Title and References

Present law

    No provision.

Explanation of provision

    Short Title: Child Care and Development Block Grant 
Amendments of 1996. Unless otherwise specified, references 
should be considered as made to the Child Care and Development 
Block Grant Act of 1990.

Reason for change

    The committee provision continues current use of the term 
``Child Care and Development Block Grant'' because this popular 
and widely-used program, which is greatly expanded by this 
proposal, will become the major Federal-State child care 
program.

Effective date

    October 1, 1996.

                                2. Goals

Present law

    No provision.

Explanation of provision

    This section establishes the following goals for the Child 
Care and Development Block Grant:
          (1) to allow each State maximum flexibility in 
        developing child care programs and policies that best 
        suit the needs of children and parents within the 
        State;
          (2) to promote parental choice in making decisions on 
        the child care that best suits their family's needs;
          (3) to encourage States to provide consumer 
        information to help parents make informed child care 
        choices;
          (4) to assist States in providing child care to 
        parents trying to become independent of public 
        assistance; and
          (5) to assist States in implementing the health, 
        safety, licensing and registration standards 
        established in State regulations.

Reason for change

    The committee believes that establishing a few broad goals 
for the States, with proper assessments and accountability for 
results in relationship to these goals, to replace the current 
fragmented and highly regulated Federal system of support for 
child care will provide more efficient and effective use of 
Federal funds.

Effective date

    October 1, 1996.

      3. Authorization of Appropriations and Entitlement Authority

Present law

    The authorization of appropriations for the Child Care and 
Development Block Grant expires at the end of fiscal year 1995. 
Appropriations in fiscal year 1996 are $935 million. (Sec. 658B 
of the CCDBG Act)
    (Note: In addition to appropriated funds, entitlement funds 
are available for the Child Care Block Grant under the AFDC 
Child Care, Transitional Child Care, and At-Risk Child Care 
programs authorized by Title IV-A of the Social Security Act.)

Explanation of provision

    Authorization of Appropriations. There are authorized to be 
appropriated $1,000,000,000 for each of fiscal years 1996 
through 2002. (Additional mandatory funding will be provided 
for child care under the Social Security Act so that a total of 
$22 billion will be provided for child care over the 7-year 
period fiscal years 1996-2002.)
    Child Care Entitlement. The proposal establishes a single 
child care block grant and State administrative system by 
adding mandatory funds to the existing Child Care and 
Development Block Grant (CCDBG). Specifically, one 
discretionary and two mandatory streams of funding will be 
consolidated in a reconstituted CCDBG.
            a. State general entitlement
    From the stream of entitlement funding, each State will 
receive the amount of funds it received for child care under 
all of the entitlement programs currently under Title IV-A of 
the Social Security Act (AFDC Child Care, Transitional Child 
Care, and At-Risk Child Care) in fiscal year 1994, in fiscal 
year 1995, or the average amount in fiscal years 1992 through 
1994, whichever is greater. This source of funds will provide 
States with approximately $1.2 billion for child care each year 
between 1997 and 2002.
            b. Remainder
    The mandatory funds remaining after the allocation to 
Indians (see below) and the State General Entitlement (see 
above) will be distributed among the States based on the 
formula currently used in the Title IV-A At-Risk Child Care 
grant. Specifically, funds will be distributed based on the 
proportion of the number of children under age 13 residing in 
the State to the number of all of the Nation's children under 
age 13. States must provide matching funds at the fiscal year 
1995 State Medicaid rate to receive these funds and must 
maintain spending at their fiscal year 1994 level under the 
Title IV-A child care programs. The money available to States 
through this source of funds for fiscal years 1997 through 
2002, respectively, will be: $0.76 billion, $0.86 billion, 
$0.96 billion, $1.16 billion, $1.36 billion, and $1.51 billion.
    If a State does not use its full portion of funds, the 
remaining portion will be redistributed to other States 
according to section 402(i) of the At-Risk Child Care grant (as 
such section was in effect before October 1, 1995). Thus, each 
State applying for these remaining funds will receive the 
percentage of funds that equals the percentage of children 
under age 13 residing in that State of all children under age 
13 residing in all the States that apply for funds. The 
Secretary must determine whether States will use their entire 
portion of funds no later than the end of the first quarter of 
the subsequent fiscal year.
            c. Appropriation
    Total child care funds under this proposal will equal $22 
billion for child care over the 7-year period fiscal years 
1996-2002, including both the $15 billion in mandatory funds 
discussed above and $7 billion in discretionary funds. Under 
current law for the three existing AFDC-related child care 
programs, $1.1 billion in mandatory funds will be spent in 
fiscal year 1996. In addition, a total of $13.85 billion in 
mandatory funds would be authorized for child care in fiscal 
years 1997-2002, starting at $2.0 billion in fiscal year 1997 
and rising to $2.7 billion in fiscal year 2002. Finally, as 
stated earlier, $1 billion will be authorized annually in 
discretionary funds for the Child Care and Development Block 
Grant.
            d. Indian tribes
    One percent of all funds under the section are provided to 
Indian tribes.
    Use of Funds. Funds shall only be used to provide child 
care assistance. Amounts received by a State, based on the 
amounts received in previous years, shall be available for use 
by the State without fiscal year limitation. All funds from 
both mandatory and discretionary sources must be transferred to 
the lead agency under the Child Care and Development Block 
Grant and integrated into the State child care programs.
    Not less than 70 percent of the total amount of mandatory 
funds received by the State in a fiscal year must be used to 
provide child care assistance to families that are receiving 
assistance under a State program, families that are attempting 
to transition off public assistance, and families at risk of 
becoming dependent on public assistance.

Reason for change

    The proposal allocates $3 billion more in child care 
entitlement funds than current law. The committee believes that 
the consolidation of programs eliminates income requirements, 
time limits, and work requirements between and among programs, 
and facilitates efficient use of Federal money by both States 
and parents.
    The substantial increase in funding for child care over 
current law reflects the subcommittee's position that giving 
States more resources with maximum flexibility will move more 
people from welfare to work and help pay the child care 
expenses of low-income working families. In addition, providing 
Federal funds that are allowed to follow the parent whether the 
parent is receiving public cash assistance while participating 
in work or education, has recently left public assistance, or 
is otherwise employed but meets the State criteria for ``very 
low income'' increases efficiency and saves parents time and 
trouble.
    The proposal contains a requirement that 70 percent of the 
mandatory child care funds received in a given fiscal year must 
be used solely to assist in providing child care for families 
receiving public assistance, or families that recently left 
public assistance or are at risk of becoming dependent. This 
provision is consistent with the purpose of the proposal to 
decrease dependency through work.

Effective date

    The effective date of this title will be October 1, 1996, 
except for the authorization of discretionary funds, which will 
be effective upon date of enactment.

                             4. lead agency

Present law

    The Chief Executive Officer of a State is required to 
designate an appropriate State agency to act as the lead agency 
in administering financial assistance under the Act. (Sec. 658D 
of the CCDBG Act)

Explanation of provision

    The proposal requires States to identify a lead agency to 
administer all the child care funds received under the Act, 
including funds received through other ``governmental or 
nongovernmental'' agencies (instead of other ``State'' 
agencies). States must ensure that ``sufficient time and 
statewide distribution of the notice'' be given of the public 
hearing on the development of the State plan. This section 
strikes language in current law specifying issues that may be 
considered during consultation with local governments on 
development of the State plan.

Reason for change

    The term ``agency'' was changed to ``entity'' to allow 
States more flexibility in determining how the block grant 
would be administered. Under this change, an entity, chosen by 
the State, but not necessarily a State agency, could be 
established to administer the block grant.
    The section also requires that States give sufficient 
notice of public hearings on the development of the State plan. 
The committee included this provision in order to ensure that 
all interested parties have an opportunity to participate in 
the development of the State plan.

Effective date

    October 1, 1996.

                        5. application and plan

Present law

    States are required to prepare and submit to the Secretary 
an application that includes a State plan. The initial plan 
must cover a 3-year period, and subsequent plans must cover 2-
year periods. Required contents of the plan include designation 
of a lead agency; outline of policies and procedures regarding 
parental choice of providers, summary of policies that 
guarantee unlimited parental access, parental complaints, and 
consumer education; and overview of policies that ensure 
compliance with State and local regulatory requirements, 
establishment of and compliance with health and safety 
requirements, and review of State licensing and regulatory 
requirements.
    In addition, the State plan must provide that all funds 
will be used for child care services, and that 25 percent of 
funds will be reserved for activities to improve the quality of 
child care and to increase the availability of early childhood 
development and before- and after-school child care. (Sec. 658E 
of the CCDBG Act)
    State plans must also assure that payment rates will be 
adequate to provide eligible children with equal access to 
child care as compared with children whose families are not 
eligible for subsidies, and must assure that the State will 
establish and periodically revise a sliding fee scale that 
provides for cost sharing by families that receive child care 
subsidies.

Explanation of provision

    The proposal requires the State plan to cover a 2-year 
period. States must provide a detailed description of 
procedures to be used to assure parental choice of providers. 
Instead of ``providing assurances,'' States must ``certify'' 
that procedures are in effect within the State to ensure 
unlimited parental access to the families providing care to 
children and to ensure parental choice of child care provider; 
the proposal also requires that the State plan provide a 
detailed description of such procedures. Instead of ``providing 
assurances,'' a State must ``certify'' that it maintains a 
record of parental complaints and requires the State to provide 
a detailed description of how such a record is maintained and 
made available. The proposal changes the consumer education 
part of the State plan to require assurances that the State 
will collect and disseminate consumer education information. 
States must certify that they have in effect child care 
licensing requirements and provide a detailed description of 
the requirements and how they are enforced. This provision does 
not require that licensing requirements be applied to specific 
types of child care providers. States must certify that 
procedures are in effect to ensure that child care providers 
receiving funds under this Act comply with applicable State or 
local health and safety requirements. The Secretary is required 
to develop minimum standards for Indian tribes and tribal 
organizations receiving assistance.
    The proposal eliminates review of State licensing and 
regulatory requirements, notification to the Department of 
Health and Human Services (HHS) when standards are reduced, and 
supplementation. The proposal also eliminates the requirement 
that unlicensed providers be registered. The committee decided 
to retain a current law requirement that all States establish 
health and safety standards. The committee provision does not 
specify the particular standards that must be established, but 
all States must have requirements on prevention and control of 
infectious diseases (including immunizations), building and 
physical premises safety, and minimum health and safety 
training.
    A summary of the facts relied upon by the State to 
determine that payment rates are sufficient to ensure equal 
access to child care must be included in the State plan. Funds 
must be used for child care services, for activities to improve 
the quality and availability of such services, and for any 
other activity that the State deems appropriate to realize the 
goals specified above. The proposal deletes the current law 
requirement that States reserve 25 percent of funds for 
activities to improve the quality of child care and to increase 
availability of early childhood development and before- and 
after-school care. States may spend no more than 5 percent on 
administrative costs.
    States must spend a substantial portion of the amounts 
available to provide child care to low-income working families 
who are not working their way off welfare or are at risk of 
becoming welfare dependent. However, States first must comply 
with requirement that at least 70 percent of mandatory funds 
must be used for welfare or at-risk families. States must 
demonstrate how they will meet the child care needs of welfare 
and at-risk families.

Reason for change

    The committee intends this provision to reflect a change in 
the approval process followed by the Secretary of HHS. In this 
new approach, the committee limits the Secretary's ability to 
shape the content of the State plan. For functions in which 
Congress requires the State to have in effect certain 
procedures and policies, States must certify in their State 
plan that such procedures and policies are actually in effect.
    In reviewing the State plan, the Secretary may determine 
the form in which the plan is submitted and determine what 
information the State presents in the plan. However, unlike the 
existing approval process, about required components the 
Secretary is only authorized to ensure that the plan submitted 
includes the certifications and assurances called for by the 
statute. The Secretary does not have authority to require 
changes in the State's plan unless the plan does not include 
the basic elements called for by the statute or when, based on 
the content of the plan, it is clear that the State would be 
expending Federal funds on activities not authorized by law. 
The committee believes that this approach is necessary to 
ensure that States are given adequate flexibility to design 
programs of child care assistance that address needs within the 
State and that are within the broad parameters of the law.
    The committee believes that the information collected and 
disseminated by the State should directly support the goal of 
helping parents make informed child care choices rather than 
being focused solely on bureaucratic requirements. The 
committee also notes that consumer information should not only 
include sources of subsidized care, but should make a concerted 
effort to provide information on other sources of affordable 
care, such as family and relative care.
    While the committee is eliminating some of the burdensome 
requirements that are unnecessary for assuring the safety of 
children, the provision does retain the Federal requirements 
that States establish health and safety standards and ensure 
that providers of child care comply with applicable licensing 
and regulatory requirements.
    The committee's child care proposal assures that adequate 
money is available for child care assistance to families 
working their way off welfare, families at risk of becoming 
dependent on welfare, and families already dependent on 
welfare. Further, the proposal reforms current law to ensure 
that States can use available resources in the most efficient 
manner while simultaneously protecting the health and safety of 
children.

Effective date

    October 1, 1996.

           6. Activities to Improve the Quality of Child Care

Present law

    As stated above, 25 percent of State allotments must be 
reserved for activities to improve child care quality and to 
increase the availability of early childhood development and 
before- and after-school child care. Section 658G specifies how 
these funds are to be used. Of reserved funds, States are 
required to use no less than 20 percent for improving the 
quality of care, including resource and referral programs, 
making grants or loans to assist providers in meeting State and 
local standards, monitoring of compliance with licensing and 
regulatory requirements, training of child care personnel, and 
improving compensation for child care personnel. (Sec. 658G of 
the CCDBG Act)

Explanation of provision

    A State that receives child care funds must use at least 3 
percent of all funds received (both mandatory and 
discretionary) for activities designed to provide comprehensive 
consumer education to parents and the public, for activities 
that increase parental choice, and for activities designed to 
improve the quality and availability of child care.

Reason for change

    The categorical language of current law that requires 
States to spend fixed percentages of funds on specific 
activities is rigid and interferes with State flexibility. 
Under the committee proposal, more money is devoted to actually 
paying for child care and States are given more flexibility 
over the smaller amount of money set aside for improving the 
quality of child care.

Effective date

    October 1, 1996.

 7. Repeal of Early Childhood Development and Before- and After-School 
                            Care Requirement

Present law

    States are required to use no less than 75 percent of funds 
reserved for quality improvement for activities to expand and 
conduct early childhood development programs and before- and 
after-school child care. (Sec. 658H of the CCDBG Act)

Explanation of provision

    The set-aside for early childhood development programs and 
before- and after-school care is repealed.

Reason for change

    States are provided with substantially more child care 
funds than under current law. If they so choose, they may spend 
part of these funds on either early childhood programs or 
before- and after-school care. A major goal of the block grant 
approach is to leave the allocation of funds to specific types 
of child care completely up to States.

Effective date

    October 1, 1996.

                   8. Administration and Enforcement

Present law

    The Secretary of Health and Human Services (HHS) is 
required to coordinate HHS and other Federal child care 
agencies, to collect and publish a list of State child care 
standards every 3 years, and to provide technical assistance to 
States. The Secretary must also review, monitor, and enforce 
compliance with the Act and the State plan by withholding 
payments and imposing additional sanctions in certain cases. 
(Sec. 658I of the CCDBG Act)

Explanation of provision

    This section strikes the current law requirement that the 
Secretary withhold further payments to a State in case of a 
finding of noncompliance until the noncompliance is corrected. 
Instead, the Secretary is authorized, in such cases, to require 
that the State reimburse the Secretary for any improperly spent 
funds, or the Secretary may deduct from the administrative 
portion of the State's subsequent allotment an amount equal to 
or less than the misspent funds, or a combination of such 
options.

Reason for change

    The committee chose to strike this provision because it did 
not want to penalize recipients of child care assistance by 
withholding payments to States indefinitely. Instead, the 
committee decided to provide the Secretary with discretion in 
sanctioning States. The committee believes it is important that 
any sanctions should be designed to ensure the State's 
compliance while limiting the impact of those sanctions on the 
families dependent upon Federal assistance to meet their child 
care needs.

Effective date

    October 1, 1996.

                              9. Payments

Present law

    Payments received by a State for a fiscal year may be 
expended in that fiscal year or in the succeeding 3 fiscal 
years. (Sec. 658J of the CCDBG Act)

Explanation of provision

    Payments received by a State for a fiscal year may be 
obligated in the fiscal year received or the succeeding fiscal 
year, instead of expended in the fiscal year received or the 
succeeding 3 fiscal years.

Reason for change

    Requiring States to spend money in only the next fiscal 
year will permit the Secretary to reallocate unspent funds 
among other States.

Effective date

    October 1, 1996.

                      10. Annual Report and Audits

Present law

    States must prepare and submit to the Secretary every year 
a report specifying how funds are used; presenting data on the 
manner in which the child care needs of families in the State 
are being fulfilled, including information on the number of 
children served, child care programs in the State, compensation 
provided to child care staff, and activities to encourage 
public-private partnerships in child care; describing the 
extent to which affordability and availability of child care 
has increased; summarizing findings from a review of State 
licensing and regulatory requirements, if applicable; 
explaining any action taken by the State to reduce standards, 
if applicable; and describing standards and health and safety 
requirements applied to child care providers in the State, 
including a description of efforts to improve the quality of 
child care. (Sec. 658K of the CCDBG Act)

Explanation of provision

    The title of the section is changed from ``Annual Report 
and Audits'' to ``Reports and Audits.'' States must collect on 
a monthly basis, and report to HHS on a quarterly basis, the 
following information on each family receiving assistance:
          (1) family income;
          (2) county of residence;
          (3) the gender, race, age of children receiving 
        benefits;
          (4) whether the family includes only one parent;
          (5) the sources of family income, including:
                  (a) the amount obtained from employment, 
                including self-employment;
                  (b) cash assistance or other assistance under 
                Part A;
                  (c) housing assistance;
                  (d) food stamps; and
                  (e) other public assistance;
          (6) the number of months the family has received 
        benefits;
          (7) the type of care in which the child was enrolled 
        (family day care, center, own home);
          (8) whether the provider was a relative;
          (9) the cost of care; and
          (10) the average hours per week of care.
    Twice each year, the State must submit the following 
aggregate data to HHS:
          (1) the number of providers separately identified in 
        accord with each type of provider that received funding 
        under this subchapter;
          (2) the monthly cost of child care services and the 
        portion of such cost paid with assistance from this Act 
        by type of care;
          (3) the number of payments by the State in vouchers, 
        contracts, cash, and disregards from public benefit 
        programs by type of care;
          (4) the manner in which consumer education 
        information was provided and the number of parents who 
        received it; and
          (5) total number (unduplicated) of children and 
        families served.

Reason for change

    This set of data elements, which is somewhat more detailed 
than report elements required under existing law, will provide 
a consistent set of data on federally subsidized child care 
programs. This information is necessary for Congress and the 
public to judge the adequacy, effectiveness, and efficiency of 
the Child Care and Development Block Grant.

Effective date

    October 1, 1996.

                      11. Report by the Secretary

Present law

    The Secretary is required to prepare and submit an annual 
report, summarizing and analyzing information provided by 
States, to the House Education and Labor Committee and the 
Senate Labor and Human Resources Committee. This report must 
contain an assessment and, where appropriate, recommendations 
to Congress regarding efforts that should be taken to improve 
access of the public to quality and affordable child care. 
(Sec. 658L of the CCDBG Act)

Explanation of provision

    The Secretary must prepare and submit biennial reports, 
rather than annual reports, with the first report due no later 
than July 31, 1997; the reference to the House Education and 
Labor Committee is replaced with the House Economic and 
Educational Opportunities Committee.

Reason for change

    Annual reports are unnecessary; reports every 2 years are 
sufficient to keep the Congress and the public informed of 
progress in use of child care funds.

Effective date

    October 1, 1996.

                             12. Allotments

Present law

    The Secretary must reserve \1/2\ of 1 percent of 
appropriations for payment to Guam, American Samoa, the Virgin 
Islands, the Northern Marianas and the Trust Territory of the 
Pacific Islands. The Secretary also must reserve no more than 3 
percent for payment to Indian tribes and tribal organizations 
with approved applications. Remaining funds are allocated to 
the States based on the States' proportion of children under 
age 5 and the number of children receiving free or reduced-
price school lunches, as well as the States' per capita income. 
Any portion of a State's reallotment that the Secretary 
determines is not needed by the State to carry out its plan for 
the allotment period must be reallotted by the Secretary to the 
other States in the same proportion as the original allotments. 
(Sec. 658O of the CCDBG Act)

Explanation of provision

    Set-asides for the Territories, Indian tribes, and tribal 
organizations are maintained, except that the Trust Territory 
of the Pacific Islands is deleted from the set-aside for 
Territories. Indian tribes are provided with a 1 percent set-
aside of all funds, both entitlement and appropriated, 
authorized by this section each year. Under some circumstances, 
and with approval from the Secretary, Indian tribes are 
authorized to use a portion of their funds for renovation and 
construction of child care facilities. Within the overall block 
grant for social programs provided to the territories, each 
territory is authorized to spend whatever portion they choose 
of their capped amount on child care (for additional details 
see item 79 of Title I). Allotments to States were described in 
item 3 above.

Reason for change

    The reason for this change in allocation to Indians is to 
assure that they receive a portion of mandatory as well as 
discretionary child care funding. Territories are provided with 
a child care block grant that is integrated with the other 
block grants so they will enjoy maximum flexibility in use of 
funds.

Effective date

    October 1, 1996.

                            13. Definitions

Present law

    The following terms are defined: caregiver, child care 
certificate, elementary school, eligible child, eligible child 
care provider, family child care provider, Indian tribe, lead 
agency, parent, secondary school, Secretary, sliding fee scale, 
State, and tribal organization. (Sec. 658P of the CCDBG Act)

Explanation of provision

    Child care deposits are added as an allowable use of a 
child care certificate. The definition of ``eligible child'' is 
revised to one whose family income does not exceed 85 percent 
of the State median, instead of 75 percent. The definition of 
``relative child care provider'' is revised by adding great 
grandchild and sibling (if the provider lives in a separate 
residence) to the list of eligible relative providers and the 
requirement that relatives providing care be registered is 
struck. Relative providers are required to comply with any 
applicable requirements governing child care provided by a 
relative, rather than State requirements. The definition for 
elementary and secondary school is eliminated. The Trust 
Territory of the Pacific Islands is dropped from the definition 
of ``State.'' Native Hawaiian Organization is added to the 
definition of ``tribal organization.''

Reason for change

    The committee is concerned that many child care providers 
require parents to pay a deposit before their children can be 
enrolled for services. Such deposits can be a barrier to 
receiving services for poor families who lack the funds to pay 
a deposit. The committee provision will eliminate this barrier 
by allowing States to use funds to pay these deposits when 
necessary. This section also expands the definition of who can 
be considered an eligible relative child care provider in order 
to remove barriers to providing child care services under this 
proposal.

Effective date

    October 1, 1996.

                              14. Repeals

Present law

    No provision.

Explanation of provision

    The proposal repeals the following programs: (1) Child 
Development Associate (CDA) Scholarship Assistance; (2) State 
Dependent Care Development Grants; (3) Programs of National 
Significance under Title X of the Elementary and Secondary 
Education Assistance Act of 1965 (child care related to 
Cultural Partnerships for At-Risk Children and Youth, and Urban 
and Rural Education Assistance); and (4) Native-Hawaiian 
Family-Based Education Centers.
    (Note: Title I of the proposal also repeals child care 
assistance provided under current law by Title IV-A of the 
Social Security Act. This assistance is provided under three 
programs known as AFDC Child Care, Transitional Child Care, and 
At-Risk Child Care. Thus, the total number of child care 
programs merged into the Child Care and Development Block Grant 
is seven.)

Reason for change

    The provision eliminates categorical, single purpose 
programs and provides maximum flexibility to States in their 
use of child care dollars by combining seven programs into a 
single block grant.

Effective date

    October 1, 1996.

                           15. Effective date

Present law

    No provision.

Explanation of provision

    This title and the amendments made by this title take 
effect on October 1, 1996; the authorization of appropriations 
and entitlement authority under section 803(a) take effect on 
the date of enactment.

Reason for change

    States are given access to the block grant in the next 
fiscal year so they can begin enjoying the benefits of greater 
flexibility as soon as possible. In the meantime, however, 
funding for child care under existing programs continues.

                  SUBTITLE H--MISCELLANEOUS PROVISIONS

1. Expenditure of Federal Funds in Accordance with Laws and Procedures 
                Applicable to Expenditure of State Funds

Present law

    According to the National Conference of State Legislatures, 
there are six States in which under court rulings of 
interpretations of State constitutions, certain Federal funds 
are controlled by the Executive branch rather than the State 
legislature. (An example would be action on funds when the 
legislature is out of session.) These States are Arizona, 
Colorado, Connecticut, Delaware, New Mexico, and Oklahoma.

Explanation of provision

    The proposal stipulates that funds from certain Federal 
block grants to the States are to be expended in accordance 
with the laws and procedures applicable to the expenditure of 
the State's own resources (i.e., appropriated through the State 
legislature in all States). This provision applies to the 
following block grants: temporary assistance to needy families 
block grant, the optional State food assistance block grant, 
and the child care block grant. Thus, in the States in which 
the Governor previously had exclusive control over Federal 
block grant funds, the State legislatures now would share 
control through the appropriations process. However, States 
would continue to spend Federal funds in accord with Federal 
law.

Reason for change

    The purpose of this provision is to ensure that Federal 
funds are spent in accord with the wishes of State legislatures 
as well as Governors.

Effective date

    October 1, 1996.

     2. Sanctioning for Testing Positive for Controlled Substances

Present law

    Eligibility and benefit status for most Federal welfare 
programs are not affected by a recipient's use of illegal 
drugs.

Explanation of provision

    States are not prohibited by the Federal Government from 
testing welfare recipients for use of controlled substances nor 
for sanctioning welfare recipients who test positive for the 
use of controlled substances.

Reason for change

    Research shows that a substantial number of adults on 
welfare use drugs. In the Aid to Families with Dependent 
Children Program, for example, research suggests that about 20 
percent of mothers use illegal substances. The purpose of this 
provision is to clarify that States have the authority to test 
welfare recipients for use of controlled substances and to 
sanction recipients, either by reducing their benefit or by 
taking other actions, if they believe sanctions are 
appropriate.

Effective date

    October 1, 1996.

       3. Reduction in Block Grants to States for Social Services

Present law

    The Social Services Block Grant (Title XX) provides funds 
to States in order to provide a wide variety of social 
services, including child care, family planning, protective 
services for children and adults, services for children and 
adults on foster care, and employment services. States have 
wide discretion over how they use Social Services Block Grant 
funds. States set their own eligibility requirements and are 
allowed to transfer up to 10 percent of their allotment to 
certain Federal health block grants, and for low-income home 
energy assistance (LIHEAP). Funding for the Social Services 
Block Grant is capped at $2.8 billion a year. Funds are 
allocated among States according to the State's share of its 
total population. No State matching funds are required to 
receive Social Services Block Grant money.

Explanation of provision

    For fiscal years 1997 through 2002, the Social Services 
Block Grant is reduced by 10 percent.

Reason for change

    Across the three block grants created by this legislation, 
States will receive about $3 billion more than they would 
receive under current law. In addition, States will have much 
greater flexibility in the use of these dollars and are limited 
in the amount of time they can keep adults on cash welfare. 
Thus, between the extra funds provided by the block grants, the 
flexibility to transfer funds across block grants, and the 
reduced eligibility for funds, States will have enough money to 
meet the needs of poor citizens. Under these circumstances, a 
reduction in the general purpose Title XX block grant is 
appropriate.

Effective date

    October 1, 1996.

                   4. Earned Income Credit Provisions

Present law

            (1) Change test for disqualified income
    For taxable years beginning after December 31, 1995, an 
individual is not eligible for the credit if the aggregate 
amount of ``disqualified income'' of the taxpayer for the 
taxable year exceeds $2,350. This threshold is not indexed. 
Disqualified income is the sum of:
          (1) interest (taxable and tax-exempt),
          (2) dividends, and
          (3) net rent and royalty income (if greater than 
        zero).
            (2) Modify definition of adjusted gross income used for 
                    phasing out the credit
    For taxpayers with earned income (or AGI, if greater) in 
excess of the beginning of the phaseout range, the maximum 
credit amount is reduced by the phaseout rate multiplied by the 
amount of earned income (or AGI, if greater) in excess of the 
beginning of the phaseout range. For taxpayers with earned 
income (or AGI, if greater) in excess of the end of the 
phaseout range, no credit is allowed.
            (3) Second-tier phaseout of the credit
    Under present law, for taxpayers with earned income (or 
AGI, if greater) in excess of the beginning of the phaseout 
range, the maximum credit amount is reduced by the phaseout 
rate multiplied by the amount of earned income (or AGI, if 
greater) in excess of the beginning of the phaseout range. For 
taxpayers with earned income (or AGI, if greater) in excess of 
the end of the phaseout range, no credit is allowed.

Explanation of provision

            (1) Change test for disqualified income
    For purposes of the disqualified income test, the following 
items are added to the definition of disqualified income: 
capital gain net income and net passive income (if greater than 
zero) that is not self-employment income.
    The threshold above which an individual is not eligible for 
the credit is reduced from $2,350 to $2,250, and the threshold 
is indexed for inflation after 1997.
            (2) Modify definition of adjusted gross income used for 
                    phasing out the credit
    The bill modifies the definition of AGI used for phasing 
out the credit by disregarding certain losses. The losses 
disregarded are:
          (1) net capital losses (if greater than zero),
          (2) net losses from trusts and estates,
          (3) net losses from nonbusiness rents and royalties, 
        and
          (4) 50 percent of the net loss from businesses, 
        computed separately with respect to sole 
        proprietorships (other than in farming), sole 
        proprietorships in farming, and other businesses.
For purposes of item (4), above, amounts attributable to a 
business that consists of the performance of services by the 
taxpayer as an employee are not taken into account.
            (3) Second-tier phaseout of the credit
    The bill increases the phaseout rate of the credit for 
individuals with earned income (or modified AGI, if greater) in 
excess of a second-tier phaseout threshold. This second-tier 
phaseout does not apply to individuals with no qualifying 
children. For individuals with two or more qualifying children, 
the second-tier phaseout threshold is $21,360 and the phaseout 
rate for income in excess of that threshold is 23 percent. For 
individuals with one qualifying child, the second-tier phaseout 
threshold is $17,340 and the phaseout rate for income in excess 
of that threshold is 18 percent. These second-tier phaseout 
thresholds are indexed for inflation after 1997. The phaseout 
rate applied to income between the present-law phaseout 
threshold and the new, second-tier phaseout threshold is the 
same as would apply under present law for 1997 and future 
years. With these changes, the parameters of the credit for 
1997 will be:

------------------------------------------------------------------------
                                   Two or more      One           No    
                                    qualifying   qualifying   qualifying
                                    children--    child--     children--
------------------------------------------------------------------------
Credit rate (percent)............        40.00        34.00         7.65
Earned income amount.............       $9,120       $6,500       $4,330
Maximum credit...................       $3,648       $2,210         $331
First-tier phaseout threshold....      $11,910      $11,910       $5,420
First-tier phaseout rate                                                
 (percent).......................        21.06        15.98         7.65
Second-tier phaseout threshold...      $21,360      $17,340             
Second-tier phaseout rate                                               
 (percent).......................        23.00        18.00             
Phaseout ends....................      $28,568      $24,797       $9,750
------------------------------------------------------------------------

    For years after 1997, the credit rates and the phaseout 
rates will be the same as in the preceding table. The dollar 
values will continue to be indexed, as under present law.

Reason for change

            (1) Change test for disqualified income
    The committee believes that individuals with substantial 
assets could use proceeds from the sale of those assets in 
place of the earned income credit to support consumption in 
times of low income. Transfer programs such as AFDC, food 
stamps, and Medicaid have asset tests for determining 
eligibility. Such programs also have caseworkers available to 
make determinations about the assets owned by a potential 
claimant. In the case of the earned income credit, the IRS does 
not have caseworkers to assess the balance sheets of millions 
of taxpayers, and it does not currently have information on 
most taxpayers asset-holdings. Therefore, in order to apply a 
proxy for an asset-based test, the recently enacted 
disqualified income test concentrates on the returns generated 
by those assets. Interest, dividend, and net rental and royalty 
income represent flows of income from assets that represent 
wealth of the taxpayer. The committee believes that net capital 
gains and other passive income represent other flows of income 
from assets that could be liquidated to support current 
consumption. The committee also believes that this threshold 
should be set in inflation-adjusted dollars, so it is indexing 
the threshold for inflation.
            (2) Modify definition of adjusted gross income used for 
                    phasing out the credit
    The committee believes it can improve the targeting of the 
credit by expanding the definition of income used in phasing 
out the credit. The committee believes that the definition of 
AGI used currently in phasing out the credit is too narrow; 
denying certain losses reported on Schedules C, D, E, and F 
would conform the income definition used for the phaseout more 
closely to the concept of ``total positive income.''
            (3) Second-tier phaseout of the credit
    The committee is concerned that the credit is not well-
targeted. Under present law, in 1997 taxpayers with two or more 
qualifying children would be able to claim the credit even if 
they have AGI as high as $29,232. Taxpayers with one qualifying 
child would be able to claim the credit even if they have AGI 
as high as $25,740. The committee believes that taxpayers with 
such incomes do not need a tax credit designed to benefit the 
poor. Therefore, the committee increased the rates at which the 
credit is phased out for credit-eligible taxpayers with higher 
incomes.

Effective date

    The provisions are effective for taxable years beginning 
after December 31, 1996.

                      III. VOTES OF THE COMMITTEE

    In compliance with clause 2(l)(2)(B) of rule XI of the 
Rules of the House of Representatives, the following statements 
are made concerning the votes of the Committee on Ways and 
Means in its consideration of recommendations to the Committee 
on the Budget on budget reconciliation welfare recommendations.

                  Motion to Report the Recommendations

    The recommendations were ordered favorably reported to the 
Committee on the Budget by a rollcall vote of 23 yeas and 14 
nays (with a quorum being present). The vote was as follows:

----------------------------------------------------------------------------------------------------------------
        Representatives             Yea       Nay     Present    Representatives      Yea       Nay     Present 
----------------------------------------------------------------------------------------------------------------
Mr. Archer.....................        X   ........  .........  Mr. Gibbons......  ........  ........  .........
Mr. Crane......................        X   ........  .........  Mr. Rangel.......  ........  ........         X 
Mr. Thomas.....................        X   ........  .........  Mr. Stark........  ........  ........         X 
Mr. Shaw.......................        X   ........  .........  Mr. Jacobs.......  ........  ........         X 
Mrs. Johnson...................        X   ........  .........  Mr. Ford.........  ........  ........         X 
Mr. Bunning....................        X   ........  .........  Mr. Matsui.......  ........  ........         X 
Mr. Houghton...................        X   ........  .........  Mrs. Kennelly....  ........  ........         X 
Mr. Herger.....................        X   ........  .........  Mr. Coyne........  ........  ........         X 
Mr. McCrery....................        X   ........  .........  Mr. Levin........  ........  ........         X 
Mr. Hancock....................        X   ........  .........  Mr. Cardin.......  ........  ........         X 
Mr. Camp.......................        X   ........  .........  Mr. McDermott....  ........  ........         X 
Mr. Ramstad....................        X   ........  .........  Mr. Kleczka......        X   ........  .........
Mr. Zimmer.....................        X   ........  .........  Mr. Lewis........  ........  ........         X 
Mr. Nussle.....................        X   ........  .........  Mr. Payne........  ........  ........         X 
Mr. Johnson....................        X   ........  .........  Mr. Neal.........  ........  ........         X 
Ms. Dunn.......................        X   ........  .........  Mr. McNulty......  ........  ........         X 
Mr. Collins....................        X   ........  .........                                                  
Mr. Portman....................        X   ........  .........                                                  
Mr. Hayes......................  ........  ........  .........                                                  
Mr. Laughlin...................        X   ........  .........                                                  
Mr. English....................        X   ........  .........                                                  
Mr. Ensign.....................        X   ........  .........                                                  
Mr. Christensen................        X   ........  .........                                                  
----------------------------------------------------------------------------------------------------------------

                          Votes on Amendments

    Rollcall votes were conducted on the following amendments 
to the chairman's amendment in the nature of a substitute.
    An amendment by Mr. Levin to Title I to retain current law 
medical assistance eligibility for families currently eligible 
for AFDC was defeated by a rollcall vote of 14 yeas to 16 nays. 
The vote was as follows:

----------------------------------------------------------------------------------------------------------------
        Representatives             Yea       Nay     Present    Representatives      Yea       Nay     Present 
----------------------------------------------------------------------------------------------------------------
Mr. Archer.....................  ........        X   .........  Mr. Gibbons......        X   ........  .........
Mr. Crane......................  ........  ........  .........  Mr. Rangel.......        X   ........  .........
Mr. Thomas.....................  ........        X   .........  Mr. Stark........        X   ........  .........
Mr. Shaw.......................  ........        X   .........  Mr. Jacobs.......  ........  ........  .........
Mrs. Johnson...................        X   ........  .........  Mr. Ford.........  ........  ........  .........
Mr. Bunning....................  ........  ........  .........  Mr. Matsui.......  ........  ........  .........
Mr. Houghton...................  ........        X   .........  Mrs. Kennelly....        X   ........  .........
Mr. Herger.....................  ........        X   .........  Mr. Coyne........        X   ........  .........
Mr. McCrery....................  ........        X   .........  Mr. Levin........        X   ........  .........
Mr. Hancock....................  ........        X   .........  Mr. Cardin.......        X   ........  .........
Mr. Camp.......................  ........  ........  .........  Mr. McDermott....        X   ........  .........
Mr. Ramstad....................  ........        X   .........  Mr. Kleczka......        X   ........  .........
Mr. Zimmer.....................  ........  ........  .........  Mr. Lewis........        X   ........  .........
Mr. Nussle.....................  ........        X   .........  Mr. Payne........  ........  ........  .........
Mr. Johnson....................  ........        X   .........  Mr. Neal.........        X   ........  .........
Ms. Dunn.......................  ........        X   .........  Mr. McNulty......        X   ........  .........
Mr. Collins....................  ........        X   .........                                                  
Mr. Portman....................  ........        X   .........                                                  
Mr. Hayes......................  ........  ........  .........                                                  
Mr. Laughlin...................  ........        X   .........                                                  
Mr. English....................        X   ........  .........                                                  
Mr. Ensign.....................  ........        X   .........                                                  
Mr. Christensen................  ........        X   .........                                                  
----------------------------------------------------------------------------------------------------------------

    An amendment by Mr. Levin to Title I to allow States to 
provide noncash benefits, such as vouchers, to recipients who 
have already received 5 years of cash welfare benefits provided 
under the block grant was defeated by a rollcall vote of 15 
yeas to 18 nays. The vote was as follows:

----------------------------------------------------------------------------------------------------------------
        Representatives             Yea       Nay     Present    Representatives      Yea       Nay     Present 
----------------------------------------------------------------------------------------------------------------
Mr. Archer.....................  ........        X   .........  Mr. Gibbons......  ........  ........  .........
Mr. Crane......................  ........        X   .........  Mr. Rangel.......        X   ........  .........
Mr. Thomas.....................  ........        X   .........  Mr. Stark........        X   ........  .........
Mr. Shaw.......................  ........        X   .........  Mr. Jacobs.......  ........  ........  .........
Mrs. Johnson...................  ........        X   .........  Mr. Ford.........        X   ........  .........
Mr. Bunning....................  ........        X   .........  Mr. Matsui.......        X   ........  .........
Mr. Houghton...................  ........        X   .........  Mrs. Kennelly....        X   ........  .........
Mr. Herger.....................  ........  ........  .........  Mr. Coyne........        X   ........  .........
Mr. McCrery....................        X   ........  .........  Mr. Levin........        X   ........  .........
Mr. Hancock....................  ........        X   .........  Mr. Cardin.......        X   ........  .........
Mr. Camp.......................  ........        X   .........  Mr. McDermott....  ........  ........  .........
Mr. Ramstad....................        X   ........  .........  Mr. Kleczka......        X   ........  .........
Mr. Zimmer.....................  ........        X   .........  Mr. Lewis........        X   ........  .........
Mr. Nussle.....................  ........        X   .........  Mr. Payne........  ........  ........  .........
Mr. Johnson....................  ........        X   .........  Mr. Neal.........  ........  ........  .........
Ms. Dunn.......................  ........        X   .........  Mr. McNulty......        X   ........  .........
Mr. Collins....................  ........        X   .........                                                  
Mr. Portman....................  ........        X   .........                                                  
Mr. Hayes......................  ........  ........  .........                                                  
Mr. Laughlin...................  ........        X   .........                                                  
Mr. English....................        X   ........  .........                                                  
Mr. Ensign.....................  ........        X   .........                                                  
Mr. Christensen................  ........        X   .........                                                  
----------------------------------------------------------------------------------------------------------------

    An amendment by Mr. Ford to Title I to add equal 
protections language was defeated by a rollcall vote of 14 yeas 
to 22 nays. The vote was as follows:

----------------------------------------------------------------------------------------------------------------
        Representatives             Yea       Nay     Present    Representatives      Yea       Nay     Present 
----------------------------------------------------------------------------------------------------------------
Mr. Archer.....................  ........        X   .........  Mr. Gibbons......  ........  ........  .........
Mr. Crane......................  ........        X   .........  Mr. Rangel.......        X   ........  .........
Mr. Thomas.....................  ........        X   .........  Mr. Stark........        X   ........  .........
Mr. Shaw.......................  ........        X   .........  Mr. Jacobs.......        X   ........  .........
Mrs. Johnson...................  ........        X   .........  Mr. Ford.........        X   ........  .........
Mr. Bunning....................  ........        X   .........  Mr. Matsui.......        X   ........  .........
Mr. Houghton...................  ........        X   .........  Mrs. Kennelly....        X   ........  .........
Mr. Herger.....................  ........        X   .........  Mr. Coyne........        X   ........  .........
Mr. McCrery....................  ........        X   .........  Mr. Levin........        X   ........  .........
Mr. Hancock....................  ........        X   .........  Mr. Cardin.......        X   ........  .........
Mr. Camp.......................  ........        X   .........  Mr. McDermott....        X   ........  .........
Mr. Ramstad....................  ........        X   .........  Mr. Kleczka......        X   ........  .........
Mr. Zimmer.....................  ........        X   .........  Mr. Lewis........        X   ........  .........
Mr. Nussle.....................  ........        X   .........  Mr. Payne........  ........  ........  .........
Mr. Johnson....................  ........        X   .........  Mr. Neal.........        X   ........  .........
Ms. Dunn.......................  ........        X   .........  Mr. McNulty......        X   ........  .........
Mr. Collins....................  ........        X   .........                                                  
Mr. Portman....................  ........        X   .........                                                  
Mr. Hayes......................  ........  ........  .........                                                  
Mr. Laughlin...................  ........        X   .........                                                  
Mr. English....................  ........        X   .........                                                  
Mr. Ensign.....................  ........        X   .........                                                  
Mr. Christensen................  ........        X   .........                                                  
----------------------------------------------------------------------------------------------------------------

    An amendment by Mrs. Johnson to Title I to require medical 
assistance to be provided for all recipients of assistance 
under the State program funded under the States plan approved 
under Title XIX was agreed to by a rollcall vote of 19 yeas to 
14 nays. The vote was as follows:

----------------------------------------------------------------------------------------------------------------
        Representatives             Yea       Nay     Present    Representatives      Yea       Nay     Present 
----------------------------------------------------------------------------------------------------------------
Mr. Archer.....................  ........        X   .........  Mr. Gibbons......  ........  ........  .........
Mr. Crane......................  ........        X   .........  Mr. Rangel.......        X   ........  .........
Mr. Thomas.....................  ........        X   .........  Mr. Stark........        X   ........  .........
Mr. Shaw.......................        X   ........  .........  Mr. Jacobs.......  ........  ........  .........
Mrs. Johnson...................        X   ........  .........  Mr. Ford.........        X   ........  .........
Mr. Bunning....................  ........  ........  .........  Mr. Matsui.......        X   ........  .........
Mr. Houghton...................        X   ........  .........  Mrs. Kennelly....        X   ........  .........
Mr. Herger.....................  ........        X   .........  Mr. Coyne........        X   ........  .........
Mr. McCrery....................  ........        X   .........  Mr. Levin........        X   ........  .........
Mr. Hancock....................  ........        X   .........  Mr. Cardin.......        X   ........  .........
Mr. Camp.......................  ........        X   .........  Mr. McDermott....        X   ........  .........
Mr. Ramstad....................  ........        X   .........  Mr. Kleczka......        X   ........  .........
Mr. Zimmer.....................        X   ........  .........  Mr. Lewis........        X   ........  .........
Mr. Nussle.....................  ........  ........  .........  Mr. Payne........  ........  ........  .........
Mr. Johnson....................  ........        X   .........  Mr. Neal.........        X   ........  .........
Ms. Dunn.......................  ........        X   .........  Mr. McNulty......        X   ........  .........
Mr. Collins....................  ........        X   .........                                                  
Mr. Portman....................  ........        X   .........                                                  
Mr. Hayes......................  ........  ........  .........                                                  
Mr. Laughlin...................  ........        X   .........                                                  
Mr. English....................        X   ........  .........                                                  
Mr. Ensign.....................        X   ........  .........                                                  
Mr. Christensen................  ........        X   .........                                                  
----------------------------------------------------------------------------------------------------------------

    An amendment by Mr. Cardin to amend State plans to include 
provisions of education and counseling (including abstinence-
based programs), and prepregnancy health services, was agreed 
to by a rollcall vote of 19 yeas to 12 nays. The vote was as 
follows:

----------------------------------------------------------------------------------------------------------------
        Representatives             Yea       Nay     Present    Representatives      Yea       Nay     Present 
----------------------------------------------------------------------------------------------------------------
Mr. Archer.....................  ........        X   .........  Mr. Gibbons......  ........  ........  .........
Mr. Crane......................  ........        X   .........  Mr. Rangel.......        X   ........  .........
Mr. Thomas.....................        X   ........  .........  Mr. Stark........  ........  ........  .........
Mr. Shaw.......................        X   ........  .........  Mr. Jacobs.......        X   ........  .........
Mrs. Johnson...................        X   ........  .........  Mr. Ford.........        X   ........  .........
Mr. Bunning....................        X   ........  .........  Mr. Matsui.......        X   ........  .........
Mr. Houghton...................        X   ........  .........  Mrs. Kennelly....        X   ........  .........
Mr. Herger.....................  ........        X   .........  Mr. Coyne........        X   ........  .........
Mr. McCrery....................  ........        X   .........  Mr. Levin........        X   ........  .........
Mr. Hancock....................  ........        X   .........  Mr. Cardin.......        X   ........  .........
Mr. Camp.......................  ........        X   .........  Mr. McDermott....        X   ........  .........
Mr. Ramstad....................        X   ........  .........  Mr. Kleczka......        X   ........  .........
Mr. Zimmer.....................  ........  ........  .........  Mr. Lewis........  ........  ........  .........
Mr. Nussle.....................  ........  ........  .........  Mr. Payne........  ........  ........  .........
Mr. Johnson....................  ........        X   .........  Mr. Neal.........        X   ........  .........
Ms. Dunn.......................        X   ........  .........  Mr. McNulty......        X   ........  .........
Mr. Collins....................  ........        X   .........                                                  
Mr. Portman....................        X   ........  .........                                                  
Mr. Hayes......................  ........  ........  .........                                                  
Mr. Laughlin...................  ........        X   .........                                                  
Mr. English....................  ........        X   .........                                                  
Mr. Ensign.....................  ........        X   .........                                                  
Mr. Christensen................  ........        X   .........                                                  
----------------------------------------------------------------------------------------------------------------

    An amendment by Mr. Rangel to Title to provide an exemption 
for families that ``play by the rules'' to receive benefits 
beyond the 5-year time limit was defeated by a rollcall vote 10 
yeas to 19 nays, with 1 member voting present. The vote was as 
follows:

----------------------------------------------------------------------------------------------------------------
        Representatives             Yea       Nay     Present    Representatives      Yea       Nay     Present 
----------------------------------------------------------------------------------------------------------------
Mr. Archer.....................  ........        X   .........  Mr. Gibbons......  ........  ........  .........
Mr. Crane......................  ........        X   .........  Mr. Rangel.......        X   ........  .........
Mr. Thomas.....................  ........        X   .........  Mr. Stark........  ........  ........  .........
Mr. Shaw.......................  ........        X   .........  Mr. Jacobs.......        X   ........  .........
Mrs. Johnson...................  ........        X   .........  Mr. Ford.........        X   ........  .........
Mr. Bunning....................  ........  ........  .........  Mr. Matsui.......        X   ........  .........
Mr. Houghton...................  ........        X   .........  Mrs. Kennelly....        X   ........  .........
Mr. Herger.....................  ........        X   .........  Mr. Coyne........        X   ........  .........
Mr. McCrery....................  ........        X   .........  Mr. Levin........  ........  ........         X 
Mr. Hancock....................  ........        X   .........  Mr. Cardin.......  ........  ........  .........
Mr. Camp.......................  ........        X   .........  Mr. McDermott....        X   ........  .........
Mr. Ramstad....................  ........        X   .........  Mr. Kleczka......        X   ........  .........
Mr. Zimmer.....................  ........        X   .........  Mr. Lewis........  ........  ........  .........
Mr. Nussle.....................  ........  ........  .........  Mr. Payne........  ........  ........  .........
Mr. Johnson....................  ........  ........  .........  Mr. Neal.........        X   ........  .........
Ms. Dunn.......................  ........        X   .........  Mr. McNulty......        X   ........  .........
Mr. Collins....................  ........        X   .........                                                  
Mr. Portman....................  ........        X   .........                                                  
Mr. Hayes......................  ........  ........  .........                                                  
Mr. Laughlin...................  ........        X   .........                                                  
Mr. English....................  ........        X   .........                                                  
Mr. Ensign.....................  ........        X   .........                                                  
Mr. Christensen................  ........        X   .........                                                  
----------------------------------------------------------------------------------------------------------------

    An amendment by Messrs. Neal and Payne to Title I to 
require a State's plan be approved by the Department of Health 
and Human Services for a State to be eligible to receive block 
grant funds was defeated by a rollcall vote of 13 yeas to 19 
nays. The vote was as follows:

----------------------------------------------------------------------------------------------------------------
        Representatives             Yea       Nay     Present    Representatives      Yea       Nay     Present 
----------------------------------------------------------------------------------------------------------------
Mr. Archer.....................  ........        X   .........  Mr. Gibbons......  ........  ........  .........
Mr. Crane......................  ........        X   .........  Mr. Rangel.......        X   ........  .........
Mr. Thomas.....................  ........        X   .........  Mr. Stark........        X   ........  .........
Mr. Shaw.......................  ........        X   .........  Mr. Jacobs.......        X   ........  .........
Mrs. Johnson...................  ........        X   .........  Mr. Ford.........  ........  ........  .........
Mr. Bunning....................  ........        X   .........  Mr. Matsui.......  ........  ........  .........
Mr. Houghton...................  ........        X   .........  Mrs. Kennelly....        X   ........  .........
Mr. Herger.....................  ........  ........  .........  Mr. Coyne........        X   ........  .........
Mr. McCrery....................  ........        X   .........  Mr. Levin........        X   ........  .........
Mr. Hancock....................  ........        X   .........  Mr. Cardin.......        X   ........  .........
Mr. Camp.......................  ........        X   .........  Mr. McDermott....        X   ........  .........
Mr. Ramstad....................  ........        X   .........  Mr. Kleczka......        X   ........  .........
Mr. Zimmer.....................  ........        X   .........  Mr. Lewis........        X   ........  .........
Mr. Nussle.....................  ........  ........  .........  Mr. Payne........  ........  ........  .........
Mr. Johnson....................  ........  ........  .........  Mr. Neal.........        X   ........  .........
Ms. Dunn.......................  ........        X   .........  Mr. McNulty......        X   ........  .........
Mr. Collins....................  ........        X   .........                                                  
Mr. Portman....................  ........  ........  .........                                                  
Mr. Hayes......................  ........  ........  .........                                                  
Mr. Laughlin...................  ........        X   .........                                                  
Mr. English....................  ........        X   .........                                                  
Mr. Ensign.....................  ........        X   .........                                                  
Mr. Christensen................  ........        X   .........                                                  
----------------------------------------------------------------------------------------------------------------

    An amendment by Messrs. Coyne and Matsui to Title I to 
disregard advance payments or refunds of the Earned Income Tax 
Credit was defeated by a rollcall vote of 13 yeas to 18 nays. 
The vote was as follows:

----------------------------------------------------------------------------------------------------------------
        Representatives             Yea       Nay     Present    Representatives      Yea       Nay     Present 
----------------------------------------------------------------------------------------------------------------
Mr. Archer.....................  ........        X   .........  Mr. Gibbons......  ........  ........  .........
Mr. Crane......................  ........        X   .........  Mr. Rangel.......        X   ........  .........
Mr. Thomas.....................  ........        X   .........  Mr. Stark........        X   ........  .........
Mr. Shaw.......................  ........        X   .........  Mr. Jacobs.......  ........  ........         X 
Mrs. Johnson...................  ........        X   .........  Mr. Ford.........        X   ........  .........
Mr. Bunning....................  ........        X   .........  Mr. Matsui.......        X   ........  .........
Mr. Houghton...................  ........        X   .........  Mrs. Kennelly....        X   ........  .........
Mr. Herger.....................  ........  ........  .........  Mr. Coyne........        X   ........  .........
Mr. McCrery....................  ........        X   .........  Mr. Levin........        X   ........  .........
Mr. Hancock....................  ........  ........  .........  Mr. Cardin.......        X   ........  .........
Mr. Camp.......................  ........        X   .........  Mr. McDermott....        X   ........  .........
Mr. Ramstad....................  ........        X   .........  Mr. Kleczka......        X   ........  .........
Mr. Zimmer.....................  ........  ........  .........  Mr. Lewis........        X   ........  .........
Mr. Nussle.....................  ........  ........  .........  Mr. Payne........  ........  ........  .........
Mr. Johnson....................  ........  ........  .........  Mr. Neal.........        X   ........  .........
Ms. Dunn.......................  ........        X   .........  Mr. McNulty......        X   ........  .........
Mr. Collins....................  ........        X   .........                                                  
Mr. Portman....................  ........        X   .........                                                  
Mr. Hayes......................  ........  ........  .........                                                  
Mr. Laughlin...................  ........        X   .........                                                  
Mr. English....................  ........        X   .........                                                  
Mr. Ensign.....................  ........        X   .........                                                  
Mr. Christensen................  ........        X   .........                                                  
----------------------------------------------------------------------------------------------------------------

    An amendment by Messrs. Kleczka and English to Title I to 
require vouchers if States opt to end cash benefits before 5 
years was defeated by a rollcall vote of 17 yeas to 19 nays. 
The vote was as follows:

----------------------------------------------------------------------------------------------------------------
        Representatives             Yea       Nay     Present    Representatives      Yea       Nay     Present 
----------------------------------------------------------------------------------------------------------------
Mr. Archer.....................  ........        X   .........  Mr. Gibbons......  ........  ........         X 
Mr. Crane......................  ........        X   .........  Mr. Rangel.......  ........  ........         X 
Mr. Thomas.....................  ........        X   .........  Mr. Stark........  ........  ........         X 
Mr. Shaw.......................  ........        X   .........  Mr. Jacobs.......  ........  ........         X 
Mrs. Johnson...................  ........        X   .........  Mr. Ford.........        X                      
Mr. Bunning....................  ........        X   .........  Mr. Matsui.......  ........  ........         X 
Mr. Houghton...................  ........        X   .........  Mrs. Kennelly....  ........  ........         X 
Mr. Herger.....................  ........        X   .........  Mr. Coyne........        X   ........  .........
Mr. McCrery....................  ........        X   .........  Mr. Levin........        X   ........  .........
Mr. Hancock....................  ........        X   .........  Mr. Cardin.......        X   ........  .........
Mr. Camp.......................  ........        X   .........  Mr. McDermott....        X   ........  .........
Mr. Ramstad....................  ........        X   .........  Mr. Kleczka......        X   ........  .........
Mr. Zimmer.....................  ........        X   .........  Mr. Lewis........        X   ........  .........
Mr. Nussle.....................  ........        X   .........  Mr. Payne........  ........  ........  .........
Mr. Johnson....................  ........        X   .........  Mr. Neal.........        X   ........  .........
Ms. Dunn.......................  ........        X   .........  Mr. McNulty......        X   ........  .........
Mr. Collins....................  ........        X   .........                                                  
Mr. Portman....................  ........        X   .........                                                  
Mr. Hayes......................  ........  ........  .........                                                  
Mr. Laughlin...................  ........        X   .........                                                  
Mr. English....................        X   ........  .........                                                  
Mr. Ensign.....................        X   ........  .........                                                  
Mr. Christensen................        X   ........  .........                                                  
----------------------------------------------------------------------------------------------------------------

    An amendment by Mr. Levin to Title I to uncap the 
contingency fund in a severe recession was defeated by a 
rollcall vote of 15 yeas to 19 nays. The vote was as follows:

----------------------------------------------------------------------------------------------------------------
        Representatives             Yea       Nay     Present    Representatives      Yea       Nay     Present 
----------------------------------------------------------------------------------------------------------------
Mr. Archer.....................  ........        X   .........  Mr. Gibbons......        X   ........  .........
Mr. Crane......................  ........  ........  .........  Mr. Rangel.......        X   ........  .........
Mr. Thomas.....................  ........  ........  .........  Mr. Stark........        X   ........  .........
Mr. Shaw.......................  ........        X   .........  Mr. Jacobs.......        X   ........  .........
Mrs. Johnson...................  ........        X   .........  Mr. Ford.........        X   ........  .........
Mr. Bunning....................  ........        X   .........  Mr. Matsui.......        X   ........  .........
Mr. Houghton...................  ........        X   .........  Mrs. Kennelly....        X                      
Mr. Herger.....................  ........  ........  .........  Mr. Coyne........        X   ........  .........
Mr. McCrery....................  ........        X   .........  Mr. Levin........        X   ........  .........
Mr. Hancock....................  ........        X   .........  Mr. Cardin.......        X   ........  .........
Mr. Camp.......................  ........        X   .........  Mr. McDermott....        X   ........  .........
Mr. Ramstad....................  ........        X   .........  Mr. Kleczka......        X   ........  .........
Mr. Zimmer.....................  ........        X   .........  Mr. Lewis........        X   ........  .........
Mr. Nussle.....................  ........        X   .........  Mr. Payne........        X   ........  .........
Mr. Johnson....................  ........        X   .........  Mr. Neal.........        X   ........  .........
Ms. Dunn.......................  ........        X   .........  Mr. McNulty......        X   ........  .........
Mr. Collins....................  ........        X   .........                                                  
Mr. Portman....................  ........        X   .........                                                  
Mr. Hayes......................  ........  ........  .........                                                  
Mr. Laughlin...................  ........        X   .........                                                  
Mr. English....................  ........        X   .........                                                  
Mr. Ensign.....................  ........        X   .........                                                  
Mr. Christensen................  ........        X   .........                                                  
----------------------------------------------------------------------------------------------------------------

    An amendment by Mrs. Kennelly to Title I to increase the 
maintenance of effort requirement was defeated by a rollcall 
vote of 16 yeas to 20 nays. The vote was as follows:

----------------------------------------------------------------------------------------------------------------
        Representatives             Yea       Nay     Present    Representatives      Yea       Nay     Present 
----------------------------------------------------------------------------------------------------------------
Mr. Archer.....................  ........        X   .........  Mr. Gibbons......        X   ........  .........
Mr. Crane......................  ........  ........  .........  Mr. Rangel.......        X   ........  .........
Mr. Thomas.....................  ........        X   .........  Mr. Stark........        X   ........  .........
Mr. Shaw.......................  ........        X   .........  Mr. Jacobs.......        X   ........  .........
Mrs. Johnson...................        X   ........  .........   Mr. Ford........        X   ........  .........
Mr. Bunning....................  ........        X   .........   Mr. Matsui......        X   ........  .........
Mr. Houghton...................  ........        X   .........  Mrs. Kennelly....        X   ........  .........
Mr. Herger.....................  ........  ........         X   Mr. Coyne........        X   ........  .........
Mr. McCrery....................  ........        X   .........  Mr. Levin........        X   ........  .........
Mr. Hancock....................  ........        X   .........  Mr. Cardin.......        X   ........  .........
Mr. Camp.......................  ........  ........         X   Mr. McDermott....        X   ........  .........
Mr. Ramstad....................  ........        X   .........  Mr. Kleczka......        X   ........  .........
Mr. Zimmer.....................  ........        X   .........  Mr. Lewis........        X   ........  .........
Mr. Nussle.....................  ........        X   .........  Mr. Payne........        X   ........  .........
Mr. Johnson....................  ........        X   .........  Mr. Neal.........        X   ........  .........
Ms. Dunn.......................  ........        X   .........  Mr. McNulty......        X   ........  .........
Mr. Collins....................  ........        X   .........                                                  
Mr. Portman....................  ........  ........  .........                                                  
Mr. Hayes......................  ........  ........  .........                                                  
Mr. Laughlin...................  ........        X   .........                                                  
Mr. English....................  ........        X   .........                                                  
Mr. Ensign.....................  ........        X   .........                                                  
Mr. Christensen................  ........        X   .........                                                  
----------------------------------------------------------------------------------------------------------------

    A substitute amendment by Mr. Cardin was defeated by a 
rollcall vote of 11 yeas to 24 nays. The vote was as follows:

----------------------------------------------------------------------------------------------------------------
        Representatives             Yea       Nay     Present    Representatives      Yea       Nay     Present 
----------------------------------------------------------------------------------------------------------------
Mr. Archer.....................  ........        X   .........  Mr. Gibbons......  ........  ........  .........
Mr. Crane......................  ........        X   .........  Mr. Rangel.......        X   ........  .........
Mr. Thomas.....................  ........        X   .........  Mr. Stark........  ........        X   .........
Mr. Shaw.......................  ........        X   .........  Mr. Jacobs.......        X   ........  .........
Mrs. Johnson...................  ........        X   .........  Mr. Ford.........        X   ........  .........
Mr. Bunning....................  ........        X   .........  Mr. Matsui.......        X   ........  .........
Mr. Houghton...................  ........        X   .........  Mrs. Kennelly....        X   ........  .........
Mr. Herger.....................  ........        X   .........  Mr. Coyne........        X   ........  .........
Mr. McCrery....................  ........        X   .........  Mr. Levin........        X   ........  .........
Mr. Hancock....................  ........        X   .........  Mr. Cardin.......        X   ........  .........
Mr. Camp.......................  ........        X   .........  Mr. McDermott....  ........  ........  .........
Mr. Ramstad....................  ........        X   .........  Mr. Kleczka......  ........        X   .........
Mr. Zimmer.....................  ........        X   .........  Mr. Lewis........        X   ........  .........
Mr. Nussle.....................  ........        X   .........  Mr. Payne........  ........        X   .........
Mr. Johnson....................  ........  ........  .........  Mr. Neal.........        X   ........  .........
Ms. Dunn.......................  ........        X   .........  Mr. McNulty......        X   ........  .........
Mr. Collins....................  ........        X   .........                                                  
Mr. Portman....................  ........        X   .........                                                  
Mr. Hayes......................  ........  ........  .........                                                  
Mr. Laughlin...................  ........        X   .........                                                  
Mr. English....................  ........        X   .........                                                  
Mr. Ensign.....................  ........        X   .........                                                  
Mr. Christensen................  ........        X   .........                                                  
----------------------------------------------------------------------------------------------------------------

                  Congressional Budget Office Estimate

    Pursuant to clause 2(l)(3)(C) of rule XI of the Rules of 
the House of Representatives, the following is the cost 
estimate provided by the Congressional Budget Office pursuant 
to section 403 of the Congressional Budget Act of 1974. [See 
consolidated Congressional Budget Office Cost Estimate on page 
1940.]

   Changes in Existing Law Made by Titile IV of the Bill, as Reported

    In compliance with clause 3 of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italics, existing law in which no change 
is proposed is shown in roman):

          * * * * * * *

                          SOCIAL SECURITY ACT

          * * * * * * *

           old-age and survivors insurance benefits payments

                       Old-age Insurance Benefits

    Sec. 202. (a) * * *
          * * * * * * *

   Limitation on Payments to Prisoners and Certain Other Inmates of 
                      Publicly Funded Institutions

    (x)(1)(A) Notwithstanding any other provision of this 
title, no monthly benefits shall be paid under this section or 
under section 223 to any individual for any month [during] 
throughout which such individual--
            (i) is confined in a jail, prison, or other penal 
        institution or correctional facility [pursuant to his 
        conviction of an offense punishable by imprisonment for 
        more than 1 year (regardless of the actual sentence 
        imposed)], or
            (ii) is confined by court order in an institution 
        at public expense in connection with--
                    (I) a verdict or finding that the 
                individual is guilty but insane, with respect 
                to [an offense punishable by imprisonment for 
                more than 1 year] a criminal offense,
          * * * * * * *
    (3)(A) Notwithstanding the provisions of section 552a of 
title 5, United States Code, or any other provision of Federal 
or State law, any agency of the United States Government or of 
any State (or political subdivision thereof) shall make 
available to the Commissioner of Social Security, upon written 
request, the name and social security account number of any 
individual who is confined as described in paragraph (1) if the 
confinement is under the jurisdiction of such agency and the 
Commissioner of Social Security requires such information to 
carry out the provisions of this section.
    (B)(i) The Commissioner shall enter into a contract, with 
any interested State or local institution described in clause 
(i) or (ii) of paragraph (1)(A) the primary purpose of which is 
to confine individuals as described in paragraph (1)(A), under 
which--
            (I) the institution shall provide to the 
        Commissioner, on a monthly basis, the names, social 
        security account numbers, dates of birth, and such 
        other identifying information concerning the 
        individuals confined in the institution as the 
        Commissioner may require for the purpose of carrying 
        out paragraph (1); and
            (II) the Commissioner shall pay to any such 
        institution, with respect to each individual who is 
        entitled to a benefit under this title for the month 
        preceding the first month throughout which such 
        individual is confined in such institution as described 
        in paragraph (1)(A), an amount not to exceed $400 if 
        the institution furnishes the information described in 
        subclause (I) to the Commissioner within 30 days after 
        the date such individual's confinement in such 
        institution begins, or an amount not to exceed $200 if 
        the institution furnishes such information after 30 
        days after such date but within 90 days after such 
        date.
    (ii) The provisions of section 552a of title 5, United 
States Code, shall not apply to any contract entered into under 
clause (i) or to information exchanged pursuant to such 
contract.
          * * * * * * *

                     overpayments and underpayments

    Sec. 204. (a) * * *
          * * * * * * *
    (g) For payments which are adjusted or withheld to recover 
an overpayment of supplemental security income benefits paid 
under title XVI (including State supplementary payments which 
were paid under an agreement pursuant to section 1616(a) or 
section 212(b) of Public Law 93-66), see section 1146.
          * * * * * * *

           evidence, procedure, and certification for payment

    Sec. 205. (a) * * *
          * * * * * * *
    (c)(1) For the purposes of this subsection--
            (A) * * *
          * * * * * * *
    (2)(A) On the basis of information obtained by or submitted 
to the Commissioner of Social Security, and after such 
verification thereof as he deems necessary, the Commissioner of 
Social Security, shall establish and maintain records of the 
amounts of wages paid to, and the amounts of self-employment 
income derived by, each individual and of the periods in which 
such wages were paid and such income was derived and, upon 
request, shall inform any individual or his survivor, or the 
legal representative of such individual or his estate, of the 
amounts of wages and self-employment income of such individual 
and the periods during which such wages were paid and such 
income was derived, as shown by such records at the time of 
such request.
          * * * * * * *
    (C)(i) It is the policy of the United States that any State 
(or political subdivision thereof) may, in the administration 
of any tax, general public assistance, driver's license, or 
motor vehicle registration law within its jurisdiction, utilize 
the social security account numbers issued by the Commissioner 
of Social Security for the purpose of establishing the 
identification of individuals affected by such law, and [may] 
shall require any individual who is or appears to be so 
affected to furnish to such State (or political subdivision 
thereof) or any agency thereof having administrative 
responsibility for the law involved, the social security 
account number (or numbers, if he has more than one such 
number) issued to him by the Commissioner of Social Security.
    (ii) In the administration of any law involving the 
issuance of a birth certificate, each State shall require each 
parent to furnish to such State (or political subdivision 
thereof) or any agency thereof having administrative 
responsibility for the law involved, the social security 
account number (or numbers, if the parent has more than one 
such number) issued to the parent unless the State (in 
accordance with regulations prescribed by the Commissioner of 
Social Security) finds good cause for not requiring the 
furnishing of such number. In the administration of any law 
involving the issuance of a marriage certificate or license, 
each State shall require each party named in the certificate or 
license to furnish to the State (or political subdivision 
thereof), or any State agency having administrative 
responsibility for the law involved, the social security number 
of the party. The State shall make numbers furnished under this 
subclause available to the agency administering the State's 
plan under part D of title IV in accordance with Federal or 
State law and regulation. Such numbers shall not be recorded on 
the birth certificate or marriage certificate. A State shall 
not use any social security account number, obtained with 
respect to the issuance by the State of a birth certificate, 
for any purpose other than for the enforcement of child support 
orders in effect in the State, unless section 7(a) of the 
Privacy Act of 1974 does not prohibit the State from requiring 
the disclosure of such number, by reason of the State havini 
adopted, before January 1, 1975, a statute or regulation 
requiring such disclosure.
          * * * * * * *
    (vi) For purposes of clause (i) of this subparagraph, an 
agency of a State (or political subdivision thereof) charged 
with the administration of any general public assistance, 
driver's license, or motor vehicle registration law which did 
not use the social security account number for identification 
under a law or regulation adopted before January 1, 1975, [may] 
shall require an individual to disclose his or her social 
security number to such agency solely for the purpose of 
aclzninistering the laws referred to in clause (i) above and 
for the purpose of responding to requests for information from 
an agency administering a program funded under part A of title 
IV or an agency operating pursuant to the provisions of part [A 
or D of title IV of this Act] D of such title.
          * * * * * * *
    (x) An agency of a State (or a political subdivision 
thereof) charged with the administration of any law concerning 
the issuance or renewal of a license, certificate, permit, or 
other authorization to engage in a profession, an occupation, 
or a commercial activity shall require all applicants for 
issuance or renewal of the license, certificate, permit, or 
other authorization to provide the applicant's social security 
number to the agency for the purpose of administering such 
laws, and for the purpose of responding to requests for 
information from an agency operating pursuant to part D of 
title IV.
    (xi) All divorce decrees, support orders, and paternity 
determinations issued, and all paternity acknowledgments made, 
in each State shall include the social security number of each 
party to the decree, order, determination, or acknowledgment in 
the records relating to the matter, for the purpose of 
responding to requests for information from an agency operating 
pursuant to part D of title IV.

          benefits as age 72 for certain uninsured individuals

                              Eligibility

    Sec. 228. (a) * * *
          * * * * * * *

  Suspension for Months in Which Cash Payments Are Made Under Public 
                               Assistance

    (d) The benefit to which any individual is entitled under 
this section for any month shall not be paid for such month if-
            (1) such individual receives aid or assistance in 
        the form of money payments in such month under a State 
        plan approved under title I, X, XIV, or XVI, or under a 
        State program funded under part A of title IV, or
          * * * * * * *

       TITLE III--GRANTS TO STATES FOR UNEMPLOYMENT COMPENSATION 
                             ADMINISTRATION

          * * * * * * *

                        provisions of state laws

    Sec. 303. (a) * * *
          * * * * * * *
    (e)(1) The State agency charged with the administration of 
the State law--
            (A) * * *
          * * * * * * *
    (5) A State or local child support enforcement agency may 
disclose to any agent of the agency that is under contract with 
the agency to carry out the purposes described in paragraph 
(1)(B) wage information that is disclosed to an officer or 
employee of the agency under paragraph (1)(A). Any agent of a 
State or local child support agency that receives wage 
information under this paragraph shall comply with the 
safeguards established pursuant to paragraph (1)(B).
    [(h)(l) The State agency charged with the administration of 
the State law shall take such actions (in such manner as may be 
provided in the agreement between the Secretary of Health and 
Human Services and the Secretary of Labor under section 
453(e)(3)) as may be necessary to enable the Secretary of 
Health and Human Services to obtain prompt access to any wage 
and unemployment compensation claims information (including any 
information that might be useful in locating an absent parent 
or such parent's employer) for use by the Secretary of Health 
and Human Services, for purposes of section 453, in carrying 
out the child support enforcement programunder title IV.
    [(2) Whenever the Secretary of Labor, after reasonable 
notice and opportunity for hearing to the State agency charged 
with the administration of the State law, finds that there is a 
failure to comply substantially with the requirement of 
paragraph (1), the Secretary of Labor shall notify such State 
agency that further payments will not be made to the State 
until such Secretary is satisfied that there is no longer any 
such failure. Until the Secretary of Labor is so satisfied, 
such Secretary shall make no further certification to the 
Secretary of the Treasury with respect to such State.]
    (h)(1) The State agency charged with the administration of 
the State law shall, on a reimbursable basis--
            (A) disclose quarterly, to the Secretary of Health 
        and Human Services, wage and claim information, as 
        required pursuant to section 453(i)(1), contained in 
        the records of such agency;
            (B) ensure that information provided pursuant to 
        subparagraph (A) meets such standards relating to 
        correctness and verification as the Secretary of Health 
        and Human Services, with the concurrence of the 
        Secretary of Labor, may find necessary; and
            (C) establish such safeguards as the Secretary of 
        Labor determines are necessary to insure that 
        information disclosed under subparagraph (A) is used 
        only for purposes of section 453(i)(1) in carrying out 
        the child support enforcement program under title IV.
    (2) Whenever the Secretary of Labor, after reasonable 
notice and opportunity for hearing to the State agency charged 
with the administration of the State law, finds that there is a 
failure to comply substantially with the requirements of 
paragraph (1), the Secretary of Labor shall notify such State 
agency that further payments will not be made to the State 
until the Secretary of Labor is satisfied that there is no 
longer any such failure. Until the Secretary of Labor is so 
satisfied, the Secretary shall make no future certification to 
the Secretary of the Treasury with respect to the State.
    (3) For purposes of this subsection--
            (A) the term ``wage information'' means information 
        regarding wages paid to an individual, the social 
        security account number of such individual, and the 
        name, address, State, and the Federal employer 
        identification number of the employer paying such wages 
        to such individual; and
            (B) the term ``claim information'' means 
        information regarding whether an individual is 
        receiving, has received, or has made application for, 
        unemployment compensation, the amount of any such 
        compensation being received (or to be received by such 
        individual), and the individual's current (or most 
        recent) home address.
          * * * * * * *

TITLE IV--GRANTS TO STATES FOR AID AND SERVICES TO NEEDY FAMILIES WITH 
                CHILDREN AND FOR CHILD-WELFARE SERVICES

            [Part A--Aid to Families With Dependent Children

                             [APPROPRIATION

    [Sec. 401. For the purpose of encouraging the care of 
dependent children in their own homes or in the homes of 
relatives by enabling each State to furnish financial 
assistance and rehabilitation and other services, as far as 
practicable under the conditions in such State, to needy 
dependent children and the parents or relatives with whom they 
are living to help maintain and strengthen family life and to 
help such parents or relatives to attain or retain capability 
for the maximum self-support and personal independence 
consistent with the maintenance of continuing parental care and 
protection, there is hereby authorized to be appropriated for 
each fiscal year a sum sufficient to carry out the purposes of 
this part. The sums made available under this section shall be 
used for making payments to States which have submitted, and 
had approved by the Secretary, State plans for aid and services 
to needy families with children.

   [STATE PLANS FOR AID AND SERVICES TO NEEDY FAMILIES WITH CHILDREN

    [Sec. 402. (a) A State plan for aid and services to needy 
families with children must--
            [(1) provide that it shall be in effect in all 
        political subdivisions of the State, and, if 
        administered by them, be mandatory upon them;
            [(2) provide for financial participation by the 
        State;
            [(3) either provide for the establishment or 
        designation of a single State agency to administer the 
        plan, or provide for the establishment or designation 
        of a single State agency to supervise the 
        administration of the plan;
            [(4) provide for granting an opportunity for a fair 
        hearing before the State agency to any individual whose 
        claim for aid to families with dependent children is 
        denied or is not acted upon with reasonable promptness;
            [(5) provide such methods of administration 
        (including after January 1, 1940, methods relating to 
        the establishment and maintenance of personnel 
        standards on a merit basis, except that the Secretary 
        shall exercise no authority with respect to the 
        selection, tenure of office, and compensation of any 
        individual employed in accordance with such methods) as 
        are found by the Secretary to be necessary for the 
        proper and efficient operation of the plan;
            [(6) provide that the State agency will make such 
        reports, in such form and containing such information, 
        as the Secretary may from time to time require, and 
        comply with such provisions as the Secretary may from 
        time to time find necessary to assure the correctness 
        and verification of such reports;
            [(7) except as may be otherwise provided in 
        paragraph (8) or (31) and section 415, provide that the 
        State agency--
                    [(A) shall, in determining need, take into 
                consideration any other income and resources of 
                any child or relative claiming aid to families 
                with dependent children, or of any other 
                individual (living in the same home as such 
                child and relative) whose needs the State 
                determines should be considered in determining 
                the need of the child or relative claiming such 
                aid;
                    [(B) shall determine ineligible for aid any 
                family the combined value of whose resources 
                (reduced by any obligations or debts with 
                respect to such resources) exceeds $1,000 or 
                such lower amount as the State may determine, 
                but not including as a resource for purposes of 
                this subparagraph (i) a home owned and occupied 
                by such child, relative, or other individual 
                and so much of the family member's ownership 
                interest in one automobile as does not exceed 
                such amount as the Secretary may prescribe, 
                (ii) under regulations prescribed by the 
                Secretary, burial plots (one for each such 
                child, relative, and other individual), and 
                funeral agreements (iii) for such period or 
                periods of time as the Secretary may prescribe, 
                real property which the family is making a 
                good-faith effort to dispose of, but any aid 
                payable to the family for any such period shall 
                be conditioned upon such disposal, and any 
                payments of such aid for that period shall (at 
                the time of the disposal) be considered 
                overpayments to the extent that they would not 
                have been made had the disposal occurred at the 
                beginning of the period for which the payments 
                of such aid were made, or (iv) for the month of 
                receipt and the following month, any refund of 
                Federal income taxes made to such family by 
                reason of section 32 of the Internal Revenue 
                Code of 1986 (relating to earned income 
                credit), and any payment made to such family by 
                an employer under section 3507 of such Code 
                (relating to advance payment of earned income 
                credit), or (iv) for the month of receipt and 
                the following month, any refund of Federal 
                income taxes made to such family by reason of 
                section 32 of the Internal Revenue Code of 1986 
                (relating to earned income credit), and any 
                payment made to such family by an employer 
                under section 3507 of such Code (relating to 
                advance payment of earned income credit); and
                    [(C) may, in the case of a family claiming 
                or receiving aid under this part for any month, 
                take into consideration as income (to the 
                extent the State determines appropriate, as 
                specified in such plan, and notwithstanding any 
                other provision of law)--
                            [(i) an amount not to exceed the 
                        value of the family's monthly allotment 
                        of food stamp coupons, to the extent 
                        such value duplicates the amount for 
                        food included in the maximum amount 
                        that would be payable under the State 
                        plan to a family of the same 
                        composition with no other income; and
                            [(ii) an amount not to exceed the 
                        value of any rent or housing subsidy 
                        provided to such family, to the extent 
                        such value duplicates the amount for 
                        housing included in the maximum amount 
                        that would be payable under the State 
                        plan to a family of the same 
                        composition with no other income;
            [(8)(A) provide that, with respect to any month, in 
        making the determination under paragraph (7), the State 
        agency--
                    [(i) shall disregard all of the earned 
                income of each dependent child receiving aid to 
                families with dependent children who is (as 
                determined by the State in accordance with 
                standards prescribed by the Secretary) a full-
                time student or a part-time student who is not 
                a full-time employee attending a school, 
                college, or university, or a course of 
                vocational or technical training designed to 
                fit him for gainful employment;
                    [(ii) shall disregard from the earned 
                income of any child or relative applying for or 
                receiving aid to families with dependent 
                children, or of any other individual (living in 
                the same home as such relative and child) whose 
                needs are taken into account in making such 
                determination, the first $90 of the total of 
                such earned income for such month;
                    [(iii) after applying the other clauses of 
                this subparagraph, shall disregard from the 
                earned income of any child, relative, or other 
                individual specified in clause (ii), an amount 
                equal to expenditures for care in such month 
                for a dependent child, or an incapacitated 
                individual living in the same home as the 
                dependent child, receiving aid to families with 
                dependent children and requiring such care for 
                such month, to the extent that such amount (for 
                each such dependent child or incapacitated 
                individual) does not exceed $175 (or such 
                lesser amount as the Secretary may prescribe in 
                the case of an individual not engaged in full-
                time employment or not employed throughout the 
                month), or, in the case such child is under age 
                2, $200
                    [(iv) shall disregard from the earned 
                income of any child or relative receiving aid 
                to families with dependent children, or of any 
                other individual (living in the same home as 
                such relative and child) whose needs are taken 
                into account in making such determination, an 
                amount equal to (I) the first $30 of the total 
                of such earned income not disregarded under any 
                other clause of this subparagraph plus (II) 
                one-third of the remainder thereof
                    [(v) may disregard the income of any 
                dependent child applying for or receiving aid 
                to families with dependent children which is 
                derived from a program carried out under the 
                Job Training Partnership Act (as originally 
                enacted), but only in such amounts, and for 
                such period of time (not to exceed six months 
                with respect to earned income) as the Secretary 
                may provide in regulations;
                    [(vi) shall disregard the first $50 of any 
                child support payments for such month received 
                in that month, and the first $50 of child 
                support payments for each prior month received 
                in that month if such payments were made by the 
                absent parent in the month when due, with 
                respect to the dependent child or children in 
                any family applying for or receiving aid to 
                families with dependent children (including 
                support payments collected and paid to the 
                family under section 457(b));
                    [(vii) may disregard all or any part of the 
                earned income of a dependent child who is a 
                full-time student and who is applying for aid 
                to families with dependent children, but only 
                if the earned income of such child is excluded 
                for such month in determining the family's 
                total income under paragraph (18); and
                    [(viii) shall disregard any refund of 
                Federal income taxes made to a family receiving 
                aid to families with dependent children by 
                reason of section 32 of the Internal Revenue 
                Code of 1986 (relating to earned income tax 
                credit) and any payment made to such a family 
                by an employer under section 3507 of such Code 
                (relating to advance payment of earned income 
                credit); and
            [(B) provide that (with respect to any month) the 
        State agency--
                    [(i) shall not disregard, under clause 
                (ii), (iii), or (iv) of subparagraph (A), any 
                earned income of any one of the persons 
                specified in subparagraph (A)(ii) if such 
                person--
                            [(I) terminated his employment or 
                        reduced his earned income without good 
                        cause within such period (of not less 
                        than thirty days) preceding such month 
                        as may be prescribed by the Secretary;
                            [(II) refused without good cause, 
                        within such period preceding such month 
                        as may be prescribed by the Secretary, 
                        to accept employment in which he 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 by the State or local 
                        agency administering the State plan, 
                        after notification by the employer, to 
                        be a bona fide offer of employment; or
                            [(III) failed without good cause to 
                        make a timely report (as prescribed by 
                        the State plan pursuant to paragraph 
                        (14)) to the State agency of earned 
                        income received in such month; and
                    [(ii)(I) shall not disregard--
                            [(a) under subclause (II) of 
                        subparagraph (A)(iv), in a case where 
                        such subclause has already been applied 
                        to the income of the persons involved 
                        for four consecutive months while they 
                        were receiving aid under the plan, or
                            [(b) under subclause (I) of 
                        subparagraph (A)(iv), in a case where 
                        such subclause has already been applied 
                        to the income of the persons involved 
                        for twelve consecutive months while 
                        they were receiving aid under the plan,
                any earned income of any of the persons 
                specified in subparagraph (A)(ii), if, with 
                respect to such month, the income of the 
                persons so specified was in excess of their 
                need, as determined by the State agency 
                pursuant to paragraph (7) (without regard to 
                subparagraph (A)(iv) of this paragraph), unless 
                the persons received aid under the plan in one 
                or more of the four months preceding such 
                month; and
                    [(II) in the case of the earned income of a 
                person with respect to whom subparagraph 
                (A)(iv) has been applied for four consecutive 
                months, shall not apply the provisions of 
                subclause (II) of such subparagraph to any 
                month after such month, or apply the provisions 
                of subclause (I) of such subparagraph to any 
                month after the eighth month following such 
                month, for so long as he continues to receive 
                aid under the plan, and shall not apply the 
                provisions of either such subclause to any 
                month thereafter until the expiration of an 
                additional period of twelve consecutive months 
                during which he is not a recipient of such aid; 
                and
            [(C) provide that in implementing this paragraph 
        the term ``earned income'' shall mean gross earned 
        income, prior to any deductions for taxes or for any 
        other purposes;
        (9) provide safeguards which restrict the use or 
        disclosure of information concerning applicants or 
        recipients to purposes directly connected with (A) the 
        administration of the plan of the State approved under 
        this part (including activities under part F), the plan 
        or program of the State under part B, D, or E of this 
        title or under title I, X, XIV, XVI, XIX, or XX, or the 
        supplemental security income program established by 
        title XVI, (B) any investigation, prosecution, or 
        criminal or civil proceeding, conducted in connection 
        with the administration of any such plan or program, 
        (C) the administration of any other Federal or 
        federally assisted program which provides assistance, 
        in cash or in kind, or services, directly to 
        individuals on the basis of need, (D) any audit or 
        similar activity conducted in connection with the 
        administration of any such plan or program by any 
        governmental entity which is authorized by law to 
        conduct such audit or activity, and (E) reporting and 
        providing information pursuant to paragraph (16) to 
        appropriate authorities with respect to known or 
        suspected child abuse or neglect; and the safeguards so 
        provided shall prohibit disclosure, to any committee or 
        legislative body (other than an entity referred to in 
        clause (D) with respect to an activity referred to in 
        such clause), of any information which identifies by 
        name or address any such applicant or recipient; but 
        such safeguards shall not prevent the State agency or 
        the local agency responsible for the administration of 
        the State plan in the locality (whether or not the 
        State has enacted legislation allowing public access to 
        Federal welfare records) from furnishing a State or 
        local law enforcement officer, upon his request, with 
        the current address of any recipient if the officer 
        furnishes the agency with such recipient's name and 
        social security account number and satisfactorily 
        demonstrates that such recipient is a fugitive felon, 
        that the location or apprehension of such felon is 
        within the officer's official duties, and that the 
        request is made in the proper exercise of those duties;
            [(10)(A) provide that all individuals wishing to 
        make application for aid to families with dependent 
        children shall have opportunity to do so, and that aid 
        to families with dependent children shall, subject to 
        paragraphs (25) and (26), be furnished with reasonable 
        promptness to all eligible individuals; and
            [(B) provide that an application for aid under the 
        plan will be effective no earlier than the date such 
        application is filed with the State agency or local 
        agency responsible for the administration of the State 
        plan, and the amount payable for the month in which the 
        application becomes effective, if such application 
        becomes effective after the first day of such month, 
        shall bear the same ratio to the amount which would be 
        payable if the application had been effective on the 
        first day of such month as the number of days in the 
        month including and following the effective date of the 
        application bears to the total number of days in such 
        month;
            [(11) provide for prompt notice (including the 
        transmittal of all relevant information) to the State 
        child support collection agency (established pursuant 
        to part D of this title) of the furnishing of aid to 
        families with dependent children with respect to a 
        child who has been deserted or abandoned by a parent 
        (including a child born out of wedlock without regard 
        to whether the paternity of such child has been 
        established);
            [(12) provide, effective October 1, 1950, that no 
        aid will be furnished any individual under the plan 
        with respect to any period with respect to which he is 
        receiving old-age assistance under the State plan 
        approved under section 2 of this Act;
            [(13) provide, at the option of the State and with 
        respect to such category or categories as the State may 
        select and identify in the State plan, that--
                    [(A) except as provided in subparagraph 
                (B), the State agency (i) will determine a 
                family's eligibility for aid for a month on the 
                basis of the family's income, composition, 
                resources, and other similar relevant 
                circumstances during such month, and (ii) will 
                determine the amount of such aid on the basis 
                of the income and other relevant circumstances 
                in the first or, at the option of the State 
                (but only where the Secretary determines it to 
                be appropriate) second month preceding such 
                month; and
                    [(B) in the case of the first month, or at 
                the option of the State (but only where the 
                Secretary determines it to be appropriate), the 
                first and second months, in a period of 
                consecutive months for which aid is payable, 
                the State agency will determine the amount of 
                aid on the basis of the family's income and 
                other relevant circumstances in such first or 
                second month;
            [(14) at the option of the State and with respect 
        to such category or categories as the State may select 
        and identify in the plan, provide that--
                    [(A) the State agency will require each 
                family to which the State provides (or, but for 
                paragraph (22) or (32), would provide) aid to 
                families with dependent children, as a 
                condition to the continued receipt of such aid 
                (or to continuing to be deemed to be a 
                recipient of such aid), to report to the State 
                agency monthly (or less frequently in the case 
                of such categories of recipients as the State 
                may select) on--
                            [(i) the income of the family, the 
                        composition of the family, and other 
                        relevant circumstances during the prior 
                        month; and
                            [(ii) the income and resources the 
                        family expects to receive, or any 
                        changes in circumstances affecting 
                        continued eligibility for, or amount of 
                        benefits, the family expects to occur, 
                        in that month or in future months; and
                    [(B) in addition to any action that may be 
                appropriate based on other reports or 
                information received by the State agency, the 
                State agency will--
                            [(i) take prompt action to adjust 
                        the amount of assistance payable, as 
                        may be appropriate, on the basis of the 
                        information contained in the report (or 
                        upon the failure of the family to 
                        submit a timely report); and
                            [(ii) give the family an 
                        appropriate explanatory notice 
                        concurrent with any action taken under 
                        clause (i);
            [(15) provide (A) for the development of a program, 
        for each appropriate relative and dependent child 
        receiving aid under the plan and for each appropriate 
        individual (living in the same home as a relative and 
        child receiving such aid) whose needs are taken into 
        account in making the determination under paragraph 
        (7), for preventing or reducing the incidence of births 
        out of wedlock and otherwise strengthening family life, 
        and for implementing such program by assuring that in 
        all appropriate cases (including minors who can be 
        considered to be sexually active) family planning 
        services are offered to them and are provided promptly 
        (directly or under arrangements with others) to all 
        individuals voluntarily requesting such services, but 
        acceptance of family planning services provided under 
        the plan shall be voluntary on the part of such members 
        and individuals and shall not be a prerequisite to 
        eligibility for or the receipt of any other service 
        under the plan; and (B) to the extent that services 
        provided under this paragraph are furnished by the 
        staff of the State agency or the local agency 
        administering the State plan in each of the political 
        subdivisions of the State, for the establishment of a 
        single organizational unit in such State or local 
        agency, as the case may be, responsible for the 
        furnishing of such services;
            [(16) provide that the State agency will--
                    [(A) report to an appropriate agency or 
                official, known or suspected instances of 
                physical or mental injury, sexual abuse or 
                exploitation, or negligent treatment or 
                maltreatment of a child receiving aid under 
                this part under circumstances which indicate 
                that the child's health or welfare is 
                threatened thereby; and
                    [(B) provide such information with respect 
                to a situation described in subparagraph (A) as 
                the State agency may have;
            [(17) provide that if a child or relative applying 
        for or receiving aid to families with dependent 
        children, or any other person whose need the State 
        considers when determining the income of a family, 
        receives in any month an amount of earned or unearned 
        income which, together with all other income for that 
        month not excluded under paragraph (8), exceeds the 
        State's standard of need applicable to the family of 
        which he is a member--
                    [(A) such amount of income shall be 
                considered income to such individual in the 
                month received, and the family of which such 
                person is a member shall be ineligible for aid 
                under the plan for the whole number of months 
                that equals (i) the sum of such amount and all 
                other income received in such month, not 
                excluded under paragraph (8), divided by (ii) 
                the standard of need applicable to such family, 
                and
                    [(B) any income remaining (which amount is 
                less than the applicable monthly standard) 
                shall be treated as income received in the 
                first month following the period of 
                ineligibility specified in subparagraph (A);
        except that the State may at its option recalculate the 
        period of ineligibility otherwise determined under 
        subparagraph (A) (but only with respect to the 
        remaining months in such period) in any one or more of 
        the following cases: (i) an event occurs which, had the 
        family been receiving aid under the State plan for the 
        month of the occurrence, would result in a change in 
        the amount of aid payable for such month under the 
        plan, or (ii) the income received has become 
        unavailable to the members of the family for reasons 
        that were beyond the control of such members, or (iii) 
        the family incurs, becomes responsible for, and pays 
        medical expenses (as allowed by the State) in a month 
        of ineligibility determined under subparagraph (A) 
        (which expenses may be considered as an offset against 
        the amount of income received in the first month of 
        such ineligibility);
            [(18) provide that no family shall be eligible for 
        aid under the plan for any month if, for that month, 
        the total income of the family (other than payments 
        under the plan), without application of paragraph (8), 
        other than paragraph (8)(A)(v) or 8(A)(viii), exceeds 
        185 percent of the State's standard of need for a 
        family of the same composition, except that in 
        determining the total income of the family the State 
        may exclude any earned income of a dependent child who 
        is a full-time student, in such amounts and for such 
        period of time (not to exceed 6 months) as the State 
        may determine;
            [(19) provide--
                    [(A) that the State has in effect and 
                operation a job opportunities and basic skills 
                training program which meets the requirements 
                of part F;
                    [(B) that--
                            [(i) the State will (except as 
                        otherwise provided in this paragraph or 
                        part F), to the extent that the program 
                        is available in the political 
                        subdivision involved and State 
                        resources otherwise permit--
                                    [(I) require all recipients 
                                of aid to families with 
                                dependent children in such 
                                subdivision with respect to 
                                whom the State guarantees child 
                                care in accordance with section 
                                402(g) to participate in the 
                                program; and
                                    [(II) allow applicants for 
                                and recipients of aid to 
                                families with dependent 
                                children (and individuals who 
                                would be recipients of such aid 
                                if the State had not exercised 
                                the option under section 
                                407(b)(2)(B)(i)) who are not 
                                required under subclause (I) to 
                                participate in the program to 
                                do so on a voluntary basis;
                            [(ii) in determining the priority 
                        of participation by individuals from 
                        among those groups described in clauses 
                        (i), (ii), (iii), and (iv) of section 
                        403(l)(2)(B), the State will give first 
                        consideration to applicants for or 
                        recipients of aid to families with 
                        dependent children within any such 
                        group who volunteer to participate in 
                        the program;
                            [(iii) if an exempt participant 
                        drops out of the program without good 
                        cause after having commenced 
                        participation in the program, he or she 
                        shall thereafter not be given priority 
                        so long as other individuals are 
                        actively seeking to participate; and
                            [(iv) the State need not require or 
                        allow participation of an individual in 
                        the program if as a result of such 
                        participation the amount payable to the 
                        State for quarters in a fiscal year 
                        with respect to the program would be 
                        reduced pursuant to section 403(l)(2);
                    [(C) that an individual may not be required 
                to participate in the program if such 
                individual--
                            [(i) is ill, incapacitated, or of 
                        advanced age;
                            [(ii) is needed in the home because 
                        of the illness or incapacity of another 
                        member of the household;
                            [(iii) subject to subparagraph 
                        (D)--
                                    [(I) is the parent or other 
                                relative of a child under 3 
                                years of age (or, if so 
                                provided in the State plan, 
                                under any age that is less than 
                                3 years but not less than one 
                                year) who is personally 
                                providing care for the child, 
                                or
                                    [(II) is the parent or 
                                other relative personally 
                                providing care for a child 
                                under 6 years of age, unless 
                                the State assures that child 
                                care in accordance with section 
                                402(g) will be guaranteed and 
                                that participation in the 
                                program by the parent or 
                                relative will not be required 
                                for more than 20 hours a week;
                            [(iv) works 30 or more hours a 
                        week;
                            [(v) is a child who is under age 16 
                        or attends, full-time, an elementary, 
                        secondary, or vocational (or technical) 
                        school;
                            [(vi) is pregnant if it has been 
                        medically verified that the child is 
                        expected to be born in the month in 
                        which such participation would 
                        otherwise be required or within the 6-
                        month period immediately following such 
                        month; or
                            [i) resides in an area of the State 
                        where the program is not available;
                    [(D) that, in the case of a family eligible 
                for aid to families with dependent children by 
                reason of the unemployment of the parent who is 
                the principal earner, subparagraph (C)(iii) 
                shall apply only to one parent, except that, in 
                the case of such a family, the State may at its 
                option make such subparagraph inapplicable to 
                both of the parents (and require their 
                participation in the program) if child care in 
                accordance with section 402(g) is guaranteed 
                with respect to the family;
                    [(E) that--
                            [(i) to the extent that the program 
                        is available in the political 
                        subdivision involved and State 
                        resources otherwise permit, in the case 
                        of a custodial parent who has not 
                        attained 20 years of age, has not 
                        successfully completed a high-school 
                        education (or its equivalent), and is 
                        required to participate in the program 
                        (including an individual who would 
                        otherwise be exempt from participation 
                        in the program solely by reason of 
                        subparagraph (C)(iii)), the State 
                        agency (subject to clause (ii)) will 
                        require such parent to participate in 
                        an educational activity; and
                            [(ii) the State agency may--
                                    [(I) require a parent 
                                described in clause (i) 
                                (notwithstanding the part-time 
                                requirement in subparagraph 
                                (C)(iii)(II)) to participate in 
                                educational activities directed 
                                toward the attainment of a high 
                                school diploma or its 
                                equivalent on a full-time (as 
                                defined by the educational 
                                provider) basis,
                                    [(II) establish criteria in 
                                accordance with regulations of 
                                the Secretary under which 
                                custodial parents described in 
                                clause (i) who have not 
                                attained 18 years of age may be 
                                exempted from the school 
                                attendance requirement under 
                                such clause, or
                                    [(III) require a parent 
                                described in clause (i) who is 
                                age 18 or 19 to participate in 
                                training or work activities (in 
                                lieu of the educational 
                                activities under such clause) 
                                if such parent fails to make 
                                good progress in successfully 
                                completing such educational 
                                activities or if it is 
                                determined (prior to any 
                                assignment of the individual to 
                                such educational activities) 
                                pursuant to an educational 
                                assessment that participation 
                                in such educational activities 
                                is inappropriate for such 
                                parent;
                    [(F) that--
                            [(i) if the parent or other 
                        caretaker relative or any dependent 
                        child in the family is attending (in 
                        good standing) an institution of higher 
                        education (as defined in section 481(a) 
                        of the Higher Education Act of 1965), 
                        or a school or course of vocational or 
                        technical training (not less than half 
                        time) consistent with the individual's 
                        employment goals, and is making 
                        satisfactory progress in such 
                        institution, school, or course, at the 
                        time he or she would otherwise commence 
                        participation in the program under this 
                        section, such attendance may constitute 
                        satisfactory participation in the 
                        program (by that caretaker or child) so 
                        long as it continues and is consistent 
                        with such goals;
                            [(ii) any other activities in which 
                        an individual described in clause (i) 
                        participates may not be permitted to 
                        interfere with the school or training 
                        described in that clause;
                            [(iii) the costs of such school or 
                        training shall not constitute federally 
                        reimbursable expenses for purposes of 
                        section 403; and
                            [(iv) the costs of day care, 
                        transportation, and other services 
                        which are necessary (as determined by 
                        the State agency) for such attendance 
                        in accordance with section 402(g) are 
                        eligible for Federal reimbursement;
                    [(G) that--
                            [(i) if an individual who is 
                        required by the provisions of this 
                        paragraph to participate in the program 
                        or who is so required by reason of the 
                        State's having exercised the option 
                        under subparagraph (D) fails without 
                        good cause to participate in the 
                        program or refuses without good cause 
                        to accept employment 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--
                                    [(I) the needs of such 
                                individual (whether or not 
                                section 407 applies) shall not 
                                be taken into account in making 
                                the determination with respect 
                                to his or her family under 
                                paragraph (7) of this 
                                subsection, and if such 
                                individual is a parent or other 
                                caretaker relative, 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 a case shall be without 
                                regard to clauses (A) through 
                                (D) thereof) will be made 
                                unless the State agency, after 
                                making reasonable efforts, is 
                                unable to locate an appropriate 
                                individual to whom such 
                                payments can be made; and
                                    [(II) if such individual is 
                                a member of a family which is 
                                eligible for aid to families 
                                with dependent children by 
                                reason of section 407, and his 
                                or her spouse is not 
                                participating in the program, 
                                the needs of such spouse shall 
                                also not be taken into account 
                                in making such determination;
                            [(ii) any sanction described in 
                        clause (i) shall continue--
                                    [(I) in the case of the 
                                individual's first failure to 
                                comply, until the failure to 
                                comply ceases;
                                    [(II) in the case of the 
                                individual's second failure to 
                                comply, until the failure to 
                                comply ceases or 3 months 
                                (whichever is longer); and
                                    [(III) in the case of any 
                                subsequent failure to comply, 
                                until the failure to comply 
                                ceases or 6 months (whichever 
                                is longer);
                            [(iii) the State will promptly 
                        remind any individual whose failure to 
                        comply has continued for 3 months, in 
                        writing, of the individual's option to 
                        end the sanction by terminating such 
                        failure; and
                            [(iv) no sanction shall be imposed 
                        under this subparagraph--
                                    [(I) on the basis of the 
                                refusal of an individual 
                                described in subparagraph 
                                (C)(iii)(II) to accept 
                                employment, if the employment 
                                would require such individual 
                                to work more than 20 hours a 
                                week, or
                                    [(II) on the basis of the 
                                refusal of an individual to 
                                participate in the program or 
                                accept employment, if child 
                                care (or day care for any 
                                incapacitated individual living 
                                in the same home as a dependent 
                                child) is necessary for an 
                                individual to participate in 
                                the program or accept 
                                employment, such care is not 
                                available, and the State agency 
                                fails to provide such care; and
                    [(H) the State agency may require a 
                participant in the program to accept a job only 
                if such agency assures that the family of such 
                participant will experience no net loss of cash 
                income resulting from acceptance of the job; 
                and any costs incurred by the State agency as a 
                result of this subparagraph shall be treated as 
                expenditures with respect to which section 
                403(a)(1) or 403(a)(2) applies;
            [(20) provide that the State has in effect a State 
        plan for foster care and adoption assistance approved 
        under part E of this title;
            [(21) provide--
                    [(A) that, for purposes of this part, 
                participation in a strike shall not constitute 
                good cause to leave, or to refuse to seek or 
                accept employment; and
                    [(B)(i) that aid to families with dependent 
                children is not payable to a family for any 
                month in which any caretaker relative with whom 
                the child is living is, on the last day of such 
                month, participating in a strike, and (ii) that 
                no individual's needs shall be included in 
                determining the amount of aid payable for any 
                month to a family under the plan if, on the 
                last day of such month, such individual is 
                participating in a strike;
            [(22) provide that the State agency will promptly 
        take all necessary steps to correct any overpayment or 
        underpayment of aid under the State plan, and, in the 
        case of--
                    [(A) an overpayment to an individual who is 
                a current recipient of such aid (including a 
                current recipient whose overpayment occurred 
                during a prior period of eligibility), recovery 
                will be made by repayment by the individual or 
                by reducing the amount of any future aid 
                payable to the family of which he is a member, 
                except that such recovery shall not result in 
                the reduction of aid payable for any month, 
                such that the aid, when added to such family's 
                liquid resources and to its income (without 
                application of paragraph (8)), is less than 90 
                percent of the amount payable under the State 
                plan to a family of the same composition with 
                no other income (and, in the case of an 
                individual to whom no payment is made for a 
                month solely by reason of recovery of an 
                overpayment, such individual shall be deemed to 
                be a recipient of aid for such month);
                    [(B) an 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; and
                    [(C) an underpayment, the corrective 
                payment shall be disregarded in determining the 
                income of the family, and shall be disregarded 
                in determining its resources in the month the 
                corrective payment is made and in the following 
                month;
        except that no recovery need be attempted or carried 
        out under subparagraph (B) in any case, other than a 
        case involving fraud on the part of the recipient, 
        where (as determined by the State agency in accordance 
        with criteria for determining cost-effectiveness, and 
        with dollar limitations, which shall be prescribed by 
        the Secretary in regulations) the cost of recovery 
        would equal or exceed the amount of the overpayment 
        involved;
            [(23) provide that by July 1, 1969, the amounts 
        used by the State to determine the needs of individuals 
        will have been adjusted to reflect fully changes in 
        living costs since such amounts were established, and 
        any maximums that the State imposes on the amount of 
        aid paid to families will have been proportionately 
        adjusted;
            [(24) provide that if an individual is receiving 
        benefits under title XVI or his costs in a foster 
        family home or child-care institution are covered by 
        the foster care maintenance payments being made to his 
        or her minor parent as provided in section 475(4)(B), 
        then, for the period for which such benefits are 
        received or such costs are so covered, such individual 
        shall not be regarded as a member of a family for 
        purposes of determining the amount of the benefits of 
        the family under this title and his income and 
        resources shall not be counted as income and resources 
        of a family under this title;
            [(25) provide that information is requested and 
        exchanged for purposes of income and eligibility 
        verification in accordance with a State system which 
        meets the requirements of section 1137 of this Act;
            [(26) provide that, as a condition of eligibility 
        for aid, each applicant or recipient will be required--
                    [(A) to assign the State any rights to 
                support from any other person such applicant 
                may have (i) in his own behalf or in behalf of 
                any other family member for whom the applicant 
                is applying for or receiving aid, and (ii) 
                which have accrued at the time such assignment 
                is executed;
                    [(B) to cooperate with the State (i) in 
                establishing the paternity of a child born out 
                of wedlock with respect to whom aid is claimed, 
                and (ii) in obtaining support payments for such 
                applicant and for a child with respect to whom 
                such aid is claimed, or in obtaining any other 
                payments or property due such applicant or such 
                child, unless (in either case) such applicant 
                or recipient is found to have good cause for 
                refusing to cooperate as determined by the 
                State agency 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; and that, if the relative with whom a 
                child is living is found to be ineligible 
                because of failure to comply with the 
                requirements of subparagraphs (A) and (B) of 
                this paragraph, any aid for which such child is 
                eligible will be provided in the form of 
                protective payments as described in section 
                406(b)(2) (without regard to clauses (A) 
                through (D) of such section) unless the State 
                agency, after making reasonable efforts, is 
                unable to locate an appropriate individual to 
                whom such payments can be made; and
                    [(C) to cooperate with the State in 
                identifying, and providing information to 
                assist the State in pursuing, any third party 
                who may be liable to pay for care and services 
                available under the State's plan for medical 
                assistance under title XIX, unless such 
                individual has good cause for refusing to 
                cooperate as determined by the State agency in 
                accordance with standards prescribed by the 
                Secretary, which standards shall take into 
                consideration the best interests of the 
                individuals involved; but the State shall not 
                be subject to any financial penalty in the 
                administration or enforcement of this 
                subparagraph as a result of any monitoring, 
                quality control, or auditing requirements;
            [(27) provide that the State has in effect a plan 
        approved under part D and operates a child support 
        program in substantial compliance with such plan;
            [(28) provide that, in determining the amount of 
        aid to which an eligible family is entitled, any 
        portion of the amounts collected in any particular 
        month as child support pursuant to a plan approved 
        under part D, and retained by the State under section 
        457, which (under the State plan approved under this 
        part as in effect both during July 1975 and during that 
        particular month) would not have caused a reduction in 
        the amount of aid paid to the family if such amounts 
        had been paid directly to the family, shall be added to 
        the amount of aid otherwise payable to such family 
        under the State plan approved under this part;
            [(30) at the option of the State, provide for the 
        establishment and operation, in accordance with an 
        (initial and annually updated) advance automated data 
        processing planning document approved under subsection 
        (e), of an automated statewide management information 
        system designed effectively and efficiently, to assist 
        management in the administration of the State plan for 
        aid to families with dependent children approved under 
        this part, so as (A) to control and account for (i) all 
        the factors in the total eligibility determination 
        process under such plan for aid (including but not 
        limited to (I) identifiable correlation factors (such 
        as social security numbers, names, dates of birth, home 
        addresses, and mailing addresses (including postal ZIP 
        codes), of all applicants and recipients of such aid 
        and the relative with whom any child who is such an 
        applicant or recipient is living) to assure sufficient 
        compatibility among the systems of different 
        jurisdictions to permit periodic screening to determine 
        whether an individual is or has been receiving benefits 
        from more than one jurisdiction, (II) checking records 
        of applicants and recipients of such aid on a periodic 
        basis with other agencies, both intra-and inter-State, 
        for determination and verification of eligibility and 
        payment pursuant to requirements imposed by other 
        provisions of this Act), (ii) the costs, quality, and 
        delivery of funds and services furnished to applicants 
        for and recipients of such aid, (B) to notify the 
        appropriate officials of child support, food stamp, 
        social service, and medical assistance programs 
        approved under title XIX whenever the case becomes 
        ineligible or the amount of aid or services is changed, 
        and (C) to provide for security against unauthorized 
        access to, or use of, the data in such system;
            [(31) provide that, in making the determination for 
        any month under paragraph (7), the State agency shall 
        take into consideration so much of the income of the 
        dependent child's stepparent living in the same home as 
        such child as exceeds the sum of (A) the first $90 of 
        the total of such stepparent's earned income for such 
        month, (B) the State's standard of need under such plan 
        for a family of the same composition as the stepparent 
        and those other individuals living in the same 
        household as the dependent child and claimed by such 
        stepparent as dependents for purposes of determining 
        his Federal personal income tax liability but whose 
        needs are not taken into account in making the 
        determination under paragraph (7), (C) amounts paid by 
        the stepparent to individuals not living in such 
        household and claimed by him as dependents for purposes 
        of determining his Federal personal income tax 
        liability, and (D) payments by such stepparent of 
        alimony or child support with respect to individuals 
        not living in such household;
            [(32) provide that no payment of aid shall be made 
        under the plan for any month if the amount of such 
        payment, as determined in accordance with the 
        applicable provisions of the plan and of this part, 
        would be less than $10, but an individual with respect 
        to whom a payment of aid under the plan is denied 
        solely by reason of this paragraph is deemed to be a 
        recipient of aid but shall not be eligible to 
        participate in a community work experience program;
            [(33) provide that in order for any individual to 
        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, 
        such individual must be either (A) a citizen, or (B) an 
        alien lawfully admitted for permanent residence or 
        otherwise permanently residing in the United States 
        under color of law (including any alien who is lawfully 
        present in the United States as a result of the 
        application of the provisions of section 207(c) of the 
        Immigration and Nationality Act (or of section 
        203(a)(7) of such Act prior to April 1, 1980), or as a 
        result of the application of the provisions of section 
        208 or 212(d)(5) of such Act);
            [(34) provide that both the standard of need 
        applied to a family and the amount of aid determined to 
        be payable, when not a whole dollar amount, shall be 
        rounded to the next lower whole dollar amount;
            [(36) provide, at the option of the State, that in 
        making the determination for any month under paragraph 
        (7), the State agency shall not include as income any 
        support or maintenance assistance furnished to or on 
        behalf of the family which (as determined under 
        regulations of the Secretary by such State agency as 
        the chief executive officer of the State may designate) 
        is based on need for such support and maintenance, 
        including assistance received to assist in meeting the 
        costs of home energy (including both heating and 
        cooling), and which is (A) assistance furnished in kind 
        by a private nonprofit agency, or (B) assistance 
        furnished by a supplier of home heating oil or gas, by 
        an entity whose revenues are primarily derived on a 
        rate-of-return basis regulated by a State or Federal 
        governmental entity, or by a municipal utility 
        providing home energy;
            [(37) provide that if any family becomes ineligible 
        to receive aid to families with dependent children 
        because of hours of or income from employment of the 
        caretaker relative or because of paragraph 
        (8)(B)(ii)(II), having received such aid in at least 3 
        of the 6 months immediately preceding the month in 
        which such ineligibility begins, the family shall 
        remain eligible for medical assistance under the 
        State's plan approved under title XIX for an extended 
        period or periods as provided in section 1925, and that 
        the family will be appropriately notified of such 
        extension (in the State agency's notice to the family 
        of the termination of its eligibility for such aid) as 
        required by section 1925(a)(2);
            [(38) provide that in making the determination 
        under paragraph (7) with respect to a dependent child 
        and applying paragraph (8), the State agency shall 
        (except as otherwise provided in this part) include--
                    [(A) any parent of such child, and
                    [(B) any brother or sister of such child, 
                if such brother or sister meets the conditions 
                described in clauses (1) and (2) of section 
                406(a) or in section 407(a),
        if such parent, brother, or sister is living in the 
        same home as the dependent child, and any income of or 
        available for such parent, brother, or sister shall be 
        included in making such determination and applying such 
        paragraph with respect to the family (notwithstanding 
        section 205(j), in the case of benefits provided under 
        title II);
            [(39) provide that in making the determination 
        under paragraph (7) with respect to a dependent child 
        whose parent is under the age of 18, the State agency 
        shall (except as otherwise provided in this part) 
        include any income of such minor's own parents who are 
        living in the same home as such minor and dependent 
        child, to the same extent that income of a stepparent 
        is included under paragraph (31);
            [(40) provide, if the State has elected to 
        establish and operate a fraud control program under 
        section 416, that the State will submit to the 
        Secretary (with such revisions as may from time to time 
        be necessary) a description of and budget for such 
        program, and will operate such program in full 
        compliance with that section;
            [(41) provide that aid to families with dependent 
        children will be provided under the plan with respect 
        to dependent children of unemployed parents in 
        accordance with section 407;
            [(42) provide that if, under section 
        407(b)(2)(B)(i), the State limits the number of months 
        for which a family may receive aid to families with 
        dependent children, the State shall provide medical 
        assistance to all members of the family under the 
        State's plan approved under title XIX, without time 
        limitation;
            [(43) at the option of the State, provide that--
                    [(A) subject to subparagraph (B), in the 
                case of any individual who is under the age of 
                18 and has never married, and who has a 
                dependent child in his or her care (or is 
                pregnant and is eligible for aid to families 
                with dependent children under the State plan)--
                            [(i) such individual may receive 
                        aid to families with dependent children 
                        under the plan for the individual and 
                        such child (or for herself in the case 
                        of a pregnant woman) only if such 
                        individual and child (or such pregnant 
                        woman) reside in a place of residence 
                        maintained by a parent, legal guardian, 
                        or other adult relative of such 
                        individual as such parent's, 
                        guardian's, or adult relative's own 
                        home, or reside in a foster home, 
                        maternity home, or other adult-
                        supervised supportive living 
                        arrangement; and
                            [(ii) such aid (where possible) 
                        shall be provided to the parent, legal 
                        guardian, or other adult relative on 
                        behalf of such individual and child; 
                        and
                    [(B) subparagraph (A) does not apply in the 
                case where--
                            [(i) such 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 such individual or such 
                        dependent child would be jeopardized if 
                        such individual and such dependent 
                        child lived in the same residence with 
                        such individual's own parent or legal 
                        guardian;
                            [(iv) such 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 
                        such 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 
                        such subparagraph;
            [(44) provide that the State agency shall--
                    [(A) be responsible for assuring that the 
                benefits and services under the programs under 
                this part, part D, and part F are furnished in 
                an integrated manner, and
                    [(B) consistent with the provisions of this 
                title, ensure that all applicants for and 
                recipients of aid to families with dependent 
                children are encouraged, assisted, and required 
                to cooperate in the establishment of paternity 
                and the enforcement of child support 
                obligations, and are notified of the paternity 
                establishment and child support services for 
                which they may be eligible; and
            [(45) provide (in accordance with regulations 
        issued by the Secretary) for appropriate measures to 
        detect fraudulent applications for aid to families with 
        dependent children prior to the establishment of 
        eligibility for such aid.
The Secretary may waive any of the requirements imposed under 
or in connection with paragraphs (13) and (14) of this 
subsection to the extent necessary to make such requirements 
compatible with the corresponding reporting and budgeting 
requirements by the Food Stamp Act of 1977.
    [(b) The Secretary shall approve any plan which fulfills 
the conditions specified in subsection (a), except that he 
shall not approve any plan which imposes as a condition of 
eligibility for aid to families with dependent children, a 
residence requirement which denies aid with respect to any 
child residing in the State (1) who has resided in the State 
for one year immediately preceding the application for such 
aid, or (2) who was born within one year immediately preceding 
the application, if the parent or other relative with whom the 
child is living has resided in the State for one year 
immediately preceding the birth.
    [(c) The Secretary shall, on the basis of his review of the 
reports received from the States under paragraph (15) of 
subsection (a), compile such data as he believes necessary and 
from time to time publish his findings as to the effectiveness 
of the programs developed and administered by the States under 
such paragraph. The Secretary shall annually report to the 
Congress (with the first such report being made on or before 
July 1, 1970) on the programs developed and administered by 
each State under such paragraph (15).
    [(e)(1) The Secretary shall not approve the initial and 
annually updated advance automated data processing planning 
document, referred to in subsection (a)(30), unless he finds 
that such document, when implemented, will generally carry out 
the objectives of the statewide management system referred to 
in such subsection, and such document--
            [(A) provides for the conduct of, and reflects the 
        results of, requirements analysis studies, which 
        include consideration of the program mission, 
        functions, organization, services, constraints, and 
        current support, of, in, or relating to, such system,
            [(B) contains a description of the proposed 
        statewide management system, including a description of 
        information flows, input data, and output reports and 
        uses,
            [(C) sets forth the security and interface 
        requirements to be employed in such statewide 
        management system,
            [(D) describes the projected resource requirements 
        for staff and other needs, and the resources available 
        or expected to be available to meet such requirements,
            [(E) includes cost-benefit analyses of each 
        alternative management system, data processing services 
        and equipment, and a cost allocation plan containing 
        the basis for rates, both direct and indirect, to be in 
        effect under such statewide management system,
            [(F) contains an implementation plan with charts of 
        development events, testing descriptions, proposed 
        acceptance criteria, and backup and fallback procedures 
        to handle possible failure of contingencies, and
            [(G) contains a summary of proposed improvement of 
        such statewide management system in terms of 
        qualitative and quantitative benefits.
    [(2)(A) The Secretary shall, on a continuing basis, review, 
assess, and inspect the planning, design, and operation of, 
statewide management information systems referred to in section 
403(a)(3)(B), with a view to determining whether, and to what 
extent, such systems meet and continue to meet requirements 
imposed under such section and the conditions specified under 
subsection (a)(30) of this section.
    [(B) If the Secretary finds with respect to any statewide 
management information system referred to in section 
403(a)(3)(B) that there is a failure substantially to comply 
with criteria, requirements, and other undertakings, prescribed 
by the advance automated data processing planning document 
theretofore approved by the Secretary with respect to such 
system, then the Secretary shall suspend his approval of such 
document until there is no longer any such failure of such 
system to comply with such criteria, requirements, and other 
undertakings so prescribed.
    [(C) If the Secretary determines that such a system has not 
been implemented by the State by the date specified for 
implementation in the State's advance automated data processing 
planning document, then the Secretary shall reduce payments to 
such State, in accordance with section 403(b), in an amount 
equal to 40 percent of the expenditures referred to in section 
403(a)(3)(B) with respect to which payments were made to the 
State under section 403(a)(3)(B). The Secretary may extend the 
deadline for implementation if the State demonstrates to the 
satisfaction of the Secretary that the State cannot implement 
such system by the date specified in such planning document due 
to circumstances beyond the State's control.
    [(f)(1) For temporary disqualification of certain newly 
legalized aliens from receiving aid to families with dependent 
children, see subsection (h) of section 245A of the Immigration 
and Nationality Act, subsection (f) of section 210 of such Act, 
and subsection (d)(7) of section 210A of such Act. (2) In any 
case where an alien disqualified from receiving aid under such 
subsection (h), (f), or (d)(7) is the parent of a child who is 
not so disqualified and who (without any adjustment of status 
under such section 245A, 210, or 210A) is considered a 
dependent child under subsection (a)(33), or is the brother or 
sister of such a child, subsection (a)(38) shall not apply, and 
the needs of such alien shall not be taken into account in 
making the determination under subsection (a)(7) with respect 
to such child, but the income of such alien (if he or she is 
the parent of such child) shall be included in making such 
determination to the same extent that income of a stepparent is 
included under subsection (a)(31).
    [(g)(1)(A)(i) Each State agency must guarantee child care 
in accordance with subparagraph (B)--
            [(I) for each family with a dependent child 
        requiring such care, to the extent that such care is 
        determined by the State agency to be necessary for an 
        individual in the family to accept employment or remain 
        employed; and
            [(II) for each individual participating in an 
        education and training activity (including 
        participation in a program that meets the requirements 
        of subsection (a)(19) and part F) if the State agency 
        approves the activity and determines that the 
        individual is satisfactorily participating in the 
        activity.
    [(ii) Each State agency must guarantee child care, subject 
to the limitations described in this section, to the extent 
that such care is determined by the State agency to be 
necessary for an individual's employment in any case where a 
family has ceased to receive aid to families with dependent 
children as a result of increased hours of, or increased income 
from, such employment or by reason of subsection 
(a)(8)(B)(ii)(II).
    [(iii) A family shall only be eligible for child care 
provided under clause (ii) for a period of 12 months after the 
last month for which the family received aid to families with 
dependent children under this part.
    [(iv) A family shall not be eligible for child care 
provided under clause (ii) unless the family received aid to 
families with dependent children in at least 3 of the 6 months 
immediately preceding the month in which the family became 
ineligible for such aid.
    [(v) A family shall not be eligible for child care provided 
under clause (ii) unless the family includes a child who is 
(or, if needy, would be) a dependent child.
    [(vi) A family shall not be eligible for child care 
provided under clause (ii) for any month beginning after the 
caretaker relative who is a member of the family has--
            [(I) without good cause, terminated his or her 
        employment; or
            [(II) refused to cooperate with the State in 
        establishing and enforcing his or her child support 
        obligations, without good cause as determined by the 
        State agency in accordance with standards prescribed by 
        the Secretary which shall take into consideration the 
        best interests of the child for whom child care is to 
        be provided.
    [(vii) A family shall contribute to child care provided 
under clause (ii) in accordance with a sliding scale formula 
which shall be established by the State agency based on the 
family's ability to pay.
    [(B) The State agency may guarantee child care by--
            [(i) providing such care directly;
            [(ii) arranging the care through providers by use 
        of purchase of service contracts, or vouchers;
            [(iii) providing cash or vouchers in advance to the 
        caretaker relative in the family;
            [(iv) reimbursing the caretaker relative in the 
        family; or(v) adopting such other arrangements as the 
        agency deems appropriate.
When the State agency arranges for child care, the agency shall 
take into account the individual needs of the child.
    [(C)(i) Subject to clause (ii), the State agency shall make 
payment for the cost of child care provided with respect to a 
family in an amount that is the lesser of--
            [(I) the actual cost of such care; and
            [(II) the dollar amount of the child care disregard 
        for which the family is otherwise eligible under 
        subsection (a)(8)(A)(iii), or (if higher) an amount 
        established by the State.
    [(ii) The State agency may not reimburse the cost of child 
care provided with respect to a family in an amount that is 
greater than the applicable local market rate (as determined by 
the State in accordance with regulations issued by the 
Secretary).
    [(D) The State may not make any change in its method of 
reimbursing child care costs which has the effect of 
disadvantaging families receiving aid under the State plan on 
the date of the enactment of this section by reducing their 
income or otherwise.
    [(E) The value of any child care provided or arranged (or 
any amount received as payment for such care or reimbursement 
for costs incurred for the care) under this paragraph--
            [(i) shall not be treated as income for purposes of 
        any other Federal or federally-assisted program that 
        bases eligibility for or the amount of benefits upon 
        need, and
            [(ii) may not be claimed as an employment-related 
        expense for purposes of the credit under section 21 of 
        the Internal Revenue Code of 1986.
    [(2) In the case of any individual participating in the 
program under part F, each State agency (in addition to 
guaranteeing child care under paragraph (1)) shall provide 
payment or reimbursement for such transportation and other 
work-related expenses (including other work-related supportive 
services), as the State determines are necessary to enable such 
individual to participate in such program.
    [(3)(A)(i) In the case of amounts expended for child care 
pursuant to paragraph (1)(A) by any State to which section 1108 
does not apply, the applicable rate for purposes of section 
403(a) shall be the Federal medical assistance percentage (as 
defined in section 1905(b)).
    [(ii) In the case of amounts expended for child care 
pursuant to paragraph (1)(A)(ii) (relating to the provision of 
child care for certain families which cease to receive aid 
under this part) by any State to which section 1108 applies, 
the applicable rate for purposes of section 403(a) shall be the 
Federal medical assistance percentage (as defined in section 
1118).
    [(B) In the case of any amounts expended by the State 
agency for child care under this subsection, only such amounts 
as are within such limits as the State may prescribe (subject 
to the limitations of paragraph (1)(C)) shall be treated as 
amounts for which payment may be made to a State under this 
part and they may be so treated only to the extent that--
            [(i) such amounts do not exceed the applicable 
        local market rate (as determined by the State in 
        accordance with regulations issued by the Secretary);
            [(ii) the child care involved meets applicable 
        standards of State and local law; and(iii) in the case 
        of child care, the entity providing such care allows 
        parental access.
    [(4) The State must establish procedures to ensure that 
center-based child care will be subject to State and local 
requirements designed to ensure basic health and safety, 
including fire safety, protections. The State must also 
endeavor to develop guidelines for family day care. The State 
must provide the Secretary with a description of such State and 
local requirements and guidelines.
    [(5) By October 1, 1992, the Secretary shall report to the 
Congress on the nature and content of State and local standards 
for health and safety.
    [(6)(A) The Secretary shall make grants to States to 
improve their child care licensing and registration 
requirements and procedures, to enforce standards with respect 
to child care provided to children under this part, and to 
provide for the training of child care providers.
    [(B) Subject to subparagraph (C), the Secretary shall make 
grants to each State under subparagraph (A) in proportion to 
the number of children in the State receiving aid under the 
State plan approved under subsection (a).
    [(C) The Secretary may not make grants to a State under 
subparagraph (A) unless the State provides matching funds in an 
amount that is not less than 10 percent of the amount of the 
grant.
    [(D) For grants under this paragraph, there is authorized 
to be appropriated to the Secretary $13,000,000 for each of the 
fiscal years 1990 and 1991, and $50,000,000 for each of fiscal 
years 1992, 1993, and 1994.
    [(E) Each State to which the Secretary makes a grant under 
this paragraph shall expend not less than 50 percent of the 
amount of the grant to provide for the training of child care 
providers.
    [(7) Activities under this subsection and subsection (i) 
shall be coordinated in each State with existing early 
childhood education programs in that State, including Head 
Start programs, preschool programs funded under chapter 1 of 
the Education Consolidation and Improvement Act of 1981, and 
school and nonprofit child care programs (including community-
based organizations receiving funds designated for preschool 
programs for handicapped children).
    [(h)(1) Each State shall reevaluate the need standard and 
payment standard under its plan at least once every 3 years, in 
accordance with a schedule established by the Secretary, and 
report the results of the reevaluation to the Secretary and the 
public at such time and in such form and manner as the 
Secretary may require.
    [(2) The report required by paragraph (1) shall include a 
statement of--
            [(A) the manner in which the need standard of the 
        State is determined,
            [(B) the relationship between the need standard and 
        the payment standard (expressed as a percentage or in 
        any other manner determined by the Secretary to be 
        appropriate), and
            [(C) any changes in the need standard or the 
        payment standard in the preceding 3-year period.
    [(3) The Secretary shall report promptly to the Congress 
the results of the reevaluations required by paragraph (1).
    [(i)(1) Each State agency may, to the extent that it 
determines that resources are available, provide child care in 
accordance with paragraph (2) to any low income family that the 
State determines--
            [(A) is not receiving aid under the State plan 
        approved under this part;
            [(B) needs such care in order to work; and
            [(C) would be at risk of becoming eligible for aid 
        under the State plan approved under this part if such 
        care were not provided.
    [(2) The State agency may provide child care pursuant to 
paragraph (1) by--
            [(A) providing such care directly;
            [(B) arranging such care through providers by use 
        of purchase of service contracts or vouchers;
            [(C) providing cash or vouchers in advance to the 
        family;
            [(D) reimbursing the family; or(E) adopting such 
        other arrangements as the agency deems appropriate.
    [(3)(A) A family provided with child care under paragraph 
(1) shall contribute to such care in accordance with a sliding 
scale formula established by the State agency based on the 
family's ability to pay.
    [(B) The State agency shall make payment for the cost of 
child care provided under paragraph (1) with respect to a 
family in an amount that is the lesser of--
            [(i) the actual cost of such care; and
            [(ii) the applicable local market rate (as 
        determined by the State in accordance with regulations 
        issued by the Secretary).
    [(4) The value of any child care provided or arranged (or 
any amount received as payment for such care or reimbursement 
for costs incurred for the care) under this subsection--
            [(A) shall not be treated as income or as a 
        deductible expense for purposes of any other Federal or 
        federally assisted program that bases eligibility for 
        or amount of benefits upon need; and
            [(B) may not be claimed as an employment-related 
        expense for purposes of the credit under section 21 of 
        the Internal Revenue Code of 1986.
    [(5) Amounts expended by the State agency for child care 
under paragraph (1) shall be treated as amounts for which 
payment may be made to a State under section 403(n) only to the 
extent that--
            [(A) such amounts are paid in accordance with 
        paragraph (3)(B);
            [(B) the care involved meets applicable standards 
        of State and local law;
            [(C) the provider of the care--
                    [(i) in the case of a provider who is not 
                an individual that provides such care solely to 
                members of the family of the individual, is 
                licensed, regulated, or registered by the State 
                or locality in which the care is provided; and
                    [(ii) allows parental access; and(D) such 
                amounts are not used to supplant any other 
                Federal or State funds used for child care 
                services.
    [(6)(A)(i) Each State shall prepare reports annually, 
beginning with fiscal year 1993, on the activities of the State 
carried out with funds made available under section 403(n).
    [(ii) The State shall make available for public inspection 
within the State copies of each report required by this 
paragraph, shall transmit a copy of each such report to the 
Secretary, and shall provide a copy of each such report, on 
request, to any interested public agency.
    [(iii) The Secretary shall annually compile, and submit to 
the Congress, the State reports transmitted to the Secretary 
pursuant to clause (ii).
    [(B) Each report prepared and transmitted by a State under 
subparagraph (A) shall set forth with respect to child care 
services provided under this subsection--
            [(i) showing separately for center-based child care 
        services, group home child care services, family child 
        care services, and relative care services, the number 
        of children who received such services and the average 
        cost of such services;
            [(ii) the criteria applied in determining 
        eligibility or priority for receiving services, and 
        sliding fee schedules;
            [(iii) the child care licensing and regulatory 
        (including registration) requirements in effect in the 
        State with respect to each type of service specified in 
        clause (i); and
            [(iv) the enforcement policies and practices in 
        effect in the State which apply to licensed and 
        regulated child care providers (including providers 
        required to register).
    [(C) Within 12 months after the date of the enactment of 
this subsection, the Secretary shall establish uniform 
reporting requirements for use by the States in preparing the 
information required by this paragraph, and make such other 
provision as may be necessary or appropriate to ensure that 
compliance with this subsection will not be unduly burdensome 
on the States.
    [(D) Not later than July 1, 1992, the Secretary shall issue 
a report on the implementation of this subsection, based on 
such information as as  has been made available to the 
Secretary by the States.

                           [PAYMENT TO STATES

    [Sec. 403. (a) From the sums appropriated therefor, the 
Secretary of the Treasury shall pay to each State which has an 
approved plan for aid and services to needy families with 
children, for each quarter, beginning with the quarter 
commencing October 1, 1958--
            [(1) in the case of any State other than Puerto 
        Rico, the Virgin Islands, Guam, and American Samoa, an 
        amount equal to the sum of the following proportions of 
        the total amounts expended during such quarter as aid 
        to families with dependent children under the State 
        plan--
                    [(A) five-sixths of such expenditures, not 
                counting so much of any expenditure with 
                respect to any month as exceeds the product of 
                $18 multiplied by the total number of 
                recipients of aid to families with dependent 
                children for such month (which total number, 
                for purposes of this subsection, means (i) the 
                number of individuals with respect to whom such 
                aid in the form of money payments is paid for 
                such month, plus (ii) the number of 
                individuals, not counted under clause (i), with 
                respect to whom payments described in section 
                406(b)(2) are made in such month and included 
                as expenditures for purposes of this paragraph 
                or paragraph (2)); plus
                    [(B) the Federal percentage of the amount 
                by which such expenditures exceed the maximum 
                which may be counted under clause (A), not 
                counting so much of any expenditure with 
                respect to any month as exceeds (i) the product 
                of $32 multiplied by the total number of 
                recipients of aid to families with dependent 
                children (other than such aid in the form of 
                foster care) for such month, plus (ii) the 
                product of $100 multiplied by the total number 
                of recipients of aid to families with dependent 
                children in the form of foster care for such 
                month; and
            [(2) in the case of Puerto Rico, the Virgin 
        Islands, Guam, and American Samoa, an amount equal to 
        one-half of the total of the sums expended during such 
        quarter as aid to families with dependent children 
        under the State plan, not counting so much of any 
        expenditure with respect to any month as exceeds $18 
        multiplied by the total number of recipients of such 
        aid for such month; and
            [(3) in the case of any State, 50 percent of the 
        total amounts expended during such quarter as found 
        necessary by the Secretary for the proper and efficient 
        administration of the State plan, except that no 
        payment shall be made with respect to amounts expended 
        in connection with the provision of any service 
        described in section 2002(a) other than services 
        furnished pursuant to section 402(g); and
            [(5) in the case of any State, an amount equal to 
        50 per centum of the total amount expended under the 
        State plan during such quarter as emergency assistance 
        to needy families with children.
No payment shall be made under this subsection with respect to 
amounts paid to supplement or otherwise increase the amount of 
aid to families with dependent children found payable in 
accordance with section 402(a)(13) if such amount is determined 
to have been paid by the State in recognition of the current or 
anticipated needs of a family (other than with respect to the 
first or first and second months of eligibility), but any such 
amount, if determined to have been paid by the State in 
recognition of the difference between the current or 
anticipated needs of a family for a month based upon actual 
income or other relevant circumstances for such month, and the 
needs of such family for such month based upon income and other 
relevant circumstances as retrospectively determined under 
section 402(a)(13)(A)(ii), shall not be considered income 
within the meaning of section 402(a)(13) for the purpose of 
determining the amount of aid in the succeeding months.
(b) The method of computing and paying such amounts shall be as 
follows:
            [(1) The Secretary shall, prior to the beginning of 
        each quarter, estimate the amount to be paid to the 
        State for such quarter under the provisions of 
        subsection (a), such estimate to be based on (A) a 
        report filed by the State containing its estimate of 
        the total sum to be expended in such quarter in 
        accordance with the provisions of such subsection and 
        stating the amount appropriated or made available by 
        the State and its political subdivisions for such 
        expenditures in such quarter, and if such amount is 
        less than the State's proportionate share of the total 
        sum of such estimated expenditures, the source or 
        sources from which the difference is expected to be 
        derived, (B) records showing the number of dependent 
        children in the State, and (C) such other investigation 
        as the Secretary may find necessary.
            [(2) The Secretary shall then certify to the 
        Secretary of the Treasury the amount so estimated by 
        the Secretary, (A) reduced or increased, as the case 
        may be, by any sum by which he finds that his estimate 
        for any prior quarter was greater or less than the 
        amount which should have been paid to the State for 
        such quarter, (B) reduced by a sum equivalent to the 
        pro rata share to which the United States is equitably 
        entitled, as determined by the Secretary, of the net 
        amount recovered during any prior quarter by the State 
        or any political subdivision thereof with respect to 
        aid to families with dependent children furnished under 
        the State plan, and (C) reduced by such amount as is 
        necessary to provide the ``appropriate reimbursement of 
        the Federal Government'' that the State is required to 
        make under section 457 out of that portion of child 
        support collections retained by it pursuant to such 
        section; except that such increases or reductions shall 
        not be made to the extent that such sums have been 
        applied to make the amount certified for any prior 
        quarter greater or less than the amount estimated by 
        the Secretary for such prior quarter.
            [(3) The Secretary of the Treasury shall thereupon, 
        through the Fiscal Service of the Department of the 
        Treasury and prior to audit or settlement by the 
        General Accounting Office, pay to the State, at the 
        time or times fixed by the Secretary, the amount so 
        certified.
    [(e) In order to assist in obtaining the information needed 
to carry out subsection (b)(1) and otherwise to perform his 
duties under this part, the Secretary shall establish uniform 
reporting requirements under which each State will be required 
periodically to furnish such information and data as the 
Secretary may determine to be necessary to ensure that sections 
402(a)(37), 402(a)(43), and 402(g)(1)(A), are being effectively 
implemented, including at a minimum the average monthly number 
of families assisted under each such section, the types of such 
families, the amounts expended with respect to such families, 
and the length of time for which such families are assisted. 
The information and data so furnished with respect to families 
assisted under section 402(g) shall be separately stated with 
respect to families who have earnings and those who do not, and 
with respect to families who are receiving aid under the State 
plan and those who are not.
(f) Notwithstanding any other provision of this section, the 
amount payable to any State under this part for quarters in a 
fiscal year shall with respect to quarters in fiscal years 
beginning after June 30, 1973, be reduced by 1 per centum 
(calculated without regard to any reduction under section 
403(g)) of such amount if such State--
            [(1) in the immediately preceding fiscal year 
        failed to carry out the provisions of section 
        402(a)(15)(B) as pertain to requiring the offering and 
        arrangement for provision of family planning services; 
        or
            [(2) in the immediately preceding fiscal year (but, 
        in the case of the fiscal year beginning July 1, 1972, 
        only considering the third and fourth quarters 
        thereof), failed to carry out the provisions of section 
        402(a)(15)(B) of the Social Security Act with respect 
        to any individual who, within such period or periods as 
        the Secretary may prescribe, has been an applicant for 
        or recipient of aid to families with dependent children 
        under the plan of the State approved under this part.
    [(h)(1) Notwithstanding any other provision of this Act, if 
a State's program operated under part D is found as a result of 
a review conducted under section 452(a)(4) not to have complied 
substantially with the requirements of such part for any 
quarter beginning after September 30, 1983, and the Secretary 
determines that the State's program is not complying 
substantially with such requirements at the time such finding 
is made, the amounts otherwise payable to the State under this 
part for such quarter and each subsequent quarter, prior to the 
first quarter throughout which the State program is found to be 
in substantial compliance with such requirements, shall be 
reduced (subject to paragraph (2)) by--
            [(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 such finding 
        made as a result of such a review, or
            [(C) not less than three nor more than five 
        percent, if the finding is the third or a subsequent 
        consecutive such finding made as a result of such a 
        review.
(2)(A) The reductions required under paragraph (1) shall be 
suspended for any quarter if--
            [(i) the State submits a corrective action plan, 
        within a period prescribed by the Secretary following 
        notice of the finding under paragraph (1), which 
        contains steps necessary to achieve substantial 
        compliance within a time period which the Secretary 
        finds to be appropriate;
            [(ii) the Secretary approves such corrective action 
        plan (and any amendments thereto) as being sufficient 
        to achieve substantial compliance; and
            [(iii) the Secretary finds that the corrective 
        action plan (and any amendment thereto approved by the 
        Secretary under clause (ii)), is being fully 
        implemented by the State and that the State is 
        progressing in accordance with the timetable contained 
        in the plan to achieve substantial compliance with such 
        requirements.
    [(B) A suspension of the penalty under subparagraph (A) 
shall continue until such time as the Secretary determines 
that--
            [(i) the State has achieved substantial compliance,
            [(ii) the State is no longer implementing its 
        corrective action plan, or
            [(iii) the State is implementing or has implemented 
        its corrective action plan but has failed to achieve 
        substantial compliance within the appropriate time 
        period (as specified in subparagraph (A)(i)).
    [(C)(i) In the case of a State whose penalty suspension 
ends pursuant to subparagraph (B)(i), the penalty shall not be 
applied.
    [(ii) In the case of a State whose penalty suspension ends 
pursuant to subparagraph (B)(ii), the penalty shall be applied 
as if the suspension had not occurred.
    [(iii) In the case of a State whose penalty suspension ends 
pursuant to subparagraph (B)(iii), the penalty shall be applied 
to all quarters ending after the expiration of the time period 
specified in such subparagraph (and prior to the first quarter 
throughout which the State program is found to be in 
substantial compliance).
    [(3) For purposes of this subsection, section 402(a)(27), 
and section 452(a)(4), a State which is not in full compliance 
with the requirements of this part shall be determined to be in 
substantial compliance with such requirements only if the 
Secretary determines that any noncompliance with such 
requirements is of a technical nature which does not adversely 
affect the performance of the child support enforcement 
program.
    [(k)(1) Each State with a plan approved under part F shall 
be entitled to payments under subsection (l) for any fiscal 
year in an amount equal to the sum of the applicable 
percentages (specified in such subsection) of its expenditures 
to carry out the program under part F (subject to limitations 
prescribed by or pursuant to such part or this section on 
expenditures that may be included for purposes of determining 
payment under subsection (l)), but such payments for any fiscal 
year in the case of any State may not exceed the limitation 
determined under paragraph (2) with respect to the State.
    [(2) The limitation determined under this paragraph with 
respect to a State for any fiscal year is--
            [(A) the amount allotted to the State for fiscal 
        year 1987 under part C of this title as then in effect, 
        plus
            [(B) 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) $600,000,000 in the case of the fiscal year 
        1989,
            [(B) $800,000,000 in the case of the fiscal year 
        1990,
            [(C) $1,000,000,000 in the case of each of the 
        fiscal years 1991, 1992, and 1993,
            [(D) $1,100,000,000 in the case of the fiscal year 
        1994,
            [(E) $1,300,000,000 in the case of the fiscal year 
        1995, reduced by an amount equal to the total of those 
        funds that are within each State's limitation for 
        fiscal year 1995 that are not necessary to pay such 
        State's allowable claims for such fiscal year (except 
        that such amount for such year shall be deemed to be 
        $1,300,000,000 for the purpose of determining the 
        amount of the payment under subsection (l) to which 
        each State is entitled), and
            [(F) $1,000,000,000 in the case of the fiscal year 
        1996 and each succeeding fiscal year, reduced by an 
        amount equal to the total of those funds that are 
        within each State's limitation for fiscal year 1996 
        that are not necessary to pay such State's allowable 
        claims for such fiscal year (except that such amount 
        for such year shall be deemed to be $1,000,000,000 for 
        the purpose of determining the amount of the payment 
        under subsection (1) to which each State is entitled),
reduced by the aggregate amount allotted to all the States for 
fiscal year 1987 pursuant to part C of this title as then in 
effect.
    [(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.
    [(5) None of the funds available to a State for purposes of 
the programs or activities conducted under part F shall be used 
for construction.
    [(l)(1)(A) In lieu of any payment under subsection (a), the 
Secretary shall pay to each State with a plan approved under 
section 482(a) (subject to the limitation determined under 
section 482(i)(2)) with respect to expenditures by the State to 
carry out a program under part F (including expenditures for 
child care under section 402(g)(1)(A)(i), but only in the case 
of a State with respect to which section 1108 applies), an 
amount equal to--
            [(i) with respect to so much of such expenditures 
        in a fiscal year as do not exceed the State's 
        expenditures in the fiscal year 1987 with respect to 
        which payments were made to such State from its 
        allotment for such fiscal year pursuant to part C of 
        this title as then in effect, 90 percent; and
            [(ii) with respect to so much of such expenditures 
        in a fiscal year as exceed the amount described in 
        clause (i)--
                    [(I) 50 percent, in the case of 
                expenditures for administrative costs made by a 
                State in operating such a program for such 
                fiscal year (other than the personnel costs for 
                staff employed full-time in the operation of 
                such program) and the costs of transportation 
                and other work- related supportive services 
                under section 402(g)(2), and
                    [(II) the greater of 60 percent or the 
                Federal medical assistance percentage (as 
                defined in section 1118 in the case of any 
                State to which section 1108 applies, or as 
                defined in section 1905(b) in the case of any 
                other State), in the case of expenditures made 
                by a State in operating such a program for such 
                fiscal year (other than for costs described in 
                subclause (I)).
    [(B) With respect to the amount for which payment is made 
to a State under subparagraph (A)(i), the State's expenditures 
for the costs of operating a program established under part F 
may be in cash or in kind, fairly evaluated.
    [(2)(A) Notwithstanding paragraph (1), the Secretary shall 
pay to a State an amount equal to 50 percent of the 
expenditures made by such State in operating its program 
established under part F (in lieu of any different percentage 
specified in paragraph (1)(A)) if less than 55 percent of such 
expenditures are made with respect to individuals who are 
described in subparagraph (B).
    [(B) An individual is described in this paragraph if the 
individual--
            [(i)(I) is receiving aid to families with dependent 
        children, and
            [(II) has received such aid for any 36 of the 
        preceding 60 months;
            [(ii)(I) makes application for aid to families with 
        dependent children, and
            [(II) has received such aid for any 36 of the 60 
        months immediately preceding the most recent month for 
        which application has been made;
            [(iii) is a custodial parent under the age of 24 
        who (I) has not completed a high school education and, 
        at the time of application for aid to families with 
        dependent children, is not enrolled in high school (or 
        a high school equivalency course of instruction), or 
        (II) had little or no work experience in the preceding 
        year; or
            [(iv) is a member of a family in which the youngest 
        child is within 2 years of being ineligible for aid to 
        families with dependent children because of age.
    [(C) This paragraph may be waived by the Secretary with 
respect to any State which demonstrates to the satisfaction of 
the Secretary that the characteristics of the caseload in that 
State make it infeasible to meet the requirements of this 
paragraph, and that the State is targeting other long-term or 
potential long-term recipients.
    [(D) The Secretary shall biennially submit to the Congress 
any recommendations for modifications or additions to the 
groups of individuals described in subparagraph (B) that the 
Secretary determines would further the goal of assisting long-
term or potential long-term recipients of aid to families with 
dependent children to achieve self-sufficiency, which 
recommendations shall take into account the particular 
characteristics of the populations of individual States.
    [(3)(A) Notwithstanding paragraph (1), the Secretary shall 
pay to a State an amount equal to 50 percent of the 
expenditures made by such State in a fiscal year in operating 
its program established under part F (in lieu of any different 
percentage specified in paragraph (1)(A)) if the State's 
participation rate (determined under subparagraph (B)) for the 
preceding fiscal year does not exceed or equal--
            [(i) 7 percent if the preceding fiscal year is 
        1990;
            [(ii) 7 percent if such year is 1991;
            [(iii) 11 percent if such year is 1992;
            [(iv) 11 percent if such year is 1993;
            [(v) 15 percent if such year is 1994; and
            [(vi) 20 percent if such year is 1995.
    [(B)(i) The State's participation rate for a fiscal year 
shall be the average of its participation rates for computation 
periods (as defined in clause (ii)) in such fiscal year.
    [(ii) The computation periods shall be--
            [(I) the fiscal year, in the case of fiscal year 
        1990,
            [(II) the first six months, and the seventh through 
        twelfth months, in the case of fiscal year 1991,
            [(III) the first three months, the fourth through 
        sixth months, the seventh through ninth months, and the 
        tenth through twelfth months, in the case of fiscal 
        years 1992 and 1993, and
            [(IV) each month, in the case of fiscal years 1994 
        and 1995.
    [(iii) The State's participation rate for a computation 
period shall be the number, expressed as a percentage, equal 
to--
            [(I) the average monthly number of individuals 
        required or allowed by the State to participate in the 
        program under part F who have participated in such 
        program in months in the computation period, plus the 
        number of individuals required or allowed by the State 
        to participate in such program who have so participated 
        in that month in such period for which the number of 
        such participants is the greatest, divided by
            [(II) twice the average monthly number of 
        individuals required to participate in such period 
        (other than individuals described in subparagraph 
        (C)(iii)(I) or (D) of section 402(a)(19) with respect 
        to whom the State has exercised its option to require 
        their participation).
For purposes of this subparagraph, an individual shall not be 
considered to have satisfactorily participated in the program 
under part F solely by reason of such individual being 
registered to participate in such program.
    [(C) Notwithstanding any other provision of this paragraph, 
no State shall be subject to payment under this paragraph (in 
lieu of paragraph (1)(A)) for failing to meet any participation 
rate required under this paragraph with respect to any fiscal 
year before 1991.
    [(D) For purposes of this paragraph, an individual shall be 
determined to have participated in the program under part F, if 
such individual has participated in accordance with such 
requirements, consistent with regulations of the Secretary, as 
the State shall establish.
    [(E) If the Secretary determines that the State has failed 
to achieve the participation rate for any fiscal year specified 
in the numbered clauses of subparagraph (A), he may waive, in 
whole or in part, the reduction in the payment rate otherwise 
required by such subparagraph if he finds that--
            [(i) the State is in conformity with section 
        402(a)(19) and part F;
            [(ii) the State has made a good faith effort to 
        achieve the applicable participation rate for such 
        fiscal year; and
            [(iii) the State has submitted a proposal which is 
        likely to achieve the applicable participation rate for 
        the current fiscal year and the subsequent fiscal years 
        (if any) specified therein.
    [(4)(A)(i) Subject to subparagraph (B), in the case of any 
family eligible for aid to families with dependent children by 
reason of the unemployment of the parent who is the principal 
earner, the State agency shall require that at least one parent 
in any such family participate, for a total of at least 16 
hours a week during any period in which either parent is 
required to participate in the program, in a work 
supplementation program, a community work experience or other 
work experience program, on-the-job training, or a State 
designed work program approved by the Secretary, as such 
programs are described in section 482(d)(1). In the case of a 
parent under age 25 who has not completed high school or an 
equivalent course of education, the State may require such 
parent to participate in educational activities directed at the 
attainment of a high school diploma (or equivalent) or another 
basic education program in lieu of one or more of the programs 
specified in the preceding sentence.
    [(ii) For purposes of clause (i), an individual 
participating in a community work experience program under 
section 482 shall be considered to have met the requirement of 
such clause if he participates for the number of hours in any 
month equal to the monthly payment of aid to families with 
dependent children to the family of which he is a member, 
divided by the greater of the Federal or the applicable State 
minimum wage (and the portion of such monthly payment for which 
the State is reimbursed by a child support collection shall not 
be taken into account in determining the number of hours that 
such individual may be required to work).
    [(B) The requirement under subparagraph (A) shall not be 
considered to have been met by any State if the requirement is 
not met with respect to the following percentages of all 
families in the State eligible for aid to families with 
dependent children by reason of the unemployment of the parent 
who is the principal earner:
            [(i) 40 percent, in the case of the average of each 
        month in fiscal year 1994,
            [(ii) 50 percent, in the case of the average of 
        each month in fiscal year 1995,
            [(iii) 60 percent, in the case of the average of 
        each month in fiscal year 1996, and
            [(iv) 75 percent in the case of the average of each 
        month in each of the fiscal years 1997 and 1998.
    [(C) The percentage of participants for any month in a 
fiscal year for purposes of the preceding sentence shall equal 
the average of--
            [(i) the number of individuals described in 
        subparagraph (A)(i) who have met the requirement 
        prescribed therein, divided by
            [(ii) the total number of principal earners 
        described in such subparagraph (but excluding those in 
        families who have been recipients of aid for 2 months 
        or less if, during the period that the family received 
        aid, at least one parent engaged in intensive job 
        search).
    [(D) If the Secretary determines that the State has failed 
to meet the requirement under subparagraph (A) (determined with 
respect to the percentages prescribed in subparagraph (B)), he 
may waive, in whole or in part, any penalty if he finds that--
            [(i) the State is operating a program in conformity 
        with section 402(a)(19) and part F,
            [(ii) the State has made a good faith effort to 
        meet the requirement of subparagraph (A) but has been 
        unable to do so because of economic conditions in the 
        State (including significant numbers of recipients 
        living in remote locations or isolated rural areas 
        where the availability of work sites is severely 
        limited), or because of rapid and substantial increases 
        in the caseload that cannot reasonably be planned for, 
        and
            [(iii) the State has submitted a proposal which is 
        likely to achieve the required percentage of 
        participants for the subsequent fiscal years.
    [(m)(1) During the 12-month period beginning on July 1, 
1988 (in this subsection referred to as the ``moratorium 
period''), the Secretary shall not impose any reductions in 
payments to States pursuant to subsection (i) (or prior 
regulations), or pursuant to any comparable provision of law 
relating to the programs under this part in Puerto Rico, Guam, 
the Virgin Islands, American Samoa, or the Northern Mariana 
Islands.
    [(2) During the moratorium period--
            [(A) the Secretary and the States shall continue to 
        operate the quality control systems in effect under 
        this part, and to calculate the error rates under the 
        provisions referred to in paragraph (1), including the 
        process of requesting and reviewing waivers; and
            [(B) the Departmental Grant Appeals Board shall, 
        notwithstanding paragraph (1), review disallowances for 
        fiscal year 1981 and thereafter and hear appeals with 
        respect thereto (but collection of disallowances owed 
        as a result of Departmental Grant Appeals Board 
        decisions shall not occur).
    [(n)(1) In addition to any payment under subsection (a) or 
(l), each State shall be entitled to payment from the Secretary 
of an amount equal to the lesser of--
            [(A) the Federal medical assistance percentage (as 
        defined in section 1905(b)) of the expenditures by the 
        State in providing child care services pursuant to 
        section 402(i), and in administering the provision of 
        such child care services, for any fiscal year; and
            [(B) the limitation determined under paragraph (2) 
        with respect to the State for the fiscal year.
    [(2)(A) The limitation determined under this paragraph with 
respect to a State for any fiscal year is the amount that bears 
the same ratio to the amount specified in subparagraph (B) for 
such fiscal year as the number of children residing in the 
State in the second preceding fiscal year bears to the number 
of children residing in the United States in the second 
preceding fiscal year.
    [(B) The amount specified in this subparagraph is--
            [(i) $300,000,000 for fiscal year 1991;
            [(ii) $300,000,000 for fiscal year 1992;
            [(iii) $300,000,000 for fiscal year 1993;
            [(iv) $300,000,000 for fiscal year 1994; and
            [(v) $300,000,000 for fiscal year 1995, and for 
        each fiscal year thereafter.
    [(C) If the limitation determined under subparagraph (A) 
with respect to a State for a fiscal year exceeds the amount 
paid to the State under this subsection for the fiscal year, 
the limitation determined under this paragraph with respect to 
the State for the immediately succeeding fiscal year shall be 
increased by the amount of such excess.
    [(3) Amounts appropriated for a fiscal year to carry out 
this part shall be made available for payments under this 
subsection for such fiscal year.

                       [OPERATION OF STATE PLANS

    [Sec. 404. (a) In the case of any State plan for aid and 
services to needy families with children which has been 
approved by the Secretary, if the Secretary, after reasonable 
notice and opportunity for hearing to the State agency 
administering or supervising the administration of such plan, 
finds--
            [(1) that the plan has been so changed as to impose 
        any residence requirement prohibited by section 402(b), 
        or that in the administration of the plan any such 
        prohibited requirement is imposed, with the knowledge 
        of such State agency, in a substantial number of cases; 
        or
            [(2) that in the administration of the plan there 
        is a failure to comply substantially with any provision 
        required by section 402(a) to be included in the plan;
the Secretary shall notify such State agency that further 
payments will not be made to the State (or, in his discretion, 
that payments will be limited to categories under or parts of 
the State plan not affected by such failure) until the 
Secretary is satisfied that such prohibited requirement is no 
longer so imposed, and that there is no longer any such failure 
to comply. Until he is so satisfied he shall make no further 
payments to such State (or shall limit payments to categories 
under or parts of the State plan not affected by such failure).
    [(b) No payment to which a State is otherwise entitled 
under this part for any period before September 1, 1962, shall 
be withheld by reason of any action taken pursuant to a State 
statute which requires that aid be denied under the State plan 
approved under this part with respect to a child because of the 
conditions in the home in which the child resides; nor shall 
any such payment be withheld for any period beginning on or 
after such date by reason of any action taken pursuant to such 
a statute if provision is otherwise made pursuant to a State 
statute for adequate care and assistance with respect to such 
child.
    [(c) No State shall be found, prior to January 1, 1977, to 
have failed substantially to comply with the requirements of 
section 402(a)(27) if, in the judgment of the Secretary, such 
State is making a good faith effort to implement the program 
required by such section.
    [(d) After December 31, 1976, in the case of any State 
which is found to have failed substantially to comply with the 
requirements of section 402(a)(27), the reduction in any amount 
payable to such State required to be imposed under section 
403(h) shall be imposed in lieu of any reduction, with respect 
to such failure, which would otherwise be required to be 
imposed under this section.

                 [USE OF PAYMENTS FOR BENEFIT OF CHILD

    [Sec. 405. Whenever the State agency has reason to believe 
that any payments of aid to families with dependent children 
made with respect to a child are not being or may not be used 
in the best interests of the child, the State agency may 
provide for such counseling and guidance services with respect 
to the use of such payments and the management of other funds 
by the relative receiving such payments as it deems advisable 
in order to assure use of such payments in the best interests 
of such child, and may provide for advising such relative that 
continued failure to so use such payments will result in 
substitution therefor of protective payments as provided under 
section 406(b)(2), or in seeking appointment of a guardian or 
legal representative as provided in section 1111, or in the 
imposition of criminal or civil penalties authorized under 
State law if it is determined by a court of competent 
jurisdiction that such relative is not using or has not used 
for the benefit of the child any such payments made for that 
purpose; and the provision of such services or advice by the 
State agency (or the taking of the action specified in such 
advice) shall not serve as a basis for withholding funds from 
such State under section 404 and shall not prevent such 
payments with respect to such child from being considered aid 
to families with dependent children.

                              [DEFINITIONS

    [Sec. 406. When used in this part--
    [(a) The term ``dependent child'' means a needy child (1) 
who has been deprived of parental support or care by reason of 
the death, continued absence from the home (other than absence 
occasioned solely by reason of the performance of active duty 
in the uniformed services of the United States), or physical or 
mental incapacity of a parent, and who is living with his 
father, mother, grandfather, grandmother, brother, sister, 
stepfather, stepmother, stepbrother, stepsister, uncle, aunt, 
first cousin, nephew, or niece, in a place of residence 
maintained by one or more of such relatives as his or their own 
home, and (2) who is (A) under the age of eighteen, or (B) at 
the option of the State, under the age of nineteen and a full-
time student in a secondary school (or in the equivalent level 
of vocational or technical training), if, before he attains age 
nineteen, he may reasonably be expected to complete the program 
of such secondary school (or such training);
    [(b) The term ``aid to families with dependent children'' 
means money payments with respect to a dependent child or 
dependent children, or, at the option of the State, a pregnant 
woman but only if it has been medically verified that the child 
is expected to be born in the month such payments are made or 
within the three-month period following such month of payment, 
and who, if such child had been born and was living with her in 
the month of payment, would be eligible for aid to families 
with dependent children, and includes (1) money payments to 
meet the needs of the relative with whom any dependent child is 
living (and the spouse of such relative if living with him and 
if such relative is the child's parent and the child is a 
dependent child by reason of the physical or mental incapacity 
of a parent or is a dependent child under section 407), and (2) 
payments with respect to any dependent child (including 
payments to meet the needs of the relative, and the relative's 
spouse, with whom such child is living, and the needs of any 
other individual living in the same home if such needs are 
taken into account in making the determination under section 
402(a)(7)) which do not meet the preceding requirements of this 
subsection, but which would meet such requirements except that 
such payments are made to another individual who (as determined 
in accordance with standards prescribed by the Secretary) is 
interested in or concerned with the welfare of such child or 
relative, or are made on behalf of such child or relative 
directly to a person furnishing food, living accommodations, or 
other goods, services, or items to or for such child, relative, 
or other individual, but only with respect to a State whose 
State plan approved under section 402 includes provision for--
            [(A) determination by the State agency that the 
        relative of the child with respect to whom such 
        payments are made has such inability to manage funds 
        that making payments to him would be contrary to the 
        welfare of the child and, therefore, it is necessary to 
        provide such aid with respect to such child and 
        relative through payments described in this clause (2);
            [(B) undertaking and continuing special efforts to 
        develop greater ability on the part of the relative to 
        manage funds in such manner as to protect the welfare 
        of the family;
            [(C) periodic review by such State agency of the 
        determination under clause (A) to ascertain whether 
        conditions justifying such determination still exist, 
        with provision for termination of such payments if they 
        do not and for seeking judicial appointment of a 
        guardian or other legal representative, as described in 
        section 1111, if and when it appears that the need for 
        such payments is continuing, or is likely to continue, 
        beyond a period specified by the Secretary; and
            [(D) opportunity for a fair hearing before the 
        State agency on the determination referred to in clause 
        (A) for any individual with respect to whom it is made.
Payments with respect to a dependent child which are intended 
to enable the recipient to pay for specific goods, services, or 
items recognized by the State agency as a part of the child's 
need under the State plan may (in the discretion of the State 
or local agency administering the plan in the political 
subdivision) be made, pursuant to a determination referred to 
in clause (2)(A), in the form of checks drawn jointly to the 
order of the recipient and the person furnishing such goods, 
services, or items and negotiable only upon endorsement by both 
such recipient and such person; and payments so made shall be 
considered for all of the purposes of this part to be payments 
described in clause (2). Whenever payments with respect to a 
dependent child are made in the manner described in clause (2) 
(including payments described in the preceding sentence), a 
statement of the specific reasons for making such payments in 
that manner (on which the determination under clause (2)(A) was 
based) shall be placed in the file maintained with respect to 
such child by the State or local agency administering the State 
plan in the political subdivision. Payments of the type 
described in clause (2) shall not be subject to the 
requirements of clauses (A) through (D) of such clause (2), 
when they are made in the manner described in clause (2) at the 
request of the family member to whom payment would otherwise be 
made in an unrestricted manner.
    [(c) The term ``relative with whom any dependent child is 
living'' means the individual who is one of the relatives 
specified in subsection (a) and with whom such child is living 
(within the meaning of such subsection) in a place of residence 
maintained by such individual (himself or together with any one 
or more of the other relatives so specified) as his (or their) 
own home.
    [(e)(1) The term ``emergency assistance to needy families 
with children'' means any of the following, furnished for a 
period not in excess of 30 days in any 12-month period, in the 
case of a needy child under the age of 21 who is (or, within 
such period as may be specified by the Secretary, has been) 
living with any of the relatives specified in subsection (a)(1) 
in a place of residence maintained by one or more of such 
relatives as his or their own home, but only where such child 
is without available resources, the payments, care, or services 
involved are necessary to avoid destitution of such child or to 
provide living arrangements in a home for such child, and such 
destitution or need for living arrangements did not arise 
because such child or relative refused without good cause to 
accept employment or training for employment--
            [(A) money payments, payments in kind, or such 
        other payments as the State agency may specify with 
        respect to, or medical care or any other type of 
        remedial care recognized under State law (for which 
        such individual is not entitled to medical assistance 
        under the State plan under title XIX) on behalf of, 
        such child or any other member of the household in 
        which he is living, and
            [(B) such services as may be specified by the 
        Secretary;
but only with respect to a State whose State plan approved 
under section 402 includes provision for such assistance.
    [(2) Emergency assistance as authorized under paragraph (1) 
may be provided under the conditions specified in such 
paragraph to migrant workers with families in the State or in 
such part or parts thereof as the State shall designate.
    [(f) Notwithstanding the provisions of subsection (b), the 
term ``aid to families with dependent children'' does not mean 
payments with respect to a parent (or other individual whose 
needs such State determines should be considered in determining 
the need of the child or relative claiming aid under the plan 
of such State approved under this part) of a child who fails to 
cooperate with any agency or official of the State in obtaining 
such support payments for such child. Nothing in this 
subsection shall be construed to make an otherwise eligible 
child ineligible for protective payments because of the failure 
of such parent (or such other individual) to so cooperate.
    [(g) Notwithstanding the provisions of subsection (b), the 
term ``aid to families with dependent children'' does not mean 
any--
            [(1) amount paid to meet the needs of an unborn 
        child; or
            [(2) amount paid (or by which a payment is 
        increased) to meet the needs of a woman occasioned by 
        or resulting from her pregnancy, unless, as has been 
        medically verified, the woman's child is expected to be 
        born in the month such payments are made (or increased) 
        or within the three-month period following such month 
        of payment.
    [(h) Each dependent child, and each relative with whom such 
a child is living (including the spouse of such relative as 
described in subsection (b)), who becomes ineligible for aid to 
families with dependent children as a result (wholly or partly) 
of the collection or increased collection of child or spousal 
support under part D, and who has received such aid in at least 
three of the six months immediately preceding the month in 
which such ineligibility begins, shall be deemed to be a 
recipient of aid to families with dependent children for 
purposes of title XIX for an additional four calendar months 
beginning with the month in which such ineligibility begins.

               [DEPENDENT CHILDREN OF UNEMPLOYED PARENTS

    [Sec. 407. (a) The term ``dependent child'' shall, 
notwithstanding section 406(a), include a needy child who meets 
the requirements of section 406(a)(2), who has been deprived of 
parental support or care by reason of the unemployment (as 
determined in accordance with standards prescribed by the 
Secretary) of the parent who is the principal earner, and who 
is living with any of the relatives specified in section 
406(a)(1) in a place of residence maintained by one or more of 
such relatives as his (or their) own home.
    [(b)(1) In providing for the provision of aid to families 
with dependent children under the State's plan approved under 
section 402, in the case of families that include dependent 
children within the meaning of subsection (a) of this section, 
as required by section 402(a)(41), the State's plan--
            [(A) subject to paragraph (2), shall require the 
        payment of aid to families with dependent children with 
        respect to a dependent child as defined in subsection 
        (a) when--
                    [(i) whichever of such child's parents is 
                the principal earner has not been employed (as 
                determined in accordance with standards 
                prescribed by the Secretary) for at least 30 
                days prior to the receipt of such aid,
                    [(ii) such parent has not without good 
                cause, within such period (of not less than 30 
                days) as may be prescribed by the Secretary, 
                refused a bona fide offer of employment or 
                training for employment, and
                    [(iii)(I) such parent has 6 or more 
                quarters of work (as defined in subsection 
                (d)(1)), no more than 4 of which may be 
                quarters of work defined in subsection 
                (d)(1)(B), in any 13-calendar-quarter period 
                ending within one year prior to the application 
                for such aid or (II) such parent received 
                unemployment compensation under an unemployment 
                compensation law of a State or of the United 
                States, or such parent was qualified (within 
                the meaning of subsection (d)(3)) for 
                unemployment compensation under the 
                unemployment compensation law of the State, 
                within one year prior to the application for 
                such aid; and
            [(B) shall provide--
                    [(i) for such assurances as will satisfy 
                the Secretary that unemployed parents of 
                dependent children as defined in subsection (a) 
                will participate or apply for participation in 
                a program under part F (unless the program is 
                not available in the area where the parent is 
                living) within 30 days after receipt of aid 
                with respect to such children;
                    [(ii) for entering into cooperative 
                arrangements with the State agency responsible 
                for administering or supervising the 
                administration of vocational education in the 
                State, designed to assure maximum utilization 
                of available public vocational education 
                services and facilities in the State in order 
                to encourage the retraining of individuals 
                capable of being retrained;
                    [(iii) for the denial of aid to families 
                with dependent children to any child or 
                relative specified in subsection (a) with 
                respect to any week for which such child's 
                parent described in subparagraph (A)(i) 
                qualifies for unemployment compensation under 
                an unemployment compensation law of a State or 
                of the United States, but refuses to apply for 
                or accept such unemployment compensation;
                    [(iv) for the reduction of the aid to 
                families with dependent children otherwise 
                payable to any child or relative specified in 
                subsection (a) by the amount of any 
                unemployment compensation that such child's 
                parent described in subparagraph (A)(i) 
                receives under an unemployment compensation law 
                of a State or of the United States; and
                    [(v) that, if and for so long as the 
                child's parent described in subparagraph 
                (A)(i), unless meeting a condition of section 
                402(a)(19)(C), is, without good cause, not 
                participating (or available for participation) 
                in a program under part F, or if exempt under 
                such section by reason of clause (vii) thereof 
                or because there has not been established or 
                provided under part F a program in which such 
                parent can effectively participate, is not 
                registered with the public employment offices 
                in the State, the needs of such parent shall 
                not be taken into account in determining the 
                need of such parent's family under section 
                402(a)(7), and the needs of such parent's 
                spouse shall not be so taken into account 
                unless such spouse is participating in such a 
                program, or if not participating solely by 
                reason of section 402(a)(19)(C)(vii) or because 
                there has not been established or provided 
                under part F a program in which such spouse can 
                effectively participate, is registered with the 
                public employment offices of the State; and if 
                neither parents' needs are so taken into 
                account, the payment provisions of section 
                402(a)(19)(G)(i)(I) shall apply.
    [(2)(A) In carrying out the program under this section, a 
State may design its program to reflect the individual needs of 
the State and to emphasize education, training, and employment 
services for unemployed parents and their spouses who are 
eligible for aid to families with dependent children by reason 
of this section, to the extent provided under this paragraph.
    [(B)(i) Subject to clauses (ii) and (iii), with respect to 
the requirement under section 402(a)(41), a State may, at its 
option, limit the number of months with respect to which a 
family receives aid to families with dependent children to the 
extent determined appropriate by the State for the operation of 
its program under this section.
    [(ii)(I) A State may not limit the number of months under 
clause (i) for which a family may receive aid to families with 
dependent children unless it provides in its plan assurances to 
the Secretary that it has a program (that meets such 
requirements as the Secretary may in regulation prescribe) for 
providing education, training, and employment services 
(including any activity authorized under section 402(a)(19) or 
under part F) in order to assist parents of children described 
in subsection (a) in preparing for and obtaining employment.
    [(II) In exercising the option under clause (i), a State 
plan may not provide for the denial of aid to families with 
dependent children to a family otherwise eligible for such aid 
for any month unless the family has received such aid (on the 
basis of the unemployment of the parent who is the principal 
earner) in at least 6 of the preceding 12 months.
    [(III) Any family that is otherwise eligible for aid to 
families with dependent children that does not receive such aid 
in any month solely by reason of the State exercising the 
option under clause (i) shall be deemed, for purposes of 
determining the period under paragraph (1)(A)(iii)(I), to be 
receiving such aid in such month.
    [(iii) Each State which, on September 26, 1988, has a 
program in effect under this section shall continue to operate 
such program without a time limitation.
    [(C) With respect to the participation in the program under 
section 402(a)(19) and part F of a family eligible for aid to 
families with dependent children by reason of this section, a 
State may, at its option--
            [(i) except as otherwise provided in such section 
        and such part, require that any parent participating in 
        such program engage in program activities for up to 40 
        hours per week; and
            [(ii) provide for the payment of aid to families 
        with dependent children at regular intervals of no 
        greater than one month but after the performance of 
        assigned program activities.
    [(c) Notwithstanding any other provisions of this section, 
expenditures pursuant to this section shall be excluded from 
aid to families with dependent children (A) where such 
expenditures are made under the plan with respect to any 
dependent child as defined in subsection (a), (i) for any part 
of the 30-day period referred to in subsection (b)(1)(A)(i), or 
(ii) for any period prior to the time when the parent satisfies 
subsection (b)(1)(A)(ii), and (B) if, and for as long as, no 
action is taken (after the 30-day period referred to in 
subsection (b)(1)(B)(i), under the program therein specified, 
to undertake appropriate steps directed towards the 
participation of such parent in a program under part F.
    [(d) For purposes of this section--
            [(1) the term ``quarter of work'' with respect to 
        any individual means (A) a calendar quarter in which 
        such individual received earned income of not less than 
        $50 (or which is a ``quarter of coverage'' as defined 
        in section 213(a)(2)), or in which such individual 
        participated in a program under part F, (B) at the 
        option of the State, a calendar quarter in which such 
        individual attended, full-time, an elementary school, a 
        secondary school, or a vocational or technical training 
        course (approved by the Secretary) that is designed to 
        prepare the individual for gainful employment, or in 
        which such individual participated in an education or 
        training program established under the Job Training 
        Partnership Act, and (C) a calendar quarter ending 
        before October 1990 in which such individual 
        participated in a community work experience program 
        under section 409 (as in effect for a State immediately 
        before the effective date for that State of the 
        amendments made by title II of the Family Support Act 
        of 1988 or the work incentive program established under 
        part C (as in effect for a State immediately before 
        such effective date);
            [(2) the term ``calendar quarter'' means a period 
        of 3 consecutive calendar months ending on March 31, 
        June 30, September 30, or December 31;
            [(3) an individual shall, for purposes of 
        subsection (b)(1)(A)(iii), be deemed qualified for 
        unemployment compensation under the State's 
        unemployment compensation law if--
                    [(A) he would have been eligible to receive 
                such unemployment compensation upon filing 
                application, or
                    [(B) he performed work not covered under 
                such law and such work, if it had been covered, 
                would (together with any covered work he 
                performed) have made him eligible to receive 
                such unemployment compensation upon filing 
                application; and
            [(4) the phrase ``whichever of such child's parents 
        is the principal earner'', in the case of any child, 
        means whichever parent, in a home in which both parents 
        of such child are living, earned the greater amount of 
        income in the 24-month period the last month of which 
        immediately precedes the month in which an application 
        is filed for aid under this part on the basis of the 
        unemployment of a parent, for each consecutive month 
        for which the family receives such aid on that basis.
Notwithstanding section 402(a)(1), a State that chooses to 
exercise the option provided under paragraph (1)(B) may provide 
that the definition of calendar quarter under such option apply 
in one or more political subdivisions of the State.
    [(e) The Secretary and the Secretary of Labor shall jointly 
enter into an agreement with each State which is able and 
willing to do so for the purpose of (1) simplifying the 
procedures to be followed by unemployed parents and other 
unemployed persons in such State in participating in a program 
under part F and in registering with public employment offices 
(under this section and otherwise) or in connection with 
applications for unemployment compensation, by reducing the 
number of locations or agencies where such persons must go in 
order to participate in or register for such programs and in 
connection with such applications, and (2) providing where 
possible for a single registration satisfying this section and 
the requirements of both part F and the applicable unemployment 
compensation laws.
    [Sec. 408. AFDC Quality Control System.--
    [(a) In General.--In order to improve the accuracy of 
payments of aid to families with dependent children, the 
Secretary shall establish and operate a quality control system 
under which the Secretary shall determine, with respect to each 
State, the amount (if any) of the disallowance required to be 
repaid to the Secretary due to erroneous payments made by the 
State in carrying out the State plan approved under this part.
    [(b) Review of Cases.--
            [(1) State review.--
                    [(A) In general.--Each State with a plan 
                approved under this part shall for each fiscal 
                year, in accordance with the time schedule and 
                methodology prescribed in regulations issued 
                under paragraphs (1) and (2) of subsection 
                (h)--
                            [(i) review a sample of cases in 
                        the State with respect to which a 
                        payment has been made under such plan 
                        during the fiscal year; and
                            [(ii) determine the level of 
                        erroneous payments for the State for 
                        the fiscal year.
                    [(B) Effects of failure to complete review 
                in a timely manner.--
                            [(i) Secretary conducts review.--If 
                        a State fails to conduct and complete, 
                        on a timely basis, a review required by 
                        subparagraph (A), or otherwise fails to 
                        cooperate with the Secretary in 
                        implementing this subsection, the 
                        Secretary, directly or through 
                        contractual or such other arrangements 
                        as the Secretary may find appropriate, 
                        shall conduct the review and establish 
                        the error rate for the State for the 
                        fiscal year on the basis of the best 
                        data reasonably available to the 
                        Secretary, in accordance with the 
                        statistical methods that would apply if 
                        the review were conducted by the State.
                            [(ii) State incurs costs of 
                        review.--The amount that would 
                        otherwise be payable under this part to 
                        a State for which the Secretary 
                        conducts a review under clause (i) 
                        shall be reduced by the costs incurred 
                        by the Secretary in conducting the 
                        review.
            [(2) Review by the secretary.--The Secretary shall 
        review a subsample of the cases reviewed by the State, 
        or by the Secretary with respect to the State, under 
        paragraph (1).
            [(3) Notification of difference cases.--Upon 
        completion of the review under paragraph (2), the 
        Secretary shall notify the State of any case in the 
        subsample which the Secretary finds involves erroneous 
        payments, and which the State's review determined to be 
        correct (in this section referred to as a ``difference 
        case'').
            [(4) Establishment of quality control review 
        panel.--The Secretary shall by regulation establish a 
        Quality Control Review Panel to review difference 
        cases.
            [(5) Resolution of difference cases.--
                    [(A) In general.--The State may seek review 
                by the Panel of any difference case, within the 
                time period prescribed in regulations issued 
                under subsection (h)(3).
                    [(B) Procedural rules.--The State and the 
                Secretary may submit such documentation to the 
                Panel as the State or the Secretary finds 
                appropriate to substantiate its position. The 
                findings of the Panel shall be made on the 
                record, within the time period prescribed in 
                regulations issued under subsection (h)(4).
                    [(C) Status of decisions of the quality 
                control review panel.--The decisions of the 
                Panel shall constitute the decisions of the 
                Secretary for purposes of establishing the 
                State's error rate for the fiscal year.
                    [(D) Appealability of decisions of the 
                quality control review panel.--The decisions of 
                the Panel shall not be appealable, except as 
                provided in subsection (k).
    [(c) Identification of Erroneous Payments.--
            [(1) Apply provisions of state plan.--Except as 
        provided in paragraph (2), in determining whether a 
        payment is an erroneous payment, the State and the 
        Secretary shall apply all relevant provisions of the 
        State plan approved under this part.
            [(2) Treatment of provisions of state plan that are 
        inconsistent with federal law.--
                    [(A) In general.--If a provision of a State 
                plan approved under this part is inconsistent 
                with a provision of Federal law or regulations, 
                and the Secretary has notified the State of the 
                inconsistency, the provision of Federal law or 
                regulations shall control.
                    [(B) Exception.--Subparagraph (A) shall not 
                apply with respect to a payment of the State 
                if--
                            [(i) it is necessary for the State 
                        to enact a law in order to remove an 
                        inconsistency described in subparagraph 
                        (A), the Secretary has advised the 
                        State that the State will be allowed a 
                        reasonable period in which to enact 
                        such a law, and the payment was made 
                        during such period; or
                            [(ii) the State agency made the 
                        payment in compliance with a court 
                        order.
            [(3) Certain payments not considered erroneous.--
        For purposes of this section, a payment by a State 
        shall not be considered an erroneous payment if the 
        payment is in error solely by reason of--
                    [(A) the State's failure to implement 
                properly changes in Federal statute within 6 
                months after the effective date of such changes 
                or, if later, 6 months after the issuance of 
                final regulations (including regulations in 
                interim final form) if such regulations are 
                reasonably necessary to construe or apply the 
                Federal statutory change;
                    [(B) the State's reliance upon and correct 
                use of erroneous information provided by the 
                Secretary about matters of fact;
                    [(C) the State's reliance upon and correct 
                use of written statements of Federal policy 
                provided to the State by the Secretary;
                    [(D) the occurrence of an event in the 
                State that--
                            [(i) results in the declaration by 
                        the President or the Governor of the 
                        State of a state of emergency or major 
                        disaster; and
                            [(ii) directly affects the State 
                        agency's ability to make correct 
                        payments under the State plan approved 
                        under this part; or
                    [(E) the failure of a family to submit 
                monthly reports to the State pursuant to 
                section 402(a)(14), if the failure did not 
                affect the amount of the payment.
            [(4) Certain payments considered erroneous.--
        Notwithstanding any other provision of this section, a 
        payment shall be considered an erroneous payment if the 
        payment is made to a family--
                    [(A) which has failed without good cause to 
                assign support rights as required by section 
                402(a)(26); or
                    [(B) any member of which is a recipient of 
                aid under a State plan approved under this part 
                and does not have a social security account 
                number (unless an application for a social 
                security account number for the family member 
                has been filed within 30 days after the date of 
                application for such aid).
    [(d) Determination of Error Rates.--
            [(1) In general.--The Secretary shall, in 
        accordance with this subsection, determine an error 
        rate for each State for the fiscal year involved, based 
        on the reviews under paragraphs (1) and (2) of 
        subsection (b) and the decisions of the Quality Control 
        Review Panel under subsection (b)(5).
            [(2) Error rate formula.--Except as provided in 
        paragraph (3), the State's error rate for a fiscal year 
        is--
                    [(A) the ratio of--
                            [(i) the erroneous payments of the 
                        State for the fiscal year; to
                            [(ii) the total payments of aid 
                        under the State plan approved under 
                        this part for the fiscal year; reduced 
                        by
                    [(B) the amount by which--
                            [(i) the national average 
                        underpayment rate for the fiscal year; 
                        exceeds
                            [(ii) the underpayment rate of the 
                        State for the fiscal year.
            [(3) Application of reduction to subsequent fiscal 
        year.--At the request of a State, the Secretary shall 
        apply the reduction described in paragraph (2)(B) in 
        determining the State's error rate for either of the 2 
        following fiscal years instead of in determining the 
        State's error rate for the fiscal year to which the 
        reduction would otherwise apply.
    [(e) Notification to States of Error Rates.--The Secretary 
shall notify each State of the error rate of the State 
determined under subsection (d), within the time period 
prescribed in regulations issued under subsection (h)(5).
    [(f) Imposition of Disallowances.--If a State's error rate 
for the fiscal year exceeds the national average error rate for 
the fiscal year, the Secretary shall impose a disallowance on 
the State for the fiscal year in an amount equal to--
            [(1) the product of--
                    [(A) the State's total payments of aid to 
                families with dependent children for the fiscal 
                year;
                    [(B) the Federal medical assistance 
                percentage applicable to the State for purposes 
                of section 1118;
                    [(C) the lesser of--
                            [(i) the ratio of--
                                    [(I) the amount by which 
                                the State's error rate for the 
                                fiscal year exceeds the 
                                national average error rate for 
                                the fiscal year; to
                                    [(II) the national average 
                                error rate for the fiscal year; 
                                or
                            [(ii) 1; and
                    [(D) the amount by which the State's error 
                rate for the fiscal year exceeds the national 
                average error rate for the fiscal year;
reduced by
            [(2) the product of--
                    [(A) the ratio of--
                            [(i) the amount by which the 
                        State's error rate for the fiscal year 
                        exceeds the national average error rate 
                        for the fiscal year; and
                            [(ii) the State's error rate for 
                        the fiscal year;
                    [(B) the overpayments recovered by the 
                State in the fiscal year; and
                    [(C) the Federal medical assistance 
                percentage applicable to the State for purposes 
                of section 1118;
and further reduced by
            [(3) the product of--
                    [(A) the calculation described in 
                paragraphs (1) and (2); and
                    [(B) the percentage by which--
                            [(i) the State's rate of child 
                        support collections for the fiscal 
                        year; exceeds
                            [(ii) the lesser of--
                                    [(I) the national average 
                                rate of child support 
                                collections for the fiscal 
                                year; or
                                    [(II) the average of the 
                                State's child support 
                                collection rates for each of 
                                the 3 fiscal years preceding 
                                the fiscal year.
    [(g) Notification to States of Amounts of Disallowances.--
The Secretary shall notify each State on which the Secretary 
imposes a disallowance the amount of the disallowance, within 
the time period prescribed in regulations issued under 
subsection (h)(6).
    [(h) Regulations.--The Secretary, after consultation with 
the chief executives of the States, shall by regulation 
prescribe--
            [(1) the periods within which--
                    [(A) the reviews required by paragraphs (1) 
                and (2) of subsection (b) are to begin and be 
                completed; and
                    [(B) the results of the review required by 
                subsection (b)(1) are to be reported to the 
                Secretary;
            [(2) matters relating to the selection and size of 
        the samples to be reviewed under paragraphs (1) and (2) 
        of subsection (b), and the methodology for making 
        statistically valid estimates of each State's error 
        rate;
            [(3) the period within which a State may seek 
        review by the Quality Control Review Panel of a 
        difference case;
            [(4) the period within which a difference case 
        appealed by a State is to be resolved by the Quality 
        Control Review Panel;
            [(5) the period, after the completion of the 
        reviews required by paragraphs (1) and (2) of 
        subsection (b) and the resolution by the Quality 
        Control Review Panel of any difference cases appealed 
        by a State, within which the Secretary is to notify the 
        State of the error rate of the State for the fiscal 
        year involved; and
            [(6) the period within which the Secretary is to 
        notify a State of any disallowance.
    [(i) Payment of Disallowances.--
            [(1) Payment options.--Within 45 days after the 
        date a State is notified of a disallowance pursuant to 
        subsection (g), the State shall, at the option of the 
        State--
                    [(A) pay the Secretary the amount of the 
                disallowance; or
                    [(B) enter into an agreement with the 
                Secretary under which the State will make 
                quarterly payments to the Secretary over a 
                period not to exceed 30 months beginning not 
                later than the first quarter beginning after 
                the date the State receives the notice, in 
                amounts sufficient to repay the disallowance 
                with interest by the end of such period.
            [(2) Authority to adjust state matching payments.--
        If a State fails to pay the amount of a disallowance 
        imposed on the State, in the manner required by the 
        applicable subparagraph of paragraph (1), the Secretary 
        shall reduce the amount to be paid to the State under 
        section 403(a) by amounts sufficient to recover the 
        amount of the disallowance with interest.
            [(3) Interest on unpaid disallowances.--
                    [(A) Rate of interest.--Interest on the 
                unpaid amount of a disallowance shall accrue at 
                the overpayment rate established under section 
                6621(a)(1) of the Internal Revenue Code of 
                1986.
                    [(B) Accrual of interest.--
                            [(i) In general.--Except as 
                        provided in clause (ii), interest on 
                        the unpaid amount of a State's 
                        disallowance shall accrue beginning 45 
                        days after the date the State receives 
                        notice of the disallowance.
                            [(ii) Exception.--If the State 
                        appeals the imposition of a 
                        disallowance under this section to the 
                        Departmental Appeals Board and the 
                        Board does not decide the appeal within 
                        90 days after the date of the State's 
                        notice of appeal, interest shall not 
                        accrue on the unpaid amount of the 
                        disallowance during the period 
                        beginning on such 90th day and ending 
                        on the date of the Board's final 
                        decision on the appeal, except to the 
                        extent that the Board finds that the 
                        State caused or requested the delay.
    [(j) Administrative Review of Disallowances.--
            [(1) In general.--Within 60 days after the date a 
        State receives notice of a disallowance imposed under 
        this section, the State may appeal the imposition of 
        the disallowance, in whole or in part, to the 
        Departmental Appeals Board established in the 
        Department of Health and Human Services, by filing an 
        appeal with the Board.
            [(2) Procedural rules.--The Board shall consider a 
        State's appeal on the basis of such documentation as 
        the State may submit and as the Board may require to 
        support the final decision of the Board. In deciding 
        whether to uphold a disallowance or any portion 
        thereof, the Board shall conduct a thorough review of 
        the issues and take into account all relevant evidence. 
        In rendering its final decision, the Board shall 
        incorporate by reference any findings of the Quality 
        Control Review Panel that were made in connection with 
        the determination of the error rate and the amount of 
        the disallowance, and such findings shall not be 
        reviewable by the Board.
    [(k) Judicial Review of Disallowances.--
            [(1) In general.--Within 90 days after the date of 
        a final decision by the Departmental Appeals Board with 
        respect to the imposition of a disallowance on a State 
        under this section, the State may obtain judicial 
        review of the final decision (and the findings of the 
        Quality Control Review Panel incorporated into the 
        final decision) by filing an action in--
                    [(A) the district court of the United 
                States for the judicial district in which the 
                principal or headquarters office of the State 
                agency is located; or
                    [(B) the United States District Court for 
                the District of Columbia.
            [(2) Procedural rules.--The district court in which 
        an action is filed shall review the final decision of 
        the Board on the record established in the 
        administrative proceeding, in accordance with the 
        standards of review prescribed by subparagraphs (A) 
        through (E) of section 706(2) of title 5, United States 
        Code. The review shall be on the basis of the documents 
        and supporting data submitted to the Board (or to the 
        Quality Control Review Panel, in the case of any 
        finding by the Panel which is at issue in the appeal).
    [(l) Refund of Disallowances Imposed in Error.--If the 
Secretary, directly or indirectly, receives from a State part 
or all of the amount of a disallowance imposed on the State 
under this section, and part or all of the disallowance is 
finally determined to have been imposed in error, the Secretary 
shall refund to the State the amount received by reason of the 
error, with interest which shall accrue from the date of 
receipt at the rate described in subsection (i)(3)(A).
    [(m) Definitions.--As used in this section:
            [(1) National average error rate.--The term 
        ``national average error rate'' for a fiscal year means 
        the greater of--
                    [(A) the ratio of--
                            [(i) the total amount of erroneous 
                        payments made by all States for the 
                        fiscal year; to
                            [(ii) the total amount of aid paid 
                        by all the States for the fiscal year 
                        under plans approved under this part; 
                        or
                    [(B) 4 percent.
            [(2) Underpayment rate.--The term ``underpayment 
        rate'', with respect to a State for a fiscal year, 
        means the ratio of--
                    [(A) the total amounts of aid that should 
                have been but were erroneously not paid for the 
                fiscal year to recipients of aid under the 
                State plan approved under this part; to
                    [(B) the total amount of aid paid under 
                such plan for the fiscal year.
            [(3) National average underpayment rate.--The term 
        ``national average underpayment rate'' for a fiscal 
        year means the ratio of--
                    [(A) the total amounts of aid that should 
                have been but were erroneously not paid for a 
                fiscal year to all recipients of aid under 
                State plans approved under this part; to
                    [(B) the total amount of aid paid for the 
                fiscal year under all State plans approved 
                under this part.
            [(4) Child support collection rate.--The term 
        ``child support collection rate'', with respect to a 
        State for a fiscal year, means the ratio of--
                    [(A) the sum of the number of cases 
                reported by the agency administering the State 
                plan approved under part D for each quarter in 
                the fiscal year for which--
                            [(i) an assignment was made under 
                        section 402(a)(26); and
                            [(ii) a collection was made under 
                        the State's plan approved under part D; 
                        to
                    [(B) the sum of the number of cases 
                reported by such agency for each quarter in the 
                fiscal year under which an assignment was made 
                under section 402(a)(26).
            [(5) National child support collection rate.--The 
        term ``national child support collection rate'' for a 
        fiscal year means the ratio of--
                    [(A) the sum of the number of cases 
                described in paragraph (4)(A) reported by all 
                States for quarters in the fiscal year; to
                    [(B) the sum of the number of cases 
                described in paragraph (4)(B) reported by all 
                States for quarters in the fiscal year.
            [(6) Erroneous payments.--The term ``erroneous 
        payments'' means the sum of overpayments to eligible 
        families and payments to ineligible families made in 
        carrying out a plan approved under this part.

 [Exclusion From AFDC Unit of Child for Whom Federal, State, or local 
    foster care maintenance or adoption assistance payments are made

    [Sec. 409. (a) Notwithstanding any other provision of this 
title (other than subsection (b))--
            [(1) a child with respect to whom foster care 
        maintenance payments or adoption assistance payments 
        are made under part E or under State or local law shall 
        not, for the period for which such payments are made, 
        be regarded as a member of a family for purposes of 
        determining the amount of benefits of the family under 
        this part; and
            [(2) the income and resources of such child shall 
        be excluded from the income and resources of a family 
        under this part.
    [(b) Subsection (a) shall not apply in the case of a child 
with respect to whom adoption assistance payments are made 
under part E or under State or local law, if application of 
such subsection would reduce the benefits under this part of 
the family of which the child would otherwise be regarded as a 
member.

                        [FOOD STAMP DISTRIBUTION

    [Sec. 410. (a) Any State plan for aid and services to needy 
families with children may (but is not required under this 
title or any other provision of Federal law to) provide for the 
institution of procedures, in any or all areas of the State, by 
the State agency administering or supervising the 
administration of such plan under which any household 
participating in the food stamp program established by the Food 
Stamp Act of 1977, as amended, will be entitled, if it so 
elects, to have the charges, if any, for its coupon allotment 
under such program deducted from any aid, in the form of money 
payments, which is (or, except for the deduction of such 
charge, would be) payable to or with respect to such household 
(or any member or members thereof) under such plan and have its 
coupon allotment distributed to it with such aid.
    [(b) Any deduction made pursuant to an option provided in 
accordance with subsection (a) shall not be considered to be a 
payment described in section 406(b)(2).
    [(c) Notwithstanding any other provision of law, no agency 
which is designated as a State agency for any State under or 
pursuant to the Food Stamp Act of 1977, as amended, shall be 
regarded as having failed to comply with any requirement 
imposed by or pursuant to such Act solely because of the 
failure, of the State agency administering or supervising the 
administration of the State plan (approved under this part) of 
such State, to institute or carry out a procedure, described in 
subsection (a).

    [PRORATING SHELTER ALLOWANCE OF AFDC FAMILY LIVING WITH ANOTHER 
                               HOUSEHOLD

    [Sec. 412. A State plan for aid and services to needy 
families with children may provide that, in determining the 
need of any dependent child or relative claiming aid who is 
living with other individuals (not claiming aid together with 
such child or relative) as a household (as defined, for 
purposes of this section, by the Secretary), the amount 
included in the standard of need, and the payment standard, 
applied to such child or relative for shelter, utilities, and 
similar needs may be prorated on a reasonable basis, in such 
manner and under such circumstances as the State may determine 
to be appropriate. For purposes of any method of proration used 
by a State under this section, there shall not be included as a 
member of a household an individual receiving benefits under 
title XVI in any month to whom the one-third reduction 
prescribed by section 1612(a)(2)(A)(i) is applied.

  [TECHNICAL ASSISTANCE FOR DEVELOPING MANAGEMENT INFORMATION SYSTEMS

    [Sec. 413. The Secretary shall provide such technical 
assistance to States as he determines necessary to assist 
States to plan, design, develop, or install and provide for the 
security of, the management information systems referred to in 
section 403(a)(3)(B) of this Act.

        [ATTRIBUTION OF SPONSOR'S INCOME AND RESOURCES TO ALIEN

    [Sec. 415. (a) For purposes of determining eligibility for 
and the amount of benefits under a State plan approved under 
this part for an individual who is an alien described in clause 
(B) of section 402(a)(33), the income and resources of any 
person who (as a sponsor of such individual's entry into the 
United States) executed an affidavit of support or similar 
agreement with respect to such individual, and the income and 
resources of the sponsor's spouse, shall be deemed to be the 
unearned income and resources of such individual (in accordance 
with subsections (b) and (c)) for a period of three years after 
the individual's entry into the United States, except that this 
section is not applicable if such individual is a dependent 
child and such sponsor (or such sponsor's spouse) is the parent 
of such child.
    [(b)(1) The amount of income of a sponsor (and his spouse) 
which shall be deemed to be the unearned income of an alien for 
any month shall be determined as follows:
            [(A) the total amount of earned and unearned income 
        of such sponsor and such sponsor's spouse (if such 
        spouse is living with the sponsor) shall be determined 
        for such month;
            [(B) the amount determined under subparagraph (A) 
        shall be reduced by an amount equal to the sum of--
                    [(i) the lesser of (I) 20 percent of the 
                total of any amounts received by the sponsor 
                and his spouse in such month as wages or salary 
                or as net earnings from self-employment, plus 
                the full amount of any costs incurred by them 
                in producing self-employment income in such 
                month, or (II) $175;
                    [(ii) the cash needs standard established 
                by the State under its plan for a family of the 
                same size and composition as the sponsor and 
                those other individuals living in the same 
                household as the sponsor who are claimed by him 
                as dependents for purposes of determining his 
                Federal personal income tax liability but whose 
                needs are not taken into account in making a 
                determination under section 402(a)(7);
                    [(iii) any amounts paid by the sponsor (or 
                his spouse) to individuals not living in such 
                household who are claimed by him as dependents 
                for purposes of determining his Federal 
                personal income tax liability; and
                    [(iv) any payments of alimony or child 
                support with respect to individuals not living 
                in such household.
    [(2) The amount of resources of a sponsor (and his spouse) 
which shall be deemed to be the resources of an alien for any 
month shall be determined as follows:
            [(A) the total amount of the resources (determined 
        as if the sponsor were applying for aid under the State 
        plan approved under this part) of such sponsor and such 
        sponsor's spouse (if such spouse is living with the 
        sponsor) shall be determined; and
            [(B) the amount determined under subparagraph (A) 
        shall be reduced by $1,500.
    [(c)(1) Any individual who is an alien and whose sponsor 
was a public or private agency shall be ineligible for aid 
under a State plan approved under this part during the period 
of three years after his or her entry into the United States, 
unless the State agency administering such plan determines that 
such sponsor either no longer exists or has become unable to 
meet such individual's needs; and such determination shall be 
made by the State agency based upon such criteria as it may 
specify in the State plan, and upon such documentary evidence 
as it may therein require. Any such individual, and any other 
individual who is an alien (as a condition of his or her 
eligibility for aid under a State plan approved under this part 
during the period of three years after his or her entry into 
the United States), shall be required to provide to the State 
agency administering such plan such information and 
documentation with respect to his sponsor as may be necessary 
in order for the State agency to make any determination 
required under this section, and to obtain any cooperation from 
such sponsor necessary for any such determination. Such alien 
shall also be required to provide to the State agency such 
information and documentation as it may request and which such 
alien or his sponsor provided in support of such alien's 
immigration application.
    [(2) The Secretary shall enter into agreements with the 
Secretary of State and the Attorney General whereby any 
information available to them and required in order to make any 
determination under this section will be provided by them to 
the Secretary (who may, in turn, make such information 
available, upon request, to a concerned State agency), and 
whereby the Secretary of State and Attorney General will inform 
any sponsor of an alien, at the time such sponsor executes an 
affidavit of support or similar agreement, of the requirements 
imposed by this section.
    [(d) Any sponsor of an alien, and such alien, shall be 
jointly and severally liable for an amount equal to any 
overpayment of aid under the State plan made to such alien 
during the period of three years after such alien's entry into 
the United States, on account of such sponsor's failure to 
provide correct information under the provisions of this 
section, except where such sponsor was without fault, or where 
good cause of such failure existed. Any such overpayment which 
is not repaid to the State or recovered in accordance with the 
procedures generally applicable under the State plan to the 
recoupment of overpayments shall be withheld from any 
subsequent payment to which such alien or such sponsor is 
entitled under any provision of this Act.
    [(e)(1) In any case where a person is the sponsor of two or 
more alien individuals who are living in the same home, the 
income and resources of such sponsor (and his spouse), to the 
extent they would be deemed the income and resources of any one 
of such individuals under the preceding provisions of this 
section, shall be divided into two or more equal shares (the 
number of shares being the same as the number of such alien 
individuals) and the income and resources of each such 
individual shall be deemed to include one such share.
    [(2) Income and resources of a sponsor (and his spouse) 
which are deemed under this section to be the income and 
resources of any alien individual in a family shall not be 
considered in determining the need of other family members 
except to the extent such income or resources are actually 
available to such other members.
    [(f)The provisions of this section shall not apply with 
respect to any alien who is--
            [(1) admitted to the United States as a result of 
        the application, prior to April 1, 1980, of the 
        provisions of section 203(a)(7) of the Immigration and 
        Nationality Act;
            [(2) admitted to the United States as a result of 
        the application, after March 31, 1980, of the 
        provisions of section 207(c) of such Act;
            [(3) paroled into the United States as a refugee 
        under section 212(d)(5) of such Act;
            [(4) granted political asylum by the Attorney 
        General under section 208 of such Act; or
            [(5) a Cuban and Haitian entrant, as defined in 
        section 501(e) of the Refugee Education Assistance Act 
        of 1980 (Public Law 96-422).

                             [FRAUD CONTROL

    [Sec. 416. (a) Any State, in the administration of its 
State plan approved under section 402, may elect to establish 
and operate a fraud control program in accordance with this 
section.
    [(b) Under any such program, if an individual who is a 
member of a family applying for or receiving aid under the 
State plan approved under section 402 is found by a Federal or 
State court or pursuant to an administrative hearing meeting 
requirements determined in regulations of the Secretary, on the 
basis of a plea of guilty or nolo contendere or otherwise, to 
have intentionally--
            [(1) made a false or misleading statement or 
        misrepresented, concealed, or withheld facts, or
            [(2) committed any act intended to mislead, 
        misrepresent, conceal, or withhold facts or propound a 
        falsity,
    [for the purpose of establishing or maintaining the 
family's eligibility for aid under such State plan or of 
increasing (or preventing a reduction in) the amount of such 
aid, then the needs of such individual shall not be taken into 
account in making the determination under section 402(a)(7) 
with respect to his or her family (A) for a period of 6 months 
upon the first occasion of any such offense, (B) for a period 
of 12 months upon the second occasion of any such offense, and 
(C) permanently upon the third or a subsequent occasion of any 
such offense.
    [(c) The State agency involved shall proceed against any 
individual alleged to have committed an offense described in 
subsection (b) either by way of administrative hearing or by 
referring the matter to the appropriate authorities for civil 
or criminal action in a court of law. The State agency shall 
coordinate its actions under this section with any 
corresponding actions being taken under the food stamp program 
in any case where the factual issues involved arise from the 
same or related circumstances.
    [(d) Any period for which sanctions are imposed under 
subsection (b) shall remain in effect, without possibility of 
administrative stay, unless and until the finding upon which 
the sanctions were imposed is subsequently reversed by a court 
of appropriate jurisdiction; but in no event shall the duration 
of the period for which such sanctions are imposed be subject 
to review.
    [(e) The sanctions provided under subsection (b) shall be 
in addition to, and not in substitution for, any other 
sanctions which may be provided for by law with respect to the 
offenses involved.
    [(f) Each State which has elected to establish and operate 
a fraud control program under this section must provide all 
applicants for aid to families with dependent children under 
its approved State plan, at the time of their application for 
such aid, with a written notice of the penalties for fraud 
which are provided for under this section.
    [Sec. 417. The programs under this part, part D, and part F 
shall be administered by an Assistant Secretary for Family 
Support within the Department of Health and Human Services, who 
shall be appointed by the President, by and with the advice and 
consent of the Senate, and who shall be in addition to any 
other Assistant Secretary of Health and Human Services provided 
for by law.

                   [PART B--CHILD AND FAMILY SERVICES

                   [Subpart 1--Child Welfare Services

                             [APPROPRIATION

    [Sec. 420. (a) For the purpose of enabling the United 
States, through the Secretary, to cooperate with State public 
welfare agencies in establishing, extending, and strengthening 
child welfare services, there is authorized to be appropriated 
for each fiscal year the sum of $325,000,000.
    [(b) Funds appropriated for any fiscal year pursuant to the 
authorization contained in subsection (a) shall be included in 
the appropriation Act (or supplemental appropriation Act) for 
the fiscal year preceding the fiscal year for which such funds 
are available for obligation. In order to effect a transition 
to this method of timing appropriation action, the preceding 
sentence shall apply notwithstanding the fact that its initial 
application will result in the enactment in the same year 
(whether in the same appropriation Act or otherwise) of two 
separate appropriations, one for the then current fiscal year 
and one for the succeeding fiscal year.

                         [ALLOTMENTS TO STATES

    [Sec. 421. (a) The sum appropriated pursuant to section 420 
for each fiscal year shall be allotted by the Secretary for use 
by cooperating State public welfare agencies which have plans 
developed jointly by the State agency and the Secretary as 
follows: He shall first allot $70,000 to each State, and shall 
then allot to each State an amount which bears the same ratio 
to the remainder of such sum as the product of (1) the 
population of the State under the age of twenty-one and (2) the 
allotment percentage of the State (as determined under this 
section) bears to the sum of the corresponding products of all 
the States.
    [(b) The ``allotment percentage'' for any State shall be 
100 per centum less the State percentage; and the State 
percentage shall be the percentage which bears the same ratio 
to 50 per centum as the per capita income of such State bears 
to the per capita income of the United States; except that (1) 
the allotment percentage shall in no case be less than 30 per 
centum or more than 70 per centum, and (2) the allotment 
percentage shall be 70 per centum in the case of Puerto Rico, 
the Virgin Islands, Guam, and American Samoa.
    [(c) The allotment percentage for each State shall be 
promulgated by the Secretary between October 1 and November 30 
of each even-numbered year, on the basis of the average per 
capita income of each State and of the United States for the 
three most recent calendar years for which satisfactory data 
are available from the Department of Commerce. Such 
promulgation shall be conclusive for each of the two fiscal 
years in the period beginning October 1 next succeeding such 
promulgation.
    [(d) For purposes of this section, the term ``United 
States'' means the fifty States and the District of Columbia.

                [STATE PLANS FOR CHILD WELFARE SERVICES

    [Sec. 422. (a) In order to be eligible for payment under 
this subpart, a State must have a plan for child welfare 
services which has been developed jointly by the Secretary and 
the State agency designated pursuant to subsection (b)(1), and 
which meets the requirements of subsection (b).
    [(b) Each plan for child welfare services under this 
subpart shall--
            [(1) provide that (A) the individual or agency that 
        administers or supervises the administration of the 
        State's services program under title XX will administer 
        or supervise the administration of the plan (except as 
        otherwise provided in section 103(d) of the Adoption 
        Assistance and Child Welfare Act of 1980), and (B) to 
        the extent that child welfare services are furnished by 
        the staff of the State agency or local agency 
        administering the plan, a single organizational unit in 
        such State or local agency, as the case may be, will be 
        responsible for furnishing such child welfare services;
            [(2) provide for coordination between the services 
        provided for children under the plan and the services 
        and assistance provided under title XX, under the State 
        plan approved under part A of this title, under the 
        State plan approved under subpart 2 of this part, under 
        the State plan approved under part E of this title, and 
        under other State programs having a relationship to the 
        program under this subpart, with a view to provision of 
        welfare and related services which will best promote 
        the welfare of such children and their families;
            [(3) provide that the standards and requirements 
        imposed with respect to child day care under title XX 
        shall apply with respect to day care services under 
        this part, except insofar as eligibility for such 
        services is involved;
            [(4) provide for the training and effective use of 
        paid paraprofessional staff, with particular emphasis 
        on the full-time or part-time employment of persons of 
        low income, as community service aides, in the 
        administration of the plan, and for the use of nonpaid 
        or partially paid volunteers in providing services and 
        in assisting any advisory committees established by the 
        State agency;
            [(5) contain a description of the services to be 
        provided and specify the geographic areas where such 
        services will be available;
            [(6) contain a description of the steps which the 
        State will take to provide child welfare services and 
        to make progress in--
                    [(A) covering additional political 
                subdivisions,
                    [(B) reaching additional children in need 
                of services, and
                    [(C) expanding and strengthening the range 
                of existing services and developing new types 
                of services,
along with a description of the State's child welfare services 
staff development and training plans;
            [(7) provide, in the development of services for 
        children, for utilization of the facilities and 
        experience of voluntary agencies in accordance with 
        State and local programs and arrangements, as 
        authorized by the State;
            [(8) provide that the agency administering or 
        supervising the administration of the plan will furnish 
        such reports, containing such information, and 
        participate in such evaluations, as the Secretary may 
        require;
            [(9) provide assurances that the State--
                    [(A) since June 17, 1980, has completed an 
                inventory of all children who, before the 
                inventory, had been in foster care under the 
                responsibility of the State for 6 months or 
                more, which determined--
                            [(i) the appropriateness of, and 
                        necessity for, the foster care 
                        placement;
                            [(ii) whether the child could or 
                        should be returned to the parents of 
                        the child or should be freed for 
                        adoption or other permanent placement; 
                        and
                            [(iii) the services necessary to 
                        facilitate the return of the child or 
                        the placement of the child for adoption 
                        or legal guardianship;
                    [(B) is operating, to the satisfaction of 
                the Secretary--
                            [(i) a statewide information system 
                        from which can be readily determined 
                        the status, demographic 
                        characteristics, location, and goals 
                        for the placement of every child who is 
                        (or, within the immediately preceding 
                        12 months, has been) in foster care;
                            [(ii) a case review system (as 
                        defined in section 475(5)) for each 
                        child receiving foster care under the 
                        supervision of the State;
                            [(iii) a service program designed 
                        to help children--
                                    [(I) where appropriate, 
                                return to families from which 
                                they have been removed; or
                                    [(II) be placed for 
                                adoption, with a legal 
                                guardian, or if adoption or 
                                legal guardianship is 
                                determined not to be 
                                appropriate for a child, in 
                                some other planned, permanent 
                                living arrangement; and
                            [(iv) a preplacement preventive 
                        services program designed to help 
                        children as risk of foster care 
                        placement remain with their families; 
                        and
                    [(C)(i) has reviewed (or within 12 months 
                after the date of the enactment of this 
                paragraph will review) State policies and 
                administrative and judicial procedures in 
                effect for children abandoned at or shortly 
                after birth (including policies and procedures 
                providing for legal representation of such 
                children); and
                    [(ii) is implementing (or within 24 months 
                after the date of the enactment of this 
                paragraph will implement) such policies and 
                procedures as the State determines, on the 
                basis of the review described in clause (i), to 
                be necessary to enable permanent decisions to 
                be made expeditiously with respect to the 
                placement of such children; and
            [(10) contain a description, developed after 
        consultation with tribal organizations (as defined in 
        section 4 of the Indian Self-Determination and 
        Education Assistance Act) in the State, of the specific 
        measures taken by the State to comply with the Indian 
        Child Welfare Act.

                           [PAYMENT TO STATES

    [Sec. 423. (a) From the sums appropriated therefor and the 
allotment under this subpart, subject to the conditions set 
forth in this section and in section 427, the Secretary shall 
from time to time pay to each State that has a plan developed 
in accordance with section 422 an amount equal to 75 per centum 
of the total sum expended under the plan (including the cost of 
administration of the plan) in meeting the costs of State, 
district, county, or other local child welfare services.
    [(b) The method of computing and making payments under this 
section shall be as follows:
            [(1) The Secretary shall, prior to the beginning of 
        each period for which a payment is to be made, estimate 
        the amount to be paid to the State for such period 
        under the provisions of this section.
            [(2) From the allotment available therefor, the 
        Secretary shall pay the amount so estimated, reduced or 
        increased, as the case may be, by any sum (not 
        previously adjusted under this section) by which he 
        finds that his estimate of the amount to be paid the 
        State for any prior period under this section was 
        greater or less than the amount which should have been 
        paid to the State for such prior period under this 
        section.
    [(c)(1) No payment may be made to a State under this part, 
for any fiscal year beginning after September 30, 1979, with 
respect to State expenditures made for (A) child day care 
necessary solely because of the employment, or training to 
prepare for employment, of a parent or other relative with whom 
the child involved is living, (B) foster care maintenance 
payments, and (C) adoption assistance payments, to the extent 
that the Federal payment with respect to those expenditures 
would exceed the total amount of the Federal payment under this 
part for fiscal year 1979.
    [(2) Expenditures made by a State for any fiscal year which 
begins after September 30, 1979, for foster care maintenance 
payments shall be treated for purposes of making Federal 
payments under this part with respect to expenditures for child 
welfare services, as if such foster care maintenance payments 
constituted child welfare services of a type to which the 
limitation imposed by paragraph (1) does not apply; except that 
the amount payable to the State with respect to expenditures 
made for other child welfare services and for foster care 
maintenance payments during any such year shall not exceed 100 
per centum of the amount of the expenditures made for child 
welfare services for which payment may be made under the 
limitation imposed by paragraph (1) as in effect without regard 
to this paragraph.
    [(d) No payment may be made to a State under this part in 
excess of the payment made under this part for fiscal year 
1979, for any fiscal year beginning after September 30, 1979, 
if for the latter fiscal year the total of the State's 
expenditures for child welfare services under this part 
(excluding expenditures for activities specified in subsection 
(c)(1)) is less than the total of the State's expenditures 
under this part (excluding expenditures for such activities) 
for fiscal year 1979.

                              [REALLOTMENT

    [Sec. 424. (a) In General.--Subject to subsection (b), the 
amount of any allotment to a State under section 421 for any 
fiscal year which the State certifies to the Secretary will not 
be required for carrying out the State plan developed as 
provided in section 422 shall be available for reallotment from 
time to time, on such dates as the Secretary may fix, to other 
States which the Secretary determines (1) have need in carrying 
out their State plans so developed for sums in excess of those 
previously allotted to them under section 421 and (2) will be 
able to use such excess amounts during such fiscal year. Such 
reallotments shall be made on the basis of the State plans so 
developed, after taking into consideration the population under 
the age of twenty-one, and the per capita income of each such 
State as compared with the population under the age of twenty-
one, and the per capita income of all such States with respect 
to which such a determination by the Secretary has been made. 
Any amount so reallotted to a State shall be deemed part of its 
allotment under section 421.
    [(b) Exception Relating to Foster Child Protections.--The 
Secretary shall not reallot under subsection (a) of this 
section any amount that is withheld or recovered from a State 
due to the failure of the State to meet the requirements of 
section 422(b)(9).

                              [DEFINITIONS

    [Sec. 425. (a)(1) For purposes of this title, the term 
``child welfare services'' means public social services which 
are directed toward the accomplishment of the following 
purposes: (A) protecting and promoting the welfare of all 
children, including handicapped, homeless, dependent, or 
neglected children; (B) preventing or remedying, or assisting 
in the solution of problems which may result in, the neglect, 
abuse, exploitation, or delinquency of children; (C) preventing 
the unnecessary separation of children from their families by 
identifying family problems, assisting families in resolving 
their problems, and preventing breakup of the family where the 
prevention of child removal is desirable and possible; (D) 
restoring to their families children who have been removed, by 
the provision of services to the child and the families; (E) 
placing children in suitable adoptive homes, in cases where 
restoration to the biological family is not possible or 
appropriate; and (F) assuring adequate care of children away 
from their homes, in cases where the child cannot be returned 
home or cannot be placed for adoption.
    [(2) Funds expended by a State for any calendar quarter to 
comply with the statistical report required by section 476(b), 
and funds expended with respect to nonrecurring costs of 
adoption proceedings in the case of children placed for 
adoption with respect to whom assistance is provided under a 
State plan for adoption assistance approved under part E of 
this title, shall be deemed to have been expended for child 
welfare services.
    [(b) For other definitions relating to this part and to 
part E of this title, see section 475 of this Act.

             [RESEARCH, TRAINING, OR DEMONSTRATION PROJECTS

    [Sec. 426. (a) There are hereby authorized to be 
appropriated for each fiscal year such sums as the Congress may 
determine--
            [(1) for grants by the Secretary--
                    [(A) to public or other nonprofit 
                institutions of higher learning, and to public 
                or other nonprofit agencies and organizations 
                engaged in research or child-welfare 
                activities, for special research or 
                demonstration projects in the field of child 
                welfare which are of regional or national 
                significance and for special projects for the 
                demonstration of new methods or facilities 
                which show promise of substantial contribution 
                to the advancement of child welfare;
                    [(B) to State or local public agencies 
                responsible for administering, or supervising 
                the administration of, the plan under this 
                part, for projects for the demonstration of the 
                utilization of research (including findings 
                resulting therefrom) in the field of child 
                welfare in order to encourage experimental and 
                special types of welfare services; and
                    [(C) to public or other nonprofit 
                institutions of higher learning for special 
                projects for training personnel for work in the 
                field of child welfare, including traineeships 
                described in section 429 with such stipends and 
                allowances as may be permitted by the 
                Secretary; and
            [(2) for contracts or jointly financed cooperative 
        arrangements with States and public and other 
        organizations and agencies for the conduct of research, 
        special projects, or demonstration projects relating to 
        such matters.
    [(b)(1) There are authorized to be appropriated $4,000,000 
for each of the fiscal years 1988, 1989, and 1990 for grants by 
the Secretary to public or private nonprofit entities 
submitting applications under this subsection for the purpose 
of conducting demonstration projects under this subsection to 
develop alternative care arrangements for infants who do not 
have health conditions that require hospitalization and who 
would otherwise remain in inappropriate hospital settings.
    [(2) The demonstration projects conducted under this 
section may include--
            [(A) multidisciplinary projects designed to prevent 
        the inappropriate hospitalization of infants and to 
        allow infants described in paragraph (1) to remain with 
        or return to a parent in a residential setting, where 
        appropriate care for the infant and suitable treatment 
        for the parent (including treatment for drug or alcohol 
        addiction) may be assured, with the goal (where 
        possible) of rehabilitating the parent and eliminating 
        the need for such care for the infant;
            [(B) multidisciplinary projects that assure 
        appropriate, individualized care for such infants in a 
        foster home or other non-medical residential setting in 
        cases where such infant does not require 
        hospitalization and would otherwise remain in 
        inappropriate hospital settings, including projects to 
        demonstrate methods to recruit, train, and retain 
        foster care families; and
            [(C) such other projects as the Secretary 
        determines will best serve the interests of such 
        infants and will serve as models for projects that 
        agencies or organizations in other communities may wish 
        to develop.
    [(3) In the case of any project which includes the use of 
funds authorized under this subsection for the care of infants 
in foster homes or other non-medical residential settings away 
from their parents, there shall be developed for each such 
infant a case plan of the type described in section 475(1) (to 
the extent that such infant is not otherwise covered by such a 
plan), and each such project shall include a case review system 
of the type described in section 475(5) (covering each such 
infant who is not otherwise subject to such a system).
    [(4) In evaluating applications from entities proposing to 
conduct demonstration projects under this subsection, the 
Secretary shall give priority to those projects that serve 
areas most in need of alternative care arrangements for infants 
described in paragraph (1).
    [(5) No project may be funded unless the application 
therefor contains assurances that it will--
            [(A) provide for adequate evaluation;
            [(B) provide for coordination with local 
        governments;
            [(C) provide for community education regarding the 
        inappropriate hospitalization of infants;
            [(D) use, to the extent practical, other available 
        private, local, State, and Federal sources for the 
        provision of direct services; and
            [(E) meet such other criteria as the Secretary may 
        prescribe.
    [(6) Grants may be used to pay the costs of maintenance and 
of necessary medical and social services (to the extent that 
these costs are not otherwise paid for under other titles of 
this Act), and for such other purposes as the Secretary may 
allow.
    [(7) The Secretary shall provide training and technical 
assistance to grantees, as requested.
    [(c) Payments of grants or under contracts or cooperative 
arrangements under this section may be made in advance or by 
way of reimbursement, and in such installments, as the 
Secretary may determine; and shall be made on such conditions 
as the Secretary finds necessary to carry out the purposes of 
the grants, contracts, or other arrangements.

                [PAYMENTS TO INDIAN TRIBAL ORGANIZATIONS

    [Sec. 428. (a) The Secretary may, in appropriate cases (as 
determined by the Secretary) make payments under this subpart 
directly to an Indian tribal organization within any State 
which has a plan for child welfare services approved under this 
subpart. Such payments shall be made in such manner and in such 
amounts as the Secretary determines to be appropriate.
    [(b) Amounts paid under subsection (a) shall be deemed to 
be a part of the allotment (as determined under section 421) 
for the State in which such Indian tribal organization is 
located.
    [(c) For purposes of this section--
            [(1) the term ``tribal organization'' means the 
        recognized governing body of any Indian tribe, or any 
        legally established organization of Indians which is 
        controlled, sanctioned, or chartered by such governing 
        body; and
            [(2) the term ``Indian tribe'' means any tribe, 
        band, nation, or other organized group or community of 
        Indians (including any Alaska Native village or 
        regional or village corporation as defined in or 
        established pursuant to the Alaska Native Claims 
        Settlement Act (Public Law 92-203; 85 Stat. 688)) which 
        (A) is recognized as eligible for the special programs 
        and services provided by the United States to Indians 
        because of their status as Indians, or (B) is located 
        on, or in proximity to, a Federal or State reservation 
        or rancheria.

                      [CHILD WELFARE TRAINEESHIPS

    [Sec. 429. The Secretary may approve an application for a 
grant to a public or nonprofit institution for higher learning 
to provide traineeships with stipends under section 
426(a)(1)(C) only if the application--
            [(1) provides assurances that each individual who 
        receives a stipend with such traineeship (in this 
        section referred to as a ``recipient'') agrees--
                    [(A) to participate in training at a public 
                or private nonprofit child welfare agency on a 
                regular basis (as determined by the Secretary) 
                for the period of the traineeship;
                    [(B) to be employed for a period of years 
                equivalent to the period of the traineeship, in 
                a public or private nonprofit child welfare 
                agency in any State, within a period of time 
                (determined by the Secretary in accordance with 
                regulations) after completing the postsecondary 
                education for which the traineeship was 
                awarded;
                    [(C) to furnish to the institution and the 
                Secretary evidence of compliance with 
                subparagraphs (A) and (B); and
                    [(D) if the recipient fails to comply with 
                subparagraph (A) or (B) and does not qualify 
                for any exception to this subparagraph which 
                the Secretary may prescribe in regulations, to 
                repay to the Secretary all (or an appropriately 
                prorated part) of the amount of the stipend, 
                plus interest, and, if applicable, reasonable 
                collection fees (in accordance with regulations 
                promulgated by the Secretary);
            [(2) provides assurances that the institution 
        will--
                    [(A) enter into agreements with child 
                welfare agencies for onsite training of 
                recipients;
                    [(B) permit an individual who is employed 
                in the field of child welfare services to apply 
                for a traineeship with a stipend if the 
                traineeship furthers the progress of the 
                individual toward the completion of degree 
                requirements; and
                    [(C) develop and implement a system that, 
                for the 3-year period that begins on the date 
                any recipient completes a child welfare 
                services program of study, tracks the 
                employment record of the recipient, for the 
                purpose of determining the percentage of 
                recipients who secure employment in the field 
                of child welfare services and remain employed 
                in the field.

          [Subpart 2--Family Preservation and Support Services

[SEC. 430. PURPOSES; LIMITATIONS ON AUTHORIZATIONS OF APPROPRIATIONS; 
                    RESERVATION OF CERTAIN AMOUNTS.

    [(a) Purposes; Limitations on Authorization of 
Appropriations.--For the purpose of encouraging and enabling 
each State to develop and establish, or expand, and to operate 
a program of family preservation services and community-based 
family support services, there are authorized to be 
appropriated to the Secretary the amounts described in 
subsection (b) for the fiscal years specified in subsection 
(b).
    [(b) Description of Amounts.--The amount described in this 
subsection is--
            [(1) for fiscal year 1994, $60,000,000;
            [(2) for fiscal year 1995, $150,000,000;
            [(3) for fiscal year 1996, $225,000,000;
            [(4) for fiscal year 1997, $240,000,000; or
            [(5) for fiscal year 1998, the greater of--
                    [(A) $255,000,000; or
                    [(B) the amount described in this 
                subsection for fiscal year 1997, increased by 
                the inflation percentage applicable to fiscal 
                year 1998.
    [(c) Inflation Percentage.--For purposes of subsection 
(b)(5)(B) of this section, the inflation percentage applicable 
to any fiscal year is the percentage (if any) by which--
            [(1) the average of the Consumer Price Index (as 
        defined in section 1(f)(5) of the Internal Revenue Code 
        of 1986) for the 12-month period ending on December 31 
        of the immediately preceding fiscal year; exceeds
            [(2) the average of the Consumer Price Index (as so 
        defined) for the 12-month period ending on December 31 
        of the 2nd preceding fiscal year.
    [(d) Reservation of Certain Amounts.--
            [(1) Evaluation, research, training, and technical 
        assistance.--The Secretary shall reserve $2,000,000 of 
        the amount described in subsection (b) for fiscal year 
        1994, and $6,000,000 of the amounts so described for 
        each of fiscal years 1995, 1996, 1997, and 1998, for 
        expenditure by the Secretary--
                    [(A) for research, training, and technical 
                assistance related to the program under this 
                subpart; and
                    [(B) for evaluation of State programs 
                funded under this subpart and any other 
                Federal, State, or local program, regardless of 
                whether federally assisted, that is designed to 
                achieve the same purposes as the program under 
                this subpart.
            [(2) State court assessments.--The Secretary shall 
        reserve $5,000,000 of the amount described in 
        subsection (b) for fiscal year 1995, and $10,000,000 of 
        the amounts so described for each of fiscal years 1996, 
        1997, and 1998, for grants under section 13712 of the 
        Omnibus Budget Reconciliation Act of 1993.
            [(3) Indian tribes.--The Secretary shall reserve 1 
        percent of the amounts described in subsection (b) for 
        each fiscal year, for allotment to Indian tribes in 
        accordance with section 433(a).

[SEC. 431. DEFINITIONS.

    [(a) In General.--As used in this subpart:
            [(1) Family preservation services.--The term 
        ``family preservation services'' means services for 
        children and families designed to help families 
        (including adoptive and extended families) at risk or 
        in crisis, including--
                    [(A) service programs designed to help 
                children--
                            [(i) where appropriate, return to 
                        families from which they have been 
                        removed; or
                            [(ii) be placed for adoption, with 
                        a legal guardian, or, if adoption or 
                        legal guardianship is determined not to 
                        be appropriate for a child, in some 
                        other planned, permanent living 
                        arrangement;
                    [(B) preplacement preventive services 
                programs, such as intensive family preservation 
                programs, designed to help children at risk of 
                foster care placement remain with their 
                families;
                    [(C) service programs designed to provide 
                followup care to families to whom a child has 
                been returned after a foster care placement;
                    [(D) respite care of children to provide 
                temporary relief for parents and other 
                caregivers (including foster parents); and
                    [(E) services designed to improve parenting 
                skills (by reinforcing parents' confidence in 
                their strengths, and helping them to identify 
                where improvement is needed and to obtain 
                assistance in improving those skills) with 
                respect to matters such as child development, 
                family budgeting, coping with stress, health, 
                and nutrition.
            [(2) Family support services.--The term ``family 
        support services'' means community-based services to 
        promote the well-being of children and families 
        designed to increase the strength and stability of 
        families (including adoptive, foster, and extended 
        families), to increase parents' confidence and 
        competence in their parenting abilities, to afford 
        children a stable and supportive family environment, 
        and otherwise to enhance child development.
            [(3) State agency.--The term ``State agency'' means 
        the State agency responsible for administering the 
        program under subpart 1.
            [(4) State.--The term ``State'' includes an Indian 
        tribe or tribal organization, in addition to the 
        meaning given such term for purposes of subpart 1.
            [(5) Tribal organization.--The term ``tribal 
        organization'' means the recognized governing body of 
        any Indian tribe.
            [(6) Indian tribe.--The term ``Indian tribe'' means 
        any Indian tribe (as defined in section 482(i)(5)) and 
        any Alaska Native organization (as defined in section 
        482(i)(7)(A)).
    [(b) Other Terms.--For other definitions of other terms 
used in this subpart, see section 475.

[SEC. 432. STATE PLANS.

    [(a) Plan Requirements.--A State plan meets the 
requirements of this subsection if the plan--
            [(1) provides that the State agency shall 
        administer, or supervise the administration of, the 
        State program under this subpart;
            [(2)(A)(i) sets forth the goals intended to be 
        accomplished under the plan by the end of the 5th 
        fiscal year in which the plan is in operation in the 
        State, and (ii) is updated periodically to set forth 
        the goals intended to be accomplished under the plan by 
        the end of each 5th fiscal year thereafter;
            [(B) describes the methods to be used in measuring 
        progress toward accomplishment of the goals;
            [(C) contains assurances that the State--
                    [(i) after the end of each of the 1st 4 
                fiscal years covered by a set of goals, will 
                perform an interim review of progress toward 
                accomplishment of the goals, and on the basis 
                of the interim review will revise the statement 
                of goals in the plan, if necessary, to reflect 
                changed circumstances; and
                    [(ii) after the end of the last fiscal year 
                covered by a set of goals, will perform a final 
                review of progress toward accomplishment of the 
                goals, and on the basis of the final review (I) 
                will prepare, transmit to the Secretary, and 
                make available to the public a final report on 
                progress toward accomplishment of the goals, 
                and (II) will develop (in consultation with the 
                entities required to be consulted pursuant to 
                subsection (b)) and add to the plan a statement 
                of the goals intended to be accomplished by the 
                end of the 5th succeeding fiscal year;
            [(3) provides for coordination, to the extent 
        feasible and appropriate, of the provision of services 
        under the plan and the provision of services or 
        benefits under other Federal or federally assisted 
        programs serving the same populations;
            [(4) contains assurances that not more than 10 
        percent of expenditures under the plan for any fiscal 
        year with respect to which the State is eligible for 
        payment under section 434 for the fiscal year shall be 
        for administrative costs, and that the remaining 
        expenditures shall be for programs of family 
        preservation services and community-based family 
        support services with significant portions of such 
        expenditures for each such program;
            [(5) contains assurances that the State will--
                    [(A) annually prepare, furnish to the 
                Secretary, and make available to the public a 
                description (including separate descriptions 
                with respect to family preservation services 
                and community-based family support services) 
                of--
                            [(i) the service programs to be 
                        made available under the plan in the 
                        immediately succeeding fiscal year;
                            [(ii) the populations which the 
                        programs will serve; and
                            [(iii) the geographic areas in the 
                        State in which the services will be 
                        available; and
                    [(B) perform the activities described in 
                subparagraph (A)--
                            [(i) in the case of the 1st fiscal 
                        year under the plan, at the time the 
                        State submits its initial plan; and
                            [(ii) in the case of each 
                        succeeding fiscal year, by the end of 
                        the 3rd quarter of the immediately 
                        preceding fiscal year;
            [(6) provides for such methods of administration as 
        the Secretary finds to be necessary for the proper and 
        efficient operation of the plan;
            [(7)(A) contains assurances that Federal funds 
        provided to the State under this subpart will not be 
        used to supplant Federal or non-Federal funds for 
        existing services and activities which promote the 
        purposes of this subpart; and
            [(B) provides that the State will furnish reports 
        to the Secretary, at such times, in such format, and 
        containing such information as the Secretary may 
        require, that demonstrate the State's compliance with 
        the prohibition contained in subparagraph (A); and
            [(8) provides that the State agency will furnish 
        such reports, containing such information, and 
        participate in such evaluations, as the Secretary may 
        require.
    [(b) Approval of Plans.--
            [(1) In general.--The Secretary shall approve a 
        plan that meets the requirements of subsection (a) only 
        if the plan was developed jointly by the Secretary and 
        the State, after consultation by the State agency with 
        appropriate public and nonprofit private agencies and 
        community-based organizations with experience in 
        administering programs of services for children and 
        families (including family preservation and family 
        support services).
            [(2) Plans of indian tribes.--
                    [(A) Exemption from inappropriate 
                requirements.--The Secretary may exempt a plan 
                submitted by an Indian tribe from any 
                requirement of this section that the Secretary 
                determines would be inappropriate to apply to 
                the Indian tribe, taking into account the 
                resources, needs, and other circumstances of 
                the Indian tribe.
                    [(B) Special rule.--Notwithstanding 
                subparagraph (A) of this paragraph, the 
                Secretary may not approve a plan of an Indian 
                tribe under this subpart to which (but for this 
                subparagraph) an allotment of less than $10,000 
                would be made under section 433(a) if 
                allotments were made under section 433(a) to 
                all Indian tribes with plans approved under 
                this subpart with the same or larger numbers of 
                children.

[SEC. 433. ALLOTMENTS TO STATES.

    [(a) Indian Tribes.--From the amount reserved pursuant to 
section 430(d)(3) for any fiscal year, the Secretary shall 
allot to each Indian tribe with a plan approved under this 
subpart an amount that bears the same ratio to such reserved 
amount as the number of children in the Indian tribe bears to 
the total number of children in all Indian tribes with State 
plans so approved, as determined by the Secretary on the basis 
of the most current and reliable information available to the 
Secretary.
    [(b) Territories.--From the amount described in section 
430(b) for any fiscal year that remains after applying section 
430(d) for the fiscal year, the Secretary shall allot to each 
of the jurisdictions of Puerto Rico, Guam, the Virgin Islands, 
the Northern Mariana Islands, and American Samoa an amount 
determined in the same manner as the allotment to each of such 
jurisdictions is determined under section 421.
    [(c) Other States.--
            [(1) In general.--From the amount described in 
        section 430(b) for any fiscal year that remains after 
        applying section 430(d) and subsection (b) of this 
        section for the fiscal year, the Secretary shall allot 
        to each State (other than an Indian tribe) which is not 
        specified in subsection (b) of this section an amount 
        equal to such remaining amount multiplied by the food 
        stamp percentage of the State for the fiscal year.
            [(2) Food stamp percentage defined.--
                    [(A) In general.--As used in paragraph (1) 
                of this subsection, the term ``food stamp 
                percentage'' means, with respect to a State and 
                a fiscal year, the average monthly number of 
                children receiving food stamp benefits in the 
                State for months in the 3 fiscal years referred 
                to in subparagraph (B) of this paragraph, as 
                determined from sample surveys made under 
                section 16(c) of the Food Stamp Act of 1977, 
                expressed as a percentage of the average 
                monthly number of children receiving food stamp 
                benefits in the States described in such 
                paragraph (1) for months in such 3 fiscal 
                years, as so determined.
                    [(B) Fiscal years used in calculation.--For 
                purposes of the calculation pursuant to 
                subparagraph (A), the Secretary shall use data 
                for the 3 most recent fiscal years, preceding 
                the fiscal year for which the State's allotment 
                is calculated under this subsection, for which 
                such data are available to the Secretary.

[SEC. 434. PAYMENTS TO STATES.

    [(a) Entitlement.--
            [(1) General rule.--Except as provided in paragraph 
        (2) of this subsection, each State which has a plan 
        approved under this subpart shall be entitled to 
        payment of the lesser of--
                    [(A) 75 percent of the total expenditures 
                by the State for activities under the plan 
                during the fiscal year or the immediately 
                succeeding fiscal year; or
                    [(B) the allotment of the State under 
                section 433 for the fiscal year.
            [(2) Special rule.--Upon submission by a State to 
        the Secretary during fiscal year 1994 of an application 
        in such form and containing such information as the 
        Secretary may require (including, if the State is 
        seeking payment of an amount pursuant to subparagraph 
        (B) of this paragraph, a description of the services to 
        be provided with the amount), the State shall be 
        entitled to payment of an amount equal to the sum of--
                    [(A) such amount, not exceeding $1,000,000, 
                from the allotment of the State under section 
                433 for fiscal year 1994, as the State may 
                require to develop and submit a plan for 
                approval under section 432; and
                    [(B) an amount equal to the lesser of--
                            [(i) 75 percent of the expenditures 
                        by the State for services to children 
                        and families in accordance with the 
                        application and the expenditure rules 
                        of section 432(a)(4); or
                            [(ii) the allotment of the State 
                        under section 433 for fiscal year 1994, 
                        reduced by any amount paid to the State 
                        pursuant to subparagraph (A) of this 
                        paragraph.
    [(b) Prohibitions.--
            [(1) No use of other federal funds for state 
        match.--Each State receiving an amount paid under 
        paragraph (1) or (2)(B) of subsection (a) may not 
        expend any Federal funds to meet the costs of services 
        described in this subpart not covered by the amount so 
        paid.
            [(2) Availability of funds.--A State may not expend 
        any amount paid under subsection (a)(1) for any fiscal 
        year after the end of the immediately succeeding fiscal 
        year.
    [(c) Direct Payments to Tribal Organizations of Indian 
Tribes.--The Secretary shall pay any amount to which an Indian 
tribe is entitled under this section directly to the tribal 
organization of the Indian tribe.

[SEC. 435. EVALUATIONS.I20    [(a) Evaluations.--

            [(1) In general.--The Secretary shall evaluate the 
        effectiveness of the programs carried out pursuant to 
        this subpart in accomplishing the purposes of this 
        subpart, and may evaluate any other Federal, State, or 
        local program, regardless of whether federally 
        assisted, that is designed to achieve the same purposes 
        as the program under this subpart, in accordance with 
        criteria established in accordance with paragraph (2).
            [(2) Criteria to be used.--In developing the 
        criteria to be used in evaluations under paragraph (1), 
        the Secretary shall consult with appropriate parties, 
        such as--
                    [(A) State agencies administering programs 
                under this part and part E;
                    [(B) persons administering child and family 
                services programs (including family 
                preservation and family support programs) for 
                private, nonprofit organizations with an 
                interest in child welfare; and
                    [(C) other persons with recognized 
                expertise in the evaluation of child and family 
                services programs (including family 
                preservation and family support programs) or 
                other related programs.
    [(b) Coordination of Evaluations.--The Secretary shall 
develop procedures to coordinate evaluations under this 
section, to the extent feasible, with evaluations by the States 
of the effectiveness of programs under this subpart.]

   PART A--BLOCK GRANTS TO STATES FOR TEMPORARY ASSISTANCE FOR NEEDY 
                                FAMILIES

SEC. 401. PURPOSE.

    (a) In General.--The purpose of this part is to increase 
the flexibility of States in operating a program designed to--
            (1) provide assistance to needy families so that 
        children may be cared for in their own homes or in the 
        homes of relatives;
            (2) end the dependence of needy parents on 
        government benefits by promoting job preparation, work, 
        and marriage;
            (3) prevent and reduce the incidence of out-of-
        wedlock pregnancies and establish annual numerical 
        goals for preventing and reducing the incidence of 
        these pregnancies; and
            (4) encourage the formation and maintenance of two-
        parent families.
    (b) No Individual Entitlement.--This part shall not be 
interpreted to entitle any individual or family to assistance 
under any State program funded under this part.

SEC. 402. ELIGIBLE STATES; STATE PLAN.

    (a) In General.--As used in this part, the term ``eligible 
State'' means, with respect to a fiscal year, a State that, 
during the 2-year period immediately preceding the fiscal year, 
has submitted to the Secretary a plan that the Secretary has 
found includes the following:
            (1) Outline of family assistance program.--
                    (A) General provisions.--A written document 
                that outlines how the State intends to do the 
                following:
                            (i) Conduct a program, designed to 
                        serve all political subdivisions in the 
                        State (not necessarily in a uniform 
                        manner), that provides assistance to 
                        needy families with (or expecting) 
                        children and provides parents with job 
                        preparation, work, and support services 
                        to enable them to leave the program and 
                        become self-sufficient.
                            (ii) Require a parent or caretaker 
                        receiving assistance under the program 
                        to engage in work (as defined by the 
                        State) once the State determines the 
                        parent or caretaker is ready to engage 
                        in work, or once the parent or 
                        caretaker has received assistance under 
                        the program for 24 months (whether or 
                        not consecutive), whichever is earlier.
                            (iii) Ensure that parents and 
                        caretakers receiving assistance under 
                        the program engage in work activities 
                        in accordance with section 407.
                            (iv) Take such reasonable steps as 
                        the State deems necessary to restrict 
                        the use and disclosure of information 
                        about individuals and families 
                        receiving assistance under the program 
                        attributable to funds provided by the 
                        Federal Government.
                            (v) Establish goals and take action 
                        (including provision of education and 
                        counseling (including abstinence-based 
                        programs) and pre-pregnancy health 
                        services) to prevent and reduce the 
                        incidence of out-of-wedlock 
                        pregnancies, with special emphasis on 
                        teenage pregnancies, and establish 
                        numerical goals for reducing the 
                        illegitimacy ratio of the State (as 
                        defined in section 403(a)(2)(B)) for 
                        calendar years 1996 through 2005.
                    (B) Special provisions.--
                            (i) The document shall indicate 
                        whether the State intends to treat 
                        families moving into the State from 
                        another State differently than other 
                        families under the program, and if so, 
                        how the State intends to treat such 
                        families under the program.
                            (ii) The document shall indicate 
                        whether the State intends to provide 
                        assistance under the program to 
                        individuals who are not citizens of the 
                        United States, and if so, shall include 
                        an overview of such assistance.
                            (iii) The document shall set forth 
                        objective criteria for the delivery of 
                        benefits and the determination of 
                        eligibility and for fair and equitable 
                        treatment, including an explanation of 
                        how the State will provide 
                        opportunities for recipients who have 
                        been adversely affected to be heard in 
                        a State administrative or appeal 
                        process.
            (2) Certification that the state will operate a 
        child support enforcement program.--A certification by 
        the chief executive officer of the State that, during 
        the fiscal year, the State will operate a child support 
        enforcement program under the State plan approved under 
        part D.
            (3) Certification that the state will operate a 
        child protection program.--A certification by the chief 
        executive officer of the State that, during the fiscal 
        year, the State will operate a child protection program 
        under the State plan approved under part B.
            (4) Certification of the administration of the 
        program.--A certification by the chief executive 
        officer of the State specifying which State agency or 
        agencies will administer and supervise the program 
        referred to in paragraph (1) for the fiscal year, which 
        shall include assurances that local governments and 
        private sector organizations--
                    (A) have been consulted regarding the plan 
                and design of welfare services in the State so 
                that services are provided in a manner 
                appropriate to local populations; and
                    (B) have had at least 45 days to submit 
                comments on the plan and the design of such 
                services.
            (5) Certification that the state will provide 
        indians with equitable access to assistance.--A 
        certification by the chief executive officer of the 
        State that, during the fiscal year, the State will 
        provide each Indian who is a member of an Indian tribe 
        in the State that does not have a tribal family 
        assistance plan approved under section 412 with 
        equitable access to assistance under the State program 
        funded under this part attributable to funds provided 
        by the Federal Government.
    (b) Public Availability of State Plan Summary.--The State 
shall make available to the public a summary of any plan 
submitted by the State under this section.

SEC. 403. GRANTS TO STATES.

    (a) Grants.--
            (1) Family assistance grant.--
                    (A) In general.--Each eligible State shall 
                be entitled to receive from the Secretary, for 
                each of fiscal years 1996, 1997, 1998, 1999, 
                2000, and 2001 a grant in an amount equal to 
                the State family assistance grant.
                    (B) State family assistance grant 
                defined.--As used in this part, the term 
                ``State family assistance grant'' means the 
                greatest of--
                            (i) \1/3\ of the total amount 
                        required to be paid to the State under 
                        former section 403 (as in effect on 
                        September 30, 1995) for fiscal years 
                        1992, 1993, and 1994 (other than with 
                        respect to amounts expended by the 
                        State for child care under subsection 
                        (g) or (i) of former section 402 (as so 
                        in effect));
                            (ii)(I) the total amount required 
                        to be paid to the State under former 
                        section 403 for fiscal year 1994 (other 
                        than with respect to amounts expended 
                        by the State for child care under 
                        subsection (g) or (i) of former section 
                        402 (as so in effect)); plus
                            (II) an amount equal to 85 percent 
                        of the amount (if any) by which the 
                        total amount required to be paid to the 
                        State under former section 403(a)(5) 
                        for emergency assistance for fiscal 
                        year 1995 exceeds the total amount 
                        required to be paid to the State under 
                        former section 403(a)(5) for fiscal 
                        year 1994, if, during fiscal year 1994 
                        or 1995, the Secretary approved under 
                        former section 402 an amendment to the 
                        former State plan to allow the 
                        provision of emergency assistance in 
                        the context of family preservation; or
                            (iii) \4/3\ of the total amount 
                        required to be paid to the State under 
                        former section 403 (as in effect on 
                        September 30, 1995) for the 1st 3 
                        quarters of fiscal year 1995 (other 
                        than with respect to amounts expended 
                        by the State under the State plan 
                        approved under part F (as so in effect) 
                        or for child care under subsection (g) 
                        or (i) of former section 402 (as so in 
                        effect)), plus the total amount 
                        required to be paid to the State for 
                        fiscal year 1995 under former section 
                        403(l) (as so in effect).
                    (C) Total amount required to be paid to the 
                state under former section 403 defined.--As 
                used in this part, the term ``total amount 
                required to be paid to the State under former 
                section 403'' means, with respect to a fiscal 
                year--
                            (i) in the case of a State to which 
                        section 1108 does not apply, the sum 
                        of--
                                    (I) the Federal share of 
                                maintenance assistance 
                                expenditures for the fiscal 
                                year, before reduction pursuant 
                                to subparagraph (B) or (C) of 
                                section 403(b)(2) (as in effect 
                                on September 30, 1995), as 
                                reported by the State on ACF 
                                Form 231;
                                    (II) the Federal share of 
                                administrative expenditures 
                                (including administrative 
                                expenditures for the 
                                development of management 
                                information systems) for the 
                                fiscal year, as reported by the 
                                State on ACF Form 231;
                                    (III) the Federal share of 
                                emergency assistance 
                                expenditures for the fiscal 
                                year, as reported by the State 
                                on ACF Form 231;
                                    (IV) the Federal share of 
                                expenditures for the fiscal 
                                year with respect to child care 
                                pursuant to subsections (g) and 
                                (i) of former section 402 (as 
                                in effect on September 30, 
                                1995), as reported by the State 
                                on ACF Form 231; and
                                    (V) the aggregate amount 
                                required to be paid to the 
                                State for the fiscal year with 
                                respect to the State program 
                                operated under part F (as in 
                                effect on September 30, 1995), 
                                as determined by the Secretary, 
                                including additional 
                                obligations or reductions in 
                                obligations made after the 
                                close of the fiscal year; and
                            (ii) in the case of a State to 
                        which section 1108 applies, the lesser 
                        of--
                                    (I) the sum described in 
                                clause (i); or
                                    (II) the total amount 
                                certified by the Secretary 
                                under former section 403 (as in 
                                effect during the fiscal year) 
                                with respect to the territory.
                    (D) Information to be used in determining 
                amounts.--
                            (i) For fiscal years 1992 and 
                        1993.--
                                    (I) In determining the 
                                amounts described in subclauses 
                                (I) through (IV) of 
                                subparagraph (C)(i) for any 
                                State for each of fiscal years 
                                1992 and 1993, the Secretary 
                                shall use information available 
                                as of April 28, 1995.
                                    (II) In determining the 
                                amount described in 
                                subparagraph (C)(i)(V) for any 
                                State for each of fiscal years 
                                1992 and 1993, the Secretary 
                                shall use information available 
                                as of January 6, 1995.
                            (ii) For fiscal year 1994.--In 
                        determining the amounts described in 
                        subparagraph (C)(i) for any State for 
                        fiscal year 1994, the Secretary shall 
                        use information available as of April 
                        28, 1995.
                            (iii) For fiscal year 1995.--
                                    (I) In determining the 
                                amount described in 
                                subparagraph (B)(ii)(II) for 
                                any State for fiscal year 1995, 
                                the Secretary shall use the 
                                information which was reported 
                                by the States and estimates 
                                made by the States with respect 
                                to emergency assistance 
                                expenditures and was available 
                                as of August 11, 1995.
                                    (II) In determining the 
                                amounts described in subclauses 
                                (I) through (III) of 
                                subparagraph (C)(i) for any 
                                State for fiscal year 1995, the 
                                Secretary shall use information 
                                available as of October 2, 
                                1995.
                                    (III) In determining the 
                                amount described in 
                                subparagraph (C)(i)(IV) for any 
                                State for fiscal year 1995, the 
                                Secretary shall use information 
                                available as of February 28, 
                                1996.
                                    (IV) In determining the 
                                amount described in 
                                subparagraph (C)(i)(V) for any 
                                State for fiscal year 1995, the 
                                Secretary shall use information 
                                available as of October 5, 
                                1995.
                    (E) Appropriation.--Out of any money in the 
                Treasury of the United States not otherwise 
                appropriated, there are appropriated for fiscal 
                years 1996, 1997, 1998, 1999, 2000, and 2001 
                such sums as are necessary for grants under 
                this paragraph.
            (2) Grant to reward states that reduce out-of-
        wedlock births.--
                    (A) In general.--Each eligible State shall 
                be entitled to receive from the Secretary for 
                fiscal year 1998 or any succeeding fiscal year, 
                a grant in an amount equal to the State family 
                assistance grant multiplied by--
                            (i) 5 percent if--
                                    (I) the illegitimacy ratio 
                                of the State for the fiscal 
                                year is at least 1 percentage 
                                point lower than the 
                                illegitimacy ratio of the State 
                                for fiscal year 1995; and
                                    (II) the rate of induced 
                                pregnancy terminations in the 
                                State for the fiscal year is 
                                less than the rate of induced 
                                pregnancy terminations in the 
                                State for fiscal year 1995; or
                            (ii) 10 percent if--
                                    (I) the illegitimacy ratio 
                                of the State for the fiscal 
                                year is at least 2 percentage 
                                points lower than the 
                                illegitimacy ratio of the State 
                                for fiscal year 1995; and
                                    (II) the rate of induced 
                                pregnancy terminations in the 
                                State for the fiscal year is 
                                less than the rate of induced 
                                pregnancy terminations in the 
                                State for fiscal year 1995.
                    (B) Illegitimacy ratio.--As used in this 
                paragraph, the term ``illegitimacy ratio'' 
                means, with respect to a State and a fiscal 
                year--
                            (i) the number of out-of-wedlock 
                        births that occurred in the State 
                        during the most recent fiscal year for 
                        which such information is available; 
                        divided by
                            (ii) the number of births that 
                        occurred in the State during the most 
                        recent fiscal year for which such 
                        information is available.
                    (C) Disregard of changes in data due to 
                changed reporting methods.--For purposes of 
                subparagraph (A), the Secretary shall 
                disregard--
                            (i) any difference between the 
                        illegitimacy ratio of a State for a 
                        fiscal year and the illegitimacy ratio 
                        of the State for fiscal year 1995 which 
                        is attributable to a change in State 
                        methods of reporting data used to 
                        calculate the illegitimacy ratio; and
                            (ii) any difference between the 
                        rate of induced pregnancy terminations 
                        in a State for a fiscal year and such 
                        rate for fiscal year 1995 which is 
                        attributable to a change in State 
                        methods of reporting data used to 
                        calculate such rate.
                    (D) Appropriation.--Out of any money in the 
                Treasury of the United States not otherwise 
                appropriated, there are appropriated for fiscal 
                year 1998 and for each succeeding fiscal year 
                such sums as are necessary for grants under 
                this paragraph.
            (3) Supplemental grant for population increases in 
        certain states.--
                    (A) In general.--Each qualifying State 
                shall, subject to subparagraph (F), be entitled 
                to receive from the Secretary--
                            (i) for fiscal year 1997 a grant in 
                        an amount equal to 2.5 percent of the 
                        total amount required to be paid to the 
                        State under former section 403 (as in 
                        effect during fiscal year 1994) for 
                        fiscal year 1994; and
                            (ii) for each of fiscal years 1998, 
                        1999, and 2000, a grant in an amount 
                        equal to the sum of--
                                    (I) the amount (if any) 
                                required to be paid to the 
                                State under this paragraph for 
                                the immediately preceding 
                                fiscal year; and
                                    (II) 2.5 percent of the sum 
                                of--
                                            (aa) the total 
                                        amount required to be 
                                        paid to the State under 
                                        former section 403 (as 
                                        in effect during fiscal 
                                        year 1994) for fiscal 
                                        year 1994; and
                                            (bb) the amount (if 
                                        any) required to be 
                                        paid to the State under 
                                        this paragraph for the 
                                        fiscal year preceding 
                                        the fiscal year for 
                                        which the grant is to 
                                        be made.
                    (B) Preservation of grant without increases 
                for states failing to remain qualifying 
                states.--Each State that is not a qualifying 
                State for a fiscal year specified in 
                subparagraph (A)(ii) but was a qualifying State 
                for a prior fiscal year shall, subject to 
                subparagraph (F), be entitled to receive from 
                the Secretary for the specified fiscal year, a 
                grant in an amount equal to the amount required 
                to be paid to the State under this paragraph 
                for the most recent fiscal year for which the 
                State was a qualifying State.
                    (C) Qualifying state.--
                            (i) In general.--For purposes of 
                        this paragraph, a State is a qualifying 
                        State for a fiscal year if--
                                    (I) the level of welfare 
                                spending per poor person by the 
                                State for the immediately 
                                preceding fiscal year is less 
                                than the national average level 
                                of State welfare spending per 
                                poor person for such preceding 
                                fiscal year; and
                                    (II) the population growth 
                                rate of the State (as 
                                determined by the Bureau of the 
                                Census) for the most recent 
                                fiscal year for which 
                                information is available 
                                exceeds the average population 
                                growth rate for all States (as 
                                so determined) for such most 
                                recent fiscal year.
                            (ii) State must qualify in fiscal 
                        year 1997.--Notwithstanding clause (i), 
                        a State shall not be a qualifying State 
                        for any fiscal year after 1997 by 
                        reason of clause (i) if the State is 
                        not a qualifying State for fiscal year 
                        1997 by reason of clause (i).
                            (iii) Certain states deemed 
                        qualifying states.--For purposes of 
                        this paragraph, a State is deemed to be 
                        a qualifying State for fiscal years 
                        1997, 1998, 1999, and 2000 if--
                                    (I) the level of welfare 
                                spending per poor person by the 
                                State for fiscal year 1996 is 
                                less than 35 percent of the 
                                national average level of State 
                                welfare spending per poor 
                                person for fiscal year 1996; or
                                    (II) the population of the 
                                State increased by more than 10 
                                percent from April 1, 1990 to 
                                July 1, 1994, according to the 
                                population estimates in 
                                publication CB94-204 of the 
                                Bureau of the Census.
                    (D) Definitions.--As used in this 
                paragraph:
                            (i) Level of welfare spending per 
                        poor person.--The term ``level of State 
                        welfare spending per poor person'' 
                        means, with respect to a State and a 
                        fiscal year--
                                    (I) the sum of--
                                            (aa) the total 
                                        amount required to be 
                                        paid to the State under 
                                        former section 403 (as 
                                        in effect during fiscal 
                                        year 1994) for fiscal 
                                        year 1994; and
                                            (bb) the amount (if 
                                        any) paid to the State 
                                        under this paragraph 
                                        for the immediately 
                                        preceding fiscal year; 
                                        divided by
                                    (II) the number of 
                                individuals, according to the 
                                1990 decennial census, who were 
                                residents of the State and 
                                whose income was below the 
                                poverty line.
                            (ii) National average level of 
                        state welfare spending per poor 
                        person.--The term ``national average 
                        level of State welfare spending per 
                        poor person'' means, with respect to a 
                        fiscal year, an amount equal to--
                                    (I) the total amount 
                                required to be paid to the 
                                States under former section 403 
                                (as in effect during fiscal 
                                year 1994) for fiscal year 
                                1994; divided by
                                    (II) the number of 
                                individuals, according to the 
                                1990 decennial census, who were 
                                residents of any State and 
                                whose income was below the 
                                poverty line.
                            (iii) State.--The term ``State'' 
                        means each of the 50 States of the 
                        United States and the District of 
                        Columbia.
                    (E) Appropriation.--Out of any money in the 
                Treasury of the United States not otherwise 
                appropriated, there are appropriated for fiscal 
                years 1997, 1998, 1999, and 2000 such sums as 
                are necessary for grants under this paragraph, 
                in a total amount not to exceed $800,000,000.
                    (F) Grants reduced pro rata if insufficient 
                appropriations.--If the amount appropriated 
                pursuant to this paragraph for a fiscal year is 
                less than the total amount of payments 
                otherwise required to be made under this 
                paragraph for the fiscal year, then the amount 
                otherwise payable to any State for the fiscal 
                year under this paragraph shall be reduced by a 
                percentage equal to the amount so appropriated 
                divided by such total amount.
                    (G) Budget scoring.--Notwithstanding 
                section 257(b)(2) of the Balanced Budget and 
                Emergency Deficit Control Act of 1985, the 
                baseline shall assume that no grant shall be 
                made under this paragraph after fiscal year 
                2000.
            (4) Bonus to reward high performance states.--
                    (A) In general.--The Secretary shall make a 
                grant pursuant to this paragraph to each State 
                for each bonus year for which the State is a 
                high performing State.
                    (B) Amount of grant.--
                            (i) In general.--Subject to clause 
                        (ii) of this subparagraph, the 
                        Secretary shall determine the amount of 
                        the grant payable under this paragraph 
                        to a high performing State for a bonus 
                        year, which shall be based on the score 
                        assigned to the State under 
                        subparagraph (D)(i) for the fiscal year 
                        that immediately precedes the bonus 
                        year.
                            (ii) Limitation.--The amount 
                        payable to a State under this paragraph 
                        for a bonus year shall not exceed 5 
                        percent of the State family assistance 
                        grant.
                    (C) Formula for measuring state 
                performance.--Not later than 1 year after the 
                date of the enactment of the Personal 
                Responsibility and Work Opportunity Act of 
                1996, the Secretary, in consultation with the 
                National Governors' Association and the 
                American Public Welfare Association, shall 
                develop a formula for measuring State 
                performance in operating the State program 
                funded under this part so as to achieve the 
                goals set forth in section 401(a).
                    (D) Scoring of state performance; setting 
                of performance thresholds.--For each bonus 
                year, the Secretary shall--
                            (i) use the formula developed under 
                        subparagraph (C) to assign a score to 
                        each eligible State for the fiscal year 
                        that immediately precedes the bonus 
                        year; and
                            (ii) prescribe a performance 
                        threshold in such a manner so as to 
                        ensure that--
                                    (I) the average annual 
                                total amount of grants to be 
                                made under this paragraph for 
                                each bonus year equals 
                                $200,000,000; and
                                    (II) the total amount of 
                                grants to be made under this 
                                paragraph for all bonus years 
                                equals $1,000,000,000.
                    (E) Definitions.--As used in this 
                paragraph:
                            (i) Bonus year.--The term ``bonus 
                        year'' means fiscal years 1999, 2000, 
                        2001, 2002, and 2003.
                            (ii) High performing state.--The 
                        term ``high performing State'' means, 
                        with respect a bonus year, an eligible 
                        State whose score assigned pursuant to 
                        subparagraph (D)(i) for the fiscal year 
                        immediately preceding the bonus year 
                        equals or exceeds the performance 
                        threshold prescribed under subparagraph 
                        (D)(ii) for such preceding fiscal year.
                    (F) Appropriation.--Out of any money in the 
                Treasury of the United States not otherwise 
                appropriated, there are appropriated for fiscal 
                years 1999 through 2003 $1,000,000,000 for 
                grants under this paragraph.
    (b) Contingency Fund.--
            (1) Establishment.--There is hereby established in 
        the Treasury of the United States a fund which shall be 
        known as the ``Contingency Fund for State Welfare 
        Programs'' (in this section referred to as the 
        ``Fund'').
            (2) Deposits into fund.--Out of any money in the 
        Treasury of the United States not otherwise 
        appropriated, there are appropriated for fiscal years 
        1997, 1998, 1999, 2000, and 2001 such sums as are 
        necessary for payment to the Fund in a total amount not 
        to exceed $2,000,000,000.
            (3) Grants.--
                    (A) Provisional payments.--If an eligible 
                State submits to the Secretary a request for 
                funds under this paragraph during an eligible 
                month, the Secretary shall, subject to this 
                paragraph, pay to the State, from amounts 
                appropriated pursuant to paragraph (2), an 
                amount equal to the amount of funds so 
                requested.
                    (B) Payment priority.--The Secretary shall 
                make payments under subparagraph (A) in the 
                order in which the Secretary receives requests 
                for such payments.
                    (C) Limitations.--
                            (i) Monthly payment to a state.--
                        The total amount paid to a single State 
                        under subparagraph (A) during a month 
                        shall not exceed \1/12\ of 20 percent 
                        of the State family assistance grant.
                            (ii) Payments to all states.--The 
                        total amount paid to all States under 
                        subparagraph (A) during fiscal years 
                        1997 through 2001 shall not exceed the 
                        total amount appropriated pursuant to 
                        paragraph (2).
            (4) Annual reconciliation.--Notwithstanding 
        paragraph (3), at the end of each fiscal year, each 
        State shall remit to the Secretary an amount equal to 
        the amount (if any) by which the total amount paid to 
        the State under paragraph (3) during the fiscal year 
        exceeds--
                    (A) the Federal medical assistance 
                percentage for the State for the fiscal year 
                (as defined in section 1905(b), as in effect on 
                September 30, 1995) of the amount (if any) by 
                which the expenditures under the State program 
                funded under this part for the fiscal year 
                exceed historic State expenditures (as defined 
                in section 409(a)(7)(B)(iii)); multiplied by
                    (B) \1/12\ times the number of months 
                during the fiscal year for which the Secretary 
                makes a payment to the State under this 
                subsection.
            (5) Eligible month.--As used in paragraph (3)(A), 
        the term ``eligible month'' means, with respect to a 
        State, a month in the 2-month period that begins with 
        any month for which the State is a needy State.
            (6) Needy state.--For purposes of paragraph (5), a 
        State is a needy State for a month if--
                    (A) the average rate of--
                            (i) total unemployment in such 
                        State (seasonally adjusted) for the 
                        period consisting of the most recent 3 
                        months for which data for all States 
                        are published equals or exceeds 6.5 
                        percent; and
                            (ii) total unemployment in such 
                        State (seasonally adjusted) for the 3-
                        month period equals or exceeds 110 
                        percent of such average rate for either 
                        (or both) of the corresponding 3-month 
                        periods ending in the 2 preceding 
                        calendar years; or
                    (B) as determined by the Secretary of 
                Agriculture (in the discretion of the Secretary 
                of Agriculture), the monthly average number of 
                individuals (as of the last day of each month) 
                participating in the food stamp program in the 
                State in the then most recently concluded 3-
                month period for which data are available 
                exceeds by not less than 10 percent the lesser 
                of--
                            (i) the monthly average number of 
                        individuals (as of the last day of each 
                        month) in the State that would have 
                        participated in the food stamp program 
                        in the corresponding 3-month period in 
                        fiscal year 1994 if the amendments made 
                        by subtitles D and J of the Personal 
                        Responsibility and Work Opportunity Act 
                        of 1996 had been in effect throughout 
                        fiscal year 1994; or
                            (ii) the monthly average number of 
                        individuals (as of the last day of each 
                        month) in the State that would have 
                        participated in the food stamp program 
                        in the corresponding 3-month period in 
                        fiscal year 1995 if the amendments made 
                        by subtitles D and J of the Personal 
                        Responsibility and Work Opportunity Act 
                        of 1996 had been in effect throughout 
                        fiscal year 1995.
            (7) Other terms defined.--As used in this 
        subsection:
                    (A) State.--The term ``State'' means each 
                of the 50 States of the United States and the 
                District of Columbia.
                    (B) Secretary.--The term ``Secretary'' 
                means the Secretary of the Treasury.
            (8) Annual reports.--The Secretary shall annually 
        report to the Congress on the status of the Fund.
            (9) Budget scoring.--Notwithstanding section 
        257(b)(2) of the Balanced Budget and Emergency Deficit 
        Control Act of 1985, the baseline shall assume that no 
        grant shall be made under this subsection after fiscal 
        year 2001.

SEC. 404. USE OF GRANTS.

    (a) General Rules.--Subject to this part, a State to which 
a grant is made under section 403 may use the grant--
            (1) in any manner that is reasonably calculated to 
        accomplish the purpose of this part, including to 
        provide low income households with assistance in 
        meeting home heating and cooling costs; or
            (2) in any manner that the State was authorized to 
        use amounts received under part A or F, as such parts 
        were in effect on September 30, 1995.
    (b) Limitation on Use of Grant for Administrative 
Purposes.--
            (1) Limitation.--A State to which a grant is made 
        under section 403 shall not expend more than 15 percent 
        of the grant for administrative purposes.
            (2) Exception.--Paragraph (1) shall not apply to 
        the use of a grant for information technology and 
        computerization needed for tracking or monitoring 
        required by or under this part.
    (c) Authority to Treat Interstate Immigrants Under Rules of 
Former State.--A State operating a program funded under this 
part may apply to a family the rules (including benefit 
amounts) of the program funded under this part of another State 
if the family has moved to the State from the other State and 
has resided in the State for less than 12 months.
    (d) Authority to Use Portion of Grant for Other Purposes.--
            (1) In general.--A State may use not more than 30 
        percent of the amount of the grant made to the State 
        under section 403 for a fiscal year to carry out a 
        State program pursuant to any or all of the following 
        provisions of law:
                    (A) Part B or E of this title.
                    (B) Title XX of this Act.
                    (C) The Child Care and Development Block 
                Grant Act of 1990.
            (2) Applicable rules.--Any amount paid to the State 
        under this part that is used to carry out a State 
        program pursuant to a provision of law specified or 
        described in paragraph (1) shall not be subject to the 
        requirements of this part, but shall be subject to the 
        requirements that apply to Federal funds provided 
        directly under the provision of law to carry out the 
        program.
    (e) Authority to Reserve Certain Amounts for Assistance.--A 
State may reserve amounts paid to the State under this part for 
any fiscal year for the purpose of providing, without fiscal 
year limitation, assistance under the State program funded 
under this part.
    (f) Authority to Operate Employment Placement Program.--A 
State to which a grant is made under section 403 may use the 
grant to make payments (or provide job placement vouchers) to 
State-approved public and private job placement agencies that 
provide employment placement services to individuals who 
receive assistance under the State program funded under this 
part.
    (g) Implementation of Electronic Benefit Transfer System.--
A State to which a grant is made under section 403 is 
encouraged to implement an electronic benefit transfer system 
for providing assistance under the State program funded under 
this part, and may use the grant for such purpose.

SEC. 405. ADMINISTRATIVE PROVISIONS.

    (a) Quarterly.--The Secretary shall pay each grant payable 
to a State under section 403 in quarterly installments.
    (b) Notification.--Not later than 3 months before the 
payment of any such quarterly installment to a State, the 
Secretary shall notify the State of the amount of any reduction 
determined under section 412(a)(1)(B) with respect to the 
State.
    (c) Computation and Certification of Payments to States.--
            (1) Computation.--The Secretary shall estimate the 
        amount to be paid to each eligible State for each 
        quarter under this part, such estimate to be based on a 
        report filed by the State containing an estimate by the 
        State of the total sum to be expended by the State in 
        the quarter under the State program funded under this 
        part and such other information as the Secretary may 
        find necessary.
            (2) Certification.--The Secretary of Health and 
        Human Services shall certify to the Secretary of the 
        Treasury the amount estimated under paragraph (1) with 
        respect to a State, reduced or increased to the extent 
        of any overpayment or underpayment which the Secretary 
        of Health and Human Services determines was made under 
        this part to the State for any prior quarter and with 
        respect to which adjustment has not been made under 
        this paragraph.
    (d) Payment Method.--Upon receipt of a certification under 
subsection (c)(2) with respect to a State, the Secretary of the 
Treasury shall, through the Fiscal Service of the Department of 
the Treasury and before audit or settlement by the General 
Accounting Office, pay to the State, at the time or times fixed 
by the Secretary of Health and Human Services, the amount so 
certified.
    (e) Collection of State Overpayments to Families From 
Federal Tax Refunds.--
            (1) In general.--Upon receiving notice from the 
        Secretary of Health and Human Services that a State 
        agency administering a program funded under this part 
        has notified the Secretary that a named individual has 
        been overpaid under the State program funded under this 
        part, the Secretary of the Treasury shall determine 
        whether any amounts as refunds of Federal taxes paid 
        are payable to such individual, regardless of whether 
        the individual filed a tax return as a married or 
        unmarried individual. If the Secretary of the Treasury 
        finds that any such amount is so payable, the Secretary 
        shall withhold from such refunds an amount equal to the 
        overpayment sought to be collected by the State and pay 
        such amount to the State agency.
            (2) Regulations.--The Secretary of the Treasury 
        shall issue regulations, after review by the Secretary 
        of Health and Human services, that provide--
                    (A) that a State may only submit under 
                paragraph (1) requests for collection of 
                overpayments with respect to individuals--
                            (i) who are no longer receiving 
                        assistance under the State program 
                        funded under this part;
                            (ii) with respect to whom the State 
                        has already taken appropriate action 
                        under State law against the income or 
                        resources of the individuals or 
                        families involved to collect the past-
                        due legally enforceable debt; and
                            (iii) to whom the State agency has 
                        given notice of its intent to request 
                        withholding by the Secretary of the 
                        Treasury from the income tax refunds of 
                        such individuals;
                    (B) that the Secretary of the Treasury will 
                give a timely and appropriate notice to any 
                other person filing a joint return with the 
                individual whose refund is subject to 
                withholding under paragraph (1); and
                    (C) the procedures that the State and the 
                Secretary of the Treasury will follow in 
                carrying out this subsection which, to the 
                maximum extent feasible and consistent with the 
                provisions of this subsection, will be the same 
                as those issued pursuant to section 464(b) 
                applicable to collection of past-due child 
                support.

SEC. 406. FEDERAL LOANS FOR STATE WELFARE PROGRAMS.

    (a) Loan Authority.--
            (1) In general.--The Secretary shall make loans to 
        any loan-eligible State, for a period to maturity of 
        not more than 3 years.
            (2) Loan-eligible state.--As used in paragraph (1), 
        the term ``loan-eligible State'' means a State against 
        which a penalty has not been imposed under section 
        409(a)(1).
    (b) Rate of Interest.--The Secretary shall charge and 
collect interest on any loan made under this section at a rate 
equal to the current average market yield on outstanding 
marketable obligations of the United States with remaining 
periods to maturity comparable to the period to maturity of the 
loan.
    (c) Use of Loan.--A State shall use a loan made to the 
State under this section only for any purpose for which grant 
amounts received by the State under section 403(a) may be used, 
including--
            (1) welfare anti-fraud activities; and
            (2) the provision of assistance under the State 
        program to Indian families that have moved from the 
        service area of an Indian tribe with a tribal family 
        assistance plan approved under section 412.
    (d) Limitation on Total Amount of Loans to a State.--The 
cumulative dollar amount of all loans made to a State under 
this section during fiscal years 1997 through 2001 shall not 
exceed 10 percent of the State family assistance grant.
    (e) Limitation on Total Amount of Outstanding Loans.--The 
total dollar amount of loans outstanding under this section may 
not exceed $1,700,000,000.
    (f) Appropriation.--Out of any money in the Treasury of the 
United States not otherwise appropriated, there are 
appropriated such sums as may be necessary for the cost of 
loans under this section.

SEC. 407. MANDATORY WORK REQUIREMENTS.

    (a) Participation Rate Requirements.--
            (1) All families.--A State to which a grant is made 
        under section 403 for a fiscal year shall achieve the 
        minimum participation rate specified in the following 
        table for the fiscal year with respect to all families 
        receiving assistance under the State program funded 
        under this part:

                                                             The minimum
                                                           participation
        If the fiscal year is:                                  rate is:
            1996........................................           15   
            1997........................................           20   
            1998........................................           25   
            1999........................................           30   
            2000........................................           35   
            2001........................................           40   
            2002 or thereafter..........................           50.  

            (2) 2-parent families.--A State to which a grant is 
        made under section 403 for a fiscal year shall achieve 
        the minimum participation rate specified in the 
        following table for the fiscal year with respect to 2-
        parent families receiving assistance under the State 
        program funded under this part:

                                                             The minimum
                                                           participation
        If the fiscal year is:                                  rate is:
            1996........................................           50   
            1997........................................           75   
            1998........................................           75   
            1999 or thereafter..........................           90.  

    (b) Calculation of Participation Rates.--
            (1) All families.--
                    (A) Average monthly rate.--For purposes of 
                subsection (a)(1), the participation rate for 
                all families of a State for a fiscal year is 
                the average of the participation rates for all 
                families of the State for each month in the 
                fiscal year.
                    (B) Monthly participation rates.--The 
                participation rate of a State for all families 
                of the State for a month, expressed as a 
                percentage, is--
                            (i) the number of families 
                        receiving assistance under the State 
                        program funded under this part that 
                        include an adult who is engaged in work 
                        for the month; divided by
                            (ii) the amount by which--
                                    (I) the number of families 
                                receiving such assistance 
                                during the month that include 
                                an adult receiving such 
                                assistance; exceeds
                                    (II) the number of families 
                                receiving such assistance that 
                                are subject in such month to a 
                                penalty described in subsection 
                                (e)(1) but have not been 
                                subject to such penalty for 
                                more than 3 months within the 
                                preceding 12-month period 
                                (whether or not consecutive).
            (2) 2-parent families.--
                    (A) Average monthly rate.--For purposes of 
                subsection (a)(2), the participation rate for 
                2-parent families of a State for a fiscal year 
                is the average of the participation rates for 
                2-parent families of the State for each month 
                in the fiscal year.
                    (B) Monthly participation rates.--The 
                participation rate of a State for 2-parent 
                families of the State for a month shall be 
                calculated by use of the formula set forth in 
                paragraph (1)(B), except that in the formula 
                the term ``number of 2-parent families'' shall 
                be substituted for the term ``number of 
                families'' each place such latter term appears.
            (3) Pro rata reduction of participation rate due to 
        caseload reductions not required by federal law.--
                    (A) In general.--The Secretary shall 
                prescribe regulations for reducing the minimum 
                participation rate otherwise required by this 
                section for a fiscal year by the number of 
                percentage points equal to the number of 
                percentage points (if any) by which--
                            (i) the average monthly number of 
                        families receiving assistance during 
                        the fiscal year under the State program 
                        funded under this part is less than
                            (ii) the average monthly number of 
                        families that received aid under the 
                        State plan approved under part A (as in 
                        effect on September 30, 1995) during 
                        fiscal year 1995.
                The minimum participation rate shall not be 
                reduced to the extent that the Secretary 
                determines that the reduction in the number of 
                families receiving such assistance is required 
                by Federal law.
                    (B) Eligibility changes not counted.--The 
                regulations described in subparagraph (A) shall 
                not take into account families that are 
                diverted from a State program funded under this 
                part as a result of differences in eligibility 
                criteria under a State program funded under 
                this part and eligibility criteria under the 
                State program operated under the State plan 
                approved under part A (as such plan and such 
                part were in effect on September 30, 1995). 
                Such regulations shall place the burden on the 
                Secretary to prove that such families were 
                diverted as a direct result of differences in 
                such eligibility criteria.
            (4) State option to include individuals receiving 
        assistance under a tribal family assistance plan.--For 
        purposes of paragraphs (1)(B) and (2)(B), a State may, 
        at its option, include families receiving assistance 
        under a tribal family assistance plan approved under 
        section 412.
            (5) State option for participation requirement 
        exemptions.--For any fiscal year, a State may, at its 
        option, not require an individual who is a single 
        custodial parent caring for a child who has not 
        attained 12 months of age to engage in work and may 
        disregard such an individual in determining the 
        participation rates under subsection (a).
    (c) Engaged in Work.--
            (1) All families.--For purposes of subsection 
        (b)(1)(B)(i), a recipient is engaged in work for a 
        month in a fiscal year if the recipient is 
        participating in work activities for at least the 
        minimum average number of hours per week specified in 
        the following table during the month, not fewer than 20 
        hours per week of which are attributable to an activity 
        described in paragraph (1), (2), (3), (4), (5), (6), 
        (7), or (8) of subsection (d):

                                                             The minimum
          If the month is                              average number of
            in fiscal year:                           hours per week is:
              1996......................................           20   
              1997......................................           20   
              1998......................................           20   
              1999 or thereafter........................           25.  

            (2) 2-parent families.--For purposes of subsection 
        (b)(2)(B)(i), an adult is engaged in work for a month 
        in a fiscal year if the adult is making progress in 
        work activities for at least 35 hours per week during 
        the month, not fewer than 30 hours per week of which 
        are attributable to an activity described in paragraph 
        (1), (2), (3), (4), (5), (6), (7), or (8) of subsection 
        (d).
            (3) Limitation on number of weeks for which job 
        search counts as work.--Notwithstanding paragraphs (1) 
        and (2), an individual shall not be considered to be 
        engaged in work by virtue of participation in an 
        activity described in subsection (d)(6), after the 
        individual has participated in such an activity for 12 
        weeks in a fiscal year. An individual shall be 
        considered to be participating in such an activity for 
        a week if the individual participates in such an 
        activity at any time during the week.
            (4) Limitation on vocational education activities 
        counted as work.--For purposes of determining monthly 
        participation rates under paragraphs (1)(B)(i) and 
        (2)(B)(i) of subsection (b), not more than 20 percent 
        of adults in all families and in 2-parent families 
        determined to be engaged in work in the State for a 
        month may meet the work activity requirement through 
        participation in vocational educational training.
            (5) Single parent with child under age 6 deemed to 
        be meeting work participation requirements if parent is 
        engaged in work for 20 hours per week.--For purposes of 
        determining monthly participation rates under 
        subsection (b)(1)(B)(i), a recipient in a 1-parent 
        family who is the parent of a child who has not 
        attained 6 years of age is deemed to be engaged in work 
        for a month if the recipient is engaged in work for an 
        average of at least 20 hours per week during the month.
            (6) Teen head of household who maintains 
        satisfactory school attendance deemed to be meeting 
        work participation requirements.--For purposes of 
        determining monthly participation rates under 
        subsection (b)(1)(B)(i), a recipient who is a single 
        head of household and has not attained 20 years of age 
        is deemed to be engaged in work for a month in a fiscal 
        year if the recipient--
                    (A) maintains satisfactory attendance at 
                secondary school or the equivalent during the 
                month; or
                    (B) participates in education directly 
                related to employment for at least the minimum 
                average number of hours per week specified in 
                the table set forth in paragraph (1).
    (d) Work Activities Defined.--As used in this section, the 
term ``work activities'' means--
            (1) unsubsidized employment;
            (2) subsidized private sector employment;
            (3) subsidized public sector employment;
            (4) work experience (including work associated with 
        the refurbishing of publicly assisted housing) if 
        sufficient private sector employment is not available;
            (5) on-the-job training;
            (6) job search and job readiness assistance;
            (7) community service programs;
            (8) vocational educational training (not to exceed 
        12 months with respect to any individual);
            (9) job skills training directly related to 
        employment;
            (10) education directly related to employment, in 
        the case of a recipient who has not attained 20 years 
        of age, and has not received a high school diploma or a 
        certificate of high school equivalency; and
            (11) satisfactory attendance at secondary school, 
        in the case of a recipient who--
                    (A) has not completed secondary school; and
                    (B) is a dependent child, or a head of 
                household who has not attained 20 years of age.
    (e) Penalties Against Individuals.--
            (1) In general.--Except as provided in paragraph 
        (2), if an adult in a family receiving assistance under 
        the State program funded under this part refuses to 
        engage in work required in accordance with this 
        section, the State shall--
                    (A) reduce the amount of assistance 
                otherwise payable to the family pro rata (or 
                more, at the option of the State) with respect 
                to any period during a month in which the adult 
                so refuses; or
                    (B) terminate such assistance,
        subject to such good cause and other exceptions as the 
        State may establish.
            (2) Exception.--Notwithstanding paragraph (1), a 
        State may not reduce or terminate assistance under the 
        State program funded under this part based on a refusal 
        of an adult to work if the adult is a single custodial 
        parent caring for a child who has not attained 6 years 
        of age, and the adult proves that the adult has a 
        demonstrated inability (as determined by the State) to 
        obtain needed child care, for 1 or more of the 
        following reasons:
                    (A) Unavailability of appropriate child 
                care within a reasonable distance from the 
                individual's home or work site.
                    (B) Unavailability or unsuitability of 
                informal child care by a relative or under 
                other arrangements.
                    (C) Unavailability of appropriate and 
                affordable formal child care arrangements.
    (f) Nondisplacement in Work Activities.--
            (1) In general.--Subject to paragraph (2), an adult 
        in a family receiving assistance under a State program 
        funded under this part attributable to funds provided 
        by the Federal Government may fill a vacant employment 
        position in order to engage in a work activity 
        described in subsection (d).
            (2) No filling of certain vacancies.--No adult in a 
        work activity described in subsection (d) which is 
        funded, in whole or in part, by funds provided by the 
        Federal Government shall be employed or assigned--
                    (A) when any other individual is on layoff 
                from the same or any substantially equivalent 
                job; or
                    (B) if the employer has terminated the 
                employment of any regular employee or otherwise 
                caused an involuntary reduction of its 
                workforce in order to fill the vacancy so 
                created with an adult described in paragraph 
                (1).
            (3) No preemption.--Nothing in this subsection 
        shall preempt or supersede any provision of State or 
        local law that provides greater protection for 
        employees from displacement.
    (g) Sense of the Congress.--It is the sense of the Congress 
that in complying with this section, each State that operates a 
program funded under this part is encouraged to assign the 
highest priority to requiring adults in 2-parent families and 
adults in single-parent families that include older preschool 
or school-age children to be engaged in work activities.
    (h) Sense of the Congress That States Should Impose Certain 
Requirements on Noncustodial, Nonsupporting Minor Parents.--It 
is the sense of the Congress that the States should require 
noncustodial, nonsupporting parents who have not attained 18 
years of age to fulfill community work obligations and attend 
appropriate parenting or money management classes after school.

SEC. 408. PROHIBITIONS; REQUIREMENTS.

    (a) In General.--
            (1) No assistance for families without a minor 
        child.--A State to which a grant is made under section 
        403 shall not use any part of the grant to provide 
        assistance to a family, unless the family includes--
                    (A) a minor child who resides with a 
                custodial parent or other adult caretaker 
                relative of the child; or
                    (B) a pregnant individual.
            (2) No additional cash assistance for children born 
        to families receiving assistance.--
                    (A) General rule.--A State to which a grant 
                is made under section 403 shall not use any 
                part of the grant to provide cash benefits for 
                a minor child who is born to--
                            (i) a recipient of assistance under 
                        the program operated under this part; 
                        or
                            (ii) a person who received such 
                        assistance at any time during the 10-
                        month period ending with the birth of 
                        the child.
                    (B) Exception for children born into 
                families with no other children.--Subparagraph 
                (A) shall not apply to a minor child who is 
                born into a family that does not include any 
                other children.
                    (C) Exception for vouchers.--Subparagraph 
                (A) shall not apply to vouchers which are 
                provided in lieu of cash benefits and which may 
                be used only to pay for particular goods and 
                services specified by the State as suitable for 
                the care of the child involved.
                    (D) Exception for rape or incest.--
                Subparagraph (A) shall not apply with respect 
                to a child who is born as a result of rape or 
                incest.
                    (E) State election to opt out.--
                Subparagraph (A) shall not apply to a State if 
                State law specifically exempts the State 
                program funded under this part from the 
                application of subparagraph (A).
                    (F) Substitution of family caps in effect 
                under waivers.--Subparagraph (A) shall not 
                apply to a State--
                            (i) if, as of the date of the 
                        enactment of this part, there is in 
                        effect a waiver approved by the 
                        Secretary under section 1115 which 
                        permits the State to deny aid under the 
                        State plan approved under part A of 
                        this title (as in effect without regard 
                        to the amendments made by subtitle A of 
                        the Personal Responsibility and Work 
                        Opportunity Act of 1996) to a family by 
                        reason of the birth of a child to a 
                        family member otherwise eligible for 
                        such aid; and
                            (ii) for so long as the State 
                        continues to implement such policy 
                        under the State program funded under 
                        this part, under rules prescribed by 
                        the State.
            (3) Reduction or elimination of assistance for 
        noncooperation in establishing paternity or obtaining 
        child support.--If the agency responsible for 
        administering the State plan approved under part D 
        determines that an individual is not cooperating with 
        the State in establishing paternity or in establishing, 
        modifying, or enforcing a support order with respect to 
        a child of the individual, and the individual does not 
        qualify for any good cause or other exception 
        established by the State pursuant to section 454(29), 
        then the State--
                    (A) shall deduct from the assistance that 
                would otherwise be provided to the family of 
                the individual under the State program funded 
                under this part the share of such assistance 
                attributable to the individual; and
                    (B) may deny the family any assistance 
                under the State program.
            (4) No assistance for families not assigning 
        certain support rights to the state.--
                    (A) In general.--A State to which a grant 
                is made under section 403 shall require, as a 
                condition of providing assistance to a family 
                under the State program funded under this part, 
                that a member of the family assign to the State 
                any rights the family member may have (on 
                behalf of the family member or of any other 
                person for whom the family member has applied 
                for or is receiving such assistance) to support 
                from any other person, not exceeding the total 
                amount of assistance so provided to the family, 
                which accrue (or have accrued) before the date 
                the family leaves the program, which 
                assignment, on and after the date the family 
                leaves the program, shall not apply with 
                respect to any support (other than support 
                collected pursuant to section 464) which 
                accrued before the family received such 
                assistance and which the State has not 
                collected by--
                            (i) September 30, 2000, if the 
                        assignment is executed on or after 
                        October 1, 1997, and before October 1, 
                        2000; or
                            (ii) the date the family leaves the 
                        program, if the assignment is executed 
                        on or after October 1, 2000.
                    (B) Limitation.--A State to which a grant 
                is made under section 403 shall not require, as 
                a condition of providing assistance to any 
                family under the State program funded under 
                this part, that a member of the family assign 
                to the State any rights to support described in 
                subparagraph (A) which accrue after the date 
                the family leaves the program.
            (5) No assistance for teenage parents who do not 
        attend high school or other equivalent training 
        program.--A State to which a grant is made under 
        section 403 shall not use any part of the grant to 
        provide assistance to an individual who has not 
        attained 18 years of age, is not married, has a minor 
        child at least 12 weeks of age in his or her care, and 
        has not successfully completed a high-school education 
        (or its equivalent), if the individual does not 
        participate in--
                    (A) educational activities directed toward 
                the attainment of a high school diploma or its 
                equivalent; or
                    (B) an alternative educational or training 
                program that has been approved by the State.
            (6) No assistance for teenage parents not living in 
        adult-supervised settings.--
                    (A) In general.--
                            (i) Requirement.--Except as 
                        provided in subparagraph (B), a State 
                        to which a grant is made under section 
                        403 shall not use any part of the grant 
                        to provide assistance to an individual 
                        described in clause (ii) of this 
                        subparagraph if the individual and the 
                        minor child referred to in clause 
                        (ii)(II) do not reside in a place of 
                        residence maintained by a parent, legal 
                        guardian, or other adult relative of 
                        the individual as such parent's, 
                        guardian's, or adult relative's own 
                        home.
                            (ii) Individual described.-- For 
                        purposes of clause (i), an individual 
                        described in this clause is an 
                        individual who--
                                    (I) has not attained 18 
                                years of age; and
                                    (II) is not married, and 
                                has a minor child in his or her 
                                care.
                    (B) Exception.--
                            (i) Provision of, or assistance in 
                        locating, adult-supervised living 
                        arrangement.--In the case of an 
                        individual who is described in clause 
                        (ii), the State agency referred to in 
                        section 402(a)(4) shall provide, or 
                        assist the individual in locating, a 
                        second chance home, maternity home, or 
                        other appropriate adult-supervised 
                        supportive living arrangement, taking 
                        into consideration the needs and 
                        concerns of the individual, unless the 
                        State agency determines that the 
                        individual's current living arrangement 
                        is appropriate, and thereafter shall 
                        require that the individual and the 
                        minor child referred to in subparagraph 
                        (A)(ii)(II) reside in such living 
                        arrangement as a condition of the 
                        continued receipt of assistance under 
                        the State program funded under this 
                        part attributable to funds provided by 
                        the Federal Government (or in an 
                        alternative appropriate arrangement, 
                        should circumstances change and the 
                        current arrangement cease to be 
                        appropriate).
                            (ii) Individual described.--For 
                        purposes of clause (i), an individual 
                        is described in this clause if the 
                        individual is described in subparagraph 
                        (A)(ii), and--
                                    (I) the individual has no 
                                parent, legal guardian or other 
                                appropriate adult relative 
                                described in subclause (II) of 
                                his or her own who is living or 
                                whose whereabouts are known;
                                    (II) no living parent, 
                                legal guardian, or other 
                                appropriate adult relative, who 
                                would otherwise meet applicable 
                                State criteria to act as the 
                                individual's legal guardian, of 
                                such individual allows the 
                                individual to live in the home 
                                of such parent, guardian, or 
                                relative;
                                    (III) the State agency 
                                determines that--
                                            (aa) the individual 
                                        or the minor child 
                                        referred to in 
                                        subparagraph 
                                        (A)(ii)(II) is being or 
                                        has been subjected to 
                                        serious physical or 
                                        emotional harm, sexual 
                                        abuse, or exploitation 
                                        in the residence of the 
                                        individual's own parent 
                                        or legal guardian; or
                                            (bb) substantial 
                                        evidence exists of an 
                                        act or failure to act 
                                        that presents an 
                                        imminent or serious 
                                        harm if the individual 
                                        and the minor child 
                                        lived in the same 
                                        residence with the 
                                        individual's own parent 
                                        or legal guardian; or
                                    (IV) the State agency 
                                otherwise determines that it is 
                                in the best interest of the 
                                minor child to waive the 
                                requirement of subparagraph (A) 
                                with respect to the individual 
                                or the minor child.
                            (iii) Second-chance home.--For 
                        purposes of this subparagraph, the term 
                        ``second-chance home'' means an entity 
                        that provides individuals described in 
                        clause (ii) with a supportive and 
                        supervised living arrangement in which 
                        such individuals are required to learn 
                        parenting skills, including child 
                        development, family budgeting, health 
                        and nutrition, and other skills to 
                        promote their long-term economic 
                        independence and the well-being of 
                        their children.
            (7) No medical services.--
                    (A) In general.--Except as provided in 
                subparagraph (B), a State to which a grant is 
                made under section 403 shall not use any part 
                of the grant to provide medical services.
                    (B) Exception for family planning 
                services.--As used in subparagraph (A), the 
                term ``medical services'' does not include 
                family planning services.
            (8) No assistance for more than 5 years.--
                    (A) In general.--Except as provided in 
                subparagraphs (B) and (C), a State to which a 
                grant is made under section 403 shall not use 
                any part of the grant to provide assistance to 
                a family that includes an adult who has 
                received assistance under any State program 
                funded under this part attributable to funds 
                provided by the Federal Government, for 60 
                months (whether or not consecutive) after the 
                date the State program funded under this part 
                commences.
                    (B) Minor child exception.--In determining 
                the number of months for which an individual 
                who is a parent or pregnant has received 
                assistance under the State program funded under 
                this part, the State shall disregard any month 
                for which such assistance was provided with 
                respect to the individual and during which the 
                individual was--
                            (i) a minor child; and
                            (ii) not the head of a household or 
                        married to the head of a household.
                    (C) Hardship exception.--
                            (i) In general.--The State may 
                        exempt a family from the application of 
                        subparagraph (A) by reason of hardship 
                        or if the family includes an individual 
                        who has been battered or subjected to 
                        extreme cruelty.
                            (ii) Limitation.--The number of 
                        families with respect to which an 
                        exemption made by a State under clause 
                        (i) is in effect for a fiscal year 
                        shall not exceed 20 percent of the 
                        average monthly number of families to 
                        which assistance is provided under the 
                        State program funded under this part.
                            (iii) Battered or subject to 
                        extreme cruelty defined.--For purposes 
                        of clause (i), an individual has been 
                        battered or subjected to extreme 
                        cruelty if the individual has been 
                        subjected to--
                                    (I) physical acts that 
                                resulted in, or threatened to 
                                result in, physical injury to 
                                the individual;
                                    (II) sexual abuse;
                                    (III) sexual activity 
                                involving a dependent child;
                                    (IV) being forced as the 
                                caretaker relative of a 
                                dependent child to engage in 
                                nonconsensual sexual acts or 
                                activities;
                                    (V) threats of, or attempts 
                                at, physical or sexual abuse;
                                    (VI) mental abuse; or
                                    (VII) neglect or 
                                deprivation of medical care.
                    (D) Rule of interpretation.--Subparagraph 
                (A) shall not be interpreted to require any 
                State to provide assistance to any individual 
                for any period of time under the State program 
                funded under this part.
            (9) Denial of assistance for 10 years to a person 
        found to have fraudulently misrepresented residence in 
        order to obtain assistance in 2 or more states.--A 
        State to which a grant is made under section 403 shall 
        not use any part of the grant to provide cash 
        assistance to an individual during the 10-year period 
        that begins on the date the individual is convicted in 
        Federal or State court of having made a fraudulent 
        statement or representation with respect to the place 
        of residence of the individual in order to receive 
        assistance simultaneously from 2 or more States under 
        programs that are funded under this title, title XV or 
        XIX, or the Food Stamp Act of 1977, or benefits in 2 or 
        more States under the supplemental security income 
        program under title XVI. The preceding sentence shall 
        not apply with respect to a conviction of an 
        individual, for any month beginning after the President 
        of the United States grants a pardon with respect to 
        the conduct which was the subject of the conviction.
            (10) Denial of assistance for fugitive felons and 
        probation and parole violators.--
                    (A) In general.--A State to which a grant 
                is made under section 403 shall not use any 
                part of the grant to provide assistance to any 
                individual who is--
                            (i) fleeing to avoid prosecution, 
                        or custody or confinement after 
                        conviction, under the laws of the place 
                        from which the individual flees, for a 
                        crime, or an attempt to commit a crime, 
                        which is a felony under the laws of the 
                        place from which the individual flees, 
                        or which, in the case of the State of 
                        New Jersey, is a high misdemeanor under 
                        the laws of such State; or
                            (ii) violating a condition of 
                        probation or parole imposed under 
                        Federal or State law.
                The preceding sentence shall not apply with 
                respect to conduct of an individual, for any 
                month beginning after the President of the 
                United States grants a pardon with respect to 
                the conduct.
                    (B) Exchange of information with law 
                enforcement agencies.--If a State to which a 
                grant is made under section 403 establishes 
                safeguards against the use or disclosure of 
                information about applicants or recipients of 
                assistance under the State program funded under 
                this part, the safeguards shall not prevent the 
                State agency administering the program from 
                furnishing a Federal, State, or local law 
                enforcement officer, upon the request of the 
                officer, with the current address of any 
                recipient if the officer furnishes the agency 
                with the name of the recipient and notifies the 
                agency that--
                            (i) the recipient--
                                    (I) is described in 
                                subparagraph (A); or
                                    (II) has information that 
                                is necessary for the officer to 
                                conduct the official duties of 
                                the officer; and
                            (ii) the location or apprehension 
                        of the recipient is within such 
                        official duties.
            (11) Denial of assistance for minor children who 
        are absent from the home for a significant period.--
                    (A) In general.--A State to which a grant 
                is made under section 403 shall not use any 
                part of the grant to provide assistance for a 
                minor child who has been, or is expected by a 
                parent (or other caretaker relative) of the 
                child to be, absent from the home for a period 
                of 45 consecutive days or, at the option of the 
                State, such period of not less than 30 and not 
                more than 180 consecutive days as the State may 
                provide for in the State plan submitted 
                pursuant to section 402.
                    (B) State authority to establish good cause 
                exceptions.--The State may establish such good 
                cause exceptions to subparagraph (A) as the 
                State considers appropriate if such exceptions 
                are provided for in the State plan submitted 
                pursuant to section 402.
                    (C) Denial of assistance for relative who 
                fails to notify state agency of absence of 
                child.--A State to which a grant is made under 
                section 403 shall not use any part of the grant 
                to provide assistance for an individual who is 
                a parent (or other caretaker relative) of a 
                minor child and who fails to notify the agency 
                administering the State program funded under 
                this part of the absence of the minor child 
                from the home for the period specified in or 
                provided for pursuant to subparagraph (A), by 
                the end of the 5-day period that begins with 
                the date that it becomes clear to the parent 
                (or relative) that the minor child will be 
                absent for such period so specified or provided 
                for.
            (12) Income security payments not to be disregarded 
        in determining the amount of assistance to be provided 
        to a family.--If a State to which a grant is made under 
        section 403 uses any part of the grant to provide 
        assistance for any individual who is receiving 
        benefits, or on behalf of whom benefits are paid, under 
        a State plan for old-age assistance approved under 
        section 2, under section 202, 205(j)(1), 223, or 228, 
        under a State program funded under part E that provides 
        cash payments for foster care, or under the 
        supplemental security income program under title XVI, 
        then the State may disregard the payment in determining 
        the amount of assistance to be provided under the State 
        program funded under this part, from funds provided by 
        the Federal Government, to the family of which the 
        individual is a member.
            (13) Medical assistance required to be provided for 
        1 year for families becoming ineligible for assistance 
        under this part due to increased earnings from 
        employment or collection of child support.--A State to 
        which a grant is made under section 403 shall take such 
        action as may be necessary to ensure that, if any 
        family becomes ineligible to receive assistance under 
        the State program funded under this part as a result of 
        increased earnings from employment or as a result of 
        the collection or increased collection of child or 
        spousal support, or a combination thereof, having 
        received such assistance in at least 3 of the 6 months 
        immediately preceding the month in which such 
        ineligibility begins, the family shall be eligible for 
        medical assistance under the State's plan approved 
        under title XIX (or, if applicable, title XV) during 
        the immediately succeeding 12-month period for so long 
        as family income (as defined by the State), excluding 
        any refund of Federal income taxes made by reason of 
        section 32 of the Internal Revenue Code of 1986 
        (relating to earned income tax credit) and any payment 
        made by an employer under section 3507 of such Code 
        (relating to advance payment of earned income credit), 
        is less than the poverty line, and that the family will 
        be appropriately notified of such eligibility.
            (14) Medical assistance required to be provided for 
        all recipients of assistance under this part.--A State 
        to which a grant is made under section 403 shall take 
        such action as may be necessary to ensure that each 
        recipient of assistance under the State program funded 
        under this part is eligible for medical assistance 
        under the State's plan approved under title XIX (or, if 
        applicable, title XV) to the extent that the health 
        care costs of the recipient are not covered by other 
        health insurance.
    (b) Aliens.--For special rules relating to the treatment of 
aliens, see section 4402 of the Personal Responsibility and 
Work Opportunity Act of 1996.

SEC. 409. PENALTIES.

    (a) In General.--Subject to this section:
            (1) Use of grant in violation of this part.--
                    (A) General penalty.--If an audit conducted 
                under chapter 75 of title 31, United States 
                Code, finds that an amount paid to a State 
                under section 403 for a fiscal year has been 
                used in violation of this part, the Secretary 
                shall reduce the grant payable to the State 
                under section 403(a)(1) for the immediately 
                succeeding fiscal year quarter by the amount so 
                used.
                    (B) Enhanced penalty for intentional 
                violations.--If the State does not prove to the 
                satisfaction of the Secretary that the State 
                did not intend to use the amount in violation 
                of this part, the Secretary shall further 
                reduce the grant payable to the State under 
                section 403(a)(1) for the immediately 
                succeeding fiscal year quarter by an amount 
                equal to 5 percent of the State family 
                assistance grant.
            (2) Failure to submit required report.--
                    (A) In general.--If the Secretary 
                determines that a State has not, within 1 month 
                after the end of a fiscal quarter, submitted 
                the report required by section 411(a) for the 
                quarter, the Secretary shall reduce the grant 
                payable to the State under section 403(a)(1) 
                for the immediately succeeding fiscal year by 
                an amount equal to 4 percent of the State 
                family assistance grant.
                    (B) Rescission of penalty.--The Secretary 
                shall rescind a penalty imposed on a State 
                under subparagraph (A) with respect to a report 
                if the State submits the report before the end 
                of the fiscal quarter that immediately succeeds 
                the fiscal quarter for which the report was 
                required.
            (3) Failure to satisfy minimum participation 
        rates.--
                    (A) In general.--If the Secretary 
                determines that a State to which a grant is 
                made under section 403 for a fiscal year has 
                failed to comply with section 407(a) for the 
                fiscal year, the Secretary shall reduce the 
                grant payable to the State under section 
                403(a)(1) for the immediately succeeding fiscal 
                year by an amount equal to not more than 5 
                percent of the State family assistance grant.
                    (B) Penalty based on severity of failure.--
                The Secretary shall impose reductions under 
                subparagraph (A) based on the degree of 
                noncompliance.
            (4) Failure to participate in the income and 
        eligibility verification system.--If the Secretary 
        determines that a State program funded under this part 
        is not participating during a fiscal year in the income 
        and eligibility verification system required by section 
        1137, the Secretary shall reduce the grant payable to 
        the State under section 403(a)(1) for the immediately 
        succeeding fiscal year by an amount equal to not more 
        than 2 percent of the State family assistance grant.
            (5) Failure to comply with paternity establishment 
        and child support enforcement requirements under part 
        d.--Notwithstanding any other provision of this Act, if 
        the Secretary determines that the State agency that 
        administers a program funded under this part does not 
        enforce the penalties requested by the agency 
        administering part D against recipients of assistance 
        under the State program who fail to cooperate in 
        establishing paternity or in establishing, modifying, 
        or enforcing a child support order in accordance with 
        such part and who do not qualify for any good cause or 
        other exception established by the State under section 
        454(29), the Secretary shall reduce the grant payable 
        to the State under section 403(a)(1) for the 
        immediately succeeding fiscal year (without regard to 
        this section) by not more than 5 percent.
            (6) Failure to timely repay a federal loan fund for 
        state welfare programs.--If the Secretary determines 
        that a State has failed to repay any amount borrowed 
        from the Federal Loan Fund for State Welfare Programs 
        established under section 406 within the period of 
        maturity applicable to the loan, plus any interest owed 
        on the loan, the Secretary shall reduce the grant 
        payable to the State under section 403(a)(1) for the 
        immediately succeeding fiscal year quarter (without 
        regard to this section) by the outstanding loan amount, 
        plus the interest owed on the outstanding amount. The 
        Secretary shall not forgive any outstanding loan amount 
        or interest owed on the outstanding amount.
            (7) Failure of any state to maintain certain level 
        of historic effort.--
                    (A) In general.--The Secretary shall reduce 
                the grant payable to the State under section 
                403(a)(1) for fiscal year 1998, 1999, 2000, 
                2001, or 2002 by the amount (if any) by which 
                qualified State expenditures for the then 
                immediately preceding fiscal year are less than 
                the applicable percentage of historic State 
                expenditures with respect to such preceding 
                fiscal year.
                    (B) Definitions.--As used in this 
                paragraph:
                            (i) Qualified state expenditures.--
                                    (I) In general.--The term 
                                ``qualified State 
                                expenditures'' means, with 
                                respect to a State and a fiscal 
                                year, the total expenditures by 
                                the State during the fiscal 
                                year, under all State programs, 
                                for any of the following with 
                                respect to eligible families:
                                            (aa) Cash 
                                        assistance.
                                            (bb) Child care 
                                        assistance.
                                            (cc) Educational 
                                        activities designed to 
                                        increase self-
                                        sufficiency, job 
                                        training, and work, 
                                        excluding any 
                                        expenditure for public 
                                        education in the State 
                                        except expenditures 
                                        which involve the 
                                        provision of services 
                                        or assistance to a 
                                        member of an eligible 
                                        family which is not 
                                        generally available to 
                                        persons who are not 
                                        members of an eligible 
                                        family.
                                            (dd) Administrative 
                                        costs in connection 
                                        with the matters 
                                        described in items 
                                        (aa), (bb), (cc), and 
                                        (ee), but only to the 
                                        extent that such costs 
                                        do not exceed 15 
                                        percent of the total 
                                        amount of qualified 
                                        State expenditures for 
                                        the fiscal year.
                                            (ee) Any other use 
                                        of funds allowable 
                                        under section 
                                        404(a)(1).
                                    (II) Exclusion of transfers 
                                from other state and local 
                                programs.--Such term does not 
                                include expenditures under any 
                                State or local program during a 
                                fiscal year, except to the 
                                extent that--
                                            (aa) the 
                                        expenditures exceed the 
                                        amount expended under 
                                        the State or local 
                                        program in the fiscal 
                                        year most recently 
                                        ending before the date 
                                        of the enactment of 
                                        this part; or
                                            (bb) the State is 
                                        entitled to a payment 
                                        under former section 
                                        403 (as in effect 
                                        immediately before such 
                                        date of enactment) with 
                                        respect to the 
                                        expenditures.
                                    (III) Eligible families.--
                                As used in subclause (I), the 
                                term ``eligible families'' 
                                means families eligible for 
                                assistance under the State 
                                program funded under this part, 
                                and families that would be 
                                eligible for such assistance 
                                but for the application of 
                                section 408(a)(8) of this Act 
                                or section 4402 of the Personal 
                                Responsibility and Work 
                                Opportunity Act of 1996.
                            (ii) Applicable percentage.--The 
                        term ``applicable percentage'' means 
                        for fiscal years 1997 through 2001, 75 
                        percent reduced (if appropriate) in 
                        accordance with subparagraph (C)(ii).
                            (iii) Historic state 
                        expenditures.--The term ``historic 
                        State expenditures'' means, with 
                        respect to a State, the lesser of--
                                    (I) the expenditures by the 
                                State under parts A and F (as 
                                in effect during fiscal year 
                                1994) for fiscal year 1994; or
                                    (II) the amount which bears 
                                the same ratio to the amount 
                                described in subclause (I) as--
                                            (aa) the State 
                                        family assistance 
                                        grant, plus the total 
                                        amount required to be 
                                        paid to the State under 
                                        former section 403 for 
                                        fiscal year 1994 with 
                                        respect to amounts 
                                        expended by the State 
                                        for child care under 
                                        subsection (g) or (i) 
                                        of section 402 (as in 
                                        effect during fiscal 
                                        year 1994); bears to
                                            (bb) the total 
                                        amount required to be 
                                        paid to the State under 
                                        former section 403 (as 
                                        in effect during fiscal 
                                        year 1994) for fiscal 
                                        year 1994.
                        Such term does not include any 
                        expenditures under the State plan 
                        approved under part A (as so in effect) 
                        on behalf of individuals covered by a 
                        tribal family assistance plan approved 
                        under section 412, as determined by the 
                        Secretary.
                            (iv) Expenditures by the state.--
                        The term ``expenditures by the State'' 
                        does not include--
                                    (I) any expenditures from 
                                amounts made available by the 
                                Federal Government;
                                    (II) State funds expended 
                                for the medicaid program under 
                                title XV or XIX; or
                                    (III) any State funds which 
                                are used to match Federal funds 
                                or are expended as a condition 
                                of receiving Federal funds 
                                under Federal programs other 
                                than under this part.
                    (C) Applicable percentage reduced for high 
                performance states.--
                            (i) Determination of high 
                        performance states.--The Secretary 
                        shall use the formula developed under 
                        section 403(a)(4)(C) to assign a score 
                        to each eligible State that represents 
                        the performance of the State program 
                        funded under this part for each fiscal 
                        year, and shall prescribe a performance 
                        threshold which the Secretary shall use 
                        to determine whether to reduce the 
                        applicable percentage with respect to 
                        any eligible State for a fiscal year.
                            (ii) Reduction proportional to 
                        performance.--The Secretary shall 
                        reduce the applicable percentage for a 
                        fiscal year with respect to each 
                        eligible State by an amount which is 
                        directly proportional to the amount (if 
                        any) by which the score assigned to the 
                        State under clause (i) for the 
                        immediately preceding fiscal year 
                        exceeds the performance threshold 
                        prescribed under clause (i) for such 
                        preceding fiscal year, subject to 
                        clause (iii).
                            (iii) Limitation on reduction.--The 
                        applicable percentage for a fiscal year 
                        with respect to a State may not be 
                        reduced by more than 8 percentage 
                        points under this subparagraph.
            (8) Substantial noncompliance of state child 
        support enforcement program with requirements of part 
        d.--
                    (A) In general.--If a State program 
                operated under part D is found as a result of a 
                review conducted under section 452(a)(4) not to 
                have complied substantially with the 
                requirements of such part for any quarter, and 
                the Secretary determines that the program is 
                not complying substantially with such 
                requirements at the time the finding is made, 
                the Secretary shall reduce the grant payable to 
                the State under section 403(a)(1) for the 
                quarter and each subsequent quarter that ends 
                before the 1st quarter throughout which the 
                program is found to be in substantial 
                compliance with such requirements by--
                            (i) not less than 1 nor more than 2 
                        percent;
                            (ii) not less than 2 nor more than 
                        3 percent, if the finding is the 2nd 
                        consecutive such finding made as a 
                        result of such a review; or
                            (iii) not less than 3 nor more than 
                        5 percent, if the finding is the 3rd or 
                        a subsequent consecutive such finding 
                        made as a result of such a review.
                    (B) Disregard of noncompliance which is of 
                a technical nature.--For purposes of 
                subparagraph (A) and section 452(a)(4), a State 
                which is not in full compliance with the 
                requirements of this part shall be determined 
                to be in substantial compliance with such 
                requirements only if the Secretary determines 
                that any noncompliance with such requirements 
                is of a technical nature which does not 
                adversely affect the performance of the State's 
                program operated under part D.
            (9) Failure of state receiving amounts from 
        contingency fund to maintain 100 percent of historic 
        effort.--If, at the end of any fiscal year during which 
        amounts from the Contingency Fund for State Welfare 
        Programs have been paid to a State, the Secretary finds 
        that the expenditures under the State program funded 
        under this part for the fiscal year are less than 100 
        percent of historic State expenditures (as defined in 
        paragraph (8)(B)(iii) of this subsection), the 
        Secretary shall reduce the grant payable to the State 
        under section 403(a)(1) for the immediately succeeding 
        fiscal year by the total of the amounts so paid to the 
        State.
            (10) Failure to expend additional state funds to 
        replace grant reductions.--If the grant payable to a 
        State under section 403(a)(1) for a fiscal year is 
        reduced by reason of this subsection, the State shall, 
        during the immediately succeeding fiscal year, expend 
        under the State program funded under this part an 
        amount equal to the total amount of such reductions.
            (11) Failure to provide medical assistance to 
        families becoming ineligible for assistance under this 
        part due to increased earnings from employment or 
        collection of child support.--
                    (A) In general.--If the Secretary 
                determines that a State program funded under 
                this part is not in compliance with section 
                408(a)(13) for a quarter, the Secretary shall 
                reduce the grant payable to the State under 
                section 403(a)(1) for the immediately 
                succeeding fiscal year by an amount equal to 
                not more than 5 percent of the State family 
                assistance grant.
                    (B) Penalty based on severity of failure.--
                The Secretary shall impose reductions under 
                subparagraph (A) based on the degree of 
                noncompliance.
    (b) Reasonable Cause Exception.--
            (1) In general.--The Secretary may not impose a 
        penalty on a State under subsection (a) with respect to 
        a requirement if the Secretary determines that the 
        State has reasonable cause for failing to comply with 
        the requirement.
            (2) Exception.--Paragraph (1) of this subsection 
        shall not apply to any penalty under paragraph (7), 
        (8), or (11) of subsection (a).
    (c) Corrective Compliance Plan.--
            (1) In general.--
                    (A) Notification of violation.--Before 
                imposing a penalty against a State under 
                subsection (a) with respect to a violation of 
                this part, the Secretary shall notify the State 
                of the violation and allow the State the 
                opportunity to enter into a corrective 
                compliance plan in accordance with this 
                subsection which outlines how the State will 
                correct the violation and how the State will 
                insure continuing compliance with this part.
                    (B) 60-day period to propose a corrective 
                compliance plan.--During the 60-day period that 
                begins on the date the State receives a notice 
                provided under subparagraph (A) with respect to 
                a violation, the State may submit to the 
                Federal Government a corrective compliance plan 
                to correct the violation.
                    (C) Consultation about modifications.--
                During the 60-day period that begins with the 
                date the Secretary receives a corrective 
                compliance plan submitted by a State in 
                accordance with subparagraph (B), the Secretary 
                may consult with the State on modifications to 
                the plan.
                    (D) Acceptance of plan.-- A corrective 
                compliance plan submitted by a State in 
                accordance with subparagraph (B) is deemed to 
                be accepted by the Secretary if the Secretary 
                does not accept or reject the plan during 60-
                day period that begins on the date the plan is 
                submitted.
            (2) Effect of correcting violation.--The Secretary 
        may not impose any penalty under subsection (a) with 
        respect to any violation covered by a State corrective 
        compliance plan accepted by the Secretary if the State 
        corrects the violation pursuant to the plan.
            (3) Effect of failing to correct violation.--The 
        Secretary shall assess some or all of a penalty imposed 
        on a State under subsection (a) with respect to a 
        violation if the State does not, in a timely manner, 
        correct the violation pursuant to a State corrective 
        compliance plan accepted by the Secretary.
            (4) Inapplicability to failure to timely repay a 
        federal loan fund for a state welfare program.--This 
        subsection shall not apply to the imposition of a 
        penalty against a State under subsection (a)(6).
    (d) Limitation on Amount of Penalty.--
            (1) In general.--In imposing the penalties 
        described in subsection (a), the Secretary shall not 
        reduce any quarterly payment to a State by more than 25 
        percent.
            (2) Carryforward of unrecovered penalties.--To the 
        extent that paragraph (1) of this subsection prevents 
        the Secretary from recovering during a fiscal year the 
        full amount of penalties imposed on a State under 
        subsection (a) of this section for a prior fiscal year, 
        the Secretary shall apply any remaining amount of such 
        penalties to the grant payable to the State under 
        section 403(a)(1) for the immediately succeeding fiscal 
        year.

SEC. 410. APPEAL OF ADVERSE DECISION.

    (a) In General.--Within 5 days after the date the Secretary 
takes any adverse action under this part with respect to a 
State, the Secretary shall notify the chief executive officer 
of the State of the adverse action, including any action with 
respect to the State plan submitted under section 402 or the 
imposition of a penalty under section 409.
    (b) Administrative Review.--
            (1) In general.--Within 60 days after the date a 
        State receives notice under subsection (a) of an 
        adverse action, the State may appeal the action, in 
        whole or in part, to the Departmental Appeals Board 
        established in the Department of Health and Human 
        Services (in this section referred to as the ``Board'') 
        by filing an appeal with the Board.
            (2) Procedural rules.--The Board shall consider an 
        appeal filed by a State under paragraph (1) on the 
        basis of such documentation as the State may submit and 
        as the Board may require to support the final decision 
        of the Board. In deciding whether to uphold an adverse 
        action or any portion of such an action, the Board 
        shall conduct a thorough review of the issues and take 
        into account all relevant evidence. The Board shall 
        make a final determination with respect to an appeal 
        filed under paragraph (1) not less than 60 days after 
        the date the appeal is filed.
    (c) Judicial Review of Adverse Decision.--
            (1) In general.--Within 90 days after the date of a 
        final decision by the Board under this section with 
        respect to an adverse action taken against a State, the 
        State may obtain judicial review of the final decision 
        (and the findings incorporated into the final decision) 
        by filing an action in--
                    (A) the district court of the United States 
                for the judicial district in which the 
                principal or headquarters office of the State 
                agency is located; or
                    (B) the United States District Court for 
                the District of Columbia.
            (2) Procedural rules.--The district court in which 
        an action is filed under paragraph (1) shall review the 
        final decision of the Board on the record established 
        in the administrative proceeding, in accordance with 
        the standards of review prescribed by subparagraphs (A) 
        through (E) of section 706(2) of title 5, United States 
        Code. The review shall be on the basis of the documents 
        and supporting data submitted to the Board.

SEC. 411. DATA COLLECTION AND REPORTING.

    (a) Quarterly Reports by States.--
            (1) General reporting requirement.--
                    (A) Contents of report.--Each eligible 
                State shall collect on a monthly basis, and 
                report to the Secretary on a quarterly basis, 
                the following disaggregated case record 
                information on the families receiving 
                assistance under the State program funded under 
                this part:
                            (i) The county of residence of the 
                        family.
                            (ii) Whether a child receiving such 
                        assistance or an adult in the family is 
                        disabled.
                            (iii) The ages of the members of 
                        such families.
                            (iv) The number of individuals in 
                        the family, and the relation of each 
                        family member to the youngest child in 
                        the family.
                            (v) The employment status and 
                        earnings of the employed adult in the 
                        family.
                            (vi) The marital status of the 
                        adults in the family, including whether 
                        such adults have never married, are 
                        widowed, or are divorced.
                            (vii) The race and educational 
                        status of each adult in the family.
                            (viii) The race and educational 
                        status of each child in the family.
                            (ix) Whether the family received 
                        subsidized housing, medical assistance 
                        under the State plan under title XV or 
                        the State plan approved under title 
                        XIX, food stamps, or subsidized child 
                        care, and if the latter 2, the amount 
                        received.
                            (x) The number of months that the 
                        family has received each type of 
                        assistance under the program.
                            (xi) If the adults participated in, 
                        and the number of hours per week of 
                        participation in, the following 
                        activities:
                                    (I) Education.
                                    (II) Subsidized private 
                                sector employment.
                                    (III) Unsubsidized 
                                employment.
                                    (IV) Public sector 
                                employment, work experience, or 
                                community service.
                                    (V) Job search.
                                    (VI) Job skills training or 
                                on-the-job training.
                                    (VII) Vocational education.
                            (xii) Information necessary to 
                        calculate participation rates under 
                        section 407.
                            (xiii) The type and amount of 
                        assistance received under the program, 
                        including the amount of and reason for 
                        any reduction of assistance (including 
                        sanctions).
                            (xiv) Any amount of unearned income 
                        received by any member of the family.
                            (xv) The citizenship of the members 
                        of the family.
                            (xvi) From a sample of closed 
                        cases, whether the family left the 
                        program, and if so, whether the family 
                        left due to--
                                    (I) employment;
                                    (II) marriage;
                                    (III) the prohibition set 
                                forth in section 408(a)(8);
                                    (IV) sanction; or
                                    (V) State policy.
                    (B) Use of estimates.--
                            (i) Authority.--A State may comply 
                        with subparagraph (A) by submitting an 
                        estimate which is obtained through the 
                        use of scientifically acceptable 
                        sampling methods approved by the 
                        Secretary.
                            (ii) Sampling and other methods.--
                        The Secretary shall provide the States 
                        with such case sampling plans and data 
                        collection procedures as the Secretary 
                        deems necessary to produce 
                        statistically valid estimates of the 
                        performance of State programs funded 
                        under this part. The Secretary may 
                        develop and implement procedures for 
                        verifying the quality of data submitted 
                        by the States.
            (2) Report on use of federal funds to cover 
        administrative costs and overhead.--The report required 
        by paragraph (1) for a fiscal quarter shall include a 
        statement of the percentage of the funds paid to the 
        State under this part for the quarter that are used to 
        cover administrative costs or overhead.
            (3) Report on state expenditures on programs for 
        needy families.--The report required by paragraph (1) 
        for a fiscal quarter shall include a statement of the 
        total amount expended by the State during the quarter 
        on programs for needy families.
            (4) Report on noncustodial parents participating in 
        work activities.--The report required by paragraph (1) 
        for a fiscal quarter shall include the number of 
        noncustodial parents in the State who participated in 
        work activities (as defined in section 407(d)) during 
        the quarter.
            (5) Report on transitional services.--The report 
        required by paragraph (1) for a fiscal quarter shall 
        include the total amount expended by the State during 
        the quarter to provide transitional services to a 
        family that has ceased to receive assistance under this 
        part because of employment, along with a description of 
        such services.
            (6) Regulations.--The Secretary shall prescribe 
        such regulations as may be necessary to define the data 
        elements with respect to which reports are required by 
        this subsection.
    (b) Annual Reports to the Congress by the Secretary.--Not 
later than 6 months after the end of fiscal year 1997, and each 
fiscal year thereafter, the Secretary shall transmit to the 
Congress a report describing--
            (1) whether the States are meeting--
                    (A) the participation rates described in 
                section 407(a); and
                    (B) the objectives of--
                            (i) increasing employment and 
                        earnings of needy families, and child 
                        support collections; and
                            (ii) decreasing out-of-wedlock 
                        pregnancies and child poverty;
            (2) the demographic and financial characteristics 
        of families applying for assistance, families receiving 
        assistance, and families that become ineligible to 
        receive assistance;
            (3) the characteristics of each State program 
        funded under this part; and
            (4) the trends in employment and earnings of needy 
        families with minor children living at home.

SEC. 411A. STATE REQUIRED TO PROVIDE CERTAIN INFORMATION.

    Each State to which a grant is made under section 403 
shall, at least 4 times annually and upon request of the 
Immigration and Naturalization Service, furnish the Immigration 
and Naturalization Service with the name and address of, and 
other identifying information on, any individual who the State 
knows is unlawfully in the United States.

SEC. 412. DIRECT FUNDING AND ADMINISTRATION BY INDIAN TRIBES.

    (a) Grants for Indian Tribes.--
            (1) Tribal family assistance grant.--
                    (A) In general.--For each of fiscal years 
                1997, 1998, 1999, and 2000, the Secretary shall 
                pay to each Indian tribe that has an approved 
                tribal family assistance plan a tribal family 
                assistance grant for the fiscal year in an 
                amount equal to the amount determined under 
                subparagraph (B), and shall reduce the grant 
                payable under section 403(a)(1) to any State in 
                which lies the service area or areas of the 
                Indian tribe by that portion of the amount so 
                determined that is attributable to expenditures 
                by the State.
                    (B) Amount determined.--
                            (i) In general.--The amount 
                        determined under this subparagraph is 
                        an amount equal to the total amount of 
                        the Federal payments to a State or 
                        States under section 403 (as in effect 
                        during such fiscal year) for fiscal 
                        year 1994 attributable to expenditures 
                        (other than child care expenditures) by 
                        the State or States under parts A and F 
                        (as so in effect) for fiscal year 1994 
                        for Indian families residing in the 
                        service area or areas identified by the 
                        Indian tribe pursuant to subsection 
                        (b)(1)(C) of this section.
                            (ii) Use of state submitted data.--
                                    (I) In general.--The 
                                Secretary shall use State 
                                submitted data to make each 
                                determination under clause (i).
                                    (II) Disagreement with 
                                determination.--If an Indian 
                                tribe or tribal organization 
                                disagrees with State submitted 
                                data described under subclause 
                                (I), the Indian tribe or tribal 
                                organization may submit to the 
                                Secretary such additional 
                                information as may be relevant 
                                to making the determination 
                                under clause (i) and the 
                                Secretary may consider such 
                                information before making such 
                                determination.
            (2) Grants for indian tribes that received jobs 
        funds.--
                    (A) In general.--The Secretary shall pay to 
                each eligible Indian tribe for each of fiscal 
                years 1996, 1997, 1998, 1999, 2000, and 2001 a 
                grant in an amount equal to the amount received 
                by the Indian tribe in fiscal year 1994 under 
                section 482(i) (as in effect during fiscal year 
                1994).
                    (B) Eligible indian tribe.--For purposes of 
                subparagraph (A), the term ``eligible Indian 
                tribe'' means an Indian tribe or Alaska Native 
                organization that conducted a job opportunities 
                and basic skills training program in fiscal 
                year 1995 under section 482(i) (as in effect 
                during fiscal year 1995).
                    (C) Use of grant.--Each Indian tribe to 
                which a grant is made under this paragraph 
                shall use the grant for the purpose of 
                operating a program to make work activities 
                available to members of the Indian tribe.
                    (D) Appropriation.--Out of any money in the 
                Treasury of the United States not otherwise 
                appropriated, there are appropriated $7,638,474 
                for each fiscal year specified in subparagraph 
                (A) for grants under subparagraph (A).
    (b) 3-Year Tribal Family Assistance Plan.--
            (1) In general.--Any Indian tribe that desires to 
        receive a tribal family assistance grant shall submit 
        to the Secretary a 3-year tribal family assistance plan 
        that--
                    (A) outlines the Indian tribe's approach to 
                providing welfare-related services for the 3-
                year period, consistent with this section;
                    (B) specifies whether the welfare-related 
                services provided under the plan will be 
                provided by the Indian tribe or through 
                agreements, contracts, or compacts with 
                intertribal consortia, States, or other 
                entities;
                    (C) identifies the population and service 
                area or areas to be served by such plan;
                    (D) provides that a family receiving 
                assistance under the plan may not receive 
                duplicative assistance from other State or 
                tribal programs funded under this part;
                    (E) identifies the employment opportunities 
                in or near the service area or areas of the 
                Indian tribe and the manner in which the Indian 
                tribe will cooperate and participate in 
                enhancing such opportunities for recipients of 
                assistance under the plan consistent with any 
                applicable State standards; and
                    (F) applies the fiscal accountability 
                provisions of section 5(f)(1) of the Indian 
                Self-Determination and Education Assistance Act 
                (25 U.S.C. 450c(f)(1)), relating to the 
                submission of a single-agency audit report 
                required by chapter 75 of title 31, United 
                States Code.
            (2) Approval.--The Secretary shall approve each 
        tribal family assistance plan submitted in accordance 
        with paragraph (1).
            (3) Consortium of tribes.--Nothing in this section 
        shall preclude the development and submission of a 
        single tribal family assistance plan by the 
        participating Indian tribes of an intertribal 
        consortium.
    (c) Minimum Work Participation Requirements and Time 
Limits.--The Secretary, with the participation of Indian 
tribes, shall establish for each Indian tribe receiving a grant 
under this section minimum work participation requirements, 
appropriate time limits for receipt of welfare-related services 
under the grant, and penalties against individuals--
            (1) consistent with the purposes of this section;
            (2) consistent with the economic conditions and 
        resources available to each tribe; and
            (3) similar to comparable provisions in section 
        407(d).
    (d) Emergency Assistance.--Nothing in this section shall 
preclude an Indian tribe from seeking emergency assistance from 
any Federal loan program or emergency fund.
    (e) Accountability.--Nothing in this section shall be 
construed to limit the ability of the Secretary to maintain 
program funding accountability consistent with--
            (1) generally accepted accounting principles; and
            (2) the requirements of the Indian Self-
        Determination and Education Assistance Act (25 U.S.C. 
        450 et seq.).
    (f) Penalties.--
            (1) Subsections (a)(1), (a)(6), and (b) of section 
        409, shall apply to an Indian tribe with an approved 
        tribal assistance plan in the same manner as such 
        subsections apply to a State.
            (2) Section 409(a)(3) shall apply to an Indian 
        tribe with an approved tribal assistance plan by 
        substituting ``meet minimum work participation 
        requirements established under section 412(c)'' for 
        ``comply with section 407(a)''.
    (g) Data Collection and Reporting.--Section 411 shall apply 
to an Indian tribe with an approved tribal family assistance 
plan.
    (h) Special Rule for Indian Tribes in Alaska.--
            (1) In general.--Notwithstanding any other 
        provision of this section, and except as provided in 
        paragraph (2), an Indian tribe in the State of Alaska 
        that receives a tribal family assistance grant under 
        this section shall use the grant to operate a program 
        in accordance with requirements comparable to the 
        requirements applicable to the program of the State of 
        Alaska funded under this part. Comparability of 
        programs shall be established on the basis of program 
        criteria developed by the Secretary in consultation 
        with the State of Alaska and such Indian tribes.
            (2) Waiver.--An Indian tribe described in paragraph 
        (1) may apply to the appropriate State authority to 
        receive a waiver of the requirement of paragraph (1).

SEC. 413. RESEARCH, EVALUATIONS, AND NATIONAL STUDIES.

    (a) Research.--The Secretary shall conduct research on the 
benefits, effects, and costs of operating different State 
programs funded under this part, including time limits relating 
to eligibility for assistance. The research shall include 
studies on the effects of different programs and the operation 
of such programs on welfare dependency, illegitimacy, teen 
pregnancy, employment rates, child well-being, and any other 
area the Secretary deems appropriate. The Secretary shall also 
conduct research on the costs and benefits of State activities 
under section 409.
    (b) Development and Evaluation of Innovative Approaches To 
Reducing Welfare Dependency and Increasing Child Well-Being.--
            (1) In general.--The Secretary may assist States in 
        developing, and shall evaluate, innovative approaches 
        for reducing welfare dependency and increasing the 
        well-being of minor children living at home with 
        respect to recipients of assistance under programs 
        funded under this part. The Secretary may provide funds 
        for training and technical assistance to carry out the 
        approaches developed pursuant to this paragraph.
            (2) Evaluations.--In performing the evaluations 
        under paragraph (1), the Secretary shall, to the 
        maximum extent feasible, use random assignment as an 
        evaluation methodology.
    (c) Dissemination of Information.--The Secretary shall 
develop innovative methods of disseminating information on any 
research, evaluations, and studies conducted under this 
section, including the facilitation of the sharing of 
information and best practices among States and localities 
through the use of computers and other technologies.
    (d) Annual Ranking of States and Review of Most and Least 
Successful Work Programs.--
            (1) Annual ranking of states.--The Secretary shall 
        rank annually the States to which grants are paid under 
        section 403 in the order of their success in placing 
        recipients of assistance under the State program funded 
        under this part into long-term private sector jobs, 
        reducing the overall welfare caseload, and, when a 
        practicable method for calculating this information 
        becomes available, diverting individuals from formally 
        applying to the State program and receiving assistance. 
        In ranking States under this subsection, the Secretary 
        shall take into account the average number of minor 
        children living at home in families in the State that 
        have incomes below the poverty line and the amount of 
        funding provided each State for such families.
            (2) Annual review of most and least successful work 
        programs.--The Secretary shall review the programs of 
        the 3 States most recently ranked highest under 
        paragraph (1) and the 3 States most recently ranked 
        lowest under paragraph (1) that provide parents with 
        work experience, assistance in finding employment, and 
        other work preparation activities and support services 
        to enable the families of such parents to leave the 
        program and become self-sufficient.
    (e) Annual Ranking of States and Review of Issues Relating 
to Out-of-Wedlock Births.--
            (1) Annual ranking of states.--
                    (A) In general.--The Secretary shall 
                annually rank States to which grants are made 
                under section 403 based on the following 
                ranking factors:
                            (i) Absolute out-of-wedlock 
                        ratios.--The ratio represented by--
                                    (I) the total number of 
                                out-of-wedlock births in 
                                families receiving assistance 
                                under the State program under 
                                this part in the State for the 
                                most recent fiscal year for 
                                which information is available; 
                                over
                                    (II) the total number of 
                                births in families receiving 
                                assistance under the State 
                                program under this part in the 
                                State for such year.
                            (ii) Net changes in the out-of-
                        wedlock ratio.--The difference between 
                        the ratio described in subparagraph 
                        (A)(i) with respect to a State for the 
                        most recent fiscal year for which such 
                        information is available and the ratio 
                        with respect to the State for the 
                        immediately preceding year.
            (2) Annual review.--The Secretary shall review the 
        programs of the 5 States most recently ranked highest 
        under paragraph (1) and the 5 States most recently 
        ranked the lowest under paragraph (1).
    (f) State-Initiated Evaluations.--A State shall be eligible 
to receive funding to evaluate the State program funded under 
this part if--
            (1) the State submits a proposal to the Secretary 
        for the evaluation;
            (2) the Secretary determines that the design and 
        approach of the evaluation is rigorous and is likely to 
        yield information that is credible and will be useful 
        to other States, and
            (3) unless otherwise waived by the Secretary, the 
        State contributes to the cost of the evaluation, from 
        non-Federal sources, an amount equal to at least 10 
        percent of the cost of the evaluation.
    (g) Report on Circumstances of Certain Children and 
Families.--
            (1) In general.--Beginning 3 years after the date 
        of the enactment of this Act, the Secretary of Health 
        and Human Services shall prepare and submit to the 
        Committees on Ways and Means and on Economic and 
        Educational Opportunities of the House of 
        Representatives and to the Committees on Finance and on 
        Labor and Resources of the Senate annual reports that 
        examine in detail the matters described in paragraph 
        (2) with respect to each of the following groups for 
        the period after such enactment:
                    (A) Individuals who were children in 
                families that have become ineligible for 
                assistance under a State program funded under 
                this part by reason of having reached a time 
                limit on the provision of such assistance.
                    (B) Families that include a child who is 
                ineligible for assistance under a State program 
                funded under this part by reason of section 
                408(a)(2).
                    (C) Children born after such date of 
                enactment to parents who, at the time of such 
                birth, had not attained 20 years of age.
                    (D) Individuals who, after such date of 
                enactment, became parents before attaining 20 
                years of age.
            (2) Matters described.--The matters described in 
        this paragraph are the following:
                    (A) The percentage of each group that has 
                dropped out of secondary school (or the 
                equivalent), and the percentage of each group 
                at each level of educational attainment.
                    (B) The percentage of each group that is 
                employed.
                    (C) The percentage of each group that has 
                been convicted of a crime or has been 
                adjudicated as a delinquent.
                    (D) The rate at which the members of each 
                group are born, or have children, out-of-
                wedlock, and the percentage of each group that 
                is married.
                    (E) The percentage of each group that 
                continues to participate in State programs 
                funded under this part.
                    (F) The percentage of each group that has 
                health insurance provided by a private entity 
                (broken down by whether the insurance is 
                provided through an employer or otherwise), the 
                percentage that has health insurance provided 
                by an agency of government, and the percentage 
                that does not have health insurance.
                    (G) The average income of the families of 
                the members of each group.
                    (H) Such other matters as the Secretary 
                deems appropriate.
    (h) Funding of Studies and Demonstrations.--
            (1) In general.--Out of any money in the Treasury 
        of the United States not otherwise appropriated, there 
        are appropriated $15,000,000 for each fiscal year 
        specified in section 403(a)(1) for the purpose of 
        paying--
                    (A) the cost of conducting the research 
                described in subsection (a);
                    (B) the cost of developing and evaluating 
                innovative approaches for reducing welfare 
                dependency and increasing the well-being of 
                minor children under subsection (b);
                    (C) the Federal share of any State-
                initiated study approved under subsection (f); 
                and
                    (D) an amount determined by the Secretary 
                to be necessary to operate and evaluate 
                demonstration projects, relating to this part, 
                that are in effect or approved under section 
                1115 as of September 30, 1995, and are 
                continued after such date.
            (2) Allocation.--Of the amount appropriated under 
        paragraph (1) for a fiscal year--
                    (A) 50 percent shall be allocated for the 
                purposes described in subparagraphs (A) and (B) 
                of paragraph (1), and
                    (B) 50 percent shall be allocated for the 
                purposes described in subparagraphs (C) and (D) 
                of paragraph (1).
            (3) Demonstrations of innovative strategies.--The 
        Secretary may implement and evaluate demonstrations of 
        innovative and promising strategies which--
                    (A) provide one-time capital funds to 
                establish, expand, or replicate programs;
                    (B) test performance-based grant-to-loan 
                financing in which programs meeting performance 
                targets receive grants while programs not 
                meeting such targets repay funding on a 
                prorated basis; and
                    (C) test strategies in multiple States and 
                types of communities.

SEC. 414. STUDY BY THE CENSUS BUREAU.

    (a) In General.--The Bureau of the Census shall expand the 
Survey of Income and Program Participation as necessary to 
obtain such information as will enable interested persons to 
evaluate the impact of the amendments made by subtitle A of the 
Personal Responsibility and Work Opportunity Act of 1996 on a 
random national sample of recipients of assistance under State 
programs funded under this part and (as appropriate) other low 
income families, and in doing so, shall pay particular 
attention to the issues of out-of-wedlock birth, welfare 
dependency, the beginning and end of welfare spells, and the 
causes of repeat welfare spells.
    (b) Appropriation.--Out of any money in the Treasury of the 
United States not otherwise appropriated, there are 
appropriated $10,000,000 for each of fiscal years 1996, 1997, 
1998, 1999, 2000, 2001, and 2002 for payment to the Bureau of 
the Census to carry out subsection (a).

SEC. 415. WAIVERS.

    (a) Continuation of Waivers.--
            (1) Waivers in effect on date of enactment of 
        welfare reform.--Except as provided in paragraph (3), 
        if any waiver granted to a State under section 1115 or 
        otherwise which relates to the provision of assistance 
        under a State plan under this part (as in effect on 
        September 30, 1995) is in effect as of the date of the 
        enactment of the Personal Responsibility and Work 
        Opportunity Act of 1996, the amendments made by such 
        Act (other than by section 4103(d) of such Act) shall 
        not apply with respect to the State before the 
        expiration (determined without regard to any 
        extensions) of the waiver to the extent such amendments 
        are inconsistent with the waiver.
            (2) Waivers granted subsequently.--Except as 
        provided in paragraph (3), if any waiver granted to a 
        State under section 1115 or otherwise which relates to 
        the provision of assistance under a State plan under 
        this part (as in effect on September 30, 1995) is 
        submitted to the Secretary before the date of the 
        enactment of the Personal Responsibility and Work 
        Opportunity Act of 1996 and approved by the Secretary 
        on or before July 1, 1997, and the State demonstrates 
        to the satisfaction of the Secretary that the waiver 
        will not result in Federal expenditures under title IV 
        of this Act (as in effect without regard to the 
        amendments made by the Personal Responsibility and Work 
        Opportunity Act of 1996) that are greater than would 
        occur in the absence of the waiver, the amendments made 
        by the Personal Responsibility and Work Opportunity Act 
        of 1996 (other than by section 4103(d) of such Act) 
        shall not apply with respect to the State before the 
        expiration (determined without regard to any 
        extensions) of the waiver to the extent the amendments 
        made by the Personal Responsibility and Work 
        Opportunity Act of 1996 are inconsistent with the 
        waiver.
            (3) Financing limitation.--Notwithstanding any 
        other provision of law, beginning with fiscal year 
        1996, a State operating under a waiver described in 
        paragraph (1) shall be entitled to payment under 
        section 403 for the fiscal year, in lieu of any other 
        payment provided for in the waiver.
    (b) State Option To Terminate Waiver.--
            (1) In general.--A State may terminate a waiver 
        described in subsection (a) before the expiration of 
        the waiver.
            (2) Report.--A State which terminates a waiver 
        under paragraph (1) shall submit a report to the 
        Secretary summarizing the waiver and any available 
        information concerning the result or effect of the 
        waiver.
            (3) Hold harmless provision.--
                    (A) In general.--Notwithstanding any other 
                provision of law, a State that, not later than 
                the date described in subparagraph (B), submits 
                a written request to terminate a waiver 
                described in subsection (a) shall be held 
                harmless for accrued cost neutrality 
                liabilities incurred under the waiver.
                    (B) Date described.--The date described in 
                this subparagraph is 90 days following the 
                adjournment of the first regular session of the 
                State legislature that begins after the date of 
                the enactment of the Personal Responsibility 
                and Work Opportunity Act of 1996.
    (c) Secretarial Encouragement of Current Waivers.--The 
Secretary shall encourage any State operating a waiver 
described in subsection (a) to continue the waiver and to 
evaluate, using random sampling and other characteristics of 
accepted scientific evaluations, the result or effect of the 
waiver.
    (d) Continuation of Individual Waivers.--A State may elect 
to continue 1 or more individual waivers described in 
subsection (a).

SEC. 416. ASSISTANT SECRETARY FOR FAMILY SUPPORT.

    The programs under this part and part D shall be 
administered by an Assistant Secretary for Family Support 
within the Department of Health and Human Services, who shall 
be appointed by the President, by and with the advice and 
consent of the Senate, and who shall be in addition to any 
other Assistant Secretary of Health and Human Services provided 
for by law.

SEC. 417. LIMITATION ON FEDERAL AUTHORITY.

    No officer or employee of the Federal Government may 
regulate the conduct of States under this part or enforce any 
provision of this part, except to the extent expressly provided 
in this part.

SEC. 418. FUNDING FOR CHILD CARE.

    (a) General Child Care Entitlement.--
            (1) General entitlement.--Subject to the amount 
        appropriated under paragraph (3), each State shall, for 
        the purpose of providing child care assistance, be 
        entitled to payments under a grant under this 
        subsection for a fiscal year in an amount equal to--
                    (A) the sum of the total amount required to 
                be paid to the State under former section 403 
                for fiscal year 1994 or 1995 (whichever is 
                greater) with respect to amounts expended for 
                child care under section--
                            (i) 402(g) of this Act (as such 
                        section was in effect before October 1, 
                        1995); and
                            (ii) 402(i) of this Act (as so in 
                        effect); or
                    (B) the average of the total amounts 
                required to be paid to the State for fiscal 
                years 1992 through 1994 under the sections 
                referred to in subparagraph (A);
        whichever is greater.
            (2) Remainder.--
                    (A) Grants.--The Secretary shall use any 
                amounts appropriated for a fiscal year under 
                paragraph (3), and remaining after the 
                reservation described in paragraph (4) and 
                after grants are awarded under paragraph (1), 
                to make grants to States under this paragraph.
                    (B) Amount.--Subject to subparagraph (C), 
                the amount of a grant awarded to a State for a 
                fiscal year under this paragraph shall be based 
                on the formula used for determining the amount 
                of Federal payments to the State under section 
                403(n) (as such section was in effect before 
                October 1, 1995).
                    (C) Matching requirement.--The Secretary 
                shall pay to each eligible State in a fiscal 
                year an amount, under a grant under 
                subparagraph (A), equal to the Federal medical 
                assistance percentage for such State for fiscal 
                year 1995 (as defined in section 1905(b)) of so 
                much of the expenditures by the State for child 
                care in such year as exceed the State set-aside 
                for such State under paragraph (1)(A) for such 
                year and the amount of State expenditures in 
                fiscal year 1994 that equal the non-Federal 
                share for the programs described in 
                subparagraph (A) of paragraph (1).
                    (D) Redistribution.--
                            (i) In general.--With respect to 
                        any fiscal year, if the Secretary 
                        determines (in accordance with clause 
                        (ii)) that amounts under any grant 
                        awarded to a State under this paragraph 
                        for such fiscal year will not be used 
                        by such State during such fiscal year 
                        for carrying out the purpose for which 
                        the grant is made, the Secretary shall 
                        make such amounts available in the 
                        subsequent fiscal year for carrying out 
                        such purpose to 1 or more States which 
                        apply for such funds to the extent the 
                        Secretary determines that such States 
                        will be able to use such additional 
                        amounts for carrying out such purpose. 
                        Such available amounts shall be 
                        redistributed to a State pursuant to 
                        section 402(i) (as such section was in 
                        effect before October 1, 1995) by 
                        substituting ``the number of children 
                        residing in all States applying for 
                        such funds'' for ``the number of 
                        children residing in the United States 
                        in the second preceding fiscal year''.
                            (ii) Time of determination and 
                        distribution.--The determination of the 
                        Secretary under clause (i) for a fiscal 
                        year shall be made not later than the 
                        end of the first quarter of the 
                        subsequent fiscal year. The 
                        redistribution of amounts under clause 
                        (i) shall be made as close as 
                        practicable to the date on which such 
                        determination is made. Any amount made 
                        available to a State from an 
                        appropriation for a fiscal year in 
                        accordance with this subparagraph 
                        shall, for purposes of this part, be 
                        regarded as part of such State's 
                        payment (as determined under this 
                        subsection) for the fiscal year in 
                        which the redistribution is made.
            (3) Appropriation.--There are authorized to be 
        appropriated, and there are appropriated, to carry out 
        this section--
                    (A) $1,967,000,000 for fiscal year 1997;
                    (B) $2,067,000,000 for fiscal year 1998;
                    (C) $2,167,000,000 for fiscal year 1999;
                    (D) $2,367,000,000 for fiscal year 2000;
                    (E) $2,567,000,000 for fiscal year 2001; 
                and
                    (F) $2,717,000,000 for fiscal year 2002.
            (4) Indian tribes.--The Secretary shall reserve not 
        more than 1 percent of the aggregate amount 
        appropriated to carry out this section in each fiscal 
        year for payments to Indian tribes and tribal 
        organizations.
    (b) Use of Funds.--
            (1) In general.--Amounts received by a State under 
        this section shall only be used to provide child care 
        assistance. Amounts received by a State under a grant 
        under subsection (a)(1) shall be available for use by 
        the State without fiscal year limitation.
            (2) Use for certain populations.--A State shall 
        ensure that not less than 70 percent of the total 
        amount of funds received by the State in a fiscal year 
        under this section are used to provide child care 
        assistance to families who are receiving assistance 
        under a State program under this part, families who are 
        attempting through work activities to transition off of 
        such assistance program, and families who are at risk 
        of becoming dependent on such assistance program.
    (c) Application of Child Care and Development Block Grant 
Act of 1990.--Notwithstanding any other provision of law, 
amounts provided to a State under this section shall be 
transferred to the lead agency under the Child Care and 
Development Block Grant Act of 1990, integrated by the State 
into the programs established by the State under such Act, and 
be subject to requirements and limitations of such Act.
    (d) Definition.--As used in this section, the term 
``State'' means each of the 50 States or the District of 
Columbia.

SEC. 419. DEFINITIONS.

    As used in this part:
            (1) Adult.--The term ``adult'' means an individual 
        who is not a minor child.
            (2) Minor child.--The term ``minor child'' means an 
        individual who--
                    (A) has not attained 18 years of age; or
                    (B) has not attained 19 years of age and is 
                a full-time student in a secondary school (or 
                in the equivalent level of vocational or 
                technical training).
            (3) Fiscal year.--The term ``fiscal year'' means 
        any 12-month period ending on September 30 of a 
        calendar year.
            (4) Indian, indian tribe, and tribal 
        organization.--
                    (A) In general.--Except as provided in 
                subparagraph (B), the terms ``Indian'', 
                ``Indian tribe'', and ``tribal organization'' 
                have the meaning given such terms by section 4 
                of the Indian Self-Determination and Education 
                Assistance Act (25 U.S.C. 450b).
                    (B) Special rule for indian tribes in 
                alaska.--The term ``Indian tribe'' means, with 
                respect to the State of Alaska, only the 
                Metlakatla Indian Community of the Annette 
                Islands Reserve and the following Alaska Native 
                regional nonprofit corporations:
                            (i) Arctic Slope Native 
                        Association.
                            (ii) Kawerak, Inc.
                            (iii) Maniilaq Association.
                            (iv) Association of Village Council 
                        Presidents.
                            (v) Tanana Chiefs Conference.
                            (vi) Cook Inlet Tribal Council.
                            (vii) Bristol Bay Native 
                        Association.
                            (viii) Aleutian and Pribilof Island 
                        Association.
                            (ix) Chugachmuit.
                            (x) Tlingit Haida Central Council.
                            (xi) Kodiak Area Native 
                        Association.
                            (xii) Copper River Native 
                        Association.
            (5) State.--Except as otherwise specifically 
        provided, the term ``State'' means the 50 States of the 
        United States, the District of Columbia, the 
        Commonwealth of Puerto Rico, the United States Virgin 
        Islands, Guam, and American Samoa.

     PART B--BLOCK GRANTS TO STATES FOR THE PROTECTION OF CHILDREN

SEC. 421. PURPOSE.

    The purpose of this part is to enable eligible States to 
carry out a child protection program to--
            (1) identify and assist families at risk of abusing 
        or neglecting their children;
            (2) operate a system for receiving reports of abuse 
        or neglect of children;
            (3) improve the intake, assessment, screening, and 
        investigation of reports of abuse and neglect;
            (4) enhance the general child protective system by 
        improving risk and safety assessment tools and 
        protocols;
            (5) improve legal preparation and representation, 
        including procedures for appealing and responding to 
        appeals of substantiated reports of abuse and neglect;
            (6) provide support, treatment, and family 
        preservation services to families which are, or are at 
        risk of, abusing or neglecting their children;
            (7) support children who must be removed from or 
        who cannot live with their families;
            (8) make timely decisions about permanent living 
        arrangements for children who must be removed from or 
        who cannot live with their families;
            (9) provide for continuing evaluation and 
        improvement of child protection laws, regulations, and 
        services;
            (10) develop and facilitate training protocols for 
        individuals mandated to report child abuse or neglect; 
        and
            (11) develop and enhance the capacity of community-
        based programs to integrate shared leadership 
        strategies between parents and professionals to prevent 
        and treat child abuse and neglect at the neighborhood 
        level.

SEC. 422. ELIGIBLE STATES.

    (a) In General.--As used in this part, the term `eligible 
State' means a State that has submitted to the Secretary, not 
later than October 1, 1996, and every 3 years thereafter, a 
plan which has been signed by the chief executive officer of 
the State and that includes the following:
            (1) Outline of child protection program.--A written 
        document that outlines the activities the State intends 
        to conduct to achieve the purpose of this part, 
        including the procedures to be used for--
                    (A) receiving and assessing reports of 
                child abuse or neglect;
                    (B) investigating such reports;
                    (C) with respect to families in which abuse 
                or neglect has been confirmed, providing 
                services or referral for services for families 
                and children where the State makes a 
                determination that the child may safely remain 
                with the family;
                    (D) protecting children by removing them 
                from dangerous settings and ensuring their 
                placement in a safe environment;
                    (E) providing training for individuals 
                mandated to report suspected cases of child 
                abuse or neglect;
                    (F) protecting children in foster care;
                    (G) promoting timely adoptions;
                    (H) protecting the rights of families, 
                using adult relatives as the preferred 
                placement for children separated from their 
                parents where such relatives meet the relevant 
                State child protection standards; and
                    (I) providing services to individuals, 
                families, or communities, either directly or 
                through referral, that are aimed at preventing 
                the occurrence of child abuse and neglect.
            (2) Certification of state law requiring the 
        reporting of child abuse and neglect.--A certification 
        that the State has in effect laws that require public 
        officials and other professionals to report, in good 
        faith, actual or suspected instances of child abuse or 
        neglect.
            (3) Certification of procedures for screening, 
        safety assessment, and prompt investigation.--A 
        certification that the State has in effect procedures 
        for receiving and responding to reports of child abuse 
        or neglect, including the reports described in 
        paragraph (2), and for the immediate screening, safety 
        assessment, and prompt investigation of such reports.
            (4) Certification of state procedures for removal 
        and placement of abused or neglected children.--A 
        certification that the State has in effect procedures 
        for the removal from families and placement of abused 
        or neglected children and of any other child in the 
        same household who may also be in danger of abuse or 
        neglect.
            (5) Certification of provisions for immunity from 
        prosecution.--A certification that the State has in 
        effect laws requiring immunity from prosecution under 
        State and local laws and regulations for individuals 
        making good faith reports of suspected or known 
        instances of child abuse or neglect.
            (6) Certification of provisions and procedures 
        relating to appeals.--A certification that not later 
        than 2 years after the date of the enactment of this 
        part, the State shall have laws and procedures in 
        effect affording individuals an opportunity to appeal 
        an official finding of abuse or neglect.
            (7) Certification of state procedures for 
        developing and reviewing written plans for permanent 
        placement of removed children.--A certification that 
        the State has in effect procedures for ensuring that a 
        written plan is prepared for children who have been 
        removed from their families. Such plan shall specify 
        the goals for achieving a permanent placement for the 
        child in a timely fashion, for ensuring that the 
        written plan is reviewed every 6 months (until such 
        placement is achieved), and for ensuring that 
        information about such children is collected regularly 
        and recorded in case records, and include a description 
        of such procedures.
            (8) Certification of state program to provide 
        independent living services.--A certification that the 
        State has in effect a program to provide independent 
        living services, for assistance in making the 
        transition to self-sufficient adulthood, to individuals 
        in the child protection program of the State who are 
        16, but who are not 20 (or, at the option of the State, 
        22), years of age, and who do not have a family to 
        which to be returned.
            (9) Certification of state procedures to respond to 
        reporting of medical neglect of disabled infants.--
                    (A) In general.--A certification that the 
                State has in place for the purpose of 
                responding to the reporting of medical neglect 
                of infants (including instances of withholding 
                of medically indicated treatment from disabled 
                infants with life-threatening conditions), 
                procedures or programs, or both (within the 
                State child protective services system), to 
                provide for--
                            (i) coordination and consultation 
                        with individuals designated by and 
                        within appropriate health-care 
                        facilities;
                            (ii) prompt notification by 
                        individuals designated by and within 
                        appropriate health-care facilities of 
                        cases of suspected medical neglect 
                        (including instances of withholding of 
                        medically indicated treatment from 
                        disabled infants with life-threatening 
                        conditions); and
                            (iii) authority, under State law, 
                        for the State child protective service 
                        to pursue any legal remedies, including 
                        the authority to initiate legal 
                        proceedings in a court of competent 
                        jurisdiction, as may be necessary to 
                        prevent the withholding of medically 
                        indicated treatment from disabled 
                        infants with life-threatening 
                        conditions.
                    (B) Withholding of medically indicated 
                treatment.--As used in subparagraph (A), the 
                term `withholding of medically indicated 
                treatment' means the failure to respond to the 
                infant's life-threatening conditions by 
                providing treatment (including appropriate 
                nutrition, hydration, and medication) which, in 
                the treating physician's or physicians' 
                reasonable medical judgment, will be most 
                likely to be effective in ameliorating or 
                correcting all such conditions, except that 
                such term does not include the failure to 
                provide treatment (other than appropriate 
                nutrition, hydration, or medication) to an 
                infant when, in the treating physician's or 
                physicians' reasonable medical judgment--
                            (i) the infant is chronically and 
                        irreversibly comatose;
                            (ii) the provision of such 
                        treatment would--
                                    (I) merely prolong dying;
                                    (II) not be effective in 
                                ameliorating or correcting all 
                                of the infant's life-
                                threatening conditions; or
                                    (III) otherwise be futile 
                                in terms of the survival of the 
                                infant; or
                            (iii) the provision of such 
                        treatment would be virtually futile in 
                        terms of the survival of the infant and 
                        the treatment itself under such 
                        circumstances would be inhumane.
            (10) Identification of child protection goals.--The 
        quantitative goals of the State child protection 
        program.
            (11) Certification of child protection standards.--
        With respect to fiscal years beginning on or after 
        April 1, 1996, a certification that the State--
                    (A) has completed an inventory of all 
                children who, before the inventory, had been in 
                foster care under the responsibility of the 
                State for 6 months or more, which determined--
                            (i) the appropriateness of, and 
                        necessity for, the foster care 
                        placement;
                            (ii) whether the child could or 
                        should be returned to the parents of 
                        the child or should be freed for 
                        adoption or other permanent placement; 
                        and
                            (iii) the services necessary to 
                        facilitate the return of the child or 
                        the placement of the child for adoption 
                        or legal guardianship;
                    (B) is operating, to the satisfaction of 
                the Secretary--
                            (i) a statewide information system 
                        from which can be readily determined 
                        the status, demographic 
                        characteristics, location, and goals 
                        for the placement of every child who is 
                        (or, within the immediately preceding 
                        12 months, has been) in foster care;
                            (ii) a case review system for each 
                        child receiving foster care under the 
                        supervision of the State;
                            (iii) a service program designed to 
                        help children--
                                    (I) where appropriate, 
                                return to families from which 
                                they have been removed; or
                                    (II) be placed for 
                                adoption, with a legal 
                                guardian, or if adoption or 
                                legal guardianship is 
                                determined not to be 
                                appropriate for a child, in 
                                some other planned, permanent 
                                living arrangement; and
                            (iv) a preplacement preventive 
                        services program designed to help 
                        children at risk for foster care 
                        placement remain with their families; 
                        and
                    (C)(i) has reviewed (or not later than 
                October 1, 1997, will review) State policies 
                and administrative and judicial procedures in 
                effect for children abandoned at or shortly 
                after birth (including policies and procedures 
                providing for legal representation of such 
                children); and
                    (ii) is implementing (or not later than 
                October 1, 1997, will implement) such policies 
                and procedures as the State determines, on the 
                basis of the review described in clause (i), to 
                be necessary to enable permanent decisions to 
                be made expeditiously with respect to the 
                placement of such children.
            (12) Certification of reasonable efforts before 
        placement of children in foster care.--A certification 
        that the State in each case will--
                    (A) make reasonable efforts prior to the 
                placement of a child in foster care, to prevent 
                or eliminate the need for removal of the child 
                from the child's home, and to make it possible 
                for the child to return home; and
                    (B) with respect to families in which abuse 
                or neglect has been confirmed, provide services 
                or referral for services for families and 
                children where the State makes a determination 
                that the child may safely remain with the 
                family.
            (13) Certification of cooperative efforts.--A 
        certification by the State, where appropriate, that all 
        steps will be taken, including cooperative efforts with 
        the State agencies administering the plans approved 
        under parts A and D, to secure an assignment to the 
        State of any rights to support on behalf of each child 
        receiving foster care maintenance payments under part 
        E.
            (14) Certification of confidentiality and 
        requirements for information disclosure.--
                    (A) In general.--A certification that the 
                State has in effect and operational--
                            (i) requirements ensuring that 
                        reports and records made and maintained 
                        pursuant to the purposes of this part 
                        shall only be made available to--
                                    (I) individuals who are the 
                                subject of the report;
                                    (II) Federal, State, or 
                                local government entities, or 
                                any agent of such entities, 
                                having a need for such 
                                information in order to carry 
                                out their responsibilities 
                                under law to protect children 
                                from abuse and neglect;
                                    (III) child abuse citizen 
                                review panels;
                                    (IV) child fatality review 
                                panels;
                                    (V) a grand jury or court, 
                                upon a finding that information 
                                in the record is necessary for 
                                the determination of an issue 
                                before the court or grand jury; 
                                and
                                    (VI) other entities or 
                                classes of individuals 
                                statutorily authorized by the 
                                State to receive such 
                                information pursuant to a 
                                legitimate State purpose; and
                            (ii) provisions that allow for 
                        public disclosure of the findings or 
                        information about cases of child abuse 
                        or neglect that have resulted in a 
                        child fatality or near fatality.
                    (B) Limitation.--Disclosures made pursuant 
                to clause (i) or (ii) shall not include the 
                identifying information concerning the 
                individual initiating a report or complaint 
                alleging suspected instances of child abuse or 
                neglect.
                    (C) Definition.--For purposes of this 
                paragraph, the term `near fatality' means an 
                act that, as certified by a physician, places 
                the child in serious or critical condition.
    (b) Determinations.--The Secretary shall determine whether 
a plan submitted pursuant to subsection (a) contains the 
material required by subsection (a), other than the material 
described in paragraph (9) of such subsection. The Secretary 
may not require a State to include in such a plan any material 
not described in subsection (a).

SEC. 423. GRANTS TO STATES FOR CHILD PROTECTION.

    (a) Funding of Block Grants.--
            (1) Entitlement component.--
                    (A) Eligible states.--Each eligible State 
                shall be entitled to receive from the Secretary 
                for each fiscal year specified in subsection 
                (b)(1) a grant in an amount equal to the State 
                share of 99 percent of the child protection 
                amount for the fiscal year.
                    (B) Indian tribes and tribal 
                organizations.--The Secretary shall reserve for 
                payments to Indian tribes (as defined in 
                section 658P(7) of the Child Care and 
                Development Block Grant Act of 1990) and tribal 
                organizations (as defined in section 658P(14) 
                of such Act) for each fiscal year specified in 
                subsection (b)(1) an amount equal to 1 percent 
                of the child protection amount for the fiscal 
                year.
            (2) Authorization component.--
                    (A) In general.--
                            (i) Eligible states.--For each 
                        eligible State for each fiscal year 
                        specified in subsection (b)(1), the 
                        Secretary shall supplement the grant 
                        under paragraph (1)(A) of this 
                        subsection by an amount equal to the 
                        State share of 99.64 percent of the 
                        amount (if any) appropriated pursuant 
                        to subparagraph (B) of this paragraph 
                        for the fiscal year.
                            (ii) Indian tribes and tribal 
                        organizations.--The Secretary shall 
                        supplement the amount reserved for 
                        payments pursuant to paragraph (1)(B) 
                        of this subsection for each fiscal year 
                        specified in subsection (b)(1), by an 
                        amount equal to 0.36 percent of the 
                        amount (if any) appropriated pursuant 
                        to subparagraph (B) of this paragraph 
                        for the fiscal year.
                    (B) Limitation on authorization of 
                appropriations.--For grants under subparagraph 
                (A), there are authorized to be appropriated to 
                the Secretary an amount not to exceed 
                $325,000,000 for each fiscal year specified in 
                subsection (b)(1).
    (b) Definitions.--As used in this section:
            (1) Child protection amount.--The term `child 
        protection amount' means--
                    (A) $240,000,000 for fiscal year 1997;
                    (B) $255,000,000 for fiscal year 1998;
                    (C) $262,000,000 for fiscal year 1999;
                    (D) $270,000,000 for fiscal year 2000;
                    (E) $278,000,000 for fiscal year 2001; and
                    (F) $286,000,000 for fiscal year 2002;
            (2) State share.--
                    (A) In general.--The term `State share' 
                means the qualified child protection expenses 
                of the State divided by the sum of the 
                qualified child protection expenses of all of 
                the States.
                    (B) Qualified child protection expenses.--
                The term ``qualified child protection 
                expenses'' means, with respect to a State the 
                greater of--
                            (i) the total amount of one-third 
                        of the Federal grant amounts to the 
                        State under the provisions of law 
                        specified in clauses (i) and (ii) of 
                        subparagraph (C) for fiscal years 1992, 
                        1993, and 1994; or
                            (ii) the total amount of the 
                        Federal grant amounts to the State 
                        under the provisions of law specified 
                        in clauses (i) and (ii) of subparagraph 
                        (C) for fiscal year 1994.
                    (C) Provisions of law.--The provisions of 
                law specified in this subparagraph are the 
                following (as in effect with respect to each of 
                the fiscal years referred to in subparagraph 
                (B)):
                            (i) Section 423 of this Act.
                            (ii) Section 434 of this Act.
                    (D) Determination of information.--In 
                determining amounts for fiscal years 1992, 
                1993, and 1994 under clauses (i) and (ii) of 
                subparagraph (B), the Secretary shall use 
                information listed as actual amounts in the 
                Justification for Estimates for Appropriation 
                Committees of the Administration for Children 
                and Families for fiscal years 1994, 1995, and 
                1996, respectively.
    (c) Use of Grant.--
            (1) In general.--A State to which a grant is made 
        under this section may use the grant in any manner that 
        the State deems appropriate to accomplish the purpose 
        of this part.
            (2) Timing of expenditures.--A State to which a 
        grant is made under this section for a fiscal year 
        shall expend the total amount of the grant not later 
        than the end of the immediately succeeding fiscal year.
            (3) Rule of interpretation.--This part shall not be 
        interpreted to prohibit short- and long-term foster 
        care facilities operated for profit from receiving 
        funds provided under this part or part E.
    (d) Timing of Payments.--The Secretary shall pay each 
eligible State the amount of the grant payable to the State 
under this section in quarterly installments.
    (e) Penalties.--
            (1) For use of grant in violation of this part.--If 
        an audit conducted pursuant to chapter 75 of title 31, 
        United States Code, finds that an amount paid to a 
        State under this section for a fiscal year has been 
        used in violation of this part, then the Secretary 
        shall reduce the amount of the grant that would (in the 
        absence of this paragraph) be payable to the State 
        under this section for the immediately succeeding 
        fiscal year by the amount so used, plus 5 percent of 
        the grant paid under this section to the State for such 
        fiscal year.
            (2) For failure to maintain effort.--
                    (A) In general.--If an audit conducted 
                pursuant to chapter 75 of title 31, United 
                States Code, finds that the amount expended by 
                a State (other than from amounts provided by 
                the Federal Government) during the fiscal years 
                specified in subparagraph (B), to carry out the 
                State program funded under this part is less 
                than the applicable percentage specified in 
                such subparagraph of the total amount expended 
                by the State (other than from amounts provided 
                by the Federal Government) during fiscal year 
                1994 under part B of this title (as in effect 
                on the day before the date of the enactment of 
                this part), then the Secretary shall reduce the 
                amount of the grant that would (in the absence 
                of this paragraph) be payable to the State 
                under this section for the immediately 
                succeeding fiscal year by the amount of the 
                difference, plus 5 percent of the grant paid 
                under this section to the State for such fiscal 
                year.
                    (B) Specification of fiscal years and 
                applicable percentages.--The fiscal years and 
                applicable percentages specified in this 
                subparagraph are as follows:
                            (i) For fiscal years 1997 and 1998, 
                        100 percent.
                            (ii) For fiscal years 1999 through 
                        2002, 75 percent.
            (3) For failure to submit required report.--
                    (A) In general.--The Secretary shall reduce 
                by 3 percent the amount of the grant that would 
                (in the absence of this paragraph) be payable 
                to a State under this section for a fiscal year 
                if the Secretary determines that the State has 
                not submitted the report required by section 
                424 for the immediately preceding fiscal year, 
                within 6 months after the end of the 
                immediately preceding fiscal year.
                    (B) Rescission of penalty.--The Secretary 
                shall rescind a penalty imposed on a State 
                under subparagraph (A) with respect to a report 
                for a fiscal year if the State submits the 
                report before the end of the immediately 
                succeeding fiscal year.
            (4) State funds to replace reductions in grant.--A 
        State which has a penalty imposed against it under this 
        subsection for a fiscal year shall expend additional 
        State funds in an amount equal to the amount of the 
        penalty for the purpose of carrying out the State 
        program under this part during the immediately 
        succeeding fiscal year.
            (5) Reasonable cause exception.--Except in the case 
        of the penalty described in paragraph (2), the 
        Secretary may not impose a penalty on a State under 
        this subsection with respect to a requirement if the 
        Secretary determines that the State has reasonable 
        cause for failing to comply with the requirement.
            (6) Corrective compliance plan.--
                    (A) In general.--
                            (i) Notification of violation.--
                        Before imposing a penalty against a 
                        State under this subsection with 
                        respect to a violation of this part, 
                        the Secretary shall notify the State of 
                        the violation and allow the State the 
                        opportunity to enter into a corrective 
                        compliance plan in accordance with this 
                        paragraph which outlines how the State 
                        will correct the violation and how the 
                        State will insure continuing compliance 
                        with this part.
                            (ii) 60-day period to propose a 
                        corrective compliance plan.--During the 
                        60-day period that begins on the date 
                        the State receives a notice provided 
                        under clause (i) with respect to a 
                        violation, the State may submit to the 
                        Federal Government a corrective 
                        compliance plan to correct the 
                        violation.
                            (iii) Consultation about 
                        modifications.--During the 60-day 
                        period that begins with the date the 
                        Secretary receives a corrective 
                        compliance plan submitted by a State in 
                        accordance with clause (ii), the 
                        Secretary may consult with the State on 
                        modifications to the plan.
                            (iv) Acceptance of plan.--A 
                        corrective compliance plan submitted by 
                        a State in accordance with clause (ii) 
                        is deemed to be accepted by the 
                        Secretary if the Secretary does not 
                        accept or reject the plan during the 
                        60-day period that begins on the date 
                        the plan is submitted.
                    (B) Effect of correcting violation.--The 
                Secretary may not impose any penalty under this 
                subsection with respect to any violation 
                covered by a State corrective compliance plan 
                accepted by the Secretary if the State corrects 
                the violation pursuant to the plan.
                    (C) Effect of failing to correct 
                violation.--The Secretary shall assess some or 
                all of a penalty imposed on a State under this 
                subsection with respect to a violation if the 
                State does not, in a timely manner, correct the 
                violation pursuant to a State corrective 
                compliance plan accepted by the Secretary.
            (7) Limitation on amount of penalty.--
                    (A) In general.--In imposing the penalties 
                described in this subsection, the Secretary 
                shall not reduce any quarterly payment to a 
                State by more than 25 percent.
                    (B) Carryforward of unrecovered 
                penalties.--To the extent that subparagraph (A) 
                prevents the Secretary from recovering during a 
                fiscal year the full amount of all penalties 
                imposed on a State under this subsection for a 
                prior fiscal year, the Secretary shall apply 
                any remaining amount of such penalties to the 
                grant payable to the State under subsection (a) 
                for the immediately succeeding fiscal year.
    (f) Treatment of Territories.--
            (1) In general.--A territory, as defined in section 
        1108(b)(1), shall carry out a child protection program 
        in accordance with the provisions of this part.
            (2) Payments.--Subject to the mandatory ceiling 
        amounts specified in section 1108, each territory, as 
        so defined, shall be entitled to receive from the 
        Secretary for any fiscal year an amount equal to the 
        total obligations to the territory under section 434 
        (as in effect on the day before the date of the 
        enactment of this part) for fiscal year 1995.
    (g) Limitation on Federal Authority.--Except as expressly 
provided in this Act, the Secretary may not regulate the 
conduct of States under this part or enforce any provision of 
this part.

SEC. 424. DATA COLLECTION AND REPORTING.

    (a) National Child Abuse and Neglect Data System.--The 
Secretary shall establish a national data collection and 
analysis program--
            (1) which, to the extent practicable, coordinates 
        existing State child abuse and neglect reports and 
        which shall include--
                    (A) standardized data on substantiated, as 
                well as false, unfounded, or unsubstantiated 
                reports; and
                    (B) information on the number of deaths due 
                to child abuse and neglect; and
            (2) which shall collect, compile, analyze, and make 
        available State child abuse and neglect reporting 
        information which, to the extent practical, is 
        universal and case-specific and integrated with other 
        case-based foster care and adoption data collected by 
        the Secretary.
    (b) Adoption and Foster Care and Analysis and Reporting 
Systems.--The Secretary shall implement a system for the 
collection of data relating to adoption and foster care in the 
United States. Such data collection system shall--
            (1) avoid unnecessary diversion of resources from 
        agencies responsible for adoption and foster care;
            (2) assure that any data that is collected is 
        reliable and consistent over time and among 
        jurisdictions through the use of uniform definitions 
        and methodologies;
            (3) provide comprehensive national information with 
        respect to--
                    (A) the demographic characteristics of 
                adoptive and foster children and their 
                biological and adoptive or foster parents;
                    (B) the status of the foster care 
                population (including the number of children in 
                foster care, length of placement, type of 
                placement, availability for adoption, and goals 
                for ending or continuing foster care);
                    (C) the number and characteristics of--
                            (i) children placed in or removed 
                        from foster care;
                            (ii) children adopted or with 
                        respect to whom adoptions have been 
                        terminated; and
                            (iii) children placed in foster 
                        care outside the State which has 
                        placement and care responsibility; and
                    (D) the extent and nature of assistance 
                provided by Federal, State, and local adoption 
                and foster care programs and the 
                characteristics of the children with respect to 
                whom such assistance is provided; and
            (4) utilize appropriate requirements and incentives 
        to ensure that the system functions reliably throughout 
        the United States.
    (c) Additional Information.--The Secretary may require the 
provision of additional information under the data collection 
system established under subsection (b) if the addition of such 
information is agreed to by a majority of the States.
    (d) Annual Report by the Secretary.--Not later than 6 
months after the end of each fiscal year, the Secretary shall 
prepare a report based on information provided by the States 
for the fiscal year pursuant to this section, and shall make 
the report and such information available to the Congress and 
the public.

SEC. 425. FUNDING FOR STUDIES OF CHILD WELFARE.

    (a) National Random Sample Study of Child Welfare.--There 
are authorized to be appropriated and there are appropriated to 
the Secretary for each of fiscal years 1996 through 2002--
            (1) $6,000,000 to conduct a national study based on 
        random samples of children who are at risk of child 
        abuse or neglect, or are determined by States to have 
        been abused or neglected under section 208 of the Child 
        and Family Services Block Grant Act of 1996; and
            (2) $10,000,000 for such other research as may be 
        necessary under such section.
    (b) Assessment of State Courts Improvement of Handling of 
Proceedings Relating to Foster Care and Adoption.--There are 
authorized to be appropriated and there are appropriated to the 
Secretary for each of fiscal years 1996 through 1998 
$10,000,000 for the purpose of carrying out section 13712 of 
the Omnibus Budget Reconciliation Act of 1993 (42 U.S.C. 670 
note). All funds appropriated under this subsection shall be 
expended not later than September 30, 1999.

SEC. 426. DEFINITIONS.

    For purposes of this part and part E, the following 
definitions shall apply:
            (1) Administrative review.--The term 
        ``administrative review'' means a review open to the 
        participation of the parents of the child, conducted by 
        a panel of appropriate persons at least one of whom is 
        not responsible for the case management of, or the 
        delivery of services to, either the child or the 
        parents who are the subject of the review.
            (2) Adoption assistance agreement.--The term 
        ``adoption assistance agreement'' means a written 
        agreement, binding on the parties to the agreement, 
        between the State, other relevant agencies, and the 
        prospective adoptive parents of a minor child which at 
        a minimum--
                    (A) specifies the nature and amount of any 
                payments, services, and assistance to be 
                provided under such agreement; and
                    (B) stipulates that the agreement shall 
                remain in effect regardless of the State of 
                which the adoptive parents are residents at any 
                given time.
        The agreement shall contain provisions for the 
        protection (under an interstate compact approved by the 
        Secretary or otherwise) of the interests of the child 
        in cases where the adoptive parents and child move to 
        another State while the agreement is effective.
            (3) Case plan.--The term ``case plan'' means a 
        written document which includes at least the following:
                    (A) A description of the type of home or 
                institution in which a child is to be placed, 
                including a discussion of the appropriateness 
                of the placement and how the agency which is 
                responsible for the child plans to carry out 
                the voluntary placement agreement entered into 
                or judicial determination made with respect to 
                the child in accordance with section 472(a)(1).
                    (B) A plan for assuring that the child 
                receives proper care and that services are 
                provided to the parents, child, and foster 
                parents in order to improve the conditions in 
                the parents' home, facilitate return of the 
                child to his or her own home or the permanent 
                placement of the child, and address the needs 
                of the child while in foster care, including a 
                discussion of the appropriateness of the 
                services that have been provided to the child 
                under the plan.
                    (C) To the extent available and accessible, 
                the health and education records of the child, 
                including--
                            (i) the names and addresses of the 
                        child's health and educational 
                        providers;
                            (ii) the child's grade level 
                        performance;
                            (iii) the child's school record;
                            (iv) assurances that the child's 
                        placement in foster care takes into 
                        account proximity to the school in 
                        which the child is enrolled at the time 
                        of placement;
                            (v) a record of the child's 
                        immunizations;
                            (vi) the child's known medical 
                        problems;
                            (vii) the child's medications; and
                            (viii) any other relevant health 
                        and education information concerning 
                        the child determined to be appropriate 
                        by the State.
                Where appropriate, for a child age 16 or over, 
                the case plan must also include a written 
                description of the programs and services which 
                will help such child prepare for the transition 
                from foster care to independent living.
            (4) Case review system.--The term ``case review 
        system'' means a procedure for assuring that--
                    (A) each child has a case plan designed to 
                achieve placement in the least restrictive 
                (most family-like) and most appropriate setting 
                available and in close proximity to the 
                parents' home, consistent with the best 
                interests and special needs of the child, 
                which--
                            (i) if the child has been placed in 
                        a foster family home or child-care 
                        institution a substantial distance from 
                        the home of the parents of the child, 
                        or in a State different from the State 
                        in which such home is located, sets 
                        forth the reasons why such placement is 
                        in the best interests of the child; and
                            (ii) if the child has been placed 
                        in foster care outside the State in 
                        which the home of the parents of the 
                        child is located, requires that, 
                        periodically, but not less frequently 
                        than every 12 months, a caseworker on 
                        the staff of the State in which the 
                        home of the parents of the child is 
                        located, or of the State in which the 
                        child has been placed, visit such child 
                        in such home or institution and submit 
                        a report on such visit to the State in 
                        which the home of the parents of the 
                        child is located;
                    (B) the status of each child is reviewed 
                periodically but no less frequently than once 
                every 6 months by either a court or by 
                administrative review (as defined in paragraph 
                (1)) in order to determine the continuing 
                necessity for and appropriateness of the 
                placement, the extent of compliance with the 
                case plan, and the extent of progress which has 
                been made toward alleviating or mitigating the 
                causes necessitating placement in foster care, 
                and to project a likely date by which the child 
                may be returned to the home or placed for 
                adoption or legal guardianship;
                    (C) with respect to each such child, 
                procedural safeguards will be applied, among 
                other things, to assure each child in foster 
                care under the supervision of the State of a 
                dispositional hearing to be held, in a family 
                or juvenile court or another court (including a 
                tribal court) of competent jurisdiction, or by 
                an administrative body appointed or approved by 
                the court, no later than 18 months after the 
                original placement (and not less frequently 
                than every 12 months thereafter during the 
                continuation of foster care), which hearing 
                shall determine the future status of the child 
                (including whether the child should be returned 
                to the parent, should be continued in foster 
                care for a specified period, should be placed 
                for adoption, or should (because of the child's 
                special needs or circumstances) be continued in 
                foster care on a permanent or long-term basis) 
                and, in the case of a child described in 
                subparagraph (A)(ii), whether the out-of-State 
                placement continues to be appropriate and in 
                the best interests of the child, and, in the 
                case of a child who has attained age 16, the 
                services needed to assist the child to make the 
                transition from foster care to independent 
                living; and procedural safeguards shall also be 
                applied with respect to parental rights 
                pertaining to the removal of the child from the 
                home of his parents, to a change in the child's 
                placement, and to any determination affecting 
                visitation privileges of parents; and
                    (D) a child's health and education record 
                (as described in paragraph (3)(C)) is reviewed 
                and updated, and supplied to the foster parent 
                or foster care provider with whom the child is 
                placed, at the time of each placement of the 
                child in foster care.
            (5) Child-care institution.--The term ``child-care 
        institution'' means a private child-care institution, 
        or a public child-care institution which accommodates 
        no more than 25 children, which is licensed by the 
        State in which it is situated or has been approved, by 
        the agency of such State responsible for licensing or 
        approval of institutions of this type, as meeting the 
        standards established for such licensing, but the term 
        shall not include detention facilities, forestry camps, 
        training schools, or any other facility operated 
        primarily for the detention of children who are 
        determined to be delinquent.
            (6) Foster care maintenance payments.--
                    (A) In general.--The term ``foster care 
                maintenance payments'' means payments to cover 
                the cost of (and the cost of providing) food, 
                clothing, shelter, daily supervision, school 
                supplies, a child's personal incidentals, 
                liability insurance with respect to a child, 
                and reasonable travel to the child's home for 
                visitation. In the case of institutional care, 
                such term shall include the reasonable costs of 
                administration and operation of such 
                institution as are necessarily required to 
                provide the items described in the preceding 
                sentence.
                    (B) Special rule.--In cases where--
                            (i) a child placed in a foster 
                        family home or child-care institution 
                        is the parent of a son or daughter who 
                        is in the same home or institution; and
                            (ii) payments described in 
                        subparagraph (A) are being made under 
                        this part with respect to such child,
                the foster care maintenance payments made with 
                respect to such child as otherwise determined 
                under subparagraph (A) shall also include such 
                amounts as may be necessary to cover the cost 
                of the items described in that subparagraph 
                with respect to such son or daughter.
            (7) Foster family home.--The term ``foster family 
        home'' means a foster family home for children which is 
        licensed by the State in which it is situated or has 
        been approved, by the agency of such State having 
        responsibility for licensing homes of this type, as 
        meeting the standards established for such licensing.
            (8) Parents.--The term ``parents'' means biological 
        or adoptive parents or legal guardians, as determined 
        by applicable State law.
            (9) State.--The term ``State'' means the 50 States 
        and the District of Columbia.
            (10) Voluntary placement.--The term ``voluntary 
        placement'' means an out-of-home placement of a minor, 
        by or with participation of the State, after the 
        parents or guardians of the minor have requested the 
        assistance of the State and signed a voluntary 
        placement agreement.
            (11) Voluntary placement agreement.--The term 
        ``voluntary placement agreement'' means a written 
        agreement, binding on the parties to the agreement, 
        between the State, any other agency acting on its 
        behalf, and the parents or guardians of a minor child 
        which specifies, at a minimum, the legal status of the 
        child and the rights and obligations of the parents or 
        guardians, the child, and the agency while the child is 
        in placement.
          * * * * * * *

          Part D--Child Support and Establishment of Paternity

                             APPROPRIATION

    Sec. 451. For the purpose of enforcing the support 
obligations owed by [absent] noncustodial parents to their 
children and the spouse (or former spouse) with whom such 
children are living, locating absent parents, establishing 
paternity, obtaining child and spousal support, and assuring 
that assistance in obtaining support will be available under 
this part to all children (whether or not eligible for [aid] 
assistance under a State program funded under part A) for whom 
such assistance is requested, there is hereby authorized to be 
appropriated for each fiscal year a sum sufficient to carry out 
the purposes of this part.

                        DUTIES OF THE SECRETARY

    Sec. 452. (a) The Secretary shall establish, within the 
Department of Health and Human Services a separate 
organizational unit, under the direction of a designee of the 
Secretary, who shall report directly to the Secretary and who 
shall--
            (1) establish such standards for State programs for 
        locating [absent] noncustodial parents, establishing 
        paternity, and obtaining child support and support for 
        the spouse (or former spouse) with whom the [absent] 
        noncustodial parent's child is living as he determines 
        to be necessary to assure that such programs will be 
        effective;
            (2) establish minimum organizational and staffing 
        requirements for State units engaged in carrying out 
        such programs under plans approved under this part;
            (3) review and approve State plans for such 
        programs;
            [(4) evaluate the implementation of State programs 
        established pursuant to such plan, conduct such audits 
        of State programs established under the plan approved 
        under this part as may be necessary to assure their 
        conformity with the requirements of this part, and, not 
        less often than once every three years (or not less 
        often than annually in the case of any State to which a 
        reduction is being applied under section 403(h)(1), or 
        which is operating under a corrective action plan in 
        accordance with section 403(h)(2)), conduct a complete 
        audit of the programs established under such plan in 
        each State and determine for the purposes of the 
        penalty provision of section 403(h) whether the actual 
        operation of such programs in each State conforms to 
        the requirements of this part;]
            (4)(A) review data and calculations transmitted by 
        State agencies pursuant to section 454(15)(B) on State 
        program accomplishments with respect to performance 
        indicators for purposes of subsection (g) of this 
        section and section 458;
            (B) review annual reports submitted pursuant to 
        section 454(15)(A) and, as appropriate, provide to the 
        State comments, recommendations for additional or 
        alternative corrective actions, and technical 
        assistance; and
            (C) conduct audits, in accordance with the 
        Government auditing standards of the Comptroller 
        General of the United States--
                    (i) at least once every 3 years (or more 
                frequently, in the case of a State which fails 
                to meet the requirements of this part 
                concerning performance standards and 
                reliability of program data) to assess the 
                completeness, reliability, and security of the 
                data and the accuracy of the reporting systems 
                used in calculating performance indicators 
                under subsection (g) of this section and 
                section 458;
                    (ii) of the adequacy of financial 
                management of the State program operated under 
                the State plan approved under this part, 
                including assessments of--
                            (I) whether Federal and other funds 
                        made available to carry out the State 
                        program are being appropriately 
                        expended, and are properly and fully 
                        accounted for; and
                            (II) whether collections and 
                        disbursements of support payments are 
                        carried out correctly and are fully 
                        accounted for; and
                    (iii) for such other purposes as the 
                Secretary may find necessary;
            (5) assist States in establishing adequate 
        reporting procedures and maintain records of the 
        operations of programs established pursuant to this 
        part in each State, and establish procedures to be 
        followed by States for collecting and reporting 
        information required to be provided under this part, 
        and establish uniform definitions (including those 
        necessary to enable the measurement of State compliance 
        with the requirements of this part relating to 
        expedited processes) to be applied in following such 
        procedures;
            (6) maintain records of all amounts collected and 
        disbursed under programs established pursuant to the 
        provisions of this part and of the costs incurred in 
        collecting such amounts;
            (7) provide technical assistance to the States to 
        help them establish effective systems for collecting 
        child and spousal support and establishing paternity, 
        and specify the minimum requirements of an affidavit to 
        be used for the voluntary acknowledgment of paternity 
        which shall include the social security number of each 
        parent and, after consultation with the States, other 
        common elements as determined by such designee;
            (8) receive applications from States for permission 
        to utilize the courts of the United States to enforce 
        court orders for support against [absent] noncustodial 
        parents and, upon a finding that (A) another State has 
        not undertaken to enforce the court order of the 
        originating State against the [absent] noncustodial 
        parent within a reasonable time, and (B) that 
        utilization of the Federal courts is the only 
        reasonable method of enforcing such order, approve such 
        applications;
            (9) operate the Federal Parent Locator Service 
        established by section 453; [and]
            (10) not later than three months after the end of 
        each fiscal year, beginning with the year 1977, submit 
        to the Congress a full and complete report on all 
        activities undertaken pursuant to the provisions of 
        this part, which report shall include, but not be 
        limited to, the following:
                    (A) total program costs and collections set 
                forth in sufficient detail to show the cost to 
                the States and the Federal Government, the 
                distribution of collections to families, State 
                and local governmental units, and the Federal 
                Government; and an identification of the 
                financial impact of the provisions of [this 
                part;] this part, including--
                            (i) the total amount of child 
                        support payments collected as a result 
                        of services furnished during the fiscal 
                        year to individuals receiving services 
                        under this part;
                            (ii) the cost to the States and to 
                        the Federal Government of so furnishing 
                        the services; and
                            (iii) the number of cases involving 
                        families--
                                    (I) who became ineligible 
                                for assistance under State 
                                programs funded under part A 
                                during a month in the fiscal 
                                year; and
                                    (II) with respect to whom a 
                                child support payment was 
                                received in the month;
                    (B) costs and staff associated with the 
                Office of Child Support Enforcement;
                    (C) the following data, [with the data 
                required under each clause being separately 
                stated for cases] separately stated for cases 
                where the child is receiving [aid to families 
                with dependent children] assistance under a 
                State program funded under part A (or foster 
                care maintenance payments under part E), [cases 
                where the child was formerly receiving[ or 
                formerly received such [aid] assistance or 
                payments and the State is continuing to collect 
                support assigned to it [under section 
                402(a)(26) or 471(a)(17),] pursuant to section 
                408(a)(4) or 1912 and for all other cases under 
                this part:
                            (i) the total number of cases in 
                        which a support obligation has been 
                        established in the fiscal year for 
                        which the report is submitted[, and the 
                        total amount of such obligations];
                            (ii) the total number of cases in 
                        which a support obligation has been 
                        established[, and the total amount of 
                        such obligations];
                            (iii) the number of cases 
                        [described in clause (i) in which 
                        support was collected during such 
                        fiscal year, and the total amount of 
                        such collections;] in which support was 
                        collected during the fiscal year;
                            [(iv) the number of cases described 
                        in clause (ii) in which support was 
                        collected during such fiscal year, and 
                        the total amount of such collections; 
                        and]
                            (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
                            [(v)] (vii) the number of child 
                        support cases filed in each State in 
                        such fiscal year, and the amount of the 
                        collections made in each State in such 
                        fiscal year, on behalf of children 
                        residing in another State or against 
                        parents residing in another State;
                    (D) the status of all State plans under 
                this part as of the end of the fiscal year last 
                ending before the report is submitted, together 
                with an explanation of any problems which are 
                delaying or preventing approval of State plans 
                under this part;
                    (E) data, by State, on the use of the 
                Federal Parent Locator Service, and the number 
                of locate requests submitted without the 
                [absent] noncustodial parent's social security 
                account number;
                    (F) the number of cases, by State, in which 
                an applicant for or recipient of [aid under a 
                State plan approved] assistance under a State 
                program funded under part A has refused to 
                cooperate in identifying and locating the 
                [absent] noncustodial parent and the number of 
                cases in which refusal so to cooperate is based 
                on good cause (as determined [in accordance 
                with the standards referred to in section 
                402(a)(26)(B)(ii)] by the State);
                    (G) data, by State, [on the use of Federal 
                courts and] on use of the Internal Revenue 
                Service for collections, the number of court 
                orders on which collections were made, the 
                number of paternity determinations made and the 
                number of parents located, in sufficient detail 
                to show the cost and benefits to the States and 
                to the Federal Government;
                    (H) the major problems encountered which 
                have delayed or prevented implementation of the 
                provisions of this part during the fiscal year 
                last ending prior to the submission of such 
                report; [and]
                    (I) the amount of administrative costs 
                which are expended in each functional category 
                of expenditures, including establishment of 
                paternity[.]; and
                    (J) compliance, by State, with the 
                standards established pursuant to subsections 
                (h) and (i);
            (11) not later than October 1, 1996, after 
        consulting with the State directors of programs under 
        this part, promulgate forms to be used by States in 
        interstate cases for--
                    (A) collection of child support through 
                income withholding;
                    (B) imposition of liens; and
                    (C) administrative subpoenas.
        [The information contained in any such report under 
        subparagraph (A) shall specifically include (i) the 
        total amount of child support payments collected as a 
        result of services furnished during the fiscal year 
        involved to individuals under section 454(6), (ii) the 
        cost to the States and to the Federal Government of 
        furnishing such services to those individuals, and 
        (iii) the extent to which the furnishing of such 
        services was successful in providing sufficient support 
        to those individuals to assure that they did not 
        require assistance under the State plan approved under 
        part A.]
    (b) The Secretary shall, upon the request of any State 
having in effect a State plan approved under this part, certify 
to the Secretary of the Treasury for collection pursuant to the 
provisions of section 6305 of the Internal Revenue Code of 1954 
the amount of any child support obligation (including any 
support obligation with respect to the parent who is living 
with the child and receiving [aid under the State plan approved 
under part A] assistance under the State program funded under 
part A) which is assigned to such State or is undertaken to be 
collected by such State pursuant to section [454(6)] 454(4). No 
amount may be certified for collection under this subsection 
except the amount of the delinquency under a court or 
administrative order for support and upon a showing by the 
State that such State has made diligent and reasonable efforts 
to collect such amounts utilizing its own collection 
mechanisms, and upon an agreement that the State will reimburse 
the Secretary of the Treasury for any costs involved in making 
the collection. All reimbursements shall be credited to the 
appropriation accounts which bore all or part of the costs 
involved in making the collections. The Secretary after 
consultation with the Secretary of the Treasury may, by 
regulation, establish criteria for accepting amounts for 
collection and for making certification under this subsection 
including imposing such limitations on the frequency of making 
such certifications under this subsection.
          * * * * * * *
    (d)(1) Except as provided in paragraph (3), the Secretary 
shall not approve the initial and annually updated advance 
automated data processing planning document, referred to in 
section 454(16), unless he finds that such document, when 
implemented, will generally carry out the objectives of the 
management system referred to in such subsection, and such 
document
            (A) * * *
          * * * * * * *
    (3) The Secretary may waive any requirement of paragraph 
(1) or any condition specified under section 454(16) with 
respect to a State if--
            (A) the State demonstrates to the satisfaction of 
        the Secretary that the State has an alternative system 
        or systems that enable the State, for purposes of 
        section 403(h), to be in substantial compliance with 
        other requirements of this part; and
            (B)(i) the waiver meets the criteria of paragraphs 
        (1), (2), and (3) of section [1115(c)] 1115(b), or
            (ii) the State provides assurances to the Secretary 
        that steps will be taken to otherwise improve the 
        State's child support enforcement program.
    (e) The Secretary shall provide such technical assistance 
to States as he determines necessary to assist States to plan, 
design, develop, or install and provide for the security of, 
the management information systems referred to in section 
454(16).
    (f) The Secretary shall issue regulations to require that 
State agencies administering the child support enforcement 
program under this part petition for the inclusion of medical 
support as part of any child support order whenever health care 
coverage is available to the [absent] noncustodial parent at a 
reasonable cost. Such regulation shall also provide for 
improved information exchange between such State agencies and 
the State agencies administering the State medicaid programs 
under title XIX with respect to the availability of health 
insurance coverage.
    (g)(1) A State's program under this part shall be found, 
for purposes of section 403(h), not to have complied 
substantially with the requirements of this part unless, for 
any fiscal year beginning on or after October 1, 1994, its 
paternity establishment percentage for such fiscal year is 
based on reliable data and (rounded to the nearest whole 
percentage point) equals or exceeds--
            (A) [75] 90 percent;
            (B) for a State with a paternity establishment 
        percentage of not less than 75 percent but less than 90 
        percent for such fiscal year, the paternity 
        establishment percentage of the State for the 
        immediately preceding fiscal year plus 2 percentage 
        points;
            [(B)] (C) for a State with a paternity 
        establishment percentage of not less than 50 percent 
        but less than 75 percent for such fiscal year, the 
        paternity establishment percentage of the State for the 
        immediately preceding fiscal year plus 3 percentage 
        points;
            [(C)] (D) for a State with a paternity 
        establishment percentage of not less than 45 percent 
        but less than 50 percent for such fiscal year, the 
        paternity establishment percentage of the State for the 
        immediately preceding fiscal year plus 4 percentage 
        points;
            [(D)] (E) for a State with a paternity 
        establishment percentage of not less than 40 percent 
        but less than 45 percent for such fiscal year, the 
        paternity establishment percentage of the State for the 
        immediately preceding fiscal year plus 5 percentage 
        points; or
            [(E)] (F) for a State with a paternity 
        establishment percentage of less than 40 percent for 
        such fiscal year, the paternity establishment 
        percentage of the State for the immediately preceding 
        fiscal year plus 6 percentage points.
In determining compliance under this section, a State may use 
as its paternity establishment percentage either the State's 
IV-D paternity establishment percentage (as defined in 
paragraph (2)(A)) or the State's statewide paternity 
establishment percentage (as defined in paragraph (2)(B)).
    (2) For purposes of this section--
            (A) the term ``[paternity establishment percentage] 
        IV-D paternity establishment percentage'' means, with 
        respect to a State [(or all States, as the case may 
        be)] for a fiscal year, the ratio (expressed as a 
        percentage) that the total number of children--
                    (i) who have been born out of wedlock,
                    (ii)(I) except as provided in the last 
                sentence of this paragraph, with respect to 
                whom [aid is being paid under the State's plan 
                approved under part A or E]  assistance is 
                being provided under the State program, funded 
                under part A or benefits or services for foster 
                care maintenance were being provided under the 
                State program funded under part E in the fiscal 
                year or, at the option of the State, as of the 
                end of such year, or (II) with respect to whom 
                services are being provided under the State's 
                plan approved under this part in the fiscal 
                year or, at the option of the State, as of the 
                end of such year pursuant to an application 
                submitted under section [454(6)] 454(4)(A)(ii), 
                and
                    (iii) the paternity of whom has been 
                established or acknowledged,
        bears to the total number of children born out of 
        wedlock and (except as provided in such last sentence) 
        with respect to whom [aid was being paid under the 
        State's plan approved under part A or E] assistance was 
        being provided under the State program funded under 
        part A or benefits or services for foster care 
        maintenance were being provided under the State program 
        funded under part E as of the end of the preceding 
        fiscal year or with respect to whom services were being 
        provided under the State's plan approved under this 
        part as of the end of the preceding fiscal year 
        pursuant to an application submitted under section 
        [454(6)] 454(4)(A)(ii); [and]
            (B) the term ``statewide paternity establishment 
        percentage'' means, with respect to a State for a 
        fiscal year, the ratio (expressed as a percentage) that 
        the total number of minor children--
                    (i) who have been born out of wedlock, and
                    (ii) the paternity of whom has been 
                established or acknowledged during the fiscal 
                year,
        bears to the total number of children born out of 
        wedlock during the preceding fiscal year; and
            [(B)] (C) the term ``reliable data'' means the most 
        recent data available which are found by the Secretary 
        to be reliable for purposes of this section.
For purposes of subparagraph (A), the total number of children 
shall not include any child [who is a dependent child] with 
respect to whom assistance is being provided under the State 
program funded under part A by reason of the death of a parent 
unless paternity is established for such child or any child 
with respect to whom an applicant or recipient is found by the 
State [to have good cause for refusing to cooperate under 
section 402(a)(26)] to qualify for a good cause or other 
exception to cooperation pursuant to section 454(29) or any 
child with respect to whom the State agency administering the 
plan under part E determines (as provided in section 454(4)(B)) 
that it is against the best interests of such child to do so.
    (3)[(A) The requirements of this subsection are in addition 
to and shall not supplant any other requirement (that is not 
inconsistent with such requirements) established in regulations 
by the Secretary for the purpose of determining (for purposes 
of section 403(h)) whether the program of a State operated 
under this part shall be treated as complying substantially 
with the requirements of this part.]
    [(B)] (A) The Secretary may modify the requirements of this 
subsection to take into account such additional variables as 
the Secretary identifies (including the [percentage of children 
born out-of-wedlock in a State] the percentage of children in a 
State who are born out of wedlock or for whom support has not 
been established) that affect the ability of a State to meet 
the requirements of this subsection.
    [(C)] (B) The Secretary shall submit an annual report to 
the Congress that sets forth the data upon which the paternity 
establishment percentages for States for a fiscal year are 
based, lists any additional variables the Secretary has 
identified under subparagraph (A), and describes State 
performance in establishing paternity.
    (h) The standards required by subsection (a)(1) shall 
include standards establishing time limits governing the period 
or periods within which a State must accept and respond to 
requests (from States, jurisdictions thereof, or individuals 
who apply for services furnished by the State agency under this 
part or with respect to whom an assignment [under section 
402(a)(26)] pursuant to section 408(a)(4) is in effect) for 
assistance in establishing and enforcing support orders, 
including requests to locate [absent] noncustodial parents, 
establish paternity, and initiate proceedings to establish and 
collect child support awards.
    (j) Out of any money in the Treasury of the United States 
not otherwise appropriated, there is hereby appropriated to the 
Secretary for each fiscal year an amount equal to 1 percent of 
the total amount paid to the Federal Government pursuant to 
section 457(a) during the immediately preceding fiscal year (as 
determined on the basis of the most recent reliable data 
available to the Secretary as of the end of the 3rd calendar 
quarter following the end of such preceding fiscal year), to 
cover costs incurred by the Secretary for--
            (1) information dissemination and technical 
        assistance to States, training of State and Federal 
        staff, staffing studies, and related activities needed 
        to improve programs under this part (including 
        technical assistance concerning State automated systems 
        required by this part); and
            (2) research, demonstration, and special projects 
        of regional or national significance relating to the 
        operation of State programs under this part.
The amount appropriated under this subsection shall remain 
available until expended.
    (k)(1) If the Secretary receives a certification by a State 
agency in accordance with the requirements of section 454(31) 
that an individual owes arrearages of child support in an 
amount exceeding $5,000, the Secretary shall transmit such 
certification to the Secretary of State for action (with 
respect to denial, revocation, or limitation of passports) 
pursuant to paragraph (2).
    (2) The Secretary of State shall, upon certification by the 
Secretary transmitted under paragraph (1), refuse to issue a 
passport to such individual, and may revoke, restrict, or limit 
a passport issued previously to such individual.
    (3) The Secretary and the Secretary of State shall not be 
liable to an individual for any action with respect to a 
certification by a State agency under this section.

                     federal PARENT LOCATOR SERVICE

    Sec. 453. (a) The Secretary shall establish and conduct a 
Federal Parent Locator Service, under the direction of the 
designee of the Secretary referred to in section 452(a), which 
shall be used to obtain and transmit to any authorized person 
(as defined in subsection (c)) [information as to the 
whereabouts of any absent parent when such information is to be 
used to locate such parent for the purpose of enforcing support 
obligations against such parent.], for the purpose of 
establishing parentage, establishing, setting the amount of, 
modifying, or enforcing child support obligations, or enforcing 
child custody or visitation orders--
            (1) information on, or facilitating the discovery 
        of, the location of any individual--
                    (A) who is under an obligation to pay child 
                support or provide child custody or visitation 
                rights;
                    (B) against whom such an obligation is 
                sought;
                    (C) to whom such an obligation is owed,
        including the individual's social security number (or 
        numbers), most recent address, and the name, address, 
        and employer identification number of the individual's 
        employer;
            (2) information on the individual's wages (or other 
        income) from, and benefits of, employment (including 
        rights to or enrollment in group health care coverage); 
        and
            (3) information on the type, status, location, and 
        amount of any assets of, or debts owed by or to, any 
        such individual.
    (b) Upon request, filed in accordance with subsection (d) 
of any authorized person (as defined in subsection (c)) for the 
[social security account number (or numbers, if the individual 
involved has more than one such number) and the most recent 
address and place of employment of any absent parent] 
information described in subsection (a), the Secretary shall, 
notwithstanding any other provision of law, provide through the 
Federal Parent Locator Service such information to such person, 
if such information--
            (1) is contained in any files or records maintained 
        by the Secretary or by the Department of Health and 
        Human Services; or
            (2) is not contained in such files or records, but 
        can be obtained by the Secretary, under the authority 
        conferred by subsection (e), from any other department, 
        agency, or instrumentality of the United States or of 
        any State.
No information shall be disclosed to any person if the 
disclosure of such information would contravene the national 
policy or security interests of the United States or the 
confidentiality of census data. The Secretary shall give 
priority to requests made by any authorized person described in 
subsection (c)(1). No information shall be disclosed to any 
person if the State has notified the Secretary that the State 
has reasonable evidence of domestic violence or child abuse and 
the disclosure of such information could be harmful to the 
custodial parent or the child of such parent. Information 
received or transmitted pursuant to this section shall be 
subject to the safeguard provisions contained in section 
454(26).
    (c) As used in subsection (a), the term ``authorized 
person'' means--
            (1) any agent or attorney of any State having in 
        effect a plan approved under this part, who has the 
        duty or authority under such plans to seek to recover 
        any amounts owed as child and spousal [support] 
        (including, when authorized under the State plan, any 
        support or to seek to enforce orders providing child 
        custody or visitation rights official of a political 
        subdivision);
            (2) the court which has authority to issue an order 
        against [an absent] a noncustodial parent for the 
        support and maintenance of a child[, or any agent of 
        such court; and] or to issue an order against a 
        resident parent for child custody or visitation rights, 
        or any agent of such court;
            (3) the resident parent, legal guardian, attorney, 
        or agent of a child (other than a child receiving [aid 
        under part A of this title] assistance under a State 
        program funded under part A) (as determined by 
        regulations prescribed by the Secretary) without regard 
        to the existence of a court order against [an absent] a 
        noncustodial parent who has a duty to support and 
        maintain any such child.
          * * * * * * *
    (e)(1) Whenever the Secretary receives a request submitted 
under subsection (b) which he is reasonably satisfied meets the 
criteria established by subsections (a), (b), and (c), he shall 
promptly undertake to provide the information requested from 
the files and records maintained by any of the departments, 
agencies, or instrumentalities of the United States or of any 
State.
    (2) Notwithstanding any other provision of law, whenever 
the individual who is the head of any department, agency, or 
instrumentality of the United States receives a request from 
the Secretary for information authorized to be provided by the 
Secretary under this section, such individual shall promptly 
cause a search to be made of the files and records maintained 
by such department, agency, or instrumentality with a view to 
determining whether the information requested is contained in 
any such files or records. If such search discloses the 
information requested, such individual shall immediately 
transmit such information to the Secretary, except that if any 
information is obtained the disclosure of which would 
contravene national policy or security interests of the United 
States or the confidentiality of census data, such information 
shall not be transmitted and such individual shall immediately 
notify the Secretary. If such search fails to disclose the 
information requested, such individual shall immediately so 
notify the Secretary. The costs incurred by any such 
department, agency, or instrumentality of the United States or 
of any State in providing such information to the Secretary 
shall be reimbursed by him in an amount which the Secretary 
determines to be reasonable payment for the information 
exchange (which amount shall not include payment for the costs 
of obtaining, compiling, or maintaining the information). 
Whenever such services are furnished to an individual specified 
in subsection (c)(3), a fee shall be charged such individual. 
The fee so charged shall be used to reimburse the Secretary or 
his delegate for the expense of providing such services.
    (f) The Secretary, in carrying out his duties and functions 
under this section, shall enter into arrangements with State 
agencies administering State plans approved under this part for 
such State agencies to accept from resident parents, legal 
guardians, or agents of a child described in subsection (c)(3) 
and to transmit to the Secretary requests for information with 
regard to the whereabouts of [absent] noncustodial parents and 
otherwise to cooperate with the Secretary in carrying out the 
purposes of this section.
    (g) Reimbursement for Reports by State Agencies.--The 
Secretary may reimburse Federal and State agencies for the 
costs incurred by such entities in furnishing information 
requested by the Secretary under this section in an amount 
which the Secretary determines to be reasonable payment for the 
information exchange (which amount shall not include payment 
for the costs of obtaining, compiling, or maintaining the 
information).
    (h) Federal Case Registry of Child Support Orders.--
            (1) In general.--Not later than October 1, 1998, in 
        order to assist States in administering programs under 
        State plans approved under this part and programs 
        funded under part A, and for the other purposes 
        specified in this section, the Secretary shall 
        establish and maintain in the Federal Parent Locator 
        Service an automated registry (which shall be known as 
        the ``Federal Case Registry of Child Support Orders''), 
        which shall contain abstracts of support orders and 
        other information described in paragraph (2) with 
        respect to each case in each State case registry 
        maintained pursuant to section 454A(e), as furnished 
        (and regularly updated), pursuant to section 454A(f), 
        by State agencies administering programs under this 
        part.
            (2) Case information.--The information referred to 
        in paragraph (1) with respect to a case shall be such 
        information as the Secretary may specify in regulations 
        (including the names, social security numbers or other 
        uniform identification numbers, and State case 
        identification numbers) to identify the individuals who 
        owe or are owed support (or with respect to or on 
        behalf of whom support obligations are sought to be 
        established), and the State or States which have the 
        case.
    (i) National Directory of New Hires.--
            (1) In general.--In order to assist States in 
        administering programs under State plans approved under 
        this part and programs funded under part A, and for the 
        other purposes specified in this section, the Secretary 
        shall, not later than October 1, 1997, establish and 
        maintain in the Federal Parent Locator Service an 
        automated directory to be known as the National 
        Directory of New Hires, which shall contain the 
        information supplied pursuant to section 453A(g)(2).
            (2) Entry of data.--Information shall be entered 
        into the data base maintained by the National Directory 
        of New Hires within 2 business days of receipt pursuant 
        to section 453A(g)(2).
            (3) Administration of federal tax laws.--The 
        Secretary of the Treasury shall have access to the 
        information in the National Directory of New Hires for 
        purposes of administering section 32 of the Internal 
        Revenue Code of 1986, or the advance payment of the 
        earned income tax credit under section 3507 of such 
        Code, and verifying a claim with respect to employment 
        in a tax return.
            (4) List of multistate employers.--The Secretary 
        shall maintain within the National Directory of New 
        Hires a list of multistate employers that report 
        information regarding newly hired employees pursuant to 
        section 453A(b)(1)(B), and the State which each such 
        employer has designated to receive such information.
    (j) Information Comparisons and Other Disclosures.--
            (1) Verification by social security 
        administration.--
                    (A) In general.--The Secretary shall 
                transmit information on individuals and 
                employers maintained under this section to the 
                Social Security Administration to the extent 
                necessary for verification in accordance with 
                subparagraph (B).
                    (B) Verification by ssa.--The Social 
                Security Administration shall verify the 
                accuracy of, correct, or supply to the extent 
                possible, and report to the Secretary, the 
                following information supplied by the Secretary 
                pursuant to subparagraph (A):
                            (i) The name, social security 
                        number, and birth date of each such 
                        individual.
                            (ii) The employer identification 
                        number of each such employer.
            (2) Information comparisons.--For the purpose of 
        locating individuals in a paternity establishment case 
        or a case involving the establishment, modification, or 
        enforcement of a support order, the Secretary shall--
                    (A) compare information in the National 
                Directory of New Hires against information in 
                the support case abstracts in the Federal Case 
                Registry of Child Support Orders not less often 
                than every 2 business days; and
                    (B) within 2 business days after such a 
                comparison reveals a match with respect to an 
                individual, report the information to the State 
                agency responsible for the case.
            (3) Information comparisons and disclosures of 
        information in all registries for title iv program 
        purposes.--To the extent and with the frequency that 
        the Secretary determines to be effective in assisting 
        States to carry out their responsibilities under 
        programs operated under this part and programs funded 
        under part A, the Secretary shall--
                    (A) compare the information in each 
                component of the Federal Parent Locator Service 
                maintained under this section against the 
                information in each other such component (other 
                than the comparison required by paragraph (2)), 
                and report instances in which such a comparison 
                reveals a match with respect to an individual 
                to State agencies operating such programs; and
                    (B) disclose information in such registries 
                to such State agencies.
            (4) Provision of new hire information to the social 
        security administration.--The National Directory of New 
        Hires shall provide the Commissioner of Social Security 
        with all information in the National Directory, which 
        shall be used to determine the accuracy of payments 
        under the supplemental security income program under 
        title XVI and in connection with benefits under title 
        II.
            (5) Research.--The Secretary may provide access to 
        information reported by employers pursuant to section 
        453A(b) for research purposes found by the Secretary to 
        be likely to contribute to achieving the purposes of 
        part A or this part, but without personal identifiers.
    (k) Fees.--
            (1) For ssa verification.--The Secretary shall 
        reimburse the Commissioner of Social Security, at a 
        rate negotiated between the Secretary and the 
        Commissioner, for the costs incurred by the 
        Commissioner in performing the verification services 
        described in subsection (j).
            (2) For information from state directories of new 
        hires.--The Secretary shall reimburse costs incurred by 
        State directories of new hires in furnishing 
        information as required by subsection (j)(3), at rates 
        which the Secretary determines to be reasonable (which 
        rates shall not include payment for the costs of 
        obtaining, compiling, or maintaining such information).
            (3) For information furnished to state and federal 
        agencies.--A State or Federal agency that receives 
        information from the Secretary pursuant to this section 
        shall reimburse the Secretary for costs incurred by the 
        Secretary in furnishing the information, at rates which 
        the Secretary determines to be reasonable (which rates 
        shall include payment for the costs of obtaining, 
        verifying, maintaining, and comparing the information).
    (l) Restriction on Disclosure and Use.--Information in the 
Federal Parent Locator Service, and information resulting from 
comparisons using such information, shall not be used or 
disclosed except as expressly provided in this section, subject 
to section 6103 of the Internal Revenue Code of 1986.
    (m) Information Integrity and Security.--The Secretary 
shall establish and implement safeguards with respect to the 
entities established under this section designed to--
            (1) ensure the accuracy and completeness of 
        information in the Federal Parent Locator Service; and
            (2) restrict access to confidential information in 
        the Federal Parent Locator Service to authorized 
        persons, and restrict use of such information to 
        authorized purposes.
    (n) Federal Government Reporting.--Each department, agency, 
and instrumentality of the United States shall on a quarterly 
basis report to the Federal Parent Locator Service the name and 
social security number of each employee and the wages paid to 
the employee during the previous quarter, except that such a 
report shall not be filed with respect to an employee of a 
department, agency, or instrumentality performing intelligence 
or counterintelligence functions, if the head of such 
department, agency, or instrumentality has determined that 
filing such a report could endanger the safety of the employee 
or compromise an ongoing investigation or intelligence mission.
    (o) Recovery of Costs.--Out of any money in the Treasury of 
the United States not otherwise appropriated, there is hereby 
appropriated to the Secretary for each fiscal year an amount 
equal to 2 percent of the total amount paid to the Federal 
Government pursuant to section 457(a) during the immediately 
preceding fiscal year (as determined on the basis of the most 
recent reliable data available to the Secretary as of the end 
of the 3rd calendar quarter following the end of such preceding 
fiscal year), to cover costs incurred by the Secretary for 
operation of the Federal Parent Locator Service under this 
section, to the extent such costs are not recovered through 
user fees.
    (p) Support Order Defined.--As used in this part, the term 
``support order'' means a judgment, decree, or order, whether 
temporary, final, or subject to modification, issued by a court 
or an administrative agency of competent jurisdiction, for the 
support and maintenance of a child, including a child who has 
attained the age of majority under the law of the issuing 
State, or a child and the parent with whom the child is living, 
which provides for monetary support, health care, arrearages, 
or reimbursement, and which may include related costs and fees, 
interest and penalties, income withholding, attorneys' fees, 
and other relief.

SEC. 453A. STATE DIRECTORY OF NEW HIRES.

    (a) Establishment.--
            (1) In general.--
                    (A) Requirement for States that have no 
                directory.--Except as provided in subparagraph 
                (B), not later than October 1, 1997, each State 
                shall establish an automated directory (to be 
                known as the ``State Directory of New Hires'') 
                which shall contain information supplied in 
                accordance with subsection (b) by employers on 
                each newly hired employee.
                    (B) States with new hire reporting in 
                existence.--A State which has a new hire 
                reporting law in existence on the date of the 
                enactment of this section may continue to 
                operate under the State law, but the State must 
                meet the requirements of subsection (g)(2) not 
                later than October 1, 1997, and the 
                requirements of this section (other than 
                subsection (g)(2)) not later than October 1, 
                1998.
            (2) Definitions.--As used in this section:
                    (A) Employee.--The term ``employee''--
                            (i) means an individual who is an 
                        employee within the meaning of chapter 
                        24 of the Internal Revenue Code of 
                        1986; and
                            (ii) does not include an employee 
                        of a Federal or State agency performing 
                        intelligence or counterintelligence 
                        functions, if the head of such agency 
                        has determined that reporting pursuant 
                        to paragraph (1) with respect to the 
                        employee could endanger the safety of 
                        the employee or compromise an ongoing 
                        investigation or intelligence mission.
                    (B) Employer.--
                            (i) In general.--The term 
                        ``employer'' has the meaning given such 
                        term in section 3401(d) of the Internal 
                        Revenue Code of 1986 and includes any 
                        governmental entity and any labor 
                        organization.
                            (ii) Labor organization.--The term 
                        ``labor organization'' shall have the 
                        meaning given such term in section 2(5) 
                        of the National Labor Relations Act, 
                        and includes any entity (also known as 
                        a ``hiring hall'') which is used by the 
                        organization and an employer to carry 
                        out requirements described in section 
                        8(f)(3) of such Act of an agreement 
                        between the organization and the 
                        employer.
    (b) Employer Information.--
            (1) Reporting requirement.--
                    (A) In general.--Except as provided in 
                subparagraphs (B) and (C), each employer shall 
                furnish to the Directory of New Hires of the 
                State in which a newly hired employee works, a 
                report that contains the name, address, and 
                social security number of the employee, and the 
                name and address of, and identifying number 
                assigned under section 6109 of the Internal 
                Revenue Code of 1986 to, the employer.
                    (B) Multistate employers.--An employer that 
                has employees who are employed in 2 or more 
                States and that transmits reports magnetically 
                or electronically may comply with subparagraph 
                (A) by designating 1 State in which such 
                employer has employees to which the employer 
                will transmit the report described in 
                subparagraph (A), and transmitting such report 
                to such State. Any employer that transmits 
                reports pursuant to this subparagraph shall 
                notify the Secretary in writing as to which 
                State such employer designates for the purpose 
                of sending reports.
                    (C) Federal government employers.--Any 
                department, agency, or instrumentality of the 
                United States shall comply with subparagraph 
                (A) by transmitting the report described in 
                subparagraph (A) to the National Directory of 
                New Hires established pursuant to section 453.
            (2) Timing of report.--Each State may provide the 
        time within which the report required by paragraph (1) 
        shall be made with respect to an employee, but such 
        report shall be made--
                    (A) not later than 20 days after the date 
                the employer hires the employee; or
                    (B) in the case of an employer transmitting 
                reports magnetically or electronically, by 2 
                monthly transmissions (if necessary) not less 
                than 12 days nor more than 16 days apart.
    (c) Reporting Format and Method.--Each report required by 
subsection (b) shall be made on a W-4 form or, at the option of 
the employer, an equivalent form, and may be transmitted by 1st 
class mail, magnetically, or electronically.
    (d) Civil Money Penalties on Noncomplying Employers.--The 
State shall have the option to set a State civil money penalty 
which shall be less than--
            (1) $25; or
            (2) $500 if, under State law, the failure is the 
        result of a conspiracy between the employer and the 
        employee to not supply the required report or to supply 
        a false or incomplete report.
    (e) Entry of Employer Information.--Information shall be 
entered into the data base maintained by the State Directory of 
New Hires within 5 business days of receipt from an employer 
pursuant to subsection (b).
    (f) Information Comparisons.--
            (1) In general.--Not later than May 1, 1998, an 
        agency designated by the State shall, directly or by 
        contract, conduct automated comparisons of the social 
        security numbers reported by employers pursuant to 
        subsection (b) and the social security numbers 
        appearing in the records of the State case registry for 
        cases being enforced under the State plan.
            (2) Notice of match.--When an information 
        comparison conducted under paragraph (1) reveals a 
        match with respect to the social security number of an 
        individual required to provide support under a support 
        order, the State Directory of New Hires shall provide 
        the agency administering the State plan approved under 
        this part of the appropriate State with the name, 
        address, and social security number of the employee to 
        whom the social security number is assigned, and the 
        name and address of, and identifying number assigned 
        under section 6109 of the Internal Revenue Code of 1986 
        to, the employer.
    (g) Transmission of Information.--
            (1) Transmission of wage withholding notices to 
        employers.--Within 2 business days after the date 
        information regarding a newly hired employee is entered 
        into the State Directory of New Hires, the State agency 
        enforcing the employee's child support obligation shall 
        transmit a notice to the employer of the employee 
        directing the employer to withhold from the income of 
        the employee an amount equal to the monthly (or other 
        periodic) child support obligation (including any past 
        due support obligation) of the employee, unless the 
        employee's income is not subject to withholding 
        pursuant to section 466(b)(3).
            (2) Transmissions to the national directory of new 
        hires.--
                    (A) New hire information.--Within 3 
                business days after the date information 
                regarding a newly hired employee is entered 
                into the State Directory of New Hires, the 
                State Directory of New Hires shall furnish the 
                information to the National Directory of New 
                Hires.
                    (B) Wage and unemployment compensation 
                information.--The State Directory of New Hires 
                shall, on a quarterly basis, furnish to the 
                National Directory of New Hires extracts of the 
                reports required under section 303(a)(6) to be 
                made to the Secretary of Labor concerning the 
                wages and unemployment compensation paid to 
                individuals, by such dates, in such format, and 
                containing such information as the Secretary of 
                Health and Human Services shall specify in 
                regulations.
            (3) Business day defined.--As used in this 
        subsection, the term ``business day'' means a day on 
        which State offices are open for regular business.
    (h) Other Uses of New Hire Information.--
            (1) Location of child support obligors.--The agency 
        administering the State plan approved under this part 
        shall use information received pursuant to subsection 
        (f)(2) to locate individuals for purposes of 
        establishing paternity and establishing, modifying, and 
        enforcing child support obligations, and may disclose 
        such information to any agent of the agency that is 
        under contract with the agency to carry out such 
        purposes.
            (2) Verification of eligibility for certain 
        programs.--A State agency responsible for administering 
        a program specified in section 1137(b) shall have 
        access to information reported by employers pursuant to 
        subsection (b) of this section for purposes of 
        verifying eligibility for the program.
            (3) Administration of employment security and 
        workers' compensation.--State agencies operating 
        employment security and workers' compensation programs 
        shall have access to information reported by employers 
        pursuant to subsection (b) for the purposes of 
        administering such programs.

                STATE PLAN FOR CHILD AND SPOUSAL SUPPORT

    Sec. 454. A State plan for child and spousal support must--
            (1) * * *
          * * * * * * *
            [(4) provide that such State will undertake--
                    [(A) in the case of a child born out of 
                wedlock with respect to whom an assignment 
                under section 402(a)(26) or section 1912 is 
                effective, to establish the paternity of such 
                child, unless the agency administering the plan 
                of the State under part A of this title 
                determines in accordance with the standards 
                prescribed by the Secretary pursuant to section 
                402(a)(26)(B) that it is against the best 
                interests of the child to do so, or, in the 
                case of such a child with respect to whom an 
                assignment under section 1912 is in effect, the 
                State agency administering the plan approved 
                under title XIX determines pursuant to section 
                1912(a)(1)(B) that it is against the best 
                interests of the child to do so, and
                    [(B) in the case of any child with respect 
                to whom such assignment is effective, including 
                an assignment with respect to a child on whose 
                behalf a State agency is making foster care 
                maintenance payments under part E, to secure 
                support for such child from his parent (or from 
                any other person legally liable for such 
                support), and from such parent for his spouse 
                (or former spouse) receiving aid to families 
                with dependent children or medical assistance 
                under a State plan approved under title XIX 
                (but only if a support obligation has been 
                established with respect to such spouse, and 
                only if the support obligation established with 
                respect to the child is being enforced under 
                the plan), utilizing any reciprocal 
                arrangements adopted with other States (unless 
                the agency administering the plan of the State 
                under part A or E of this title determines in 
                accordance with the standards prescribed by the 
                Secretary pursuant to section 402(a)(26)(B) 
                that it is against the best interests of the 
                child to do so), except that when such 
                arrangements and other means have proven 
                ineffective, the State may utilize the Federal 
                courts to obtain or enforce court orders for 
                support;]
            (4) provide that the State will--
                    (A) provide services relating to the 
                establishment of paternity or the 
                establishment, modification, or enforcement of 
                child support obligations, as appropriate, 
                under the plan with respect to--
                            (i) each child for whom (I) 
                        assistance is provided under the State 
                        program funded under part A of this 
                        title, (II) benefits or services for 
                        foster care maintenance are provided 
                        under the State program funded under 
                        part E of this title, (III) medical 
                        assistance is provided under the State 
                        plan under title XV, or (IV) medical 
                        assistance is provided under the State 
                        plan approved under title XIX, unless, 
                        in accordance with paragraph (29), good 
                        cause or other exceptions exist;
                            (ii) any other child, if an 
                        individual applies for such services 
                        with respect to the child; and
                    (B) enforce any support obligation 
                established with respect to--
                            (i) a child with respect to whom 
                        the State provides services under the 
                        plan; or
                            (ii) the custodial parent of such a 
                        child;
            (5) provide that (A) in any case in which support 
        payments are collected for an individual with respect 
        to whom an assignment [under section 402(a)(26)] 
        pursuant to section 408(a)(4) is effective, such 
        payments shall be made to the State for distribution 
        pursuant to section 457 and shall not be paid directly 
        to the family, and the individual will be notified on a 
        monthly basis (or on a quarterly basis for so long as 
        the Secretary determines with respect to a State that 
        requiring such notice on a monthly basis would impose 
        an unreasonable administrative burden) of the amount of 
        the support payments collected[; except that this 
        paragraph shall not apply to such payments for any 
        month following the first month in which the amount 
        collected is sufficient to make such family ineligible 
        for assistance under the State plan approved under part 
        A;], and (B) in any case in which support payments are 
        collected for an individual pursuant to the assignment 
        made under section 1912, such payments shall be made to 
        the State for distribution pursuant to section 1912, 
        except that this clause shall not apply to such 
        payments for any month after the month in which the 
        individual ceases to be eligible for medical 
        assistance;
            (6) provide [that] that--[(A) the child support 
        collection or paternity determination services 
        established under the plan shall be made available to 
        any individual not otherwise eligible for such services 
        upon application filed by such individual with the 
        State, including support collection services for the 
        spouse (or former spouse) with whom the absent parent's 
        child is living (but only if a support obligation has 
        been established with respect to such spouse, and only 
        if the support obligation established with respect to 
        the child is being enforced under the plan),]
                    (A) services under the plan shall be made 
                available to residents of other States on the 
                same terms as to residents of the State 
                submitting the plan;
                    (B) an application fee for furnishing such 
                services shall be imposed on individuals not 
                receiving assistance under any State program 
                funded under part A, which shall be paid by the 
                individual applying for such services, or 
                recovered from the absent parent, or paid by 
                the State out of its own funds (the payment of 
                which from State funds shall not be considered 
                as an administrative cost of the State for the 
                operation of the plan, and shall be considered 
                income to the program), the amount of which (i) 
                will not exceed $25 (or such higher or lower 
                amount (which shall be uniform for all States) 
                as the Secretary may determine to be 
                appropriate for any fiscal year to reflect 
                increases or decreases in administrative 
                costs), and (ii) may vary among such 
                individuals on the basis of ability to pay (as 
                determined by the State)[,];
                    (C) a fee of not more than $25 may be 
                imposed in any case where the State requests 
                the Secretary of the Treasury to withhold past-
                due support owed to or on behalf of such 
                individual from a tax refund pursuant to 
                section 464(a)(2)[,];
                    (D) a fee (in accordance with regulations 
                of the Secretary) for performing genetic tests 
                may be imposed on any individual who is not a 
                recipient of [aid under a State plan approved] 
                assistance under a State program funded under 
                part A[,]; and
                    (E) any costs in excess of the fees so 
                imposed may be collected--
                            (i) from the parent who owes the 
                        child or spousal support obligation 
                        involved, or
                            (ii) at the option of the State, 
                        from the individual to whom such 
                        services are made available, but only 
                        if such State has in effect a procedure 
                        whereby all persons in such State 
                        having authority to order child or 
                        spousal support are informed that such 
                        costs are to be collected from the 
                        individual to whom such services were 
                        made available;
            (7) provide for entering into cooperative 
        arrangements with appropriate courts and law 
        enforcement officials (A) to assist the agency 
        administering the plan, including the entering into of 
        financial arrangements with such courts and officials 
        in order to assure optimum results under such program, 
        and (B) with respect to any other matters of common 
        concern to such courts or officials and the agency 
        administering the plan;
            (8) provide that the agency administering the plan 
        will establish a service to locate [absent] 
        noncustodial parents utilizing--
                    (A) all sources of information and 
                available records, and
                    [(B) the Parent Locator Service in the 
                Department of Health and Human Services;]
                    (B) the Federal Parent Locator Service 
                established under section 453;
            (9) provide that the State will, in accordance with 
        standards prescribed by the Secretary, cooperate with 
        any other State--
                    (A) in establishing paternity, if 
                necessary,
                    (B) in locating [an absent] a noncustodial 
                parent residing in the State (whether or not 
                permanently) against whom any action is being 
                taken under a program established under a plan 
                approved under this part in another State,
                    (C) in securing compliance by [an absent] a 
                noncustodial parent residing in such State 
                (whether or not permanently) with an order 
                issued by a court of competent jurisdiction 
                against such parent for the support and 
                maintenance of the child or children or the 
                parent of such child or children with respect 
                to whom aid is being provided under the plan of 
                such other State, [and]
                    (D) in carrying out other functions 
                required under a plan approved under this part; 
                and
                    (E) not later than March 1, 1997, in using 
                the forms promulgated pursuant to section 
                452(a)(11) for income withholding, imposition 
                of liens, and issuance of administrative 
                subpoenas in interstate child support cases;
            (10) provide that the State will maintain a full 
        record of collections and disbursements made under the 
        plan and have an adequate reporting system;
            (11)(A) provide that amounts collected as support 
        shall be distributed as provided in section 457; and
            [(12)] (B) provide that any payment required to be 
        made under section 456 or 457 to a family shall be made 
        to the resident parent, legal guardian, or caretaker 
        relative having custody of or responsibility for the 
        child or children;
            (12) provide for the establishment of procedures to 
        require the State to provide individuals who are 
        applying for or receiving services under the State 
        plan, or who are parties to cases in which services are 
        being provided under the State plan--
                    (A) with notice of all proceedings in which 
                support obligations might be established or 
                modified; and
                    (B) with a copy of any order establishing 
                or modifying a child support obligation, or (in 
                the case of a petition for modification) a 
                notice of determination that there should be no 
                change in the amount of the child support 
                award, within 14 days after issuance of such 
                order or determination;
            (13) provide that the State will comply with such 
        other requirements and standards as the Secretary 
        determines to be necessary to the establishment of an 
        effective program for locating [absent] noncustodial 
        parents, establishing paternity, obtaining support 
        orders, and collecting support payments and provide 
        that information requests by parents who are residents 
        of other States be treated with the same priority as 
        requests by parents who are residents of the State 
        submitting the plan;
            (14)(A) comply with such bonding requirements, for 
        employees who receive, disburse, handle, or have access 
        to, cash, as the Secretary shall by regulations 
        prescribe;
            [(15)] (B) maintain methods of administration which 
        are designed to assure that persons responsible for 
        handling cash receipts shall not participate in 
        accounting or operating functions which would permit 
        them to conceal in the accounting records the misuse of 
        cash receipts (except that the Secretary shall by 
        regulations provide for exceptions to this requirement 
        in the case of sparsely populated areas where the 
        hiring of unreasonable additional staff would otherwise 
        be necessary);
            (15) provide for--
                    (A) a process for annual reviews of and 
                reports to the Secretary on the State program 
                operated under the State plan approved under 
                this part, including such information as may be 
                necessary to measure State compliance with 
                Federal requirements for expedited procedures, 
                using such standards and procedures as are 
                required by the Secretary, under which the 
                State agency will determine the extent to which 
                the program is operated in compliance with this 
                part; and
                    (B) a process of extracting from the 
                automated data processing system required by 
                paragraph (16) and transmitting to the 
                Secretary data and calculations concerning the 
                levels of accomplishment (and rates of 
                improvement) with respect to applicable 
                performance indicators (including paternity 
                establishment percentages) to the extent 
                necessary for purposes of sections 452(g) and 
                458;
            (16) provide[, at the option of the State,] for the 
        establishment and operation bt the State agency, in 
        accordance with an (initial and annually updated) 
        advance automated data processing planning document 
        approved under section 452(d), of a statewide automated 
        data processing and information retrieval system 
        meeting the requirements of section 454A designed 
        effectively and efficiently to assist management in the 
        administration of the State plan, [in the State and 
        localities thereof, so as (A)] so as to control, 
        account for, and monitor [(i)] all the factors in the 
        support enforcement collection and paternity 
        determination process under such plan [(including, but 
        not limited to, (I) identifiable correlation factors 
        (such as social security numbers, names, dates of 
        birth, home addresses and mailing addresses (including 
        postal ZIP codes) of any individual with respect to 
        whom support obligations are sought to be established 
        or enforced and with respect to any person to whom such 
        support obligations are owing) to assure sufficient 
        compatibility among the systems of different 
        jurisdictions to permit periodic screening to determine 
        whether such individual is paying or is obligated to 
        pay support in more than one jurisdiction, (II) 
        checking of records of such individuals on a periodic 
        basis with Federal, intra- and inter-State, and local 
        agencies, (III) maintaining the data necessary to meet 
        the Federal reporting requirements on a timely basis, 
        and (IV) delinquency and enforcement activities), (ii) 
        the collection and distribution of support payments 
        (both intra- and inter-State), the determination, 
        collection, and distribution of incentive payments both 
        inter- and intra-State, and the maintenance of accounts 
        receivable on all amounts owed, collected and 
        distributed, and (iii) the costs of all services 
        rendered, either directly or by interfacing with State 
        financial management and expenditure information, (B) 
        to provide interface with records of the State's aid to 
        families with dependent children program in order to 
        determine if a collection of a support payment causes a 
        change affecting eligibility for or the amount of aid 
        under such program, (C) to provide for security against 
        unauthorized access to, or use of, the data in such 
        system, (D) to facilitate the development and 
        improvement of the income withholding and other 
        procedures required under section 466(a) through the 
        monitoring of support payments, the maintenance of 
        accurate records regarding the payment of support, and 
        the prompt provision of notice to appropriate officials 
        with respect to any arrearages in support payments 
        which may occur, and (E) to provide management 
        information on all cases under the State plan from 
        initial referral or application through collection and 
        enforcement;];
            (17) * * *
          * * * * * * *
            (21)(A) at the option of the State, impose a late 
        payment fee on all overdue support (as defined in 
        section 466(e)) under any obligation being enforced 
        under this part, in an amount equal to a uniform 
        percentage determined by the State (not less than 3 
        percent nor more than 6 percent) of the overdue 
        support, which shall be payable by the [absent] 
        noncustodial parent owing the overdue support; and
            (B) assure that the fee will be collected in 
        addition to, and only after full payment of, the 
        overdue support, and that the imposition of the late 
        payment fee shall not directly or indirectly result in 
        a decrease in the amount of the support which is paid 
        to the child (or spouse) to whom, or on whose behalf, 
        it is owed;
            (22) in order for the State to be eligible to 
        receive any incentive payments under section 458, 
        provide that, if one or more political subdivisions of 
        the State participate in the costs of carrying out 
        activities under the State plan during any period, each 
        such subdivision shall be entitled to receive an 
        appropriate share (as determined by the State) of any 
        such incentive payments made to the State for such 
        period, taking into account the efficiency and 
        effectiveness of the activities carried out under the 
        State plan by such political subdivision;
            (23) provide that the State will regularly and 
        frequently publicize, through public service 
        announcements, the availability of child support 
        enforcement services under the plan and otherwise, 
        including information as to any application fees for 
        such services and a telephone number or postal address 
        at which further information may be obtained and will 
        publicize the availability and encourage the use of 
        procedures for voluntary establishment of paternity and 
        child support by means the State deems appropriate; 
        [and]
            [(24) provide that if the State, as of the date of 
        the enactment of this paragraph, does not have in 
        effect an automated data processing and information 
        retrieval system meeting all of the requirements of 
        paragraph (16), the State--
                    [(A) will submit to the Secretary by 
                October 1, 1991, for review and approval by the 
                Secretary within 9 months after submittal an 
                advance automated data processing planning 
                document of the type referred to in such 
                paragraph; and
                    [(B) will have in effect by October 1, 
                1997, an operational automated data processing 
                and information retrieval system, meeting all 
                the requirements of that paragraph, which has 
                been approved by the Secretary.
The State may allow the jurisdiction which makes the collection 
involved to retain any application fee under paragraph (6)(B) 
or any late payment fee under paragraph (21).]
            (24) provide that the State will have in effect an 
        automated data processing and information retrieval 
        system--
                    (A) by October 1, 1997, which meets all 
                requirements of this part which were enacted on 
                or before the date of enactment of the Family 
                Support Act of 1988, and
                    (B) by October 1, 1999, which meets all 
                requirements of this part enacted on or before 
                the date of the enactment of the Personal 
                Responsibility and Work Opportunity Act of 
                1996, except that such deadline shall be 
                extended by 1 day for each day (if any) by 
                which the Secretary fails to meet the deadline 
                imposed by section 4344(a)(3) of the Personal 
                Responsibility and Work Opportunity Act of 
                1996;
            (25) provide that if a family with respect to which 
        services are provided under the plan ceases to receive 
        assistance under the State program funded under part A, 
        the State shall provide appropriate notice to the 
        family and continue to provide such services, subject 
        to the same conditions and on the same basis as in the 
        case of other individuals to whom services are 
        furnished under the plan, except that an application or 
        other request to continue services shall not be 
        required of such a family and paragraph (6)(B) shall 
        not apply to the family;
            (26) will have in effect safeguards, applicable to 
        all confidential information handled by the State 
        agency, that are designed to protect the privacy rights 
        of the parties, including--
                    (A) safeguards against unauthorized use or 
                disclosure of information relating to 
                proceedings or actions to establish paternity, 
                or to establish or enforce support;
                    (B) prohibitions against the release of 
                information on the whereabouts of 1 party to 
                another party against whom a protective order 
                with respect to the former party has been 
                entered; and
                    (C) prohibitions against the release of 
                information on the whereabouts of 1 party to 
                another party if the State has reason to 
                believe that the release of the information may 
                result in physical or emotional harm to the 
                former party;
            (27) provide that, on and after October 1, 1998, 
        the State agency will--
                    (A) operate a State disbursement unit in 
                accordance with section 454B; and
                    (B) have sufficient State staff (consisting 
                of State employees) and (at State option) 
                contractors reporting directly to the State 
                agency to--
                            (i) monitor and enforce support 
                        collections through the unit in cases 
                        being enforced by the State pursuant to 
                        section 454(4) (including carrying out 
                        the automated data processing 
                        responsibilities described in section 
                        454A(g)); and
                            (ii) take the actions described in 
                        section 466(c)(1) in appropriate cases;
            (28) provide that, on and after October 1, 1997, 
        the State will operate a State Directory of New Hires 
        in accordance with section 453A;
            (29) provide that the State agency responsible for 
        administering the State plan--
                    (A) shall make the determination (and 
                redetermination at appropriate intervals) as to 
                whether an individual who has applied for or is 
                receiving assistance under the State program 
                funded under part A, the State program under 
                title XV, or the State program under title XIX 
                is cooperating in good faith with the State in 
                establishing the paternity of, or in 
                establishing, modifying, or enforcing a support 
                order for, any child of the individual by 
                providing the State agency with the name of, 
                and such other information as the State agency 
                may require with respect to, the noncustodial 
                parent of the child, subject to good cause and 
                other exceptions which--
                            (i) shall be defined, taking into 
                        account the best interests of the 
                        child, and
                            (ii) shall be applied in each case,
                by, at the option of the State, the State 
                agency administering the State program under 
                part A, this part, title XV, or title XIX;
                    (B) shall require the individual to supply 
                additional necessary information and appear at 
                interviews, hearings, and legal proceedings;
                    (C) shall require the individual and the 
                child to submit to genetic tests pursuant to 
                judicial or administrative order;
                    (D) may request that the individual sign a 
                voluntary acknowledgment of paternity, after 
                notice of the rights and consequences of such 
                an acknowledgment, but may not require the 
                individual to sign an acknowledgment or 
                otherwise relinquish the right to genetic tests 
                as a condition of cooperation and eligibility 
                for assistance under the State program funded 
                under part A, the State program under title XV, 
                or the State program under title XIX; and
                    (E) shall promptly notify the individual 
                and the State agency administering the State 
                program funded under part A, the State agency 
                administering the State program under title XV, 
                and the State agency administering the State 
                program under title XIX, of each such 
                determination, and if noncooperation is 
                determined, the basis therefore;
            (30) provide that the State shall use the 
        definitions established under section 452(a)(5) in 
        collecting and reporting information as required under 
        this part;
            (31) provide that the State agency will have in 
        effect a procedure for certifying to the Secretary, for 
        purposes of the procedure under section 452(k), 
        determinations that individuals owe arrearages of child 
        support in an amount exceeding $5,000, under which 
        procedure--
                    (A) each individual concerned is afforded 
                notice of such determination and the 
                consequences thereof, and an opportunity to 
                contest the determination; and
                    (B) the certification by the State agency 
                is furnished to the Secretary in such format, 
                and accompanied by such supporting 
                documentation, as the Secretary may require; 
                and
            (32)(A) provide that any request for services under 
        this part by a foreign reciprocating country or a 
        foreign country with which the State has an arrangement 
        described in section 459A(d)(2) shall be treated as a 
        request by a State;
            (B) provide, at State option, notwithstanding 
        paragraph (4) or any other provision of this part, for 
        services under the plan for enforcement of a spousal 
        support order not described in paragraph (4)(B) entered 
        by such a country (or subdivision); and
            (C) provide that no applications will be required 
        from, and no costs will be assessed for such services 
        against, the foreign reciprocating country or foreign 
        obligee (but costs may at State option be assessed 
        against the obligor).

SEC. 454A. AUTOMATED DATA PROCESSING.

    (a) In General.--In order for a State to meet the 
requirements of this section, the State agency administering 
the State program under this part shall have in operation a 
single statewide automated data processing and information 
retrieval system which has the capability to perform the tasks 
specified in this section with the frequency and in the manner 
required by or under this part.
    (b) Program Management.--The automated system required by 
this section shall perform such functions as the Secretary may 
specify relating to management of the State program under this 
part, including--
            (1) controlling and accounting for use of Federal, 
        State, and local funds in carrying out the program; and
            (2) maintaining the data necessary to meet Federal 
        reporting requirements under this part on a timely 
        basis.
    (c) Calculation of Performance Indicators.--In order to 
enable the Secretary to determine the incentive payments and 
penalty adjustments required by sections 452(g) and 458, the 
State agency shall--
            (1) use the automated system--
                    (A) to maintain the requisite data on State 
                performance with respect to paternity 
                establishment and child support enforcement in 
                the State; and
                    (B) to calculate the paternity 
                establishment percentage for the State for each 
                fiscal year; and
            (2) have in place systems controls to ensure the 
        completeness and reliability of, and ready access to, 
        the data described in paragraph (1)(A), and the 
        accuracy of the calculations described in paragraph 
        (1)(B).
    (d) Information Integrity and Security.--The State agency 
shall have in effect safeguards on the integrity, accuracy, and 
completeness of, access to, and use of data in the automated 
system required by this section, which shall include the 
following (in addition to such other safeguards as the 
Secretary may specify in regulations):
            (1) Policies restricting access.--Written policies 
        concerning access to data by State agency personnel, 
        and sharing of data with other persons, which--
                    (A) permit access to and use of data only 
                to the extent necessary to carry out the State 
                program under this part; and
                    (B) specify the data which may be used for 
                particular program purposes, and the personnel 
                permitted access to such data.
            (2) Systems controls.--Systems controls (such as 
        passwords or blocking of fields) to ensure strict 
        adherence to the policies described in paragraph (1).
            (3) Monitoring of access.--Routine monitoring of 
        access to and use of the automated system, through 
        methods such as audit trails and feedback mechanisms, 
        to guard against and promptly identify unauthorized 
        access or use.
            (4) Training and information.--Procedures to ensure 
        that all personnel (including State and local agency 
        staff and contractors) who may have access to or be 
        required to use confidential program data are informed 
        of applicable requirements and penalties (including 
        those in section 6103 of the Internal Revenue Code of 
        1986), and are adequately trained in security 
        procedures.
            (5) Penalties.--Administrative penalties (up to and 
        including dismissal from employment) for unauthorized 
        access to, or disclosure or use of, confidential data.
    (e) State Case Registry.--
            (1) Contents.--The automated system required by 
        this section shall include a registry (which shall be 
        known as the ``State case registry'') that contains 
        records with respect to--
                    (A) each case in which services are being 
                provided by the State agency under the State 
                plan approved under this part; and
                    (B) each support order established or 
                modified in the State on or after October 1, 
                1998.
            (2) Linking of local registries.--The State case 
        registry may be established by linking local case 
        registries of support orders through an automated 
        information network, subject to this section.
            (3) Use of standardized data elements.--Such 
        records shall use standardized data elements for both 
        parents (such as names, social security numbers and 
        other uniform identification numbers, dates of birth, 
        and case identification numbers), and contain such 
        other information (such as on case status) as the 
        Secretary may require.
            (4) Payment records.--Each case record in the State 
        case registry with respect to which services are being 
        provided under the State plan approved under this part 
        and with respect to which a support order has been 
        established shall include a record of--
                    (A) the amount of monthly (or other 
                periodic) support owed under the order, and 
                other amounts (including arrearages, interest 
                or late payment penalties, and fees) due or 
                overdue under the order;
                    (B) any amount described in subparagraph 
                (A) that has been collected;
                    (C) the distribution of such collected 
                amounts;
                    (D) the birth date of any child for whom 
                the order requires the provision of support; 
                and
                    (E) the amount of any lien imposed with 
                respect to the order pursuant to section 
                466(a)(4).
            (5) Updating and monitoring.--The State agency 
        operating the automated system required by this section 
        shall promptly establish and update, maintain, and 
        regularly monitor, case records in the State case 
        registry with respect to which services are being 
        provided under the State plan approved under this part, 
        on the basis of--
                    (A) information on administrative actions 
                and administrative and judicial proceedings and 
                orders relating to paternity and support;
                    (B) information obtained from comparison 
                with Federal, State, or local sources of 
                information;
                    (C) information on support collections and 
                distributions; and
                    (D) any other relevant information.
    (f) Information Comparisons and Other Disclosures of 
Information.--The State shall use the automated system required 
by this section to extract information from (at such times, and 
in such standardized format or formats, as may be required by 
the Secretary), to share and compare information with, and to 
receive information from, other data bases and information 
comparison services, in order to obtain (or provide) 
information necessary to enable the State agency (or the 
Secretary or other State or Federal agencies) to carry out this 
part, subject to section 6103 of the Internal Revenue Code of 
1986. Such information comparison activities shall include the 
following:
            (1) Federal case registry of child support 
        orders.--Furnishing to the Federal Case Registry of 
        Child Support Orders established under section 453(h) 
        (and update as necessary, with information including 
        notice of expiration of orders) the minimum amount of 
        information on child support cases recorded in the 
        State case registry that is necessary to operate the 
        registry (as specified by the Secretary in 
        regulations).
            (2) Federal parent locator service.--Exchanging 
        information with the Federal Parent Locator Service for 
        the purposes specified in section 453.
            (3) Temporary family assistance and medicaid 
        agencies.--Exchanging information with State agencies 
        (of the State and of other States) administering 
        programs funded under part A, programs operated under a 
        State plan under title XV or a State plan approved 
        under title XIX, and other programs designated by the 
        Secretary, as necessary to perform State agency 
        responsibilities under this part and under such 
        programs.
            (4) Intrastate and interstate information 
        comparisons.--Exchanging information with other 
        agencies of the State, agencies of other States, and 
        interstate information networks, as necessary and 
        appropriate to carry out (or assist other States to 
        carry out) the purposes of this part.
    (g) Collection and Distribution of Support Payments.--
            (1) In general.--The State shall use the automated 
        system required by this section, to the maximum extent 
        feasible, to assist and facilitate the collection and 
        disbursement of support payments through the State 
        disbursement unit operated under section 454B, through 
        the performance of functions, including, at a minimum--
                    (A) transmission of orders and notices to 
                employers (and other debtors) for the 
                withholding of income--
                            (i) within 2 business days after 
                        receipt of notice of, and the income 
                        source subject to, such withholding 
                        from a court, another State, an 
                        employer, the Federal Parent Locator 
                        Service, or another source recognized 
                        by the State; and
                            (ii) using uniform formats 
                        prescribed by the Secretary;
                    (B) ongoing monitoring to promptly identify 
                failures to make timely payment of support; and
                    (C) automatic use of enforcement procedures 
                (including procedures authorized pursuant to 
                section 466(c)) if payments are not timely 
                made.
            (2) Business day defined.--As used in paragraph 
        (1), the term ``business day'' means a day on which 
        State offices are open for regular business.
    (h) Expedited Administrative Procedures.--The automated 
system required by this section shall be used, to the maximum 
extent feasible, to implement the expedited administrative 
procedures required by section 466(c).

SEC. 454B. COLLECTION AND DISBURSEMENT OF SUPPORT PAYMENTS.

    (a) State Disbursement Unit.--
            (1) In general.--In order for a State to meet the 
        requirements of this section, the State agency must 
        establish and operate a unit (which shall be known as 
        the ``State disbursement unit'') for the collection and 
        disbursement of payments under support orders--
                    (A) in all cases being enforced by the 
                State pursuant to section 454(4); and
                    (B) in all cases not being enforced by the 
                State under this part in which the support 
                order is initially issued in the State on or 
                after January 1, 1994, and in which the income 
                of the noncustodial parent are subject to 
                withholding pursuant to section 466(a)(8)(B).
            (2) Operation.--The State disbursement unit shall 
        be operated--
                    (A) directly by the State agency (or 2 or 
                more State agencies under a regional 
                cooperative agreement), or (to the extent 
                appropriate) by a contractor responsible 
                directly to the State agency; and
                    (B) except in cases described in paragraph 
                (1)(B), in coordination with the automated 
                system established by the State pursuant to 
                section 454A.
            (3) Linking of local disbursement units.--The State 
        disbursement unit may be established by linking local 
        disbursement units through an automated information 
        network, subject to this section, if the Secretary 
        agrees that the system will not cost more nor take more 
        time to establish or operate than a centralized system. 
        In addition, employers shall be given 1 location to 
        which income withholding is sent.
    (b) Required Procedures.--The State disbursement unit shall 
use automated procedures, electronic processes, and computer-
driven technology to the maximum extent feasible, efficient, 
and economical, for the collection and disbursement of support 
payments, including procedures--
            (1) for receipt of payments from parents, 
        employers, and other States, and for disbursements to 
        custodial parents and other obligees, the State agency, 
        and the agencies of other States;
            (2) for accurate identification of payments;
            (3) to ensure prompt disbursement of the custodial 
        parent's share of any payment; and
            (4) to furnish to any parent, upon request, timely 
        information on the current status of support payments 
        under an order requiring payments to be made by or to 
        the parent.
    (c) Timing of Disbursements.--
            (1) In general.--Except as provided in paragraph 
        (2), the State disbursement unit shall distribute all 
        amounts payable under section 457(a) within 2 business 
        days after receipt from the employer or other source of 
        periodic income, if sufficient information identifying 
        the payee is provided.
            (2) Permissive retention of arrearages.--The State 
        disbursement unit may delay the distribution of 
        collections toward arrearages until the resolution of 
        any timely appeal with respect to such arrearages.
    (d) Business Day Defined.--As used in this section, the 
term ``business day'' means a day on which State offices are 
open for regular business.

                           PAYMENTS TO STATES

    Sec. 455. (a)(1) From the sums appropriated therefor, the 
Secretary shall pay to each State for each quarter an amount--
            (A) equal to the percent specified in paragraph (2) 
        of the total amounts expended by such State during such 
        quarter for the operation of the plan approved under 
        section 454,
            (B) equal to [90 percent] the percent specified in 
        paragraph (3) (rather than the percent specified in 
        subparagraph (A)) of [so much of] the sums expended 
        during such quarter as are attributable to the 
        planning, design, development, installation or 
        enhancement of an automatic data processing and 
        information retrieval system (including in such sums 
        the full cost of the hardware components of such 
        system) [which the Secretary finds meets the 
        requirements specified in section 454(16), or meets 
        such requirements without regard to clause (D) thereof, 
        and], and
            (C) equal to 90 percent (rather than the percentage 
        specified in subparagraph (A)) of so much of the sums 
        expended during such quarter as are attributable to 
        laboratory costs incurred in determining paternity;
except that no amount shall be paid to any State on account of 
amounts expended to carry out an agreement which it has entered 
into pursuant to section 463. In determining the total amounts 
expended by any State during a quarter, for purposes of this 
subsection, there shall be excluded an amount equal to the 
total of any fees collected or other income resulting from 
services provided under the plan approved under this part.
          * * * * * * *
    (3)(A) The Secretary shall pay to each State, for each 
quarter in fiscal years 1996 and 1997, 90 percent of so much of 
the State expenditures described in paragraph (1)(B) as the 
Secretary finds are for a system meeting the requirements 
specified in section 454(16) (as in effect on September 30, 
1995) but limited to the amount approved for States in the 
advance planning documents of such States submitted on or 
before September 30, 1995.
    (B)(i) The Secretary shall pay to each State, for each 
quarter in fiscal years 1996 through 2001, the percentage 
specified in clause (ii) of so much of the State expenditures 
described in paragraph (1)(B) as the Secretary finds are for a 
system meeting the requirements of sections 454(16) and 454A.
    (ii) The percentage specified in this clause is 80 percent.
          * * * * * * *
    (e)(1) In order to encourage and promote the development 
and use of more effective methods of enforcing support 
obligations under this part in cases where either the children 
on whose behalf the support is sought or their [absent] 
noncustodial parents do not reside in the State where such 
cases are filed, the Secretary is authorized to make grants, in 
such amounts and on such terms and conditions as the Secretary 
determines to be appropriate, to States which propose to 
undertake new or innovative methods of support collection in 
such cases and which will use the proceeds of such grants to 
carry out special projects designed to demonstrate and test 
such methods.
          * * * * * * *

                          SUPPORT OBLIGATIONS

    Sec. 456. (a)(1) The support rights assigned to the State 
[under section 402(a)(26)] or secured on behalf of a child 
receiving foster care maintenance payments shall constitute an 
obligation owed to such State by the individual responsible for 
providing such support. Such obligation shall be deemed for 
collection purposes to be collectible under all applicable 
State and local processes.
    (2) The amount of such obligation shall be--
            (A) the amount specified in a court order which 
        covers the assigned support rights, or
            (B) if there is no court order, an amount 
        determined by the State in accordance with a formula 
        approved by the Secretary, and
    (3) Any amounts collected from [an absent] a noncustodial 
parent under the plan shall reduce, dollar for dollar, the 
amount of his obligation under subparagraphs (A) and (B) of 
paragraph (2).
    [(b) A debt which is a child support obligation assigned to 
a State under section 402(a)(26) is not released by a discharge 
in bankruptcy under title 11, United States Code.]
    (b) Nondischargeability.--A debt (as defined in section 101 
of title 11 of the United States Code) owed under State law to 
a State (as defined in such section) or municipality (as 
defined in such section) that is in the nature of support and 
that is enforceable under this part is not released by a 
discharge in bankruptcy under title 11 of the United States 
Code.

                       [DISTRIBUTION OF PROCEEDS

    [Sec. 457. (a) The amounts collected as child support by a 
State pursuant to a plan approved under this part during the 15 
months beginning July 1, 1975, shall be distributed as follows:
            [(1) 40 per centum of the first $50 of such amounts 
        as are collected periodically which represent monthly 
        support payments shall be paid to the family without 
        any decrease in the amount paid as assistance to such 
        family during such month;
            [(2) such amounts as are collected periodically 
        which are in excess of any amount paid to the family 
        under paragraph (1) which represent monthly support 
        payments shall be retained by the State to reimburse it 
        for assistance payments to the family during such 
        period (with appropriate reimbursement of the Federal 
        Government to the extent of its participation in the 
        financing);
            [(3) such amounts as are in excess of amounts 
        retained by the State under paragraph (2) and are not 
        in excess of the amount required to be paid during such 
        period to the family by a court order shall be paid to 
        the family; and
            [(4) such amounts as are in excess of amounts 
        required to be distributed under paragraphs (1), (2), 
        and (3) shall be (A) retained by the State (with 
        appropriate reimbursement of the Federal Government to 
        the extent of its participation in the financing) as 
        reimbursement for any past assistance payments made to 
        the family for which the State has not been reimbursed 
        or (B) if no assistance payments have been made by the 
        State which have not been repaid, such amounts shall be 
        paid to the family.
    [(b) The amounts collected as support by a State pursuant 
to a plan approved under this part during any fiscal year 
beginning after September 30, 1976, shall (subject to 
subsection (d)) be distributed as follows:
            [(1) of such amounts as are collected periodically 
        which represent monthly support payments, the first $50 
        of any payments for a month received in that month, and 
        the first $50 of payments for each prior month received 
        in that month which were made by the absent parent in 
        the month when due, 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) such amounts as are collected periodically 
        which are in excess of any amount paid to the family 
        under paragraph (1) and which represent monthly support 
        payments shall be retained by the State to reimburse it 
        for assistance payments to the family during such 
        period (with appropriate reimbursement of the Federal 
        Government to the extent of its participation in the 
        financing);
            [(3) such amounts as are in excess of amounts 
        retained by the State under paragraph (2) and are not 
        in excess of the amount required to be paid during such 
        period to the family by a court or administrative order 
        shall be paid to the family; and
            [(4) such amounts as are in excess of amounts 
        required to be distributed under paragraphs (1), (2), 
        and (3) shall be (A) retained by the State (with 
        appropriate reimbursement of the Federal Government to 
        the extent of its participation in the financing) as 
        reimbursement for any past assistance payments made to 
        the family for which the State has not been reimbursed 
        or (B) if no assistance payments have been made by the 
        State which have not been repaid, such amounts shall be 
        paid to the family.
    [(c) Whenever a family with respect to which child support 
enforcement services have been provided pursuant to section 
454(4) ceases to receive assistance under part A of this title, 
the State shall provide appropriate notice to the family and 
continue to provide such services, and pay any amount of 
support collected, subject to the same conditions and on the 
same basis as in the case of the individuals to whom services 
are furnished pursuant to section 454(6), except that no 
application or other request to continue services shall be 
required of a family to which this subsection applies, and the 
provisions of section 454(6)(B) may not be applied.
    [(d) Notwithstanding the preceding provisions of this 
section, amounts collected by a State as child support for 
months in any period on behalf of a child for whom a public 
agency is making foster care maintenance payments under part 
E--
            [(1) shall be retained by the State to the extent 
        necessary to reimburse it for the foster care 
        maintenance payments made with respect to the child 
        during such period (with appropriate reimbursement of 
        the Federal Government to the extent of its 
        participation in the financing);
            [(2) shall be paid to the public agency responsible 
        for supervising the placement of the child to the 
        extent that the amounts collected exceed the foster 
        care maintenance payments made with respect to the 
        child during such period but not the amounts required 
        by a court or administrative order to be paid as 
        support on behalf of the child during such period; and 
        the responsible agency may use the payments in the 
        manner it determines will serve the best interests of 
        the child, including setting such payments aside for 
        the child's future needs or making all or a part 
        thereof available to the person responsible for meeting 
        the child's day-to-day needs; and
            [(3) shall be retained by the State, if any portion 
        of the amounts collected remains after making the 
        payments required under paragraphs (1) and (2), to the 
        extent that such portion is necessary to reimburse the 
        State (with appropriate reimbursement to the Federal 
        Government to the extent of its participation in the 
        financing) for any past foster care maintenance 
        payments (or payments of aid to families with dependent 
        children) which were made with respect to the child 
        (and with respect to which past collections have not 
        previously been retained);
and any balance shall be paid to the State agency responsible 
for supervising the placement of the child, for use by such 
agency in accordance with paragraph (2).]

SEC. 457. DISTRIBUTION OF COLLECTED SUPPORT.

    (a) In General.--Subject to subsection (e), an amount 
collected on behalf of a family as support by a State pursuant 
to a plan approved under this part shall be distributed as 
follows:
            (1) Families receiving assistance.--In the case of 
        a family receiving assistance from the State, the State 
        shall--
                    (A) pay to the Federal Government the 
                Federal share of the amount so collected; and
                    (B) retain, or distribute to the family, 
                the State share of the amount so collected.
            (2) Families that formerly received assistance.--In 
        the case of a family that formerly received assistance 
        from the State:
                    (A) Current support payments.--To the 
                extent that the amount so collected does not 
                exceed the amount required to be paid to the 
                family for the month in which collected, the 
                State shall distribute the amount so collected 
                to the family.
                    (B) Payments of arrearages.--To the extent 
                that the amount so collected exceeds the amount 
                required to be paid to the family for the month 
                in which collected, the State shall distribute 
                the amount so collected as follows:
                            (i) Distribution of arrearages that 
                        accrued after the family ceased to 
                        receive assistance.--
                                    (I) Pre-october 1997.--
                                Except as provided in subclause 
                                (II), the provisions of this 
                                section (other than subsection 
                                (b)(1)) as in effect and 
                                applied on the day before the 
                                date of the enactment of 
                                section 4302 of the Personal 
                                Responsibility and Work 
                                Opportunity Act of 1996 shall 
                                apply with respect to the 
                                distribution of support 
                                arrearages that--
                                            (aa) accrued after 
                                        the family ceased to 
                                        receive assistance, and
                                            (bb) are collected 
                                        before October 1, 1997.
                                    (II) Post-september 1997.--
                                With respect to the amount so 
                                collected on or after October 
                                1, 1997 (or before such date, 
                                at the option of the State)--
                                            (aa) In general.--
                                        The State shall first 
                                        distribute the amount 
                                        so collected (other 
                                        than any amount 
                                        described in clause 
                                        (iv)) to the family to 
                                        the extent necessary to 
                                        satisfy any support 
                                        arrearages with respect 
                                        to the family that 
                                        accrued after the 
                                        family ceased to 
                                        receive assistance from 
                                        the State.
                                            (bb) Reimbursement 
                                        of governments for 
                                        assistance provided to 
                                        the family.--After the 
                                        application of division 
                                        (aa) and clause 
                                        (ii)(II)(aa) with 
                                        respect to the amount 
                                        so collected, the State 
                                        shall retain the State 
                                        share of the amount so 
                                        collected, and pay to 
                                        the Federal Government 
                                        the Federal share (as 
                                        defined in subsection 
                                        (c)(2)) of the amount 
                                        so collected, but only 
                                        to the extent necessary 
                                        to reimburse amounts 
                                        paid to the family as 
                                        assistance by the 
                                        State.
                                            (cc) Distribution 
                                        of the remainder to the 
                                        family.--To the extent 
                                        that neither division 
                                        (aa) nor division (bb) 
                                        applies to the amount 
                                        so collected, the State 
                                        shall distribute the 
                                        amount to the family.
                            (ii) Distribution of arrearages 
                        that accrued before the family received 
                        assistance.--
                                    (I) Pre-october 2000.--
                                Except as provided in subclause 
                                (II), the provisions of this 
                                section (other than subsection 
                                (b)(1)) as in effect and 
                                applied on the day before the 
                                date of the enactment of 
                                section 4302 of the Personal 
                                Responsibility and Work 
                                Opportunity Act of 1996 shall 
                                apply with respect to the 
                                distribution of support 
                                arrearages that--
                                            (aa) accrued before 
                                        the family received 
                                        assistance, and
                                            (bb) are collected 
                                        before October 1, 2000.
                                    (II) Post-september 2000.--
                                Unless, based on the report 
                                required by paragraph (4), the 
                                Congress determines otherwise, 
                                with respect to the amount so 
                                collected on or after October 
                                1, 2000 (or before such date, 
                                at the option of the State)--
                                            (aa) In general.--
                                        The State shall first 
                                        distribute the amount 
                                        so collected (other 
                                        than any amount 
                                        described in clause 
                                        (iv)) to the family to 
                                        the extent necessary to 
                                        satisfy any support 
                                        arrearages with respect 
                                        to the family that 
                                        accrued before the 
                                        family received 
                                        assistance from the 
                                        State.
                                            (bb) Reimbursement 
                                        of governments for 
                                        assistance provided to 
                                        the family.--After the 
                                        application of clause 
                                        (i)(II)(aa) and 
                                        division (aa) with 
                                        respect to the amount 
                                        so collected, the State 
                                        shall retain the State 
                                        share of the amount so 
                                        collected, and pay to 
                                        the Federal Government 
                                        the Federal share (as 
                                        defined in subsection 
                                        (c)(2)) of the amount 
                                        so collected, but only 
                                        to the extent necessary 
                                        to reimburse amounts 
                                        paid to the family as 
                                        assistance by the 
                                        State.
                                            (cc) Distribution 
                                        of the remainder to the 
                                        family.--To the extent 
                                        that neither division 
                                        (aa) nor division (bb) 
                                        applies to the amount 
                                        so collected, the State 
                                        shall distribute the 
                                        amount to the family.
                            (iii) Distribution of arrearages 
                        that accrued while the family received 
                        assistance.--In the case of a family 
                        described in this subparagraph, the 
                        provisions of paragraph (1) shall apply 
                        with respect to the distribution of 
                        support arrearages that accrued while 
                        the family received assistance.
                            (iv) Amounts collected pursuant to 
                        section 464.--Notwithstanding any other 
                        provision of this section, any amount 
                        of support collected pursuant to 
                        section 464 shall be retained by the 
                        State to the extent past-due support 
                        has been assigned to the State as a 
                        condition of receiving assistance from 
                        the State, up to the amount necessary 
                        to reimburse the State for amounts paid 
                        to the family as assistance by the 
                        State. The State shall pay to the 
                        Federal Government the Federal share of 
                        the amounts so retained. To the extent 
                        the amount collected pursuant to 
                        section 464 exceeds the amount so 
                        retained, the State shall distribute 
                        the excess to the family.
                            (v) Ordering rules for 
                        distributions.--For purposes of this 
                        subparagraph, unless an earlier 
                        effective date is required by this 
                        section, effective October 1, 2000, the 
                        State shall treat any support 
                        arrearages collected, except for 
                        amounts collected pursuant to section 
                        464, as accruing in the following 
                        order:
                                    (I) To the period after the 
                                family ceased to receive 
                                assistance.
                                    (II) To the period before 
                                the family received assistance.
                                    (III) To the period while 
                                the family was receiving 
                                assistance.
            (3) Families that never received assistance.--In 
        the case of any other family, the State shall 
        distribute the amount so collected to the family.
            (4) Study and report.--Not later than October 1, 
        1998, the Secretary shall report to the Congress the 
        Secretary's findings with respect to--
                    (A) whether the distribution of post-
                assistance arrearages to families has been 
                effective in moving people off of welfare and 
                keeping them off of welfare;
                    (B) whether early implementation of a pre-
                assistance arrearage program by some States has 
                been effective in moving people off of welfare 
                and keeping them off of welfare;
                    (C) what the overall impact has been of the 
                amendments made by the Personal Responsibility 
                and Work Opportunity Act of 1996 with respect 
                to child support enforcement in moving people 
                off of welfare and keeping them off of welfare; 
                and
                    (D) based on the information and data the 
                Secretary has obtained, what changes, if any, 
                should be made in the policies related to the 
                distribution of child support arrearages.
    (b) Continuation Of Assignments.--Any rights to support 
obligations, which were assigned to a State as a condition of 
receiving assistance from the State under part A and which were 
in effect on the day before the date of the enactment of the 
Personal Responsibility and Work Opportunity Act of 1996, shall 
remain assigned after such date.
    (c) Definitions.--As used in subsection (a):
            (1) Assistance.--The term ``assistance from the 
        State'' means--
                    (A) assistance under the State program 
                funded under part A or under the State plan 
                approved under part A of this title (as in 
                effect on the day before the date of the 
                enactment of the Personal Responsibility and 
                Work Opportunity Act of 1996); and
                    (B) foster care maintenance payments under 
                the State plan approved under part E of this 
                title.
            (2) Federal share.--The term ``Federal share'' 
        means that portion of the amount collected resulting 
        from the application of the Federal medical assistance 
        percentage in effect for the fiscal year in which the 
        amount is collected.
            (3) Federal medical assistance percentage.--The 
        term ``Federal medical assistance percentage'' means--
                    (A) the Federal medical assistance 
                percentage (as defined in section 1118), in the 
                case of Puerto Rico, the Virgin Islands, Guam, 
                and American Samoa; or
                    (B) the Federal medical assistance 
                percentage (as defined in section 1905(b), as 
                in effect on September 30, 1996) in the case of 
                any other State.
            (4) State share.--The term ``State share'' means 
        100 percent minus the Federal share.
    (d) Hold Harmless Provision.--If the amounts collected 
which could be retained by the State in the fiscal year (to the 
extent necessary to reimburse the State for amounts paid to 
families as assistance by the State) are less than the State 
share of the amounts collected in fiscal year 1995 (determined 
in accordance with section 457 as in effect on the day before 
the date of the enactment of the Personal Responsibility and 
Work Opportunity Act of 1996), the State share for the fiscal 
year shall be an amount equal to the State share in fiscal year 
1995.
    (e) Gap Payments not Subject to Distribution Under This 
Section.--At State option, this section shall not apply to any 
amount collected on behalf of a family as support by the State 
(and paid to the family in addition to the amount of assistance 
otherwise payable to the family) pursuant to a plan approved 
under this part if such amount would have been paid to the 
family by the State under section 402(a)(28), as in effect and 
applied on the day before the date of the enactment of section 
4302 of the Personal Responsibility and Work Opportunity Act of 
1996. For purposes of subsection (d), the State share of such 
amount paid to the family shall be considered amounts which 
could be retained by the State if such payments were reported 
by the State as part of the State share of amounts collected in 
fiscal year 1995.

                      INCENTIVE PAYMENTS TO STATES

    Sec. 458. (a) In order to encourage and reward State child 
support enforcement programs which perform in a cost-effective 
and efficient manner to secure support for all children who 
have sought assistance in securing support, whether such 
children reside within the State or elsewhere and whether or 
not they are eligible for [aid to families with dependent 
children under a State plan approved under part A of this 
title] assistance under a program funded under part A, and 
regardless of the economic circumstances of their parents, the 
Secretary shall, from support collected which would otherwise 
represent the Federal share of assistance to families of 
[absent] noncustodial parents, pay to each State for each 
fiscal year, on a quarterly basis (as described in subsection 
(e)) beginning with the quarter commencing October 1, 1985, an 
incentive payment in an amount determined under subsection (b).
    (b)(1) Except as provided in paragraphs (2), (3), and (4), 
the incentive payment shall be equal to--
            (A) 6 percent of the total amount of support 
        collected under the plan during the fiscal year in 
        cases in which the support obligation involved is 
        assigned to the State pursuant to section [402(a)(26)] 
        408(a)(4) or section 471(a)(17) (with such total amount 
        for any fiscal year being hereafter referred to in this 
        section as the ``State's [AFDC] title IV-A 
        collections'' for that year), plus
            (B) 6 percent of the total amount of support 
        collected during the fiscal year in all other cases 
        under this part (with such total amount for any fiscal 
        year being hereafter referred to in this section as the 
        State's ``[non-AFDC] non-title IV-A collections'' for 
        that year).
    (2) If subsection (c) applies with respect to a State's 
[AFDC] title IV-A collections or [non-AFDC] non-title IV-A 
collections for any fiscal year, the percent specified in 
paragraph (1)(A) or (B) (with respect to such collections) 
shall be increased to the higher percent determined under such 
subsection (with respect to such collections) in determining 
the State's incentive payment under this subsection for that 
year.
    (3) The dollar amount of the portion of the State's 
incentive payment for any fiscal year which is determined on 
the basis of its [non-AFDC] non-title IV-A collections under 
paragraph (1)(B) (after adjustment under subsection (c) if 
applicable) shall in no case exceed--
            (A) the dollar amount of the portion of such 
        payment which is determined on the basis of its [AFDC] 
        title IV-A collections under paragraph (1)(A) (after 
        adjustment under subsection (c) if applicable) in the 
        case of fiscal year 1986 or 1987;
            (B) 105 percent of such dollar amount in the case 
        of fiscal year 1988;
            (C) 110 percent of such dollar amount in the case 
        of fiscal year 1989; or
            (D) 115 percent of such dollar amount in the case 
        of fiscal year 1990 or any fiscal year thereafter.
    (4) The Secretary shall make such additional payments to 
the State under this part, for fiscal year 1986 or 1987, as may 
be necessary to assure that the total amount of payments under 
this section and section 455(a)(1)(A) for such fiscal year is 
no less than 80 percent of the amount that would have been 
payable to that State and its political subdivisions for such 
fiscal year under this section and section 455(a)(1)(A) if 
those sections (including the amendment made by section 
5(c)(2)(A) of the Child Support Enforcement Amendments of 1984) 
had remained in effect as they were in effect for fiscal year 
1985.
    (c) If the total amount of a State's [AFDC] title IV-A 
collections or [non-AFDC] non-title IV-A collections for any 
fiscal year bears a ratio to the total amount expended by the 
State in that year for the operation of its plan approved under 
section 454 for which payment may be made under section 455 
(with the total amount so expended in any fiscal year being 
hereafter referred to in this section as the State's ``combined 
[AFDC/non-AFDC] title IV-A/non-title IV-A administrative 
costs'' for that year) which is equal to or greater than 1.4, 
the relevant percent specified in subparagraph (A) or (B) of 
subsection (b)(1) (with respect to such collections) shall be 
increased to--
            (1) 6.5 percent, plus
            (2) one-half of 1 percent for each full two-tenths 
        by which such ratio exceeds 1.4;
except that the percent so specified shall in no event be 
increased (for either [AFDC] title IV-A collections or [non-
AFDC] non-title IV-A collections) to more than 10 percent. For 
purposes of the preceding sentence, laboratory costs incurred 
in determining paternity in any fiscal year may at the option 
of the State be excluded from the State's combined [AFDC/non-
AFDC] title IV-A/non-title IV-A administrative costs for that 
year.

 [consent by the united states to garnishment and similar proceedings 
        for enforcement of child support and alimony obligations

    [Sec. 459. (a) Notwithstanding any other provision of law 
(including section 207), effective January 1, 1975, moneys (the 
entitlement to which is based upon remuneration for employment) 
due from, or payable by, the United States or the District of 
Columbia (including any agency, subdivision, or instrumentality 
thereof) to any individual, including members of the armed 
services, shall be subject, in like manner and to the same 
extent as if the United States or the District of Columbia were 
a private person, to legal process brought for the enforcement, 
against such individual of his legal obligations to provide 
child support or make alimony payments.
    [(b) Service of legal process brought for the enforcement 
of an individual's obligation to provide child support or make 
alimony payments shall be accomplished by certified or 
registered mail, return receipt requested, or by personal 
service, upon the appropriate agent designated for receipt of 
such service of process pursuant to regulations promulgated 
pursuant to section 461 (or, if no agent has been designated 
for the governmental entity having payment responsibility for 
the moneys involved, then upon the head of such governmental 
entity). Such process shall be accompanied by sufficient data 
to permit prompt identification of the individual and the 
moneys involved.
    [(c) No Federal employee whose duties include responding to 
interrogatories pursuant to requirements imposed by section 
461(b)(3) shall be subject under any law to any disciplinary 
action or civil or criminal liability or penalty for, or on 
account of, any disclosure of information made by him in 
connection with the carrying out of any of his duties which 
pertain (directly or indirectly) to the answering of any such 
interrogatory.
    [(d) Whenever any person, who is designated by law or 
regulation to accept service of process to which the United 
States is subject under this section, is effectively served 
with any such process or with interrogatories relating to an 
individual's child support or alimony payment obligations, such 
person shall respond thereto within thirty days (or within such 
longer period as may be prescribed by applicable State law) 
after the date effective service thereof is made, and shall, as 
soon as possible but not later than fifteen days after the date 
effective service is so made of any such process, send written 
notice that such process has been so served (together with a 
copy thereof) to the individual whose moneys are affected 
thereby at his duty station or last-known home address.
    [(e) Governmental entities affected by legal processes 
served for the enforcement of an individual's child support or 
alimony payment obligations shall not be required to vary their 
normal pay and disbursement cycles in order to comply with any 
such legal process.
    [(f) Neither the United States, any disbursing officer, nor 
governmental entity shall be liable with respect to any payment 
made from moneys due or payable from the United States to any 
individual pursuant to legal process regular on its face, if 
such payment is made in accordance with this section and the 
regulations issued to carry out this section.]

SEC. 459. CONSENT BY THE UNITED STATES TO INCOME WITHHOLDING, 
                    GARNISHMENT, AND SIMILAR PROCEEDINGS FOR 
                    ENFORCEMENT OF CHILD SUPPORT AND ALIMONY 
                    OBLIGATIONS.

    (a) Consent to Support Enforcement.--Notwithstanding any 
other provision of law (including section 207 of this Act and 
section 5301 of title 38, United States Code), effective 
January 1, 1975, moneys (the entitlement to which is based upon 
remuneration for employment) due from, or payable by, the 
United States or the District of Columbia (including any 
agency, subdivision, or instrumentality thereof) to any 
individual, including members of the Armed Forces of the United 
States, shall be subject, in like manner and to the same extent 
as if the United States or the District of Columbia were a 
private person, to withholding in accordance with State law 
enacted pursuant to subsections (a)(1) and (b) of section 466 
and regulations of the Secretary under such subsections, and to 
any other legal process brought, by a State agency 
administering a program under a State plan approved under this 
part or by an individual obligee, to enforce the legal 
obligation of the individual to provide child support or 
alimony.
    (b) Consent to Requirements Applicable to Private Person.--
With respect to notice to withhold income pursuant to 
subsection (a)(1) or (b) of section 466, or any other order or 
process to enforce support obligations against an individual 
(if the order or process contains or is accompanied by 
sufficient data to permit prompt identification of the 
individual and the moneys involved), each governmental entity 
specified in subsection (a) shall be subject to the same 
requirements as would apply if the entity were a private 
person, except as otherwise provided in this section.
    (c) Designation of Agent; Response to Notice or Process--
            (1) Designation of agent.--The head of each agency 
        subject to this section shall--
                    (A) designate an agent or agents to receive 
                orders and accept service of process in matters 
                relating to child support or alimony; and
                    (B) annually publish in the Federal 
                Register the designation of the agent or 
                agents, identified by title or position, 
                mailing address, and telephone number.
            (2) Response to notice or process.--If an agent 
        designated pursuant to paragraph (1) of this subsection 
        receives notice pursuant to State procedures in effect 
        pursuant to subsection (a)(1) or (b) of section 466, or 
        is effectively served with any order, process, or 
        interrogatory, with respect to an individual's child 
        support or alimony payment obligations, the agent 
        shall--
                    (A) as soon as possible (but not later than 
                15 days) thereafter, send written notice of the 
                notice or service (together with a copy of the 
                notice or service) to the individual at the 
                duty station or last-known home address of the 
                individual;
                    (B) within 30 days (or such longer period 
                as may be prescribed by applicable State law) 
                after receipt of a notice pursuant to such 
                State procedures, comply with all applicable 
                provisions of section 466; and
                    (C) within 30 days (or such longer period 
                as may be prescribed by applicable State law) 
                after effective service of any other such 
                order, process, or interrogatory, respond to 
                the order, process, or interrogatory.
    (d) Priority of Claims.--If a governmental entity specified 
in subsection (a) receives notice or is served with process, as 
provided in this section, concerning amounts owed by an 
individual to more than 1 person--
            (1) support collection under section 466(b) must be 
        given priority over any other process, as provided in 
        section 466(b)(7);
            (2) allocation of moneys due or payable to an 
        individual among claimants under section 466(b) shall 
        be governed by section 466(b) and the regulations 
        prescribed under such section; and
            (3) such moneys as remain after compliance with 
        paragraphs (1) and (2) shall be available to satisfy 
        any other such processes on a first-come, first-served 
        basis, with any such process being satisfied out of 
        such moneys as remain after the satisfaction of all 
        such processes which have been previously served.
    (e) No Requirement to Vary Pay Cycles.--A governmental 
entity that is affected by legal process served for the 
enforcement of an individual's child support or alimony payment 
obligations shall not be required to vary its normal pay and 
disbursement cycle in order to comply with the legal process.
    (f) Relief From Liability.--
            (1) Neither the United States, nor the government 
        of the District of Columbia, nor any disbursing officer 
        shall be liable with respect to any payment made from 
        moneys due or payable from the United States to any 
        individual pursuant to legal process regular on its 
        face, if the payment is made in accordance with this 
        section and the regulations issued to carry out this 
        section.
            (2) No Federal employee whose duties include taking 
        actions necessary to comply with the requirements of 
        subsection (a) with regard to any individual shall be 
        subject under any law to any disciplinary action or 
        civil or criminal liability or penalty for, or on 
        account of, any disclosure of information made by the 
        employee in connection with the carrying out of such 
        actions.
    (g) Regulations.--Authority to promulgate regulations for 
the implementation of this section shall, insofar as this 
section applies to moneys due from (or payable by)--
            (1) the United States (other than the legislative 
        or judicial branches of the Federal Government) or the 
        government of the District of Columbia, be vested in 
        the President (or the designee of the President);
            (2) the legislative branch of the Federal 
        Government, be vested jointly in the President pro 
        tempore of the Senate and the Speaker of the House of 
        Representatives (or their designees), and
            (3) the judicial branch of the Federal Government, 
        be vested in the Chief Justice of the United States (or 
        the designee of the Chief Justice).
    (h) Moneys Subject to Process.--
            (1) In general.--Subject to paragraph (2), moneys 
        paid or payable to an individual which are considered 
        to be based upon remuneration for employment, for 
        purposes of this section--
                    (A) consist of--
                            (i) compensation paid or payable 
                        for personal services of the 
                        individual, whether the compensation is 
                        denominated as wages, salary, 
                        commission, bonus, pay, allowances, or 
                        otherwise (including severance pay, 
                        sick pay, and incentive pay);
                            (ii) periodic benefits (including a 
                        periodic benefit as defined in section 
                        228(h)(3)) or other payments--
                                    (I) under the insurance 
                                system established by title II;
                                    (II) under any other system 
                                or fund established by the 
                                United States which provides 
                                for the payment of pensions, 
                                retirement or retired pay, 
                                annuities, dependents' or 
                                survivors' benefits, or similar 
                                amounts payable on account of 
                                personal services performed by 
                                the individual or any other 
                                individual;
                                    (III) as compensation for 
                                death under any Federal 
                                program;
                                    (IV) under any Federal 
                                program established to provide 
                                ``black lung'' benefits; or
                                    (V) by the Secretary of 
                                Veterans Affairs as 
                                compensation for a service-
                                connected disability paid by 
                                the Secretary to a former 
                                member of the Armed Forces who 
                                is in receipt of retired or 
                                retainer pay if the former 
                                member has waived a portion of 
                                the retired or retainer pay in 
                                order to receive such 
                                compensation; and
                            (iii) worker's compensation 
                        benefits paid under Federal or State 
                        law but
                    (B) do not include any payment--
                            (i) by way of reimbursement or 
                        otherwise, to defray expenses incurred 
                        by the individual in carrying out 
                        duties associated with the employment 
                        of the individual; or
                            (ii) as allowances for members of 
                        the uniformed services payable pursuant 
                        to chapter 7 of title 37, United States 
                        Code, as prescribed by the Secretaries 
                        concerned (defined by section 101(5) of 
                        such title) as necessary for the 
                        efficient performance of duty.
            (2) Certain amounts excluded.--In determining the 
        amount of any moneys due from, or payable by, the 
        United States to any individual, there shall be 
        excluded amounts which--
                    (A) are owed by the individual to the 
                United States;
                    (B) are required by law to be, and are, 
                deducted from the remuneration or other payment 
                involved, including Federal employment taxes, 
                and fines and forfeitures ordered by court-
                martial;
                    (C) are properly withheld for Federal, 
                State, or local income tax purposes, if the 
                withholding of the amounts is authorized or 
                required by law and if amounts withheld are not 
                greater than would be the case if the 
                individual claimed all dependents to which he 
                was entitled (the withholding of additional 
                amounts pursuant to section 3402(i) of the 
                Internal Revenue Code of 1986 may be permitted 
                only when the individual presents evidence of a 
                tax obligation which supports the additional 
                withholding);
                    (D) are deducted as health insurance 
                premiums;
                    (E) are deducted as normal retirement 
                contributions (not including amounts deducted 
                for supplementary coverage); or
                    (F) are deducted as normal life insurance 
                premiums from salary or other remuneration for 
                employment (not including amounts deducted for 
                supplementary coverage).
    (i) Definitions.--For purposes of this section--
            (1) United states.--The term ``United States'' 
        includes any department, agency, or instrumentality of 
        the legislative, judicial, or executive branch of the 
        Federal Government, the United States Postal Service, 
        the Postal Rate Commission, any Federal corporation 
        created by an Act of Congress that is wholly owned by 
        the Federal Government, and the governments of the 
        territories and possessions of the United States.
            (2) Child support.--The term ``child support'', 
        when used in reference to the legal obligations of an 
        individual to provide such support, means amounts 
        required to be paid under a judgment, decree, or order, 
        whether temporary, final, or subject to modification, 
        issued by a court or an administrative agency of 
        competent jurisdiction, for the support and maintenance 
        of a child, including a child who has attained the age 
        of majority under the law of the issuing State, or a 
        child and the parent with whom the child is living, 
        which provides for monetary support, health care, 
        arrearages or reimbursement, and which may include 
        other related costs and fees, interest and penalties, 
        income withholding, attorney's fees, and other relief.
            (3) Alimony.--
                    (A) In general.--The term ``alimony'', when 
                used in reference to the legal obligations of 
                an individual to provide the same, means 
                periodic payments of funds for the support and 
                maintenance of the spouse (or former spouse) of 
                the individual, and (subject to and in 
                accordance with State law) includes separate 
                maintenance, alimony pendente lite, 
                maintenance, and spousal support, and includes 
                attorney's fees, interest, and court costs when 
                and to the extent that the same are expressly 
                made recoverable as such pursuant to a decree, 
                order, or judgment issued in accordance with 
                applicable State law by a court of competent 
                jurisdiction.
                    (B) Exceptions.--Such term does not 
                include--
                            (i) any child support; or
                            (ii) any payment or transfer of 
                        property or its value by an individual 
                        to the spouse or a former spouse of the 
                        individual in compliance with any 
                        community property settlement, 
                        equitable distribution of property, or 
                        other division of property between 
                        spouses or former spouses.
            (4) Private person.--The term ``private person'' 
        means a person who does not have sovereign or other 
        special immunity or privilege which causes the person 
        not to be subject to legal process.
            (5) Legal process.--The term ``legal process'' 
        means any writ, order, summons, or other similar 
        process in the nature of garnishment--
                    (A) which is issued by--
                            (i) a court or an administrative 
                        agency of competent jurisdiction in any 
                        State, territory, or possession of the 
                        United States;
                            (ii) a court or an administrative 
                        agency of competent jurisdiction in any 
                        foreign country with which the United 
                        States has entered into an agreement 
                        which requires the United States to 
                        honor the process; or
                            (iii) an authorized official 
                        pursuant to an order of such a court or 
                        an administrative agency of competent 
                        jurisdiction or pursuant to State or 
                        local law; and
                    (B) which is directed to, and the purpose 
                of which is to compel, a governmental entity 
                which holds moneys which are otherwise payable 
                to an individual to make a payment from the 
                moneys to another party in order to satisfy a 
                legal obligation of the individual to provide 
                child support or make alimony payments.

SEC. 459A. INTERNATIONAL SUPPORT ENFORCEMENT.

    (a) Authority for Declarations.--
            (1) Declaration.--The Secretary of State, with the 
        concurrence of the Secretary of Health and Human 
        Services, is authorized to declare any foreign country 
        (or a political subdivision thereof) to be a foreign 
        reciprocating country if the foreign country has 
        established, or undertakes to establish, procedures for 
        the establishment and enforcement of duties of support 
        owed to obligees who are residents of the United 
        States, and such procedures are substantially in 
        conformity with the standards prescribed under 
        subsection (b).
            (2) Revocation.--A declaration with respect to a 
        foreign country made pursuant to paragraph (1) may be 
        revoked if the Secretaries of State and Health and 
        Human Services determine that--
                    (A) the procedures established by the 
                foreign country regarding the establishment and 
                enforcement of duties of support have been so 
                changed, or the foreign country's 
                implementation of such procedures is so 
                unsatisfactory, that such procedures do not 
                meet the criteria for such a declaration; or
                    (B) continued operation of the declaration 
                is not consistent with the purposes of this 
                part.
            (3) Form of declaration.--A declaration under 
        paragraph (1) may be made in the form of an 
        international agreement, in connection with an 
        international agreement or corresponding foreign 
        declaration, or on a unilateral basis.
    (b) Standards for Foreign Support Enforcement Procedures.--
            (1) Mandatory elements.--Support enforcement 
        procedures of a foreign country which may be the 
        subject of a declaration pursuant to subsection (a)(1) 
        shall include the following elements:
                    (A) The foreign country (or political 
                subdivision thereof) has in effect procedures, 
                available to residents of the United States--
                            (i) for establishment of paternity, 
                        and for establishment of orders of 
                        support for children and custodial 
                        parents; and
                            (ii) for enforcement of orders to 
                        provide support to children and 
                        custodial parents, including procedures 
                        for collection and appropriate 
                        distribution of support payments under 
                        such orders.
                    (B) The procedures described in 
                subparagraph (A), including legal and 
                administrative assistance, are provided to 
                residents of the United States at no cost.
                    (C) An agency of the foreign country is 
                designated as a Central Authority responsible 
                for--
                            (i) facilitating support 
                        enforcement in cases involving 
                        residents of the foreign country and 
                        residents of the United States; and
                            (ii) ensuring compliance with the 
                        standards established pursuant to this 
                        subsection.
            (2) Additional elements.--The Secretary of Health 
        and Human Services and the Secretary of State, in 
        consultation with the States, may establish such 
        additional standards as may be considered necessary to 
        further the purposes of this section.
    (c) Designation of United States Central Authority.--It 
shall be the responsibility of the Secretary of Health and 
Human Services to facilitate support enforcement in cases 
involving residents of the United States and residents of 
foreign countries that are the subject of a declaration under 
this section, by activities including--
            (1) development of uniform forms and procedures for 
        use in such cases;
            (2) notification of foreign reciprocating countries 
        of the State of residence of individuals sought for 
        support enforcement purposes, on the basis of 
        information provided by the Federal Parent Locator 
        Service; and
            (3) such other oversight, assistance, and 
        coordination activities as the Secretary may find 
        necessary and appropriate.
    (d) Effect on Other Laws.--States may enter into reciprocal 
arrangements for the establishment and enforcement of support 
obligations with foreign countries that are not the subject of 
a declaration pursuant to subsection (a), to the extent 
consistent with Federal law.

                [REGULATIONS PERTAINING TO GARNISHMENTS

    [Sec. 461. (a) Authority to promulgate regulations for the 
implementation of the provisions of section 459 shall, insofar 
as the provisions of such section are applicable to moneys due 
from (or payable by)--
            [(1) the executive branch of the Government 
        (including in such branch, for the purposes of this 
        subsection, the territories and possessions of the 
        United States, the United States Postal Service, the 
        Postal Rate Commission, any wholly owned Federal 
        corporation created by an Act of Congress, and the 
        government of the District of Columbia), be vested in 
        the President (or his designee),
            [(2) the legislative branch of the Government, be 
        vested jointly in the President pro tempore of the 
        Senate and the Speaker of the House of Representatives 
        (or their designees), and
            [(3) the judicial branch of the Government, be 
        vested in the Chief Justice of the United States (or 
        his designee).
    [(b) Regulations promulgated pursuant to this section 
shall--
            [(1) in the case of those promulgated by the 
        executive branch of the Government, include a 
        requirement that the head of each agency thereof shall 
        cause to be published, in the appendix of the 
        regulations so promulgated, (A) his designation of an 
        agent or agents to accept service of process, 
        identified by title of position, mailing address, and 
        telephone number, and (B) an indication of the data 
        reasonably required in order for the agency promptly to 
        identify the individual with respect to whose moneys 
        the legal process is brought,
            [(2) in the case of regulations promulgated for the 
        legislative and judicial branches of the Government set 
        forth, in the appendix to the regulations so 
        promulgated, (A) the name, position, address, and 
        telephone number of the agent or agents who have been 
        designated for service of process, and (B) an 
        indication of the data reasonably required in order for 
        such entity promptly to identify the individual with 
        respect to whose moneys the legal process is brought, 
        and
            [(3) provide that (A) in the case of regulations 
        promulgated by the executive branch of the Government, 
        each head of a governmental entity (or his designee) 
        shall respond to relevant interrogatories, if 
        authorized by the law of the State in which legal 
        process will issue, prior to formal issuance of such 
        process, upon a showing of the applicant's entitlement 
        to child support or alimony payments, and (B) in the 
        case of regulations promulgated for the legislative and 
        judicial branches of the Government, the person or 
        persons designated as agents for service of process in 
        accordance with paragraph (2) shall respond to relevant 
        interrogatories if authorized by the law of the State 
        in which legal process will issue, prior to formal 
        issuance of legal process, upon a showing of the 
        applicant's entitlement to child support or alimony 
        payments.
    [(c) In the event that a governmental entity, which is 
authorized under this section or regulations issued to carry 
out this section to accept service of process, pursuant to the 
provisions of subsection (a), is served with more than one 
legal process with respect to the same moneys due or payable to 
any individual, then such moneys shall be available to satisfy 
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.

                              DEFINITIONS

    [Sec. 462. For purposes of section 459--
    [(a) The term ``United States'' means the Federal 
Government of the United States, consisting of the legislative 
branch, the judicial branch, and the executive branch thereof, 
and each and every department, agency, or instrumentality of 
any such branch, including the United States Postal Service, 
the Postal Rate Commission, any wholly owned Federal 
corporation created by an Act of Congress, any office, 
commission, bureau, or other administrative subdivision or 
creature thereof, and the governments of the territories and 
possessions of the United States.
    [(b) The term ``child support'', when used in reference to 
the legal obligations of an individual to provide such support, 
means periodic payments of funds for the support and 
maintenance of a child or children with respect to which such 
individual has such an obligation, and (subject to and in 
accordance with State law) includes but is not limited to, 
payments to provide for health care, education, recreation, 
clothing, or to meet other specific needs of such a child or 
children; such term also includes attorney's fees, interest, 
and court costs, when and to the extent that the same are 
expressly made recoverable as such pursuant to a decree, order, 
or judgment issued in accordance with applicable State law by a 
court of competent jurisdiction.
    [(c) The term ``alimony'', when used in reference to the 
legal obligations of an individual to provide the same, means 
periodic payments of funds for the support and maintenance of 
the spouse (or former spouse) of such individual, and (subject 
to and in accordance with State law) includes but is not 
limited to, separate maintenance, alimony pendente lite, 
maintenance, and spousal support; such term also includes 
attorney's fees, interest, and court costs when and to the 
extent that the same are expressly made recoverable as such 
pursuant to a decree, order, or judgment issued in accordance 
with applicable State law by a court of competent jurisdiction. 
Such term does not include any payment or transfer of property 
or its value by an individual to his spouse or former spouse in 
compliance with any community property settlement, equitable 
distribution of property, or other division of property between 
spouses or former spouses.
    [(d) The term ``private person'' means a person who does 
not have sovereign or other special immunity or privilege which 
causes such person not to be subject to legal process.
    [(e) The term ``legal process'' means any writ, order, 
summons, or other similar process in the nature of garnishment, 
which--
            [(1) is issued by (A) a court of competent 
        jurisdiction within any State, territory, or possession 
        of the United States, (B) a court of competent 
        jurisdiction in any foreign country with which the 
        United States has entered into an agreement which 
        requires the United States to honor such process, or 
        (C) an authorized official pursuant to an order of such 
        a court of competent jurisdiction or pursuant to State 
        or local law, and
            [(2) is directed to, and the purpose of which is to 
        compel, a governmental entity, which holds moneys which 
        are otherwise payable to an individual, to make a 
        payment from such moneys to another party in order to 
        satisfy a legal obligation of such individual to 
        provide child support or make alimony payments.
    [(f) Entitlement of an individual to any money shall be 
deemed to be ``based upon remuneration for employment'', if 
such money consists of--
            [(1) compensation paid or payable for personal 
        services of such individual, whether such compensation 
        is denominated as wages, salary, commission, bonus, 
        pay, or otherwise, and includes but is not limited to, 
        severance pay, sick pay, and incentive pay, but does 
        not include awards for making suggestions, or
            [(2) periodic benefits (including a periodic 
        benefit as defined in section 228(h)(3) of this Act) or 
        other payments to such individual under the insurance 
        system established by title II of this Act or any other 
        system or fund established by the United States (as 
        defined in subsection (a)) 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 himself or any other individual (not 
        including any payment as compensation for death under 
        any Federal program, any payment under any Federal 
        program established to provide ``black lung'' benefits, 
        any payment by the Secretary of Veterans Affairs as 
        pension, or any payments by the Secretary of Veterans 
        Affairs as compensation for a service-connected 
        disability or death, except any compensation paid by 
        the Secretary of Veterans Affairs 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), and does not consist of amounts paid, by 
        way of reimbursement or otherwise, to such individual 
        by his employer to defray expenses incurred by such 
        individual in carrying out duties associated with his 
        employment.
    [(g) In determining the amount of any moneys due from, or 
payable by, the United States to any individual, there shall be 
excluded amounts which--
            [(1) are owed by such individual to the United 
        States,
            [(2) are required by law to be, and are, deducted 
        from the remuneration or other payment involved, 
        including but not limited to, Federal employment taxes, 
        and fines and forfeitures ordered by court-martial,
            [(3) are properly withheld for Federal, State, or 
        local income tax purposes, if the withholding of such 
        amounts is authorized or required by law and if amounts 
        withheld are not greater than would be the case if such 
        individual claimed all dependents to which he was 
        entitled (the withholding of additional amounts 
        pursuant to section 3402(i) of the Internal Revenue 
        Code of 1954 may be permitted only when such individual 
        presents evidence of a tax obligation which supports 
        the additional withholding),
            [(4) are deducted as health insurance premiums,
            [(5) are deducted as normal retirement 
        contributions (not including amounts deducted for 
        supplementary coverage), or
            [(6) are deducted as normal life insurance premiums 
        from salary or other remuneration for employment (not 
        including amounts deducted for supplementary 
        coverage).]

     USE OF FEDERAL PARENT LOCATOR SERVICE IN CONNECTION WITH THE 
ENFORCEMENT OR DETERMINATION OF CHILD CUSTODY AND IN CASES OF PARENTAL 
                          KIDNAPING OF A CHILD

    Sec. 463. (a) The Secretary shall enter into an agreement 
with any State which is able and willing to do so, under which 
the services of the Federal Parent Locator Service established 
under section 453 shall be made available to such State for the 
purpose of determining the whereabouts of any [absent] 
noncustodial parent or child when such information is to be 
used to locate such parent or child for the purpose of--
            (1) enforcing any State or Federal law with respect 
        to the unlawful taking or restraint of a child; or
            (2) making or enforcing a child custody 
        determination.
    (b) An agreement entered into under subsection (a) shall 
provide that the State agency described in section 454 will, 
under procedures prescribed by the Secretary in regulations, 
receive and transmit to the Secretary requests from authorized 
persons for information as to (or useful in determining) the 
whereabouts of any [absent] noncustodial parent or child when 
such information is to be used to locate such parent or child 
for the purpose of--
            (1) enforcing any State or Federal law with respect 
        to the unlawful taking or restraint of a child; or
            (2) making or enforcing a child custody 
        determination.
    (c) Information authorized to be provided by the Secretary 
under subsection (a), (b), (e), or (f) shall be subject to the 
same conditions with respect to disclosure as information 
authorized to be provided under section 453, and a request for 
information by the Secretary under this section shall be 
considered to be a request for information under section 453 
which is authorized to be provided under such section. Only 
information as to the most recent address and place of 
employment of any [absent] noncustodial parent or child shall 
be provided under this section.
          * * * * * * *
    (e) The Secretary shall enter into an agreement with the 
Central Authority designated by the President in accordance 
with section 7 of the International Child Abduction Remedies 
Act, under which the services of the Federal Parent Locator 
Service established under section 453 shall be made available 
to such Central Authority upon its request for the purpose of 
locating any parent or child on behalf of an applicant to such 
Central Authority within the meaning of section 3(1) of that 
Act. The Federal Parent Locator Service shall charge no fees 
for services requested pursuant to this subsection.
    (f) The Secretary shall enter into an agreement with the 
Attorney General of the United States, under which the services 
of the Federal Parent Locator Service established under section 
453 shall be made available to the Office of Juvenile Justice 
and Delinquency Prevention upon its request to locate any 
parent or child on behalf of such Office for the purpose of--
            (1) enforcing any State or Federal law with respect 
        to the unlawful taking or restraint of a child, or
            (2) making or enforcing a child custody 
        determination.
The Federal Parent Locator Service shall charge no fees for 
services requested pursuant to this subsection.
          * * * * * * *

      REQUIREMENT OF STATUTORILY PRESCRIBED PROCEDURES TO IMPROVE 
               EFFECTIVENESS OF CHILD SUPPORT ENFORCEMENT

    Sec. 466. (a) In order to satisfy section 454(20)(A), each 
State must have in effect laws requiring the use of the 
following procedures, consistent with this section and with 
regulations of the Secretary, to increase the effectiveness of 
the program which the State administers under this part:
            [(1) Procedures described in subsection (b) for the 
        withholding from income of amounts payable as support.]
            (1)(A) Procedures described in subsection (b) for 
        the withholding from income of amounts payable as 
        support in cases subject to enforcement under the State 
        plan.
            (B) Procedures under which the income of a person 
        with a support obligation imposed by a support order 
        issued (or modified) in the State before October 1, 
        1996, if not otherwise subject to withholding under 
        subsection (b), shall become subject to withholding as 
        provided in subsection (b) if arrearages occur, without 
        the need for a judicial or administrative hearing.
            (2) [Procedures under which expedited processes 
        (determined in accordance with regulations of the 
        Secretary) are in effect under the State judicial 
        system or under State administrative processes (A) for 
        obtaining and enforcing support orders, and (B) for 
        establishing paternity.] Expedited administrative and 
        judicial procedures (including the procedures specified 
        in subsection (c)) for establishing paternity and for 
        establishing, modifying, and enforcing support 
        obligations. The Secretary may waive the provisions of 
        this paragraph with respect to one or more political 
        subdivisions within the State on the basis of the 
        effectiveness and timeliness of support order issuance 
        and enforcement or paternity establishment within the 
        political subdivision (in accordance with the general 
        rule for exemptions under subsection (d)).
            (3) Procedures under which the State child support 
        enforcement agency shall request, and the State shall 
        provide, that for the purpose of enforcing a support 
        order under any State plan approved under this part--
                    (A) any refund of State income tax which 
                would otherwise be payable to [an absent] a 
                noncustodial parent will be reduced, after 
                notice has been sent to that [absent] 
                noncustodial parent of the proposed reduction 
                and the procedures to be followed to contest it 
                (and after full compliance with all procedural 
                due process requirements of the State), by the 
                amount of any overdue support owed by such 
                [absent] noncustodial parent;
                    (B) the amount by which such refund is 
                reduced shall be distributed in accordance with 
                section 457(b)(4) or (d)(3) in the case of 
                overdue support assigned to a State pursuant to 
                section [402(a)(26)] 408(a)(3) [or 471(a)(17)], 
                or, [in the case of overdue support which a 
                State has agreed to collect under section 
                454(6)] in any other case, shall be 
                distributed, after deduction of any fees 
                imposed by the State to cover the costs of 
                collection, to the child or parent to whom such 
                support is owed; and
                    (C) notice of the [absent] noncustodial 
                parent's social security account number (or 
                numbers, if he has more than one such number) 
                and home address shall be furnished to the 
                State agency requesting the refund offset, and 
                to the State agency enforcing the order.
            [(4) Procedures under which liens are imposed 
        against real and personal property for amounts of 
        overdue support owed by an absent parent who resides or 
        owns property in the State.]
            (4) Liens.--Procedures under which--
                    (A) liens arise by operation of law against 
                real and personal property for amounts of 
                overdue support owed by a noncustodial parent 
                who resides or owns property in the State; and
                    (B) the State accords full faith and credit 
                to liens described in subparagraph (A) arising 
                in another State, when the State agency, party, 
                or other entity seeking to enforce such a lien 
                complies with the procedural rules relating to 
                recording or serving liens that arise within 
                the State, except that such rules may not 
                require judicial notice or hearing prior to the 
                enforcement of such a lien.
            [(5)(A)(i) Procedures which permit the 
        establishment of the paternity of any child at any time 
        prior to such child's eighteenth birthday.
    [(ii) As of August 16, 1984, the requirement of clause (i) 
shall also apply to any child for whom paternity has not yet 
been established and any child for whom a paternity action was 
brought but dismissed because a statute of limitations of less 
than 18 years was then in effect in the State.
            [(B) Procedures under which the State is required 
        (except in cases where the individual involved has been 
        found under section 402(a)(26)(B) to have good cause 
        for refusing to cooperate) to require the child and all 
        other parties, in a contested paternity case, to submit 
        to genetic tests upon the request of any such party.
            [(C) Procedures for a simple civil process for 
        voluntarily acknowledging paternity under which the 
        State must provide that the rights and responsibilities 
        of acknowledging paternity are explained and ensure 
        that due process safeguards are afforded. Such 
        procedures must include a hospital-based program for 
        the voluntary acknowledgment of paternity during the 
        period immediately before or after the birth of a 
        child.
            [(D) Procedures under which the voluntary 
        acknowledgment of paternity creates a rebuttable, or at 
        the option of the State, conclusive presumption of 
        paternity, and under which such voluntary 
        acknowledgment is admissible as evidence of paternity.
            [(E) Procedures under which the voluntary 
        acknowledgment of paternity must be recognized as a 
        basis for seeking a support order without requiring any 
        further proceedings to establish paternity.
            [(F) Procedures which provide that (i) any 
        objection to genetic testing results must be made in 
        writing within a specified number of days before any 
        hearing at which such results may be introduced into 
        evidence, and (ii) 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.
            [(G) Procedures which create a rebuttable or, at 
        the option of the State, conclusive presumption of 
        paternity upon genetic testing results indicating a 
        threshold probability that the alleged father is the 
        father of the child.
            [(H) Procedures requiring a default order to be 
        entered in a paternity case upon a showing of service 
        of process on the defendent and any additional showing 
        required by State law.]
            (5) Procedures concerning paternity 
        establishment.--
                    (A) Establishment process available from 
                birth until age 18.--
                            (i) Procedures which permit the 
                        establishment of the paternity of a 
                        child at any time before the child 
                        attains 18 years of age.
                            (ii) As of August 16, 1984, clause 
                        (i) shall also apply to a child for 
                        whom paternity has not been established 
                        or for whom a paternity action was 
                        brought but dismissed because a statute 
                        of limitations of less than 18 years 
                        was then in effect in the State.
                    (B) Procedures concerning genetic 
                testing.--
                            (i) Genetic testing required in 
                        certain contested cases.--Procedures 
                        under which the State is required, in a 
                        contested paternity case (unless 
                        otherwise barred by State law) to 
                        require the child and all other parties 
                        (other than individuals found under 
                        section 454(29) to have good cause and 
                        other exceptions for refusing to 
                        cooperate) to submit to genetic tests 
                        upon the request of any such party, if 
                        the request is supported by a sworn 
                        statement by the party--
                                    (I) alleging paternity, and 
                                setting forth facts 
                                establishing a reasonable 
                                possibility of the requisite 
                                sexual contact between the 
                                parties; or
                                    (II) denying paternity, and 
                                setting forth facts 
                                establishing a reasonable 
                                possibility of the nonexistence 
                                of sexual contact between the 
                                parties.
                            (ii) Other requirements.--
                        Procedures which require the State 
                        agency, in any case in which the agency 
                        orders genetic testing--
                                    (I) to pay costs of such 
                                tests, subject to recoupment 
                                (if the State so elects) from 
                                the alleged father if paternity 
                                is established; and
                                    (II) to obtain additional 
                                testing in any case if an 
                                original test result is 
                                contested, upon request and 
                                advance payment by the 
                                contestant.
                    (C) Voluntary paternity acknowledgment.--
                            (i) Simple civil process.--
                        Procedures for a simple civil process 
                        for voluntarily acknowledging paternity 
                        under which the State must provide 
                        that, before a mother and a putative 
                        father can sign an acknowledgment of 
                        paternity, the mother and the putative 
                        father must be given notice, orally and 
                        in writing, of the alternatives to, the 
                        legal consequences of, and the rights 
                        (including, if 1 parent is a minor, any 
                        rights afforded due to minority status) 
                        and responsibilities that arise from, 
                        signing the acknowledgment.
                            (ii) Hospital-based program.--Such 
                        procedures must include a hospital-
                        based program for the voluntary 
                        acknowledgment of paternity focusing on 
                        the period immediately before or after 
                        the birth of a child, unless good cause 
                        and other exceptions exist which--
                                    (I) shall be defined, 
                                taking into account the best 
                                interests of the child, and
                                    (II) shall be applied in 
                                each case,
                        by, at the option of the State, the 
                        State agency administering the State 
                        program under part A, this part, title 
                        XV, or title XIX.
                            (iii) Paternity establishment 
                        services.--
                                    (I) State-offered 
                                services.--Such procedures must 
                                require the State agency 
                                responsible for maintaining 
                                birth records to offer 
                                voluntary paternity 
                                establishment services.
                                    (II) Regulations.--
                                            (aa) Services 
                                        offered by hospitals 
                                        and birth record 
                                        agencies.--The 
                                        Secretary shall 
                                        prescribe regulations 
                                        governing voluntary 
                                        paternity establishment 
                                        services offered by 
                                        hospitals and birth 
                                        record agencies.
                                            (bb) Services 
                                        offered by other 
                                        entities.--The 
                                        Secretary shall 
                                        prescribe regulations 
                                        specifying the types of 
                                        other entities that may 
                                        offer voluntary 
                                        paternity establishment 
                                        services, and governing 
                                        the provision of such 
                                        services, which shall 
                                        include a requirement 
                                        that such an entity 
                                        must use the same 
                                        notice provisions used 
                                        by, use the same 
                                        materials used by, 
                                        provide the personnel 
                                        providing such services 
                                        with the same training 
                                        provided by, and 
                                        evaluate the provision 
                                        of such services in the 
                                        same manner as the 
                                        provision of such 
                                        services is evaluated 
                                        by, voluntary paternity 
                                        establishment programs 
                                        of hospitals and birth 
                                        record agencies.
                            (iv) Use of paternity 
                        acknowledgment affidavit.--Such 
                        procedures must require the State to 
                        develop and use an affidavit for the 
                        voluntary acknowledgment of paternity 
                        which includes the minimum requirements 
                        of the affidavit specified by the 
                        Secretary under section 452(a)(7) for 
                        the voluntary acknowledgment of 
                        paternity, and to give full faith and 
                        credit to such an affidavit signed in 
                        any other State according to its 
                        procedures.
                    (D) Status of signed paternity 
                acknowledgment.--
                            (i) Inclusion in birth records.--
                        Procedures under which the name of the 
                        father shall be included on the record 
                        of birth of the child of unmarried 
                        parents only if--
                                    (I) the father and mother 
                                have signed a voluntary 
                                acknowledgment of paternity; or
                                    (II) a court or an 
                                administrative agency of 
                                competent jurisdiction has 
                                issued an adjudication of 
                                paternity.
                        Nothing in this clause shall preclude a 
                        State agency from obtaining an 
                        admission of paternity from the father 
                        for submission in a judicial or 
                        administrative proceeding, or prohibit 
                        the issuance of an order in a judicial 
                        or administrative proceeding which 
                        bases a legal finding of paternity on 
                        an admission of paternity by the father 
                        and any other additional showing 
                        required by State law.
                            (ii) Legal finding of paternity.--
                        Procedures under which a signed 
                        voluntary acknowledgment of paternity 
                        is considered a legal finding of 
                        paternity, subject to the right of any 
                        signatory to rescind the acknowledgment 
                        within the earlier of--
                                    (I) 60 days; or
                                    (II) the date of an 
                                administrative or judicial 
                                proceeding relating to the 
                                child (including a proceeding 
                                to establish a support order) 
                                in which the signatory is a 
                                party.
                            (iii) Contest.--Procedures under 
                        which, after the 60-day period referred 
                        to in clause (ii), a signed voluntary 
                        acknowledgment of paternity may be 
                        challenged in court only on the basis 
                        of fraud, duress, or material mistake 
                        of fact, with the burden of proof upon 
                        the challenger, and under which the 
                        legal responsibilities (including child 
                        support obligations) of any signatory 
                        arising from the acknowledgment may not 
                        be suspended during the challenge, 
                        except for good cause shown.
                    (E) Bar on acknowledgment ratification 
                proceedings.--Procedures under which judicial 
                or administrative proceedings are not required 
                or permitted to ratify an unchallenged 
                acknowledgment of paternity.
                    (F) Admissibility of genetic testing 
                results.--Procedures--
                            (i) requiring the admission into 
                        evidence, for purposes of establishing 
                        paternity, of the results of any 
                        genetic test that is--
                                    (I) of a type generally 
                                acknowledged as reliable by 
                                accreditation bodies designated 
                                by the Secretary; and
                                    (II) performed by a 
                                laboratory approved by such an 
                                accreditation body;
                            (ii) requiring an objection to 
                        genetic testing results to be made in 
                        writing not later than a specified 
                        number of days before any hearing at 
                        which the results may be introduced 
                        into evidence (or, at State option, not 
                        later than a specified number of days 
                        after receipt of the results); and
                            (iii) making the test results 
                        admissible as evidence of paternity 
                        without the need for foundation 
                        testimony or other proof of 
                        authenticity or accuracy, unless 
                        objection is made.
                    (G) Presumption of paternity in certain 
                cases.--Procedures which create a rebuttable 
                or, at the option of the State, conclusive 
                presumption of paternity upon genetic testing 
                results indicating a threshold probability that 
                the alleged father is the father of the child.
                    (H) Default orders.--Procedures requiring a 
                default order to be entered in a paternity case 
                upon a showing of service of process on the 
                defendant and any additional showing required 
                by State law.
                    (I) No right to jury trial.--Procedures 
                providing that the parties to an action to 
                establish paternity are not entitled to a trial 
                by jury.
                    (J) Temporary support order based on 
                probable paternity in contested cases.--
                Procedures which require that a temporary order 
                be issued, upon motion by a party, requiring 
                the provision of child support pending an 
                administrative or judicial determination of 
                parentage, if there is clear and convincing 
                evidence of paternity (on the basis of genetic 
                tests or other evidence).
                    (K) Proof of certain support and paternity 
                establishment costs.--Procedures under which 
                bills for pregnancy, childbirth, and genetic 
                testing are admissible as evidence without 
                requiring third-party foundation testimony, and 
                shall constitute prima facie evidence of 
                amounts incurred for such services or for 
                testing on behalf of the child.
                    (L) Standing of putative fathers.--
                Procedures ensuring that the putative father 
                has a reasonable opportunity to initiate a 
                paternity action.
                    (M) Filing of acknowledgments and 
                adjudications in state registry of birth 
                records.--Procedures under which voluntary 
                acknowledgments and adjudications of paternity 
                by judicial or administrative processes are 
                filed with the State registry of birth records 
                for comparison with information in the State 
                case registry.
            (6) Procedures which require that [an absent] a 
        noncustodial parent give security, post a bond, or give 
        some other guarantee to secure payment of overdue 
        support, after notice has been sent to such [absent] 
        noncustodial parent of the proposed action and of the 
        procedures to be followed to contest it (and after full 
        compliance with all procedural due process requirements 
        of the State).
            [(7) Procedures which require the State to 
        periodically reporting agencies (as defined in section 
        603(f) of the Fair Credit Reporting Act (15 U.S.C. 
        1681a(f))) the name of any parent who owes overdue 
        support and is at least 2 months delinquent in the 
        payment of such support and the amount of such 
        delinquency; except that (A) if the amount of the 
        overdue support involved in any case is less than 
        $1,000, information regarding such amount shall be made 
        available only at the option of the State, (B) any 
        information with respect to an absent parent shall be 
        made available under such procedures only after notice 
        has been sent to such absent parent of the proposed 
        action, and such absent parent has been given a 
        reasonable opportunity to contest the accuracy of such 
        information (and after full compliance with all 
        procedural due process requirements of the State), and 
        (C) such information shall not be made available to (i) 
        a consumer reporting agency which the State determines 
        does not have sufficient capability to systematically 
        and timely make accurate use of such information, or 
        (ii) an entity which has not furnished evidence 
        satisfactory to the State that the entity is a consumer 
        reporting agency.]
            (7) Reporting arrearages to credit bureaus.--
                    (A) In general.--Procedures (subject to 
                safeguards pursuant to subparagraph (B)) 
                requiring the State to report periodically to 
                consumer reporting agencies (as defined in 
                section 603(f) of the Fair Credit Reporting Act 
                (15 U.S.C. 1681a(f)) the name of any 
                noncustodial parent who is delinquent in the 
                payment of support, and the amount of overdue 
                support owed by such parent.
                    (B) Safeguards.--Procedures ensuring that, 
                in carrying out subparagraph (A), information 
                with respect to a noncustodial parent is 
                reported--
                            (i) only after such parent has been 
                        afforded all due process required under 
                        State law, including notice and a 
                        reasonable opportunity to contest the 
                        accuracy of such information; and
                            (ii) only to an entity that has 
                        furnished evidence satisfactory to the 
                        State that the entity is a consumer 
                        reporting agency (as so defined).
            (8)(A) Procedures under which all child support 
        orders not described in subparagraph (B) will include 
        provision for withholding from [wages] income, in order 
        to assure that withholding as a means of collecting 
        child support is available if arrearages occur without 
        the necessity of filing application for services under 
        this part.
            (B) Procedures under which all child support orders 
        which are initially issued in the State on or after 
        January 1, 1994, and are not being enforced under this 
        part will include the following requirements:
                    (i) The [wages] income of [an absent] a 
                noncustodial parent shall be subject to 
                withholding, regardless of whether support 
                payments by such parent are in arrears, on the 
                effective date of the order; except that such 
                [wages] income shall not be subject to 
                withholding under this clause in any case where 
                (I) one of the parties demonstrates, and the 
                court (or administrative process) finds, that 
                there is good cause not to require immediate 
                income withholding, or (II) a written agreement 
                is reached between both parties which provides 
                for an alternative arrangement.
                    (ii) The requirements of subsection (b)(1) 
                (which shall apply in the case of each [absent] 
                noncustodial parent against whom a support 
                order is or has been issued or modified in the 
                State, without regard to whether the order is 
                being enforced under the State plan).
                    (iii) The requirements of paragraphs (2), 
                (5), (6), (7), (8), (9), and (10) of subsection 
                (b), where applicable.
                    (iv) Withholding from income of amounts 
                payable as support must be carried out in full 
                compliance with all procedural due process 
                requirements of the State.
            (9) Procedures which require that any payment or 
        installment of support under any child support order, 
        whether ordered through the State judicial system or 
        through the expedited processes required by paragraph 
        (2), is (on and after the date it is due)--
                    (A) a judgment by operation of law, with 
                the full force, effect, and attributes of a 
                judgment of the State, including the ability to 
                be enforced,
                    (B) entitled as a judgment to full faith 
                and credit in such State and in any other 
                State, and
                    (C) not subject to retroactive modification 
                by such State or by any other State;
        except that such procedures may permit modification 
        with respect to any period during which there is 
        pending a petition for modification, but only from the 
        date that notice of such petition has been given, 
        either directly or through the appropriate agent, to 
        the obligee or (where the obligee is the petitioner) to 
        the obligor.
            [(10)(A) Procedures to ensure that, beginning 2 
        years after the date of the enactment of this 
        paragraph, if the State determines (pursuant to a plan 
        indicating how and when child support orders in effect 
        in the State are to be periodically reviewed and 
        adjusted) that a child support order being enforced 
        under this part should be reviewed, the State must, at 
        the request of either parent subject to the order, or 
        of a State child support enforcement agency, initiate a 
        review of such order, and adjust such order, as 
        appropriate, in accordance with the guidelines 
        established pursuant to section 467(a).
            [(B) Procedures to ensure that, beginning 5 years 
        after the date of the enactment of this paragraph or 
        such earlier date as the State may select, the State 
        must implement a process for the periodic review and 
        adjustment of child support orders being enforced under 
        this part under which the order is to be reviewed not 
        later than 36 months after the establishment of the 
        order or the most recent review, and adjusted, as 
        appropriate, in accordance with the guidelines 
        established pursuant to section 467(a), unless--
                    [(i) in the case of an order with respect 
                to an individual with respect to whom an 
                assignment under section 402(a)(26) is in 
                effect, 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 and neither parent has requested 
                review; and
                    [(ii) in the case of any other order being 
                enforced under this part, neither parent has 
                requested review.
            [(C) Procedures to ensure that the State notifies 
        each parent subject to a child support order in effect 
        in the State that is being enforced under this part--
                    [(i) of any review of such order, at least 
                30 days before the commencement of such review; 
                and
                    [(ii) of the right of such parent under 
                subparagraph (B) to request the State to review 
                such order; and
                    [(iii) of a proposed adjustment (or 
                determination that there should be no change) 
                in the child support award amount, and such 
                parent is afforded not less than 30 days after 
                such notification to initiate proceedings to 
                challenge such adjustment (or determination).]
            (10) Review and adjustment of support orders upon 
        request.--Procedures under which the State shall review 
        and adjust each support order being enforced under this 
        part if there is an assignment under part A or upon the 
        request of either parent, and may review and adjust any 
        other support order being enforced under this part. 
        Such procedures shall provide the following:
                    (A) In general.--
                            (i) 3-year cycle.--Except as 
                        provided in subparagraphs (B) and (C), 
                        the State shall review and, as 
                        appropriate, adjust the support order 
                        every 3 years, taking into account the 
                        best interests of the child involved.
                            (ii) Methods of adjustment.--The 
                        State may elect to review and, if 
                        appropriate, adjust an order pursuant 
                        to clause (i) by--
                                    (I) reviewing and, if 
                                appropriate, adjusting the 
                                order in accordance with the 
                                guidelines established pursuant 
                                to section 467(a) if the amount 
                                of the child support award 
                                under the order differs from 
                                the amount that would be 
                                awarded in accordance with the 
                                guidelines; or
                                    (II) applying a cost-of-
                                living adjustment to the order 
                                in accordance with a formula 
                                developed by the State and 
                                permit either party to contest 
                                the adjustment, within 30 days 
                                after the date of the notice of 
                                the adjustment, by making a 
                                request for review and, if 
                                appropriate, adjustment of the 
                                order in accordance with the 
                                child support guidelines 
                                established pursuant to section 
                                467(a).
                            (iii) No proof of change in 
                        circumstances necessary.--Any 
                        adjustment under this subparagraph (A) 
                        shall be made without a requirement for 
                        proof or showing of a change in 
                        circumstances.
                    (B) Automated method.--The State may use 
                automated methods (including automated 
                comparisons with wage or State income tax data) 
                to identify orders eligible for review, conduct 
                the review, identify orders eligible for 
                adjustment, and apply the appropriate 
                adjustment to the orders eligible for 
                adjustment under the threshold established by 
                the State.
                    (C) Request upon substantial change in 
                circumstances.--The State shall, at the request 
                of either parent subject to such an order or of 
                any State child support enforcement agency, 
                review and, if appropriate, adjust the order in 
                accordance with the guidelines established 
                pursuant to section 467(a) based upon a 
                substantial change in the circumstances of 
                either parent.
                    (D) Notice of right to review.--The State 
                shall provide notice not less than once every 3 
                years to the parents subject to such an order 
                informing them of their right to request the 
                State to review and, if appropriate, adjust the 
                order pursuant to this paragraph. The notice 
                may be included in the order.
            (11) Procedures under which a State must give full 
        faith and credit to a determination of paternity made 
        by any other State, whether established through 
        voluntary acknowledgment or through administrative or 
        judicial processes.
            (12) Locator information from interstate 
        networks.--Procedures to ensure that all Federal and 
        State agencies conducting activities under this part 
        have access to any system used by the State to locate 
        an individual for purposes relating to motor vehicles 
        or law enforcement.
            (13) Recording of social security numbers in 
        certain family matters.--Procedures requiring that the 
        social security number of--
                    (A) any applicant for a professional 
                license, commercial driver's license, 
                occupational license, or marriage license be 
                recorded on the application;
                    (B) any individual who is subject to a 
                divorce decree, support order, or paternity 
                determination or acknowledgment be placed in 
                the records relating to the matter; and
                    (C) any individual who has died be placed 
                in the records relating to the death and be 
                recorded on the death certificate.
        For purposes of subparagraph (A), if a State allows the 
        use of a number other than the social security number, 
        the State shall so advise any applicants.
            (14) Administrative enforcement in interstate 
        cases.--Procedures under which--
                    (A)(i) the State shall respond within 5 
                business days to a request made by another 
                State to enforce a support order; and
                    (ii) the term ``business day'' means a day 
                on which State offices are open for regular 
                business;
                    (B) the State may, by electronic or other 
                means, transmit to another State a request for 
                assistance in a case involving the enforcement 
                of a support order, which request--
                            (i) shall include such information 
                        as will enable the State to which the 
                        request is transmitted to compare the 
                        information about the case to the 
                        information in the data bases of the 
                        State; and
                            (ii) shall constitute a 
                        certification by the requesting State--
                                    (I) of the amount of 
                                support under the order the 
                                payment of which is in arrears; 
                                and
                                    (II) that the requesting 
                                State has complied with all 
                                procedural due process 
                                requirements applicable to the 
                                case;
                    (C) if the State provides assistance to 
                another State pursuant to this paragraph with 
                respect to a case, neither State shall consider 
                the case to be transferred to the caseload of 
                such other State; and
                    (D) the State shall maintain records of--
                            (i) the number of such requests for 
                        assistance received by the State;
                            (ii) the number of cases for which 
                        the State collected support in response 
                        to such a request; and
                            (iii) the amount of such collected 
                        support.
            (15) Procedures to ensure that persons owing past-
        due support work or have a plan for payment of such 
        support.--
                    (A) In general.--Procedures under which the 
                State has the authority, in any case in which 
                an individual owes past-due support with 
                respect to a child receiving assistance under a 
                State program funded under part A, to issue an 
                order or to request that a court or an 
                administrative process established pursuant to 
                State law issue an order that requires the 
                individual to--
                            (i) pay such support in accordance 
                        with a plan approved by the court, or, 
                        at the option of the State, a plan 
                        approved by the State agency 
                        administering the State program under 
                        this part; or
                            (ii) if the individual is subject 
                        to such a plan and is not 
                        incapacitated, participate in such work 
                        activities (as defined in section 
                        407(d)) as the court, or, at the option 
                        of the State, the State agency 
                        administering the State program under 
                        this part, deems appropriate.
                    (B) Past-due support defined.--For purposes 
                of subparagraph (A), the term ``past-due 
                support'' means the amount of a delinquency, 
                determined under a court order, or an order of 
                an administrative process established under 
                State law, for support and maintenance of a 
                child, or of a child and the parent with whom 
                the child is living.
            (16) Authority to withhold or suspend licenses.--
        Procedures under which the State has (and uses in 
        appropriate cases) authority to withhold or suspend, or 
        to restrict the use of driver's licenses, professional 
        and occupational licenses, and recreational licenses of 
        individuals owing overdue support or failing, after 
        receiving appropriate notice, to comply with subpoenas 
        or warrants relating to paternity or child support 
        proceedings.
            (17) Financial institution data matches.--
                    (A) In general.--Procedures under which the 
                State agency shall enter into agreements with 
                financial institutions doing business in the 
                State--
                            (i) to develop and operate, in 
                        coordination with such financial 
                        institutions, a data match system, 
                        using automated data exchanges to the 
                        maximum extent feasible, in which each 
                        such financial institution is required 
                        to provide for each calendar quarter 
                        the name, record address, social 
                        security number or other taxpayer 
                        identification number, and other 
                        identifying information for each 
                        noncustodial parent who maintains an 
                        account at such institution and who 
                        owes past-due support, as identified by 
                        the State by name and social security 
                        number or other taxpayer identification 
                        number; and
                            (ii) in response to a notice of 
                        lien or levy, encumber or surrender, as 
                        the case may be, assets held by such 
                        institution on behalf of any 
                        noncustodial parent who is subject to a 
                        child support lien pursuant to 
                        paragraph (4).
                    (B) Reasonable fees.--The State agency may 
                pay a reasonable fee to a financial institution 
                for conducting the data match provided for in 
                subparagraph (A)(i), not to exceed the actual 
                costs incurred by such financial institution.
                    (C) Liability.--A financial institution 
                shall not be liable under any Federal or State 
                law to any person--
                            (i) for any disclosure of 
                        information to the State agency under 
                        subparagraph (A)(i);
                            (ii) for encumbering or 
                        surrendering any assets held by such 
                        financial institution in response to a 
                        notice of lien or levy issued by the 
                        State agency as provided for in 
                        subparagraph (A)(ii); or
                            (iii) for any other action taken in 
                        good faith to comply with the 
                        requirements of subparagraph (A).
                    (D) Definitions.--For purposes of this 
                paragraph--
                            (i) Financial institution.--The 
                        term ``financial institution'' has the 
                        meaning given to such term by section 
                        469A(d)(1).
                            (ii) Account.--The term ``account'' 
                        means a demand deposit account, 
                        checking or negotiable withdrawal order 
                        account, savings account, time deposit 
                        account, or money-market mutual fund 
                        account.
            (18) Enforcement of orders against paternal or 
        maternal grandparents.--Procedures under which, at the 
        State's option, any child support order enforced under 
        this part with respect to a child of minor parents, if 
        the custodial parent of such child is receiving 
        assistance under the State program under part A, shall 
        be enforceable, jointly and severally, against the 
        parents of the noncustodial parent of such child.
            (19) Health care coverage.--Procedures under which 
        all child support orders enforced pursuant to this part 
        shall include a provision for the health care coverage 
        of the child, and in the case in which a noncustodial 
        parent provides such coverage and changes employment, 
        and the new employer provides health care coverage, the 
        State agency shall transfer notice of the provision to 
        the employer, which notice shall operate to enroll the 
        child in the noncustodial parent's health plan, unless 
        the noncustodial parent contests the notice.
Notwithstanding section 454(20)(B), the procedures which are 
required under paragraphs (3), (4), (6), [and (7)] (7), and 
(15) need not be used or applied in cases where the State 
determines (using guidelines which are generally available 
within the State and which take into account the payment record 
of the [absent] noncustodial parent, the availability of other 
remedies, and other relevant considerations) that such use or 
application would not carry out the purposes of this part or 
would be otherwise inappropriate in the circumstances.
    (b) The procedures referred to in [subsection (a)(1)] 
subsection (a)(1)(A) (relating to the withholding from income 
of amounts payable as support) must provide for the following:
            (1) In the case of each [absent] noncustodial 
        parent against whom a support order is or has been 
        issued or modified in the State, and is being enforced 
        under the State plan, so much of such parent's [wages 
        (as defined by the State for purposes of this section)] 
        income must be withheld, in accordance with the 
        succeeding provisions of this subsection, as is 
        necessary to comply with the order and provide for the 
        payment of any fee to the employer which may be 
        required under paragraph (6)(A), up to the maximum 
        amount permitted under section 303(b) of the Consumer 
        Credit Protection Act (15 U.S.C. 1673(b)). If there are 
        arrearages to be collected, amounts withheld to satisfy 
        such arrearages, when added to the amounts withheld to 
        pay current support and provide for the fee, may not 
        exceed the limit permitted under such section 303(b), 
        but the State need not withhold up to the maximum 
        amount permitted under such section in order to satisfy 
        arrearages.
            (2) Such withholding must be provided without the 
        necessity of any application therefor in the case of a 
        child (whether or not eligible for [aid] assistance 
        under a State program funded under part A) with respect 
        to whom services are already being provided under the 
        State plan under this part, and must be provided in 
        accordance with this subsection on the basis of an 
        application for services under the State plan in the 
        case of any other child in whose behalf a support order 
        has been issued or modified in the State. In either 
        case such withholding must occur without the need for 
        any amendment to the support order involved or for any 
        further action (other than those actions required under 
        this part) by the court or other entity which issued 
        such order.
            (3)(A) The [wages] income of [an absent] a 
        noncustodial parent shall be subject to such 
        withholding, regardless of whether support payments by 
        such parent are in arrears, in the case of a support 
        order being enforced under this part that is issued or 
        modified on or after the first day of the 25th month 
        beginning after the date of the enactment of this 
        paragraph, on the effective date of the order; except 
        that such [wages] income shall not be subject to such 
        withholding under this subparagraph in any case where 
        (i) one of the parties demonstrates, and the court (or 
        administrative process) finds, that there is good cause 
        not to require immediate income withholding, or (ii) a 
        written agreement is reached between both parties which 
        provides for an alternative arrangement.
            (B) The [wages] income of [an absent] a 
        noncustodial parent shall become subject to such 
        withholding, in the case of [wages] income not subject 
        to withholding under subparagraph (A), on the date on 
        which the payments which the [absent] noncustodial 
        parent has failed to make under a support order are at 
        least equal to the support payable for one month or, if 
        earlier, and without regard to whether there is an 
        arrearage, the earliest of--
                    (i) the date as of which the [absent] 
                noncustodial parent requests that such 
                withholding begin,
                    (ii) the date as of which the custodial 
                parent requests that such withholding begin, if 
                the State determines, in accordance with such 
                procedures and standards as it may establish, 
                that the request should be approved, or
                    (iii) such earlier date as the State may 
                select.
            [(4)(A) Such withholding must be carried out in 
        full compliance with all procedural due process 
        requirements of the State, and (subject to subparagraph 
        (B)) the State must send advance notice to each absent 
        parent to whom paragraph (1) applies regarding the 
        proposed withholding and the procedures such absent 
        parent should follow if he or she desires to contest 
        such withholding on the grounds that withholding 
        (including the amount to be withheld) is not proper in 
        the case involved because of mistakes of fact. If the 
        absent parent contests such withholding on those 
        grounds, the State shall determine whether such 
        withholding will actually occur, shall (within no more 
        than 45 days after the provision of such advance 
        notice) inform such parent of whether or not 
        withholding will occur and (if so) of the date on which 
        it is to begin, and shall furnish such parent with the 
        information contained in any notice given to the 
        employer under paragraph (6)(A) with respect to such 
        withholding.
            [(B) The requirement of advance notice set forth in 
        the first sentence of subparagraph (A) shall not apply 
        in the case of any State which has a system of income 
        withholding for child support purposes in effect on the 
        date of the enactment of this section if such system 
        provides on that date, and continues to provide, such 
        procedures as may be necessary to meet the procedural 
        due process requirements of State law.]
            (4)(A) Such withholding must be carried out in full 
        compliance with all procedural due process requirements 
        of the State, and the State must send notice to each 
        noncustodial parent to whom paragraph (1) applies--
                    (i) that the withholding has commenced; and
                    (ii) of the procedures to follow if the 
                noncustodial parent desires to contest such 
                withholding on the grounds that the withholding 
                or the amount withheld is improper due to a 
                mistake of fact.
            (B) The notice under subparagraph (A) of this 
        paragraph shall include the information provided to the 
        employer under paragraph (6)(A).
            (5) Such withholding must be administered by [a 
        public agency designated by the State, and the amounts 
        withheld must be expeditiously distributed by the State 
        or such agency in accordance with section 457 under 
        procedures (specified by the State) adequate to 
        document payments of support and to track and monitor 
        such payments, except that the State may establish or 
        permit the establishment of alternative procedures for 
        the collection and distribution of such amounts (under 
        the supervision of such public agency) otherwise than 
        through such public agency so long as the entity making 
        such collection and distribution is publicly 
        accountable for its actions taken in carrying out such 
        procedures, and so long as such procedures will assure 
        prompt distribution, provide for the keeping of 
        adequate records to document payments of support, and 
        permit the tracking and monitoring of such payments.] 
        the State through the State disbursement unit 
        established pursuant to section 454B, in accordance 
        with the requirements of section 454B.
            (6)(A)(i) The employer of any [absent] noncustodial 
        parent to whom paragraph (1) applies, upon being given 
        notice as described in clause (ii), must be required to 
        withhold from such [absent] noncustodial parent's 
        [wages] income the amount specified by such notice 
        (which may include a fee, established by the State, to 
        be paid to the employer unless waived by such employer) 
        and pay such amount (after deducting and retaining any 
        portion thereof which represents the fee so 
        established) [to the appropriate agency (or other 
        entity authorized to collect the amounts withheld under 
        the alternative procedures described in paragraph (5)) 
        for distribution in accordance with section 457.] to 
        the State disbursement unit within 5 business days 
        after the date the amount would (but for this 
        subsection) have been paid or credited to the employee, 
        for distribution in accordance with this part. The 
        employer shall withhold funds as directed in the 
        notice. For terms and conditions for withholding income 
        that are not specified in a notice issued by another 
        State, the employer shall apply the law of the State in 
        which the obligor works. An employer who complies with 
        an income withholding notice that is regular on its 
        face shall not be subject to civil liability to any 
        individual or agency for conduct in compliance with the 
        notice.
            (ii) The notice given to the employer shall be in a 
        standard format prescribed by the Secretary, and 
        contain only such information as may be necessary for 
        the employer to comply with the withholding order.
            (iii) As used in this subparagraph, the term 
        ``business day'' means a day on which State offices are 
        open for regular business.
            (B) Methods must be established by the State to 
        simplify the withholding process for employers to the 
        greatest extent possible, including permitting any 
        employer to combine all withheld amounts into a single 
        payment to each appropriate agency or entity (with the 
        portion thereof which is attributable to each 
        individual employee being separately designated).
            (C) The employer must be held liable to the State 
        for any amount which such employer fails to withhold 
        from [wages] income due an employee following receipt 
        by such employer of proper notice under subparagraph 
        (A), but such employer shall not be required to vary 
        the normal pay and disbursement cycles in order to 
        comply with this paragraph.
            (D) Provision must be made for the imposition of a 
        fine against [any employer who discharges from 
        employment, refuses to employ, or takes disciplinary 
        action against any absent parent subject to wage 
        withholding required by this subsection because of the 
        existence of such withholding and the obligations or 
        additional obligations which it imposes upon the 
        employer.] any employer who--
                    (i) discharges from employment, refuses to 
                employ, or takes disciplinary action against 
                any noncustodial parent subject to income 
                withholding required by this subsection because 
                of the existence of such withholding and the 
                obligations or additional obligations which it 
                imposes upon the employer; or
                    (ii) fails to withhold support from income 
                or to pay such amounts to the State 
                disbursement unit in accordance with this 
                subsection.
            (7) Support collection under this subsection must 
        be given priority over any other legal process under 
        State law against the same [wages] income.
            [(8) The State may take such actions as may be 
        necessary to extend its system of withholding under 
        this subsection so that such system will include 
        withholding from forms of income other than wages, in 
        order to assure that child support owed by absent 
        parents in the State will be collected without regard 
        to the types of such absent parents' income or the 
        nature of their income-producing activities.]
            (8) For purposes of subsection (a) and this 
        subsection, the term ``income'' means any periodic form 
        of payment due to an individual, regarless of source, 
        including wages, salaries, commissions, bonuses, 
        worker's compensation, disability, payments pursuant to 
        a pension or retirement program, and interest.
            (9) The State must extend its withholding system 
        under this subsection so that such system will include 
        withholding from income derived within such State in 
        cases where the applicable support orders were issued 
        in other States, in order to assure that child support 
        owed by [absent] noncustodial parents in such State or 
        any other State will be collected without regard to the 
        residence of the child for whom the support is payable 
        or of such child's custodial parent.
            (10) Provision must be made for terminating 
        withholding.
            (11) Procedures under which the agency 
        administering the State plan approved under this part 
        may execute a withholding order without advance notice 
        to the obligor, including issuing the withholding order 
        through electronic means.
    [(c) Any State may at its option, under its plan approved 
under section 454, establish procedures under which support 
payments under this part will be made through the State agency 
or other entity which administers the State's income 
withholding system in any case where either the absent parent 
or the custodial parent requests it, even though no arrearages 
in child support payments are involved and no income 
withholding procedures have been instituted; but in any such 
case an annual fee for handling and processing such payments, 
in an amount not exceeding the actual costs incurred by the 
State in connection therewith or $25, whichever is less, shall 
be imposed on the requesting parent by the State.]
    (c) Expedited Procedures.--The procedures specified in this 
subsection are the following:
            (1) Administrative action by state agency.--
        Procedures which give the State agency the authority to 
        take the following actions relating to establishment of 
        paternity or to establishment, modification, or 
        enforcement of support orders, without the necessity of 
        obtaining an order from any other judicial or 
        administrative tribunal, and to recognize and enforce 
        the authority of State agencies of other States to take 
        the following actions:
                    (A) Genetic testing.--To order genetic 
                testing for the purpose of paternity 
                establishment as provided in section 466(a)(5).
                    (B) Financial or other information.--To 
                subpoena any financial or other information 
                needed to establish, modify, or enforce a 
                support order, and to impose penalties for 
                failure to respond to such a subpoena.
                    (C) Response to state agency request.--To 
                require all entities in the State (including 
                for-profit, nonprofit, and governmental 
                employers) to provide promptly, in response to 
                a request by the State agency of that or any 
                other State administering a program under this 
                part, information on the employment, 
                compensation, and benefits of any individual 
                employed by such entity as an employee or 
                contractor, and to sanction failure to respond 
                to any such request.
                    (D) Access to information contained in 
                certain records.--To obtain access, subject to 
                safeguards on privacy and information security, 
                and subject to the nonliability of entities 
                that afford such access under this 
                subparagraph, to information contained in the 
                following records (including automated access, 
                in the case of records maintained in automated 
                data bases):
                            (i) Records of other State and 
                        local government agencies, including--
                                    (I) vital statistics 
                                (including records of marriage, 
                                birth, and divorce);
                                    (II) State and local tax 
                                and revenue records (including 
                                information on residence 
                                address, employer, income and 
                                assets);
                                    (III) records concerning 
                                real and titled personal 
                                property;
                                    (IV) records of 
                                occupational and professional 
                                licenses, and records 
                                concerning the ownership and 
                                control of corporations, 
                                partnerships, and other 
                                business entities;
                                    (V) employment security 
                                records;
                                    (VI) records of agencies 
                                administering public assistance 
                                programs;
                                    (VII) records of the motor 
                                vehicle department; and
                                    (VIII) corrections records.
                            (ii) Certain records held by 
                        private entities with respect to 
                        individuals who owe or are owed support 
                        (or against or with respect to whom a 
                        support obligation is sought), 
                        consisting of--
                                    (I) the names and addresses 
                                of such individuals and the 
                                names and addresses of the 
                                employers of such individuals, 
                                as appearing in customer 
                                records of public utilities and 
                                cable television companies, 
                                pursuant to an administrative 
                                subpoena authorized by 
                                subparagraph (B); and
                                    (II) information (including 
                                information on assets and 
                                liabilities) on such 
                                individuals held by financial 
                                institutions.
                    (E) Change in payee.--In cases in which 
                support is subject to an assignment in order to 
                comply with a requirement imposed pursuant to 
                part A or section 1912, or to a requirement to 
                pay through the State disbursement unit 
                established pursuant to section 454B, upon 
                providing notice to obligor and obligee, to 
                direct the obligor or other payor to change the 
                payee to the appropriate government entity.
                    (F) Income withholding.--To order income 
                withholding in accordance with subsections 
                (a)(1)(A) and (b) of section 466.
                    (G) Securing assets.--In cases in which 
                there is a support arrearage, to secure assets 
                to satisfy the arrearage by--
                            (i) intercepting or seizing 
                        periodic or lump-sum payments from--
                                    (I) a State or local 
                                agency, including unemployment 
                                compensation, workers' 
                                compensation, and other 
                                benefits; and
                                    (II) judgments, 
                                settlements, and lotteries;
                            (ii) attaching and seizing assets 
                        of the obligor held in financial 
                        institutions;
                            (iii) attaching public and private 
                        retirement funds; and
                            (iv) imposing liens in accordance 
                        with subsection (a)(4) and, in 
                        appropriate cases, to force sale of 
                        property and distribution of proceeds.
                    (H) Increase monthly payments.--For the 
                purpose of securing overdue support, to 
                increase the amount of monthly support payments 
                to include amounts for arrearages, subject to 
                such conditions or limitations as the State may 
                provide.
        Such procedures shall be subject to due process 
        safeguards, including (as appropriate) requirements for 
        notice, opportunity to contest the action, and 
        opportunity for an appeal on the record to an 
        independent administrative or judicial tribunal.
            (2) Substantive and procedural rules.--The 
        expedited procedures required under subsection (a)(2) 
        shall include the following rules and authority, 
        applicable with respect to all proceedings to establish 
        paternity or to establish, modify, or enforce support 
        orders:
                    (A) Locator information; presumptions 
                concerning notice.--Procedures under which--
                            (i) each party to any paternity or 
                        child support proceeding is required 
                        (subject to privacy safeguards) to file 
                        with the tribunal and the State case 
                        registry upon entry of an order, and to 
                        update as appropriate, information on 
                        location and identity of the party, 
                        including social security number, 
                        residential and mailing addresses, 
                        telephone number, driver's license 
                        number, and name, address, and 
                        telephone number of employer; and
                            (ii) in any subsequent child 
                        support enforcement action between the 
                        parties, upon sufficient showing that 
                        diligent effort has been made to 
                        ascertain the location of such a party, 
                        the tribunal may deem State due process 
                        requirements for notice and service of 
                        process to be met with respect to the 
                        party, upon delivery of written notice 
                        to the most recent residential or 
                        employer address filed with the 
                        tribunal pursuant to clause (i).
                    (B) Statewide jurisdiction.--Procedures 
                under which--
                            (i) the State agency and any 
                        administrative or judicial tribunal 
                        with authority to hear child support 
                        and paternity cases exerts statewide 
                        jurisdiction over the parties; and
                            (ii) in a State in which orders are 
                        issued by courts or administrative 
                        tribunals, a case may be transferred 
                        between local jurisdictions in the 
                        State without need for any additional 
                        filing by the petitioner, or service of 
                        process upon the respondent, to retain 
                        jurisdiction over the parties.
            (3) Coordination with erisa.--Notwithstanding 
        subsection (d) of section 514 of the Employee 
        Retirement Income Security Act of 1974 (relating to 
        effect on other laws), nothing in this subsection shall 
        be construed to alter, amend, modify, invalidate, 
        impair, or supersede subsections (a), (b), and (c) of 
        such section 514 as it applies with respect to any 
        procedure referred to in paragraph (1) and any 
        expedited procedure referred to in paragraph (2), 
        except to the extent that such procedure would be 
        consistent with the requirements of section 206(d)(3) 
        of such Act (relating to qualified domestic relations 
        orders) or the requirements of section 609(a) of such 
        Act (relating to qualified medical child support 
        orders) if the reference in such section 206(d)(3) to a 
        domestic relations order and the reference in such 
        section 609(a) to a medical child support order were a 
        reference to a support order referred to in paragraphs 
        (1) and (2) relating to the same matters, respectively.
    (d) If a State demonstrates to the satisfaction of the 
Secretary, through the presentation to the Secretary of such 
data pertaining to caseloads, processing times, administrative 
costs, and average support collections, and such other data or 
estimates as the Secretary may specify, that the enactment of 
any law or the use of any procedure or procedures required by 
or pursuant to this section will not increase the effectiveness 
and efficiency of the State child support enforcement program, 
the Secretary may exempt the State, subject to the Secretary's 
continuing review and to termination of the exemption should 
circumstances change, from the requirement to enact the law or 
use the procedure or procedures involved.
    (e) For purposes of this section, the term ``overdue 
support'' means the amount of a delinquency pursuant to an 
obligation determined under a court order, or an order of an 
administrative process established under State law, for support 
and maintenance of a minor child which is owed to or on behalf 
of such child, or for support and maintenance of the [absent] 
noncustodial parent's spouse (or former spouse) with whom the 
child is living if and to the extent that spousal support (with 
respect to such spouse or former spouse) would be included for 
purposes of [paragraph (4) or (6) of section 454] section 
454(4). At the option of the State, overdue support may include 
amounts which otherwise meet the definition in the first 
sentence of this subsection but which are owed to or on behalf 
of a child who is not a minor child. The option to include 
support owed to children who are not minors shall apply 
independently to each procedure specified under this section.
    (f) Uniform Interstate Family Support Act.--
            (1) Enactment and use.--In order to satisfy section 
        454(20)(A), on and after January 1, 1998, each State 
        must have in effect the Uniform Interstate Family 
        Support Act, as approved by the American Bar 
        Association on February 9, 1993, together with any 
        amendments officially adopted before January 1, 1998 by 
        the National Conference of Commissioners on Uniform 
        State Laws.
            (2) Employers to follow procedural rules of State 
        where employee works.--The State law enacted pursuant 
        to paragraph (1) shall provide that an employer that 
        receives an income withholding order or notice pursuant 
        to section 501 of the Uniform Interstate Family Support 
        Act follow the procedural rules that apply with respect 
        to such order or notice under the laws of the State in 
        which the obligor works.
    (g) Laws Voiding Fraudulent Transfers.--In order to satisfy 
section 454(20)(A), each State must have in effect--
            (1)(A) the Uniform Fraudulent Conveyance Act of 
        1981;
            (B) the Uniform Fraudulent Transfer Act of 1984; or
            (C) another law, specifying indicia of fraud which 
        create a prima facie case that a debtor transferred 
        income or property to avoid payment to a child support 
        creditor, which the Secretary finds affords comparable 
        rights to child support creditors; and
            (2) procedures under which, in any case in which 
        the State knows of a transfer by a child support debtor 
        with respect to which such a prima facie case is 
        established, the State must--
                    (A) seek to void such transfer; or
                    (B) obtain a settlement in the best 
                interests of the child support creditor.
          * * * * * * *

 ENCOURAGEMENT OF STATES TO ADOPT SIMPLE CIVIL PROCESS FOR VOLUNTARILY 
    ACKNOWLEDGING PATERNITY AND A CIVIL PROCEDURE FOR ESTABLISHING 
                      PATERNITY IN CONTESTED CASES

    Sec. 468. In the administration of the child support 
enforcement program under this part, each State is encouraged 
to establish and implement [a simple civil process for 
voluntarily acknowledging paternity and] a civil procedure for 
establishing paternity in contested cases.

       COLLECTION AND REPORTING OF CHILD SUPPORT ENFORCEMENT DATA

    Sec. 469. (a) The Secretary of Health and Human Services 
shall collect and maintain, on a fiscal year basis, up-to-date 
statistics, by State, with respect to each of the services 
specified in subsection (b) (separately stated in the case of 
each such service for families receiving [aid under plans 
approved] assistance under State programs funded under part A 
and for families not receiving [such aid] such assistance), 
on--
            (1) the number of cases in the child support 
        enforcement agency caseload under part D which need the 
        service involved; and
            (2) the number of such cases in which the service 
        has actually been provided.
    (b) The services referred to in subsection (a) are--
            (1) paternity determination;
            (2) location of [an absent] a noncustodial parent 
        for the purpose of establishing a child support 
        obligation;
            (3) establishment of a child support obligation; 
        and
            (4) location of [an absent] a noncustodial parent 
        for the purpose of enforcing or modifying an 
        established child support obligation.
          * * * * * * *

SEC. 469A. NONLIABILITY FOR FINANCIAL INSTITUTIONS PROVIDING FINANCIAL 
                    RECORDS TO STATE CHILD SUPPORT ENFORCEMENT AGENCIES 
                    IN CHILD SUPPORT CASES.

    (a) In General.--Notwithstanding any other provision of 
Federal or State law, a financial institution shall not be 
liable under any Federal or State law to any person for 
disclosing any financial record of an individual to a State 
child support enforcement agency attempting to establish, 
modify, or enforce a child support obligation of such 
individual.
    (b) Prohibition of Disclosure of Financial Record Obtained 
by State Child Support Enforcement Agency.--A State child 
support enforcement agency which obtains a financial record of 
an individual from a financial institution pursuant to 
subsection (a) may disclose such financial record only for the 
purpose of, and to the extent necessary in, establishing, 
modifying, or enforcing a child support obligation of such 
individual.
    (c) Civil Damages for Unauthorized Disclosure.--
            (1) Disclosure by state officer or employee.--If 
        any person knowingly, or by reason of negligence, 
        discloses a financial record of an individual in 
        violation of subsection (b), such individual may bring 
        a civil action for damages against such person in a 
        district court of the United States.
            (2) No liability for good faith but erroneous 
        interpretation.--No liability shall arise under this 
        subsection with respect to any disclosure which results 
        from a good faith, but erroneous, interpretation of 
        subsection (b).
            (3) Damages.--In any action brought under paragraph 
        (1), upon a finding of liability on the part of the 
        defendant, the defendant shall be liable to the 
        plaintiff in an amount equal to the sum of--
                    (A) the greater of--
                            (i) $1,000 for each act of 
                        unauthorized disclosure of a financial 
                        record with respect to which such 
                        defendant is found liable; or
                            (ii) the sum of--
                                    (I) the actual damages 
                                sustained by the plaintiff as a 
                                result of such unauthorized 
                                disclosure; plus
                                    (II) in the case of a 
                                willful disclosure or a 
                                disclosure which is the result 
                                of gross negligence, punitive 
                                damages; plus
                    (B) the costs (including attorney's fees) 
                of the action.
    (d) Definitions.--For purposes of this section--
            (1) Financial institution.--The term ``financial 
        institution'' means--
                    (A) a depository institution, as defined in 
                section 3(c) of the Federal Deposit Insurance 
                Act (12 U.S.C. 1813(c));
                    (B) an institution-affiliated party, as 
                defined in section 3(u) of such Act (12 U.S.C. 
                1813(u));
                    (C) any Federal credit union or State 
                credit union, as defined in section 101 of the 
                Federal Credit Union Act (12 U.S.C. 1752), 
                including an institution-affiliated party of 
                such a credit union, as defined in section 
                206(r) of such Act (12 U.S.C. 1786(r)); and
                    (D) any benefit association, insurance 
                company, safe deposit company, money-market 
                mutual fund, or similar entity authorized to do 
                business in the State.
            (2) Financial record.--The term ``financial 
        record'' has the meaning given such term in section 
        1101 of the Right to Financial Privacy Act of 1978 (12 
        U.S.C. 3401).

SEC. 469B. GRANTS TO STATES FOR ACCESS AND VISITATION PROGRAMS.

    (a) In General.--The Administration for Children and 
Families shall make grants under this section to enable States 
to establish and administer programs to support and facilitate 
noncustodial parents' access to and visitation of their 
children, by means of activities including mediation (both 
voluntary and mandatory), counseling, education, development of 
parenting plans, visitation enforcement (including monitoring, 
supervision and neutral drop-off and pickup), and development 
of guidelines for visitation and alternative custody 
arrangements.
    (b) Amount of Grant.--The amount of the grant to be made to 
a State under this section for a fiscal year shall be an amount 
equal to the lesser of--
            (1) 90 percent of State expenditures during the 
        fiscal year for activities described in subsection (a); 
        or
            (2) the allotment of the State under subsection (c) 
        for the fiscal year.
    (c) Allotments to States.--
            (1) In general.--The allotment of a State for a 
        fiscal year is the amount that bears the same ratio to 
        $10,000,000 for grants under this section for the 
        fiscal year as the number of children in the State 
        living with only 1 biological parent bears to the total 
        number of such children in all States.
            (2) Minimum allotment.--The Administration for 
        Children and Families shall adjust allotments to States 
        under paragraph (1) as necessary to ensure that no 
        State is allotted less than--
                    (A) $50,000 for fiscal year 1997 or 1998; 
                or
                    (B) $100,000 for any succeeding fiscal 
                year.
    (d) No Supplantation of State Expenditures for Similar 
Activities.--A State to which a grant is made under this 
section may not use the grant to supplant expenditures by the 
State for activities specified in subsection (a), but shall use 
the grant to supplement such expenditures at a level at least 
equal to the level of such expenditures for fiscal year 1995.
    (e) State Administration.--Each State to which a grant is 
made under this section--
            (1) may administer State programs funded with the 
        grant, directly or through grants to or contracts with 
        courts, local public agencies, or nonprofit private 
        entities;
            (2) shall not be required to operate such programs 
        on a statewide basis; and
            (3) shall monitor, evaluate, and report on such 
        programs in accordance with regulations prescribed by 
        the Secretary.

    Part E--Federal Payments for Foster Care and Adoption Assistance

                        [PURPOSE: APPROPRIATION]

SEC. 470. PURPOSE; APPROPRIATION.

    [Sec. 470.] For the purpose of enabling each State to 
provide, in appropriate cases, foster care and transitional 
independent living programs for children who otherwise would be 
eligible for assistance under the State's plan approved under 
part A and adoption assistance for children with special needs, 
there are authorized to be appropriated for each fiscal year 
(commencing with the fiscal year which begins October 1, 1980) 
such sums as may be necessary to carry out the provisions of 
this part. The sums made available under this section shall be 
used for making payments to States which have submitted, and 
had approved by the Secretary, State plans under [this part] 
section 422.

          [STATE PLAN FOR FOSTER CARE AND ADOPTION ASSISTANCE

    [Sec. 471. (a) In order for a State to be eligible for 
payments under this part, it shall have a plan approved by the 
Secretary which--
            [(1) provides for foster care maintenance payments 
        in accordance with section 472 and for adoption 
        assistance in accordance with section 473;
            [(2) provides that the State agency responsible for 
        administering the program authorized by subpart 1 of 
        part B of this title shall administer, or supervise the 
        administration of, the program authorized by this part;
            [(3) provides that the plan shall be in effect in 
        all political subdivisions of the State, and, if 
        administered by them, be mandatory upon them;
            [(4) provides that the State shall assure that the 
        programs at the local level assisted under this part 
        will be coordinated with the programs at the State or 
        local level assisted under parts A and B of this title, 
        under title XX of this Act, and under any other 
        appropriate provision of Federal law;
            [(5) provides that the State will, in the 
        administration of its programs under this part, use 
        such methods relating to the establishment and 
        maintenance of personnel standards on a merit basis as 
        are found by the Secretary to be necessary for the 
        proper and efficient operation of the programs, except 
        that the Secretary shall exercise no authority with 
        respect to the selection, tenure of office, or 
        compensation of any individual employed in accordance 
        with such methods;
            [(6) provides that the State agency referred to in 
        paragraph (2) (hereinafter in this part referred to as 
        the ``State agency'') will make such reports, in such 
        form and containing such information as the Secretary 
        may from time to time require, and comply with such 
        provisions as the Secretary may from time to time find 
        necessary to assure the correctness and verification of 
        such reports;
            [(7) provides that the State agency will monitor 
        and conduct periodic evaluations of activities carried 
        out under this part;
            [(8) provides safeguards which restrict the use of 
        or disclosure of information concerning individuals 
        assisted under the State plan to purposes directly 
        connected with (A) the administration of the plan of 
        the State approved under this part, the plan or program 
        of the State under part A, B, or D of this title 
        (including activities under part F) or under title I, 
        V, X, XIV, XVI (as in effect in Puerto Rico, Guam, and 
        the Virgin Islands), XIX, or XX, or the supplemental 
        security income program established by title XVI, (B) 
        any investigation, prosecution, or criminal or civil 
        proceeding, conducted in connection with the 
        administration of any such plan or program, (C) the 
        administration of any other Federal or federally 
        assisted program which provides assistance, in cash or 
        in kind, or services, directly to individuals on the 
        basis of need, (D) any audit or similar activity 
        conducted in connection with the administration of any 
        such plan or program by any governmental agency which 
        is authorized by law to conduct such audit or activity, 
        and (E) reporting and providing information pursuant to 
        paragraph (9) to appropriate authorities with respect 
        to known or suspected child abuse or neglect; and the 
        safeguards so provided shall prohibit disclosure, to 
        any committee or legislative body (other than an agency 
        referred to in clause (D) with respect to an activity 
        referred to in such clause), of any information which 
        identifies by name or address any such applicant or 
        recipient; except that nothing contained herein shall 
        preclude a State from providing standards which 
        restrict disclosures to purposes more limited than 
        those specified herein, or which, in the case of 
        adoptions, prevent disclosure entirely;
            [(9) provides that the State agency will--
                    [(A) report to an appropriate agency or 
                official, known or suspected instances of 
                physical or mental injury, sexual abuse or 
                exploitation, or negligent treatment or 
                maltreatment of a child receiving aid under 
                part B or this part under circumstances which 
                indicate that the child's health or welfare is 
                threatened thereby; and
                    [(B) provide such information with respect 
                to a situation described in subparagraph (A) as 
                the State agency may have;
            [(10) provides for the establishment or designation 
        of a State authority or authorities which shall be 
        responsible for establishing and maintaining standards 
        for foster family homes and child care institutions 
        which are reasonably in accord with recommended 
        standards of national organizations concerned with 
        standards for such institutions or homes, including 
        standards related to admission policies, safety, 
        sanitation, and protection of civil rights, and 
        provides that the standards so established shall be 
        applied by the State to any foster family home or child 
        care institution receiving funds under this part or 
        part B of this title;
            [(11) provides for periodic review of the standards 
        referred to in the preceding paragraph and amounts paid 
        as foster care maintenance payments and adoption 
        assistance to assure their continuing appropriateness;
            [(12) provides for granting an opportunity for a 
        fair hearing before the State agency to any individual 
        whose claim for benefits available pursuant to this 
        part is denied or is not acted upon with reasonable 
        promptness;
            [(13) provides that the State shall arrange for a 
        periodic and independently conducted audit of the 
        programs assisted under this part and part B of this 
        title, which shall be conducted no less frequently than 
        once every three years;
            [(14) provides (A) specific goals (which shall be 
        established by State law on or before October 1, 1982) 
        for each fiscal year (commencing with the fiscal year 
        which begins on October 1, 1983) as to the maximum 
        number of children (in absolute numbers or as a 
        percentage of all children in foster care with respect 
        to whom assistance under the plan is provided during 
        such year) who, at any time during such year, will 
        remain in foster care after having been in such care 
        for a period in excess of twenty-four months, and (B) a 
        description of the steps which will be taken by the 
        State to achieve such goals;
            [(15) effective October 1, 1983, provides that, in 
        each case, reasonable efforts will be made (A) prior to 
        the placement of a child in foster care, to prevent or 
        eliminate the need for removal of the child from his 
        home, and (B) to make it possible for the child to 
        return to his home;
            [(16) provides for the development of a case plan 
        (as defined in section 475(1)) for each child receiving 
        foster care maintenance payments under the State plan 
        and provides for a case review system which meets the 
        requirements described in section 475(5)(B) with 
        respect to each such child; and
            [(17) provides that, where appropriate, all steps 
        will be taken, including cooperative efforts with the 
        State agencies administering the plans approved under 
        parts A and D, to secure an assignment to the State of 
        any rights to support on behalf of each child receiving 
        foster care maintenance payments under this part.
    [(b) The Secretary shall approve any plan which complies 
with the provisions of subsection (a) of this section.

               [FOSTER CARE MAINTENANCE PAYMENTS PROGRAM

    [Sec. 472. (a) Each State with a plan approved under this 
part shall make foster care maintenance payments (as defined in 
section 475(4)) under this part with respect to a child who 
would meet the requirements of section 406(a) or of section 407 
but for his removal from the home of a relative (specified in 
section 406(a)), if--
            [(1) the removal from the home occurred pursuant to 
        a voluntary placement agreement entered into by the 
        child's parent or legal guardian, or was the result of 
        a judicial determination to the effect that 
        continuation therein would be contrary to the welfare 
        of such child and (effective October 1, 1983) that 
        reasonable efforts of the type described in section 
        471(a)(15) have been made;
            [(2) such child's placement and care are the 
        responsibility of (A) the State agency administering 
        the State plan approved under section 471, or (B) any 
        other public agency with whom the State agency 
        administering or supervising the administration of the 
        State plan approved under section 471 has made an 
        agreement which is still in effect;
            [(3) such child has been placed in a foster family 
        home or child-care institution as a result of the 
        voluntary placement agreement or judicial determination 
        referred to in paragraph (1); and
            [(4) such child--
                    [(A) received aid under the State plan 
                approved under section 402 in or for the month 
                in which such agreement was entered into or 
                court proceedings leading to the removal of 
                such child from the home were initiated, or
                    [(B)(i) would have received such aid in or 
                for such month if application had been made 
                therefor, or (ii) had been living with a 
                relative specified in section 406(a) within six 
                months prior to the month in which such 
                agreement was entered into or such proceedings 
                were initiated, and would have received such 
                aid in or for such month if in such month he 
                had been living with such a relative and 
                application therefor had been made.
In any case where the child is an alien disqualified under 
section 245A(h), 210(f), or 210A(d)(7) of the Immigration and 
Nationality Act from receiving aid under the State plan 
approved under section 402 in or for the month in which such 
agreement was entered into or court proceedings leading to the 
removal of the child from the home were instituted, such child 
shall be considered to satisfy the requirements of paragraph 
(4) (and the corresponding requirements of section 
473(a)(2)(B)), with respect to that month, if he or she would 
have satisfied such requirements but for such disqualification.
    [(b) Foster care maintenance payments may be made under 
this part only on behalf of a child described in subsection (a) 
of this section who is--
            [(1) in the foster family home of an individual, 
        whether the payments therefor are made to such 
        individual or to a public or nonprofit private child-
        placement or child-care agency, or
            [(2) in a child-care institution, whether the 
        payments therefor are made to such institution or to a 
        public or nonprofit private child-placement or child-
        care agency, which payments shall be limited so as to 
        include in such payments only those items which are 
        included in the term ``foster care maintenance 
        payments'' (as defined in section 475(4)).
    [(c) For the purposes of this part, (1) the term ``foster 
family home'' means a foster family home for children which is 
licensed by the State in which it is situated or has been 
approved, by the agency of such State having responsibility for 
licensing homes of this type, as meeting the standards 
established for such licensing; and (2) the term ``child-care 
institution'' means a nonprofit private child-care institution, 
or a public child-care institution which accommodates no more 
than twenty-five children, which is licensed by the State in 
which it is situated or has been approved, by the agency of 
such State responsible for licensing or approval of 
institutions of this type, as meeting the standards established 
for such licensing, but the term shall not include detention 
facilities, forestry camps, training schools, or any other 
facility operated primarily for the detention of children who 
are determined to be delinquent.
    [(d) Notwithstanding any other provision of this title, 
Federal payments may be made under this part with respect to 
amounts expended by any State as foster care maintenance 
payments under this section, in the case of children removed 
from their homes pursuant to voluntary placement agreements as 
described in subsection (a), only if (at the time such amounts 
were expended) the State has fulfilled all of the requirements 
of section 427(b).
    [(e) No Federal payment may be made under this part with 
respect to amounts expended by any State as foster care 
maintenance payments under this section, in the case of any 
child who was removed from his or her home pursuant to a 
voluntary placement agreement as described in subsection (a) 
and has remained in voluntary placement for a period in excess 
of 180 days, unless there has been a judicial determination by 
a court of competent jurisdiction (within the first 180 days of 
such placement) to the effect that such placement is in the 
best interests of the child.
    [(f) For the purposes of this part and part B of this 
title, (1) the term ``voluntary placement'' means an out-of-
home placement of a minor, by or with participation of a State 
agency, after the parents or guardians of the minor have 
requested the assistance of the agency and signed a voluntary 
placement agreement; and (2) the term ``voluntary placement 
agreement'' means a written agreement, binding on the parties 
to the agreement, between the State agency, any other agency 
acting on its behalf, and the parents or guardians of a minor 
child which specifies, at a minimum, the legal status of the 
child and the rights and obligations of the parents or 
guardians, the child, and the agency while the child is in 
placement.
    [(g) In any case where--
            [(1) the placement of a minor child in foster care 
        occurred pursuant to a voluntary placement agreement 
        entered into by the parents or guardians of such child 
        as provided in subsection (a), and
            [(2) such parents or guardians request (in such 
        manner and form as the Secretary may prescribe) that 
        the child be returned to their home or to the home of a 
        relative,
    [the voluntary placement agreement shall be deemed to be 
revoked unless the State agency opposes such request and 
obtains a judicial determination, by a court of competent 
jurisdiction, that the return of the child to such home would 
be contrary to the child's best interests.
    [(h) For purposes of titles XIX and XX, any child with 
respect to whom foster care maintenance payments are made under 
this section shall be deemed to be a dependent child as defined 
in section 406 and shall be deemed to be a recipient of aid to 
families with dependent children under part A of this title. 
For purposes of the preceding sentence, a child whose costs in 
a foster family home or child-care institution are covered by 
the foster care maintenance payments being made with respect to 
his or her minor parent, as provided in section 475(4)(B), 
shall be considered a child with respect to whom foster care 
maintenance payments are made under this section.

                      [ADOPTION ASSISTANCE PROGRAM

    [Sec. 473. (a)(1)(A) Each State having a plan approved 
under this part shall enter into adoption assistance agreements 
(as defined in section 475(3)) with the adoptive parents of 
children with special needs.
    [(B) Under any adoption assistance agreement entered into 
by a State with parents who adopt a child with special needs, 
the State--
            [(i) shall make payments of nonrecurring adoption 
        expenses incurred by or on behalf of such parents in 
        connection with the adoption of such child, directly 
        through the State agency or through another public or 
        nonprofit private agency, in amounts determined under 
        paragraph (3), and
            [(ii) in any case where the child meets the 
        requirements of paragraph (2), may make adoption 
        assistance payments to such parents, directly through 
        the State agency or through another public or nonprofit 
        private agency, in amounts so determined.
    [(2) For purposes of paragraph (1)(B)(ii), a child meets 
the requirements of this paragraph if such child--
            [(A)(i) at the time adoption proceedings were 
        initiated, met the requirements of section 406(a) or 
        section 407 or would have met such requirements except 
        for his removal from the home of a relative (specified 
        in section 406(a)), either pursuant to a voluntary 
        placement agreement with respect to which Federal 
        payments are provided under section 474 (or 403) or as 
        a result of a judicial determination to the effect that 
        continuation therein would be contrary to the welfare 
        of such child,
            [(ii) meets all of the requirements of title XVI 
        with respect to eligibility for supplemental security 
        income benefits, or
            [(iii) is a child whose costs in a foster family 
        home or child-care institution are covered by the 
        foster care maintenance payments being made with 
        respect to his or her minor parent as provided in 
        section 475(4)(B),
            [(B)(i) received aid under the State plan approved 
        under section 402 in or for the month in which such 
        agreement was entered into or court proceedings leading 
        to the removal of such child from the home were 
        initiated, or
            [(ii)(I) would have received such aid in or for 
        such month if application had been made therefor, or 
        (II) had been living with a relative specified in 
        section 406(a) within six months prior to the month in 
        which such agreement was entered into or such 
        proceedings were initiated, and would have received 
        such aid in or for such month if in such month he had 
        been living with such a relative and application 
        therefor had been made, or
            [(iii) is a child described in subparagraph (A)(ii) 
        or (A)(iii), and
            [(C) has been determined by the State, pursuant to 
        subsection (c) of this section, to be a child with 
        special needs.
    [The last sentence of section 472(a) shall apply, for 
purposes of subparagraph (B), in any case where the child is an 
alien described in that sentence.
    [(3) The amount of the payments to be made in any case 
under clauses (i) and (ii) of paragraph (1)(B) shall be 
determined through agreement between the adoptive parents and 
the State or local agency administering the program under this 
section, which shall take into consideration the circumstances 
of the adopting parents and the needs of the child being 
adopted, and may be readjusted periodically, with the 
concurrence of the adopting parents (which may be specified in 
the adoption assistance agreement), depending upon changes in 
such circumstances. However, in no case may the amount of the 
adoption assistance payment made under clause (ii) of paragraph 
(1)(B) exceed the foster care maintenance payment which would 
have been paid during the period if the child with respect to 
whom the adoption assistance payment is made had been in a 
foster family home.
    [(4) Notwithstanding the preceding paragraph, (A) no 
payment may be made to parents with respect to any child who 
has attained the age of eighteen (or, where the State 
determines that the child has a mental or physical handicap 
which warrants the continuation of assistance, the age of 
twenty-one), and (B) no payment may be made to parents with 
respect to any child if the State determines that the parents 
are no longer legally responsible for the support of the child 
or if the State determines that the child is no longer 
receiving any support from such parents. Parents who have been 
receiving adoption assistance payments under this section shall 
keep the State or local agency administering the program under 
this section informed of circumstances which would, pursuant to 
this subsection, make them ineligible for such assistance 
payments, or eligible for assistance payments in a different 
amount.
    [(5) For purposes of this part, individuals with whom a 
child (who has been determined by the State, pursuant to 
subsection (c), to be a child with special needs) is placed for 
adoption in accordance with applicable State and local law 
shall be eligible for such payments, during the period of the 
placement, on the same terms and subject to the same conditions 
as if such individuals had adopted such child.
    [(6)(A) For purposes of paragraph (1)(B)(i), the term 
``nonrecurring adoption expenses'' means reasonable and 
necessary adoption fees, court costs, attorney fees, and other 
expenses which are directly related to the legal adoption of a 
child with special needs and which are not incurred in 
violation of State or Federal law.
    [(B) A State's payment of nonrecurring adoption expenses 
under an adoption assistance agreement shall be treated as an 
expenditure made for the proper and efficient administration of 
the State plan for purposes of section 474(a)(3)(E).
    [(b) For purposes of titles XIX and XX, any child--
            [(1)(A) who is a child described in subsection 
        (a)(2), and
            [(B) with respect to whom an adoption assistance 
        agreement is in effect under this section (whether or 
        not adoption assistance payments are provided under the 
        agreement or are being made under this section), 
        including any such child who has been placed for 
        adoption in accordance with applicable State and local 
        law (whether or not an interlocutory or other judicial 
        decree of adoption has been issued), or
            [(2) with respect to whom foster care maintenance 
        payments are being made under section 472,
shall be deemed to be a dependent child as defined in section 
406 and shall be deemed to be a recipient of aid to families 
with dependent children under part A of this title in the State 
where such child resides. For purposes of the preceding 
sentence, a child whose costs in a foster family home or child-
care institution are covered by the foster care maintenance 
payments being made with respect to his or her minor parent, as 
provided in section 475(4)(B), shall be considered a child with 
respect to whom foster care maintenance payments are being made 
under section 472.
    [(c) For purposes of this section, a child shall not be 
considered a child with special needs unless--
            [(1) the State has determined that the child cannot 
        or should not be returned to the home of his parents; 
        and
            [(2) the State had first determined (A) that there 
        exists with respect to the child a specific factor or 
        condition (such as his ethnic background, age, or 
        membership in a minority or sibling group, or the 
        presence of factors such as medical conditions or 
        physical, mental, or emotional handicaps) because of 
        which it is reasonable to conclude that such child 
        cannot be placed with adoptive parents without 
        providing adoption assistance under this section or 
        medical assistance under title XIX, and (B) that, 
        except where it would be against the best interests of 
        the child because of such factors as the existence of 
        significant emotional ties with prospective adoptive 
        parents while in the care of such parents as a foster 
        child, a reasonable, but unsuccessful, effort has been 
        made to place the child with appropriate adoptive 
        parents without providing adoption assistance under 
        this section or medical assistance under title XIX.

               [PAYMENTS TO STATES; ALLOTMENTS TO STATES

    [Sec. 474. (a) For each quarter beginning after September 
30, 1980, each State which has a plan approved under this part 
(subject to the limitations imposed by subsection (b)) shall be 
entitled to a payment equal to the sum of--
            [(1) an amount equal to the Federal medical 
        assistance percentage (as defined in section 1905(b) of 
        this Act) of the total amount expended during such 
        quarter as foster care maintenance payments under 
        section 472 for children in foster family homes or 
        child-care institutions; plus
            [(2) an amount equal to the Federal medical 
        assistance percentage (as defined in section 1905(b) of 
        this Act) of the total amount expended during such 
        quarter as adoption assistance payments under section 
        473 pursuant to adoption assistance agreements; plus
            [(3) an amount equal to the sum of the following 
        proportions of the total amounts expended during such 
        quarter as found necessary by the Secretary for the 
        provision of child placement services and for the 
        proper and efficient administration of the State plan--
                    [(A) 75 per centum of so much of such 
                expenditures as are for the training (including 
                both short-and long-term training at 
                educational institutions through grants to such 
                institutions or by direct financial assistance 
                to students enrolled in such institutions) of 
                personnel employed or preparing for employment 
                by the State agency or by the local agency 
                administering the plan in the political 
                subdivision,
                    [(B) 75 percent of so much of such 
                expenditures (including travel and per diem 
                expenses) as are for the short-term training of 
                current or prospective foster or adoptive 
                parents and the members of the staff of State-
                licensed or State-approved child care 
                institutions providing care to foster and 
                adopted children receiving assistance under 
                this part, in ways that increase the ability of 
                such current or prospective parents, staff 
                members, and institutions to provide support 
                and assistance to foster and adopted children, 
                whether incurred directly by the State or by 
                contract,
                    [(C) 50 percent of so much of such 
                expenditures as are for the planning, design, 
                development, or installation of statewide 
                mechanized data collection and information 
                retrieval systems (including 50 percent of the 
                full amount of expenditures for hardware 
                components for such systems) but only to the 
                extent that such systems--
                            [(i) meet the requirements imposed 
                        by regulations promulgated pursuant to 
                        section 479(b)(2);
                            [(ii) to the extent practicable, 
                        are capable of interfacing with the 
                        State data collection system that 
                        collects information relating to child 
                        abuse and neglect;
                            [(iii) to the extent practicable, 
                        have the capability of interfacing 
                        with, and retrieving information from, 
                        the State data collection system that 
                        collects information relating to the 
                        eligibility of individuals under part A 
                        (for the purposes of facilitating 
                        verification of eligibility of foster 
                        children); and
                            [(iv) are determined by the 
                        Secretary to be likely to provide more 
                        efficient, economical, and effective 
                        administration of the programs carried 
                        out under a State plan approved under 
                        part B or this part; and
                    [(D) 50 percent of so much of such 
                expenditures as are for the operation of the 
                statewide mechanized data collection and 
                information retrieval systems referred to in 
                subparagraph (C); and
                    [(E) one-half of the remainder of such 
                expenditures; plus
            [(4) an amount equal to the sum of--
                    [(A) so much of the amounts expended by 
                such State to carry out programs under section 
                477 as do not exceed the basic amount for such 
                State determined under section 477(e)(1); and
                    [(B) the lesser of--
                            [(i) one-half of any additional 
                        amounts expended by such State for such 
                        programs; or
                            [(ii) the maximum additional amount 
                        for such State under such section 
                        477(e)(1).
    [(b)(1) The Secretary shall, prior to the beginning of each 
quarter, estimate the amount to which a State will be entitled 
under subsections (a) for such quarter, such estimates to be 
based on (A) a report filed by the State containing its 
estimate of the total sum to be expended in such quarter in 
accordance with subsection (a), and stating the amount 
appropriated or made available by the State and its political 
subdivisions for such expenditures in such quarter, and if such 
amount is less than the State's proportionate share of the 
total sum of such estimated expenditures, the source or sources 
from which the difference is expected to be derived, (B) 
records showing the number of children in the State receiving 
assistance under this part, and (C) such other investigation as 
the Secretary may find necessary.
    [(2) The Secretary shall then pay to the State, in such 
installments as he may determine, the amounts so estimated, 
reduced or increased to the extent of any overpayment or 
underpayment which the Secretary determines was made under this 
section to such State for any prior quarter and with respect to 
which adjustment has not already been made under this 
subsection.
    [(3) The pro rata share to which the United States is 
equitably entitled, as determined by the Secretary, of the net 
amount recovered during any quarter by the State or any 
political subdivision thereof with respect to foster care and 
adoption assistance furnished under the State plan shall be 
considered an overpayment to be adjusted under this subsection.
    [(4)(A) Within 60 days after receipt of a State claim for 
expenditures pursuant to subsection (a), the Secretary shall 
allow, disallow, or defer such claim.
    [(B) Within 15 days after a decision to defer such a State 
claim, the Secretary shall notify the State of the reasons for 
the deferral and of the additional information necessary to 
determine the allowability of the claim.
    [(C) Within 90 days after receiving such necessary 
information (in readily reviewable form), the Secretary shall--
            [(i) disallow the claim, if able to complete the 
        review and determine that the claim is not allowable, 
        or
            [(ii) in any other case, allow the claim, subject 
        to disallowance (as necessary)--
                    [(I) upon completion of the review, if it 
                is determined that the claim is not allowable; 
                or
                    [(II) on the basis of findings of an audit 
                or financial management review.
    [(c) Automated Data Collection Expenditures.--The Secretary 
shall treat as necessary for the proper and efficient 
administration of the State plan all expenditures of a State 
necessary in order for the State to plan, design, develop, 
install, and operate data collection and information retrieval 
systems described in subsection (a)(3)(C), without regard to 
whether the systems may be used with respect to foster or 
adoptive children other than those on behalf of whom foster 
care maintenance payments or adoption assistance payments may 
be made under this part.

                              [DEFINITIONS

    [Sec. 475. As used in this part or part B of this title:
            [(1) The term ``case plan'' means a written 
        document which includes at least the following:
                    [(A) A description of the type of home or 
                institution in which a child is to be placed, 
                including a discussion of the appropriateness 
                of the placement and how the agency which is 
                responsible for the child plans to carry out 
                the voluntary placement agreement entered into 
                or judicial determination made with respect to 
                the child in accordance with section 472(a)(1).
                    [(B) A plan for assuring that the child 
                receives proper care and that services are 
                provided to the parents, child, and foster 
                parents in order to improve the conditions in 
                the parents' home, facilitate return of the 
                child to his own home or the permanent 
                placement of the child, and address the needs 
                of the child while in foster care, including a 
                discussion of the appropriateness of the 
                services that have been provided to the child 
                under the plan.
                    [(C) To the extent available and 
                accessible, the health and education records of 
                the child, including--
                            [(i) the names and addresses of the 
                        child's health and educational 
                        providers;
                            [(ii) the child's grade level 
                        performance;
                            [(iii) the child's school record;
                            [(iv) assurances that the child's 
                        placement in foster care takes into 
                        account proximity to the school in 
                        which the child is enrolled at the time 
                        of placement;
                            [(v) a record of the child's 
                        immunizations;
                            [(vi) the child's known medical 
                        problems;
                            [(vii) the child's medications; and
                            [(viii) any other relevant health 
                        and education information concerning 
                        the child determined to be appropriate 
                        by the State agency.
                Where appropriate, for a child age 16 or over, 
                the case plan must also include a written 
                description of the programs and services which 
                will help such child prepare for the transition 
                from foster care to independent living.
            [(2) The term ``parents'' means biological or 
        adoptive parents or legal guardians, as determined by 
        applicable State law.
            [(3) The term ``adoption assistance agreement'' 
        means a written agreement, binding on the parties to 
        the agreement, between the State agency, other relevant 
        agencies, and the prospective adoptive parents of a 
        minor child which at a minimum (A) specifies the nature 
        and amount of any payments, services, and assistance to 
        be provided under such agreement, and (B) stipulates 
        that the agreement shall remain in effect regardless of 
        the State of which the adoptive parents are residents 
        at any given time. The agreement shall contain 
        provisions for the protection (under an interstate 
        compact approved by the Secretary or otherwise) of the 
        interests of the child in cases where the adoptive 
        parents and child move to another State while the 
        agreement is effective.
            [(4)(A) The term ``foster care maintenance 
        payments'' means payments to cover the cost of (and the 
        cost of providing) food, clothing, shelter, daily 
        supervision, school supplies, a child's personal 
        incidentals, liability insurance with respect to a 
        child, and reasonable travel to the child's home for 
        visitation. In the case of institutional care, such 
        term shall include the reasonable costs of 
        administration and operation of such institution as are 
        necessarily required to provide the items described in 
        the preceding sentence.
                    [(B) In cases where--
                            [(i) a child placed in a foster 
                        family home or child-care institution 
                        is the parent of a son or daughter who 
                        is in the same home or institution, and
                            [(ii) payments described in 
                        subparagraph (A) are being made under 
                        this part with respect to such child,
                the foster care maintenance payments made with 
                respect to such child as otherwise determined 
                under subparagraph (A) shall also include such 
                amounts as may be necessary to cover the cost 
                of the items described in that subparagraph 
                with respect to such son or daughter.
            [(5) The term ``case review system'' means a 
        procedure for assuring that--
                    [(A) each child has a case plan designed to 
                achieve placement in the least restrictive 
                (most family like) and most appropriate setting 
                available and in close proximity to the 
                parents' home, consistent with the best 
                interest and special needs of the child, 
                which--
                            [(i) if the child has been placed 
                        in a foster family home or child-care 
                        institution a substantial distance from 
                        the home of the parents of the child, 
                        or in a State different from the State 
                        in which such home is located, sets 
                        forth the reasons why such placement is 
                        in the best interests of the child, and
                            [(ii) if the child has been placed 
                        in foster care outside the State in 
                        which the home of the parents of the 
                        child is located, requires that, 
                        periodically, but not less frequently 
                        than every 12 months, a caseworker on 
                        the staff of the State agency of the 
                        State in which the home of the parents 
                        of the child is located, or of the 
                        State in which the child has been 
                        placed, visit such child in such home 
                        or institution and submit a report on 
                        such visit to the State in which the 
                        home of the parents of the child is 
                        located,
                    [(B) the status of each child is reviewed 
                periodically but no less frequently than once 
                every six months by either a court or by 
                administrative review (as defined in paragraph 
                (6)) in order to determine the continuing 
                necessity for and appropriateness of the 
                placement, the extent of compliance with the 
                case plan, and the extent of progress which has 
                been made toward alleviating or mitigating the 
                causes necessitating placement in foster care, 
                and to project a likely date by which the child 
                may be returned to the home or placed for 
                adoption or legal guardianship,
                    [(C) with respect to each such child, 
                procedural safeguards will be applied, among 
                other things, to assure each child in foster 
                care under the supervision of the State of a 
                dispositional hearing to be held, in a family 
                or juvenile court or another court (including a 
                tribal court) of competent jurisdiction, or by 
                an administrative body appointed or approved by 
                the court, no later than eighteen months after 
                the original placement (and not less frequently 
                than every 12 months thereafter during the 
                continuation of foster care), which hearing 
                shall determine the future status of the child 
                (including, but not limited to, whether the 
                child should be returned to the parent, should 
                be continued in foster care for a specified 
                period, should be placed for adoption, or 
                should (because of the child's special needs or 
                circumstances) be continued in foster care on a 
                permanent or long-term basis) and, in the case 
                of a child described in subparagraph (A)(ii), 
                whether the out-of-State placement continues to 
                be appropriate and in the best interests of the 
                child, and, in the case of a child who has 
                attained age 16, the services needed to assist 
                the child to make the transition from foster 
                care to independent living; and procedural 
                safeguards shall also be applied with respect 
                to parental rights pertaining to the removal of 
                the child from the home of his parents, to a 
                change in the child's placement, and to any 
                determination affecting visitation privileges 
                of parents; and
                    [(D) a child's health and education record 
                (as described in paragraph (1)(A)) is reviewed 
                and updated, and supplied to the foster parent 
                or foster care provider with whom the child is 
                placed, at the time of each placement of the 
                child in foster care.
            [(6) The term ``administrative review'' means a 
        review open to the participation of the parents of the 
        child, conducted by a panel of appropriate persons at 
        least one of whom is not responsible for the case 
        management of, or the delivery of services to, either 
        the child or the parents who are the subject of the 
        review.

          [TECHNICAL ASSISTANCE;DATA COLLECTION AND EVALUATION

    [Sec. 476. (a) The Secretary may provide technical 
assistance to the States to assist them to develop the programs 
authorized under this part and shall periodically (1) evaluate 
the programs authorized under this part and part B of this 
title and (2) collect and publish data pertaining to the 
incidence and characteristics of foster care and adoptions in 
this country.
    [(b) Each State shall submit statistical reports as the 
Secretary may require with respect to children for whom 
payments are made under this part containing information with 
respect to such children including legal status, demographic 
characteristics, location, and length of any stay in foster 
care.

                    [INDEPENDENT LIVING INITIATIVES

    [Sec. 477. (a)(1) Payments shall be made in accordance with 
this section for the purpose of assisting States and localities 
in establishing and carrying out programs designed to assist 
children described in paragraph (2) who have attained age 16 in 
making the transition from foster care to independent living. 
Any State which provides for the establishment and carrying out 
of one or more such programs in accordance with this section 
for a fiscal year shall be entitled to receive payments under 
this section for such fiscal year, in an amount determined 
under subsection (e).
    [(2) A program established and carried out under paragraph 
(1)--
            [(A) shall be designed to assist children with 
        respect to whom foster care maintenance payments are 
        being made by the State under this part,
            [(B) may at the option of the State also include 
        any or all other children in foster care under the 
        responsibility of the State, and
            [(C) may at the option of the State also include 
        any child who has not attained age 21 to whom foster 
        care maintenance payments were previously made by a 
        State under this part and whose payments were 
        discontinued on or after the date such child attained 
        age 16, and any child who previously was in foster care 
        described in subparagraph (B) and for whom such care 
        was discontinued on or after the date such child 
        attained age 16; and a written transitional independent 
        living plan of the type described in subsection (d)(6) 
        shall be developed for such child as a part of such 
        program.
    [(b) The State agency administering or supervising the 
administration of the State's programs under this part shall be 
responsible for administering or supervising the administration 
of the State's programs described in subsection (a). Payment 
under this section shall be made to the State, and shall be 
used for the purpose of conducting and providing in accordance 
with this section (directly or under contracts with local 
governmental entities or private nonprofit organizations) the 
activities and services required to carry out the program or 
programs involved.
    [(c) In order for a State to receive payments under this 
section for any fiscal year, the State agency must submit to 
the Secretary, in such manner and form as the Secretary may 
prescribe, a description of the program together with 
satisfactory assurances that the program will be operated in an 
effective and efficient manner and will otherwise meet the 
requirements of this section. In the case of payments for 
fiscal year 1987, such description and assurances must be 
submitted within 90 days after the Secretary promulgates 
regulations as required under subsection (i), and in the case 
of payments for any succeeding fiscal year, such description 
and assurances must be submitted prior to February 1 of such 
fiscal year.
    [(d) In carrying out the purpose described in subsection 
(a), it shall be the objective of each program established 
under this section to help the individuals participating in 
such program to prepare to live independently upon leaving 
foster care. Such programs may include (subject to the 
availability of funds) programs to--
            [(1) enable participants to seek a high school 
        diploma or its equivalent or to take part in 
        appropriate vocational training;
            [(2) provide training in daily living skills, 
        budgeting, locating and maintaining housing, and career 
        planning;
            [(3) provide for individual and group counseling;
            [(4) integrate and coordinate services otherwise 
        available to participants;
            [(5) provide for the establishment of outreach 
        programs designed to attract individuals who are 
        eligible to participate in the program;
            [(6) provide each participant a written 
        transitional independent living plan which shall be 
        based on an assessment of his needs, and which shall be 
        incorporated into his case plan, as described in 
        section 475(1); and
            [(7) provide participants with other services and 
        assistance designed to improve their transition to 
        independent living.
    [(e)(1)(A) The basic amount to which a State shall be 
entitled under section 474(a)(4) for fiscal year 1987 and any 
succeeding fiscal year shall be an amount which bears the same 
ratio to the basic ceiling for such fiscal year as such State's 
average number of children receiving foster care maintenance 
payments under this part in fiscal year 1984 bears to the total 
of the average number of children receiving such payments under 
this part for all States for fiscal year 1984.
    [(B) The maximum additional amount to which a State shall 
be entitled under section 474(a)(4) for fiscal year 1991 and 
any succeeding fiscal year shall be an amount which bears the 
same ratio to the additional ceiling for such fiscal year as 
the basic amount of such State bears to $45,000,000.
    [(C) As used in this section:
            [(i) The term ``basic ceiling'' means--
                    [(I) for fiscal year 1990, $50,000,000; and
                    [(II) for each fiscal year other than 
                fiscal year 1990, $45,000,000.
            [(ii) The term ``additional ceiling'' means--
                    [(I) for fiscal year 1991, $15,000,000; and
                    [(II) for any succeeding fiscal year, 
                $25,000,000.
    [(2) If any State does not apply for funds under this 
section for any fiscal year within the time provided in 
subsection (c), the funds to which such State would have been 
entitled for such fiscal year shall be reallocated to one or 
more other States on the basis of their relative need for 
additional payments under this section (as determined by the 
Secretary).
    [(3) Any amounts payable to States under this section shall 
be in addition to amounts payable to States under subsections 
(a)(1), (a)(2), and (a)(3) of section 474, and shall supplement 
and not replace any other funds which may be available for the 
same general purposes in the localities involved. Amounts 
payable under this section may not be used for the provision of 
room or board.
    [(f) Payments made to a State under this section for any 
fiscal year--
            [(1) shall be used only for the specific purposes 
        described in this section;
            [(2) may be made on an estimated basis in advance 
        of the determination of the exact amount, with 
        appropriate subsequent adjustments to take account of 
        any error in the estimates; and
            [(3) shall be expended by such State in such fiscal 
        year or in the succeeding fiscal year.
    [Notwithstanding paragraph (3), payments made to a State 
under this section for the fiscal year 1987 and unobligated may 
be expended by such State in the fiscal year 1989.
    [(g)(1) Not later than the first January 1 following the 
end of each fiscal year, each State shall submit to the 
Secretary a report on the programs carried out during such 
fiscal year with the amounts received under this section. Such 
report--
            [(A) shall be in such form and contain such 
        information as may be necessary to provide an accurate 
        description of such activities, to provide a complete 
        record of the purposes for which the funds were spent, 
        and to indicate the extent to which the expenditure of 
        such funds succeeded in accomplishing the purpose 
        described in subsection (a); and
            [(B) shall specifically contain such information as 
        the Secretary may require in order to carry out the 
        evaluation under paragraph (2).
    [(2)(A) Not later than July 1, 1988, the Secretary shall 
submit an interim report on the activities carried out under 
this section.
    [(B) Not later than March 1, 1989, the Secretary, on the 
basis of the reports submitted by States under paragraph (1) 
for the fiscal years 1987 and 1988, and on the basis of such 
additional information as the Secretary may obtain or develop, 
shall evaluate the use by States of the payments made available 
under this section for such fiscal year with respect to the 
purpose of this section, with the objective of appraising the 
achievements of the programs for which such payments were made 
available, and developing comprehensive information and data on 
the basis of which decisions can be made with respect to the 
improvement of such programs and the necessity for providing 
further payments in subsequent years. The Secretary shall 
report such evaluation to the Congress. As a part of such 
evaluation, the Secretary shall include, at a minimum, a 
detailed overall description of the number and characteristics 
of the individuals served by the programs, the various kinds of 
activities conducted and services provided and the results 
achieved, and shall set forth in detail findings and comments 
with respect to the various State programs and a statement of 
plans and recommendations for the future.
    [(h) Notwithstanding any other provision of this title, 
payments made and services provided to participants in a 
program under this section, as a direct consequence of their 
participation in such program, shall not be considered as 
income or resources for purposes of determining eligibility (or 
the eligibility of any other persons) for aid under the State's 
plan approved under section 402 or 471, or for purposes of 
determining the level of such aid.
    [(i) The Secretary shall promulgate final regulations for 
implementing this section within 60 days after the date of the 
enactment of this section

        [COLLECTION OF DATA RELATING TO ADOPTION AND FOSTER CARE

    [Sec. 479. (a)(1) Not later than 90 days after the date of 
the enactment of this subsection, the Secretary shall establish 
an Advisory Committee on Adoption and Foster Care Information 
(in this section referred to as the ``Advisory Committee'') to 
study the various methods of establishing, administering, and 
financing a system for the collection of data with respect to 
adoption and foster care in the United States.
    [(2) The study required by paragraph (1) shall--
            [(A) identify the types of data necessary to--
                    [(i) assess (on a continuing basis) the 
                incidence, characteristics, and status of 
                adoption and foster care in the United States, 
                and
                    [(ii) develop appropriate national policies 
                with respect to adoption and foster care;
            [(B) evaluate the feasibility and appropriateness 
        of collecting data with respect to privately arranged 
        adoptions and adoptions arranged through private 
        agencies without assistance from public child welfare 
        agencies;
            [(C) assess the validity of various methods of 
        collecting data with respect to adoption and foster 
        care; and
            [(D) evaluate the financial and administrative 
        impact of implementing each such method.
    [(3) Not later than October 1, 1987, the Advisory Committee 
shall submit to the Secretary and the Congress a report setting 
forth the results of the study required by paragraph (1) and 
evaluating and making recommendations with respect to the 
various methods of establishing, administering, and financing a 
system for the collection of data with respect to adoption and 
foster care in the United States.
    [(4)(A) Subject to subparagraph (B), the membership and 
organization of the Advisory Committee shall be determined by 
the Secretary.
    [(B) The membership of the Advisory Committee shall include 
representatives of--
            [(i) private, nonprofit organizations with an 
        interest in child welfare (including organizations that 
        provide foster care and adoption services),
            [(ii) organizations representing State and local 
        governmental agencies with responsibility for foster 
        care and adoption services,
            [(iii) organizations representing State and local 
        governmental agencies with responsibility for the 
        collection of health and social statistics,
            [(iv) organizations representing State and local 
        judicial bodies with jurisdiction over family law,
            [(v) Federal agencies responsible for the 
        collection of health and social statistics, and
            [(vi) organizations and agencies involved with 
        privately arranged or international adoptions.
    [(5) After the date of the submission of the report 
required by paragraph (3), the Advisory Committee shall cease 
to exist.
    [(b)(1)(A) Not later than July 1, 1988, the Secretary shall 
submit to the Congress a report that--
            [(i) proposes a method of establishing, 
        administering, and financing a system for the 
        collection of data relating to adoption and foster care 
        in the United States,
            [(ii) evaluates the feasibility and appropriateness 
        of collecting data with respect to privately arranged 
        adoptions and adoptions arranged through private 
        agencies without assistance from public child welfare 
        agencies, and
            [(iii) evaluates the impact of the system proposed 
        under clause (i) on the agencies with responsibility 
        for implementing it.
    [(B) The report required by subparagraph (A) shall--
            [(i) specify any changes in law that will be 
        necessary to implement the system proposed under 
        subparagraph (A)(i), and
            [(ii) describe the type of system that will be 
        implemented under paragraph (2) in the absence of such 
        changes.
    [(2) Not later than December 31, 1988, the Secretary shall 
promulgate final regulations providing for the implementation 
of--
            [(A) the system proposed under paragraph (1)(A)(i), 
        or
            [(B) if the changes in law specified pursuant to 
        paragraph (1)(B)(i) have not been enacted, the system 
        described in paragraph (1)(B)(ii).
Such regulations shall provide for the full implementation of 
the system not later than October 1, 1991.
    [(c) Any data collection system developed and implemented 
under this section shall--
            [(1) avoid unnecessary diversion of resources from 
        agencies responsible for adoption and foster care;
            [(2) assure that any data that is collected is 
        reliable and consistent over time and among 
        jurisdictions through the use of uniform definitions 
        and methodologies;
            [(3) provide comprehensive national information 
        with respect to--
                    [(A) the demographic characteristics of 
                adoptive and foster children and their 
                biological and adoptive or foster parents,
                    [(B) the status of the foster care 
                population (including the number of children in 
                foster care, length of placement, type of 
                placement, availability for adoption, and goals 
                for ending or continuing foster care),
                    [(C) the number and characteristics of--
                            [(i) children placed in or removed 
                        from foster care,
                            [(ii) children adopted or with 
                        respect to whom adoptions have been 
                        terminated, and
                            [(iii) children placed in foster 
                        care outside the State which has 
                        placement and care responsibility, and'
                    [(D) the extent and nature of assistance 
                provided by Federal, State, and local adoption 
                and foster care programs and the 
                characteristics of the children with respect to 
                whom such assistance is provided; and
            [(4) utilize appropriate requirements and 
        incentives to ensure that the system functions reliably 
        throughout the United States.

      [Part F--Job Opportunities and Basic Skills Training Program

                        [PURPOSE AND DEFINITIONS

    [Sec. 481. (a) Purpose.--It is the purpose of this part to 
assure that needy families with children obtain the education, 
training, and employment that will help them avoid long-term 
welfare dependence.
    [(b) Meaning of Terms.--Except to the extent otherwise 
specifically indicated, terms used in this part shall have the 
meanings given them in or under part A.

             [ESTABLISHMENT AND OPERATION OF STATE PROGRAMS

    [Sec. 482. (a) State Plans for Job Opportunities and Basic 
Skills Training Programs.--(1)(A) As a condition of its 
participation in the program of aid to families with dependent 
children under part A, each State shall establish and operate a 
job opportunities and basic skills training program (in this 
part referred to as the ``program'') under a plan approved by 
the Secretary as meeting all of the requirements of this part 
and section 402(a)(19), and shall, in accordance with 
regulations prescribed by the Secretary, periodically (but not 
less frequently than every 2 years) review and update its plan 
and submit the updated plan for approval by the Secretary.
    [(B) A State plan for establishing and operating the 
program must describe how the State intends to implement the 
program during the period covered by the plan, and must 
indicate, through cross-references to the appropriate 
provisions of this part and part A, that the program will be 
operated in accordance with such provision of law. In addition, 
such plan must contain (i) an estimate of the number of persons 
to be served by the program, (ii) a description of the services 
to be provided within the State and the political subdivisions 
thereof, the needs to be addressed through the provision of 
such services, the extent to which such services are expected 
to be made available by other agencies on a nonreimbursable 
basis, and the extent to which such services are to be provided 
or funded by the program, and (iii) such additional information 
as the Secretary may require by regulation to enable the 
Secretary to determine that the State program will meet all of 
the requirements of this part and part A.
    [(C) The Secretary shall consult with the Secretary of 
Labor on general plan requirements and on criteria to be used 
in approving State plans under this section.
    [(D)(i) Not later than October 1, 1992, each State shall 
make the program available in each political subdivision of 
such State where it is feasible to do so, after taking into 
account the number of prospective participants, the local 
economy, and other relevant factors.
    [(ii) If a State determines that it is not feasible to make 
the program available in each such subdivision, the State plan 
must provide appropriate justification to the Secretary.
    [(2) The State agency that administers or supervises the 
administration of the State's plan approved under section 402 
shall be responsible for the administration or supervision of 
the administration of the State's program.
    [(3) Federal funds made available to a State for purposes 
of the program shall not be used to supplant non-Federal funds 
for existing services and activities which promote the purpose 
of this part. State or local funds expended for such purpose 
shall be maintained at least at the level of such expenditures 
for the fiscal year 1986.
    [(b) Assessment and Review of Needs and Skills of 
Participants; Employability Plan.--(1)(A) The State agency must 
make an initial assessment of the educational, child care, and 
other supportive services needs as well as the skills, prior 
work experience, and employability of each participant in the 
program under this part, including a review of the family 
circumstances. The agency may also review the needs of any 
child of the participant.
    [(B) On the basis of such assessment, the State agency, in 
consultation with the participant, shall develop an 
employability plan for the participant. The employability plan 
shall explain the services that will be provided by the State 
agency and the activities in which the participant will take 
part under the program, including child care and other 
supportive services, shall set forth an employment goal for the 
participant, and shall, to the maximum extent possible and 
consistent with this section, reflect the respective 
preferences of such participant. The plan must take into 
account the participant's supportive services needs, available 
program resources, and local employment opportunities. The 
employability plan shall not be considered a contract.
    [(2) Following the initial assessment and review and the 
development of the employability plan with respect to any 
participant in the program, the State agency may require the 
participant (or the adult caretaker in the family of which the 
participant is a member) to negotiate and enter into an 
agreement with the State agency that specifies such matters as 
the participant's obligations under the program, the duration 
of participation in the program, and the activities to be 
conducted and the services to be provided in the course of such 
participation. If the State agency exercises the option under 
the preceding sentence, the State agency must give the 
participant such assistance as he or she may require in 
reviewing and understanding the agreement.
    [(3) The State agency may assign a case manager to each 
participant and the participant's family. The case manager so 
assigned must be responsible for assisting the family to obtain 
any services which may be needed to assure effective 
participation in the program.
    [(c) Provision of Program and Employment Information.--(1) 
The State agency must ensure that all applicants for and 
recipients of aid to families with dependent children are 
encouraged, assisted, and required to fulfill their 
responsibilities to support their children by preparing for, 
accepting, and retaining such employment as they are capable of 
performing.
    [(2) The State agency must inform all applicants for and 
recipients of aid to families with dependent children of the 
education, employment, and training opportunities, and the 
support services (including child care and health coverage 
transition options), for which they are eligible, the 
obligations of the State agency, and the rights, 
responsibilities, and obligations of participants in the 
program.
    [(3) The State agency must--
            [(A) provide (directly or through arrangements with 
        others) information on the types and locations of child 
        care services reasonably accessible to participants in 
        the program,
            [(B) inform participants that assistance is 
        available to help them select appropriate child care 
        services, and
            [(C) on request, provide assistance to participants 
        in obtaining child care services.
    [(4) The State agency must inform applicants for and 
recipients of aid to families with dependent children of the 
grounds for exemption from participation in the program and the 
consequences of refusal to participate if not exempt, and 
provide other appropriate information with respect to such 
participation.
    [(5) Within one month after the State agency gives a 
recipient of aid to families with dependent children the 
information described in the preceding provisions of this 
paragraph, the State agency must notify such recipient of the 
opportunity to indicate his or her desire to participate in the 
program, including a clear description of how to enter the 
program.
    [(d) Services and Activities Under the Program.--(1)(A) In 
carrying out the program, each State shall make available a 
broad range of services and activities to aid in carrying out 
the purpose of this part. Such services and activities--
            [(i) shall include--
                    [(I) educational activities (as 
                appropriate), including high school or 
                equivalent education (combined with training as 
                needed), basic and remedial education to 
                achieve a basic literacy level, and education 
                for individuals with limited English 
                proficiency;
                    [(II) job skills training;
                    [(III) job readiness activities to help 
                prepare participants for work; and
                    [(IV) job development and job placement; 
                and
            [(ii) must also include at least 2 of the 
        following:
                    [(I) group and individual job search as 
                described in subsection (g);
                    [(II) on-the-job training;
                    [(III) work supplementation programs as 
                described in subsection (e); and
                    [(IV) community work experience programs as 
                described in subsection (f) or any other work 
                experience program approved by the Secretary.
    [(B) The State may also offer to participants under the 
program (i) postsecondary education in appropriate cases, and 
(ii) such other education, training, and employment activities 
as may be determined by the State and allowed by regulations of 
the Secretary.
    [(2) If the State requires an individual who has attained 
the age of 20 years and has not earned a high school diploma 
(or equivalent) to participate in the program, the State agency 
shall include educational activities consistent with his or her 
employment goals as a component of the individual's 
participation in the program, unless the individual 
demonstrates a basic literacy level, or the employability plan 
for the individual identifies a long-term employment goal that 
does not require a high school diploma (or equivalent). Any 
other services or activities to which such a participant is 
assigned may not be permitted to interfere with his or her 
participation in an appropriate educational activity under this 
subparagraph.
    [(3) Notwithstanding any other provision of this section, 
the Secretary shall permit up to 5 States to provide services 
under the program, on a voluntary or mandatory basis, to non- 
custodial parents who are unemployed and unable to meet their 
child support obligations. Any State providing services to non-
custodial parents pursuant to this paragraph shall evaluate the 
provision of such services, giving particular attention to the 
extent to which the provision of such services to those parents 
is contributing to the achievement of the purpose of this part, 
and shall report the results of such evaluation to the 
Secretary.
    [(e) Work Supplementation Program.--(1) Any State may 
institute a work supplementation program under which such 
State, to the extent it considers appropriate, may reserve the 
sums that would otherwise be payable to participants in the 
program as aid to families with dependent children and use such 
sums instead for the purpose of providing and subsidizing jobs 
for such participants (as described in paragraph (3)(C)(i) and 
(ii)), as an alternative to the aid to families with dependent 
children that would otherwise be so payable to them.
    [(2)(A) Notwithstanding section 406 or any other provision 
of law, Federal funds may be paid to a State under part A, 
subject to this subsection, with respect to expenditures 
incurred in operating a work supplementation program under this 
subsection.
    [(B) Nothing in this part, or in any State plan approved 
under part A, shall be construed to prevent a State from 
operating (on such terms and conditions and in such cases as 
the State may find to be necessary or appropriate) a work 
supplementation program in accordance with this subsection and 
section 484.
    [(C) Notwithstanding section 402(a)(23) or any other 
provision of law, a State may adjust the levels of the 
standards of need under the State plan as the State determines 
to be necessary and appropriate for carrying out a work 
supplementation program under this subsection.
    [(D) Notwithstanding section 402(a)(1) or any other 
provision of law, a State operating a work supplementation 
program under this subsection may provide that the need 
standards in effect in those areas of the State in which such 
program is in operation may be different from the need 
standards in effect in the areas in which such program is not 
in operation, and such State may provide that the need 
standards for categories of recipients may vary among such 
categories to the extent the State determines to be appropriate 
on the basis of ability to participate in the work 
supplementation program.
    [(E) Notwithstanding any other provision of law, a State 
may make such further adjustments in the amounts of the aid to 
families with dependent children paid under the plan to 
different categories of recipients (as determined under 
subparagraph (D)) in order to offset increases in benefits from 
needs-related programs (other than the State plan approved 
under part A) as the State determines to be necessary and 
appropriate to further the purposes of the work supplementation 
program.
    [(F) In determining the amounts to be reserved and used for 
providing and subsidizing jobs under this subsection as 
described in paragraph (1), the State may use a sampling 
methodology.
    [(G) Notwithstanding section 402(a)(8) or any other 
provision of law, a State operating a work supplementation 
program under this subsection (i) may reduce or eliminate the 
amount of earned income to be disregarded under the State plan 
as the State determines to be necessary and appropriate to 
further the purposes of the work supplementation program, and 
(ii) during one or more of the first 9 months of an 
individual's employment pursuant to a program under this 
section, may apply to the wages of the individual the 
provisions of subparagraph (A)(iv) of section 402(a)(8) without 
regard to the provisions of subparagraph (B)(ii)(II) of such 
section.
    [(3)(A) A work supplementation program operated by a State 
under this subsection may provide that any individual who is an 
eligible individual (as determined under subparagraph (B)) 
shall take a supplemented job (as defined in subparagraph (C)) 
to the extent that supplemented jobs are available under the 
program. Payments by the State to individuals or to employers 
under the work supplementation program shall be treated as 
expenditures incurred by the State for aid to families with 
dependent children except as limited by paragraph (4).
    [(B) For purposes of this subsection, an eligible 
individual is an individual who is in a category which the 
State determines should be eligible to participate in the work 
supplementation program, and who would, at the time of 
placement in the job involved, be eligible for aid to families 
with dependent children under an approved State plan if such 
State did not have a work supplementation program in effect.
    [(C) For purposes of this section, a supplemented job is--
            [(i) a job provided to an eligible individual by 
        the State or local agency administering the State plan 
        under part A; or
            [(ii) a job provided to an eligible individual by 
        any other employer for which all or part of the wages 
        are paid by such State or local agency.
A State may provide or subsidize under the program any job 
which such State determines to be appropriate.
    [(D) At the option of the State, individuals who hold 
supplemented jobs under a State's work supplementation program 
shall be exempt from the retrospective budgeting requirements 
imposed pursuant to section 402(a)(13)(A)(ii) (and the amount 
of the aid which is payable to the family of any such 
individual for any month, or which would be so payable but for 
the individual's participation in the work supplementation 
program, shall be determined on the basis of the income and 
other relevant circumstances in that month).
    [(4) The amount of the Federal payment to a State under 
section 403 for expenditures incurred in making payments to 
individuals and employers under a work supplementation program 
under this subsection shall not exceed an amount equal to the 
amount which would otherwise be payable under such section if 
the family of each individual employed in the program 
established in such State under this subsection had received 
the maximum amount of aid to families with dependent children 
payable under the State plan to such a family with no income 
(without regard to adjustments under paragraph (2)) for the 
lesser of (A) 9 months, or (B) the number of months in which 
such individual was employed in such program.
    [(5)(A) Nothing in this subsection shall be construed as 
requiring the State or local agency administering the State 
plan to provide employee status to an eligible individual to 
whom it provides a job under the work supplementation program 
(or with respect to whom it provides all or part of the wages 
paid to the individual by another entity under such program), 
or as requiring any State or local agency to provide that an 
eligible individual filling a job position provided by another 
entity under such program be provided employee status by such 
entity during the first 13 weeks such individual fills that 
position.
    [(B) Wages paid under a work supplementation program shall 
be considered to be earned income for purposes of any provision 
of law.
    [(6) Any State that chooses to operate a work 
supplementation program under this subsection shall provide 
that any individual who participates in such program, and any 
child or relative of such individual (or other individual 
living in the same household as such individual) who would be 
eligible for aid to families with dependent children under the 
State plan approved under part A if such State did not have a 
work supplementation program, shall be considered individuals 
receiving aid to families with dependent children under the 
State plan approved under part A for purposes of eligibility 
for medical assistance under the State plan approved under 
title XIX.
    [(7) No individual receiving aid to families with dependent 
children under a State plan shall be excused by reason of the 
fact that such State has a work supplementation program from 
any requirement of this part relating to work requirements, 
except during periods in which such individual is employed 
under such work supplementation program.
    [(f) Community Work Experience Program.--(1)(A) Any State 
may establish a community work experience program in accordance 
with this subsection. The purpose of the community work 
experience program is to provide experience and training for 
individuals not otherwise able to obtain employment, in order 
to assist them to move into regular employment. Community work 
experience programs shall be designed to improve the 
employability of participants through actual work experience 
and training and to enable individuals employed under community 
work experience programs to move promptly into regular public 
or private employment. The facilities of the State public 
employment offices may be utilized to find employment 
opportunities for recipients under this program. Community work 
experience programs shall be limited to projects which serve a 
useful public purpose in fields such as health, social service, 
environmental protection, education, urban and rural 
development and redevelopment, welfare, recreation, public 
facilities, public safety, and day care. To the extent 
possible, the prior training, experience, and skills of a 
recipient shall be used in making appropriate work experience 
assignments.
    [(B)(i) A State that elects to establish a community work 
experience program under this subsection shall operate such 
program so that each participant (as determined by the State) 
either works or undergoes training (or both) with the maximum 
number of hours that any such individual may be required to 
work in any month being a number equal to the amount of the aid 
to families with dependent children payable with respect to the 
family of which such individual is a member under the State 
plan approved under this part, divided by the greater of the 
Federal minimum wage or the applicable State minimum wage (and 
the portion of a recipient's aid for which the State is 
reimbursed by a child support collection shall not be taken 
into account in determining the number of hours that such 
individual may be required to work).
    [(ii) After an individual has been assigned to a position 
in a community work experience program under this subsection 
for 9 months, such individual may not be required to continue 
in that assignment unless the maximum number of hours of 
participation is no greater than (I) the amount of the aid to 
families with dependent children payable with respect to the 
family of which such individual is a member under the State 
plan approved under this part (excluding any portion of such 
aid for which the State is reimbursed by a child support 
payment), divided by (II) the higher of (a) the Federal minimum 
wage or the applicable State minimum wage, whichever is 
greater, or (b) the rate of pay for individuals employed in the 
same or similar occupations by the same employer at the same 
site.
    [(C) Nothing contained in this subsection shall be 
construed as authorizing the payment of aid to families with 
dependent children as compensation for work performed, nor 
shall a participant be entitled to a salary or to any other 
work or training expense provided under any other provision of 
law by reason of his participation in a program under this 
subsection.
    [(D) Nothing in this part or in any State plan approved 
under this part shall be construed to prevent a State from 
operating (on such terms and conditions and in such cases as 
the State may find to be necessary or appropriate) a community 
work experience program in accordance with this subsection and 
subsection (d).
    [(E) Participants in community work experience programs 
under this subsection may perform work in the public interest 
(which otherwise meets the requirements of this subsection) for 
a Federal office or agency with its consent, and, 
notwithstanding section 1342 of title 31, United States Code, 
or any other provision of law, such agency may accept such 
services, but such participants shall not be considered to be 
Federal employees for any purpose.
    [(2) After each 6 months of an individual's participation 
in a community work experience program under this subsection, 
and at the conclusion of each assignment of the individual 
under such program, the State agency must provide a 
reassessment and revision, as appropriate, of the individual's 
employability plan.
    [(3) The State agency shall provide coordination among a 
community work experience program operated pursuant to this 
subsection, any program of job search under subsection (g), and 
the other employment-related activities under the program 
established by this section so as to insure that job placement 
will have priority over participation in the community work 
experience program, and that individuals eligible to 
participate in more than one such program are not denied aid to 
families with dependent children on the grounds of failure to 
participate in one such program if they are actively and 
satisfactorily participating in another. The State agency may 
provide that part-time participation in more than one such 
program may be required where appropriate.
    [(4) In the case of any State that makes expenditures in 
the form described in paragraph (1) under its State plan 
approved under section 482(a)(1), expenditures for the 
operation and administration of the program under this section 
may not include, for purposes of section 403, the cost of 
making or acquiring materials or equipment in connection with 
the work performed under a program referred to in paragraph (1) 
or the cost of supervision of work under such program, and may 
include only such other costs attributable to such programs as 
are permitted by the Secretary.
    [(g) Job Search Program.--(1) The State agency may 
establish and carry out a program of job search for individuals 
participating in the program under this part.
    [(2) Notwithstanding section 402(a)(19)(B)(i), the State 
agency may require job search by an individual applying for or 
receiving aid to families with dependent children (other than 
an individual described in section 402(a)(19)(C) who is not an 
individual with respect to whom section 402(a)(19)(D) 
applies)--
            [(A) subject to the next to last sentence of this 
        paragraph, beginning at the time such individual 
        applies for aid to families with dependent children and 
        continuing for a period (prescribed by the State) of 
        not more than 8 weeks (but this requirement may not be 
        used as a reason for any delay in making a 
        determination of an individual's eligibility for such 
        aid or in issuing a payment to or on behalf of any 
        individual who is otherwise eligible for such aid); and
            [(B) at such time or times after the close of the 
        period prescribed under subparagraph (A) as the State 
        agency may determine but not to exceed a total of 8 
        weeks in any period of 12 consecutive months.
In no event may an individual be required to participate in job 
search for more than 3 weeks before the State agency conducts 
the assessment and review with respect to such individual under 
subsection (b)(1)(A). Job search activities in addition to 
those required under the preceding provisions of this paragraph 
may be required only in combination with some other education, 
training, or employment activity which is designed to improve 
the individual's prospects for employment.
    [(3) Job search by an individual under this subsection 
shall in no event be treated, for any purpose, as an activity 
under the program if the individual has participated in such 
job search for 4 months out of the preceding 12 months.
    [(h) Dispute Resolution Procedures.--Each State shall 
establish a conciliation procedure for the resolution of 
disputes involving an individual's participation in the program 
and (if the dispute involved is not resolved through 
conciliation) shall provide an opportunity for a hearing with 
respect to the dispute, which hearing may be provided through a 
hearing process established for purposes of resolving disputes 
with respect to the program or through the provision of a 
hearing pursuant to section 402(a)(4); but in no event shall 
aid to families with dependent children be suspended, reduced, 
discontinued, or terminated as a result of a dispute involving 
an individual's participation in the program until such 
individual has an opportunity for a hearing that meets the 
standards set forth by the United States Supreme Court in 
Goldberg v. Kelly, 397 U.S. 254 (1970).
    [(i) Special Provisions Relating to Indian Tribes.--(1) 
Within 6 months after the date of the enactment of the Family 
Support Act of 1988, an Indian tribe or Alaska Native 
organization may apply to the Secretary to conduct a job 
opportunities and basic skills training program to carry out 
the purpose of this subsection. If the Secretary approves such 
tribe's or organization's application, the maximum amount that 
may be paid to the State under section 403(l) in which such 
tribe or organization is located shall be reduced by the 
Secretary in accordance with paragraph (2) and an amount equal 
to the amount of such reduction shall be paid directly to such 
tribe or organization (without the requirement of any 
nonfederal share) for the operation of such program. In 
determining whether to approve an application from an Alaska 
Native organization, the Secretary shall consider whether 
approval of the application would promote the efficient and 
nonduplicative administration of job opportunities and basic 
skills training programs in the State.
    [(2) The amount of the reduction under paragraph (1) with 
respect to any State in which is located an Indian tribe or 
Alaska Native organization with an application approved under 
such paragraph shall be an amount equal to the amount that 
bears the same ratio to the maximum amount that could be paid 
under section 403(l) to the State as--
            [(A) the number of adult Indians receiving aid to 
        families with dependent children who reside on the 
        reservation or within the designated service area bears 
        to the number of all such adult recipients in the 
        State, or
            [(B) the number of adult Alaska Natives receiving 
        aid to families with dependent children who reside 
        within the boundaries of such Alaska Native 
        organization bears to the number of all such adult 
        recipients in the State of Alaska.
    [(3) The job opportunities and basic skills training 
program set forth in the application of an Indian tribe or 
Alaska Native organization under paragraph (1) need not meet 
any requirement of the program under this part or under section 
402(a)(19) that the Secretary determines is inappropriate with 
respect to such job opportunities and basic skills training 
program.
    [(4) The job opportunities and basic skills training 
program of any Indian tribe or Alaska Native organization may 
be terminated voluntarily by such tribe or Alaska Native 
organization or may be terminated by the Secretary upon a 
finding that the tribe or Alaska Native organization is not 
conducting such program in substantial conformity with the 
terms of the application approved by the Secretary, and the 
maximum amount that may be paid under section 403(l) to the 
State within which the tribe or Alaska Native organization is 
located (as reduced pursuant to paragraph (1)) shall be 
increased by any portion of the amount retained by the 
Secretary with respect to such program (and not payable to such 
tribe or Alaska Native organization for obligations already 
incurred). The reduction under paragraph (1) shall in no event 
apply to a State for any fiscal year beginning after such 
program is terminated if no other such program remains in 
operation in the State.
    [(5) For purposes of this subsection, an Indian tribe is 
any tribe, band, nation, or other organized group or community 
of Indians that--
            [(A) is recognized as eligible for the special 
        programs and services provided by the United States to 
        Indians because of their status as Indians; and
            [(B) for which a reservation (as defined in 
        paragraph (6)) exists.
    [(6) For purposes of this subsection, a reservation 
includes Indian reservations, public domain Indian allotments, 
and former Indian reservations in Oklahoma.
    [(7) For purposes of this subsection--
            [(A) an Alaska Native organization is any organized 
        group of Alaska Natives eligible to operate a Federal 
        program under Public Law 93-638 or such group's 
        designee;
            [(B) the boundaries of an Alaska Native 
        organization shall be those of the geographical region, 
        established pursuant to section 7(a) of the Alaska 
        Native Claims Settlement Act, within which the Alaska 
        Native organization is located (without regard to the 
        ownership of the land within the boundaries);
            [(C) the Secretary may approve only one application 
        from an Alaska Native organization for each of the 12 
        geographical regions established pursuant to section 
        7(a) of the Alaska Native Claims Settlement Act; and
            [(D) any Alaska Native, otherwise eligible or 
        required to participate in a job opportunities and 
        basic skills training program, residing within the 
        boundaries of an Alaska Native organization whose 
        application has been approved by the Secretary, shall 
        be eligible to participate in the job opportunities and 
        basic skills training program administered by such 
        Alaska Native organization.
    [(8) Nothing in this subsection shall be construed to grant 
or defer any status or powers other than those expressly 
granted in this subsection or to validate or invalidate any 
claim by Alaska Natives of sovereign authority over lands or 
people.

                       [COORDINATION REQUIREMENTS

    [Sec. 483. (a)(1) The Governor of each State shall assure 
that program activities under this part are coordinated in that 
State with programs operated under the Job Training Partnership 
Act and with any other relevant employment, training, and 
education programs available in that State. Appropriate 
components of the State's plan developed under section 
482(a)(1) which relate to job training and work preparation 
shall be consistent with the coordination criteria specified in 
the Governor's coordination and special services plan required 
under section 121 of the Job Training Partnership Act.
    [(2) The State plan so developed shall be submitted to the 
State job training coordinating council not less than 60 days 
before its submission to the Secretary, for the purpose of 
review and comment by the council. Concurrent with submission 
of the plan to the State job training coordinating council, the 
proposed State plan shall be published and made reasonably 
available to the general public through local news facilities 
and public announcements, in order to provide the opportunity 
for review and comment.
    [(3) The comments and recommendations of the State job 
training coordinating council under paragraph (2) shall be 
transmitted to the Governor of the State.
    [(b) The Secretary of Health and Human Services shall 
consult with the Secretaries of Education and Labor on a 
continuing basis for the purpose of assuring the maximum 
coordination of education and training services in the 
development and implementation of the program under this part.
    [(c) The State agency responsible for administering or 
supervising the administration of the State plan approved under 
part A shall consult with the State education agency and the 
agency responsible for administering job training programs in 
the State in order to promote coordination of the planning and 
delivery of services under the program with programs operated 
under the Job Training Partnership Act and with education 
programs available in the State (including any program under 
the Adult Education Act.

       [PROVISIONS GENERALLY APPLICABLE TO PROVISION OF SERVICES

    [Sec. 484. (a) In assigning participants in the program 
under this part to any program activity, the State agency shall 
assure that--
            [(1) each assignment takes into account the 
        physical capacity, skills, experience, 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, 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;
            [(4) the conditions of participation are 
        reasonable, taking into account in each case the 
        proficiency of the participant and the child care and 
        other supportive services needs of the participant; and
            [(5) each assignment is based on available 
        resources, the participant's circumstances, and local 
        employment opportunities.
    [(b) Appropriate workers' compensation and tort claims 
protection must 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).
    [(c) No work assignment under the program shall result in--
            [(1) the displacement of any currently employed 
        worker or position (including partial displacement such 
        as a reduction in the hours of nonovertime work, wages, 
        or employment benefits), or result in the impairment of 
        existing contracts for services or collective 
        bargaining agreements;
            [(2) the employment or assignment of a participant 
        or the filling of a position when (A) any other 
        individual is on layoff from the same or any equivalent 
        position, or (B) the employer has terminated the 
        employment of any regular employee or otherwise reduced 
        its workforce with the effect of filling the vacancy so 
        created with a participant subsidized under the 
        program; or
            [(3) any infringement of the promotional 
        opportunities of any currently employed individual.
Funds available to carry out the program under this part may 
not be used to assist, promote, or deter union organizing. No 
participant may be assigned under section 482(e) or (f) to fill 
any established unfilled position vacancy.
    [(d)(1) The State shall establish and maintain (pursuant to 
regulations jointly issued by the Secretary and the Secretary 
of Labor) 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 (c). 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.
    [(2) The State shall hear complaints with respect to 
working conditions and workers' compensation, and wage rates in 
the case of individuals participating in community work 
experience programs described in section 482(f), under the 
State's fair hearing process. A decision of the State under 
such process may be appealed to the Secretary of Labor under 
such conditions as the joint regulations issued under 
subsection (f) may provide.
    [(e) The provisions of this section apply to any work-
related programs and activities under this part, and under any 
other work-related programs and activities authorized (in 
connection with the AFDC program) under section 1115.
    [(f) The Secretary of Health and Human Services and the 
Secretary of Labor shall jointly prescribe and issue 
regulations for the purpose of implementing and carrying out 
the provisions of this section, in accordance with the 
timetable established in section 203(a) of the Family Support 
Act of 1988

                          [CONTRACT AUTHORITY

    [Sec. 485. (a) The State agency that administers or 
supervises the administration of the State's plan approved 
under section 402 shall carry out the programs under this part 
directly or through arrangements or under contracts with 
administrative entities under section 4(2) of the Job Training 
Partnership Act, with State and local educational agencies, and 
with other public agencies or private organizations (including 
community-based organizations as defined in section 4(5) of 
such Act).
    [(b) Arrangements and contracts entered into under 
subsection (a) may cover any service or activity (including 
outreach) to be made available under the program to the extent 
that the service or activity is not otherwise available on a 
nonreimbursable basis.
    [(c) The State agency and private industry councils (as 
established under section 102 of the Job Training Partnership 
Act) shall consult on the development of arrangements and 
contracts under the program established under a plan approved 
under section 482(a)(1), and under programs established under 
such Act.
    [(d) In selecting service providers, the State agency shall 
take into account appropriate factors which may include past 
performance in providing similar services, demonstrated 
effectiveness, fiscal accountability, ability to meet 
performance standards, and such other factors as the State may 
determine to be appropriate.
    [(e) The State agency shall use the services of each 
private industry council to identify and provide advice on the 
types of jobs available or likely to become available in the 
service delivery area (as defined in the Job Training 
Partnership Act) of the council, and shall ensure that the 
State program provides training in any area for jobs of a type 
which are, or are likely to become, available in the area.

                       [INITIAL STATE EVALUATIONS

    [Sec. 486. (a) With the objective of--
            [(1) providing an in-depth assessment of potential 
        participants in the program under this part in each 
        State, so as to furnish an accurate picture on which to 
        base estimates of future demands for services in 
        conducting such program and to improve the efficiency 
        of targeting under such program,
            [(2) assuring that training for recipients of aid 
        under such program will be realistically geared to 
        labor market demands and that the program will produce 
        individuals with marketable skills, while avoiding 
        duplication and redundancy in the delivery of services, 
        and
            [(3) otherwise assuring that States will have the 
        information needed to carry out the purposes of the 
        program,
each State may undertake and carry out an evaluation of 
demographic characteristics of potential participants in the 
program under this part within the 12-month period beginning on 
the date of the enactment of the Family Support Act of 1988 
Such evaluation shall be carried out in each State by the 
agency which administers the State's program approved under 
section 402.
    [(b) In carrying out the evaluation under subsection (a) 
the State shall give particular attention to the current and 
anticipated demands of the labor market or markets within the 
State, the types of training which are needed to meet those 
demands, and any changes in the current service delivery 
systems which may be needed to satisfy the requirements of the 
program under this part.
    [(c) The evaluation shall be structured so as to produce 
accurate and usable information on the age, family status, 
educational and literacy levels, duration of eligibility for 
aid to families with dependent children, and work experience of 
the individuals and families who are potential participants in 
the program under this part, including the actual numbers of 
such individuals and families in each such category.
    [(d) The Secretary of Health and Human Services, in 
consultation with the Secretary of Labor, shall provide each 
State with such technical assistance and data as it may need in 
order to carry out its evaluation under subsection (a); and 
each State shall transmit its evaluation to the Secretary by 
the close of the 12-month period specified in such subsection. 
The Secretary of Health and Human Services shall take such 
evaluations into account in developing performance standards.
    [(e) As used in this section, the term ``potential 
participants'' with respect to any State's program under this 
part means collectively all individuals in such State who are 
recipients of aid to families with dependent children under 
part A and who are members of the target populations identified 
in section 403(l)(2).

                         [PERFORMANCE STANDARDS

    [Sec. 487. (a) Not later than 4 years after the effective 
date specified in section 204(a) of the Family Support Act of 
1988 , the Secretary 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 criteria for 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 recommendations with respect to 
        performance standards developed under paragraph (1) to 
        the appropriate committees of jurisdiction of the 
        Congress, which recommendations shall be made with 
        respect to specific measurements of outcomes and be 
        based on the degree of success which may reasonably be 
        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 with respect to the program 
under this part shall be reviewed periodically by the Secretary 
and modified to the extent necessary.
    [(b) The Secretary may collect information from the States 
to assist in the development of performance standards under 
subsection (a), and shall include in his regulations (issued 
pursuant to section 203(a) of the Family Support Act of 1988 
with respect to the program under this part) provisions 
establishing uniform reporting requirements under which States 
must furnish periodically information and data, including 
information and data (for each program activity) on the average 
monthly number of families assisted, the types of such 
families, the amounts spent per family, the length of their 
participation, and such other matters as the Secretary may 
determine.
    [(c) The Secretary shall develop and transmit to the 
Congress, for appropriate legislative action, a proposal for 
measuring State progress, providing technical assistance to 
enable States to meet performance standards, and modifying the 
Federal matching rate to reflect the relative effectiveness of 
the various States in carrying out the program.]

SEC. 471. ELIGIBLE STATES.

    In order for a State to be eligible for payments under this 
part, the State shall have submitted to the Secretary a plan 
which satisfies the requirements of section 422.

SEC. 472. REQUIREMENTS FOR FOSTER CARE MAINTENANCE PAYMENTS.

    (a) In General.--Each State operating a program under this 
part shall make foster care maintenance payments, as defined in 
section 426(6) with respect to a child who would meet the 
requirements of section 406(a) (as in effect on the day before 
the date of the enactment of the Personal Responsibility and 
Work Opportunity Act of 1996) or of section 407 (as so in 
effect) but for the removal of the child from the home of a 
relative (specified in section 406(a) (as so in effect)), if--
            (1) the removal from the home occurred pursuant to 
        a voluntary placement agreement entered into by the 
        child's parent or legal guardian, or was the result of 
        a judicial determination to the effect that 
        continuation therein would be contrary to the welfare 
        of such child and that reasonable efforts of the type 
        described in section 422(a)(12) have been made;
            (2) such child's placement and care are the 
        responsibility of--
                    (A) the State; or
                    (B) any other public agency with which the 
                State has made an agreement for the 
                administration of the State program under this 
                part which is still in effect;
            (3) such child has been placed in a foster family 
        home or child-care institution as a result of the 
        voluntary placement agreement or judicial determination 
        referred to in paragraph (1); and
            (4) such child--
                    (A) would have been eligible to receive aid 
                under the eligibility standards under the State 
                plan approved under section 402 (as in effect 
                on the day before the date of the enactment of 
                this part and adjusted for inflation, in 
                accordance with regulations issued by the 
                Secretary) in or for the month in which such 
                agreement was entered into or court proceedings 
                leading to the removal of such child from the 
                home were initiated; or
                    (B) would have received such aid in or for 
                such month if application had been made 
                therefor, or the child had been living with a 
                relative specified in section 406(a) (as so in 
                effect) within 6 months prior to the month in 
                which such agreement was entered into or such 
                proceedings were initiated, and would have 
                received such aid in or for such month if in 
                such month such child had been living with such 
                a relative and application therefor had been 
                made.
    (b) Limitation on Foster Care Payments.--Foster care 
maintenance payments may be made under this part only on behalf 
of a child described in subsection (a) of this section who is--
            (1) in the foster family home of an individual, 
        whether the payments therefore are made to such 
        individual or to a public or private child placement or 
        child-care agency; or
            (2) in a child-care institution, whether the 
        payments therefore are made to such institution or to a 
        public or private child-placement or child-care agency, 
        which payments shall be limited so as to include in 
        such payments only those items which are included in 
        the term ``foster care maintenance payments'' (as 
        defined in section 426(6)).
    (c) Voluntary Placements.--
            (1) Satisfaction of child protection standards.--
        Notwithstanding any other provision of this section, 
        Federal payments may be made under this part with 
        respect to amounts expended by any State as foster care 
        maintenance payments under this part, in the case of 
        children removed from their homes pursuant to voluntary 
        placement agreements as described in subsection (a), 
        only if (at the time such amounts were expended) the 
        State has fulfilled all of the requirements of section 
        422(a)(11).
            (2) Removal in excess of 180 days.--No Federal 
        payment may be made under this part with respect to 
        amounts expended by any State as foster care 
        maintenance payments, in the case of any child who was 
        removed from such child's home pursuant to a voluntary 
        placement agreement as described in subsection (a) and 
        has remained in voluntary placement for a period in 
        excess of 180 days, unless there has been a judicial 
        determination by a court of competent jurisdiction 
        (within the first 180 days of such placement) that such 
        placement is in the best interests of the child.
            (3) Deemed revocation of agreements.--In any case 
        where--
                    (A) the placement of a minor child in 
                foster care occurred pursuant to a voluntary 
                placement agreement entered into by the parents 
                or guardians of such child as provided in 
                subsection (a); and
                    (B) such parents or guardians request (in 
                such manner and form as the Secretary may 
                prescribe) that the child be returned to their 
                home or to the home of a relative,
        the voluntary placement agreement shall be deemed to be 
        revoked unless the State opposes such request and 
        obtains a judicial determination, by a court of 
        competent jurisdiction, that the return of the child to 
        such home would be contrary to the child's best 
        interests.
    (d) Eligibility for Medical Assistance.--For purposes of 
title XIX (or, if applicable, title XV) and title XX, any child 
with respect to whom foster care maintenance payments are made 
under this section is deemed to be a recipient of cash 
assistance under part A of this title. For the purposes of the 
preceding sentence, a child whose costs in a foster family home 
or child-care institution are covered by the foster care 
maintenance payments being made with respect to his or her 
minor parent, as provided in section 426(6)(B), shall be 
considered a child with respect to whom foster care maintenance 
payments are made under this section.

SEC. 473. REQUIREMENTS FOR ADOPTION ASSISTANCE PAYMENTS.

    (a) In General.--A State operating a program under this 
part shall enter into adoption assistance agreements with the 
adoptive parents of children with special needs.
    (b) Payments Under Agreements.--
            (1) In general.--Under any adoption assistance 
        agreement entered into by a State with parents who 
        adopt a child with special needs, the State--
                    (A) shall make payments of nonrecurring 
                adoption expenses incurred by or on behalf of 
                such parents in connection with the adoption of 
                such child, directly through the State agency 
                or through another public or nonprofit private 
                agency, in amounts determined under subsection 
                (e), and
                    (B) in any case where the child meets the 
                requirements of subsection (d), may make 
                adoption assistance payments to such parents, 
                directly through the State agency or through 
                another public or nonprofit private agency, in 
                amounts so determined.
            (2) Definition of nonrecurring adoption expenses.--
                    (A) In general.--For purposes of paragraph 
                (1)(A), the term ``nonrecurring adoption 
                expenses'' means reasonable and necessary 
                adoption fees, court costs, attorney fees, and 
                other expenses which are directly related to 
                the legal adoption of a child with special 
                needs and which are not incurred in violation 
                of State or Federal law.
                    (B) Treatment as an administrative 
                expense.--A State's payment of nonrecurring 
                adoption expenses under an adoption assistance 
                agreement shall be treated as an expenditure 
                made for the proper and efficient 
                administration of the State plan for purposes 
                of section 474(a)(3)(E).
    (c) Eligibility for Medical Assistance.--For purposes of 
title XIX (or, if applicable, title XV) and title XX, any 
child--
            (1)(A) who is a child described in subsection (b), 
        and
            (B) with respect to whom an adoption assistance 
        agreement is in effect under this section (whether or 
        not adoption assistance payments are provided under the 
        agreement or are being made under this section), 
        including any such child who has been placed for 
        adoption in accordance with applicable State and local 
        law (whether or not an interlocutory or other judicial 
        decree of adoption has been issued), or
            (2) with respect to whom foster care maintenance 
        payments are being made under section 472,
is deemed to be a recipient of cash assistance under part A of 
this title in the State where such child resides. For purposes 
of the preceding sentence, a child whose costs in a foster 
family home or child-care institution are covered by the foster 
care maintenance payments being made with respect to his or her 
minor parent, as provided in section 426(6)(B), shall be 
considered a child with respect to whom foster care maintenance 
payments are being made under section 472.
    (d) Children With Special Needs.--For purposes of 
subsection (b)(1)(B), a child meets the requirements of this 
subsection if such child--
            (1)(A) at the time adoption proceedings were 
        initiated, met the requirements of section 406(a) (as 
        in effect on the day before the date of the enactment 
        of the Personal Responsibility and Work Opportunity Act 
        of 1996) or section 407 (as so in effect) or would have 
        met such requirements except for such child's removal 
        from the home of a relative (specified in section 
        406(a) (as so in effect)), either pursuant to a 
        voluntary placement agreement with respect to which 
        Federal payments are provided under section 474 (or 403 
        (as so in effect)) or as a result of a judicial 
        determination to the effect that continuation therein 
        would be contrary to the welfare of such child;
            (B) meets all of the requirements of title XVI with 
        respect to eligibility for supplemental security income 
        benefits; or
            (C) is a child whose costs in a foster family home 
        or child-care institution are covered by the foster 
        care maintenance payments being made with respect to 
        his or her minor parent;
            (2)(A) would have received aid under the 
        eligibility standards under the State plan approved 
        under section 402 (as in effect on the day before the 
        date of the enactment of this part, adjusted for 
        inflation, in accordance with regulations issued by the 
        Secretary) in or for the month in which such agreement 
        was entered into or court proceedings leading to the 
        removal of such child from the home were initiated;
            (B) would have received such aid in or for such 
        month if application had been made therefor, or had 
        been living with a relative specified in section 406(a) 
        (as so in effect) within 6 months prior to the month in 
        which such agreement was entered into or such 
        proceedings were initiated, and would have received 
        such aid in or for such month if in such month such 
        child had been living with such a relative and 
        application therefor had been made; or
            (C) is a child described in subparagraph (A) or 
        (B); and
            (3) has been determined by the State, pursuant to 
        subsection (h) of this section, to be a child with 
        special needs.
    (e) Determination of Payments.--The amount of the payments 
to be made in any case under subsection (b) shall be determined 
through agreement between the adoptive parents and the State or 
a public or nonprofit private agency administering the program 
under this part, which shall take into consideration the 
circumstances of the adopting parents and the needs of the 
child being adopted, and may be readjusted periodically, with 
the concurrence of the adopting parents (which may be specified 
in the adoption assistance agreement), depending upon changes 
in such circumstances. However, in no case may the amount of 
the adoption assistance payment exceed the foster care 
maintenance payment which would have been paid during the 
period if the child with respect to whom the adoption 
assistance payment is made had been in a foster family home.
    (f) Payment Exception.--Notwithstanding subsection (e), no 
payment may be made to parents with respect to any child who 
has attained the age of 18 (or, where the State determines that 
the child has a mental or physical disability which warrants 
the continuation of assistance, the age of 21), and no payment 
may be made to parents with respect to any child if the State 
determines that the parents are no longer legally responsible 
for the support of the child or if the State determines that 
the child is no longer receiving any support from such parents. 
Parents who have been receiving adoption assistance payments 
under this part shall keep the State or public or nonprofit 
private agency administering the program under this part 
informed of circumstances which would, pursuant to this 
section, make them ineligible for such assistance payments, or 
eligible for assistance payments in a different amount.
    (g) Preadoption Payments.--For purposes of this part, 
individuals with whom a child who has been determined by the 
State, pursuant to subsection (h), to be a child with special 
needs is placed for adoption in accordance with applicable 
State and local law shall be eligible for adoption assistance 
payments during the period of the placement, on the same terms 
and subject to the same conditions as if such individuals had 
adopted such child.
    (h) Determination of Child With Special Needs.--For 
purposes of this section, a child shall not be considered a 
child with special needs unless--
            (1) the State has determined that the child cannot 
        or should not be returned to the home of the child's 
        parents; and
            (2) the State had first determined--
                    (A) that there exists with respect to the 
                child a specific factor or condition such as 
                the child's ethnic background, age, or 
                membership in a minority or sibling group, or 
                the presence of factors such as medical 
                conditions or physical, mental, or emotional 
                handicaps because of which it is reasonable to 
                conclude that such child cannot be placed with 
                adoptive parents without providing adoption 
                assistance under this part or medical 
                assistance under title XV or XIX; and
                    (B) that, except where it would be against 
                the best interests of the child because of such 
                factors as the existence of significant 
                emotional ties with prospective adoptive 
                parents while in the care of such parents as a 
                foster child, a reasonable, but unsuccessful, 
                effort has been made to place the child with 
                appropriate adoptive parents without providing 
                adoption assistance under this section or 
                medical assistance under title XV or XIX.

SEC. 474. PAYMENTS TO STATES; ALLOTMENTS TO STATES.

    (a) Foster Care, Adoption Assistance, and Independent 
Living Programs Payments.--Each eligible State, as determined 
under section 471, shall be entitled to receive from the 
Secretary for each quarter of each fiscal year a payment equal 
to the sum of--
            (1) an amount equal to the Federal medical 
        assistance percentage (as defined in section 1905(b) of 
        this Act as in effect on the day before the date of the 
        enactment of the Personal Responsibility and Work 
        Opportunity Act of 1996) of the total amount expended 
        during such quarter as foster care maintenance payments 
        under the child protection program under this part for 
        children in foster family homes or child-care 
        institutions; plus
            (2) an amount equal to the Federal medical 
        assistance percentage (as defined in section 1905(b) of 
        this Act (as so in effect)) of the total amount 
        expended during such quarter as adoption assistance 
        payments under the child protection program under this 
        part pursuant to adoption assistance agreements; plus
            (3) an amount equal to the sum of the following 
        proportions of the total amounts expended during such 
        quarter as found necessary by the Secretary for the 
        provision of child placement services and for the 
        proper and efficient administration of the State foster 
        care and adoption assistance program--
                    (A) 75 percent of so much of such 
                expenditures as are for the training (including 
                both short and long-term training at 
                educational institutions through grants to such 
                institutions or by direct financial assistance 
                to students enrolled in such institutions) of 
                personnel employed or preparing for employment 
                by the State agency or by the local agency 
                administering the plan in the political 
                subdivision;
                    (B) 75 percent of so much of such 
                expenditures (including travel and per diem 
                expenses) as are for the short-term training of 
                current or prospective foster or adoptive 
                parents and the members of the staff of State-
                licensed or State-approved child care 
                institutions providing care to foster and 
                adopted children receiving assistance under 
                this part, in ways that increase the ability of 
                such current or prospective parents, staff 
                members, and institutions to provide support 
                and assistance to foster and adopted children, 
                whether incurred directly by the State or by 
                contract;
                    (C) 50 percent (or, if the quarter is in 
                fiscal year 1997, 75 percent) of so much of 
                such expenditures as are for the planning, 
                design, development, or installation of 
                statewide mechanized data collection and 
                information retrieval systems (including 50 
                percent (or, if the quarter is in fiscal year 
                1997, 75 percent) of the full amount of 
                expenditures for hardware components for such 
                systems) but only to the extent that such 
                systems--
                            (i) meet the requirements imposed 
                        by regulations;
                            (ii) to the extent practicable, are 
                        capable of interfacing with the State 
                        data collection system that collects 
                        information relating to child abuse and 
                        neglect;
                            (iii) to the extent practicable, 
                        have the capability of interfacing 
                        with, and retrieving information from, 
                        the State data collection system that 
                        collects information relating to the 
                        eligibility of individuals under part A 
                        (for the purposes of facilitating 
                        verification of eligibility of foster 
                        children); and
                            (iv) are determined by the 
                        Secretary to be likely to provide more 
                        efficient, economical, and effective 
                        administration of the programs carried 
                        out under a State plan approved under 
                        this part;
                    (D) 50 percent of so much of such 
                expenditures as are for the operation of the 
                statewide mechanized data collection and 
                information retrieval systems referred to in 
                subparagraph (C); and
                    (E) one-half of the remainder of such 
                expenditures; plus
            (4) an amount equal to the sum of--
                    (A) so much of the amounts expended by such 
                State to carry out a program under section 476, 
                as do not exceed the basic amount for such 
                State determined under subsection (e)(1) of 
                such section; and
                    (B) the lesser of--
                            (i) one-half of any additional 
                        amounts expended by such State for such 
                        programs; or
                            (ii) the maximum additional amount 
                        for such State under subsection (e)(1) 
                        of such section.
    (b) Automated Data Collection Expenditures.--The Secretary 
shall treat as necessary for the proper and efficient 
administration of the State plan all expenditures of a State 
necessary in order for the State to plan, design, develop, 
install, and operate data collection and information retrieval 
systems, without regard to whether the systems may be used with 
respect to foster or adoptive children other than those on 
behalf of whom foster care maintenance payments or adoption 
assistance payments may be made under this part.
    (c) Estimates by the Secretary.--
            (1) In general.--The Secretary shall, prior to the 
        beginning of each quarter, estimate the amount which a 
        State will be entitled to receive under subsection (a) 
        for such quarter, such estimates to be based on--
                    (A) a report filed by the State containing 
                its estimate of the total sum to be expended in 
                such quarter in accordance with subsection (a), 
                and stating the amount appropriated or made 
                available by the State and its political 
                subdivisions for such expenditures in such 
                quarter, and if such amount is less than the 
                State's proportionate share of the total sum of 
                such estimated expenditures, the source or 
                sources from which the difference is expected 
                to be derived;
                    (B) records showing the number of children 
                in the State receiving assistance under this 
                part; and
                    (C) such other information as the Secretary 
                may find necessary.
            (2) Payments.--The Secretary shall pay to the 
        States the amounts so estimated under paragraph (1), 
        reduced or increased to the extent of any overpayment 
        or underpayment which the Secretary determines was made 
        under this subsection to such State for any prior 
        quarter and with respect to which adjustment has not 
        already been made under this subsection.
            (3) Pro rata share.-- The pro rata share to which 
        the United States is equitably entitled, as determined 
        by the Secretary, of the net amount recovered during 
        any quarter by the State or any political subdivision 
        thereof with respect to foster care and adoption 
        assistance furnished under this part shall be 
        considered an overpayment to be adjusted under this 
        subsection.
    (d) Allowance or Disallowance of Claim.--
            (1) In general.--Within 60 days after receipt of a 
        State claim for expenditures pursuant to subsection 
        (b)(1), the Secretary shall allow, disallow, or defer 
        such claim.
            (2) Notice.--Within 15 days after a decision to 
        defer a State claim, the Secretary shall notify the 
        State of the reasons for the deferral and of the 
        additional information necessary to determine the 
        allowability of the claim.
            (3) Decision.--Within 90 days after receiving such 
        necessary information (in readily reviewable form), the 
        Secretary shall--
                    (A) disallow the claim, if able to complete 
                the review and determine that the claim is not 
                allowable; or
                    (B) in any other case, allow the claim, 
                subject to disallowance (as necessary)--
                            (i) upon completion of the review, 
                        if it is determined that the claim is 
                        not allowable; or
                            (ii) on the basis of findings of an 
                        audit or financial management review.

SEC. 475. DEFINITIONS.

    For definitions of terms used in this part, see section 
426.

SEC. 476. REQUIREMENTS FOR INDEPENDENT LIVING PROGRAMS.

    (a) Payments for Independent Living Programs.--
            (1) In general.--Payments shall be made in 
        accordance with this section for the purpose of 
        assisting States and localities in establishing and 
        carrying out programs designed to assist children 
        described in paragraph (2) who have attained age 16 in 
        making the transition from foster care to independent 
        living. Any State which provides for the establishment 
        and carrying out of one or more such programs in 
        accordance with this section for a fiscal year shall be 
        entitled to receive payments under this section for 
        such fiscal year, in an amount determined under 
        subsection (e).
            (2) Program requirements.--A program established 
        and carried out under paragraph (1)--
                    (A) shall be designed to assist children 
                with respect to whom foster care maintenance 
                payments are being made by the State under this 
                part;
                    (B) may at the option of the State also 
                include any or all other children in foster 
                care under the responsibility of the State; and
                    (C) may at the option of the State also 
                include any child who has not attained age 21 
                to whom foster care maintenance payments were 
                previously made by a State under this part and 
                whose payments were discontinued on or after 
                the date such child attained age 16, and any 
                child who previously was in foster care 
                described in subparagraph (B) and for whom such 
                care was discontinued on or after the date such 
                child attained age 16; and a written 
                transitional independent living plan of the 
                type described in subsection (d)(6) shall be 
                developed for such child as a part of such 
                program.
    (b) Use of Funds.--Payment under this section shall be made 
to the State, and shall be used for the purpose of conducting 
and providing in accordance with this section (directly or 
under contracts with local governmental entities or private 
nonprofit organizations) the activities and services required 
to carry out the program or programs involved.
    (c) Submission of Program Description and Assurances.--In 
order for a State to receive payments under this section for 
any fiscal year, the State, prior to February 1 of such fiscal 
year, must submit to the Secretary, in such manner and form as 
the Secretary may prescribe, a description of the program 
together with satisfactory assurances that the program will be 
operated in an effective and efficient manner and will 
otherwise meet the requirements of this section.
    (d) Program Objectives.--In carrying out the purpose 
described in subsection (a), it shall be the objective of each 
program established under this section to help the individuals 
participating in such program to prepare to live independently 
upon leaving foster care. Such programs may include (subject to 
the availability of funds) programs to--
            (1) enable participants to seek a high school 
        diploma or its equivalent or to take part in 
        appropriate vocational training;
            (2) provide training in daily living skills, 
        budgeting, locating and maintaining housing, and career 
        planning;
            (3) provide for individual and group counseling;
            (4) integrate and coordinate services otherwise 
        available to participants;
            (5) provide for the establishment of outreach 
        programs designed to attract individuals who are 
        eligible to participate in the program;
            (6) provide each participant a written transitional 
        independent living plan which shall be based on an 
        assessment of his needs, and which shall be 
        incorporated into his case plan, as defined in section 
        426(3); and
            (7) provide participants with other services and 
        assistance designed to improve their transition to 
        independent living.
    (e) Determination of Payments.--
            (1) Basic amount.--
                    (A) In general.--The basic amount to which 
                a State shall be entitled under section 
                474(a)(4) for a fiscal year shall be an amount 
                which bears the same ratio to the basic ceiling 
                for such fiscal year as such State's average 
                number of children receiving foster care 
                maintenance payments under part E in fiscal 
                year 1984 bore to the total of the average 
                number of children receiving such payments 
                under such part for all States for fiscal year 
                1984.
                    (B) Maximum additional amount.--The maximum 
                additional amount to which a State shall be 
                entitled under section 474(a)(4) for a fiscal 
                year shall be an amount which bears the same 
                ratio to the additional ceiling for such fiscal 
                year as the basic amount of such State bears to 
                $45,000,000.
                    (C) Definitions.--For purposes of this 
                section:
                            (i) Basic ceiling.--The term 
                        ``basic ceiling'' means, for any fiscal 
                        year, $45,000,000.
                            (ii) Additional ceiling.--The term 
                        ``additional ceiling'' means, for any 
                        fiscal year, $25,000,000.
            (2) Reallocation of funds.--If any State does not 
        apply for funds under this section for any fiscal year 
        within the time provided in subsection (c), the funds 
        to which such State would have been entitled for such 
        fiscal year shall be reallocated to one or more other 
        States on the basis of their relative need for 
        additional payments under this section (as determined 
        by the Secretary).
            (3) Supplement to other funds.--Any amounts payable 
        to States under this section shall be in addition to 
        amounts payable to States under paragraphs (1), (2), 
        and (3) of section 474(a), and shall supplement and not 
        replace any other funds which may be available for the 
        same general purposes in the localities involved.
    (f) Limitation on Use of Funds.--Payments made to a State 
under this section for any fiscal year--
            (1) shall be used only for the specific purposes 
        described in this section;
            (2) may not be used for the provision of room or 
        board;
            (3) may be made on an estimated basis in advance of 
        the determination of the exact amount, with appropriate 
        subsequent adjustments to take account of any error in 
        the estimates; and
            (4) shall be expended by such State in such fiscal 
        year or in the succeeding fiscal year.
    (g) Reporting Requirements.--Not later than the first 
January 1 following the end of each fiscal year, each State 
shall submit to the Secretary a report on the programs carried 
out during such fiscal year with the amounts received under 
this section. Such report shall be in such form and contain 
such information as may be necessary to provide an accurate 
description of such activities, to provide a complete record of 
the purposes for which the funds were spent, and to indicate 
the extent to which the expenditure of such funds succeeded in 
accomplishing the purpose described in subsection (a).
    (h) Assistance Not Considered Income or Resources.--
Notwithstanding any other provision of this title, payments 
made and services provided to participants in a program under 
this section, as a direct consequence of their participation in 
such program, shall not be considered as income or resources 
for purposes of determining eligibility (or the eligibility of 
any other persons) for assistance under the State's plan 
approved under this part or part A, or for purposes of 
determining the level of such assistance.

SEC. 477. COLLECTION OF DATA RELATING TO ADOPTION AND FOSTER CARE.

    For requirements with respect to the collection of data 
relating to adoption and foster care, see section 424.
          * * * * * * *

             TITLE X--GRANT TO STATES FOR AID TO THE BLIND

          * * * * * * *

                    state plans for aid to the blind

    Sec. 1002. (a) A State plan for aid to the blind must (1) 
except to the extent permitted by the Secretary with respect to 
services, provide that it shall be in effect in all political 
subdivisions of the State, and, if administered by them, be 
mandatory upon them; (2) provide for financial participation by 
the State; (3) either provide for the establishment or 
designation of a single State agency to administer the plan, or 
provide for the establishment or designation of a single State 
agency to supervise the administration of the plan; (4) provide 
(A) for granting an opportunity for a fair hearing before the 
State agency to any individual whose claim for aid to the blind 
is denied or is not acted upon with reasonable promptness, and 
(B) that if the State plan is administered in each of the 
political subdivisions of the State by a local agency and such 
local agency provides a hearing at which evidence may be 
presented prior to a hearing before the State agency, such 
local agency may put into effect immediately upon issuance its 
decision upon the matter considered at such hearing; (5) 
provide (A) such methods of administration (including after 
January 1, 1940, methods relating to the establishment and 
maintenance of personnel standards on a merit basis, except 
that the Secretary shall exercise no authority with respect to 
the selection, tenure of office, and compensation of any 
individual employed in accordance with such methods) as are 
found by the Secretary to be necessary for the proper and 
efficient operation of the plan, and (B) for the training and 
effective use of paid subprofessional staff, with particular 
emphasis on the full-time or part-time employment of recipients 
and other persons of low-income, as community service aides, in 
the administration of the plan and for the use of nonpaid or 
partially paid volunteers in a social service volunteer program 
in providing services to applicants and recipients and in 
assisting any advisory committees established by the State 
agency; (6) provide that the State agency will make such 
reports, in such form and containing such information, as the 
Secretary may from time to time require, and comply with such 
provisions as the Secretary may from time to time find 
necessary to assure the correctness and verification of such 
reports; and (7) provide that no aid will be furnished any 
individual under the plan with respect to any period with 
respect to which he is receiving old-age assistance under the 
State plan approved under section 2 of this Act or [aid to 
families with dependent children under the State plan approved 
under section 402 of this Act] assistance under a State program 
funded under part A of title IV; (8) provide that the State 
agency shall, in determining need, take into consideration any 
other income and resources of the individual claiming aid to 
the blind, as well as any expenses reasonably attributable to 
the earning of any such income, except that, in making such 
determination, the State agency (A) shall disregard the first 
$85 per month of earned income, plus one-half of earned income 
in excess of $85 per month, (B) shall, for a period not in 
excess of twelve months, and may, for a period not in excess of 
thirty-six months, disregard such additional amounts of other 
income and resources, in the case of an individual who has a 
plan for achieving self-support approved by the State agency, 
as may be necessary for the fulfillment of such plan, and (C) 
may, before disregarding the amounts referred to in clauses (A) 
and (B), disregard not more than $7.50 of any income; (9) 
provide safeguards which permit the use or disclosure of 
information concerning applicants or recipients only (A) to 
public officials who require such information in connection 
with their official duties, or (B) to other persons for 
purposes directly connected with the administration of the 
State plan; (10) provide that, in determining whether an 
individual is blind, there shall be an examination by a 
physician skilled in diseases of the eye or by an optometrist, 
whichever the individual may select; (11) effective July 1, 
1951, provide that all individuals wishing to make application 
for aid to the blind shall have opportunity to do so, and that 
aid to the blind shall be furnished with reasonable promptness 
to all eligible individuals; (12) effective July 1, 1953, 
provide, if the plan includes payments to individuals in 
private or public institutions, for the establishment or 
designation of a State authority or authorities which shall be 
responsible for establishing and maintaining standards for such 
institutions; (13) provide a description of the services (if 
any) which the State agency makes available (using whatever 
internal organizational arrangement it finds appropriate for 
this purpose) to applicants for and recipients of aid to the 
blind to help them attain self-support or self-care, including 
a description of the steps taken to assure, in the provision of 
such services, maximum utilization of other agencies providing 
similar or related services; and (14) provide that information 
is requested and exchanged for purposes of income and 
eligibility verification in accordance with a State system 
which meets the requirements of section 1137 of this Act.
          * * * * * * *

              TITLE XI--GENERAL PROVISIONS AND PEER REVIEW

                       Part A--General Provisions

          * * * * * * *

 [limitation on payments to puerto rico, the virgin islands, guam, and 
                             american samoa

    [Sec. 1108. (a) The total amount certified by the Secretary 
of Health and Human Services under titles I, X, XIV, and XVI, 
and under parts A and E of title IV (exclusive of any amounts 
on account of services and items to which subsection (b) or, in 
the case of part A of title IV, section 403(k) applies)--
            [(1) for payment to Puerto Rico shall not exceed--
                    [(A) $12,500,000 with respect to the fiscal 
                year 1968,
                    [(B) $15,000,000 with respect to the fiscal 
                year 1969,
                    [(C) $18,000,000 with respect to the fiscal 
                year 1970,
                    [(D) $21,000,000 with respect to the fiscal 
                year 1971,
                    [(E) $24,000,000 with respect to each of 
                the fiscal years 1972 through 1978,
                    [(F) $72,000,000 with respect to each of 
                the fiscal years 1979 through 1988, or
                    [(G) $82,000,000 with respect to the fiscal 
                year 1989 and each fiscal year thereafter;
            [(2) for payment to the Virgin Islands shall not 
        exceed--
                    [(A) $425,000 with respect to the fiscal 
                year 1968,
                    [(B) $500,000 with respect to the fiscal 
                year 1969,
                    [(C) $600,000 with respect to the fiscal 
                year 1970,
                    [(D) $700,000 with respect to the fiscal 
                year 1971,
                    [(E) $800,000 with respect to each of the 
                fiscal years 1972 through 1978,
                    [(F) $2,400,000 with respect to each of the 
                fiscal years 1979 through 1988, or
                    [(G) $2,800,000 with respect to the fiscal 
                year 1989 and each fiscal year thereafter;
            [(3) for payment to Guam shall not exceed--
                    [(A) $575,000 with respect to the fiscal 
                year 1968,
                    [(B) $690,000 with respect to the fiscal 
                year 1969,
                    [(C) $825,000 with respect to the fiscal 
                year 1970,
                    [(D) $960,000 with respect to the fiscal 
                year 1971,
                    [(E) $1,100,000 with respect to each of the 
                fiscal years 1972 through 1978,
                    [(F) $3,300,000 with respect to each of the 
                fiscal years 1979 through 1988, or
                    [(G) $3,800,000 with respect to the fiscal 
                year 1989 and each fiscal year thereafter.
Each jurisdiction specified in this subsection may use in its 
program under title XX any sums available to it under this 
subsection which are not needed to carry out the programs 
specified in this subsection.
    [(b) The total amount certified by the Secretary under part 
A of title IV, on account of family planning services with 
respect to any fiscal year--
            [(1) for payment to Puerto Rico shall not exceed 
        $2,000,000,
            [(2) for payment to the Virgin Islands shall not 
        exceed $65,000, and
            [(3) for payment to Guam shall not exceed $90,000.]

SEC. 1108. ADDITIONAL GRANTS TO PUERTO RICO, THE VIRGIN ISLANDS, GUAM, 
                    AND AMERICAN SAMOA; LIMITATION ON TOTAL PAYMENTS.

    (a) Limitation on Total Payments to Each Territory.--
Notwithstanding any other provision of this Act, the total 
amount certified by the Secretary of Health and Human Services 
under titles I, X, XIV, and XVI, under parts A, B, and E of 
title IV, and under subsection (b) of this section, for payment 
to any territory for a fiscal year shall not exceed the ceiling 
amount for the territory for the fiscal year.
    (b) Entitlement to Matching Grant.--
            (1) In general.--Each territory shall be entitled 
        to receive from the Secretary for each fiscal year a 
        grant in an amount equal to 75 percent of the amount 
        (if any) by which--
                    (A) the total expenditures of the territory 
                during the fiscal year under the territory 
                programs funded under parts A, B, and E of 
                title IV; exceeds
                    (B) the sum of--
                            (i) the total amount required to be 
                        paid to the territory (other than with 
                        respect to child care) under former 
                        section 403 (as in effect on September 
                        30, 1995) for fiscal year 1995, which 
                        shall be determined by applying 
                        subparagraphs (C) and (D) of section 
                        403(a)(1) to the territory;
                            (ii) the total amount required to 
                        be paid to the territory under former 
                        section 434 (as so in effect) for 
                        fiscal year 1995; and
                            (iii) the total amount expended by 
                        the territory during fiscal year 1995 
                        pursuant to parts A, B, and F of title 
                        IV (as so in effect), other than for 
                        child care.
            (2) Use of grant.--Any territory to which a grant 
        is made under paragraph (1) may expend the amount under 
        any program operated or funded under any provision of 
        law specified in subsection (a).
    (c) Definitions.--As used in this section:
            (1) Territory.--The term ``territory'' means Puerto 
        Rico, the Virgin Islands, Guam, and American Samoa.
            (2) Ceiling amount.--The term ``ceiling amount'' 
        means, with respect to a territory and a fiscal year, 
        the mandatory ceiling amount with respect to the 
        territory plus the discretionary ceiling amount with 
        respect to the territory, reduced for the fiscal year 
        in accordance with subsection (f).
            (3) Mandatory ceiling amount.--The term ``mandatory 
        ceiling amount'' means--
                    (A) $105,538,000 with respect to for Puerto 
                Rico;
                    (B) $4,902,000 with respect to Guam;
                    (C) $3,742,000 with respect to the Virgin 
                Islands; and
                    (D) $1,122,000 with respect to American 
                Samoa.
            (4) Discretionary ceiling amount.--The term 
        ``discretionary ceiling amount'' means, with respect to 
        a territory and a fiscal year, the total amount 
        appropriated pursuant to subsection (d)(3) for the 
        fiscal year for payment to the territory.
            (5) Total amount expended by the territory.--The 
        term ``total amount expended by the territory''--
                    (A) does not include expenditures during 
                the fiscal year from amounts made available by 
                the Federal Government; and
                    (B) when used with respect to fiscal year 
                1995, also does not include--
                            (i) expenditures during fiscal year 
                        1995 under subsection (g) or (i) of 
                        section 402 (as in effect on September 
                        30, 1995); or
                            (ii) any expenditures during fiscal 
                        year 1995 for which the territory (but 
                        for section 1108, as in effect on 
                        September 30, 1995) would have received 
                        reimbursement from the Federal 
                        Government.
    (d) Discretionary Grants.--
            (1) In general.--The Secretary shall make a grant 
        to each territory for any fiscal year in the amount 
        appropriated pursuant to paragraph (3) for the fiscal 
        year for payment to the territory.
            (2) Use of grant.--Any territory to which a grant 
        is made under paragraph (1) may expend the amount under 
        any program operated or funded under any provision of 
        law specified in subsection (a).
            (3) Limitation on authorization of 
        appropriations.--For grants under paragraph (1), there 
        are authorized to be appropriated to the Secretary for 
        each fiscal year--
                    (A) $7,951,000 for payment to Puerto Rico;
                    (B) $345,000 for payment to Guam;
                    (C) $275,000 for payment to the Virgin 
                Islands; and
                    (D) $190,000 for payment to American Samoa.
    (e) Authority to Transfer Funds Among Programs.--
Notwithstanding any other provision of this Act, any territory 
to which an amount is paid under any provision of law specified 
in subsection (a) may use part or all of the amount to carry 
out any program operated by the territory, or funded, under any 
other such provision of law.
    (f) Maintenance of Effort.--The ceiling amount with respect 
to a territory shall be reduced for a fiscal year by an amount 
equal to the amount (if any) by which--
            (1) the total amount expended by the territory 
        under all programs of the territory operated pursuant 
        to the provisions of law specified in subsection (a) 
        (as such provisions were in effect for fiscal year 
        1995) for fiscal year 1995; exceeds
            (2) the total amount expended by the territory 
        under all programs of the territory that are funded 
        under the provisions of law specified in subsection (a) 
        for the fiscal year that immediately precedes the 
        fiscal year referred to in the matter preceding 
        paragraph (1).
    [(c)] (g) The total amount certified by the Secretary under 
title XIX with respect to a fiscal year for payment to--
            (1) Puerto Rico shall not exceed (A) $116,500,000 
        for fiscal year 1994 and (B) for each succeeding fiscal 
        year the amount provided in this paragraph for the 
        preceding fiscal year increased by the percentage 
        increase in the medical care component of the consumer 
        price index for all urban consumers (as published by 
        the Bureau of Labor Statistics) for the twelve-month 
        period ending in March preceding the beginning of the 
        fiscal year, rounded to the nearest $100,000;
            (2) the Virgin Islands shall not exceed (A) 
        $3,837,500 for fiscal year 1994, and (B) for each 
        succeeding fiscal year the amount provided in this 
        paragraph for the preceding fiscal year increased by 
        the percentage increase referred to in paragraph 
        (1)(B), rounded to the nearest $10,000;
            (3) Guam shall not exceed (A) $3,685,000 for fiscal 
        year 1994, and (B) for each succeeding fiscal year the 
        amount provided in this paragraph for the preceding 
        fiscal year increased by the percentage increase 
        referred to in paragraph (1)(B), rounded to the nearest 
        $10,000;
            (4) Northern Mariana Islands shall not exceed (A) 
        $1,110,000 for fiscal year 1994, and (B) for each 
        succeeding fiscal year the amount provided in this 
        paragraph for the preceding fiscal year increased by 
        the percentage increase referred to in paragraph 
        (1)(B), rounded to the nearest $10,000; and
            (5) American Samoa shall not exceed (A) $2,140,000 
        for fiscal year 1994, and (B) for each succeeding 
        fiscal year the amount provided in this paragraph for 
        the preceding fiscal year increased by the percentage 
        increase referred to in paragraph (1)(B), rounded to 
        the nearest $10,000.
    [(d) The total amount certified by the Secretary under 
parts A and E of title IV with respect to a fiscal year for 
payment to American Samoa (exclusive of any amounts on account 
of services and items to which, in the case of part A of such 
title, section 403(k) applies) shall not exceed $1,000,000.
    [(e) Notwithstanding the provisions of section 421, and 
until such time as the Congress may by appropriation or other 
law otherwise provide, the Secretary shall, in lieu of the 
initial allotment specified in such sections, allot such 
smaller amounts to Guam, American Samoa, and the Trust 
Territory of the Pacific Islands as he may deem appropriate.]

    amounts disregarded not to be taken into account in determining 
                    eligibility of other individuals

    Sec. 1109. Any amount which is disregarded (or set aside 
for future needs) in determining the eligibility of and amount 
of the aid or assistance for any individual under a State plan 
approved under title I, X, XIV, XVI, or XIX, [or part A of 
title IV,] shall not be taken into consideration in determining 
the eligibility of and amount of aid or assistance for any 
other individual under a State plan approved under any other of 
such titles.
          * * * * * * *

                         demonstration projects

    Sec. 1115. (a) In the case of any experimental, pilot, or 
demonstration project which, in the judgment of the Secretary, 
is likely to assist in promoting the objectives of title I, X, 
XIV, XVI, or XIX, or part A or D of title IV, in a State or 
States--
            (1) the Secretary may waive compliance with any of 
        the requirements of section 2, 402, 454, 1002, 1402, 
        1602, or 1902, as the case may be, to the extent and 
        for the period he finds necessary to enable such State 
        or States to carry out such project, and
            (2)(A) costs of such project which would not 
        otherwise be included as expenditures under section 3, 
        [403,] 455, 1003, 1403, 1603, or 1903, as the case may 
        be, and which are not included as part of the costs of 
        projects under section 1110, shall, to the extent and 
        for the period prescribed by the Secretary, be regarded 
        as expenditures under the State plan or plans approved 
        under such title, or for administration of such State 
        plan or plans, as may be appropriate[.], and
            (B) costs of such project which would not otherwise 
        be a permissible use of funds under part A of title IV 
        and which are not included as part of the costs of 
        projects under section 1110, shall to the extent and 
        for the period prescribed by the Secretary, be regarded 
        as a permissible use of funds under such part.
In addition, not to exceed $4,000,000 of the aggregate amount 
appropriated for payments to States under such titles for any 
fiscal year beginning after June 30, 1967, shall be available, 
under such terms and conditions as the Secretary may establish, 
for payments to States to cover so much of the cost of such 
projects as is not covered by payments under such titles and is 
not included as part of the cost of projects for purposes of 
section 1110.
          * * * * * * *
    (c) In the case of any experimental, pilot, or 
demonstration project undertaken under subsection (a) to assist 
in promoting the objectives of part D of title IV, the 
project--
            (1) must be designed to improve the financial well-
        being of children or otherwise improve the operation of 
        the child support program;
            (2) may not permit modifications in the child 
        support program which would have the effect of 
        disadvantaging children in need of support; and
    (3) must not result in increased cost to the Federal 
Government under [the program of aid to families with dependent 
children] part A of such title.
          * * * * * * *

      ADMINISTRATIVE AND JUDICIAL REVIEW OF CERTAIN ADMINISTRATIVE 
                             DETERMINATIONS

    Sec. 1116. (a)(1) Whenever a State plan is submitted to the 
Secretary by a State for approval under title I, X, XIV, XVI, 
or XIX, [or part A of title IV,] he shall, not later than 90 
days after the date the plan is submitted to him, make a 
determination as to whether it conforms to the requirements for 
approval under such title. The 90- day period provided herein 
may be extended by written agreement of the Secretary and the 
affected State.
    (2) Any State dissatisfied with a determination of the 
Secretary under paragraph (1) with respect to any plan may, 
within 60 days after it has been notified of such 
determination, file a petition with the Secretary for 
reconsideration of the issue of whether such plan conforms to 
the requirements for approval under such title. Within 30 days 
after receipt of such a petition, the Secretary shall notify 
the State of the time and place at which a hearing will be held 
for the purpose of reconsidering such issue. Such hearing shall 
be held not less than 20 days nor more than 60 days after the 
date notice of such hearing is furnished to such State, unless 
the Secretary and such State agree in writing to holding the 
hearing at another time. The Secretary shall affirm, modify, or 
reverse his original determination within 60 days of the 
conclusion of the hearing.
    (3) Any State which is dissatisfied with a final 
determination made by the Secretary on such a reconsideration 
or a final determination of the Secretary under section 4, 
[404,] 1004, 1404, 1604, or 1904 may, within 60 days after it 
has been notified of such determination, file with the United 
States court of appeals for the circuit in which such State is 
located a petition for review of such determination. A copy of 
the petition shall be forthwith transmitted by the clerk of the 
court to the Secretary. The Secretary thereupon shall file in 
the court the record of the proceedings on which he based his 
determination as provided in section 2112 of title 28, United 
States Code.
    (4) The findings of fact by the Secretary, if supported by 
substantial evidence, shall be conclusive; but the court, for 
good cause shown, may remand the case to the Secretary to take 
further evidence, and the Secretary may thereupon make new or 
modified findings of fact and may modify his previous action, 
and shall certify to the court the transcript and record of the 
further proceedings. Such new or modified findings of fact 
shall likewise be conclusive if supported by substantial 
evidence.
    (5) The court shall have jurisdiction to affirm the action 
of the Secretary or to set it aside, in whole or in part. The 
judgment of the court shall be subject to review by the Supreme 
Court of the United States upon certiorari or certification as 
provided in section 1254 of title 28, United States Code.
    (b) For the purposes of subsection (a), any amendment of a 
State plan approved under title I, X, XIV, XVI, or XIX, [or 
part A of title IV,] may, at the option of the State, be 
treated as the submission of a new State plan.
    (c) Action pursuant to an initial determination of the 
Secretary described in subsection (a) shall not be stayed 
pending reconsideration, but in the event that the Secretary 
subsequently determines that his initial determination was 
incorrect he shall certify restitution forthwith in a lump sum 
of any funds incorrectly withheld or otherwise denied.
    (d) Whenever the Secretary determines that any item or 
class of items on account of which Federal financial 
participation is claimed under title I, X, XIV, XVI, or XIX, 
[or part A of title IV,] shall be disallowed for such 
participation, the State shall be entitled to and upon request 
shall receive a reconsideration of the disallowance.
          * * * * * * *
    Sec. 1118. In the case of any State which has in effect a 
plan approved under title XIX for any calendar quarter, the 
total of the payments to which such State is entitled for such 
quarter, and for each succeeding quarter in the same fiscal 
year (which for purposes of this section means the 4 calendar 
quarters ending with September 30), under paragraphs (1) and 
(2) of sections 3(a), [403(a),] 1003(a), 1403(a), and 1603(a) 
shall, at the option of the State, be determined by application 
of the Federal medical assistance percentage (as defined in 
section 1905), instead of the percentages provided under each 
such section, to the expenditures under its State plans 
approved under titles I, X, XIV, and XVI, [and part A of title 
IV,] which would be included in determining the amounts of the 
Federal payments to which such State is entitled under such 
sections, but without regard to any maximum on the dollar 
amounts per recipient which may be counted under such sections. 
For purposes of the preceding sentence, the term ``Federal 
medical assistance percentage'' shall, in the case of Puerto 
Rico, the Virgin Islands, and Guam, mean 75 per centum[, and 
shall, in the case of American Samoa, mean 75 per centum with 
respect to part A of title IV].

    federal participation in payments for repairs to home owned by 
                     recipient of aidor assistance

    Sec. 1119. In the case of an expenditure for repairing the 
home owned by an individual who is receiving aid or assistance, 
other than medical assistance to the aged, under a State plan 
approved under title I, X, XIV, or XVI, [or part A of title IV] 
if--
            (1) the State agency or local agency administering 
        the plan approved under such title has made a finding 
        (prior to making such expenditure) that (A) such home 
        is so defective that continued occupancy is 
        unwarranted, (B) unless repairs are made to such home, 
        rental quarters will be necessary for such individual, 
        and (C) the cost of rental quarters to take care of the 
        needs of such individual (including his spouse living 
        with him in such home and any other individual whose 
        needs were taken into account in determining the need 
        of such individual) would exceed (over such time as the 
        Secretary may specify) the cost of repairs needed to 
        make such home habitable together with other costs 
        attributable to continued occupancy of such home, and
            (2) no such expenditures were made for repairing 
        such home pursuant to any prior finding under this 
        section, the amount paid to any such State for any 
        quarter under section 3(a), [403(a),] 1003(a), 1403(a), 
        or 1603(a) shall be increased by 50 per centum of such 
        expenditures, except that the excess above $500 
        expended with respect to any one home shall not be 
        included in determining such expenditures.
          * * * * * * *

 reviews of child and family services programs, and of foster care and 
     adoption assistance programs, for conformity with state plan 
                              requirements

    Sec. [1123.] 1123A. (a) In General.--[The Secretary] 
Notwithstanding section 423(g), the Secretary, in consultation 
with the State agencies administering the State programs under 
parts B and E of title IV, shall promulgate regulations for the 
review of such programs to determine whether such programs are 
in substantial conformity with--
            (1) State plan requirements under such parts B and 
        E,
            (2) implementing regulations promulgated under this 
        section by the Secretary, and
            (3) the relevant approved State plans.
          * * * * * * *

  applicants or recipients under public assistance programs not to be 
    required to make election respecting certain veterans' benefits

    Sec. 1133. (a) Notwithstanding any other provision of law 
(but subject to subsection (b)), no individual who is an 
applicant for or recipient of aid or assistance under a State 
plan approved under title I, X, XIV, or XVI, [or part A of 
title IV,] or of benefits under the Supplemental Security 
Income program established by title XVI shall--
            (1)  * * *
          * * * * * * *

 [pilot projects to demonstrate the use of integrated service delivery 
                  systems for human services programs

    [Sec. 1136. (a) In order to develop and demonstrate ways of 
improving the delivery of services to individuals and families 
who need them under the various human services programs, by 
eliminating programmatic fragmentation and thereby assuring 
that an applicant for services under any one such program will 
be informed of and have access to all of the services which may 
be available to him or his family under the other human 
services programs being carried out in the community involved, 
any State having an approved plan under part A of title IV may, 
subject to the provisions of this section, establish and 
conduct one or more pilot projects to demonstrate the use of 
integrated service delivery systems for human services programs 
in that State or in one or more political subdivisions thereof.
    [(b) The integration of service delivery systems for human 
services programs in any State or locality under a pilot 
project established under this section shall involve or 
include--
            [(1) the development of a common set of terms for 
        use in all of the human services programs involved;
            [(2) the development for each applicant of a single 
        comprehensive family profile which is suitable for use 
        under all of the human services programs involved;
            [(3) the establishment and maintenance of a single 
        resources directory by which the citizens of the 
        community involved may be informed of and gain access 
        to the services which are available under all such 
        programs;
            [(4) the development of a unified budget and 
        budgeting process, and a unified accounting system, 
        with standardized audit procedures;
            [(5) the implementation of unified planning, needs 
        assessment, and evaluation;
            [(6) the consolidation of agency locations and 
        related transportation services;
            [(7) the standardization of procedures for 
        purchasing services from nongovernmental sources;
            [(8) the creation of communications linkages among 
        agencies to permit the serving of individual and family 
        needs across program and agency lines;
            [(9) the development, to the maximum extent 
        possible, of uniform application and eligibility 
        determination procedures; and
            [(10) any other methods, arrangements, and 
        procedures which the Secretary determines are necessary 
        or desirable for, and consistent with, the 
        establishment and operation of an integrated service 
        delivery system.
    [(c)(1) Any State which desires to establish and conduct a 
pilot project under this section, after having published a 
description of the proposed project and invited comments 
thereon from interested persons in the community or communities 
which would be affected, shall submit an application to the 
Secretary (in such form and containing such information as the 
Secretary may require) within 6 months after the date of the 
enactment of this section. The proposed project may be 
statewide in operation or may be limited to one or more 
political subdivisions of the State; and the application shall 
in any event include or be accompanied by satisfactory 
assurances that the project as proposed would be permitted 
under applicable State and local law.
    [(2) The Secretary shall consider all applications and 
accompanying comments and materials which are submitted under 
paragraph (1), and, no later than 9 months after the date of 
the enactment of this section, shall approve no fewer than 3 
nor more than 5 of the proposed projects (including one such 
project to be operated on a statewide basis). In considering 
and approving such applications the Secretary shall take into 
account the size and characteristics of the population that 
would be served by each proposed project, the desirability of 
wide geographic distribution among the projects, the number and 
nature of the human services programs which are in active 
operation in the various communities involved, and such other 
factors as may tend to indicate whether or not a particular 
proposed project would provide a useful and effective 
demonstration of the value of an integrated service delivery 
system. Each project approved under this paragraph shall be 
deemed for purposes of this section to begin on the first day 
of the month following the month in which the application with 
respect to such project is approved.
    [(3) The Secretary shall approve any application for a 
project under this section only after determining that the 
conduct of such project will not lower or restrict the levels 
of aid, assistance, benefits, or services, or the income or 
resource standards, deductions, or exclusions, under any of the 
human services programs involved, and will not delay the 
provision of aid, assistance, benefits, or services under any 
of such programs.
    [(d)(1) Any State whose application is approved under 
subsection (c) may submit to the Secretary a request for the 
waiver of any requirement which would otherwise apply with 
respect to the proposed project under any of the laws governing 
the human services programs to be included in the project; 
and--
            [(A) if the law involved is within the jurisdiction 
        of the Secretary and authority to grant the waiver 
        involved is otherwise available to the Secretary under 
        this title, title IV, or any other provision of law, 
        the Secretary shall approve such request upon a 
        determination that the waiver is necessary for the 
        project to provide a useful and effective demonstration 
        of the value of an integrated service delivery system; 
        and
            [(B) if the law involved is within the jurisdiction 
        of a Federal agency other than the Department of Health 
        and Human Services and authority to grant the waiver 
        involved is available to the head of such other agency 
        under that law or any other provision of law, the 
        Secretary shall transmit such request (on behalf of the 
        requesting State) to the head of such other agency, who 
        shall approve such request upon a determination that 
        the waiver is necessary for the project to provide a 
        useful and effective demonstration of the value of an 
        integrated service delivery system and who shall 
        certify such approval to the Secretary.
    [(2) If under the law governing any of the human services 
programs included within a project there are provisions 
establishing safeguards which limit or restrict the use or 
disclosure of information (concerning applicants for or 
recipients of benefits or services) which has been obtained or 
developed by the agency involved in the conduct of that 
program, and a waiver of such provisions is granted under 
paragraph (1) in order to make such information available for 
purposes of the project--
            [(A) the State shall provide each applicant for and 
        recipient of aid, assistance, benefits, or services 
        under the proposed integrated service delivery system 
        with a clear and readily comprehensible notice that 
        such information may be disclosed to and used by 
        project personnel, or exchanged with the other agencies 
        having responsibility for human services programs 
        included within the project;
            [(B) the State shall take such steps as may be 
        necessary to ensure that the information disclosed will 
        be used only for purposes of, and by persons directly 
        connected with, such project; and
            [(C) the State's application with respect to the 
        project under subsection (c) shall contain or be 
        accompanied by satisfactory assurances that the 
        preceding requirements of this paragraph will be fully 
        complied with.
    [(e) The Secretary shall from time to time pay to each 
State which has an approved pilot project under this section, 
in such manner and according to such schedule as may be agreed 
upon by the Secretary and such State, amounts equal in the 
aggregate to--
            [(1) 90 percent of the costs incurred by such State 
        and its political subdivisions in carrying out such 
        project during the first 18 months after the date on 
        which the project begins,
            [(2) 80 percent of any such costs incurred during 
        the 12-month period beginning with the nineteenth month 
        after such date, and
            [(3) 70 percent of any such costs incurred during 
        the 12-month period beginning with the thirty-first 
        month after such date.
    [(f)(1) For purposes of this section, the term ``human 
services program'' includes the program of aid to families with 
dependent children under part A of title IV, the supplemental 
security income benefits program under title XVI, the Federal 
food stamp program, and any other Federal or federally assisted 
program (other than a program under the Rehabilitation Act of 
1973) which provides aid, assistance, or benefits based wholly 
or partly on need or on income-related qualifications to 
specified classes or types of individuals or families or which 
is designed to help in crisis or emergency situations by 
meeting the basic human needs of individuals or families whose 
own resources are insufficient for that purpose.
    [(2) In carrying out this section the Secretary shall 
regularly consult with the Secretary of Labor, the Secretary of 
Agriculture, the Secretary of Housing and Urban Development, 
and the head of any other Federal agency having jurisdiction 
over or responsibility for one or more human services programs, 
in order to ensure that the administrative efforts of the 
various agencies involved are coordinated with respect to all 
of the pilot projects being carried out under this section.
    [(g) The Secretary shall require each State which is 
carrying out a pilot project under this section to submit 
periodic reports on the progress of such project, giving 
particular attention to the cost-effectiveness of the 
integrated service delivery system involved and the extent to 
which such system is improving the delivery of services. No 
pilot project under this section shall be conducted for a 
period of longer than 42 months. The first such report shall be 
submitted no later than 3 months after the date on which the 
project begins.
    [(h) The Secretary shall from time to time submit to the 
Congress a report on the progress and current status of each of 
the approved pilot projects under this section. Each such 
report shall reflect the periodic reports theretofore submitted 
to the Secretary by the States involved under subsection (g), 
and shall contain such additional comments, findings, and 
recommendations with respect to the operation of the program 
under this section as the Secretary may determine to be 
appropriate.
    [(i) The Comptroller General shall, at such time or times 
as he determines to be appropriate, review and evaluate any or 
all of the pilot projects undertaken pursuant to this section, 
and shall from time to time report to the Congress on the 
results of such reviews and evaluations together with his 
findings and recommendations with respect thereto.
    [(j) There are authorized to be appropriated, for the four-
fiscal-year period beginning with the fiscal year 1985, such 
sums, not to exceed $8,000,000 in the aggregate, as may be 
necessary to carry out this section.]

               income and eligibility verification system

    Sec. 1137. (a) In order to meet the requirements of this 
section, a State must have in effect an income and eligibility 
verification system which meets the requirements of subsection 
(d) and under which--
            (1)  * * *
          * * * * * * *
            (3) employers (including State and local 
        governmental entities and labor organizations (as 
        defined in section 453A(a)(2)(B)(iii)) in such State 
        are required, effective Septem- ber 30, 1988, to make 
        quarterly wage reports to a State agency (which may be 
        the agency administering the State's unemployment 
        compensation law) except that the Secretary of Labor 
        (in consultation with the Secretary of Health and Human 
        Services and the Secretary of Agriculture) may waive 
        the provisions of this paragraph if he determines that 
        the State has in effect an alternative system which is 
        as effective and timely for purposes of providing 
        employment related income and eligibility data for the 
        purposes described in paragraph (2), and except that no 
        report shall be filed with respect to an employee of a 
        State or local agency performing intelligence or 
        counterintelligence functions, if the head of such 
        agency has determined that filing such a report could 
        endanger the safety of the employee or compromise an 
        ongoing investigation or intelligence mission;
          * * * * * * *
    (b) The programs which must participate in the income and 
eligibility verification system are--
            [(1) the aid to families with dependent children 
        program under part A of title IV of this Act;]
            (1) any State program funded under part A of title 
        IV of this Act;
          * * * * * * *
    (d) The requirements of this subsection, with respect to an 
income and eligibility verification system of a State, are as 
follows:
            (1)(A)  * * *
            (B) [In this subsection--
                    [(4)(i) in the case of the program 
                described in subsection (b)(1), any reference 
                to an individual's eligibility for benefits 
                under the program shall be considered a 
                reference to the individual's being considered 
                a dependent child or to the individual's being 
                treated as a caretaker relative or other person 
                whose needs are to be taken into account in 
                making the determination under section 
                402(a)(7),
                    [(ii) in] In this subsection, in the case 
                of the program described in subsection (b)(4)--
                    [(I)] (i) any reference to the State shall 
                be considered a reference to the State agency, 
                and
                    [(II)] (ii) any reference to an 
                individual's eligibility for benefits under the 
                program shall be considered a reference to the 
                individual's eligibility to participate in the 
                program as a member of a household, and
                    [(III)] (iii) the term ``satisfactory 
                immigration status'' means an immigration 
                status which does not make the individual 
                ineligible for benefits under the applicable 
                program.
          * * * * * * *


       recovery of ssi overpayments from social security benefits


    Sec. 1146. (a) In General.--Whenever the Commissioner of 
Social Security determines that more than the correct amount of 
any payment has been made to any person under the supplemental 
security income program authorized by title XVI, and the 
Commissioner is unable to make proper adjustment or recovery of 
the amount so incorrectly paid as provided in section 1631(b), 
the Commissioner (notwithstanding section 207) may recover the 
amount incorrectly paid by decreasing any amount which is 
payable under the Federal Old-Age and Survivors Insurance 
program or the Federal Disability Insurance program authorized 
by title II to that person or that person's estate.
    (b) No Effect on SSI Benefit Eligibility or Amount.--
Notwithstanding subsections (a) and (b) of section 1611, in any 
case in which the Commissioner takes action in accordance with 
subsection (a) to recover an overpayment from any person, 
neither that person, nor any individual whose eligibility or 
benefit amount is determined by considering any part of that 
person's income, shall, as a result of such action--
            (1) become eligible under the program of 
        supplemental security income benefits under title XVI, 
        or
            (2) if such person or individual is already so 
        eligible, become eligible for increased benefits 
        thereunder.
    (c) Program Under Title XVI.--For purposes of this section, 
the term ``supplemental security income program authorized by 
title XVI'' includes supplementary payments pursuant to an 
agreement for Federal administration under section 1616(a), and 
payments pursuant to an agreement entered into under section 
212(b) of Public Law 93-66.
          * * * * * * *

  TITLE XIV--GRANTS TO STATES FOR AID TO THE PERMAMENTLY AND TOTALLY 
                                DISABLED

          * * * * * * *

      state plans for aid to the permanently and totally disabled

    Sec. 1402. (a) A State plan for aid to the permanently and 
totally disabled must (1) except to the extent permitted by the 
Secretary with respect to services, provide that it shall be in 
effect in all political subdivisions of the State, and, if 
administered by them, be mandatory upon them; (2) provide for 
financial participation by the State; (3) either provide for 
the establishment or designation of a single State agency to 
administer the plan, or provide for the establishment or 
designation of a single State agency to supervise the 
administration of the plan; (4) provide (A) for granting an 
opportunity for a fair hearing before the State agency to any 
individual whose claim for aid to the permanently and totally 
disabled is denied or is not acted upon with reasonable 
promptness, and (B) that if the State plan is administered in 
each of the political subdivisions of the State by a local 
agency and such local agency provides a hearing at which 
evidence may be presented prior to a hearing before the State 
agency, such local agency may put into effect immediately upon 
issuance its decision upon the matter considered at such 
hearing; (5) provide (A) such methods of administration 
(including methods relating to the establishment and 
maintenance of personnel standards on a merit basis, except 
that the Secretary shall exercise no authority with respect to 
the selection, tenure of office, and compensation of any 
individual employed in accordance with such methods) as are 
found by the Secretary to be necessary for the proper and 
efficient operation of the plan, and (B) for the training and 
effective use of paid subprofessional staff, with particular 
emphasis on the full-time or part-time employment of recipients 
and other persons of low income, as community service aides, in 
the administration of the plan and for the use of nonpaid or 
partially paid volunteers in a social service volunteer program 
in providing services to applicants and recipients and in 
assisting any advisory committees established by the State 
agency; (6) provide that the State agency will make such 
reports, in such form and containing such information, as the 
Secretary may from time to time require, and comply with such 
provisions as the Secretary may from time to time find 
necessary to assure the correctness and verification of such 
reports; (7) provide that no aid will be furnished any 
individual under the plan with respect to any period with 
respect to which he is receiving old-age assistance under the 
State plan approved under section 2 of this Act, [aid to 
families with dependent children under the State plan approved 
under section 402 of this Act] assistance under a State program 
funded under part A of title IV, or aid to the blind under the 
State plan approved under section 1002 of this Act; (8) provide 
that the State agency shall, in determining need, take into 
consideration any other income and resources of an individual 
claiming aid to the permanently and totally disabled, as well 
as any expenses reasonably attributable to the earning of any 
such income; except that, in making such determination, (A) the 
State agencv mav disregard not more than $7.50 of any income, 
(B) of the first $AO par month of additional income which is 
earned the State agency may disregard not more than the first 
$20 thereof plus one-half of the remainder, and (C) the State 
agency may, for a period not in excess of 36 months, disregard 
such additional amounts of other income and resources, in the 
case of an individual who has a plan for achieving self-support 
approved by the State agency, as may be necessary for the 
fulfillment of such plan, but only with respect to the part or 
parts of such period during substantially all of which he is 
actually undergoing vocational rehabilitation; (9) provide 
safeguards which permit the use or disclosure of information 
concerning applicants or recipients only (A) to public 
officials who require such information in connection with their 
official duties, or (B) to other persons for purposes directly 
connected with the administration of the State plan; (10) 
provide that all individuals wishing to make application for 
aid to the permanently and totally disabled shall have 
opportunity to do so, and that aid to the permanently and 
totally disabled shall be furnished with reasonable promptness 
to all eligible individuals; (11) effective July 1, 1953, 
provide, if the plan includes payments to individuals in 
private or public institutions, for the establishment or 
designation of a State authority or authorities which shall be 
responsible for establishing and maintaining standards for such 
institutions; (12) provide a description of the services (if 
any) which the State agency makes available (using whatever 
internal organizational arrangement it finds appropriate for 
this purpose) to applicants for and recipients of aid to the 
permanently and totally disabled to help them attain self-
support or self-care, including a description of the steps 
taken to assure, in the provision of such services, maximum 
utilization of other agencies providing similar or related 
services; and (13) provide that information is requested and 
exchanged for purposes of income and eligibility verification 
in accordance with a State system which meets the requirements 
of section 1137 of this Act.
          * * * * * * *

   TITLE XVI--SUPPLEMENTAL SECURITY INCOME FOR THE AGED, BLIND, AND 
                                DISABLED

          * * * * * * *

                   Part A--Determination of Benefits

                 ELIGIBILITY FOR AND AMOUNT OF BENEFITS

                   Definition of Eligible Individual

    Sec. 1611. (a)  * * *
          * * * * * * *

                  Period for Determination of Benefits

    (c)(1)  * * *
          * * * * * * *
    (5) Notwithstanding paragraphs (1) and (2), any income 
which is paid to or on behalf of an individual in any month 
pursuant to [(A) a State plan approved under part A of title IV 
of this Act (relating to aid to families with dependent 
children),] (A) a State program funded under part A of title 
IV, (B) section 472 of this Act (relating to foster care 
assistance), (C) section 412(e) of the Immigration and 
Nationality Act (relating to assistance for refugees), (D) 
section 501(a) of Public Law 96-422 (relating to assistance for 
Cuban and Haitian entrants), or (E) the Act of November 2, 1921 
(42 Stat. 208), as amended (relating to assistance furnished by 
the Bureau of Indian Affairs), shall be taken into account in 
determining the amount of the benefit under this title of such 
individual (and his eligible spouse, if any) only for that 
month, and shall not be taken into account in determining the 
amount of the benefit for any other month.
          * * * * * * *
    (7) For purposes of this subsection, an application of an 
individual for benefits under this title shall be effective on 
the later of--
            [(A) the date such application is filed, or
            [(B) the date such individual first becomes 
        eligible for such benefits with respect to such 
        application.]
            (A) the first day of the month following the date 
        such application is filed, or
            (B) the first day of the month following the date 
        such individual becomes eligible for such benefits with 
        respect to such application.
          * * * * * * *
    (e)(1)(A) Except as provided in subparagraphs (B), (C), 
(D), (E), and (G), no person shall be an eligible individual or 
eligible spouse for purposes of this title with respect to any 
month if throughout such month he is an inmate of a public 
institution.
    (B) In any case where an eligible individual or his 
eligible spouse (if any) is, throughout any month (subject to 
subparagraph (G)), in a hospital, extended care facility, 
nursing home, or intermediate care facility receiving payments 
(with respect to such individual or spouse) under a State plan 
approved under [title XIX, or] title XV or XIX, an eligible 
individual is a child described in section 1614(f)(2)(B), or, 
in the case of an eligible individual under the age of 18, 
receiving payments (with respect to such individual) under any 
health insurance policy issued by a private provider of such 
insurance the benefit under this title for such individual for 
such month shall be payable (subject to subparagraph (E))--
            (i)  * * *
          * * * * * * *
    (I)(i) The Commissioner shall enter into a contract, with 
any interested State or local institution referred to in 
subparagraph (A), under which--
            (I) the institution shall provide to the 
        Commissioner, on a monthly basis, the names, social 
        security account numbers, dates of birth, and such 
        other identifying information concerning the inmates of 
        the institution as the Commissioner may require for the 
        purpose of carrying out paragraph (1); and
            (II) the Commissioner shall pay to any such 
        institution, with respect to each inmate of the 
        institution who is eligible for a benefit under this 
        title for the month preceding the first month 
        throughout which such inmate is in such institution and 
        becomes ineligible for such benefit (or becomes 
        eligible only for a benefit payable at a reduced rate) 
        as a result of the application of this paragraph, an 
        amount not to exceed $400 if the institution furnishes 
        the information described in subclause (I) to the 
        Commissioner within 30 days after such individual 
        becomes an inmate of such institution, or an amount not 
        to exceed $200 if the institution furnishes such 
        information after 30 days after such date but within 90 
        days after such date.
    (ii) The provisions of section 552a of title 5, United 
States Code, shall not apply to any contract entered into under 
clause (i) or to information exchanged pursuant to such 
contract.
    (J) In any case in which the Commissioner of Social 
Security finds that a person has made a fraudulent statement or 
representation in order to obtain or to continue to receive 
benefits under this title while being an inmate in a penal 
institution, such person shall not be considered an eligible 
individual or eligible spouse for any month ending during the 
10-year period beginning on the date on which such person 
ceases being such an inmate.
    [(5)] (3) Notwithstanding anything to the contrary in the 
criteria being used by the Commissioner of Social Security in 
determining when a husband and wife are to be considered two 
eligible individuals for purposes of this title and when they 
are to be considered an eligible individual with an eligible 
spouse, the State agency administering or supervising the 
administration of a State plan under any other program under 
this Act may (in the administration of such plan) treat a 
husband and wife living in the same hospital, home, or facility 
described in paragraph (1)(B) as though they were an eligible 
individual with his or her eligible spouse for purposes of this 
title (rather than two eligible individuals), after they have 
continuously lived in the same such hospital, home, or facility 
for 6 months, if treating such husband and wife as two eligible 
individuals would prevent either of them from receiving 
benefits or assistance under such plan or reduce the amount 
thereof.
    (4)(A) No person shall be considered an eligible individual 
or eligible spouse for purposes of this title during the 10-
year period that begins on the date the person is convicted in 
Federal or State court of having made a fraudulent statement or 
representation with respect to the place of residence of the 
person in order to receive assistance simultaneously from 2 or 
more States under programs that are funded under title IV, 
title XV, title XIX, or the Food Stamp Act of 1977, or benefits 
in 2 or more States under the supplemental security income 
program under this title.
    (B) As soon as practicable after the conviction of a person 
in a Federal or State court as described in subparagraph (A), 
an official of such court shall notify the Commissioner of such 
conviction.
    (5) No person shall be considered an eligible individual or 
eligible spouse for purposes of this title with respect to any 
month if during such month the person is--
            (A) fleeing to avoid prosecution, or custody or 
        confinement after conviction, under the laws of the 
        place from which the person flees, for a crime, or an 
        attempt to commit a crime, which is a felony under the 
        laws of the place from which the person flees, or 
        which, in the case of the State of New Jersey, is a 
        high misdemeanor under the laws of such State; or
            (B) violating a condition of probation or parole 
        imposed under Federal or State law.
    (6) Notwithstanding any other provision of law (other than 
section 6103 of the Internal Revenue Code of 1986), the 
Commissioner shall furnish any Federal, State, or local law 
enforcement officer, upon the written request of the officer, 
with the current address, Social Security number, and 
photograph (if applicable) of any recipient of benefits under 
this title, if the officer furnishes the Commissioner with the 
name of the recipient, and other identifying information as 
reasonably required by the Commissioner to establish the unique 
identity of the recipient, and notifies the Commissioner that--
            (A) the recipient--
                    (i) is described in subparagraph (A) or (B) 
                of paragraph (5); or
                    (ii) has information that is necessary for 
                the officer to conduct the officer's official 
                duties; and
            (B) the location or apprehension of the recipient 
        is within the officer's official duties.

                                 INCOME

                           Meaning of Income

    Sec. 1612. (a) For purposes of this title, income means 
both earned income and unearned income; and--
            (1) earned income means only--
                    (A) wages as determined under section 
                203(f)(5)(C);
            (2) unearned income means all other income, 
        including--
                    (A)  * * *
          * * * * * * *
                    (E) support and alimony payments, and 
                (subject to the provisions of subparagraph (D) 
                excluding certain amounts expended for purposes 
                of a last illness and burial) gifts (cash or 
                otherwise) and inheritances; [and]
                    (F) rents, dividends, interest, and 
                royalties not described in paragraph (1)(E)[.]; 
                and
                    (G) any earnings of, and additions to, the 
                corpus of a trust (as defined in section 
                1613(f)) established by an individual (within 
                the meaning of section 1613(e)(2)(A)) and of 
                which such individual is a beneficiary (other 
                than a trust to which section 1613(e)(4) 
                applies), except that in the case of an 
                irrevocable trust, there shall exist 
                circumstances under which payment from such 
                earnings or additions could be made to, or for 
                the benefit of, such individual.
          * * * * * * *

                         Exclusions From Income

    (b) In determining the income of an individual (and his 
eligible spouse) there shall be excluded--
            (1)  * * *
          * * * * * * *
            (19) any refund of Federal income taxes made to 
        such individual (or such spouse) by reason of section 
        32 of the Internal Revenue Code of 1986 (relating to 
        earned income tax credit), and any payment made to such 
        individual (or such spouse) by an employer under 
        section 3507 of such Code (relating to advance payment 
        of earned income credit); [and]
            (20) special pay received pursuant to section 310 
        of title 37, United States Code[.]; and
            (21) the interest or other earnings on any account 
        established and maintained in accordance with section 
        1631(a)(2)(F).

                               RESOURCES

                       Exclusions From Resources

    Sec. 1613. (a) In determining the resources of an 
individual (and his eligible spouse, if any) there shall be 
excluded--
            (1)  * * *
          * * * * * * *
            (9) for the 9-month period beginning after the 
        month in which received, any amount received by such 
        individual (or such spouse) from a fund established by 
        a State to aid victims of crime, to the extent that 
        such individual (or such spouse) demonstrates that such 
        amount was paid as compensation for expenses incurred 
        or losses suffered as a result of a crime;
            (10) for the 9-month period beginning after the 
        month in which received, relocation assistance provided 
        by a State or local government to such individual (or 
        such spouse), comparable to assistance provided under 
        title II of the Uniform Relocation Assistance and Real 
        Property Acquisitions Policies Act of 1970 which is 
        subject to the treatment required by section 216 of 
        such Act; [and]
            (11) for the month of receipt and the following 
        month, any refund of Federal income taxes made to such 
        individual (or such spouse) by reason of section 32 of 
        the Internal Revenue Code of 1986 (relating to earned 
        income tax credit), and any payment made to such 
        individual (or such spouse) by an employer under 
        section 3507 of such Code (relating to advance payment 
        of earned income credit)[.]; and
            (12) any account, including accrued interest or 
        other earnings thereon, established and maintained in 
        accordance with section 1631(a)(2)(F).
In determining the resources of an individual (or eligible 
spouse) an insurance policy shall be taken into account only to 
the extent of its cash surrender value; except that if the 
total face value of all life insurance policies on any person 
is $1,500 or less, no part of the value of any such policy 
shall be taken into account.
          * * * * * * *

      [Notification of Medicaid Policy Restricting Eligibility of 
    Institutionalized Individuals for Benefits Based on Disposal of 
               Resources for Less Than Fair Market Value

    [(c)(1) At the time an individual (and the individual's 
eligible spouse, if any) applies for benefits under this title, 
and at the time the eligibility of an individual (and such 
spouse, if any) for such benefits is redetermined, the 
Commissioner of Social Security shall--
            [(A) inform such individual of the provisions of 
        section 1917(c) providing for a period of ineligibility 
        for benefits under title XIX for individuals who make 
        certain dispositions of resources for less than fair 
        market value, and inform such individual that 
        information obtained pursuant to subparagraph (B) will 
        be made available to the State agency administering a 
        State plan under title XIX (as provided in paragraph 
        (2)); and
            [(B) obtain from such individual information which 
        may be used by the State agency in determining whether 
        or not a period of ineligibility for such benefits 
        would be required by reason of section 1917(c) if such 
        individual (or such spouse, if any) enters a medical 
        institution or nursing facility.
    [(2) The Commissioner of Social Security shall make the 
information obtained under paragraph (1)(B) available, on 
request, to any State agency administering a State plan 
approved under title XIX.]

         Disposal of Resources for Less Than Fair Market Value

    (c)(1)(A)(i) If an individual who has not attained 18 years 
of age (or any person acting on such individual's behalf) 
disposes of resources of the individual for less than fair 
market value on or after the look-back date specified in clause 
(ii)(I), the individual is ineligible for benefits under this 
title for months during the period beginning on the date 
specified in clause (iii) and equal to the number of months 
specified in clause (iv).
    (ii)(I) The look-back date specified in this subclause is a 
date that is 36 months before the date specified in subclause 
(II).
    (II) The date specified in this subclause is the date on 
which the individual applies for benefits under this title or, 
if later, the date on which the disposal of the individual's 
resources for less than fair market value occurs.
    (iii) The date specified in this clause is the first day of 
the first month that follows the month in which the 
individual's resources were disposed of for less than fair 
market value and that does not occur in any other period of 
ineligibility under this paragraph.
    (iv) The number of months of ineligibility under this 
clause for an individual shall be equal to--
            (I) the total, cumulative uncompensated value of 
        all the individual's resources so disposed of on or 
        after the look-back date specified in clause (ii)(I), 
        divided by
            (II) the amount of the maximum monthly benefit 
        payable under section 1611(b) to an eligible individual 
        for the month in which the date specified in clause 
        (ii)(II) occurs.
    (B) An individual shall not be ineligible for benefits 
under this title by reason of subparagraph (A) if the 
Commissioner determines that--
            (i) the individual intended to dispose of the 
        resources at fair market value;
            (ii) the resources were transferred exclusively for 
        a purpose other than to qualify for benefits under this 
        title;
            (iii) all resources transferred for less than fair 
        market value have been returned to the individual; or
            (iv) the denial of eligibility would work an undue 
        hardship on the individual (as determined on the basis 
        of criteria established by the Commissioner in 
        regulations).
    (C) For purposes of this paragraph, in the case of a 
resource held by an individual in common with another person or 
persons in a joint tenancy, tenancy in common, or similar 
arrangement, the resource (or the affected portion of such 
resource) shall be considered to be disposed of by such 
individual when any action is taken, either by such individual 
or by any other person, that reduces or eliminates such 
individual's ownership or control of such resource.
    (D)(i) Notwithstanding subparagraph (A), this subsection 
shall not apply to a transfer of a resource to a trust if the 
portion of the trust attributable to such resource is 
considered a resource available to the individual pursuant to 
subsection (e)(3) (or would be so considered, but for the 
application of subsection (e)(4)).
    (ii) In the case of a trust established by an individual 
(within the meaning of subsection (e)(2)(A)), if from such 
portion of the trust (if any) that is considered a resource 
available to the individual pursuant to subsection (e)(3) (or 
would be so considered but for the application of subsection 
(e)(2)) or the residue of such portion upon the termination of 
the trust--
            (I) there is made a payment other than to or for 
        the benefit of the individual, or
            (II) no payment could under any circumstance be 
        made to the individual,
then the payment described in subclause (I) or the foreclosure 
of payment described in subclause (II) shall be considered a 
disposal of resources by the individual subject to this 
subsection, as of the date of such payment or foreclosure, 
respectively.
    (2)(A) At the time an individual (and the individual's 
eligible spouse, if any) applies for benefits under this title, 
and at the time the eligibility of an individual (and such 
spouse, if any) for such benefits is redetermined, the 
Commissioner of Social Security shall--
            (i) inform such individual of the provisions of 
        paragraph (1) providing for a period of ineligibility 
        for benefits under this title for individuals who make 
        certain dispositions of resources for less than fair 
        market value, and inform such individual that 
        information obtained pursuant to clause (ii) will be 
        made available to the State agency administering a 
        State plan approved under title XV or XIX (as provided 
        in subparagraph (B)); and
            (ii) obtain from such individual information which 
        may be used in determining whether or not a period of 
        ineligibility for such benefits would be required by 
        reason of paragraph (1).
    (B) The Commissioner of Social Security shall make the 
information obtained under subparagraph (A)(ii) available, on 
request, to any State agency administering a State plan 
approved under title XV or XIX.
    (3) For purposes of this subsection--
            (A) the term ``trust'' includes any legal 
        instrument or device that is similar to a trust; and
            (B) the term ``benefits under this title'' includes 
        supplementary payments pursuant to an agreement for 
        Federal administration under section 1616(a), and 
        payments pursuant to an agreement entered into under 
        section 212(b) of Public Law 93-66.
          * * * * * * *

                                 Trusts

    (e)(1) In determining the resources of an individual who 
has not attained 18 years of age, the provisions of paragraph 
(3) shall apply to a trust established by such individual.
    (2)(A) For purposes of this subsection, an individual shall 
be considered to have established a trust if any assets of the 
individual were transferred to the trust.
    (B) In the case of an irrevocable trust to which the assets 
of an individual and the assets of any other person or persons 
were transferred, the provisions of this subsection shall apply 
to the portion of the trust attributable to the assets of the 
individual.
    (C) This subsection shall apply without regard to--
            (i) the purposes for which the trust is 
        established;
            (ii) whether the trustees have or exercise any 
        discretion under the trust;
            (iii) any restrictions on when or whether 
        distributions may be made from the trust; or
            (iv) any restrictions on the use of distributions 
        from the trust.
    (3)(A) In the case of a revocable trust, the corpus of the 
trust shall be considered a resource available to the 
individual.
    (B) In the case of an irrevocable trust, if there are any 
circumstances under which payment from the trust could be made 
to or for the benefit of the individual, the portion of the 
corpus from which payment to or for the benefit of the 
individual could be made shall be considered a resource 
available to the individual.
    (4) The Commissioner may waive the application of this 
subsection with respect to any individual if the Commissioner 
determines, on the basis of criteria prescribed in regulations, 
that such application would work an undue hardship on such 
individual.
    (5) For purposes of this subsection--
            (A) the term ``trust'' includes any legal 
        instrument or device that is similar to a trust;
            (B) the term ``corpus'' means all property and 
        other interests held by the trust, including 
        accumulated earnings and any other addition to such 
        trust after its establishment (except that such term 
        does not include any such earnings or addition in the 
        month in which such earnings or addition is credited or 
        otherwise transferred to the trust);
            (C) the term ``asset'' includes any income or 
        resource of the individual, including--
                    (i) any income otherwise excluded by 
                section 1612(b);
                    (ii) any resource otherwise excluded by 
                this section; and
                    (iii) any other payment or property that 
                the individual is entitled to but does not 
                receive or have access to because of action 
                by--
                            (I) such individual;
                            (II) a person or entity (including 
                        a court) with legal authority to act in 
                        place of, or on behalf of, such 
                        individual; or
                            (III) a person or entity (including 
                        a court) acting at the direction of, or 
                        upon the request of, such individual; 
                        and
            (D) the term ``benefits under this title'' includes 
        supplementary payments pursuant to an agreement for 
        Federal administration under section 1616(a), and 
        payments pursuant to an agreement entered into under 
        section 212(b) of Public Law 93-66.

                            MEANING OF TERMS

                  Aged, Blind, or Disabled Individual

    Sec. 1614. (a)(1)  * * *
          * * * * * * *
    (3)(A) [An individual] Except as provided in subparagraph 
(C), an individual shall be considered to be disabled for 
purposes of this title if he is unable to engage in any 
substantial gainful activity by reason of any medically 
determinable physical or mental impairment which can be 
expected to result in death or which has lasted or can be 
expected to last for a continuous period of not less than 
twelve months [(or, in the case of an individual under the age 
of 18, if he suffers from any medically determinable physical 
or mental impairment of comparable severity)].
          * * * * * * *
    (C)(i) An individual under the age of 18 shall be 
considered disabled for the purposes of this title if that 
individual has a medically determinable physical or mental 
impairment, which results in marked and severe functional 
limitations, and which can be expected to result in death or 
which has lasted or can be expected to last for a continuous 
period of not less than 12 months.
    (ii) The Commissioner shall ensure that the combined 
effects of all physical or mental impairments of an individual 
are taken into account in determining whether an individual is 
disabled in accordance with clause (i).
    (iii) The Commissioner shall ensure that the regulations 
prescribed under this subparagraph provide for the evaluation 
of children who cannot be tested because of their young age.
    (iv) Notwithstanding the preceding provisions of this 
subparagraph, no individual under the age of 18 who engages in 
substantial gainful activity (determined in accordance with 
regulations prescribed pursuant to subparagraph (E)) may be 
considered to be disabled.
    [(C)] (D) For purposes of this paragraph, a physical or 
mental impairment is an impairment that results from 
anatomical, physiological, or psychological abnormalities which 
are demonstrable by medically acceptable clinical and 
laboratory diagnostic techniques.
    [(D)] (E) The Commissioner of Social Security shall by 
regulations prescribe the criteria for determining when 
services performed or earnings derived from services 
demonstrate an individual's ability to engage in substantial 
gainful activity. In determining whether an individual is able 
to engage in substantial gainful activity by reason of his 
earnings, where his disability is sufficiently severe to result 
in a functional limitation requiring assistance in order for 
him to work, there shall be excluded from such earnings an 
amount equal to the cost (to such individual) of any attendant 
care services, medical devices, equipment, prostheses, and 
similar items and services (not including routine drugs or 
routine medical services unless such drugs or services are 
necessary for the control of the disabling condition) which are 
necessary (as determined by the Commissioner of Social Security 
in regulations) for that purpose, whether or not such 
assistance is also needed to enable him to carry out his normal 
daily functions; except that the amounts to be excluded shall 
be subject to such reasonable limits as the Commissioner of 
Social Security may prescribe. Notwithstanding the provisions 
of subparagraph (B), an individual whose services or earnings 
meet such criteria shall be found not to be disabled. The 
Commissioner of Social Security shall make determinations under 
this title with respect to substantial gainful activity, 
without regard to the legality of the activity.
    [(E)] (F) Notwithstanding the provisions of subparagraphs 
(A) through [(D)] (E), an individual shall also be considered 
to be disabled for purposes of this title if he is permanently 
and totally disabled as defined under a State plan approved 
under title XIV or XVI as in effect for October 1972 and 
received aid under such plan (on the basis of disability) for 
December 1973 (and for at least one month prior to July 1973), 
so long as he is continuously disabled as so defined.
    [(F)] (G) In determining whether an individual's physical 
or mental impairment or impairments are of a sufficient medical 
severity that such impairment or impairments could be the basis 
of eligibility under this section, the Commissioner of Social 
Security shall consider the combined effect of all of the 
individual's impairments without regard to whether any such 
impairment, if considered separately, would be of such 
severity. If the Commissioner of Social Security does find a 
medically severe combination of impairments, the combined 
impact of the impairments shall be considered throughout the 
disability determination process.
    [(G)] (H)(i) In making determinations with respect to 
disability under this title, the provisions of sections 221(h), 
221(k), and 223(d)(5) shall apply in the same manner as they 
apply to determinations of disability under title II.
    (ii)(I) Not less frequently than once every 3 years, the 
Commissioner shall review in accordance with paragraph (4) the 
continued eligibility for benefits under this title of each 
individual who has not attained 18 years of age and is eligible 
for such benefits by reason of an impairment (or combination of 
impairments) which is likely to improve (or, at the option of 
the Commissioner, which is unlikely to improve).
    (II) A representative payee of a recipient whose case is 
reviewed under this clause shall present, at the time of 
review, evidence demonstrating that the recipient is, and has 
been, receiving treatment, to the extent considered medically 
necessary and available, of the condition which was the basis 
for providing benefits under this title.
    (III) If the representative payee refuses to comply without 
good cause with the requirements of subclause (II), the 
Commissioner of Social Security shall, if the Commissioner 
determines it is in the best interest of the individual, 
promptly suspend payment of benefits to the representative 
payee, and provide for payment of benefits to an alternative 
representative payee of the individual or, if the interest of 
the individual under this title would be served thereby, to the 
individual.
    (IV) Subclause (II) shall not apply to the representative 
payee of any individual with respect to whom the Commissioner 
determines such application would be inappropriate or 
unnecessary. In making such determination, the Commissioner 
shall take into consideration the nature of the individual's 
impairment (or combination of impairments). Section 1631(c) 
shall not apply to a finding by the Commissioner that the 
requirements of subclause (II) should not apply to an 
individual's representative payee.
    (iii) If an individual is eligible for benefits under this 
title by reason of disability for the month preceding the month 
in which the individual attains the age of 18 years, the 
Commissioner shall redetermine such eligibility--
            (I) during the 1-year period beginning on the 
        individual's 18th birthday; and
            (II) by applying the criteria used in determining 
        the initial eligibility for applicants who are age 18 
        or older.
With respect to a redetermination under this clause, paragraph 
(4) shall not apply and such redetermination shall be 
considered a substitute for a review or redetermination 
otherwise required under any other provision of this 
subparagraph during that 1-year period.
    (iv)(I) Not later than 12 months after the birth of an 
individual, the Commissioner shall review in accordance with 
paragraph (4) the continuing eligibility for benefits under 
this title by reason of disability of such individual whose low 
birth weight is a contributing factor material to the 
Commissioner's determination that the individual is disabled.
    (II) A review under subclause (I) shall be considered a 
substitute for a review otherwise required under any other 
provision of this subparagraph during that 12-month period.
    (III) A representative payee of a recipient whose case is 
reviewed under this clause shall present, at the time of 
review, evidence demonstrating that the recipient is, and has 
been, receiving treatment, to the extent considered medically 
necessary and available, of the condition which was the basis 
for providing benefits under this title.
    (IV) If the representative payee refuses to comply without 
good cause with the requirements of subclause (III), the 
Commissioner of Social Security shall, if the Commissioner 
determines it is in the best interest of the individual, 
promptly suspend payment of benefits to the representative 
payee, and provide for payment of benefits to an alternative 
representative payee of the individual or, if the interest of 
the individual under this title would be served thereby, to the 
individual.
    (V) Subclause (III) shall not apply to the representative 
payee of any individual with respect to whom the Commissioner 
determines such application would be inappropriate or 
unnecessary. In making such determination, the Commissioner 
shall take into consideration the nature of the individual's 
impairment (or combination of impairments). Section 1631(c) 
shall not apply to a finding by the Commissioner that the 
requirements of subclause (III) should not apply to an 
individual's representative payee.
    [(H)] (I) In making any determination under this title with 
respect to the disability of an individual who has not attained 
the age of 18 years and to whom section 221(h) does not apply, 
the Commissioner of Social Security shall make reasonable 
efforts to ensure that a qualified pediatrician or other 
individual who specializes in a field of medicine appropriate 
to the disability of the individual (as determined by the 
Commissioner of Social Security) evaluates the case of such 
individual.
    [(I)] (J) Notwithstanding subparagraph (A), an individual 
shall not be considered to be disabled for purposes of this 
title if alcoholism or drug addiction would (but for this 
subparagraph) be a contributing factor material to the 
Commissioner's determination that the individual is disabled.
    (4) A recipient of benefits based on disability under this 
title may be determined not to be entitled to such benefits on 
the basis of a finding that the physical or mental impairment 
on the basis of which such benefits are provided has ceased, 
does not exist, or is not disabling only if such finding is 
supported by--
            (A) in the case of an individual who is age 18 or 
        older--
                    [(A)] (i) substantial evidence which 
                demonstrates that--
                            [(i)] (I) there has been any 
                        medical improvement in the individual's 
                        impairment or combination of 
                        impairments (other than medical 
                        improvement which is not related to the 
                        individual's ability to work), and
                            [(ii)] (II) the individual is now 
                        able to engage in substantial gainful 
                        activity; or
                    [(B)] (ii) substantial evidence (except in 
                the case of an individual eligible to receive 
                benefits under section 1619) which--
                            [(i)] (I) consists of new medical 
                        evidence and a new assessment of the 
                        individual's residual functional 
                        capacity, and demonstrates that--
                                    [(I)] (aa) although the 
                                individual has not improved 
                                medically, he or she is 
                                nonetheless a beneficiary of 
                                advances in medical or 
                                vocational therapy or 
                                technology (related to the 
                                individual's ability to work), 
                                and
                                    [(II)] (bb) the individual 
                                is now able to engage in 
                                substantial gainful activity, 
                                or
                            [(ii)] (II) demonstrates that--
                                    [(I)] (aa) although the 
                                individual has not improved 
                                medically, he or she has 
                                undergone vocational therapy 
                                (related to the individual's 
                                ability to work), and
                                    [(II)] (bb) the individual 
                                is now able to engage in 
                                substantial gainful activity; 
                                or
                    [(C)] (iii) substantial evidence which 
                demonstrates that, as determined on the basis 
                of new or improved diagnostic techniques or 
                evaluations, the individual's impairment or 
                combination of impairments is not as disabling 
                as it was considered to be at the time of the 
                most recent prior decision that he or she was 
                under a disability or continued to be under a 
                disability, and that therefore the individual 
                is able to engage in substantial gainful 
                activity; or
            (B) in the case of an individual who is under the 
        age of 18--
                    (i) substantial evidence which demonstrates 
                that there has been medical improvement in the 
                individual's impairment or combination of 
                impairments, and that such impairment or 
                combination of impairments no longer results in 
                marked and severe functional limitations; or
                    (ii) substantial evidence which 
                demonstrates that, as determined on the basis 
                of new or improved diagnostic techniques or 
                evaluations, the individual's impairment or 
                combination of impairments, is not as disabling 
                as it was considered to be at the time of the 
                most recent prior decision that the individual 
                was under a disability or continued to be under 
                a disability, and such impairment or 
                combination of impairments does not result in 
                marked and severe functional limitations; or
            [(D)] (C) in the case of any individual, 
        substantial evidence (which may be evidence on the 
        record at the time any prior determination of the 
        entitlement to benefits based on disability was made, 
        or newly obtained evidence which relates to that 
        determination) which demonstrates that a prior 
        determination was in error.
Nothing in this paragraph shall be construed to require a 
determination that an individual receiving benefits based on 
disability under this title is entitled to such benefits if the 
prior determination was fraudulently obtained or if the 
individual is engaged in substantial gainful activity, cannot 
be located, or fails, without good cause, to cooperate in a 
review of his or her entitlement or to follow prescribed 
treatment which would be expected (i) to restore his or her 
ability to engage in substantial gainful activity. Any 
determination under this paragraph shall be made on the basis 
of all the evidence available in the individual's case file, 
including new evidence concerning the individual's prior or 
current condition which is presented by the individual or 
secured by the Commissioner of Social Security. Any 
determination made under this paragraph shall be made on the 
basis of the weight of the evidence and on a neutral basis with 
regard to the individual's condition, without any initial 
inference as to the presence or absence of disability being 
drawn from the fact that the individual has previously been 
determined to be disabled, or (ii) in the case of an individual 
under the age of 18, to eliminate or improve the individual's 
impairment or combination of impairments so that it no longer 
results in marked and severe functional limitations.

                            Eligible Spouse

    (b) For purposes of this title, the term ``eligible 
spouse'' means an aged, blind, or disabled individual who is 
the husband or wife of another aged, blind, or disabled 
individual, and who, in a month, is living with such aged, 
blind, or disabled individual on the first day of the month or, 
in any case in which either spouse files an application for 
benefits or requests restoration of eligibility under this 
title during the month, [at the time the application or request 
is filed] on the first day of the month following the date the 
application or request is filed. If two aged, blind, or 
disabled individuals are husband and wife as described in the 
preceding sentence, only one of them may be an ``eligible 
individual'' within the meaning of section 1611(a).
          * * * * * * *

              [OPERATION OF STATE SUPPLEMENTATION PROGRAMS

    [Sec. 1618. (a) In order for any State which makes 
supplementary payments of the type described in section 1616(a) 
(including payments pursuant to an agreement entered into under 
section 212(a) of Public Law 93-66), on or after June 30, 1977, 
to be eligible for payments pursuant to title XIX with respect 
to expenditures for any calendar quarter which begins--
            [(1) after June 30, 1977, or, if later,
            [(2) after the calendar quarter in which it first 
        makes such supplementary payments,
such State must have in effect an agreement with the 
Commissioner of Social Security whereby the State will--
            [(3) continue to make such supplementary payments, 
        and
            [(4) maintain such supplementary payments at levels 
        which are not lower than the levels of such payments in 
        effect in December 1976, or, if no such payments were 
        made in that month, the levels for the first subsequent 
        month in which such payments were made.
    [(b)(1) The Commissioner of Social Security shall not find 
that a State has failed to meet the requirements imposed by 
paragraph (4) of subsection (a) with respect to the levels of 
its supplementary payments for a particular month or months if 
the State's expenditures for such payments in the twelve-month 
period (within which such month or months fall) beginning on 
the effective date of any increase in the level of supplemental 
security income benefits pursuant to section 1617 are not less 
than its expenditures for such payments in the preceding 
twelve-month period.
    [(2) For purposes of determining under paragraph (1) 
whether a State's expenditures for supplementary payments in 
the 12-month period beginning on the effective date of any 
increase in the level of supplemental security income benefits 
are not less than the State's expenditures for such payments in 
the preceding 12-month period, the Commissioner of Social 
Security, in computing the State's expenditures, shall 
disregard, pursuant to a 1-time election of the State, all 
expenditures by the State for retroactive supplementary 
payments that are required to be made in connection with the 
retroactive supplemental security income benefits referred to 
in section 5041 of the Omnibus Budget Reconciliation Act of 
1990.
    [(c) Any State which satisfies the requirements of this 
section solely by reason of subsection (b) for a particular 
month or months in any 12-month period (described in such 
subsection) ending on or after June 30, 1982, may elect, with 
respect to any month in any subsequent 12-month period (so 
described), to apply subsection (a)(4) as though the reference 
to December 1976 in such subsection were a reference to the 
month of December which occurred in the 12-month period 
immediately preceding such subsequent period.
    [(d) The Commissioner of Social Security shall not find 
that a State has failed to meet the requirements imposed by 
paragraph (4) of subsection (a) with respect to the levels of 
its supplementary payments for any portion of the period July 
1, 1980, through June 30, 1981, if the State's expenditures for 
such payments in that twelve-month period were not less than 
its expenditures for such payments for the period July 1, 1976, 
through June 30, 1977 (or, if the State made no supplementary 
payments in the period July 1, 1976, through June 30, 1977, the 
expenditures for the first twelve-month period extending from 
July 1 through June 30 in which the State made such payments).
    [(e)(1) For any particular month after March 1983, a State 
which is not treated as meeting the requirements imposed by 
paragraph (4) of subsection (a) by reason of subsection (b) 
shall be treated as meeting such requirements if and only if--
            [(A) the combined level of its supplementary 
        payments (to recipients of the type involved) and the 
        amounts payable (to or on behalf of such recipients) 
        under section 1611(b) of this Act and section 
        211(a)(1)(A) of Public Law 93-66, for that particular 
        month,
is not less than--
            [(B) the combined level of its supplementary 
        payments (to recipients of the type involved) and the 
        amounts payable (to or on behalf of such recipients) 
        under section 1611(b) of this Act and section 
        211(a)(1)(A) of Public Law 93-66, for March 1983, 
        increased by the amount of all cost-of-living 
        adjustments under section 1617 (and any other benefit 
        increases under this title) which have occurred after 
        March 1983 and before that particular month.
    [(2) In determining the amount of any increase in the 
combined level involved under paragraph (1)(B) of this 
subsection, any portion of such amount which would otherwise be 
attributable to the increase under section 1617(c) shall be 
deemed instead to be equal to the amount of the cost-of-living 
adjustment which would have occurred in July 1983 (without 
regard to the 3-percent limitation contained in section 
215(i)(1)(B)) if section 111 of the Social Security Amendments 
of 1983 had not been enacted.
    [(f) The Commissioner of Social Security shall not find 
that a State has failed to meet the requirements imposed by 
subsection (a) with respect to the levels of its supplementary 
payments for the period January 1, 1984, through December 31, 
1985, if in the period January 1, 1986, through December 31, 
1986, its supplementary payment levels (other than to 
recipients of benefits determined under section 1611(e)(1)(B)) 
are not less than those in effect in December 1976, increased 
by a percentage equal to the percentage by which payments under 
section 1611(b) of this Act and section 211(a)(1)(A) of Public 
Law 93-66 have been increased as a result of all adjustments 
under section 1617(a) and (c) which have occurred after 
December 1976 and before February 1986.
    [(g) In order for any State which makes supplementary 
payments of the type described in section 1616(a) (including 
payments pursuant to an agreement entered into under section 
212(a) of Public Law 93-66) to recipients of benefits 
determined under section 1611(e)(1)(B), on or after October 1, 
1987, to be eligible for payments pursuant to title XIX with 
respect to any calendar quarter which begins--
            [(1) after October 1, 1987, or, if later
            [(2) after the calendar quarter in which it first 
        makes such supplementary payments to recipients of 
        benefits so determined,
such State must have in effect an agreement with the 
Commissioner of Social Security whereby the State will--
            [(3) continue to make such supplementary payments 
        to recipients of benefits so determined, and
            [(4) maintain such supplementary payments to 
        recipients of benefits so determined at levels which 
        assure (with respect to any particular month beginning 
        with the month in which this subsection is first 
        effective) that--
                    [(A) the combined level of such 
                supplementary payments and the amounts payable 
                to or on behalf of such recipients under 
                section 1611(e)(1)(B) for that particular 
                month,
    [is not less than--
                    [(B) the combined level of such 
                supplementary payments and the amounts payable 
                to or on behalf of such recipients under 
                section 1611(e)(1)(B) for October 1987 (or, if 
                no such supplementary payments were made for 
                that month, the combined level for the first 
                subsequent month for which such payments were 
                made), increased--
                            [(i) in a case to which clause (i) 
                        of such section 1611(e)(1)(B) applies 
                        or (with respect to the individual or 
                        spouse who is in the hospital, home, or 
                        facility involved) to which clause (ii) 
                        of such section applies, by $5, and
                            [(ii) in a case to which clause 
                        (iii) of such section 1611(e)(1)(B) 
                        applies, by $10.]
          * * * * * * *

               Part B--Procedural and General Provisions

                        PAYMENTS AND PROCEDURES

                          Payment of Benefits

    Sec. 1631. (a)(1) Benefits under this title shall be paid 
at such time or times and (subject to paragraph (10)) in such 
installments as will best effectuate the purposes of this 
title, as determined under regulations (and may in any case be 
paid less frequently than monthly where the amount of the 
monthly benefit would not exceed $10).
    (2)(A) * * *
          * * * * * * *
    (F)(i)(I) Each representative payee of an eligible 
individual under the age of 18 who is eligible for the payment 
of benefits described in subclause (II) shall establish on 
behalf of such individual an account in a financial institution 
into which such benefits shall be paid, and shall thereafter 
maintain such account for use in accordance with clause (ii).
    (II) Benefits described in this subclause are past-due 
monthly benefits under this title (which, for purposes of this 
subclause, include State supplementary payments made by the 
Commissioner pursuant to an agreement under section 1616 or 
section 212(b) of Public Law 93-66) in an amount (after any 
withholding by the Commissioner for reimbursement to a State 
for interim assistance under subsection (g)) that exceeds the 
product of--
            (aa) 6, and
            (bb) the maximum monthly benefit payable under this 
        title to an eligible individual.
    (ii)(I) A representative payee shall use funds in the 
account established under clause (i) to pay for allowable 
expenses described in subclause (II).
    (II) An allowable expense described in this subclause is an 
expense for--
            (aa) education or job skills training;
            (bb) personal needs assistance;
            (cc) special equipment;
            (dd) housing modification;
            (ee) medical treatment;
            (ff) therapy or rehabilitation; or
            (gg) any other item or service that the 
        Commissioner determines to be appropriate;
provided that such expense benefits such individual and, in the 
case of an expense described in item (bb), (cc), (dd), (ff), or 
(gg), is related to the impairment (or combination of 
impairments) of such individual.
    (III) The use of funds from an account established under 
clause (i) in any manner not authorized by this clause--
            (aa) by a representative payee shall be considered 
        a misapplication of benefits for all purposes of this 
        paragraph, and any representative payee who knowingly 
        misapplies benefits from such an account shall be 
        liable to the Commissioner in an amount equal to the 
        total amount of such benefits; and
            (bb) by an eligible individual who is his or her 
        own payee shall be considered a misapplication of 
        benefits for all purposes of this paragraph and the 
        total amount of such benefits so used shall be 
        considered to be the uncompensated value of a disposed 
        resource and shall be subject to the provisions of 
        section 1613(c).
    (IV) This clause shall continue to apply to funds in the 
account after the child has reached age 18, regardless of 
whether benefits are paid directly to the beneficiary or 
through a representative payee.
    (iii) The representative payee may deposit into the account 
established pursuant to clause (i)--
            (I) past-due benefits payable to the eligible 
        individual in an amount less than that specified in 
        clause (i)(II), and
            (II) any other funds representing an underpayment 
        under this title to such individual, provided that the 
        amount of such underpayment is equal to or exceeds the 
        maximum monthly benefit payable under this title to an 
        eligible individual.
    (iv) The Commissioner of Social Security shall establish a 
system for accountability monitoring whereby such 
representative payee shall report, at such time and in such 
manner as the Commissioner shall require, on activity 
respecting funds in the account established pursuant to clause 
(i).
    [(F)] (G) The Commissioner of Social Security shall include 
as a part of the annual report required under section 704 
information with respect to the implementation of the preceding 
provisions of this paragraph, including--
            (i) the number of cases in which the representative 
        payee was changed;
            (ii) the number of cases discovered where there has 
        been a misuse of funds;
            (iii) how any such cases were dealt with by the 
        Commissioner of Social Security;
            (iv) the final disposition of such cases (including 
        any criminal penalties imposed); and
            (v) such other information as the Commissioner of 
        Social Security determines to be appropriate.
    [(G)] (H) The Commissioner of Social Security shall make an 
initial report to each House of the Congress on the 
implementation of subparagraphs (B) and (C) within 270 days 
after the date of the enactment of this subparagraph. The 
Commissioner of Social Security shall include in the annual 
report required under section 704, information with respect to 
the implementation of subparagraphs (B) and (C), including the 
same factors as are required to be included in the 
Commissioner's report under section 205(j)(4)(B).
    (3) The Commissioner of Social Security may by regulations 
establish ranges of incomes within which a single amount of 
benefits under this title shall apply.
    (4) The Commissioner of Social Security--
            (A) may make to any individual initially applying 
        for benefits under this title who is presumptively 
        eligible for such benefits for the month following the 
        date the application is filed and who is faced with 
        financial emergency a cash advance against such 
        benefits, including any federally-administered State 
        supplementary payments, in an amount not exceeding the 
        monthly amount that would be payable to an eligible 
        individual with no other income for the first month of 
        such presumptive eligibility, which shall be repaid 
        through proportionate reductions in such benefits over 
        a period of not more than 6 months; and
          * * * * * * *
    (10)(A) If an individual is eligible for past-due monthly 
benefits under this title in an amount that (after any 
withholding for reimbursement to a State for interim assistance 
under subsection (g)) equals or exceeds the product of--
            (i) 12, and
            (ii) the maximum monthly benefit payable under this 
        title to an eligible individual (or, if appropriate, to 
        an eligible individual and eligible spouse),
then the payment of such past-due benefits (after any such 
reimbursement to a State) shall be made in installments as 
provided in subparagraph (B).
    (B)(i) The payment of past-due benefits subject to this 
subparagraph shall be made in not to exceed 3 installments that 
are made at 6-month intervals.
    (ii) Except as provided in clause (iii), the amount of each 
of the first and second installments may not exceed an amount 
equal to the product of clauses (i) and (ii) of subparagraph 
(A).
    (iii) In the case of an individual who has--
            (I) outstanding debt attributable to--
                    (aa) food,
                    (bb) clothing,
                    (cc) shelter, or
                    (dd) medically necessary services, supplies 
                or equipment, or medicine; or
            (II) current expenses or expenses anticipated in 
        the near term attributable to--
                    (aa) medically necessary services, supplies 
                or equipment, or medicine, or
                    (bb) the purchase of a home, and
such debt or expenses are not subject to reimbursement by a 
public assistance program, the Secretary under title XVIII, a 
State plan approved under title XV or XIX, or any private 
entity legally liable to provide payment pursuant to an 
insurance policy, pre-paid plan, or other arrangement, the 
limitation specified in clause (ii) may be exceeded by an 
amount equal to the total of such debt and expenses.
    (C) This paragraph shall not apply to any individual who, 
at the time of the Commissioner's determination that such 
individual is eligible for the payment of past-due monthly 
benefits under this title--
            (i) is afflicted with a medically determinable 
        impairment that is expected to result in death within 
        12 months; or
            (ii) is ineligible for benefits under this title 
        and the Commissioner determines that such individual is 
        likely to remain ineligible for the next 12 months.
    (D) For purposes of this paragraph, the term ``benefits 
under this title'' includes supplementary payments pursuant to 
an agreement for Federal administration under section 1616(a), 
and payments pursuant to an agreement entered into under 
section 212(b) of Public Law 93-66.

                     Overpayments and Underpayments

    (b)(1) * * *
          * * * * * * *
    (5) For the recovery of overpayments of benefits under this 
title from benefits payable under title II, see section 1146.
          * * * * * * *

               Applications and Furnishing of Information

    (e)(1) * * *
          * * * * * * *
    [(6)] (7)(A)(i) The Commissioner of Social Security shall 
immediately redetermine the eligibility of an individual for 
benefits under this title if there is reason to believe that 
fraud or similar fault was involved in the application of the 
individual for such benefits, unless a United States attorney, 
or equivalent State prosecutor, with jurisdiction over 
potential or actual related criminal cases, certifies, in 
writing, that there is a substantial risk that such action by 
the Commissioner of Social Security with regard to recipients 
in a particular investigation would jeopardize the criminal 
prosecution of a person involved in a suspected fraud.
          * * * * * * *
    [(7)] (8)(A) The Commissioner of Social Security shall 
request the Immigration and Naturalization Service or the 
Centers for Disease Control to provide the Commissioner of 
Social Security with whatever medical information, 
identification information, and employment history either such 
entity has with respect to any alien who has applied for 
benefits under title XVI to the extent that the information is 
relevant to any determination relating to eligibility for such 
benefits under title XVI.
    (B) Subparagraph (A) shall not be construed to prevent the 
Commissioner of Social Security from adjudicating the case 
before receiving such information.
    (9) Notwithstanding any other provision of law, the 
Commissioner shall, at least 4 times annually and upon request 
of the Immigration and Naturalization Service (hereafter in 
this paragraph referred to as the ``Service''), furnish the 
Service with the name and address of, and other identifying 
information on, any individual who the Commissioner knows is 
unlawfully in the United States, and shall ensure that each 
agreement entered into under section 1616(a) with a State 
provides that the State shall furnish such information at such 
times with respect to any individual who the State knows is 
unlawfully in the United States.
          * * * * * * *

        Reimbursement to States for Interim Assistance Payments

    (g)(1)  * * *
          * * * * * * *
    (3) For purposes of this subsection, the term ``interim 
assistance'' with respect to any individual means assistance 
financed from State or local funds and furnished for meeting 
basic needs (A) during the period, beginning with the month 
following the month in which the individual filed an 
application for benefits (as defined in paragraph (2)), for 
which he was eligible for such benefits, or (B) during the 
period beginning with the first month for which the 
individual's benefits (as defined in paragraph (2)) have been 
terminated or suspended if the individual was subsequently 
found to have been eligible for such benefits.
          * * * * * * *


                        annual report on program


    Sec. 1637. (a) Not later than May 30 of each year, the 
Commissioner of Social Security shall prepare and deliver a 
report annually to the President and the Congress regarding the 
program under this title, including--
            (1) a comprehensive description of the program;
            (2) historical and current data on allowances and 
        denials, including number of applications and allowance 
        rates for initial determinations, reconsideration 
        determinations, administrative law judge hearings, 
        appeals council reviews, and Federal court decisions;
            (3) historical and current data on characteristics 
        of recipients and program costs, by recipient group 
        (aged, blind, disabled adults, and disabled children);
            (4) projections of future number of recipients and 
        program costs, through at least 25 years;
            (5) number of redeterminations and continuing 
        disability reviews, and the outcomes of such 
        redeterminations and reviews;
            (6) data on the utilization of work incentives;
            (7) detailed information on administrative and 
        other program operation costs;
            (8) summaries of relevant research undertaken by 
        the Social Security Administration, or by other 
        researchers;
            (9) State supplementation program operations;
            (10) a historical summary of statutory changes to 
        this title; and
            (11) such other information as the Commissioner 
        deems useful.
    (b) Each member of the Social Security Advisory Board shall 
be permitted to provide an individual report, or a joint report 
if agreed, of views of the program under this title, to be 
included in the annual report required under this section.
          * * * * * * *

      TITLE XIX--GRANTS TO STATES FOR MEDICAL ASSISTANCE PROGRAMS

                   STATE PLANS FOR MEDICAL ASSISTANCE

    Sec. 1902. (a)  * * *
          * * * * * * *
    [(c) Notwithstanding subsection (b), the Secretary shall 
not approve any State plan for medical assistance if--
            [(1) the State has in effect, under its plan 
        established under part A of title IV, payment levels 
        that are less than the payment levels in effect under 
        such plan on May 1, 1988; or
            [(2) the State requires individuals described in 
        subsection (l)(1) to apply for benefits under such part 
        as a condition of applying for, or receiving, medical 
        assistance under this title.]
          * * * * * * *
    (j) Notwithstanding any other requirement of this title, 
the Secretary may waive or modify any requirement of this title 
with respect to the medical assistance program in American 
Samoa and the Northern Mariana Islands, other than a waiver of 
the Federal medical assistance percentage, the limitation in 
section [1108(c)] 1108(g), or the requirement that payment may 
be made for medical assistance only with respect to amounts 
expended by American Samoa or the Northern Mariana Islands for 
care and services described in paragraphs (1) through (25) of 
section 1905(a).
          * * * * * * *

                           PAYMENT TO STATES

    Sec. 1903. (a)  * * *
          * * * * * * *
    (i) Payment under the preceding provisions of this section 
shall not be made--
            (1)  * * *
          * * * * * * *
            [(9) with respect to any amount of medical 
        assistance for pregnant women and children described in 
        section 1902(a)(10)(A)(ii)(IX), if the State has in 
        effect, under its plan established under part A of 
        title IV, payment levels that are less than the payment 
        levels in effect under such plan on July 1, 1987;]
          * * * * * * *

          TITLE XX--BLOCK GRANTS TO STATES FOR SOCIAL SERVICES

          * * * * * * *

                               allotments

    Sec. 2003. (a) * * *
          * * * * * * *
    (c) The amount specified for purposes of subsections (a) 
and (b) shall be--
            (1) $2,400,000,000 for the fiscal year 1982;
          * * * * * * *
            (4) $2,750,000,000 for the fiscal year 1988; [and]
            [(5) $2,800,000,000 for each fiscal year after 
        fiscal year 1989.]
            (5) $2,800,000,000 for each of the fiscal years 
        1990 through 1995;
            (6) $2,520,000,000 for each of the fiscal years 
        1997 through 2002; and
            (7) $2,380,000,000 for the fiscal year 2003 and 
        each succeeding fiscal year.
          * * * * * * *
                              ----------                              


                         FOOD STAMP ACT OF 1977

          * * * * * * *

                          ELIGIBLE HOUSEHOLDS

    Sec. 5. (a) Participation in the food stamp program shall 
be limited to those households whose incomes and other 
financial resources, held singly or in joint ownership, are 
determined to be a substantial limiting factor in permitting 
them to obtain a more nutritious diet. Notwithstanding any 
other provisions of this Act except sections 6(b), 6(d)(2), and 
6(g) and the third sentence of section 3(i), households in 
which each member receives benefits under a State [plan 
approved under part A of title IV of the Social Security Act] 
program funded under part A of title IV of the Social Security 
Act (42 U.S.C. 601 et seq.), supplemental security income 
benefits under title XVI of the Social Security Act, or aid to 
the aged, blind, or disabled under title I, X, XIV, or XVI of 
the Social Security Act, shall be eligible to participate in 
the food stamp program. Except for sections 6, 16(e)(1), and 
the third sentence of section 3(i), households in which each 
member receives benefits under a State or local general 
assistance program that complies with standards established by 
the Secretary for ensuring that the program is based on income 
criteria comparable to or more restrictive than those under 
subsection (c)(2), and not limited to one-time emergency 
payments that cannot be provided for more than one consecutive 
month, shall be eligible to participate in the food stamp 
program. Assistance under this program shall be furnished to 
all eligible households who make application for such 
participation.
          * * * * * * *
    (d) Household income for purposes of the food stamp program 
shall include all income from whatever source excluding only 
(1) any gain or benefit which is not in the form of money 
payable directly to a household (notwithstanding its conversion 
in whole or in part to direct payments to households pursuant 
to any demonstration project carried out or authorized under 
Federal law including demonstration projects created by the 
waiver of provisions of Federal law), except as provided in 
subsection (k), (2) any income in the certification period 
which is received too infrequently or irregularly to be 
reasonably anticipated, but not in excess of $30 in a quarter, 
subject to modification by the Secretary in light of subsection 
(f), (3) all educational loans on which payment is deferred, 
grants, scholarships, fellowships, veterans' educational 
benefits, and the like (A) awarded to a household member 
enrolled at a recognized institution of post-secondary 
education, at a school for the handicapped, in a vocational 
education program, or in a program that provides for completion 
of a secondary school diploma or obtaining the equivalent 
thereof, (B) to the extent that they do not exceed the amount 
used for or made available as an allowance determined by such 
school, institution, program, or other grantor, for tuition and 
mandatory fees (including the rental or purchase of any 
equipment, materials, and supplies related to the pursuit of 
the course of study involved), books, supplies, transportation, 
and other miscellaneous personal expenses (other than living 
expenses), of the student incidental to attending such school, 
institution, or program, and (C) to the extent loans include 
any origination fees and insurance premiums, (4) all loans 
other than educational loans on which repayment is deferred, 
(5) reimbursements which do not exceed expenses actually 
incurred and which do not represent a gain or benefit to the 
household and any allowance a State agency provides no more 
frequently than annually to families with children on the 
occasion of those children's entering or returning to school or 
child care for the purpose of obtaining school clothes (except 
that no such allowance shall be excluded if the State agency 
reduces monthly [assistance to families with dependent 
children] assistance under a State program funded under part A 
of title IV of the Social Security Act (42 U.S.C. 601 et seq.) 
in the month for which the allowance is provided): Provided, 
That no portion of benefits provided under title IV-A of the 
Social Security Act, to the extent it is attributable to an 
adjustment for work-related or child care expenses (except for 
payments or reimbursements for such expenses made under an 
employment, education, or training program initiated under such 
title after the date of enactment of the Hunger Prevention Act 
of 1988), and no portion of any educational loan on which 
payment is deferred, grant, scholarship, fellowship, veterans' 
benefits, and the like that are provided for living expenses, 
shall be considered such reimbursement, (6) moneys received and 
used for the care and maintenance of a third-party beneficiary 
who is not a household member, (7) income earned by a child who 
is a member of the household, who is an elementary or secondary 
school student, and who is 21 years of age or younger, (8) 
moneys received in the form of nonrecurring lump-sum payments, 
including, but not limited to, income tax refunds, rebates, or 
credits, cash donations based on need that are received from 
one or more private nonprofit charitable organizations, but not 
in excess of $300 in the aggregate in a quarter, retroactive 
lump-sum social security or railroad retirement pension 
payments and retroactive lump-sum insurance settlements: 
Provided, That such payments shall be counted as resources, 
unless specifically excluded by other laws, (9) the cost of 
producing self-employed income, but household income that 
otherwise is included under this subsection shall be reduced by 
the extent that the cost of producing self-employment income 
exceeds the income derived from self-employment as a farmer, 
(10) any income that any other Federal law specifically 
excludes from consideration as income for purposes of 
determining eligibility for the food stamp program except as 
otherwise provided in subsection (k) of this section, (11) any 
payments or allowances made for the purpose of providing energy 
assistance (A) under any Federal law, or (B) under any State or 
local laws, designated by the State or local legislative body 
authorizing such payments or allowances as energy assistance, 
and determined by the Secretary to be calculated as if provided 
by the State or local government involved on a seasonal basis 
for an aggregate period not to exceed six months in any year 
even if such payments or allowances (including tax credits) are 
not provided on a seasonal basis because it would be 
administratively infeasible or impracticable to do so, (12) 
through September 30 of any fiscal year, any increase in income 
attributable to a cost-of-living adjustment made on or after 
July 1 of such fiscal year under title II or XVI of the Social 
Security Act (42 U.S.C. 401 et seq.), section 3(a)(1) of the 
Railroad Retirement Act of 1974 (45 U.S.C. 231b(a)(1)), or 
section 3112 of title 38, United States Code, if the household 
was certified as eligible to participate in the food stamp 
program or received an allotment in the month immediately 
preceding the first month in which the adjustment was 
effective, [(13) at the option of a State agency and subject to 
subsection (m), child support payments that are excluded under 
section 402(a)(8)(A)(vi) of the Social Security Act (42 U.S.C. 
602(a)(8)(A)(vi)), (14)] (13) any payment made to the household 
under section 3507 of the Internal Revenue Code of 1986 
(relating to advance payment of earned income credit), [(15)] 
(14) any payment made to the household under section 6(d)(4)(I) 
for work related expenses or for dependent care, and [(16)] 
(15) any amounts necessary for the fulfillment of a plan for 
achieving self-support of a household member as provided under 
subparagraph (A)(iii) or (B)(iv) of section 1612(b)(4) of the 
Social Security Act (42 U.S.C. 1382a(b)(4)).
          * * * * * * *
    (j) Notwithstanding subsections (a) through (i), a State 
agency shall consider a household member who receives 
supplemental security income benefits under title XVI of the 
Social Security Act (42 U.S.C. 1382 et seq.), aid to the aged, 
blind, or disabled under title I, II, X, XIV, or XVI of such 
Act (42 U.S.C. 301 et seq.), or who receives benefits under a 
State [plan approved under part A of title IV of such Act (42 
U.S.C. 601 et seq.)] program funded under part A of title IV of 
the Act (42 U.S.C. 601 et seq.) to have satisfied the resource 
limitations prescribed under subsection (g).
    [(m) If a State agency excludes payments from income for 
purposes of the food stamp program under subsection (d)(13), 
such State agency shall pay to the Federal Government, in a 
manner prescribed by the Secretary, the cost of any additional 
benefits provided to households in such State that arise under 
such program as the result of such exclusion.]

                     ELIGIBILITY DISQUALIFICATIONS

    Sec. 6. (a) * * *
          * * * * * * *
    (c) No household shall be eligible to participate in the 
food stamp program if it refuses to cooperate in providing 
information to the State agency that is necessary for making a 
determination of its eligibility or for completing any 
subsequent review of its eligibility.
            (1) * * *
          * * * * * * *
            (5) The Secretary is authorized, upon the request 
        of a State agency, to waive any provisions of this 
        subsection (except the provisions of the first sentence 
        of paragraph (1) which relate to households which are 
        not required to file periodic reports) to the extent 
        necessary to permit the State agency to establish 
        periodic reporting requirements for purposes of this 
        Act which are similar to the periodic reporting 
        requirements established under [the State plan 
        approved] the State program funded under part A of 
        title IV of the Social Security Act (42 U.S.C. 601 et 
        seq.) in that State.
          * * * * * * *
    (e) No individual 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 the food stamp 
program as a member of that or any other household if the 
individual is enrolled at least half-time in an institution of 
higher education, unless the individual--
            (1) * * *
          * * * * * * *
            (6) is receiving [aid to families with dependent 
        children] benefits under a State program funded under 
        part A of title IV of the Social Security Act (42 
        U.S.C. 601 et seq.);
          * * * * * * *

            ADMINISTRATIVE COST-SHARING AND QUALITY CONTROL

    Sec. 16. (a) * * *
          * * * * * * *
    (g) The Secretary is authorized to pay to each State agency 
an amount equal to--
    63 percent effective on October 1, 1991, of the costs 
incurred by the State agency in the planning, design, 
development, or installation of automatic data processing and 
information retrieval systems that the Secretary determines (1) 
will assist in meeting the requirements of this Act, (2) meet 
such conditions as the Secretary prescribes, (3) are likely to 
provide more efficient and effective administration of the food 
stamp program, and (4) will be compatible with other such 
systems used in the administration of [State plans under the 
Aid to Families with Dependent Children Program under] State 
programs funded under part A of title IV of the Social Security 
Act: Provided, That there shall be no such payments to the 
extent that a State agency is reimbursed for such costs under 
any other Federal program or uses such systems for purposes not 
connected with the food stamp program: Provided further, That 
any costs matched under this subsection shall be excluded in 
determining the State agency's administrative costs under any 
other subsection of this section.
          * * * * * * *

                RESEARCH, DEMONSTRATION, AND EVALUATIONS

    Sec. 17. (a) * * *
    (b)(1)(A) The Secretary may conduct on a trial basis, in 
one or more areas of the United States, pilot or experimental 
projects designed to test program changes that might increase 
the efficiency of the food stamp program and improve the 
delivery of food stamp benefits to eligible households, 
including projects involving the payment of the value of 
allotments or the average value of allotments by household size 
in the form of cash to eligible households all of whose members 
are age sixty-five or over or any of whose members are entitled 
to supplemental security income benefits under title XVI of the 
Social Security Act or [to aid to families with dependent 
children under part A of title IV of the Social Security Act] 
or are receiving assistance under a State program funded under 
part A of title IV of the Social Security Act (42 U.S.C. 601 et 
seq.), the use of countersigned food coupons or similar 
identification mechanisms that do not invade a household's 
privacy, and the use of food checks or other voucher-type forms 
in place of food coupons. The Secretary may waive the 
requirements of this Act to the degree necessary for such 
projects to be conducted, except that no project, other than a 
project involving the payment of the average value of 
allotments by household size in the form of cash to eligible 
households or a project conducted under paragraph (3), shall be 
implemented which would lower or further restrict the income or 
resource standards or benefit levels provided pursuant to 
sections 5 and 8 of this Act. Any pilot or experimental project 
implemented under this paragraph and operating as of October 1, 
1981, involving the payment of the value of allotments in the 
form of cash to eligible households all of whose members are 
either age sixty-five or over or entitled to supplemental 
security income benefits under title XVI of the Social Security 
Act shall be continued through October 1, 2002, if the State so 
requests.
          * * * * * * *
    (3)(A) The Secretary may conduct demonstration projects to 
test improved consistency or coordination between the food 
stamp employment and training program and the Job Opportunities 
and Basic Skills program under title IV of the Social Security 
Act (42 U.S.C. 601 et seq.).
          * * * * * * *
    (I) The Secretary may not grant a waiver under this 
paragraph on or after October 1, 1995. Any reference in this 
paragraph to a provision of title IV of the Social Security Act 
shall be deemed to be a reference to such provision as in 
effect on September 30, 1995.

                                WORKFARE

    Sec. 20. (a)(1) The Secretary shall permit any political 
subdivision, in any State, that applies and submits a plan to 
the Secretary in compliance with guidelines promulgated by the 
Secretary to operate a workfare program pursuant to which every 
member of a household participating in the food stamp program 
who is not exempt by virtue of the provisions of subsection (b) 
of this section shall accept an offer from such subdivision to 
perform work on its behalf, or may seek an offer to perform 
work, in return for compensation consisting of the allotment to 
which the household is entitled under section 8(a) of this Act, 
with each hour of such work entitling that household to a 
portion of its allotment equal in value to 100 per centum of 
the higher of the applicable State minimum wage or the Federal 
minimum hourly rate under the Fair Labor Standards Act of 1938.
    (2)(A) The Secretary shall promulgate guidelines pursuant 
to paragraph (1) which, to the maximum extent practicable, 
enable a political subdivision to design and operate a workfare 
program under this section which is compatible and consistent 
with similar workfare programs operated by the subdivision.
    (B) A political subdivision may comply with the 
requirements of this section by [operating--
            [(i) a workfare program pursuant to title IV of the 
        Social Security Act (42 U.S.C. 601 et seq.); or
            [(ii) any other] operating any workfare program 
        which the Secretary determines meets the provisions and 
        protections provided under this section.
    (b)[(1)] A household member shall be exempt from workfare 
requirements imposed under this section if such member is--
            [(A)] (1) exempt from section 6(d)(1) as the result 
        of clause (B), (C), (D), (E), or (F) of section 
        6(d)(2);
            [(B)] (2) at the option of the operating agency, 
        subject to and currently actively and satisfactorily 
        participating at least 20 hours a week in a work 
        [training program] activity required under title IV of 
        the Social Security Act (42 U.S.C. 601 et seq.);
            [(C)] (3) mentally or physically unfit;
            [(D)] (4) under sixteen years of age;
            [(E)] (5) sixty years of age or older; or
            [(F)] (6) a parent or other caretaker of a child in 
        a household in which another member is subject to the 
        requirements of this section or is employed fulltime.
    [(2)(A) Subject to subparagraphs (B) and (C), in the case 
of a household that is exempt from work requirements imposed 
under this Act as the result of participation in a community 
work experience program established under section 409 of the 
Social Security Act (42 U.S.C. 609), the maximum number of 
hours in a month for which all members of such household may be 
required to participate in such program shall equal the result 
obtained by dividing--
            [(i) the amount of assistance paid to such 
        household for such month under title IV of such Act, 
        together with the value of the food stamp allotment of 
        such household for such month; by
            [(ii) the higher of the Federal or State minimum 
        wage in effect for such month.
    [(B) In no event may any such member be required to 
participate in such program more than 120 hours per month.
    [(C) For the purpose of subparagraph (A)(i), the value of 
the food stamp allotment of a household for a month shall be 
determined in accordance with regulations governing the 
issuance of an allotment to a household that contains more 
members than the number of members in an assistance unit 
established under title IV of such Act.]
          * * * * * * *
                              ----------                              


    SECTION 5 OF THE AGRICULTURE AND CONSUMER PROTECTION ACT OF 1973

    Sec. 5. (a) * * *
          * * * * * * *
    (h) Each State agency administering a commodity 
supplemental food program serving women, infants, and children 
shall--
            (1) ensure that written information concerning food 
        stamps, [the program for aid to families with dependent 
        children] the State program funded under part A of 
        title IV of the Social Security Act (42 U.S.C. 601 et 
        seq.), and the child support enforcement program under 
        part D of title IV of the Social Security Act (42 
        U.S.C. 651 et seq.) is provided on at least one 
        occasion to each adult who applies for or participates 
        in the commodity supplemental food program;
          * * * * * * *
                              ----------                              


               SECTION 9 OF THE NATIONAL SCHOOL LUNCH ACT

               NUTRITIONAL AND OTHER PROGRAM REQUIREMENTS

    Sec. 9. (a) * * *
    (b)(1)(A) * * *
    (2)(A) * * *
          * * * * * * *
    (C)(i) Except as provided in clause (ii), each eligibility 
determination shall be made on the basis of a complete 
application executed by an adult member of the household. The 
Secretary, State, or local food authority may verify any data 
contained in such application. A local school food authority 
shall undertake such verification of information contained in 
any such application as the Secretary may by regulation 
prescribe and, in accordance with such regulations, shall make 
appropriate changes in the eligibility determination with 
respect to such application on the basis of such verification.
    (ii) Subject to clause (iii), any school food authority may 
certify any child as eligible for free or reduced price lunches 
or breakfasts, without further application, by directly 
communicating with the appropriate State or local agency to 
obtain documentation of such child's status as a member of--
            (I) a household that is receiving food stamps under 
        the Food Stamp Act of 1977; or
            (II) a family that is receiving assistance under 
        the [program for aid to families with dependent 
        children] State program funded under part A of title IV 
        of the Social Security Act that the Secretary 
        determines complies with standards established by the 
        Secretary that ensure that the standards under the 
        State program are comparable to or more restrictive 
        than those in effect on June 1, 1995.
          * * * * * * *
    (6)(A) A child shall be considered automatically eligible 
for a free lunch and breakfast under this Act and the Child 
Nutrition Act of 1966 (42 U.S.C. 1771 et seq.), respectively, 
without further application or eligibility determination, if 
the child is--
            (i) * * *
            (ii) a member of [an AFDC assistance unit (under 
        the aid to families with dependent children program 
        authorized] a family (under the State program funded 
        under part A of title IV of the Social Security Act (42 
        U.S.C. 601 et seq.))[, in a State where the standard of 
        eligibility for the assistance does not exceed 130 
        percent of the poverty line (as defined in section 
        673(2) of the Community Services Block Grant Act (42 
        U.S.C. 9902(2)))] that the Secretary determines 
        complies with standards established by the Secretary 
        that ensure that the standards under the State program 
        are comparable to or more restrictive than those in 
        effect on June 1, 1995; or
          * * * * * * *
    (B) Proof of receipt of food stamps or [aid to families 
with dependent children] assistance under the State program 
funded under part A of title IV of the Social Security Act (42 
U.S.C. 601 et seq.) that the Secretary determines complies with 
standards established by the Secretary that ensure that the 
standards under the State program are comparable to or more 
restrictive than those in effect on June 1, 1995, or of 
enrollment or participation in a Head Start program on the 
basis described in subparagraph (A)(iii), shall be sufficient 
to satisfy any verification requirement imposed under paragraph 
(2)(C).
          * * * * * * *
    (d)(1) The Secretary shall require as a condition of 
eligibility for receipt of free or reduced price lunches that 
the member of the household who executes the application 
furnish the social security account number of the parent or 
guardian who is the primary wage earner responsible for the 
care of the child for whom the application is made, or that of 
another appropriate adult member of the child's household, as 
determined by the Secretary. The Secretary shall require that 
social security account numbers of all adult members of the 
household be provided if verification of the data contained in 
the application is sought under subsection (b)(2)(C).
    (2) No member of a household may be provided a free or 
reduced price lunch under this Act unless--
            (A) * * *
          * * * * * * *
            (C) documentation has been provided to the 
        appropriate local school food authority showing that 
        the family is receiving assistance under the [program 
        for aid to families with dependent children] State 
        program funded under part A of title IV of the Social 
        Security Act that the Secretary determines complies 
        with standards established by the Secretary that ensure 
        that the standards under the State program are 
        comparable to or more restrictive than those in effect 
        on June 1, 1995.
          * * * * * * *
                              ----------                              


             SECTION 17 OF THE CHILD NUTRITION ACT OF 1966

SPECIAL SUPPLEMENTAL NUTRITION PROGRAM FOR WOMEN, INFANTS, AND CHILDREN

    Sec. 17. (a) * * *
          * * * * * * *
    (d)(1) Participation in the program under this section 
shall be limited to pregnant, postpartum, and breastfeeding 
women, infants, and children from low-income families who are 
determined by a competent professional authority to be at 
nutritional risk.
    (2)(A) The Secretary shall establish income eligibility 
standards to be used in conjunction with the nutritional risk 
criteria in determining eligibility of individuals for 
participation in the program. Any individual at nutritional 
risk shall be eligible for the program under this section only 
if such individual--
            (i) is a member of a family with an income that is 
        less than the maximum income limit prescribed under 
        section 9(b) of the National School Lunch Act for free 
        and reduced price meals;
            (ii)(I) receives food stamps under the Food Stamp 
        Act of 1977; or
            (II) is a member of a family that receives 
        assistance under the [program for aid to families with 
        dependent children established] State program funded 
        under part A of title IV of the Social Security Act 
        that the Secretary determines complies with standards 
        established by the Secretary that ensure that the 
        standards under the State program are comparable to or 
        more restrictive than those in effect on June 1, 1995; 
        or
          * * * * * * *
                              ----------                              


    SECTION 508 OF THE UNEMPLOYMENT COMPENSATION AMENDMENTS OF 1976

SEC. 508. STATE EMPLOYMENT OFFICES TO SUPPLY DATA IN AID OF 
                    ADMINISTRATION OF AFDC AND CHILD SUPPORT PROGRAMS.

    (a) * * *
    [(b) Provision for Reimbursement of Expenses.--For purposes 
of section 403 of the Social Security Act, expenses incurred to 
reimburse State employment offices for furnishing information 
requested of such offices pursuant to the third sentence of 
section 3(a) of the Act entitled ``An Act to provide for the 
establishment of a national employment system and for 
cooperation with the States in the promotion of such system, 
and for other purposes'', approved June 6, 1933 (29 U.S.C. 
49b(a), by a State or local agency administering a State plan 
approved under part A of title IV of the Social Security Act 
shall be considered to constitute expenses incurred in the 
administration of such State plan; and for purposes of section 
455 of the Social Security Act, expenses incurred to reimburse 
State employment offices for furnishing information so 
requested by a State or local agency charged with the duty of 
carrying out a State plan for child support approved under part 
D of title IV of the Social Security Act shall be considered to 
constitute expenses incurred in the administration of such 
State plan.]
    (b) Provision for Reimbursement of Expenses.--For purposes 
of section 455 of the Social Security Act, expenses incurred to 
reimburse State employment offices for furnishing information 
requested of such offices--
            (1) pursuant to the third sentence of section 3(a) 
        of the Act entitled ``An Act to provide for the 
        establishment of a national employment system and for 
        cooperation with the States in the promotion of such 
        system, and for other purposes'', approved June 6, 1933 
        (29 U.S.C. 49b(a)), or
            (2) by a State or local agency charged with the 
        duty of carrying a State plan for child support 
        approved under part D of title IV of the Social 
        Security Act,
shall be considered to constitute expenses incurred in the 
administration of such State plan.
                              ----------                              


               OMNIBUS BUDGET RECONCILIATION ACT OF 1987

          * * * * * * *

             TITLE IX--INCOME SECURITY AND RELATED PROGRAMS

          * * * * * * *

 Subtitle B--Provisions Relating to Public Assistance and Unemployment 
                              Compensation

                    PART 1--AFDC AND SSI AMENDMENTS

          * * * * * * *

[SEC. 9121. DEMONSTRATION OF FAMILY INDEPENDENCE PROGRAM.

    [(a) In General.--Upon application of the State of 
Washington and approval by the Secretary of Health and Human 
Services, the State of Washington (in this section referred to 
as the ``State'') may conduct a demonstration project in 
accordance with this section for the purpose of testing whether 
the operation of its Family Independence Program enacted in May 
1987 (in this section referred to as the ``Program''), as an 
alternative to the AFDC program under title IV of the Social 
Security Act, would more effectively break the cycle of poverty 
and provide families with opportunities for economic 
independence and strengthened family functioning.
    [(b) Nature of Project.--Under the demonstration project 
conducted under this section--
            [(1) every individual eligible for aid under the 
        State plan approved under section 402(a) of the Social 
        Security Act shall be eligible to enroll in the 
        Program, which shall operate simultaneously with the 
        AFDC program so long as there are individuals who 
        qualify for the latter;
            [(2) cash assistance shall be furnished in a timely 
        manner to all eligible individuals under the Program 
        (and the State may not make expenditures for services 
        under the Program until it has paid all necessary cash 
        assistance), with no family receiving less in cash 
        benefits than it would have received under the AFDC 
        program;
            [(3) individuals may be required to register, 
        undergo assessment, and participate in work, education, 
        or training under the Program, except that--
                    [(A) work or training may not be required 
                in the case of--
                            [(i) a single parent of a child 
                        under six months of age, or more than 
                        one parent of such a child in a two-
                        parent family,
                            [(ii) a single parent with a child 
                        of any age who has received assistance 
                        for less than six months,
                            [(iii) a single parent with a child 
                        under three years of age who has 
                        received assistance for less than three 
                        years,
                            [(iv) an individual under 16 years 
                        of age or over 64 years of age,
                            [(v) an individual who is 
                        incapacitated, temporarily ill, or 
                        needed at home to care for an impaired 
                        person, or
                            [(vi) an individual who has not yet 
                        been individually notified in writing 
                        of such requirement or of the 
                        expiration of his or her exempt status 
                        under this subparagraph;
                    [(B) participation in work or training 
                shall in any case be voluntary during the first 
                two years of the Program, and may thereafter be 
                made mandatory only in counties where more than 
                50 percent of the enrollees can be placed in 
                employment within three months after they are 
                job ready;
                    [(C) in no case shall the work and training 
                aspect of the Program be mandated in any county 
                where the unemployment level is at least twice 
                the State average; and
                    [(D) mandated work shall not include work 
                in any position created by a reduction in the 
                work force, a bona fide labor dispute, the 
                decertification of a bargaining unit, or a new 
                job classification which subverts the intention 
                of the Program;
            [(4) there shall be no change in existing State law 
        which would eliminate guaranteed benefits or reduce the 
        rights of applicants or enrollees; and
            [(5) the Program shall include due process 
        guarantees and procedures no less than those which are 
        available to participants in the AFDC program under 
        Federal law and regulation and under State law.
    [(c) Waivers.--The Secretary shall (with respect to the 
project under this section) waive compliance with any 
requirements contained in title IV of the Social Security Act 
which (if applied) would prevent the State from carrying out 
the project or effectively achieving its purpose, or with the 
requirements of sections 1902(a)(1), 1902(e)(1), and 1916 of 
that Act (but only to the extent necessary to enable the State 
to carry out the Program as enacted by the State in April 
1987).
    [(d) Funding.--
            [(1) The Secretary, under section 403(b) or 1903(d) 
        of the Social Security Act, shall reimburse the State 
        for its expenditures under the Program--
                    [(A) at a rate equal to the Federal 
                matching rate applicable to the State under 
                section 403(a)(1) (or 1118) of the Social 
                Security Act, for cash assistance, medical 
                assistance, and child care provided to 
                enrollees;
                    [(B) at a rate equal to the applicable 
                Federal matching rate under section 403(a)(3) 
                of such Act, for administrative expenses; and
                    [(C) at the rate of 75 percent for an 
                evaluation plan approved by the Secretary.
            [(2) As a condition of approval of the project 
        under this section, the State must provide assurances 
        satisfactory to the Secretary that the total amount of 
        Federal reimbursement over the period of the project 
        will not exceed the anticipated Federal reimbursements 
        (over that period) under the AFDC and Medicaid 
        programs; but this paragraph shall not prevent the 
        State from claiming reimbursement for additional 
        persons who would qualify for assistance under the AFDC 
        program, for costs attributable to increases in the 
        State's payment standard, or for any other federally-
        matched benefits or services.
    [(e) Evaluation.--The State must satisfy the Secretary that 
the Program will be evaluated using a reasonable methodology.
  [(f) Duration of Project.--
          [(1) The project under this section shall begin on 
        the date on which the first individual is enrolled in 
        the Program and (subject to paragraph (2)) shall end 
        five years after that date.
            [(2) The project may be terminated at any time, on 
        six months written notice, by the State or (upon a 
        finding that the State has materially failed to comply 
        with this section) by the Secretary.

[SEC. 9122. CHILD SUPPORT DEMONSTRATION PROGRAM IN NEW YORK STATE.

    [(a) In General.--Upon application by the State of New York 
and approval by the Secretary of Health and Human Services (in 
this section referred to as the ``Secretary''), the State of 
New York (in this section referred to as the ``State'') may 
conduct a demonstration program in accordance with this section 
for the purpose of testing a State program as an alternative to 
the program of Aid to Families with Dependent Children under 
title IV of the Social Security Act.
    [(b) Nature of Program.--Under the demonstration program 
conducted under this section--
            [(1) all custodial parents of dependent children 
        who are eligible for supplements under the State plan 
        approved under section 402(a) of the Social Security 
        Act (and such other types or classes of such parents as 
        the State may specify) may elect to receive benefits 
        under the State's Child Support Supplement Program in 
        lieu of supplements under such plan; and
            [(2) the Federal Government will pay to the State 
        with respect to families receiving benefits under the 
        State's Child Support Supplement Program the same 
        amounts as would have been payable with respect to such 
        families under sections 403 and 1903 of the Social 
        Security Act as if the families were receiving aid and 
        medical assistance under the State plans in effect with 
        respect to such sections.
    [(c) Waivers.--The Secretary shall (with respect to the 
program under this section) waive compliance with any 
requirements contained in title IV of the Social Security Act 
which (if applied) would prevent the State from carrying out 
the program or effectively achieving its purpose.
    [(d) Conditions of Approval.--As a condition of approval of 
the program under this section, the State shall--
            [(1) provide assurances satisfactory to the 
        Secretary that the State--
                    [(A) will continue to make assistance 
                available to all eligible children in the State 
                who are in need of financial support, and
                    [(B) will continue to operate an effective 
                child support enforcement program;
            [(2) agree--
                    [(A) to have the program evaluated, and
                    [(B) to report interim findings to the 
                Secretary at such times as the Secretary shall 
                provide; and
            [(3) satisfy the Secretary that the program will be 
        evaluated using a reasonable methodology that can 
        determine whether changes in work behavior and changes 
        in earnings are attributable to participation in the 
        program.
    [(e) Application Process.--In order to participate in the 
program under this section, the State must submit an 
application under this section not later than two years after 
the date of enactment of this Act. The Secretary shall approve 
or disapprove the application of the State not later than 90 
days after the date of its submission. If the application is 
disapproved, the Secretary shall provide to the State a 
statement of the reasons for such disapproval, of the changes 
needed to obtain approval, and of the date by which the State 
may resubmit the application.
    [(f) Effective Date.--The program under this section shall 
commence not later than the first day of the third calendar 
quarter beginning on or after the date on which the application 
of the State is approved in accordance with subsection (e).
    [(g) Duration of Program.--
            [(1) Except as provided in paragraph (2), if the 
        Secretary approves the application of the State, the 
        demonstration program under this section shall be 
        conducted for a period not to exceed five years.
            [(2)(A) The Governor of the State may before the 
        end of the period described in paragraph (1) terminate 
        the demonstration program under this section if the 
        Governor finds that the program is not successful in 
        testing the State's Child Support Supplement Program as 
        an alternative to the program under title IV of the 
        Social Security Act. The Governor shall notify the 
        Secretary of the decision to terminate the program not 
        less than three months prior to the date of such 
        termination.
            [(B) The Secretary may terminate the program before 
        the end of such period if the Secretary finds that the 
        program is not in compliance with the terms of the 
        application. The Secretary shall notify the Governor of 
        the decision to terminate the program not less than 
        three months prior to the date of such termination.]
          * * * * * * *
                              ----------                              


    SECITON 221 OF THE HOUSING AND URBAN-RURAL RECOVERY ACT OF 1983

 [consideration of utility payments made by tenants in assisted housing

    [Sec. 221. Notwithstanding any other provision of law, for 
purposes of determining eligibility, or the amount of benefits 
payable, under part A of title IV of the Social Security Act, 
any utility payment made in lieu of any rental payment by a 
person living in a dwelling unit in a lower income housing 
project assisted under the United States Housing Act of 1937 or 
section 236 of the National Housing Act shall be considered to 
be a shelter payment.]
                              ----------                              


  SECTION 159 OF THE TAX EQUITY AND FISCAL RESPONSIBILITY ACT OF 1982

                         [exclusion from income

    [Sec. 159. Notwithstanding any other provision of law, 
payments which are made, under a statutorily established State 
program, to meet certain needs of children receiving aid under 
the State's plan approved under part A of title IV of the 
Social Security Act, if--
            [(1) the payments are made to such children by the 
        State agency administering such plan, but are made 
        without Federal financial participation (under section 
        403(a) of such Act or otherwise), and
            [(2) the State program has been continuously in 
        effect since before January 1, 1979,
shall be excluded from the income of such children and their 
families for purposes of section 402(a)(17) of such Act, and 
for all the other purposes of such part A and of such plan, 
effective on the date of the enactment of this Act.]
                              ----------                              


         SECTION 202 OF THE SOCIAL SECURITY AMENDMENTS OF 1967

  earnings exemption for recipients of aid to families with dependent 
                                children

    Sec. 202. (a) * * *
          * * * * * * *
    [(d) Effective with respect to quarters beginning after 
June 30, 1968, in determining the need of individuals claiming 
aid under a State plan approved under part A of title IV of the 
Social Security Act, the State shall apply the provisions of 
such part notwithstanding any provisions of law (other than 
such Act) requiring the State to disregard earned income of 
such individuals in determining need under such State plan.]
                              ----------                              


 SECTION 903 OF THE STEWART B. MCKINNEY HOMELESS ASSISTANCE AMENDMENTS 
                              ACT OF 1988

SEC. 903. DEMONSTRATION PROJECTS TO REDUCE NUMBER OF HOMELESS AFDC 
                    FAMILIES IN WELFARE HOTELS.

    (a) In General.--In order to enable States to provide 
housing for homeless families who are recipients of [aid to 
families with dependent children under a State plan approved] 
assistance under a State program funded under part A of title 
IV of the Social Security Act in transitional facilities 
instead of in commercial or similar transient facilities, at 
least 2 but not more than 3 States may undertake and carry out 
demonstration projects in accordance with this section. States 
may use public or private nonprofit agencies in carrying out 
demonstration projects in accordance with this section. 
Demonstration projects under this section shall meet such 
conditions and requirements as the Secretary of Health and 
Human Services (in this section referred to as the 
``Secretary'') shall prescribe.
          * * * * * * *
    (c) Project Requirements.--The Secretary shall not approve 
an application received from a State for a demonstration 
project under this section unless the State agency that 
administers the program of [aid to families with dependent 
children in the State under a State plan approved] assistance 
in the State under a State program funded under part A of title 
IV of the Social Security Act demonstrates that the project 
will--
          (1) * * *
          * * * * * * *
                              ----------                              


                      HIGHER EDUCATION ACT OF 1965

          * * * * * * *

                      TITLE IV--STUDENT ASSISTANCE

  Part A--Grants to Students in Attendance at Institutions of Higher 
                               Education

          * * * * * * *

  CHAPTER 2--NATIONAL EARLY INTERVENTION SCHOLARSHIP AND PARTNERSHIP 
                                PROGRAM

          * * * * * * *

SEC. 404C. EARLY INTERVENTION.

    (a) * * *
          * * * * * * *
    (c) Priority Students.--In administering the early 
intervention component, the State shall treat as priority 
students any student in preschool through grade 12 who is 
eligible--
            (1) to be counted under section 1005(c) of the 
        Elementary and Secondary Education Act of 1965;
            (2) for free or reduced price meals pursuant to the 
        National School Lunch Act; or
            (3) for assistance pursuant to part A of title IV 
        of the Social Security Act [(Aid to Families with 
        Dependent Children)].
          * * * * * * *

                     Part E--Federal Perkins Loans

          * * * * * * *

SEC. 480. DEFINITIONS.

    As used in this part:
    (a) * * *
    (b) Untaxed Income and Benefits.--The term ``untaxed income 
and benefits'' means--
            (1) child support received;
            (2) welfare benefits, including [aid to families 
        with dependent children under a State plan approved] 
        assistance under a State program funded under part A of 
        title IV of the Social Security Act and aid to 
        dependent children;
          * * * * * * *

   Part G--General Provisions Relating to Student Assistance Programs

          * * * * * * *

SEC. 484. STUDENT ELIGIBILITY.

    (a) * * *
    (b) Eligibility for Student Loans.--(1) * * *
          * * * * * * *
    (6) Notwithstanding sections 427(a)(2)(A), 428B(a), 
428C(b)(4)(A), and 464(c)(1)(E), or any other provision of this 
title, a student who is an alien lawfully admitted for 
permanent residence under the Immigration and Nationality Act 
shall not be eligible for a loan under this title unless the 
loan is endorsed and cosigned by the alien's sponsor under 
section 213A of the Immigration and Nationality Act or by 
another creditworthy individual who is a United States citizen.
          * * * * * * *
                              ----------                              


    CARL D. PERKINS VOCATIONAL AND APPLIED TECHNOLOGY EDUCATION ACT

          * * * * * * *

         TITLE II--BASIC STATE GRANTS FOR VOCATIONAL EDUCATION

                         PART A--STATE PROGRAMS

          * * * * * * *

   PART C--SECONDARY, POSTSECONDARY, AND ADULT VOCATIONAL EDUCATION 
                                PROGRAMS

                   Subpart 1--Within-State Allocation

SEC. 231. DISTRIBUTION OF FUNDS TO SECONDARY SCHOOL PROGRAMS.

    (a) * * *
          * * * * * * *
    (d) Allocations to Area Vocational Education Schools and 
Intermediate Educational Agencies.--(1) * * *
          * * * * * * *
    (3)(A) For the purposes of this subsection, the State may 
determine the number of economically disadvantaged students 
attending vocational education programs on the basis of 
eligibility for any of the following:
            (i) Free or reduced-price meals under the National 
        School Lunch Act.
            (ii) [The program for aid to dependent children] 
        The State program funded under part A of title IV of 
        the Social Security Act.
          * * * * * * *

SEC. 232. DISTRIBUTION OF FUNDS TO POSTSECONDARY AND ADULT PROGRAMS.

    (a) * * *
    (b) Waiver for More Equitable Distribution.--The Secretary 
may waive the application of subsection (a) in the case of any 
State that submits to the Secretary an application for such a 
waiver that--
            (1) * * *
            (2) includes a proposal for an alternative formula 
        that may include criteria relating to the number of 
        individuals attending institutions or consortia within 
        the State who--
                    (A) receive need-based postsecondary 
                financial aid provided from public funds;
                    (B) are members of families participating 
                in [the program for aid to families with 
                dependent children] the State program funded 
                under part A of title IV of the Social Security 
                Act;
          * * * * * * *

                      TITLE V--GENERAL PROVISIONS

          * * * * * * *

                          Part C--Definitions

SEC. 521. DEFINITIONS.

    As used in this Act:
            (1) * * *
          * * * * * * *
            (14) The term ``displaced homemaker'' means an 
        individual who--
                    (A) is an adult; and
                    (B)(i) has worked as an adult primarily 
                without remuneration to care for the home and 
                family, and for that reason has diminished 
                marketable skills;
                    (ii) has been dependent on public 
                assistance or on the income of a relative but 
                is no longer supported by such income;
                    (iii) is a parent whose youngest dependent 
                child will become ineligible to receive 
                assistance under [the program for aid to 
                families with dependent children] the State 
                program funded under part A of title IV of the 
                Social Security Act within 2 years of the 
                parent's application for assistance under this 
                Act; or
          * * * * * * *
                              ----------                              


             ELEMENTARY AND SECONDARY EDUCATION ACT OF 1965

          * * * * * * *

      TITLE I--HELPING DISADVANTAGED CHILDREN MEET HIGH STANDARDS

          * * * * * * *

PART A--IMPROVING BASIC PROGRAMS OPERATED BY LOCAL EDUCATIONAL AGENCIES

                 Subpart 1--Basic Program Requirements

          * * * * * * *

SEC. 1113. ELIGIBLE SCHOOL ATTENDANCE AREAS.

    (a) Determination.--
            (1) * * *
          * * * * * * *
            (5) Measures.--The local educational agency shall 
        use the same measure of poverty, which measure shall be 
        the number of children ages 5 through 17 in poverty 
        counted in the most recent census data approved by the 
        Secretary, the number of children eligible for free and 
        reduced priced lunches under the National School Lunch 
        Act, the number of children in families receiving 
        assistance under the [Aid to Families with Dependent 
        Children program] State program funded under part A of 
        title IV of the Social Security Act, or the number of 
        children eligible to receive medical assistance under 
        the Medicaid program, or a composite of such 
        indicators, with respect to all school attendance areas 
        in the local educational agency--
                    (A) to identify eligible school attendance 
                areas;
                    (B) to determine the ranking of each area; 
                and
                    (C) to determine allocations under 
                subsection (c).
          * * * * * * *

                         Subpart 2--Allocations

          * * * * * * *

SEC. 1124. BASIC GRANTS TO LOCAL EDUCATIONAL AGENCIES.

    (a) * * *
          * * * * * * *
    (c) Children To Be Counted.--
            (1) * * *
          * * * * * * *
            (5) Other children to be counted.--For purposes of 
        this section, the Secretary shall determine the number 
        of children aged 5 to 17, inclusive, from families 
        above the poverty level on the basis of the number of 
        such children from families receiving an annual income, 
        in excess of the current criteria of poverty, from 
        payments under [the program of aid to families with 
        dependent children under a State plan approved under] a 
        State program funded under part A of title IV of the 
        Social Security Act; and in making such determinations 
        the Secretary shall utilize the criteria of poverty 
        used by the Bureau of the Census in compiling the most 
        recent decennial census for a family of 4 in such form 
        as those criteria have been updated by increases in the 
        Consumer Price Index for all urban consumers, published 
        by the Bureau of Labor Statistics. The Secretary shall 
        determine the number of such children and the number of 
        children of such ages living in institutions for 
        neglected or delinquent children, or being supported in 
        foster homes with public funds, on the basis of the 
        caseload data for the month of October of the preceding 
        fiscal year (using, in the case of children described 
        in the preceding sentence, the criteria of poverty and 
        the form of such criteria required by such sentence 
        which were determined for the calendar year preceding 
        such month of October) or, to the extent that such data 
        are not available to the Secretary before January of 
        the calendar year in which the Secretary's 
        determination is made, then on the basis of the most 
        recent reliable data available to the Secretary at the 
        time of such determination. The Secretary of Health and 
        Human Services shall collect and transmit the 
        information required by this subparagraph to the 
        Secretary not later than January 1 of each year.
          * * * * * * *

                       TITLE V--PROMOTING EQUITY

                   PART A--MAGNET SCHOOLS ASSISTANCE

          * * * * * * *

                   PART B--WOMEN'S EDUCATIONAL EQUITY

          * * * * * * *

SEC. 5203. PROGRAMS AUTHORIZED.

    (a) * * *
    (b) Grants Authorized.--
            (1) * * *
            (2) Support and technical assistance.--To achieve 
        the purposes of this part, the Secretary is authorized 
        to provide support and technical assistance--
                    (A) to implement effective gender-equity 
                policies and programs at all educational 
                levels, including--
                            (i) * * *
          * * * * * * *
                            (xi) programs to increase 
                        educational opportunities, including 
                        higher education, vocational training, 
                        and other educational programs for low-
                        income women, including underemployed 
                        and unemployed women, and women 
                        receiving [Aid to Families with 
                        Dependent Children benefits] assistance 
                        under a State program funded under part 
                        A of title IV of the Social Security 
                        Act;
          * * * * * * *
                    (B) for research and development, which 
                shall be coordinated with each of the research 
                institutes of the Office of Educational 
                Research and Improvement to avoid duplication 
                of research efforts, designed to advance gender 
                equity nationwide and to help make policies and 
                practices in educational agencies and 
                institutions, and local communities, gender 
                equitable, including--
                            (i) * * *
          * * * * * * *
                            (viii) the development and 
                        improvement of programs and activities 
                        to increase opportunity for women, 
                        including continuing educational 
                        activities, vocational education, and 
                        programs for low-income women, 
                        including underemployed and unemployed 
                        women, and women receiving [Aid to 
                        Families with Dependent Children] 
                        assistance under the State program 
                        funded under part A of title IV of the 
                        Social Security Act; and
          * * * * * * *

               TITLE X--PROGRAMS OF NATIONAL SIGNIFICANCE

             PART A--FUND FOR THE IMPROVEMENT OF EDUCATION

          * * * * * * *

                       PART D--ARTS IN EDUCATION

                       Subpart 1--Arts Education

          * * * * * * *

    Subpart 2--Cultural Partnerships for At-Risk Children and Youth

          * * * * * * *

SEC. 10413. AUTHORIZED ACTIVITIES.

    (a) In General.--Grants awarded under this subpart may be 
used--
            (1) * * *
          * * * * * * *
            [(4) to provide child care for children of at-risk 
        students who would not otherwise be able to participate 
        in the program;]
          * * * * * * *

              PART J--URBAN AND RURAL EDUCATION ASSISTANCE

            Subpart 1--Urban Education Demonstration Grants

          * * * * * * *

SEC. 10963. URBAN SCHOOL GRANTS.

    (a) * * *
    (b) Authorized Activities.--Funds under this section may be 
used to--
            (1) * * *
            (2) ensure the readiness of all urban public school 
        children for school, such as--
                    (A) * * *
          * * * * * * *
                    [(G) establishment of comprehensive child 
                care centers in public secondary schools for 
                students who are parents and their children; 
                and]
          * * * * * * *

            Subpart 2--Rural Education Demonstration Grants

          * * * * * * *

SEC. 10974. USES OF FUNDS.

    (a) In General.--Grant funds made available under section 
10973 may be used by rural eligible local educational agencies 
to meet the National Education Goals through programs designed 
to--
            (1) * * *
          * * * * * * *
            (6) ensure the readiness of all rural children for 
        school, such as--
                    (A) * * *
          * * * * * * *
                    [(G) establishment of comprehensive child 
                care centers in public secondary schools for 
                student parents and their children; and]
          * * * * * * *
                              ----------                              


                 SUPPLEMENTAL APPROPRIATIONS ACT, 1985

                                TITLE I

          * * * * * * *

                              CHAPTER VII

                       DEPARTMENT OF THE INTERIOR

          * * * * * * *

                        Bureau of Indian Affairs

                      operation of indian programs

              (including transfer of funds and rescission)

    For an additional amount for ``Operation of Indian 
programs'', $23,423,000, and $4,900,000 which shall be derived 
by transfer from National Park Service, ``National capital 
region arts and cultural affairs'', such transferred funds to 
remain available for expenditure until September 30, 1986: 
Provided, That $8,700,000 shall be used by the Secretary to 
reduce the amount of unpaid principal on loans to the Navajo 
Agricultural Products Industry (NAPI) guaranteed under the 
Indian Financing Act of 1974, as amended (88 Stat. 77; 25 
U.S.C. 1401 et seq.): Provided further, That NAPI is discharged 
from the obligation to pay any unpaid interest accruing before 
January 1, 1991, on loans by the Secretary to NAPI under that 
Act: Provided further, That no funds shall be paid to creditors 
of the Sangre de Cristo Development Company, Inc., whose claims 
are set aside by the United States Bankrupcy Court for the 
District of New Mexico:[ Provided further, That general 
assistance payments made by the Bureau of Indian Affairs after 
April 29, 1985, shall be made on the basis of Aid to Families 
with Dependent Children (AFDC) standards of need except where a 
State ratably reduces AFDC payments in which event the Bureau 
shall reduce general assistance payments in such State by the 
same percentage as the State has reduced the AFDC payment.] 
Provided further, That general assistance payments made by the 
Bureau of Indian Affairs shall be made--
            (1) after April 29, 1985, and before October 1, 
        1995, on the basis of Aid to Families with Dependent 
        Children (AFDC) standards of need; and
            (2) on and after October 1, 1995, on the basis of 
        standards of need established under the State program 
        funded under part A of title IV of the Social Security 
        Act,
except that where a State ratably reduces its AFDC or State 
program payments, the Bureau shall reduce general assistance 
payments in such State by the same percentage as the State has 
reduced the AFDC or State program payment.
          * * * * * * *
                              ----------                              


                     INTERNAL REVENUE CODE OF 1986

          * * * * * * *

                        Subtitle A--Income Taxes

          * * * * * * *

                  CHAPTER 1--NORMAL TAXES AND SURTAXES

          * * * * * * *

              Subchapter A--Determination of Tax Liability

          * * * * * * *

                      PART IV--CREDITS AGAINST TAX

          * * * * * * *

                     Subpart C--Refundable Credits

          * * * * * * *

SEC. 32. EARNED INCOME.

    (a) Allowance of Credit.--
            (1) * * *
            (2) Limitation.--The amount of the credit allowable 
        to a taxpayer under paragraph (1) for any taxable year 
        shall not exceed the excess (if any) of--
                    (A) the credit percentage of the earned 
                income amount, over
                    [(B) the phaseout percentage of so much of 
                the adjusted gross income (or, if greater, the 
                earned income) of the taxpayer for the taxable 
                year as exceeds the phaseout amount.]
                    (B) the sum of--
                            (i) the initial phaseout percentage 
                        of so much of the modified adjusted 
                        gross income (or, if greater, the 
                        earned income) of the taxpayer for the 
                        taxable year as exceeds the initial 
                        phaseout amount but does not exceed the 
                        final phaseout amount, plus
                            (ii) the final phaseout percentage 
                        of so much of the modified adjusted 
                        gross income (or, if greater, the 
                        earned income) of the taxpayer for the 
                        taxable year as exceeds the final 
                        phaseout amount.
    [(b) Percentages and Amounts.--For purposes of subsection 
(a)--
            [(1) Percentages.--The credit percentage and the 
        phaseout percentage shall be determined as follows:
                    [(A) In general.--In the case of taxable 
                years beginning after 1995:
      

                                                                        
 [In the case of an eligible       The credit           The phaseout    
      individual with:           percentage is:        percentage is:   
                                                                        
1 qualifying child..........           34                   15.98       
2 or more qualifying                                                    
 children...................           40                   21.06       
No qualifying children......          7.65                  7.65        
                                                                        

      
                    [(B) Transitional percentages for 1995.--In 
                the case of taxable years beginning in 1995:
      

                                                                        
 [In the case of an eligible       The credit           The phaseout    
      individual with:           percentage is:        percentage is:   
                                                                        
1 qualifying child 34 15.98.                                            
2 or more qualifying                                                    
 children...................           36                   20.22       
No qualifying children......          7.65                   7.65       
                                                                        

      
                    [(C) Transitional percentages for 1994.--In 
                the case of a taxable year beginning in 1994:
      

                                                                        
 [In the case of an eligible       The credit           The phaseout    
      individual with:           percentage is:        percentage is:   
                                                                        
1 qualifying child..........          26.3                  15.98       
2 or more qualifying                                                    
 children...................           30                   17.68       
No qualifying children......          7.65                  7.65        
                                                                        

      
            [(2) Amounts.--The earned income amount and the 
        phaseout amount shall be determined as follows:
                    [(A) In general.--In the case of taxable 
                years beginning after 1994:
      

                                                                        
 [In the case of an eligible       The credit           The phaseout    
      individual with:           percentage is:        percentage is:   
                                                                        
1 qualifying child..........         $6,000                $11,000      
2 or more qualifying                                                    
 children...................         $8,425                $11,000      
No qualifying children......         $4,000                $5,000       
                                                                        

      
                    [(B) Transitional amounts.--In the case of 
                a taxable year beginning in 1994:
      

                                                                        
 [In the case of an eligible       The credit           The phaseout    
      individual with:           percentage is:        percentage is:   
                                                                        
1 qualifying child..........          $7,750               $11,000      
2 or more qualifying                                                    
 children...................         $8,425                $11,000      
No qualifying children......         $4,000               $5,000.]      
                                                                        

      
    (b) Percentages and Amounts.--For purposes of subsection 
(a)--
            (1) Percentages.--The credit percentage, the 
        initial phaseout percentage, and the final phaseout 
        percentage shall be determined as follows:

  

                                                                                                                
    In the case of an eligible                                  The initial phaseout       The final phaseout   
         individual with:          The credit percentage is:       percentage is:            percentage is:     
                                                                                                                
1 qualifying child...............              34                       15.98                      18           
2 or more qualifying children....              40                       21.06                      23           
No qualifying children...........             7.65                      7.65                        0           
                                                                                                                

  
---------------------------------------------------------------------------
            (2) Amounts.--The earned income amount, the initial 
        phaseout amount, and the final phaseout amount shall be 
        determined as follows:

  

                                                                                                                
    In the case of an eligible      The earned income amount    The initial phaseout       The final phaseout   
         individual with:                     is:                    amount is:                amount is:       
                                                                                                                
1 qualifying child...............            $6,500                    $11,910                   $17,340        
2 or more qualifying children....            $9,120                    $11,910                   $21,360        
No qualifying children...........            $4,330                    $5,420                      $0           
                                                                                                                

  
---------------------------------------------------------------------------
            (c) Definitions and Special Rules.--For purposes of 
        this section--
            (1) Eligible individual.--
                    (A) * * *
          * * * * * * *
                    (C) 2 or more eligible individuals.--If 2 
                or more individuals would (but for this 
                subparagraph and after application of 
                subparagraph (B)) be treated as eligible 
                individuals with respect to the same qualifying 
                child for taxable years beginning in the same 
                calendar year, only the individual with the 
                highest modified adjusted gross income for such 
                taxable years shall be treated as an eligible 
                individual with respect to such qualifying 
                child.
          * * * * * * *
                    (F) Identification number requirement.--The 
                term ``eligible individual'' does not include 
                any individual who does not include on the 
                return of tax for the taxable year--
                            (i) such individual's taxpayer 
                        identification number, and
                            (ii) if the individual is married 
                        (within the meaning of section 7703), 
                        the taxpayer identification number of 
                        such individual's spouse.
          * * * * * * *
            (5) Modified adjusted gross income.--
                    (A) In general.--The term ``modified 
                adjusted gross income'' means adjusted gross 
                income determined without regard to the amounts 
                described in subparagraph (B).
                    (B) Certain amounts disregarded.--An amount 
                is described in this subparagraph if it is--
                            (i) the amount of losses from sales 
                        or exchanges of capital assets in 
                        excess of gains from such sales or 
                        exchanges to the extent such amount 
                        does not exceed the amount under 
                        section 1211(b)(1),
                            (ii) the net loss from estates and 
                        trusts,
                            (iii) the excess (if any) of 
                        amounts described in subsection 
                        (i)(2)(C)(ii) over the amounts 
                        described in subsection (i)(2)(C)(i) 
                        (relating to nonbusiness rents and 
                        royalties), and
                            (iv) 50 percent of the net loss 
                        from the carrying on of trades or 
                        businesses, computed separately with 
                        respect to--
                                    (I) trades or businesses 
                                (other than farming) conducted 
                                as sole proprietorships,
                                    (II) trades or businesses 
                                of farming conducted as sole 
                                proprietorships, and
                                    (III) other trades or 
                                businesses.
                For purposes of clause (iv), there shall not be 
                taken into account items which are attributable 
                to a trade or business which consists of the 
                performance of services by the taxpayer as an 
                employee.
          * * * * * * *
    (f) Amount of Credit to Be Determined Under Tables.--
            (1) * * *
            (2) Requirements for tables.--The tables prescribed 
        under paragraph (1) shall reflect the provisions of 
        subsections (a) and (b) and shall have income brackets 
        of not greater than $50 each--
                    (A) for earned income between $0 and the 
                amount of earned income at which the credit is 
                phased out under subsection (b), and
                    (B) for modified adjusted gross income 
                between the dollar amount at which the phaseout 
                begins under subsection (b) and the amount of 
                modified adjusted gross income at which the 
                credit is phased out under subsection (b).
          * * * * * * *
    (i) Denial of Credit for Individuals Having Excessive 
Investment Income.--
            (1) In general.--No credit shall be allowed under 
        subsection (a) for the taxable year if the aggregate 
        amount of disqualified income of the taxpayer for the 
        taxable year exceeds [$2,350] $2,250.
            (2) Disqualified income.--For purposes of paragraph 
        (1), the term ``disqualified income'' means--
                    (A) interest or dividends to the extent 
                includible in gross --income for the taxable 
                year,
                    (B) interest received or accrued during the 
                taxable year which is exempt from tax imposed 
                by this chapter, [and]
                    (C) the excess (if any) of--
                            (i) gross income from rents or 
                        royalties not derived in the ordinary 
                        course of a trade or business, over
                            (ii) the sum of--
                                    (I) the deductions (other 
                                than interest) which are 
                                clearly and directly allocable 
                                to such gross income, plus
                                    (II) interest deductions 
                                properly allocable to such 
                                gross income[.],
                    (D) the capital gain net income (as defined 
                in section 1222) of the taxpayer for such 
                taxable year, and
                    (E) the excess (if any) of--
                            (i) the aggregate income from all 
                        passive activities for the taxable year 
                        (determined without regard to any 
                        amount included in earned income under 
                        subsection (c)(2) or described in a 
                        preceding subparagraph), over
                            (ii) the aggregate losses from all 
                        passive activities for the taxable year 
                        (as so determined).
        For purposes of subparagraph (E), the term ``passive 
        activity'' has the meaning given such term by section 
        469.
    [(j) Inflation Adjustments.--
            [(1) In general.--In the case of any taxable year 
        beginning after 1994, each dollar amount contained in 
        subsection (b)(2)(A) shall be increased by an amount 
        equal to--
                    [(A) such dollar amount, multiplied by
                    [(B) the cost-of-living adjustment 
                determined under section 1(f)(3), for the 
                calendar year in which the taxable year begins, 
                by substituting ``calendar year 1993'' for 
                ``calendar year 1992''.
            [(2) Rounding.--If any dollar amount after being 
        increased under paragraph (1) is not a multiple of $10, 
        such dollar amount shall be rounded to the nearest 
        multiple of $10 (or, if such dollar amount is a 
        multiple of $5, such dollar amount shall be increased 
        to the next higher multiple of $10).]
    (j) Inflation Adjustments.--
            (1) In general.--In the case of any taxable year 
        beginning after 1997, each of the dollar amounts in 
        subsections (b)(2) and (i)(1) shall be increased by an 
        amount equal to--
                    (A) such dollar amount, multiplied by
                    (B) the cost-of-living adjustment 
                determined under section 1(f)(3) for the 
                calendar year in which the taxable year begins, 
                determined by substituting ``calendar year 
                1996'' for ``calendar year 1992'' in 
                subparagraph (B) thereof.
            (2) Rounding.--
                    (A) In general.--If any dollar amount in 
                subsection (b)(2), after being increased under 
                paragraph (1), is not a multiple of $10, such 
                dollar amount shall be rounded to the nearest 
                multiple of $10.
                    (B) Disqualified income threshold amount.--
                If the dollar amount in subsection (i)(1), 
                after being increased under paragraph (1), is 
                not a multiple of $50, such amount shall be 
                rounded to the next lowest multiple of $50.
          * * * * * * *
    (l) Identification Numbers.--Solely for purposes of 
subsections (c)(1)(F) and (c)(3)(D), a taxpayer identification 
number means a social security number issued to an individual 
by the Social Security Administration (other than a social 
security number issued pursuant to clause (II) (or that portion 
of clause (III) that relates to clause (II)) of section 
205(c)(2)(B)(i) of the Social Security Act).

          Subpart F--Rules for Computing Targeted Jobs Credit

          * * * * * * *

SEC. 51. AMOUNT OF CREDIT.

    (a) * * *
          * * * * * * *
    (d) Members of Targeted Groups.--For purposes of this 
subpart--
            (1) * * *
          * * * * * * *
            (9) Eligible work incentive employees.--The term 
        ``eligible work incentive employee'' means an 
        individual who has been certified by the designated 
        local agency as[--
                    [(A) being eligible for financial 
                assistance under part A of title IV of the 
                Social Security Act and as having continually 
                received such financial assistance during the 
                90-day period which immediately precedes the 
                date on which such individual is hired by the 
                employer, or
                    [(B) having been placed in employment under 
                a work incentive program established under 
                section 432(b)(1) or 445 of the Social Security 
                Act.] being eligible for financial assistance 
                under part A of title IV of the Social Security 
                Act and as having continually received such 
                financial assistance during the 90-day period 
                which immediately precedes the date on which 
                such individual is hired by the employer.
          * * * * * * *

                   Subtitle B--Estate and Gift Taxes

          * * * * * * *

                CHAPTER 23--FEDERAL UNEMPLOYMENT TAX ACT

          * * * * * * *

SEC. 3304. APPROVAL OF STATE LAWS.

    (a) Requirements.--The Secretary of Labor shall approve any 
State law submitted to him, within 30 days of such submission, 
which he finds provides that--
            (1) * * *
          * * * * * * *
                    (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);
            (16)(A) wage information contained in the records 
        of the agency administering the State law which is 
        necessary (as determined by the [Secretary of Health, 
        Education, and Welfare] Secretary of Health and Human 
        Services in regulations) for purposes of determining an 
        individual's [eligibility for aid or services, or the 
        amount of such aid or services, under a State plan for 
        aid and services to needy families with children 
        approved] eligibility for assistance, or the amount of 
        such assistance, under a State program funded under 
        part A of title IV of the Social Security Act, shall be 
        made available to a State or political subdivision 
        thereof when such information is specifically requested 
        by such State or political subdivision for such 
        purposes, [and]
            (B) wage and unemployment compensation information 
        contained in the records of such agency shall be 
        furnished to the Secretary of Health and Human Services 
        (in accordance with regulations promulgated by such 
        Secretary) as necessary for the purposes of the 
        National Directory of New Hires established under 
        section 453(i) of the Social Security Act, and
            [(B)] (C) such safeguards are established as are 
        necessary (as determined by the [Secretary of Health, 
        Education, and Welfare] Secretary of Health and Human 
        Services in regulations) to insure that [such 
        information is used only for the purposes authorized 
        under subparagraph (A);] information furnished under 
        subparagraph (A) or (B) is used only for the purposes 
        authorized under such subparagraph;
          * * * * * * *

                Subtitle F--Procedure and Administration

          * * * * * * *

                  CHAPTER 61--INFORMATION AND RETURNS

          * * * * * * *

                 Subchapter B--Miscellaneous Provisions

          * * * * * * *

SEC. 6103. CONFIDENTIALITY AND DISCLOSURE OF RETURNS AND RETURN 
                    INFORMATION.

    (a) General Rule.--Returns and return information shall be 
confidential, and except as authorized by this title--
            (1) * * *
          * * * * * * *
            (3) no other person (or officer or employee 
        thereof) who has or had access to returns or return 
        information under subsection (e)(1)(D)(iii), [(l)(12)] 
        paragraph (6) or (12) of subsection (l), paragraph (2) 
        or (4)(B) of subsection (m), or subsection (n),
shall disclose any return or return information obtained by him 
in any manner in connection with his service as such an officer 
or an employee or otherwise or under the provisions of this 
section. For purposes of this subsection, the term ``officer or 
employee'' includes a former officer or employee.
          * * * * * * *
    (l) Disclosure of Returns and Return Information for 
Purposes Other than Tax Administration.--
            (1) * * *
          * * * * * * *
            (6) Disclosure of return information to federal, 
        state, and local child support enforcement agencies.--
                    (A) * * *
                    [(B) Restriction on disclosure.--The 
                Secretary shall disclose return information 
                under subparagraph (A) only for purposes of, 
                and to the extent necessary in, establishing 
                and collecting child support obligations from, 
                and locating, individuals owing such 
                obligations.]
                    (B) Disclosure to certain agents.--The 
                following information disclosed to any child 
                support enforcement agency under subparagraph 
                (A) with respect to any individual with respect 
                to whom child support obligations are sought to 
                be established or enforced may be disclosed by 
                such agency to any agent of such agency which 
                is under contract with such agency to carry out 
                the purposes described in subparagraph (C):
                            (i) The address and social security 
                        account number (or numbers) of such 
                        individual.
                            (ii) The amount of any reduction 
                        under section 6402(c) (relating to 
                        offset of past-due support against 
                        overpayments) in any overpayment 
                        otherwise payable to such individual.
                    (C) Restriction on disclosure.--Information 
                may be disclosed under this paragraph only for 
                purposes of, and to the extent necessary in, 
                establishing and collecting child support 
                obligations from, and locating, individuals 
                owing such obligations.
            (7) Disclosure of return information to federal, 
        state, and local agencies administering certain 
        programs under the social security act, the food stamp 
        act of 1977, or title 38, united states code or certain 
        housing assistance programs.--
                    (A) * * *
          * * * * * * *
                    (D) Programs to which rule applies.--The 
                programs to which this paragraph applies are:
                            (i) [aid to families with dependent 
                        children provided under a State plan 
                        approved] a State program funded under 
                        part A of title IV of the Social 
                        Security Act;
          * * * * * * *
            (10) Disclosure of certain information to agencies 
        requesting a reduction under section 6402(c) or 
        6402(d).--
                    (A) Disclosure of certain information to 
                agencies requesting a reduction under section 
                6402(c) or 6402 the date of the enactment of 
                this Act.--The Secretary may, upon receiving a 
                written request, disclose to officers and 
                employees of any agency seeking a reduction 
                under subsection [(c) or (d)] (c), (d), or (e) 
                of section 6402--
                            (i) * * *
          * * * * * * *
                    (B) Restriction on use of disclosed 
                information.--Any officers and employees of an 
                agency receiving return information under 
                subparagraph (A) shall use such information 
                only for the purposes of, and to the extent 
                necessary in, establishing appropriate agency 
                records, locating any person with respect to 
                whom a reduction under subsection [(c) or (d)] 
                (c), (d), or (e) of section 6402 is sought for 
                purposes of collecting the debt with respect to 
                which the reduction is sought, or in the 
                defense of any litigation or administrative 
                procedure ensuing from a reduction made under 
                subsection [(c) or (d)] (c), (d), or (e) of 
                section 6402. Any return information disclosed 
                with respect to section 6402(e) shall only be 
                disclosed to officers and employees of the 
                State agency requesting such information.
          * * * * * * *
    (p) Procedure and Recordkeeping.--
            (1) * * *
          * * * * * * *
            (4) Safeguards.--Any Federal agency described in 
        subsection (h)(2), (h)(6), (i)(1), (2), (3), (5), or 
        (8), (j)(1) or (2), (l)(1), (2), (3), [(5), (10)] (5), 
        (11), (13), or (14) or (o)(1), the General Accounting 
        Office, or any agency, body, or commission described in 
        subsection (d), (i)(3)(B)(i) or (8) or (l)(6), (7), 
        (8), [(9), or (12)] (9), (10), or (12) shall, as a 
        condition for receiving returns or return information--
                    (A) establish and maintain, to the 
                satisfaction of the Secretary, a permanent 
                system of standardized records with respect to 
                any request, the reason for such request, and 
                the date of such request made by or of it and 
                any disclosure of return or return information 
                made by or to it;
          * * * * * * *
        except that the conditions of subparagraphs (A), (B), 
        (C), (D), and (E) shall cease to apply with respect to 
        any return or return information if, and to the extent 
        that, such return or return information is disclosed in 
        the course of any judicial or administrative proceeding 
        and made a part of the public record thereof. If the 
        Secretary determines that any such agency, body, or 
        commission or the General Accounting Office has failed 
        to, or does not, meet the requirements of this 
        paragraph, he may, after any proceedings for review 
        established under paragraph (7), take such actions as 
        are necessary to ensure such requirements are met, 
        including refusing to disclose returns or return 
        information to such agency body, or commission or the 
        General Accounting Office until he determines that such 
        requirements have been or will be met. In the case of 
        any agency which receives any mailing address under 
        paragraph (2), (4), (6), or (7) of subsection (m) and 
        which discloses any such mailing address to any agent 
        or which receives any information under [subsection 
        (l)(12)(B)] paragraph (6)(A) or (12)(B) of subsection 
        (l) and which discloses any such information to any 
        agent, this paragraph shall apply to such agency and 
        each such agent (except that, in the case of an agent, 
        any report to the Secretary or other action with 
        respect to the Secretary shall be made or taken through 
        such agency). For purposes of applying this paragraph 
        in any case to which subsection (m)(6) applies, the 
        term ``return information'' includes related blood 
        donor records (as defined in section 1141(h)(2) of the 
        Social Security Act).
          * * * * * * *

                         CHAPTER 63--ASSESSMENT

          * * * * * * *

  Subchapter B--Deficiency Procedures in the Case of Income, Estate, 
                     Gift, and Certain Excise Taxes

          * * * * * * *

SEC. 6213. RESTRICTIONS APPLICABLE TO DEFICIENCIES; PETITION TO TAX 
                    COURT.

    (a) * * *
          * * * * * * *
    (g) Definitions.--For purposes of this section--
            (1) * * *
            (2) Mathematical or clerical error.--The term 
        ``mathematical or clerical error'' means--
                    (A) * * *
          * * * * * * *
                    (D) an omission of information which is 
                required to be supplied on the return to 
                substantiate an entry on the return, [and]
                    (E) an entry on a return of a deduction or 
                credit in an amount which exceeds a statutory 
                limit imposed by subtitle A or B, or chapter 
                41, 42, 43, or 44, if such limit is expressed--
                            (i) as a specified monetary amount, 
                        or
                            (ii) as a percentage, ratio, or 
                        fraction,
                and if the items entering into the application 
                of such limit appear on such return[.],
                    (F) an omission of a correct taxpayer 
                identification number required under section 32 
                (relating to the earned income tax credit) to 
                be included on a return, and
                    (G) an entry on a return claiming the 
                credit under section 32 with respect to net 
                earnings from self-employment described in 
                section 32(c)(2)(A) to the extent the tax 
                imposed by section 1401 (relating to self-
                employment tax) on such net earnings has not 
                been paid.
          * * * * * * *

                         CHAPTER 64--COLLECTION

          * * * * * * *

                    Subchapter A--General Provisions

          * * * * * * *

SEC. 6305. COLLECTION OF CERTAIN LIABILITY.

    (a) In General.--Upon receiving a certification from the 
[Secretary of Health, Education, and Welfare] Secretary of 
Health and Human Services, under section 452(b) of the Social 
Security Act with respect to any individual, the Secretary 
shall assess and collect the amount certified by the [Secretary 
of Health, Education, and Welfare] Secretary of Health and 
Human Services, in the same manner, with the same powers, and 
(except as provided in this section) subject to the same 
limitations as if such amount were a tax imposed by subtitle C 
the collection of which would be jeopardized by delay, except 
that--
            (1) no interest or penalties shall be assessed or 
        collected,
            (2) for such purposes, paragraphs (4), (6), and (8) 
        of section 6334(a) (relating to property exempt from 
        levy) shall not apply,
            (3) there shall be exempt from levy so much of the 
        salary, wages, or other income of an individual as is 
        being withheld therefrom in garnishment pursuant to a 
        judgment entered by a court of competent jurisdiction 
        for the support of his minor children, [and]
            (4) in the case of the first assessment against an 
        individual for delinquency under a court or 
        administrative order against such individual for a 
        particular person or persons, the collection shall be 
        stayed for a period of 60 days immediately following 
        notice and demand as described in section 6303[.], and
            (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.
          * * * * * * *

       Subchapter D--Seizure of Property for Collection of Taxes

          * * * * * * *

SEC. 6334. PROPERTY EXEMPT FROM LEVY.

    (a) Enumeration.--There shall be exempt from levy--
            (1) * * *
          * * * * * * *
            (11) Certain public assistance payments.--Any 
        amount payable to an individual as a recipient of 
        public assistance under--
                    (A) title IV [(relating to aid to families 
                with dependent children)] or title XVI 
                (relating to supplemental security income for 
                the aged, blind, and disabled) of the Social 
                Security Act, or
                    (B) State or local government public 
                assistance or public welfare programs for which 
                eligibility is determined by a needs or income 
                test.
          * * * * * * *

              CHAPTER 65--ABATEMENTS, CREDITS, AND REFUNDS

          * * * * * * *

                   Subchapter A--Procedure in General

          * * * * * * *

SEC. 6402. AUTHORITY TO MAKE CREDITS OR REFUNDS.

    (a) General Rule.--In the case of any overpayment, the 
Secretary, within the applicable period of limitations, may 
credit the amount of such overpayment, including any interest 
allowed thereon, against any liability in respect of an 
internal revenue tax on the part of the person who made the 
overpayment and shall, subject to subsections [(c) and (d)] 
(c), (d), and (e), refund any balance to such person.
          * * * * * * *
    (e) Collection of Overpayments Under Title IV-A of the 
Social Security Act.--The amount of any overpayment to be 
refunded to the person making the overpayment shall be reduced 
(after reductions pursuant to subsections (c) and (d), but 
before a credit against future liability for an internal 
revenue tax) in accordance with section 405(e) of the Social 
Security Act (concerning recovery of overpayments to 
individuals under State plans approved under part A of title IV 
of such Act).
          * * * * * * *
    [(e)] (f) Review of Reductions.--No court of the United 
States shall have jurisdiction to hear any action, whether 
legal or equitable, brought to restrain or review a reduction 
authorized by subsection (c) or (d). No such reduction shall be 
subject to review by the Secretary in an administrative 
proceeding. No action brought against the United States to 
recover the amount of any such reduction shall be considered to 
be a suit for refund of tax. This subsection does not preclude 
any legal, equitable, or administrative action against the 
Federal agency to which the amount of such reduction was paid 
or any such action against the Commissioner of Social Security 
which is otherwise available with respect to recoveries of 
overpayments of benefits under section 204 of the Social 
Security Act.
    [(f)] (g) Federal Agency.--For purposes of this section, 
the term ``Federal agency'' means a department, agency, or 
instrumentality of the United States (other than an agency 
subject to section 9 of the Act of May 18, 1933 (48 Stat. 63, 
chapter 32; 16 U.S.C. 831h)), and includes a Government 
corporation (as such term is defined in section 103 of title 5, 
United States Code).
    [(g)] (h) Treatment of Payments to States.--The Secretary 
may provide that, for purposes of determining interest, the 
payment of any amount withheld under subsection (c) to a State 
shall be treated as a payment to the person or persons making 
the overpayment.
    [(h)[ (i) Cross Reference.--

          For procedures relating to agency notification of the 
        Secretary, see section 3721 of title 31, United States Code.

    [(i)] (j) Refunds to Certain Fiduciaries of Insolvent 
Members of Affiliated Groups.--Notwithstanding any other 
provision of law, in the case of an insolvent corporation which 
is a member of an affiliated group of corporations filing a 
consolidated return for any taxable year and which is subject 
to a statutory or court-appointed fiduciary, the Secretary may 
by regulation provide that any refund for such taxable year may 
be paid on behalf of such insolvent corporation to such 
fiduciary to the extent that the Secretary determines that the 
refund is attributable to losses or credits of such insolvent 
corporation.
          * * * * * * *

                  CHAPTER 77--MISCELLANEOUS PROVISIONS

          * * * * * * *

SEC. 7523. GRAPHIC PRESENTATION OF MAJOR CATEGORIES OF FEDERAL OUTLAYS 
                    AND INCOME.

    (a) * * *
    (b) Definitions and Special Rules.--For purposes of 
subsection (a)--
            (1) * * *
          * * * * * * *
            (3) Required footnotes.--The pie-shaped graph 
        showing the major outlay categories shall include the 
        following footnotes:
                    (A) * * *
          * * * * * * *
                    (C) A footnote to the category referred to 
                in paragraph (1)(D) showing the percentage of 
                the total outlays which is for medicaid, food 
                stamps, and [aid to families with dependent 
                children] assistance under a State program 
                funded under part A of title IV of the Social 
                Security Act and the percentage of total 
                outlays which is for public health, 
                unemployment, assisted housing, and social 
                services.
          * * * * * * *
                              ----------                              


                   SECTION 3 OF THE WAGNER-PEYSER ACT

    Sec. 3. (a) * * *
    (b) It shall be the duty of the Secretary of Labor to 
assure that unemployment insurance and employment service 
offices in each State, as appropriate, upon request of a public 
agency administering or supervising the administration of a 
[State plan approved under part A of title IV] State program 
funded under part A of title IV of the Social Security Act, of 
a public agency charged with any duty or responsibility under 
any program or activity authorized or required under part D of 
title IV of such Act, or of a State agency charged with the 
administration of the food stamp program in a State under the 
Food Stamp Act of 1977 (7 U.S.C. 2011 et seq.), shall (and, 
notwithstanding any other provision of law, is authorized to) 
furnish to such agency making the request, from any data 
contained in the files of any such office, information with 
respect to any individual specified in the request as to (1) 
whether such individual is receiving, has received, or has made 
application for, unemployment compensation, and the amount of 
any such compensation being received by such individual, (2) 
the current (or most recent) home address of such individual, 
and (3) whether such individual has refused an offer of 
employment and, if so, a description of the employment so 
offered and the terms, conditions, and rate of pay therefor.
                              ----------                              


                      JOB TRAINING PARTNERSHIP ACT

          * * * * * * *

                              definitions

    Sec. 4. For the purposes of this Act, the following 
definitions apply:
            (1) * * *
          * * * * * * *
            (29) The term ``displaced homemaker'' means an 
        individual who has been providing unpaid services to 
        family members in the home and who--
                    (A) has been dependent either--
                            (i) on public assistance and whose 
                        youngest child is within 2 years of 
                        losing eligibility under part A of 
                        title IV of the Social Security Act 
                        [(42 U.S.C. 601 et seq.)]; or
          * * * * * * *

                   TITLE I--JOB TRAINING PARTNERSHIP

                    Part A--Service Delivery System

          * * * * * * *

                         performance standards

    Sec. 106. (a) * * *
    (b) Title II Performance Standards.--
            (1) * * *
          * * * * * * *
            (6) Requirements.--The performance standards 
        described in paragraphs (3) and (4) shall include 
        provisions governing--
                    (A) * * *
          * * * * * * *
                    (C) cost-effective methods for obtaining 
                such data as are necessary to carry out this 
                section and section 452(d) 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,] records collected under the 
                State program funded under part A of title IV 
                of the Social Security Act, statistical 
                sampling techniques, and similar records or 
                measures, with appropriate safeguards to 
                protect the confidentiality of the information 
                obtained.
          * * * * * * *

               Part B--Additional State Responsibilities

           governor's coordination and special services plan

    Sec. 121. (a) * * *
    (b)(1) * * *
    (2) The plan shall describe the measures taken by the State 
to ensure coordination and avoid duplication between the State 
agencies administering [the JOBS program] the work activities 
required under title IV of the Social Security Act and programs 
under title II in the planning and delivery of services. [The 
plan shall describe the procedures developed by the State to 
ensure that the State JOBS plan is consistent with the 
coordination criteria specified in this plan and identify the 
procedures developed to provide for the review of the JOBS plan 
by the State Job Training Coordinating Council.]
          * * * * * * *

                state education coordination and grants

    Sec. 123. (a) * * *
          * * * * * * *
    (c) Governor's Plan Requirements.--The State education 
agency shall submit for inclusion in the Governor's 
coordination and special services plan a description developed 
jointly by the State education agency and the Governor of--
            (1) the goals to be achieved and services to be 
        provided by the school-to-work transition programs 
        specified in subsection (a)(2)(A) that will receive the 
        assistance, which description shall, at a minimum, 
        include information regarding--
                    (A) * * *
          * * * * * * *
                    (E) the linkages that will be established, 
                where feasible, to avoid duplication and 
                enhance the delivery of services, with programs 
                under--
                            (i) title II and part B of title 
                        IV;
          * * * * * * *
                            [(vi) the JOBS program;]
          * * * * * * *
            (2) the goals to be achieved and services to be 
        provided by literacy and lifelong learning programs 
        specified in subsection (a)(2)(B) that will receive the 
        assistance, which description shall, at a minimum, 
        include information regarding--
                    (A) * * *
          * * * * * * *
                    (D) the linkages that will be established, 
                where feasible, to avoid duplication and 
                enhance the delivery of services, with programs 
                under--
                            (i) titles II and III;
                            (ii) the Adult Education Act;
                            (iii) the Carl D. Perkins 
                        Vocational and Applied Technology 
                        Education Act;
                            (iv) the Stewart B. McKinney 
                        Homeless Assistance Act;
                            [(v) the JOBS program;]
          * * * * * * *

           TITLE II--TRAINING SERVICES FOR THE DISADVANTAGED

                     Part A--Adult Training Program

          * * * * * * *

SEC. 203. ELIGIBILITY FOR SERVICES.

    (a) * * *
    (b) Hard-To-Serve Individuals.--Not less than 65 percent of 
the participants in the program under this part, other than 
participants served under section 204(d), in each service 
delivery area shall be individuals who are included in 1 or 
more of the following categories:
            (1) Individuals who are basic skills deficient.
            (2) Individuals who are school dropouts.
            (3) Individuals who are recipients of cash welfare 
        payments[, including recipients under the JOBS 
        program].
          * * * * * * *

SEC. 204. PROGRAM DESIGN.

    (a) Essential Elements.--
            (1) In general.--The programs under this part shall 
        include--
                    (A) an objective assessment of the skill 
                levels and service needs of each participant, 
                which shall include a review of basic skills, 
                occupational skills, prior work experience, 
                employability, interests, aptitudes (including 
                interests and aptitudes for nontraditional 
                jobs), and supportive service needs, except 
                that a new assessment of a participant is not 
                required if the program determines it is 
                appropriate to use a recent assessment of the 
                participant conducted pursuant to another 
                education or training program [(such as the 
                JOBS program)];
                    (B) development of service strategies that 
                shall identify the employment goal (including, 
                in appropriate circumstances, nontraditional 
                employment), appropriate achievement 
                objectives, and appropriate services for 
                participants taking into account the 
                assessments conducted pursuant to subparagraph 
                (A), except that a new service strategy for a 
                participant is not required if the program 
                determines it is appropriate to use a recent 
                service strategy developed for the participant 
                under another education or training program 
                [(such as the JOBS program)];
          * * * * * * *

SEC. 205. LINKAGES.

    (a) In General.--In conducting the program assisted under 
this part, service delivery areas shall establish appropriate 
linkages with other Federal programs. Such programs shall 
include, where feasible, programs assisted under--
            (1) the Adult Education Act (20 U.S.C. 1201 et 
        seq.);
          * * * * * * *
            [(4) part F of title IV of the Social Security Act 
        (42 U.S.C. 681 et seq.);]
            (4) the portions of title IV of the Social Security 
        Act relating to work activities;
          * * * * * * *

          Part B--Summer Youth Employment and Training Program

          * * * * * * *

SEC. 253. USE OF FUNDS.

    (a) * * *
    (b) Basic and Remedial Education.--
            (1) In general.--A service delivery area shall 
        expend funds (available under this Act or otherwise 
        available to the service delivery area) for basic and 
        remedial education and training as described in the job 
        training plan under section 104.
            (2) Education or training.--The education and 
        training authorized by paragraph (1) may be provided 
        by--
                    (A) the year-round program under part C;
                    (B) the Job Corps;
                    [(C) the JOBS program;]
          * * * * * * *
    (c) Assessment and Service Strategy.--
            (1) Assessment.--
                    (A) In general.--Except as provided in 
                subparagraph (B), the programs under this part 
                shall include an objective assessment of the 
                basic skills and supportive services needs of 
                each participant, which may include a review of 
                occupational skills, prior work experience, 
                employability, interests, and aptitudes.
                    (B) Recent assessment.--A new assessment, 
                or a factor of such assessment, of a 
                participant is not required if the program 
                determines it is appropriate to use a recent 
                assessment of the participant conducted 
                pursuant to another education or training 
                program (such as [the JOBS program or] a 
                regular high school academic program).
            (2) Service strategy.--
                    (A) In general.--Except as provided in 
                subparagraph (B), the programs under this part 
                shall include a service strategy for 
                participants, which may identify achievement 
                objectives, appropriate employment goals, and 
                appropriate services for participants, taking 
                into account the assessments conducted under 
                paragraph (1).
                    (B) Recent service strategy.--A new service 
                strategy for a participant is not required if 
                the program determines it is appropriate to use 
                a recent service strategy developed for the 
                participant under another education or training 
                program (such as [the JOBS program or] a 
                regular high school academic program).
          * * * * * * *

                     Part C--Youth Training Program

          * * * * * * *

SEC. 264. PROGRAM DESIGN.

    (a) * * *
    (b) Essential Elements.--
            (1) In general.--The programs under this part shall 
        include--
                    (A) an objective assessment of the skill 
                levels and service needs of each participant, 
                which assessment shall include a review of 
                basic skills, occupational skills, prior work 
                experience, employability, interests, aptitudes 
                (including interests and aptitudes for 
                nontraditional jobs), and supportive service 
                needs, except that a new assessment of a 
                participant is not required if the program 
                determines it is appropriate to use a recent 
                assessment of the participant conducted under 
                another education or training program [(such as 
                the JOBS program)];
                    (B) development of service strategies that 
                shall identify the employment goal (including, 
                in appropriate circumstances, nontraditional 
                employment), appropriate achievement 
                objectives, and appropriate services for 
                participants taking into account the 
                assessments conducted pursuant to subparagraph 
                (A), except that a new service strategy for a 
                participant is not required if the program 
                determines it is appropriate to use a recent 
                service strategy developed for the participant 
                under another education or training program 
                [(such as the JOBS program)];
          * * * * * * *
    (d) Additional Requirements.--
            (1) * * *
          * * * * * * *
            (3) Skills training.--
                    (A) Preemployment and work maturity skills 
                training.--Preemployment and work maturity 
                skills training authorized by this part shall 
                be accompanied by either work experience or 
                other additional services designed to increase 
                the basic education or occupational skills of a 
                participant. The additional services may be 
                provided, concurrently or sequentially, under 
                other education and training programs, 
                including the Job Corps [and the JOBS program].
                    (B) Additional services.--Work experience, 
                job search assistance, job search skills 
                training, and job club activities provided 
                under this part shall be accompanied by 
                additional services designed to increase the 
                basic education or occupational skills of a 
                participant. The additional services may be 
                provided, concurrently or sequentially, under 
                other education and training programs, 
                including the Job Corps [and the JOBS program].
          * * * * * * *

SEC. 265. LINKAGES.

    (a) * * *
          * * * * * * *
    (b) Education and Training Program Linkages.--In conducting 
the program assisted under this part, service delivery areas 
shall establish appropriate linkages with other education and 
training programs authorized under Federal law. Such programs 
shall include, where feasible, programs assisted under--
            (1) * * *
          * * * * * * *
            [(6) part F of title IV of the Social Security Act 
        (JOBS) (42 U.S.C. 681 et seq.);]
            (6) the portion of title IV of the Social Security 
        Act relating to work activities;
          * * * * * * *

               TITLE IV--FEDERALLY ADMINISTERED PROGRAMS

          * * * * * * *

                           Part B--Job Corps

          * * * * * * *

                         allowances and support

    Sec. 429. (a) * * *
          * * * * * * *
    (e) In addition to child care assistance provided under 
section 428(e), the Secretary shall provide enrollees who 
otherwise could not participate in the Job Corps with 
allowances to pay for child care costs, such as food, clothing, 
and health care for the child. Allowances under this subsection 
may only be provided during the first 2 months of an enrollee's 
participation in the program [and shall be in an amount that 
does not exceed the maximum amount that may be provided by the 
State pursuant to section 402(g)(1)(C) of the Social Security 
Act (42 U.S.C. 602(g)(1)(C))].
          * * * * * * *

                      Part D--National Activities

          * * * * * * *

                  guidance on eligibility verification

    Sec. 454. (a) * * *
          * * * * * * *
    (c) Contents.--The guidance provided pursuant to subsection 
(a) shall specifically address income eligibility, assessment, 
the determination regarding whether an individual is a hard-to-
serve individual, and specific uniform or standardized 
documentation forms or procedures (including simplified 
standardized forms, automated intake procedures, and self-
certification documents) and other documentation proxies (such 
as [JOBS and] Job Corps eligibility forms).
          * * * * * * *

                     UNIFORM REPORTING REQUIREMENTS

    Sec. 455. (a) * * *
    (b) Data Elements.--The Secretaries of Labor, Education, 
and Health and Human Services, in consultation with other 
appropriate departments and with the National Occupational 
Information Coordinating Committee, shall identify a core set 
of consistently defined data elements for employment and 
training programs, including those funded under titles II, III, 
and IV of this Act, the Wagner-Peyser Act (29 U.S.C. 49 et 
seq.), the Carl D. Perkins Vocational and Applied Technology 
Education Act (20 U.S.C. 2301 et seq.), [the JOBS program,] and 
title V of the Older Americans Act of 1965 (42 U.S.C. 3056 et 
seq.).
          * * * * * * *

  TITLE V--JOBS FOR EMPLOYABLE DEPENDENT INDIVIDUALS INCENTIVE BONUS 
                                PROGRAM

SEC. 501. STATEMENT OF PURPOSE.

    It is the purpose of this title to provide incentives to 
reduce welfare dependency, promote self-sufficiency, increase 
child support payments, and increase employment and earnings of 
individuals by providing to each participating State a bonus 
for providing job training to--
            (1) absent parents of children receiving [aid to 
        families with dependent children under part A of title 
        IV of the Social Security Act (42 U.S.C. 601 et seq.)] 
        assistance under the State program funded under part A 
        of title IV of the Social Security Act, who subsequent 
        to such training pay child support for their children; 
        and
          * * * * * * *

SEC. 506. ELIGIBILITY FOR INCENTIVE BONUSES.

    An individual shall be eligible to participate in a program 
established under this title if--
            (1) the individual--
                    (A) was an absent parent of any child 
                receiving [aid to families with dependent 
                children] assistance under the State program 
                funded under part A of title IV of the Social 
                Security Act at the time such individual was 
                determined to be eligible to participate in 
                activities provided under this Act;
          * * * * * * *

SEC. 508. EVALUATION AND REPORT.

    (a) Evaluation.--
            (1) In general.--The Secretary shall conduct or 
        provide for an evaluation of the incentive bonus 
        program assisted under this title.
            (2) Considerations.--The Secretary shall consider--
                    (A) whether the program results in 
                increased service under this Act to absent 
                parents of children receiving [aid to families 
                with dependent children] assistance under the 
                State program funded under part A of title IV 
                of the Social Security Act and to recipients of 
                supplemental security income under title XVI of 
                the Social Security Act;
          * * * * * * *

           TITLE VII--STATE HUMAN RESOURCE INVESTMENT COUNCIL

SEC. 701. ESTABLISHMENT AND FUNCTIONS.

    (a) * * *
    (b) Applicable Federal Human Resource Program Defined.--
            (1) * * *
            (2) Programs.--In accordance with the requirements 
        of paragraph (1), applicable Federal human resource 
        programs--
                    (A) may include the programs authorized 
                under--
                            (i) * * *
          * * * * * * *
                            (v) the Wagner-Peyser Act (29 
                        U.S.C. 49 et seq.); and
                            [(vi) part F of title IV of the 
                        Social Security Act (42 U.S.C. 681 et 
                        seq.); and]
          * * * * * * *
                              ----------                              


              SECTION 3803 OF TITLE 31, UNITED STATES CODE

Sec. 3803. Hearing and determinations

    (a) * * *
          * * * * * * *
    (c)(1) * * *
    (2)(A) * * *
          * * * * * * *
    (C) For purposes of this subsection, the term ``benefits'' 
means--
            (i) * * *
          * * * * * * *
            [(iv) aid to families with dependent children under 
        a State plan approved under section 402(a) of the 
        Social Security Act;]
            (iv) assistance under a State program funded under 
        part A of title IV of the Social Security Act;
          * * * * * * *
                              ----------                              


   SECTION 2605 OF THE LOW-INCOME HOME ENERGY ASSISTANCE ACT OF 1981

                     applications and requirements

    Sec. 2605. (a) * * *
    (b) As part of the annual application required by 
subsection (a), the chief executive officer of each State shall 
certify that the State agrees to--
            (1) * * *
            (2) make payments under this title only with 
        respect to--
                    (A) households in which 1 or more 
                individuals are receiving--
                            [(i) aid to families with dependent 
                        children under the State's plan 
                        approved under part A of title IV of 
                        the Social Security Act (other than 
                        such aid in the form of foster care in 
                        accordance with section 408 of such 
                        Act);]
                            (i) assistance under the State 
                        program funded under part A of title IV 
                        of the Social Security Act;
          * * * * * * *
                              ----------                              


                       FAMILY SUPPORT ACT OF 1988

          * * * * * * *

         TITLE I--CHILD SUPPORT AND ESTABLISHMENT OF PATERNITY

          * * * * * * *

                 Subtitle B--Establishment of Paternity

          * * * * * * *

SEC. 123. AUTOMATED TRACKING AND MONITORING SYSTEMS MADE MANDATORY.

    (a) * * *
          * * * * * * *
    [(c) Repeal of 90-Percent Federal Reimbursement Rate for 
Automated Data Systems.--Effective September 30, 1995, section 
455(a)(1) of such Act (as amended by section 112(a) of this 
Act) is amended--
            [(1) by striking subparagraphs (A) and (B);
            [(2) by redesignating subparagraph (C) as 
        subparagraph (A);
            [(3) in subparagraph (A) (as so redesignated)--
                    [(A) by striking ``(rather than the 
                percentage specified in subparagraph (A))''; 
                and
                    [(B) by inserting ``and'' after the 
                semicolon; and
            [(4) by inserting after subparagraph (A) (as so 
        redesignated) the following new subparagraph:
            [``(B) equal to the percent specified in paragraph 
        (2) of the total amounts expended by such State during 
        such quarter for the operation of the plan approved 
        under section 454;''.]
          * * * * * * *

              TITLE III--SUPPORTIVE SERVICES FOR FAMILIES

          * * * * * * *

SEC. 303. EXTENDED ELIGIBILITY FOR MEDICAL ASSISTANCE.

    (a) * * *
          * * * * * * *
    (f) Effective Date.--(1) The amendments made by this 
section (other than subsections (b)(3), (d), and (e)) shall 
apply to payments under title XIX of the Social Security Act 
for calendar quarters beginning on or after April 1, 1990 (or, 
in the case of the Commonwealth of Kentucky, October 1, 1990) 
(without regard to whether regulations to implement such 
amendments are promulgated by such date), with respect to 
families that cease to be eligible for aid under part A of 
title IV of the Social Security Act on or after such date.
    (2)[(A)] The amendment made by subsection (b)(3) shall 
become effective on April 1, 1990, but such amendment shall not 
apply with respect to families that cease to be eligible for 
aid under part A of title IV of the Social Security Act before 
such date.
    [(B) Effective September 30, 1998, the amendment made by 
subsection (b)(3) is repealed.
    [(C) Section 402(a)(37) of the Social Security Act, as in 
effect immediately before April 1, 1990, shall become effective 
on September 30, 1998.]
          * * * * * * *

                    TITLE V--DEMONSTRATION PROJECTS

          * * * * * * *

SEC. 505. [DEMONSTRATION] PROJECTS TO EXPAND THE NUMBER OF JOB 
                    OPPORTUNITIES AVAILABLE TO CERTAIN LOW-INCOME 
                    INDIVIDUALS.

    (a) In General.--The Secretary of Health and Human Services 
(in this section referred to as the ``Secretary'') [in each of 
the fiscal years 1990, 1991, and 1992, shall enter into 
agreements with not less than 5 nor more than 10] shall enter 
into agreements with nonprofit organizations (including 
community development corporations) submitting applications 
under this section for the purpose of conducting 
[demonstration] projects in accordance with subsection (b) to 
create employment opportunities for certain low-income 
individuals.
    (b) Nature of Project.--(1) Each nonprofit organization 
conducting a [demonstration] project under this section shall 
provide technical and financial assistance to private employers 
in the community to assist them in creating employment and 
business opportunities for those individuals eligible to 
participate in the projects as described in this subsection.
    (2) For purposes of this section, a nonprofit organization 
is any organization (including a community development 
corporation) exempt from taxation under section 501(a) of the 
Internal Revenue Code of 1986 by reason of paragraph (3) or (4) 
of section 501(c) of such Code.
    (3) A low-income individual eligible to participate in a 
project conducted under this section is any individual eligible 
to receive [aid to families with dependent children under part 
A of title IV of the Social Security Act] assistance under the 
program funded part A of title IV of the Social Security Act of 
the State in which the individual resides and any other 
individual whose income level does not exceed 100 percent of 
the official poverty line as defined by the Office of 
Management and Budget and revised in accordance with section 
673(2) of the Omnibus Budget Reconciliation Act of 1981.
    (c) Content of Applications; Selection Priority.--(1) Each 
nonprofit organization submitting an application under this 
section shall, as part of such application, describe--
            (A) the technical and financial assistance that 
        will be made available under the project conducted 
        under this section;
            (B) the geographic area to be served by the 
        project;
            (C) the percentage of low-income individuals (as 
        described in subsection (b)) and individuals receiving 
        [aid to families with dependent children under title IV 
        of the Social Security Act] assistance under a State 
        program funded part A of title IV of the Social 
        Security Act in the area to be served by the project; 
        and
            (D) unemployment rates in the geographic areas to 
        be served and (to the extent practicable) the jobs 
        available and skills necessary to fill those vacancies 
        in such areas.
    (2) In approving applications under this section, the 
Secretary shall give priority to applications proposing to 
serve those areas containing the highest percentage of 
individuals receiving [aid to families with dependent children 
under title IV of such Act] assistance under a State program 
funded part A of title IV of the Social Security Act.
    (d) Administration.--Each nonprofit organization 
participating in a [demonstration] project conducted under this 
section shall provide assurances in its agreement with the 
Secretary that it has or will have a cooperative relationship 
with the agency responsible for administering the [job 
opportunities and basic skills training program (as provided 
for under title IV of the Social Security Act)] the State 
program funded under part A of title IV of the Social Security 
Act in the area served by the project.
    [(e) Duration.--Each demonstration project conducted under 
this section shall be commenced not later than September 30 of 
the fiscal year specified in the agreement described in 
subsection (a), and shall be conducted for a 6-year period; 
except that the Secretary may terminate a project before the 
end of such period if he determines that the nonprofit 
organization conducting the project is not in substantial 
compliance with the terms of the agreement entered into with 
the Secretary under this section.
    [(f) Evaluation and Report.--(1) The Secretary shall 
conduct an evaluation of the success of each demonstration 
project conducted under this section in creating job 
opportunities and may require each nonprofit organization 
conducting such a project to provide the Secretary with such 
information as the Secretary determines is necessary to prepare 
the report described in paragraph (2).
    [(2) Not later than January 1, 1995, the Secretary shall 
submit to the Congress a report containing a summary of the 
evaluations conducted under paragraph (1), together with such 
recommendations as the Secretary determines are appropriate.
    [(g) Authorization of Appropriations.--For the purpose of 
making grants to conduct demonstration projects under this 
section, there is authorized to be appropriated not to exceed 
$6,500,000 for each of the fiscal years 1990, 1991, 1992, 1993, 
1994, 1995, and 1996.]
    (e) Authorization of Appropriations.--For the purpose of 
conducting projects under this section, there is authorized to 
be appropriated an amount not to exceed $25,000,000 for any 
fiscal year.
          * * * * * * *
                              ----------                              


       BALANCED BUDGET AND EMERGENCY DEFICIT CONTROL ACT OF 1985

  PART C--EMERGENCY POWERS TO ELIMINATE DEFICITS IN EXCESS OF MAXIMUM 
                             DEFICIT AMOUNT

          * * * * * * *

SEC. 255. EXEMPT PROGRAMS AND ACTIVITIES.

    (a) * * *
          * * * * * * *
    (h) Low-Income Programs.--The following programs shall be 
exempt from reduction under any order issued under this part:
            [Aid to families with dependent children (75-0412-
        0-1-609);] Block grants to States for temporary 
        assistance for needy families;
            Child nutrition (12-3539-0-1-605);
            Commodity supplemental food program (12-3512-0-1-
        605);
            Food stamp programs (12-3505-0-1-605 and 12-3550-0-
        1-605);
            Grants to States for Medicaid (75-0512-0-1-55l);
            Supplemental Security Income Program (75-0406-0-1-
        609); and
            Women, infants, and children program (12-3510-0-1-
        605).
          * * * * * * *

SEC. 256. EXCEPTIONS, LIMITATIONS, AND SPECIAL RULES.

    (a) * * *
          * * * * * * *
    [(k) Special Rules for the JOBS Portion of AFDC.--
            [(1) Full amount of sequestration required.--Any 
        order issued by the President under section 254 shall 
        accomplish the full amount of any required 
        sequestration of the job opportunities and basic skills 
        training program under section 402(a)(19), and part F 
        of title VI, of the Social Security Act, in the manner 
        specified in this subsection. Such an order may not 
        reduce any Federal matching rate pursuant to section 
        403(l) of the Social Security Act.
            [(2) New allotment formula.--
                    [(A) General rule.--Notwithstanding section 
                403(k) of the Social Security Act, each State's 
                percentage share of the amount available after 
                sequestration for direct spending pursuant to 
                section 403(l) of such Act for the fiscal year 
                to which the sequestration applies shall be 
                equal to--
                            [(i) the lesser of--
                                    [(I) that percentage of the 
                                total amount paid to the States 
                                pursuant to such section 403(l) 
                                for the prior fiscal year that 
                                is represented by the amount 
                                paid to such State pursuant to 
                                such section 403(l) for the 
                                prior fiscal year; or
                                    [(II) the amount that would 
                                have been allotted to such 
                                State pursuant to such section 
                                403(k) had the sequestration 
                                not been in effect.
                    [(B) Reallotment of amounts remaining 
                unallotted after application of general rule.--
                Any amount made available after sequestration 
                for direct spending pursuant to section 403(l) 
                of the Social Security Act for the fiscal year 
                to which the sequestration applies that remains 
                unallotted as a result of subparagraph (A) of 
                this paragraph shall be allotted among the 
                States in proportion to the absolute difference 
                between the amount allotted, respectively, to 
                each State as a result of such subparagraph and 
                the amount that would have been allotted to 
                such State pursuant to section 403(k) of such 
                Act had the sequestration not been in effect, 
                except that a State may not be allotted an 
                amount under this subparagraph that results in 
                a total allotment to the State under this 
                paragraph of more than the amount that would 
                have been allotted to such State pursuant to 
                such section 403(k) had the sequestration not 
                been in effect.]
    [(l)] (k) Effects of Sequestration.--The effects of 
sequestration shall be as follows:
            (1) Budgetary resources sequestered from any 
        account other than a trust or special fund account 
        shall be permanently cancelled.
          * * * * * * *
                              ----------                              


                    IMMIGRATION AND NATIONALITY ACT

          * * * * * * *

                            TABLE OF CONTENTS

                            Title I--General

Sec. 101.  Definitions.
Sec. 102.  Applicability of title II to certain nonimmigrants.
     * * * * * * *

                          Title II--Immigration

     * * * * * * *

  chapter 2--qualifications for admission of aliens; travel control of 
                           citizens and aliens

Sec. 211.  Documentary requirements.
Sec. 212.  General classes of aliens ineligible to receive visas and 
          excluded from admission; waivers of inadmissibility.
Sec. 213.  Admission of certain aliens on giving bond.
Sec. 213A.  Requirements for sponsor's affidavit of support.
          * * * * * * *

                         TITLE II--IMMIGRATION

                      Chapter 1--Selection System

          * * * * * * *

                      special agricultural workers

    Sec. 210. (a) * * *
          * * * * * * *
    (f) Temporary Disqualification of Newly Legalized Aliens 
From Receiving Aid to Families With Dependent Children.--During 
the five-year period beginning on the date an alien was granted 
lawful temporary resident status under subsection (a), and 
notwithstanding any other provision of law, the alien is not 
eligible for [aid under a State plan approved under] assistance 
under a State program funded under part A of title IV of the 
Social Security Act. Notwithstanding the previous sentence, in 
the case of an alien who would be eligible for [aid under a 
State plan approved under] assistance under a State program 
funded under part A of title IV of the Social Security Act but 
for the previous sentence, the provisions of paragraph (3) of 
section 245A(h) shall apply in the same manner as they apply 
with respect to paragraph (1) of such section and, for this 
purpose, any reference in section 245A(h)(3) to paragraph (1) 
is deemed a reference to the previous sentence.
          * * * * * * *


            requirements for sponsor's affidavit of support


    Sec. 213A. (a) Enforceability.--(1) No affidavit of support 
may be accepted by the Attorney General or by any consular 
officer to establish that an alien is not excludable as a 
public charge under section 212(a)(4) unless such affidavit is 
executed as a contract--
            (A) which is legally enforceable against the 
        sponsor by the sponsored alien, the Federal Government, 
        and by any State (or any political subdivision of such 
        State) which provides any means-tested public benefits 
        program, but not later than 10 years after the alien 
        last receives any such benefit;
            (B) in which the sponsor agrees to financially 
        support the alien, so that the alien will not become a 
        public charge; and
            (C) in which the sponsor agrees to submit to the 
        jurisdiction of any Federal or State court for the 
        purpose of actions brought under subsection (e)(2).
    (2) A contract under paragraph (1) shall be enforceable 
with respect to benefits provided to the alien until such time 
as the alien achieves United States citizenship through 
naturalization pursuant to chapter 2 of title III.
    (b) Forms.--Not later than 90 days after the date of 
enactment of this section, the Attorney General, in 
consultation with the Secretary of State and the Secretary of 
Health and Human Services, shall formulate an affidavit of 
support consistent with the provisions of this section.
    (c) Remedies.--Remedies available to enforce an affidavit 
of support under this section include any or all of the 
remedies described in section 3201, 3203, 3204, or 3205 of 
title 28, United States Code, as well as an order for specific 
performance and payment of legal fees and other costs of 
collection, and include corresponding remedies available under 
State law. A Federal agency may seek to collect amounts owed 
under this section in accordance with the provisions of 
subchapter II of chapter 37 of title 31, United States Code.
    (d) Notification of Change of Address.--
            (1) In general.--The sponsor shall notify the 
        Attorney General and the State in which the sponsored 
        alien is currently resident within 30 days of any 
        change of address of the sponsor during the period 
        specified in subsection (a)(2).
            (2) Penalty.--Any person subject to the requirement 
        of paragraph (1) who fails to satisfy such requirement 
        shall be subject to a civil penalty of--
                    (A) not less than $250 or more than $2,000, 
                or
                    (B) if such failure occurs with knowledge 
                that the alien has received any means-tested 
                public benefit, not less than $2,000 or more 
                than $5,000.
    (e) Reimbursement of Government Expenses.--(1)(A) Upon 
notification that a sponsored alien has received any benefit 
under any means-tested public benefits program, the appropriate 
Federal, State, or local official shall request reimbursement 
by the sponsor in the amount of such assistance.
    (B) The Attorney General, in consultation with the 
Secretary of Health and Human Services, shall prescribe such 
regulations as may be necessary to carry out subparagraph (A).
    (2) If within 45 days after requesting reimbursement, the 
appropriate Federal, State, or local agency has not received a 
response from the sponsor indicating a willingness to commence 
payments, an action may be brought against the sponsor pursuant 
to the affidavit of support.
    (3) If the sponsor fails to abide by the repayment terms 
established by such agency, the agency may, within 60 days of 
such failure, bring an action against the sponsor pursuant to 
the affidavit of support.
    (4) No cause of action may be brought under this subsection 
later than 10 years after the alien last received any benefit 
under any means-tested public benefits program.
    (5) If, pursuant to the terms of this subsection, a 
Federal, State, or local agency requests reimbursement from the 
sponsor in the amount of assistance provided, or brings an 
action against the sponsor pursuant to the affidavit of 
support, the appropriate agency may appoint or hire an 
individual or other person to act on behalf of such agency 
acting under the authority of law for purposes of collecting 
any moneys owed. Nothing in this subsection shall preclude any 
appropriate Federal, State, or local agency from directly 
requesting reimbursement from a sponsor for the amount of 
assistance provided, or from bringing an action against a 
sponsor pursuant to an affidavit of support.
    (f) Definitions.--For the purposes of this section--
            (1) Sponsor.--The term ``sponsor'' means an 
        individual who--
                    (A) is a citizen or national of the United 
                States or an alien who is lawfully admitted to 
                the United States for permanent residence;
                    (B) is 18 years of age or over;
                    (C) is domiciled in any of the 50 States or 
                the District of Columbia; and
                    (D) is the person petitioning for the 
                admission of the alien under section 204.
            (2) Means-tested public benefits program.--The term 
        ``means-tested public benefits program'' means a 
        program of public benefits (including cash, medical, 
        housing, and food assistance and social services) of 
        the Federal Government or of a State or political 
        subdivision of a State in which the eligibility of an 
        individual, household, or family eligibility unit for 
        benefits under the program, or the amount of such 
        benefits, or both are determined on the basis of 
        income, resources, or financial need of the individual, 
        household, or unit.
          * * * * * * *

              Chapter 5--Deportation; Adjustment of Status

          * * * * * * *

  adjustment of status of certain entrants before january 1, 1982, to 
              that of person admitted for lawful residence

    Sec. 245A. (a) * * *
          * * * * * * *
    (h) Temporary Disqualification of Newly Legalized Aliens 
from Receiving Certain Public Welfare Assistance.--
            (1) In general.--During the five-year period 
        beginning on the date an alien was granted lawful 
        temporary resident status under subsection (a), and 
        notwithstanding any other provision of law--
                    (A) except as provided in paragraphs (2) 
                and (3), the alien is not eligible for--
                            (i) any program of financial 
                        assistance furnished under Federal law 
                        (whether through grant, loan, 
                        guarantee, or otherwise) on the basis 
                        of financial need, as such programs are 
                        identified by the Attorney General in 
                        consultation with other appropriate 
                        heads of the various departments and 
                        agencies of Government (but in any 
                        event including the [program of aid to 
                        families with dependent children] State 
                        program of assistance under part A of 
                        title IV of the Social Security Act),
            (2) Exceptions.--Paragraph (1) shall not apply--
                    (A) to a Cuban and Haitian entrant (as 
                defined in paragraph (1) or (2)(A) of section 
                501(e) of Public Law 96-422, as in effect on 
                April 1, 1983), or
                    (B) in the case of assistance (other than 
                [aid to families with dependent children] 
                assistance under a State program funded under 
                part A of title IV of the Social Security Act) 
                which is furnished to an alien who is an aged, 
                blind, or disabled individual (as defined in 
                section 1614(a)(1) of the Social Security Act).
          * * * * * * *

             TITLE IV--MISCELLANEOUS AND REFUGEE ASSISTANCE

          * * * * * * *

                     Chapter 2--Refugee Assistance

          * * * * * * *

authorization for programs for domestic resettlement of and assistance 
                              to refugees

          * * * * * * *
    Sec. 412. (a) * * *
          * * * * * * *
    (e) Cash Assistance and Medical Assistance to Refugees.--
(1) * * *
          * * * * * * *
    (4) If a refugee is eligible for aid or assistance under a 
[State plan approved] State program funded under part A of 
title IV or under title XIX of the Social Security Act, or for 
supplemental security income benefits (including State 
supplementary payments) under the program established under 
title XVI of that Act, funds authorized under this subsection 
shall only be used for the non-Federal share of such aid or 
assistance, or for such supplementary payments, with respect to 
cash and medical assistance provided with respect to such 
refugee under this paragraph.
          * * * * * * *
                              ----------                              


                   SECTION 640 OF THE HEAD START ACT

             allotment of funds; limitations on assistance

    Sec. 640. (a)(1) * * *
          * * * * * * *
    (4) Subject to section 639(b), the Secretary shall allot 
the remaining amounts appropriated in each fiscal year among 
the States, in accordance with latest satisfactory data so 
that--
            (A) each State receives an amount which is equal to 
        the amount the State received for fiscal year 1981; and
            (B)(i) 33\1/3\ percent of any amount available 
        after all allotments have been made under subparagraph 
        (A) for such fiscal year shall be distributed on the 
        basis of the relative number of children from birth 
        through 18 years of age, on whose behalf payments are 
        made under the [program of aid to families with 
        dependent children under a State plan approved] State 
        program of assistance funded under part A of title IV 
        of the Social Security Act in each State as compared to 
        all States; and
          * * * * * * *
                              ----------                              


                 SECTION 9 OF THE ACT OF APRIL 19, 1950

 AN ACT To promote the rehabilitation of the Navajo and Hopi Tribes of 
  Indians and a better utilization of the resources of the Navajo and 
           Hopi Indian Reservations, and for other purposes.

    [Sec. 9. Beginning with the quarter commencing July 1, 
1950, the Secretary of the Treasury shall pay quarterly to each 
State (from sums made available for making payments to the 
States under section 403(a) of the Social Security Act) an 
amount, in addition to the amount prescribed to be paid to such 
State under such section, equal to 80 per centum of the total 
amount of contributions by the State toward expenditures during 
the preceding quarter by the State, under the State plan 
approved under the Social Security Act for aid to dependent 
children to Navajo and Hopi Indians residing within the 
boundaries of the State on reservations or on allotted or trust 
lands, with respect to whom payments are made to the State by 
the United States under section 403(a) of the Social Security 
Act, not counting so much of such expenditure to any individual 
for any month as exceeds the limitations prescribed in such 
section.]
                              ----------                              


      SECTION 213 OF THE SCHOOL-TO-WORK OPPORTUNITIES ACT OF 1994

SEC. 213. APPLICATION.

    (a) * * *
          * * * * * * *
    (d) State Plan.--A State plan referred to in subsection 
(b)(1) shall--
            (1) * * *
          * * * * * * *
            (6) describe the manner in which the statewide 
        School-to-Work Opportunities system will coordinate 
        with or integrate local school-to-work programs in 
        existence on or after the date of the enactment of this 
        Act, including programs financed from State and private 
        sources, with funds available from such related Federal 
        programs as programs under--
                    (A) the Adult Education Act (20 U.S.C. 1201 
                et seq.);
                    (B) the Carl D. Perkins Vocational and 
                Applied Technology Education Act (20 U.S.C. 
                2301 et seq.);
                    (C) the Elementary and Secondary Education 
                Act of 1965 (20 U.S.C. 2701 et seq.);
                    (D) the Higher Education Act of 1965 (20 
                U.S.C. 1001 et seq.);
                    [(E) part F of title IV of the Social 
                Security Act (42 U.S.C. 681 et seq.);]
                    (E) part A of title IV of the Social 
                Security Act (42 U.S.C. 601 et seq.) relating 
                to work activities;
          * * * * * * *
                              ----------                              


                      TITLE 5, UNITED STATES CODE

          * * * * * * *

                     PART I--THE AGENCIES GENERALLY

          * * * * * * *

                  CHAPTER 5--ADMINISTRATIVE PROCEDURE

          * * * * * * *

                SUBCHAPTER II--ADMINISTRATIVE PROCEDURE

          * * * * * * *

Sec. 552a. Records maintained on individuals

    (a) Definitions.--For purposes of this section--
            (1) * * *
          * * * * * * *
            (8) the term ``matching program''--
                    (A) * * *
                    (B) but does not include--
                            (i) * * *
          * * * * * * *
                            (iv) matches of tax information (I) 
                        pursuant to section 6103(d) of the 
                        Internal Revenue Code of 1986, (II) for 
                        purposes of tax administration as 
                        defined in section 6103(b)(4) of such 
                        Code, (III) for the purpose of 
                        intercepting a tax refund due an 
                        individual under authority granted by 
                        [section 464 or 1137 of the Social 
                        Security Act] section 404(e), 464, or 
                        1137 of the Social Security Act; or 
                        (IV) for the purpose of intercepting a 
                        tax refund due an individual under any 
                        other tax refund intercept program 
                        authorized by statute which has been 
                        determined by the Director of the 
                        Office of Management and Budget to 
                        contain verification, notice, and 
                        hearing requirements that are 
                        substantially similar to the procedures 
                        in section 1137 of the Social Security 
                        Act;
          * * * * * * *

                          PART III--EMPLOYEES

          * * * * * * *

                     Subpart D--Pay and Allowances

          * * * * * * *

                     CHAPTER 55--PAY ADMINISTRATION

          * * * * * * *

                     SUBCHAPTER II--WITHHOLDING PAY

          * * * * * * *

Sec. 5520a. Garnishment of pay

    (a) * * *
          * * * * * * *
    (h)(1) Subject to the provisions of paragraph (2), if an 
agency is served under this section with more than one legal 
process with respect to the same payments due or payable to an 
employee, then such payments shall be available, subject to 
section 303 of the Consumer Credit Protection Act (15 U.S.C. 
1673), to satisfy such processes in priority based on the time 
of service, with any such process being satisfied out of such 
amounts as remain after satisfaction of all such processes 
which have been previously served.
    (2) A legal process to which an agency is subject under 
[sections 459, 461, and 462 of the Social Security Act (42 
U.S.C. 659, 661, and 662)] section 459 of the Social Security 
Act (42 U.S.C. 659) for the enforcement of the employee's legal 
obligation to provide child support or make alimony payments, 
shall have priority over any legal process to which an agency 
is subject under this section.
    (i) The provisions of this section shall not modify or 
supersede the provisions of [sections 459, 461, and 462 of the 
Social Security Act (42 U.S.C. 659, 661, and 662)] section 459 
of the Social Security Act (42 U.S.C. 659) concerning legal 
process brought for the enforcement of an individual's legal 
obligations to provide child support or make alimony payments.
          * * * * * * *
                              ----------                              


      SECTION 207 OF THE SOCIAL SECURITY INDEPENDENCE AND PROGRAM 
                        IMPROVEMENTS ACT OF 1994

[SEC. 207. DISABILITY REVIEW REQUIRED FOR SSI RECIPIENTS WHO ARE 18 
                    YEARS OF AGE.

    [(a) Disability Review Requirement.--
            [(1) In general.--The applicable State agency or 
        the Secretary of Health and Human Services (as may be 
        appropriate) shall redetermine the eligibility of a 
        qualified individual for supplemental security income 
        benefits under title XVI of the Social Security Act by 
        reason of disability, by applying the criteria used in 
        determining eligibility for such benefits of applicants 
        who have attained 18 years of age.
            [(2) When conducted.--The redetermination required 
        by paragraph (1) with respect to a qualified individual 
        shall be conducted during the 1-year period that begins 
        on the date the qualified individual attains 18 years 
        of age.
            [(3) Minimum number of reviews.--The Secretary 
        shall conduct redeterminations under paragraph (1) with 
        respect to not less than \1/3\ of qualified individuals 
        in each of fiscal years 1996, 1997, and 1998.
            [(4) Qualified individual defined.--As used in this 
        paragraph, the term ``qualified individual'' means a 
        recipient of supplemental security income benefits 
        under title XVI of the Social Security Act by reason of 
        disability who attains 18 years of age in or after the 
        9th month after the month in which this Act is enacted.
            [(5) Substitute for a continuing disability 
        review.--A redetermination under paragraph (1) of this 
        subsection shall be considered a substitute for a 
        review required under section 1614(a)(3)(G) of the 
        Social Security Act.
            [(6) Sunset.--Paragraph (1) shall have no force or 
        effect after October 1, 1998.
    [(b) Report to the Congress.--Not later than October 1, 
1998, the Secretary of Health and Human Services shall submit 
to the Committee on Ways and Means of the House of 
Representatives and the Committee on Finance of the Senate a 
report on the activities conducted under subsection (a).]
                              ----------                              


             SECTION 1738B OF TITLE 28, UNITED STATES CODE

Sec. 1738B. Full faith and credit for child support orders

    (a) General Rule.--The appropriate authorities of each 
State--
            (1) shall enforce according to its terms a child 
        support order made consistently with this section by a 
        court of another State; and
            (2) shall not seek or make a modification of such 
        an order except in accordance with [subsection (e)] 
        subsections (e), (f), and (i).
    (b) Definitions.--In this section:
    ``child'' means--
            (A) a person under 18 years of age; and
            (B) a person 18 or more years of age with respect 
        to whom a child support order has been issued pursuant 
        to the laws of a State.
    ``child's State'' means the State in which a child resides.
    ``child's home State'' means the State in which a child 
lived with a parent or a person acting as parent for at least 6 
consecutive months immediately preceding the time of filing of 
a petition or comparable pleading for support and, if a child 
is less than 6 months old, the State in which the child lived 
from birth with any of them. A period of temporary absence of 
any of them is counted as part of the 6-month period.
          * * * * * * *
    (c) Requirements of Child Support Orders.--A child support 
order made by a court of a State is made consistently with this 
section if--
            (1) a court that makes the order, pursuant to the 
        laws of the State in which the court is located and 
        subsections (e), (f), and (g)--
                    (A) has subject matter jurisdiction to hear 
                the matter and enter such an order; and
                    (B) has personal jurisdiction over the 
                contestants; and
            (2) reasonable notice and opportunity to be heard 
        is given to the contestants.
    (d) Continuing Jurisdiction.--A court of a State that has 
made a child support order consistently with this section has 
continuing, exclusive jurisdiction over the order if the State 
is the child's State or the residence of any individual 
contestant unless the court of another State, acting in 
accordance with [subsection (e)] subsections (e) and (f), has 
made a modification of the order.
    (e) Authority To Modify Orders.--A court of a State may 
[make a modification of a child support order with respect to a 
child that is made] modify a child support order issued by a 
court of another State if--
            (1) the court has jurisdiction to make such a child 
        support order pursuant to subsection (i); and
            (2)(A) the court of the other State no longer has 
        continuing, exclusive jurisdiction of the child support 
        order because that State no longer is the child's State 
        or the residence of any individual contestant; or
            (B) each individual contestant has filed written 
        consent [to that court's making the modification and 
        assuming] with the State of continuing, exclusive 
        jurisdiction for a court of another State to modify the 
        order and assume continuing, exclusive jurisdiction 
        over the order.
    (f) Recognition of Child Support Orders.--If 1 or more 
child support orders have been issued with regard to an obligor 
and a child, a court shall apply the following rules in 
determining which order to recognize for purposes of 
continuing, exclusive jurisdiction and enforcement:
            (1) If only 1 court has issued a child support 
        order, the order of that court must be recognized.
            (2) If 2 or more courts have issued child support 
        orders for the same obligor and child, and only 1 of 
        the courts would have continuing, exclusive 
        jurisdiction under this section, the order of that 
        court must be recognized.
            (3) If 2 or more courts have issued child support 
        orders for the same obligor and child, and more than 1 
        of the courts would have continuing, exclusive 
        jurisdiction under this section, an order issued by a 
        court in the current home State of the child must be 
        recognized, but if an order has not been issued in the 
        current home State of the child, the order most 
        recently issued must be recognized.
            (4) If 2 or more courts have issued child support 
        orders for the same obligor and child, and none of the 
        courts would have continuing, exclusive jurisdiction 
        under this section, a court may issue a child support 
        order, which must be recognized.
            (5) The court that has issued an order recognized 
        under this subsection is the court having continuing, 
        exclusive jurisdiction.
    [(f)] (g) Enforcement of [Prior] Modified Orders.--A court 
of a State that no longer has continuing, exclusive 
jurisdiction of a child support order may enforce the order 
with respect to nonmodifiable obligations and unsatisfied 
obligations that accrued before the date on which a 
modification of the order is made under [subsection (e)] 
subsections (e) and (f).
    [(g)] (h) Choice of Law.--
            (1) In general.--In a proceeding to establish, 
        modify, or enforce a child support order, the forum 
        State's law shall apply except as provided in 
        paragraphs (2) and (3).
            (2) Law of state of issuance of order.--In 
        interpreting a child support order including the 
        duration of current payments and other obligations of 
        support, a court shall apply the law of the State of 
        the court that issued the order.
            (3) Period of limitation.--In an action to enforce 
        arrears under a child support order, a court shall 
        apply the statute of limitation of the forum State or 
        the State of the court that issued the order, whichever 
        statute provides the longer period of limitation.
    (i) Registration for Modification.--If there is no 
individual contestant or child residing in the issuing State, 
the party or support enforcement agency seeking to modify, or 
to modify and enforce, a child support order issued in another 
State shall register that order in a State with jurisdiction 
over the nonmovant for the purpose of modification.
                              ----------                              


              SECTION 604 OF THE FAIR CREDIT REPORTING ACT

Sec. 604. Permissible purposes of reports

    A consumer reporting agency may furnish a consumer report 
under the following circumstances and no other:
    (1) * * *
          * * * * * * *
    (4) In response to a request by the head of a State or 
local child support enforcement agency (or a State or local 
government official authorized by the head of such an agency), 
if the person making the request certifies to the consumer 
reporting agency that--
            (A) the consumer report is needed for the purpose 
        of establishing an individual's capacity to make child 
        support payments or determining the appropriate level 
        of such payments;
            (B) the paternity of the consumer for the child to 
        which the obligation relates has been established or 
        acknowledged by the consumer in accordance with State 
        laws under which the obligation arises (if required by 
        those laws);
            (C) the person has provided at least 10 days' prior 
        notice to the consumer whose report is requested, by 
        certified or registered mail to the last known address 
        of the consumer, that the report will be requested; and
            (D) the consumer report will be kept confidential, 
        will be used solely for a purpose described in 
        subparagraph (A), and will not be used in connection 
        with any other civil, administrative, or criminal 
        proceeding, or for any other purpose.
    (5) To an agency administering a State plan under section 
454 of the Social Security Act (42 U.S.C. 654) for use to set 
an initial or modified child support award.
                              ----------                              


              SECTION 1408 OF TITLE 10, UNITED STATES CODE

Sec. 1408. Payment of retired or retainer pay in compliance with court 
                    orders

    (a) Definitions.--In this section:
            (1) The term ``court'' means--
                    (A) any court of competent jurisdiction of 
                any State, the District of Columbia, the 
                Commonwealth of Puerto Rico, Guam, American 
                Samoa, the Virgin Islands, the Northern Mariana 
                Islands, and the Trust Territory of the Pacific 
                Islands;
                    (B) any court of the United States (as 
                defined in section 451 of title 28) having 
                competent jurisdiction; [and]
                    (C) any court of competent jurisdiction of 
                a foreign country with which the United States 
                has an agreement requiring the United States to 
                honor any court order of such country[.]; and
                    (D) any administrative or judicial tribunal 
                of a State competent to enter orders for 
                support or maintenance (including a State 
                agency administering a program under a State 
                plan approved under part D of title IV of the 
                Social Security Act), and, for purposes of this 
                subparagraph, the term ``State'' includes the 
                District of Columbia, the Commonwealth of 
                Puerto Rico, the Virgin Islands, Guam, and 
                American Samoa.
            (2) The term ``court order'' means a final decree 
        of divorce, dissolution, annulment, or legal separation 
        issued by a court, or a court ordered, ratified, or 
        approved property settlement incident to such a decree 
        (including a final decree modifying the terms of a 
        previously issued decree of divorce, dissolution, 
        annulment, or legal separation, or a court ordered, 
        ratified, or approved property settlement incident to 
        such previously issued decree), or a support order, as 
        defined in section 453(p) of the Social Security Act 
        (42 U.S.C. 653(p)), which--
                    (A) is issued in accordance with the laws 
                of the jurisdiction of that court;
                    (B) provides for--
                            (i) payment of child support [(as 
                        defined in section 462(b) of the Social 
                        Security Act (42 U.S.C. 662(b)))] (as 
                        defined in section 459(i)(2) of the 
                        Social Security Act (42 U.S.C. 
                        659(i)(2)));
                            (ii) payment of alimony [(as 
                        defined in section 462(c) of the Social 
                        Security Act (42 U.S.C. 662(c)))] (as 
                        defined in section 459(i)(3) of the 
                        Social Security Act (42 U.S.C. 
                        659(i)(3))); or
                            (iii) division of property 
                        (including a division of community 
                        property); and
          * * * * * * *
    (d) Payments by Secretary Concerned To (or for Benefit of) 
Spouse or Former Spouse.--(1) After effective service on the 
Secretary concerned of a court order providing for the payment 
of child support or alimony or, with respect to a division of 
property, specifically providing for the payment of an amount 
of the disposable retired pay from a member to the spouse or a 
former spouse of the member, the Secretary shall make payments 
(subject to the limitations of this section) from the 
disposable retired pay of the member to the spouse or former 
spouse (or for the benefit of such spouse or former spouse to a 
State disbursement unit established pursuant to section 454B of 
the Social Security Act or other public payee designated by a 
State, in accordance with part D of title IV of the Social 
Security Act, as directed by court order, or as otherwise 
directed in accordance with such part D) in an amount 
sufficient to satisfy the amount of child support and alimony 
set forth in the court order and, with respect to a division of 
property, in the amount of disposable retired pay specifically 
provided for in the court order. In the case of a spouse or 
former spouse who, pursuant to section 408(a)(4) of the Social 
Security Act (42 U.S.C. 608(a)(4)), assigns to a State the 
rights of the spouse or former spouse to receive support, the 
Secretary concerned may make the child support payments 
referred to in the preceding sentence to that State in amounts 
consistent with that assignment of rights. In the case of a 
member entitled to receive retired pay on the date of the 
effective service of the court order, such payments shall begin 
not later than 90 days after the date of effective service. In 
the case of a member not entitled to receive retired pay on the 
date of the effective service of the court order, such payments 
shall begin not later than 90 days after the date on which the 
member first becomes entitled to receive retired pay.
          * * * * * * *
    (6) In the case of a court order for which effective 
service is made on the Secretary concerned on or after the date 
of the enactment of this paragraph and which provides for 
payments from the disposable retired pay of a member to satisfy 
the amount of child support set forth in the order, the 
authority provided in paragraph (1) to make payments from the 
disposable retired pay of a member to satisfy the amount of 
child support set forth in a court order shall apply to payment 
of any amount of child support arrearages set forth in that 
order as well as to amounts of child support that currently 
become due.
          * * * * * * *
    (i) Certification Date.--It is not necessary that the date 
of a certification of the authenticity or completeness of a 
copy of a court order for child support received by the 
Secretary concerned for the purposes of this section be recent 
in relation to the date of receipt by the Secretary.
    [(i)] (j) Regulations.--The Secretaries concerned shall 
prescribe uniform regulations for the administration of this 
section.
    (k) Relationship to Other Laws.--In any case involving an 
order providing for payment of child support (as defined in 
section 459(i)(2) of the Social Security Act) by a member who 
has never been married to the other parent of the child, the 
provisions of this section shall not apply, and the case shall 
be subject to the provisions of section 459 of such Act.
                              ----------                              


                      TITLE 11, UNITED STATES CODE

          * * * * * * *

            CHAPTER 5--CREDITORS, THE DEBTOR, AND THE ESTATE

          * * * * * * *

              SUBCHAPTER II--DEBTOR'S DUTIES AND BENEFITS

          * * * * * * *

Sec. 523. Exceptions to discharge

    (a) A discharge under section 727, 1141, 1228(a), 1228(b), 
or 1328(b) of this title does not discharge an individual 
debtor from any debt--
            (1) * * *
          * * * * * * *
            (5) to a spouse, former spouse, or child of the 
        debtor, for alimony to, maintenance for, or support of 
        such spouse or child, in connection with a separation 
        agreement, divorce decree or other order of a court of 
        record, determination made in accordance with State or 
        territorial law by a governmental unit, or property 
        settlement agreement, but not to the extent that--
                    (A) such debt is assigned to another 
                entity, voluntarily, by operation of law, or 
                otherwise (other than debts assigned pursuant 
                to [section 402(a)(26)] section 408(a)(4) of 
                the Social Security Act, or any such debt which 
                has been assigned to the Federal Government or 
                to a State or any political subdivision of such 
                State); or
                    (B) such debt includes a liability 
                designated as alimony, maintenance, or support, 
                unless such liability is actually in the nature 
                of alimony, maintenance, or support;
          * * * * * * *
            (16) for a fee or assessment that becomes due and 
        payable after the order for relief to a membership 
        association with respect to the debtor's interest in a 
        dwelling unit that has condominium ownership or in a 
        share of a cooperative housing corporation, but only if 
        such fee or assessment is payable for a period during 
        which--
                    (A) the debtor physically occupied a 
                dwelling unit in the condominium or cooperative 
                project; or
                    (B) the debtor rented the dwelling unit to 
                a tenant and received payments from the tenant 
                for such period, but nothing in this paragraph 
                shall except from discharge the debt of a 
                debtor for a membership association fee or 
                assessment for a period arising before entry of 
                the order for relief in a pending or subsequent 
                bankruptcy case; [or]
            (17) for a fee imposed by a court for the filing of 
        a case, motion, complaint, or appeal, or for other 
        costs and expenses assessed with respect to such 
        filing, regardless of an assertion of poverty by the 
        debtor under section 1915 (b) or (f) of title 28, or 
        the debtor's status as a prisoner, as defined in 
        section 1915(h) of title 28[.]; or
            (18) owed under State law to a State or 
        municipality that is--
                    (A) in the nature of support, and
                    (B) enforceable under part D of title IV of 
                the Social Security Act (42 U.S.C. 601 et 
                seq.).
          * * * * * * *
                              ----------                              


   SECTION 609 OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974

              additional standards for group health plans

    Sec. 609. (a) Group Health Plan Coverage Pursuant to 
Medical Child Support Orders.--
            (1) In general.--Each group health plan shall 
        provide benefits in accordance with the applicable 
        requirements of any qualified medical child support 
        order.
            (2) Definitions.--For purposes of this subsection--
                    (A)  * * *
                    (B) Medical child support order.--The term 
                ``medical child support order'' means any 
                judgment, decree, or order (including approval 
                of a settlement agreement) [issued by a court 
                of competent jurisdiction] which--
                            (i) provides for child support with 
                        respect to a child of a participant 
                        under a group health plan or provides 
                        for health benefit coverage to such a 
                        child, is made pursuant to a State 
                        domestic relations law (including a 
                        community property law), and relates to 
                        benefits under such plan, or
                            (ii) enforces a law relating to 
                        medical child support described in 
                        section 1908 of the Social Security Act 
                        (as added by section 13822 of the 
                        Omnibus Budget Reconciliation Act of 
                        1993) with respect to a group health 
                        plan[.],
                if such judgment, decree, or order (I) is 
                issued by a court of competent jurisdiction or 
                (II) is issued through an administrative 
                process established under State law and has the 
                force and effect of law under applicable State 
                law.
          * * * * * * *
                              ----------                              


                   UNITED STATES HOUSING ACT OF 1937

              TITLE I--GENERAL PROGRAM OF ASSISTED HOUSING

          * * * * * * *

SEC. 27. PROVISION OF INFORMATION TO LAW ENFORCEMENT AND OTHER 
                    AGENCIES.

    Notwithstanding any other provision of law, the Secretary 
shall, at least 4 times annually and upon request of the 
Immigration and Naturalization Service (hereafter in this 
section referred to as the ``Service''), furnish the Service 
with the name and address of, and other identifying information 
on, any individual who the Secretary knows is unlawfully in the 
United States, and shall ensure that each contract for 
assistance entered into under section 6 or 8 of this Act with a 
public housing agency provides that the public housing agency 
shall furnish such information at such times with respect to 
any individual who the public housing agency knows is 
unlawfully in the United States.
          * * * * * * *
                              ----------                              


    SECTION 214 OF THE HOUSING AND COMMUNITY DEVELOPMENT ACT OF 1980

                 restriction on use of assisted housing

      Sec. 214. (a) Notwithstanding any other provision of law, 
the [Secretary of Housing and Urban Development] applicable 
Secretary may not make financial assistance available for the 
benefit of any alien unless that alien is a resident of the 
United States and is--
            (1)  * * *
          * * * * * * *
      (b) For purposes of this section the term ``financial 
assistance'' means financial assistance made available pursuant 
to the United States Housing Act of 1937, Section 235, or 236 
of the National Housing Act, the direct loan program under 
section 502 of the Housing Act of 1949 or section 502(c)(5)(D), 
504, 521(a)(2)(A), or 542 of such Act, subtitle A of title III 
of the Cranston-Gonzalez National Affordable Housing Act, or 
section 101 of the Housing and Urban Development Act of 1965.
    (c)(1) If, following completion of the applicable hearing 
process, financial assistance for any individual receiving such 
assistance on the date of the enactment of the Housing and 
Community Development Act of 1987 is to be terminated, the 
public housing agency or other local governmental entity 
involved (in the case of public housing or assistance under 
section 8 of the United States Housing Act of 1937) or the 
[Secretary of Housing and Urban Development] applicable 
Secretary (in the case of any other financial assistance) may, 
in its discretion, take one of the following actions:
            (A)  * * *
          * * * * * * *
    (2) Notwithstanding any other provision of law, the 
[Secretary of Housing and Urban Development] applicable 
Secretary may not make financial assistance available for the 
benefit of--
            (A)  * * *
          * * * * * * *
      (d) The following conditions apply with respect to 
financial assistance being provided for the benefit of an 
individual:
            (1)  * * *
            (2) If such an individual is not a citizen or 
        national of the United States, is not 62 years of age 
        or older, and is receiving financial assistance on the 
        date of the enactment of the Housing and Community 
        Development Act of 1987, there must be presented 
        either--
                    (A) alien registration documentation or 
                other proof of immigration registration from 
                the Immigration and Naturalization Service that 
                contains the individual's alien admission 
                number or alien file number (or numbers if the 
                individual has more than one number), or
                    (B) such other documents as the [Secretary] 
                applicable Secretary determines constitutes 
                reasonable evidence indicating a satisfactory 
                immigration status.
            (3) If the documentation described in paragraph 
        (2)(A) is presented, the [Secretary] applicable 
        Secretary shall utilize the individual's alien file or 
        alien admission number to verify with the Immigration 
        and Naturalization Service the individual's immigration 
        status through an automated or other system (designated 
        by the Service for use with States) that--
                    (A) utilizes the individual's name, file 
                number, admission number, or other means 
                permitting efficient verification, and
                    (B) protects the individual's privacy to 
                the maximum degree possible.
            (4) In the case of such an individual who is not a 
        citizen or national of the United States, is not 62 
        years of age or older, and is receiving financial 
        assistance on the date of enactment of the Housing and 
        Community Development Act of 1987, if, at the time of 
        application or recertification for financial 
        assistance, the statement described in paragraph (1) is 
        submitted but the documentation required under 
        paragraph (2)(A) is not presented or if the 
        documentation required under paragraph (2)(A) is 
        presented but such documentation is not verified under 
        paragraph (3)--
                    (A) the [Secretary] applicable Secretary--
                            (i) shall provide a reasonable 
                        opportunity to submit to the 
                        [Secretary] applicable Secretary 
                        evidence indicating a satisfactory 
                        immigration status, or to appeal to the 
                        Immigration and Naturalization Service 
                        the verification determination of the 
                        Immigration and Naturalization Service 
                        under paragraph (3), and
          * * * * * * *
                    (B) if any documents or additional 
                information are submitted as evidence under 
                subparagraph (A), or if appeal is made to the 
                Immigration and Naturalization Service with 
                respect to the verification determination of 
                the Service under paragraph (3)--
                            (i) the [Secretary] applicable 
                        Secretary shall transmit to the 
                        Immigration and Naturalization Service 
                        photostatic or other similar copies of 
                        such documents or additional 
                        information for official verification,
                            (ii) pending such verification or 
                        appeal, the [Secretary] applicable 
                        Secretary may not delay, deny, reduce, 
                        or terminate the individual's 
                        eligibility for financial assistance on 
                        the basis of the individual's 
                        immigration status, and
                            (iii) the [Secretary] applicable 
                        Secretary shall not be liable for the 
                        consequences of any action, delay, or 
                        failure of the Service to conduct such 
                        verification.
            (5) If the [Secretary] applicable Secretary 
        determines, after complying with the requirements of 
        paragraph (4), that such an individual is not in a 
        satisfactory immigration status--
                    (A) the [Secretary] applicable Secretary 
                shall deny or terminate the individual's 
                eligibility for financial assistance, and
                    (B) the applicable fair hearing process 
                shall be made available with respect to the 
                individual.
            (6) For purposes of paragraph (5)(B), the 
        applicable fair hearing process made available with 
        respect to any individual shall include not less than 
        the following procedural protections:
                    (A) The [Secretary] applicable Secretary 
                shall provide the individual with written 
                notice of the determination described in 
                paragraph (5) and of the opportunity for a 
                hearing with respect to the determination.
                    (B) Upon timely request by the individual, 
                the [Secretary] applicable Secretary shall 
                provide a hearing before an impartial hearing 
                officer designated by the [Secretary] 
                applicable Secretary, at which hearing the 
                individual may produce evidence of a 
                satisfactory immigration status.
                    (C) The [Secretary] applicable Secretary 
                shall notify the individual in writing of the 
                decision of the hearing officer on the appeal 
                of the determination in a timely manner.
                    (D) Financial assistance may not be denied 
                or terminated until the completion of the 
                hearing process.
For purposes of this subsection, [the term ``Secretary''] the 
term ``applicable Secretary'' means the [Secretary of Housing 
and Urban Development] applicable Secretary, a public housing 
agency, or another entity that determines the eligibility of an 
individual for financial assistance.
      (e) The [Secretary of Housing and Urban Development] 
applicable Secretary shall not take any compliance, 
disallowance, penalty, or other regulatory action against an 
entity with respect to any error in the entity's determination 
to make an individual eligible for financial assistance based 
on citizenship or immigration status--
            (1)  * * *
          * * * * * * *
      (g) The [Secretary of Housing and Urban Development] 
applicable Secretary is authorized to pay to each public 
housing agency or other entity an amount equal to 100 percent 
of the costs incurred by the public housing agency or other 
entity in implementing and operating an immigration status 
verification system under subsection (d) (or under any 
alternative system for verifying immigration status with the 
Immigration and Naturalization Service authorized in the 
Immigration Reform and Control Act of 1986 (Public Law 99-
603)).
    (h) For purposes of this section, the term ``applicable 
Secretary'' means--
            (1) the Secretary of Housing and Urban Development, 
        with respect to financial assistance administered by 
        such Secretary and financial assistance under subtitle 
        A of title III of the Cranston-Gonzalez National 
        Affordable Housing Act; and
            (2) the Secretary of Agriculture, with respect to 
        financial assistance administered by such Secretary.
                              ----------                              


                 SECTION 501 OF THE HOUSING ACT OF 1949

      Sec. 501. (a)  * * *
          * * * * * * *
    (h)[(1)] The Secretary may not restrict the availability of 
assistance under this title for any alien for whom assistance 
may not be restricted [by the Secretary of Housing and Urban 
Development] under section 214 of the Housing and Community 
Development Act of 1980.
    [(2) In carrying out any restriction established by the 
Secretary on the availability of assistance under this title 
for any alien, the Secretary shall follow procedures comparable 
to the procedures established in section 214 of the Housing and 
Community Development Act of 1980.]
          * * * * * * *
                              ----------                              


     SECTION 9442 OF THE OMNIBUS BUDGET RECONCILIATION ACT OF 1986

SEC. 9442. MATERNAL AND CHILD HEALTH AND ADOPTION CLEARING HOUSE.

    The Secretary of Health and Human Services shall establish, 
either directly or by grant or contract, a National Adoption 
Information Clearinghouse. The Clearinghouse shall-
            (1)  * * *
          * * * * * * *
            (4) upon the establishment of an adoption and 
        foster care data collection system pursuant to section 
        479 of the Social Security Act (as in effect before 
        October 1, 1995), disseminate the data and information 
        made available through that system.
                              ----------                              


                CHILD ABUSE PREVENTION AND TREATMENT ACT

[SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

    [(a) Short Title.--This Act may be cited as the ``Child 
Abuse Prevention and Treatment Act''.
    [(b) Table of Contents.--The table of contents is as 
follows:

                           [TABLE OF CONTENTS

[Sec. 1. Short title and table of contents.
[Sec. 2. Findings.

                        [TITLE I--GENERAL PROGRAM

[Sec. 101. National Center on Child Abuse and Neglect.
[Sec. 102. Advisory Board on Child Abuse and Neglect.
[Sec. 103. Inter-Agency Task Force on Child Abuse and Neglect.
[Sec. 104. National clearinghouse for information relating to child 
          abuse.
[Sec. 105. Research and assistance activities of the National Center on 
          Child Abuse and Neglect.
[Sec. 106. Grants to public agencies and nonprofit private organizations 
          for demonstration or service programs and projects.
[Sec. 107. Grants to States for child abuse and neglect prevention and 
          treatment programs.
[Sec. 107A. Emergency child abuse prevention services grant.
[Sec. 108. Technical assistance to States for child abuse prevention and 
          treatment programs.
[Sec. 109. Grants to States for programs relating to the investigation 
          and prosecution of child abuse and neglect cases.
[Sec. 110. Miscellaneous requirements relating to assistance.
[Sec. 111. Coordination of child abuse and neglect programs.
[Sec. 112. Reports.
[Sec. 113. Definitions.
[Sec. 114. Authorization of appropriations.

[TITLE II--GRANTS WITH RESPECT TO ENCOURAGING STATES TO MAINTAIN CERTAIN 
                           FUNDING MECHANISMS

[Sec. 201. Findings and purpose.
[Sec. 202. Definitions.
[Sec. 203. Grants authorized.
[Sec. 204. State eligibility.
[Sec. 205. Limitations.
[Sec. 206. Withholding.
[Sec. 207. Audit.
[Sec. 208. Report.

 [TITLE III--CERTAIN PREVENTIVE SERVICES REGARDING CHILDREN OF HOMELSSS 
              FAMILIES OR FAMILIES AT RISK OF HOMELESSNESS

[Sec. 301. Demonstration grants for prevention of inappropriate 
          separation from family and for prevention of child abuse and 
          neglect.
[Sec. 302. Provisions with respect to carrying out purpose of 
          demonstration grants.
[Sec. 303. Additional required agreements.
[Sec. 304. Description of intended uses of grant.
[Sec. 305. Requirement of submission of application.
[Sec. 306. Authorization of appropriations.

[SEC. 2. FINDINGS.

    [Congress finds that--
            [(1) each year, hundreds of thousands of American 
        children are victims of abuse and neglect with such 
        numbers having increased dramatically over the past 
        decade;
            [(2) many of these children and their families fail 
        to receive adequate protection or treatment;
            [(3) the problem of child abuse and neglect 
        requires a comprehensive approach that--
                    [(A) integrates the work of social service, 
                legal, health, mental health, education, and 
                substance abuse agencies and organizations;
                    [(B) strengthens coordination among all 
                levels of government, and with private 
                agencies, civic, religious, and professional 
                organizations, and individual volunteers;
                    [(C) emphasizes the need for abuse and 
                neglect prevention, investigation, and 
                treatment at the neighborhood level;
                    [(D) ensures properly trained and support 
                staff with specialized knowledge, to carry out 
                their child protection duties; and
                    [(E) is sensitive to ethnic and cultural 
                diversity;
            [(4) the failure to coordinate and comprehensively 
        prevent and treat child abuse and neglect threatens the 
        futures of tens of thousands of children and results in 
        a cost to the Nation of billions of dollars in direct 
        expenditures for health, social, and special 
        educational services and ultimately in the loss of work 
        productivity;
            [(5) all elements of American society have a shared 
        responsibility in responding to this national child and 
        family emergency;
            [(6) substantial reductions in the prevalence and 
        incidence of child abuse and neglect and the 
        alleviation of its consequences are matters of the 
        highest national priority;
            [(7) national policy should strengthen families to 
        remedy the causes of child abuse and neglect, provide 
        support for intensive services to prevent the 
        unnecessary removal of children from families, and 
        promote the reunification of families if removal has 
        taken place;
            [(8) the child protection system should be 
        comprehensive, child-centered, family-focused, and 
        community-based, should incorporate all appropriate 
        measures to prevent the occurrence or recurrence of 
        child abuse and neglect, and should promote physical 
        and psychological recovery and social re-integration in 
        an environment that fosters the health, self-respect, 
        and dignity of the child;
            [(9) because of the limited resources available in 
        low-income communities, Federal aid for the child 
        protection system should be distributed with due regard 
        to the relative financial need of the communities;
            [(10) the Federal government should ensure that 
        every community in the United States has the fiscal, 
        human, and technical resources necessary to develop and 
        implement a successful and comprehensive child 
        protection strategy;
            [(11) the Federal government should provide 
        leadership and assist communities in their child 
        protection efforts by--
                    [(A) promoting coordinated planning among 
                all levels of government;
                    [(B) generating and sharing knowledge 
                relevant to child protection, including the 
                development of models for service delivery;
                    [(C) strengthening the capacity of States 
                to assist communities;
                    [(D) allocating sufficient financial 
                resources to assist States in implementing 
                community plans;
                    [(E) helping communities to carry out their 
                child protection plans by promoting the 
                competence of professional, paraprofessional, 
                and volunteer resources; and
                    [(F) providing leadership to end the abuse 
                and neglect of the nation's children and youth.

                       [TITLE I--GENERAL PROGRAM

[SEC. 101. NATIONAL CENTER ON CHILD ABUSE AND NEGLECT.

    [(a) Establishment.--The Secretary of Health and Human 
Services shall establish an office to be known as the National 
Center on Child Abuse and Neglect.
    [(b) Appointment of Director.--
            [(1) Appointment.--The Secretary shall appoint a 
        Director of the Center. Except as otherwise provided in 
        this Act, the Director shall be responsible only for 
        administration and operation of the Center and for 
        carrying out the functions of the Center under this 
        Act. The Director shall have experience in the field of 
        child abuse and neglect.
            [(2) Compensation.--The Director shall be 
        compensated at the annual rate provided for a level GS-
        15 employee under section 5332 of title 5, United 
        States Code.
    [(c) Other Staff and Resources.--The Secretary shall make 
available to the Center such staff and resources as are 
necessary for the Center to carry out effectively its functions 
under this Act. The Secretary shall require that professional 
staff have experience relating to child abuse and neglect. The 
Secretary is required to justify, based on the priorities and 
needs of the Center, the hiring of any professional staff 
member who does not have experience relating to child abuse and 
neglect.

[SEC. 102. ADVISORY BOARD ON CHILD ABUSE AND NEGLECT.

    [(a) Appointment.--The Secretary shall appoint an advisory 
board to be known as the Advisory Board on Child Abuse and 
Neglect.
    [(b) Solicitation of Nominations.--The Secretary shall 
publish a notice in the Federal Register soliciting nominations 
for the appointments required by subsection (a).
    [(c) Composition of Board.--
            [(1) Number of members.--The board shall consist of 
        15 members, each of which shall be a person who is 
        recognized for expertise in an aspect of the area of 
        child abuse, of which--
                    [(A) 2 shall be members of the task force 
                established under section 103; and
                    [(B) 13 shall be members of the general 
                public and may not be Federal employees.
            [(2) Representation.--The Secretary shall appoint 
        members from the general public under paragraph (1)(B) 
        who are individuals knowledgeable in child abuse and 
        neglect prevention, intervention, treatment, or 
        research, and with due consideration to representation 
        of ethnic or racial minorities and diverse geographic 
        areas, and who represent--
                    [(A) law (including the judiciary);
                    [(B) psychology (including child 
                development);
                    [(C) social services (including child 
                protective services);
                    [(D) medicine (including pediatrics);
                    [(E) State and local government;
                    [(F) organizations providing services to 
                disabled persons;
                    [(G) organizations providing services to 
                adolescents;
                    [(H) teachers;
                    [(I) parent self-help organizations;
                    [(J) parents' groups; and
                    [(K) voluntary groups.
            [(3) Terms of office.--(A) Except as otherwise 
        provided in this subsection, members shall be appointed 
        for terms of office of 4 years.
            [(B) Of the members of the board from the general 
        public first appointed under subsection (a)--
                    [(i) 4 shall be appointed for terms of 
                office of 2 years;
                    [(ii) 4 shall be appointed for terms of 
                office of 3 years; and
                    [(iii) 5 shall be appointed for terms of 
                office of 4 years,
        as determined by the members from the general public 
        during the first meeting of the board.
            [(C) No member of the board appointed under 
        subsection (a) shall be eligible to serve in excess of 
        two consecutive terms, but may continue to serve until 
        such member's successor is appointed.
            [(4) Vacancies.--Any member of the board appointed 
        under subsection (a) to fill a vacancy occurring before 
        the expiration of the term to which such member's 
        predecessor was appointed shall be appointed for the 
        remainder of such term. If the vacancy occurs prior to 
        the expiration of the term of a member of the board 
        appointed under subsection (a), a replacement shall be 
        appointed in the same manner in which the original 
        appointment was made.
            [(5) Removal.--No member of the board may be 
        removed during the term of office of such member except 
        for just and sufficient cause.
    [(d) Election of Officers.--The board shall elect a 
chairperson and vice-chairperson at its first meeting from 
among the members from the general public.
    [(e) Meetings.--The board shall meet not less than twice a 
year at the call of the chairperson. The chairperson, to the 
maximum extent practicable, shall coordinate meetings of the 
board with receipt of reports from the task force under section 
103(f).
    [(f) Duties.--The board shall--
            [(1) annually submit to the Secretary and the 
        appropriate committees of Congress a report 
        containing--
                    [(A) recommendations on coordinating 
                Federal child abuse and neglect activities to 
                prevent duplication and ensure efficient 
                allocations of resources and program 
                effectiveness; and
                    [(B) recommendations as to carrying out the 
                purposes of this Act;
            [(2) annually submit to the Secretary and the 
        Director a report containing long-term and short-term 
        recommendations on--
                    [(A) programs;
                    [(B) research;
                    [(C) grant and contract needs;
                    [(D) areas of unmet needs; and
                    [(E) areas to which the Secretary should 
                provide grant and contract priorities under 
                sections 105 and 106;
            [(3) annually review the budget of the Center and 
        submit to the Director a report concerning such review; 
        and
            [(4) not later than 24 months after the date of the 
        enactment of the Child Abuse Programs, Adoption 
        Opportunities, and Family Violence Prevention 
        Amendments Act of 1992, submit to the Secretary and the 
        appropriate committees of the Congress a report 
        containing the recommendations of the Board with 
        respect to--
                    [(A) a national policy designed to reduce 
                and ultimately to prevent child and youth 
                maltreatment-related deaths, detailing 
                appropriate roles and responsibilities for 
                State and local governments and the private 
                sector;
                    [(B) specific changes needed in Federal 
                laws and programs to achieve an effective 
                Federal role in the implementation of the 
                policy specified in subparagraph (A); and
                    [(C) specific changes needed to improve 
                national data collection with respect to child 
                and youth maltreatment-related deaths.
    [(g) Compensation.--
            [(1) In general.--Except as provided in paragraph 
        (3), members of the board, other than those regularly 
        employed by the Federal Government, while serving on 
        business of the board, may receive compensation at a 
        rate not in excess of the daily equivalent payable to a 
        GS-18 employee under section 5332 of title 5, United 
        States Code, including traveltime.
            [(2) Travel.--Except as provided in paragraph (3), 
        members of the board, while serving on business of the 
        board away from their homes or regular places of 
        business, may be allowed travel expenses (including per 
        diem in lieu of subsistence) as authorized by section 
        5703 of title 5, United States Code, for persons in the 
        Government service employed intermittently.
            [(3) Restriction.--The Director may not compensate 
        a member of the board under this section if the member 
        is receiving compensation or travel expenses from 
        another source while serving on business of the board.
    [(h) Authorization of Appropriations.--There are authorized 
to be appropriated to carry out this section, $1,000,000 for 
fiscal year 1992, and such sums as may be necessary for each of 
the fiscal years 1993 through 1995.

[SEC. 103. INTER-AGENCY TASK FORCE ON CHILD ABUSE AND NEGLECT.

    [(a) Establishment.--The Secretary shall establish a task 
force to be known as the Inter-Agency Task Force on Child Abuse 
and Neglect.
    [(b) Composition.--The Secretary shall request 
representation for the task force from Federal agencies with 
responsibility for programs and activities related to child 
abuse and neglect.
    [(c) Chairperson.--The task force shall be chaired by the 
Director.
    [(d) Duties.--The task force shall--
            [(1) coordinate Federal efforts with respect to 
        child abuse prevention and treatment programs;
            [(2) encourage the development by other Federal 
        agencies of activities relating to child abuse 
        prevention and treatment;
            [(3) coordinate the use of grants received under 
        this Act with the use of grants received under other 
        programs;
            [(4) prepare a comprehensive plan for coordinating 
        the goals, objectives, and activities of all Federal 
        agencies and organizations which have responsibilities 
        for programs and activities related to child abuse and 
        neglect, and submit such plan to such Advisory Board 
        not later than 12 months after the date of enactment of 
        the Child Abuse Prevention, Adoption, and Family 
        Services Act of 1988; and
            [(5) coordinate adoption related activities, 
        develop Federal standards with respect to adoption 
        activities under this Act, and prevent duplication with 
        respect to the allocation of resources to adoption 
        activities.
    [(e) Meetings.--The task force shall meet not less than 
three times annually at the call of the chairperson.
    [(f) Reports.--The task force shall report not less than 
twice annually to the Center and the Board.

[SEC. 104. NATIONAL CLEARINGHOUSE FOR INFORMATION RELATING TO CHILD 
                    ABUSE.

    [(a) Establishment.--Before the end of the 2-year period 
beginning on the date of the enactment of the Child Abuse 
Prevention, Adoption, and Family Services Act of 1988, the 
Secretary shall through the Center, or by contract of no less 
than 3 years duration let through a competition, establish a 
national clearinghouse for information relating to child abuse.
    [(b) Functions.--The Director shall, through the 
clearinghouse established by subsection (a)--
            [(1) maintain, coordinate, and disseminate 
        information on all programs, including private 
        programs, that show promise of success with respect to 
        the prevention, identification, and treatment of child 
        abuse and neglect, including the information provided 
        by the National Center for Child Abuse and Neglect 
        under section 105(b);
            [(2) maintain and disseminate information relating 
        to--
                    [(A) the incidence of cases of child abuse 
                and neglect in the general population;
                    [(B) the incidence of such cases in 
                populations determined by the Secretary under 
                section 105(a)(1) of the Child Abuse 
                Prevention, Adoption, and Family Services Act 
                of 1988;
                    [(C) the incidence of any such cases 
                related to alcohol or drug abuse; and
                    [(D) State and local recordkeeping with 
                respect to such cases; and
            [(3) directly or through contract, identify 
        effective programs carried out by the States pursuant 
        to title II and provide technical assistance to the 
        States in the implementation of such programs.
    [(c) Coordination With Available Resources.--In 
establishing a national clearinghouse as required by subsection 
(a), the Director shall--
            [(1) consult with other Federal agencies that 
        operate similar clearinghouses;
            [(2) consult with the head of each agency that is 
        represented on the task force on the development of the 
        components for information collection and management of 
        such clearinghouse;
            [(3) develop a Federal data system involving the 
        elements under subsection (b) which, to the extent 
        practicable, coordinates existing State, regional, and 
        local data systems; and
            [(4) solicit public comment on the components of 
        such clearinghouse.

[SEC. 105. RESEARCH AND ASSISTANCE ACTIVITIES OF THE NATIONAL CENTER ON 
                    CHILD ABUSE AND NEGLECT.

    [(a) Research.--
            [(1) Topics.--The Secretary shall, through the 
        Center, conduct research on--
                    [(A) the causes, prevention, 
                identification,, treatment and cultural 
                distinctions of child abuse and neglect;
                    [(B) appropriate, effective and culturally 
                sensitive investigative, administrative, and 
                judicial procedures with respect to cases of 
                child abuse; and
                    [(C) the national incidence of child abuse 
                and neglect, including--
                            [(i) the extent to which incidents 
                        of child abuse are increasing or 
                        decreasing in number and severity;
                            [(ii) the relationship of child 
                        abuse and neglect to nonpayment of 
                        child support, cultural diversity, 
                        disabilities, and various other 
                        factors; and
                            [(iii) the incidence of 
                        substantiated reported child abuse 
                        cases that result in civil child 
                        protection proceedings or criminal 
                        proceedings, including the number of 
                        such cases with respect to which the 
                        court makes a finding that abuse or 
                        neglect exists and the disposition of 
                        such cases.
            [(2) Priorities.--(A) The Secretary shall establish 
        research and demonstration priorities for making grants 
        or contracts for purposes of carrying out paragraph 
        (1)(A) and activities under section 106.
            [(B) In establishing research and demonstration 
        priorities as required by subparagraph (A), the 
        Secretary shall--
                    [(i) publish proposed priorities in the 
                Federal Register for public comment; and
                    [(ii) allow not less than 60 days for 
                public comment on such proposed priorities.
    [(b) Publication and Dissemination of Information.--The 
Secretary shall, through the Center--
            [(1) as a part of research activities, establish a 
        national data collection and analysis program--
                    [(A) which, to the extent practicable, 
                coordinates existing State child abuse and 
                neglect reports and which shall include--
                            [(i) standardized data on false, 
                        unfounded, or unsubstantiated reports; 
                        and
                            [(ii) information on the number of 
                        deaths due to child abuse and neglect; 
                        and
                    [(B) which shall collect, compile, analyze, 
                and make available State child abuse and 
                neglect reporting information which, to the 
                extent practical, is universal and case 
                specific, and integrated with other case-based 
                foster care and adoption data collected by the 
                Secretary;
            [(2) annually compile and analyze research on child 
        abuse and neglect and publish a summary of such 
        research;
            [(3) compile, evaluate, publish, and disseminate to 
        the States and to the clearinghouse, established under 
        section 104, materials and information designed to 
        assist the States in developing, establishing, and 
        operating the programs described in section 109, 
        including an evaluation of--
                    [(A) various methods and procedures for the 
                investigation and prosecution of child physical 
                and sexual abuse cases; and
                    [(B) resultant psychological trauma to the 
                child victim;
            [(4) compile, publish, and disseminate training 
        materials--
                    [(A) for persons who are engaged in or 
                intend to engage in the prevention, 
                identification, and treatment of child abuse 
                and neglect; and
                    [(B) to appropriate State and local 
                officials to assist in training law 
                enforcement, legal, judicial, medical, mental 
                health, and child welfare personnel in 
                appropriate methods of interacting during 
                investigative, administrative, and judicial 
                proceedings with children who have been 
                subjected to abuse; and
            [(5) establish model information collection 
        systems, in consultation with appropriate State and 
        local agencies and professionals.
    [(c) Provision of Technical Assistance.--The Secretary 
shall, through the Center, provide technical assistance to 
public and nonprofit private agencies and organizations, 
including disability organizations and persons who work with 
children with disabilities, to assist such agencies and 
organizations in planning, improving, developing, and carrying 
out programs and activities relating to the prevention, 
identification, and treatment of child abuse and neglect.
    [(d) Authority to Make Grants or Enter Into Contracts.--
            [(1) In general.--The functions of the Secretary 
        under this section may be carried out either directly 
        or through grant or contract.
            [(2) Duration.--Grants under this section shall be 
        made for periods of not more than 5 years. The 
        Secretary shall review each such grant at least 
        annually, utilizing peer review mechanisms to assure 
        the quality and progress of research conducted under 
        such grant.
            [(3) Preference for long-term studies.--In making 
        grants for purposes of conducting research under 
        subsection (a), the Secretary shall give special 
        consideration to applications for long-term projects.
    [(e) Peer Review for Grants.--
            [(1) Establishment of peer review process.--(A) The 
        Secretary shall establish a formal peer review process 
        for purposes of evaluating and reviewing applications 
        for grants and contracts under this section and 
        determining the relative merits of the projects for 
        which such assistance is requested.
            [(B) In establishing the process required by 
        subparagraph (A), the Secretary shall appoint to the 
        peer review panels only members who are experts in the 
        field of child abuse and neglect or related 
        disciplines, with appropriate expertise in the 
        application to be reviewed, and who are not individuals 
        who are officers or employees of the Office of Human 
        Development. The panels shall meet as often as is 
        necessary to facilitate the expeditious review of 
        applications for grants and contracts under this 
        section, but may not meet less than once a year.
            [(2) Review of applications for assistance.--Each 
        peer review panel established under paragraph (1)(A) 
        that reviews any application for a grant, contract, or 
        other financial assistance shall--
                    [(A) determine and evaluate the merit of 
                each project described in such application;
                    [(B) rank such application with respect to 
                all other applications it reviews in the same 
                priority area for the fiscal year involved, 
                according to the relative merit of all of the 
                projects that are described in such application 
                and for which financial assistance is 
                requested; and
                    [(C) make recommendations to the Secretary 
                concerning whether the application for the 
                project shall be approved.
            [(3) Notice of approval.--(A) The Secretary shall 
        provide grants and contracts under this section from 
        among the projects which the peer review panels 
        established under paragraph (1)(A) have determined to 
        have merit.
            [(B) In the instance in which the Secretary 
        approves an application for a program without having 
        approved all applications ranked above such application 
        (as determined under subsection (e)(2)(B)), the 
        Secretary shall append to the approved application a 
        detailed explanation of the reasons relied on for 
        approving the application and for failing to approve 
        each pending application that is superior in merit, as 
        indicated on the list under subsection (e)(2)(B).

[SEC. 106. GRANTS TO PUBLIC AGENCIES AND NONPROFIT PRIVATE 
                    ORGANIZATIONS FOR DEMONSTRATION OR SERVICE PROGRAMS 
                    AND PROJECTS.

    [(a) General Authority.--
            [(1) Demonstration or service programs and 
        projects.--The Secretary, through the Center, shall, in 
        accordance with subsections (b) and (c), make grants 
        to, and enter into contracts with, public agencies or 
        nonprofit private organizations (or combinations of 
        such agencies or organizations) for demonstration or 
        service programs and projects designed to prevent, 
        identify, and treat child abuse and neglect.
            [(2) Evaluations.--In making grants or entering 
        into contracts for demonstration projects, the 
        Secretary shall require all such projects to be 
        evaluated for their effectiveness. Funding for such 
        evaluations shall be provided either as a stated 
        percentage of a demonstration grant or contract, or as 
        a separate grant or contract entered into by the 
        Secretary for the purpose of evaluating a particular 
        demonstration project or group of projects.
    [(b) Grants for Resource Centers.--The Secretary shall, 
directly or through grants or contracts with public or private 
nonprofit organizations under this section, provide for the 
establishment of resource centers--
            [(1) serving defined geographic areas;
            [(2) staffed by multidisciplinary teams of 
        personnel trained in the prevention, identification, 
        and treatment of child abuse and neglect; and
            [(3) providing advice and consultation to 
        individuals, agencies, and organizations which request 
        such services.
    [(c) Discretionary Grants.--In addition to grants or 
contracts made under subsection (b), grants or contracts under 
this section may be used for the following:
            [(1) Training programs--
                    [(A) for professional and paraprofessional 
                personnel in the fields of medicine, law, 
                education, social work, and other relevant 
                fields who are engaged in, or intend to work 
                in, the field of prevention, identification, 
                and treatment of child abuse and neglect;
                    [(B) to provide culturally specific 
                instruction in methods of protecting children 
                from child abuse and neglect to children and to 
                persons responsible for the welfare of 
                children, including parents of and persons who 
                work with children with disabilities; or
                    [(C) to improve the recruitment, selection, 
                and training of volunteers serving in private 
                and public nonprofit children, youth and family 
                service organizations in order to prevent child 
                abuse and neglect through collaborative 
                analysis of current recruitment, selection, and 
                training programs and development of model 
                programs for dissemination and replication 
                nationally.
            [(2) Such other innovative programs and projects as 
        the Secretary may approve, including programs and 
        projects for parent self-help, for prevention and 
        treatment of alcohol and drug-related child abuse and 
        neglect, and for home health visitor programs designed 
        to reach parents of children in populations in which 
        risk is high, that show promise of successfully 
        preventing and treating cases of child abuse and 
        neglect, and for a parent self-help program of 
        demonstrated effectiveness which is national in scope.
            [(3) Projects which provide educational 
        identification, prevention, and treatment services in 
        cooperation with preschool and elementary and secondary 
        schools.
            [(4) Respite and crisis nursery programs provided 
        by community-based organizations under the direction 
        and supervision of hospitals.
            [(5) Respite and crisis nursery programs provided 
        by community-based organizations.
            [(6)(A) Providing hospital-based information and 
        referral services to--
                    [(i) parents of children with disabilities; 
                and
                    [(ii) children who have been neglected or 
                abused and their parents.
            [(B) Except as provided in subparagraph (C)(iii), 
        services provided under a grant received under this 
        paragraph shall be provided at the hospital involved--
                    [(i) upon the birth or admission of a child 
                with disabilities; and
                    [(ii) upon the treatment of a child for 
                abuse or neglect.
            [(C) Services, as determined as appropriate by the 
        grantee, provided under a grant received under this 
        paragraph shall be hospital-based and shall consist 
        of--
                    [(i) the provision of notice to parents 
                that information relating to community services 
                is available;
                    [(ii) the provision of appropriate 
                information to parents of a child with 
                disabilities regarding resources in the 
                community, particularly parent training 
                resources, that will assist such parents in 
                caring for their child;
                    [(iii) the provision of appropriate 
                information to parents of a child who has been 
                neglected or abused regarding resources in the 
                community, particularly parent training 
                resources, that will assist such parents in 
                caring for their child and reduce the 
                possibility of abuse or neglect;
                    [(iv) the provision of appropriate follow-
                up services to parents of a child described in 
                subparagraph (B) after the child has left the 
                hospital; and
                    [(v) where necessary, assistance in 
                coordination of community services available to 
                parents of children described in subparagraph 
                (B).
        The grantee shall assure that parental involvement 
        described in this subparagraph is voluntary.
            [(D) For purposes of this paragraph, a qualified 
        grantee is a nonprofit acute care hospital that--
                    [(i) is in a combination with--
                            [(I) a health-care provider 
                        organization;
                            [(II) a child welfare organization;
                            [(III) a disability organization; 
                        and
                            [(IV) a State child protection 
                        agency;
                    [(ii) submits an application for a grant 
                under this paragraph that is approved by the 
                Secretary;
                    [(iii) maintains an office in the hospital 
                involved for purposes of providing services 
                under such grant;
                    [(iv) provides assurances to the Secretary 
                that in the conduct of the project the 
                confidentiality of medical, social, and 
                personal information concerning any person 
                described in subparagraph (A) or (B) shall be 
                maintained, and shall be disclosed only to 
                qualified persons providing required services 
                described in subparagraph (C) for purposes 
                relating to conduct of the project; and
                    [(v) assumes legal responsibility for 
                carrying out the terms and conditions of the 
                grant.
            [(E) In awarding grants under this paragraph, the 
        Secretary shall--
                    [(i) give priority under this section for 
                two grants under this paragraph, provided that 
                one grant shall be made to provide services in 
                an urban setting and one grant shall be made to 
                provide services in rural setting; and
                    [(ii) encourage qualified grantees to 
                combine the amounts received under the grant 
                with other funds available to such grantees.
            [(7) Such other innovative programs and projects 
        that show promise of preventing and treating cases of 
        child abuse and neglect as the Secretary may approve.

[SEC. 107. GRANTS TO STATES FOR CHILD ABUSE AND NEGLECT PREVENTION AND 
                    TREATMENT PROGRAMS.

    [(a)  Development and Operation Grants.--The Secretary, 
acting through the Center, shall make grants to the States, 
based on the population of children under the age of 18 in each 
State that applies for a grant under this section, for purposes 
of assisting the States in improving the child protective 
service system of each such State in--
            [(1) the intake and screening of reports of abuse 
        and neglect through the improvement of the receipt of 
        information, decisionmaking, public awareness, and 
        training of staff;
            [(2)(A) investigating such reports through 
        improving response time, decisionmaking, referral to 
        services, and training of staff;
            [(B) creating and improving the use of 
        multidisciplinary teams and interagency protocols to 
        enhance investigations; and
            [(C) improving legal preparation and 
        representation;
            [(3) case management and delivery services provided 
        to families through the improvement of response time in 
        service provision, improving the training of staff, and 
        increasing the numbers of families to be served;
            [(4) enhancing the general child protective system 
        by improving assessment tools, automation systems that 
        support the program, information referral systems, and 
        the overall training of staff to meet minimum 
        competencies; or
            [(5) developing, strengthening, and carrying out 
        child abuse and neglect prevention, treatment, and 
        research programs.
Not more than 15 percent of a grant under this subsection may 
be expended for carrying out paragraph (5). The preceding 
sentence does not apply to any program or activity authorized 
in any of paragraphs (1) through (4).
    [(b) Eligibility Requirements.--In order for a State to 
qualify for a grant under subsection (a), such State shall--
            [(1) have in effect a State law relating to child 
        abuse and neglect, including--
                    [(A) provisions for the reporting of known 
                and suspected instances of child abuse and 
                neglect; and
                    [(B) provisions for immunity from 
                prosecution under State and local laws for 
                persons who report instances of child abuse or 
                neglect for circumstances arising from such 
                reporting;
            [(2) provide that upon receipt of a report of known 
        or suspected instances of child abuse or neglect an 
        investigation shall be initiated promptly to 
        substantiate the accuracy of the report, and, upon a 
        finding of abuse or neglect, immediate steps shall be 
        taken to protect the health and welfare of the abused 
        or neglected child and of any other child under the 
        same care who may be in danger of abuse or neglect;
            [(3) demonstrate that there are in effect 
        throughout the State, in connection with the 
        enforcement of child abuse and neglect laws and with 
        the reporting of suspected instances of child abuse and 
        neglect, such--
                    [(A) administrative procedures;
                    [(B) personnel trained in child abuse and 
                neglect prevention and treatment;
                    [(C) training procedures;
                    [(D) institutional and other facilities 
                (public and private); and
                    [(E) such related multidisciplinary 
                programs and services,
        as may be necessary or appropriate to ensure that the 
        State will deal effectively with child abuse and 
        neglect cases in the State;
            [(4) provide for--
                    [(A) methods to preserve the 
                confidentiality of all records in order to 
                protect the rights of the child and of the 
                child's parents or guardians, including methods 
                to ensure that disclosure (and redisclosure) of 
                information concerning child abuse or neglect 
                involving specific individuals is made only to 
                persons or entities that the State determines 
                have a need for such information directly 
                related to purposes of this Act; and
                    [(B) requirements for the prompt disclosure 
                of all relevant information to any Federal, 
                State, or local governmental entity, or any 
                agent of such entity, with a need for such 
                information in order to carry out its 
                responsibilities under law to protect children 
                from abuse and neglect;
            [(5) provide for the cooperation of law enforcement 
        officials, courts of competent jurisdiction, and 
        appropriate State agencies providing human services;
            [(6) provide that in every case involving an abused 
        or neglected child which results in a judicial 
        proceeding a guardian ad litem shall be appointed to 
        represent the child in such proceedings;
            [(7) provide that the aggregate of support for 
        programs or projects related to child abuse and neglect 
        assisted by State funds shall not be reduced below the 
        level provided during fiscal year 1973, and set forth 
        policies and procedures designed to ensure that Federal 
        funds made available under this Act for any fiscal year 
        shall be so used as to supplement and, to the extent 
        practicable, increase the level of State funds which 
        would, in the absence of Federal funds, be available 
        for such programs and projects;
            [(8) provide for dissemination of information, 
        including efforts to encourage more accurate reporting, 
        to the general public with respect to the problem of 
        child abuse and neglect and the facilities and 
        prevention and treatment methods available to combat 
        instances of child abuse and neglect;
            [(9) to the extent feasible, ensure that parental 
        organizations combating child abuse and neglect receive 
        preferential treatment; and
            [(10) have in place for the purpose of responding 
        to the reporting of medical neglect (including 
        instances of withholding of medically indicated 
        treatment from disabled infants with life-threatening 
        conditions), procedures or programs, or both (within 
        the State child protective services system), to provide 
        for--
                    [(A) coordination and consultation with 
                individuals designated by and within 
                appropriate health-care facilities;
                    [(B) prompt notification by individuals 
                designated by and within appropriate health-
                care facilities of cases of suspected medical 
                neglect (including instances of withholding of 
                medically indicated treatment from disabled 
                infants with life-threatening conditions); and
                    [(C) authority, under State law, for the 
                State child protective service system to pursue 
                any legal remedies, including the authority to 
                initiate legal proceedings in a court of 
                competent jurisdiction, as may be necessary to 
                prevent the withholding of medically indicated 
                treatment from disabled infants with life-
                threatening conditions.
    [(c) State Program Plan.--To be eligible to receive a grant 
under this section, a State shall submit every four years a 
plan to the Secretary that specifies the child protective 
service system area or areas described in subsection (a) that 
the State intends to address with funds received under the 
grant. The plan shall describe the current system capacity of 
the State in the relevant area or areas from which to assess 
programs with grant funds and specify the manner in which funds 
from the State's programs will be used to make improvements. 
The plan required under this subsection shall contain, with 
respect to each area in which the State intends to use funds 
from the grant, the following information with respect to the 
State:
            [(1) Intake and screening.--
                    [(A) Staffing.--The number of child 
                protective service workers responsible for the 
                intake and screening of reports of abuse and 
                neglect relative to the number of reports filed 
                in the previous year.
                    [(B) Training.--The types and frequency of 
                pre-service and in-service training programs 
                available to support direct line and 
                supervisory personnel in report-taking, 
                screening, decision-making, and referral for 
                investigation.
                    [(C) Public education.--An assessment of 
                the State or local agency's public education 
                program with respect to--
                            [(i) what is child abuse and 
                        neglect;
                            [(ii) who is obligated to report 
                        and who may choose to report; and
                            [(iii) how to report.
            [(2) Investigation of reports.--
                    [(A) Response time.--The number of reports 
                of child abuse and neglect filed in the State 
                in the previous year where appropriate, the 
                agency response time to each with respect to 
                initial investigation, the number of 
                substantiated and unsubstantiated reports, and 
                where appropriate, the response time with 
                respect to the provision of services.
                    [(B) Staffing.--The number of child 
                protective service workers responsible for the 
                investigation of child abuse and neglect 
                reports relative to the number of reports 
                investigated in the previous year.
                    [(C) Interagency coordination.--A 
                description of the extent to which interagency 
                coordination processes exist and are available 
                Statewide, and whether protocols or formal 
                policies governing interagency relationships 
                exist in the following areas--
                            [(i) multidisciplinary 
                        investigation teams among child welfare 
                        and law enforcement agencies;
                            [(ii) interagency coordination for 
                        the prevention, intervention and 
                        treatment of child abuse and neglect 
                        among agencies responsible for child 
                        protective services, criminal justice, 
                        schools, health, mental health, and 
                        substance abuse; and
                            [(iii) special interagency child 
                        fatality review panels, including a 
                        listing of those agencies that are 
                        involved.
                    [(D) Training.--The types and frequency of 
                pre-service and in-service training programs 
                available to support direct line and 
                supervisory personnel in such areas as 
                investigation, risk assessment, court 
                preparation, and referral to and provision of 
                services.
                    [(E) Legal representation.--A description 
                of the State agency's current capacity for 
                legal representation, including the manner in 
                which workers are prepared and trained for 
                court preparation and attendance, including 
                procedures for appealing substantiated reports 
                of abuse and neglect.
            [(3) Case management and delivery of ongoing family 
        services.--For children for whom a report of abuse and 
        neglect has been substantiated and the children remain 
        in their own homes and are not currently at risk of 
        removal, the State shall assess the activities and the 
        outcomes of the following services:
                    [(A) Response time.--The number of cases 
                opened for services as a result of 
                investigation of child abuse and neglect 
                reports filed in the previous year, including 
                the response time with respect to the provision 
                of services from the time of initial report and 
                initial investigation.
                    [(B) Staffing.--The number of child 
                protective service workers responsible for 
                providing services to children and their 
                families in their own homes as a result of 
                investigation of reports of child abuse and 
                neglect.
                    [(C) Training.--The types and frequency of 
                pre-service and in-service training programs 
                available to support direct line and 
                supervisory personnel in such areas as risk 
                assessment, court preparation, provision of 
                services and determination of case disposition, 
                including how such training is evaluated for 
                effectiveness.
                    [(D) Interagency coordination.--The extent 
                to which treatment services for the child and 
                other family members are coordinated with child 
                welfare, social service, mental health, 
                education, and other agencies.
            [(4) General system enhancement.--
                    [(A) Automation.--A description of the 
                capacity of current automated systems for 
                tracking reports of child abuse and neglect 
                from intake through final disposition and how 
                personnel are trained in the use of such 
                system.
                    [(B) Assessment tools.--A description of 
                whether, how, and what risk assessment tools 
                are used for screening reports of abuse and 
                neglect, determining whether child abuse and 
                neglect has occurred, and assessing the 
                appropriate level of State agency protection 
                and intervention, including the extent to which 
                such tool is used statewide and how workers are 
                trained in its use.
                    [(C) Information and referral.--A 
                description and assessment of the extent to 
                which a State has in place--
                            [(i) information and referral 
                        systems, including their availability 
                        and ability to link families to various 
                        child welfare services such as 
                        homemakers, intensive family-based 
                        services, emergency caretakers, home 
                        health visitors, daycare and services 
                        outside the child welfare system such 
                        as housing, nutrition, health care, 
                        special education, income support, and 
                        emergency resource assistance; and
                            [(ii) efforts undertaken to 
                        disseminate to the public information 
                        concerning the problem of child abuse 
                        and neglect and the prevention and 
                        treatment programs and services 
                        available to combat instances of such 
                        abuse and neglect.
                    [(D) Staff capacity and competence.--An 
                assessment of basic and specialized training 
                needs of all staff and current training 
                provided staff. Assessment of the competencies 
                of staff with respect to minimum knowledge in 
                areas such as child development, cultural and 
                ethnic diversity, functions and relationship of 
                other systems to child protective services and 
                in specific skills such as interviewing, 
                assessment, and decisionmaking relative to the 
                child and family, and the need for training 
                consistent with such minimum competencies.
            [(5) Innovative approaches.--A description of--
                    [(A) research and demonstration efforts for 
                developing, strengthening, and carrying out 
                child abuse and neglect prevention, treatment, 
                and research programs, including the 
                interagency efforts at the State level; and
                    [(B) the manner in which proposed research 
                and development activities build on existing 
                capacity in the programs being addressed.
    [(d) Waivers.--
            [(1) General rule.--Subject to paragraph (3) of 
        this subsection, any State which does not qualify for 
        assistance under this subsection may be granted a 
        waiver of any requirement under paragraph (2) of this 
        subsection--
                    [(A) for a period of not more than one 
                year, if the Secretary makes a finding that 
                such State is making a good faith effort to 
                comply with any such requirement, and for a 
                second one-year period if the Secretary makes a 
                finding that such State is making substantial 
                progress to achieve such compliance; or
                    [(B) for a nonrenewable period of not more 
                than two years in the case of a State the 
                legislature of which meets only biennially, if 
                the Secretary makes a finding that such State 
                is making a good faith effort to comply with 
                such requirement.
            [(2) Extension.--(A) Subject to paragraph (3) of 
        this subsection, any State whose waiver under paragraph 
        (1) expired as of the end of fiscal year 1986 may be 
        granted an extension of such waiver, if the Secretary 
        makes a finding that such State is making a good faith 
        effort to comply with the requirements under subsection 
        (b) of this section--
                    [(i) through the end of fiscal year 1988; 
                or
                    [(ii) in the case of a State the 
                legislature of which meets biennially, through 
                the end of the fiscal year 1989 or the end of 
                the next regularly scheduled session of such 
                legislature, whichever is earlier.
            [(B) This provision shall be effective 
        retroactively to October 1, 1986.
            [(3) Requirements under subsection (b)(10).--No 
        waiver under paragraph (1) or (2) may apply to any 
        requirement under subsection (b)(10) of this section.
    [(e) Reduction of Funds in Case of Failure To Obligate.--If 
a State fails to obligate funds awarded under subsection (a) 
before the expiration of the 18-month period beginning on the 
date of such award, the next award made to such State under 
this section after the expiration of such period shall be 
reduced by an amount equal of the amount of such unobligated 
funds unless the Secretary determines that extraordinary 
reasons justify the failure to so obligate.
    [(f) Restrictions Relating to Child Welfare Services.--
Programs or projects relating to child abuse and neglect 
assisted under part B of title IV of the Social Security Act 
shall comply with the requirements set forth in paragraphs 
(1)(A), (2), (4), (5), and (10) of subsection (b).
    [(g) Compliance and Education Grants.--The Secretary is 
authorized to make grants to the States for purposes of 
developing, implementing, or operating--
            [(1) the procedures or programs required under 
        subsection (b)(10);
            [(2) information and education programs or training 
        programs designed to improve the provision of services 
        to disabled infants with life-threatening conditions 
        for--
                    [(A) professional and paraprofessional 
                personnel concerned with the welfare of 
                disabled infants with life-threatening 
                conditions, including personnel employed in 
                child protective services programs and health-
                care facilities; and
                    [(B) the parents of such infants; and
            [(3) programs to assist in obtaining or 
        coordinating necessary services for families of 
        disabled infants with life-threatening conditions, 
        including--
                    [(A) existing social and health services;
                    [(B) financial assistance; and
                    [(C) services necessary to facilitate 
                adoptive placement of any such infants who have 
                been relinquished for adoption.

[SEC. 108. TECHNICAL ASSISTANCE TO STATES FOR CHILD ABUSE PREVENTION 
                    AND TREATMENT PROGRAMS.

    [(a) Training and Technical Assistance.--The Secretary 
shall provide, directly or through grants or contracts with 
public or private nonprofit organizations, for--
            [(1) training and technical assistance programs to 
        assist States in developing, implementing, or operating 
        programs and procedures meeting the requirements of 
        section 107(b)(10); and
            [(2) the establishment and operation of national 
        and regional information and resource clearinghouses 
        for the purpose of providing the most current and 
        complete information regarding medical treatment 
        procedures and resources and community resources for 
        the provision of services and treatment to disabled 
        infants with life-threatening conditions, including--
                    [(A) compiling, maintaining, updating, and 
                disseminating regional directories of community 
                services and resources (including the names and 
                phone numbers of State and local medical 
                organizations) to assist parents, families, and 
                physicians; and
                    [(B) attempting to coordinate the 
                availability of appropriate regional education 
                resources for health-care personnel.
    [(b) Limitation on Funding.--Not more than $1,000,000 of 
the funds appropriated for any fiscal year for purposes of 
carrying out this title may be used to carry out this section.

[SEC. 109. GRANTS TO STATES FOR PROGRAMS RELATING TO THE INVESTIGATION 
                    AND PROSECUTION OF CHILD ABUSE AND NEGLECT CASES.

    [(a) Grants to States.--The Secretary, acting through the 
Center and in consultation with the Attorney General, is 
authorized to make grants to the States for the purpose of 
assisting States in developing, establishing, and operating 
programs designed to improve--
            [(1) the handling of child abuse and neglect cases, 
        particularly cases of child sexual abuse and 
        exploitation, in a manner which limits additional 
        trauma to the child victim;
            [(2) the handling of cases of suspected child abuse 
        or neglect related fatalities; and
            [(3) the investigation and prosecution of cases of 
        child abuse and neglect, particularly child sexual 
        abuse and exploitation.
    [(b) Eligibility Requirements.--In order for a State to 
qualify for assistance under this section, such State shall--
            [(1) fulfill the requirements of sections
            [(2) establish a task force as provided in 
        subsection (c);
            [(3) fulfill the requirements of subsection (d);
            [(4) submit annually an application to the 
        Secretary at such time and containing such information 
        and assurances as the Secretary considers necessary, 
        including an assurance that the State will--
                    [(A) make such reports to the Secretary as 
                may reasonably be required; and
                    [(B) maintain and provide access to records 
                relating to activities under subsections (a) 
                and (b); and
            [(5) submit annually to the Secretary a report on 
        the manner in which assistance received under this 
        program was expended throughout the State, with 
        particular attention focused on the areas described in 
        paragraphs (1) through (3) of subsection (a).
    [(c) State Task Forces.--
            [(1) General rule.--Except as provided in paragraph 
        (2), a State requesting assistance under this section 
        shall establish or designate, and maintain a State 
        multidisciplinary task force on children's justice 
        (hereinafter referred to as ``State task force'') 
        composed of professionals with knowledge and experience 
        relating to the criminal justice system and issues of 
        child physical abuse, child neglect, child sexual abuse 
        and exploitation, and child maltreatment related 
        fatalities. The State task force shall include--
                    [(A) individuals representing the law 
                enforcement community;
                    [(B) judges and attorneys involved in both 
                civil and criminal court proceedings related to 
                child abuse and neglect (including individuals 
                involved with the defense as well as the 
                prosecution of such cases);
                    [(C) child advocates, including both 
                attorneys for children and, where such programs 
                are in operation, court appointed special 
                advocates;
                    [(D) health and mental health 
                professionals;
                    [(E) individuals representing child 
                protective service agencies;
                    [(F) individuals experienced in working 
                with children with disabilities
                    [(G) parents; and
                    [(H) representatives of parents' groups.
            [(2) Existing task force.--As determined by the 
        Secretary, a State commission or task force established 
        after January 1, 1983, with substantially comparable 
        membership and functions, may be considered the State 
        task force for purposes of this subsection.
    [(d) State Task Force Study.--Before a State receives 
assistance under this section, and at three year intervals 
thereafter, the State task force shall comprehensively--
            [(1) review and evaluate State investigative, 
        administrative and both civil and criminal judicial 
        handling of cases of child abuse and neglect, 
        particularly child sexual abuse and exploitation, as 
        well as cases involving suspected child maltreatment 
        related fatalities and cases involving a potential 
        combination of jurisdictions, such as interstate, 
        Federal-State, and State-Tribal;
            [(2) make policy and training recommendations in 
        each of the categories described in subsection (e).
The task force may make such other comments and recommendations 
as are considered relevant and useful.
    [(e) Adoption of State Task Force Recommendations.--
            [(1) General rule.--Subject to the provisions of 
        paragraph (2), before a State receives assistance under 
        this section, a State shall adopt recommendations of 
        the State task force in each of the following 
        categories--
                    [(A) investigative, administrative, and 
                judicial handling of cases of child abuse and 
                neglect, particularly child sexual abuse and 
                exploitation, as well as cases involving 
                suspected child maltreatment related fatalities 
                and cases involving a potential combination of 
                jurisdictions, such as interstate, Federal-
                State, and State-Tribal, in a manner which 
                reduces the additional trauma to the child 
                victim and the victim's family and which also 
                ensures procedural fairness to the accused;
                    [(B) experimental, model and demonstration 
                programs for testing innovative approaches and 
                techniques which may improve the rate of 
                successful prosecution or enhance the 
                effectiveness of judicial and administrative 
                action in child abuse cases, particularly child 
                sexual abuse cases, and which also ensure 
                procedural fairness to the accused; and
                    [(C) reform of State laws, ordinances, 
                regulations, protocols and procedures to 
                provide comprehensive protection for children 
                from abuse, particularly child sexual abuse and 
                exploitation, while ensuring fairness to all 
                affected persons.
            [(2) Exemption.--As determined by the Secretary, a 
        State shall be considered to be in fulfillment of the 
        requirements of this subsection if--
                    [(A) the State adopts an alternative to the 
                recommendations of the State task force, which 
                carries out the purpose of this section, in 
                each of the categories under paragraph (1) for 
                which the State task force's recommendations 
                are not adopted; or
                    [(B) the State is making substantial 
                progress toward adopting recommendations of the 
                State task force or a comparable alternative to 
                such recommendations.
    [(f) Funds Available.--For grants under this section, the 
Secretary shall use the amount authorized by section 1404A of 
the Victims of Crime Act of 1984.

[SEC. 110. MISCELLANEOUS REQUIREMENTS RELATING TO ASSISTANCE.

    [(a) Construction of Facilities.--
            [(1) Restriction on use of funds.--Assistance 
        provided under this Act may not be used for 
        construction of facilities.
            [(2) Lease, rental, or repair.--The Secretary may 
        authorize the use of funds received under this Act--
                    [(A) where adequate facilities are not 
                otherwise available, for the lease or rental of 
                facilities; or
                    [(B) for the repair or minor remodeling or 
                alteration of existing facilities.
    [(b) Geographical Distribution.--The Secretary shall 
establish criteria designed to achieve equitable distribution 
of assistance under this Act among the States, among geographic 
areas of the Nation, and among rural and urban areas of the 
Nation. To the extent possible, the Secretary shall ensure that 
the citizens of each State receive assistance from at least one 
project under this Act.
    [(c) Prevention Activities.--The Secretary, in consultation 
with the task force and the board, shall ensure that a majority 
share of assistance under this Act is available for 
discretionary research and demonstration grants.
    [(d) Limitation.--No funds appropriated for any grant or 
contract pursuant to authorizations made in this Act may be 
used for any purpose other than that for which such funds were 
authorized to be appropriated.

[SEC. 111. COORDINATION OF CHILD ABUSE AND NEGLECT PROGRAMS.

    [The Secretary shall prescribe regulations and make such 
arrangements as may be necessary or appropriate to ensure that 
there is effective coordination among programs related to child 
abuse and neglect under this Act and other such programs which 
are assisted by Federal funds.

[SEC. 112. REPORTS.

    [(a) Coordination Efforts.--Not later than March 1 of the 
second year following the date of enactment of the Child Abuse 
Prevention, Adoption, and Family Services Act of 1988 and every 
2 years thereafter, the Secretary shall submit to the 
appropriate committees of Congress a report on efforts during 
the 2-year period preceding the date of the report to 
coordinate the objectives and activities of agencies and 
organizations which are responsible for programs and activities 
related to child abuse and neglect.
    [(b) Effectiveness of State Programs and Technical 
Assistance.--Not later than two years after the first fiscal 
year for which funds are obligated under section 1404A of the 
Victims of Crime Act of 1984, the Secretary shall submit to the 
appropriate committees of Congress a report evaluating the 
effectiveness of--
            [(1) assisted programs in achieving the objectives 
        of section 109; and
            [(2) the technical assistance provided under 
        section 108.

[SEC. 113. DEFINITIONS.

    [For purposes of this title--
            [(1) the term ``board'' means the Advisory Board on 
        Child Abuse and Neglect established under section 102;
            [(2) the term ``Center'' means the National Center 
        on Child Abuse and Neglect established under section 
        101;
            [(3) the term ``child'' means a person who has not 
        attained the lesser of--
                    [(A) the age of 18; or
                    [(B) except in the case of sexual abuse, 
                the age specified by the child protection law 
                of the State in which the child resides;
            [(4) the term ``child abuse and neglect'' means the 
        physical or mental injury, sexual abuse or 
        exploitation, negligent treatment, or maltreatment of a 
        child by a person who is responsible for the child's 
        welfare, under circumstances which indicate that the 
        child's health or welfare is harmed or threatened 
        thereby, as determined in accordance with regulations 
        prescribed by the Secretary;
            [(5) the term ``person who is responsible for the 
        child's welfare'' includes--
                    [(A) any employee of a residential 
                facility; and
                    [(B) any staff person providing out-of-home 
                care;
            [(6) the term ``Secretary'' means the Secretary of 
        Health and Human Services;
            [(7) the term ``sexual abuse'' includes--
                    [(A) the employment, use, persuasion, 
                inducement, enticement, or coercion of any 
                child to engage in, or assist any other person 
                to engage in, any sexually explicit conduct or 
                simulation of such conduct for the purpose of 
                producing a visual depiction of such conduct; 
                or
                    [(B) the rape, molestation, prostitution, 
                or other form of sexual exploitation of 
                children, or incest with children;
            [(8) the term ``State'' means each of the several 
        States, the District of Columbia, the Commonwealth of 
        Puerto Rico, the Virgin Islands, Guam, American Samoa, 
        the Commonwealth of the Northern Mariana Islands, and 
        the Trust Territory of the Pacific Islands;
            [(9) the term ``task force'' means the Inter-Agency 
        Task Force on Child Abuse and Neglect established under 
        section 103; and
            [(10) the term ``withholding of medically indicated 
        treatment'' means the failure to respond to the 
        infant's life-threatening conditions by providing 
        treatment (including appropriate nutrition, hydration, 
        and medication) which, in the treating physician's or 
        physicians' reasonable medical judgment, will be most 
        likely to be effective in ameliorating or correcting 
        all such conditions, except that the term does not 
        include the failure to provide treatment (other than 
        appropriate nutrition, hydration, or medication) to an 
        infant when, in the treating physician's or physicians' 
        reasonable medical judgment--
                    [(A) the infant is chronically and 
                irreversibly comatose;
                    [(B) the provision of such treatment 
                would--
                            [(i) merely prolong dying;
                            [(ii) not be effective in 
                        ameliorating or correcting all of the 
                        infant's life-threatening conditions; 
                        or
                            [(iii) otherwise be futile in terms 
                        of the survival of the infant; or
                    [(C) the provision of such treatment would 
                be virtually futile in terms of the survival of 
                the infant and the treatment itself under such 
                circumstances would be inhumane.

[SEC. 114. AUTHORIZATION OF APPROPRIATIONS.

    [(a) In General.--
            [(1) Authorization.--There are authorized to be 
        appropriated to carry out this title, except for 
        section 107A, $100,000,000 for fiscal year 1992, and 
        such sums as may be necessary for each of the fiscal 
        years 1993 through 1995.
            [(2) Allocations.--
                    [(A) Of the amounts appropriated under 
                paragraph (1) for a fiscal year, $5,000,000 
                shall be available for the purpose of making 
                additional grants to the States to carry out 
                the provisions of section 107(g).
                    [(B) Of the amounts appropriated under 
                paragraph (1) for a fiscal year and available 
                after compliance with subparagraph (A)--
                            [(i) 33\1/3\ percent shall be 
                        available for activities under sections 
                        104, 105 and 106; and
                            [(ii) 66\2/3\ percent of such 
                        amounts shall be made available in each 
                        such fiscal year for activities under 
                        sections 107 and 108.
    [(b) Availability of Funds Without Fiscal Year 
Limitation.--The Secretary shall ensure that funds appropriated 
pursuant to authorizations in this title shall remain available 
until expended for the purposes for which they were 
appropriated.

          [TITLE II--COMMUNITY-BASED FAMILY RESOURCE PROGRAMS

[SEC. 201. COMMUNITY-BASED FAMILY RESOURCE PROGRAMS.

    [(a) Purpose.--The purpose of this title is to assist each 
State to develop and implement, or expand and enhance, a 
comprehensive, statewide system of family resource services 
through innovative funding mechanisms and collaboration with 
existing education, vocational rehabilitation, health, mental 
health, employment and training, child welfare, and other 
social services agencies within the State.
    [(b) Authority.--The Secretary shall make grants to States 
on a formula basis for the purpose of--
            [(1) establishing and expanding statewide networks 
        of community-based family resource programs, including 
        funds for the initial costs of providing specific 
        family resource services, that ensure family 
        involvement in the design and operation of family 
        resource programs which are responsive to the unique 
        and diverse strengths of children and families;
            [(2) promoting child abuse and neglect prevention 
        activities;
            [(3) promoting the establishment and operation of 
        State trust funds or other mechanisms for integrating 
        child and family services funding streams in order to 
        provide flexible funding for the development of 
        community-based family resource programs;
            [(4) establishing or expanding community-based 
        collaboration to foster the development of a continuum 
        of preventive services for children and families, which 
        are family-centered and culturally competent;
            [(5) encouraging public and private partnerships in 
        the establishment and expansion of family resource 
        programs; and
            [(6) increasing and promoting interagency 
        coordination among State agencies, and encouraging 
        public and private partnerships in the establishment 
        and expansion of family resource programs.
    [(c) Eligibility for Grants.--A State is eligible for a 
grant under this section for any fiscal year if--
            [(1) such State has established or maintained in 
        the previous fiscal year--
                    [(A) a trust fund, including appropriations 
                for such fund; or
                    [(B) any other mechanism that pools State, 
                Federal, and private funds for integrating 
                child and family service resources; and
            [(2) such trust fund or other funding mechanism 
        includes (in whole or in part) provisions making 
        funding available specifically for a broad range of 
        child abuse and neglect prevention activities and 
        family resource programs.
    [(d) Amount of Grant.--
            [(1) In general.--Amounts appropriated for a fiscal 
        year to provide grants under this section shall be 
        allotted to the designated lead agencies of eligible 
        States in each fiscal year so that--
                    [(A) 50 percent of the total amount 
                appropriated for such fiscal year is allotted 
                among each State based on the number of 
                children under the age of 18 residing in each 
                State, except that each State shall receive not 
                less than $100,000; and
                    [(B) the remaining 50 percent of the total 
                amount appropriated for such fiscal year is 
                allotted in an amount equal to 25 percent of 
                the total amount allocated by each such State 
                to the State's trust fund or other mechanism 
                for integrating family resource services in the 
                fiscal year prior to the fiscal year for which 
                the allotment is being determined.
            [(2) Allocation.--Funds identified by the State for 
        the purpose of qualifying for incentive funds under 
        paragraph (1)(B) shall be allocated through the 
        mechanism used to determine State eligibility under 
        subsection (c) and shall be controlled by the lead 
        agency described in subsection (f)(1).
    [(e) Existing Grants.--A State or entity that has a grant 
in effect on the date of enactment of this section under the 
Family Resource and Support Program or the Emergency Child 
Abuse Prevention Grants Program shall continue to receive funds 
under such Programs, subject to the original terms under which 
such funds were granted, through the end of the applicable 
grant cycle.
    [(f) Application.--No grant may be made to any eligible 
State under this section unless an application is prepared and 
submitted to the Secretary at such time, in such manner, and 
containing or accompanied by such information as the Secretary 
determines to be essential to carry out the purposes and 
provisions of this section, including--
            [(1) a description of the agency designated by the 
        Chief Executive Officer of the State to administer the 
        funds provided under this section and assume 
        responsibility for implementation and oversight of the 
        family resource programs and other child abuse and 
        neglect prevention activities, and an assurance that 
        the agency so designated--
                    [(A) is the trust fund advisory board, or 
                an existing organization created by executive 
                order or State statute that is not an existing 
                State agency, that has interdisciplinary 
                governance, including participants from 
                communities, and that integrates family 
                resource services and leverages State, Federal, 
                and private funds for family resource programs; 
                or
                    [(B) with respect to a State without a 
                trust fund mechanism or other organization that 
                meets the requirements of subparagraph (A), is 
                an existing State agency, or other public, 
                quasi-public, or nonprofit private agency 
                responsible for the development and 
                implementation of a statewide network of 
                community-based family resource programs;
            [(2) assurances that the agency designated under 
        paragraph (1) can demonstrate the capacity to fulfill 
        the purposes described in subsection (a), and shall 
        have--
                    [(A) a demonstrated ability to work with 
                other State and community-based agencies, to 
                provide training and technical assistance;
                    [(B) a commitment to parental participation 
                in the design and implementation of family 
                resource programs;
                    [(C) the capacity to promote a statewide 
                system of family resource programs throughout 
                the State; and
                    [(D) the capacity to exercise leadership in 
                implementing effective strategies for capacity 
                building, family and professional training, and 
                access to, and funding for, family resource 
                services across agencies;
            [(3) an assurance that the State has an interagency 
        process coordinated by the agency designated in 
        paragraph (1) for effective program development that--
                    [(A) does not duplicate existing processes 
                for developing collaborative efforts to better 
                serve children and families;
                    [(B) provides a written strategic plan for 
                the establishment of a network of family 
                resource programs (publicly available and 
                funded through public and private sources) that 
                identifies specific measurable goals and 
                objectives;
                    [(C) involves appropriate personnel in the 
                process, including--
                            [(i) parents (including parents of 
                        children with disabilities) and 
                        prospective participants in family 
                        resource programs, including respite 
                        care programs;
                            [(ii) staff of existing programs 
                        providing family resource services, 
                        including staff of Head Start programs 
                        and community action agencies that 
                        provide such services;
                            [(iii) representatives of State and 
                        local government such as social 
                        service, health, mental health, 
                        education, vocational rehabilitation, 
                        employment, economic development 
                        agencies, and organizations providing 
                        community services activities;
                            [(iv) representatives of the 
                        business community;
                            [(v) representatives of general 
                        purpose local governments;
                            [(vi) representatives of groups 
                        with expertise in child abuse 
                        prevention, including respite and 
                        crisis care;
                            [(vii) representatives of local 
                        communities in which family resource 
                        programs are likely to be located;
                            [(viii) representatives of groups 
                        with expertise in providing services to 
                        children with disabilities; and
                            [(ix) other individuals with 
                        expertise in the services that the 
                        family resource programs of the State 
                        intend to offer; and
                    [(D) coordinates activities funded under 
                this title with--
                            [(i) the State Interagency 
                        Coordinating Council, established under 
                        part H of the Individuals with 
                        Disabilities Education Act;
                            [(ii) the advisory panel 
                        established under section 613(a)(12) of 
                        the Individuals with Disabilities 
                        Education Act (20 U.S.C. 1413(a)(12));
                            [(iii) the State Rehabilitation 
                        Advisory Council established under the 
                        Rehabilitation Act of 1973;
                            [(iv) the State Development 
                        Disabilities Planning Council, 
                        established under the Developmental 
                        Disabilities Assistance and Bill of 
                        Rights Act;
                            [(v) the Head Start State 
                        Collaboration project;
                            [(vi) the State Advisory group 
                        designated in the Juvenile Justice and 
                        Delinquency Prevention Act of 1974; and
                            [(vii) other local or regional 
                        family service councils within the 
                        State, to the extent that such councils 
                        exist;
            [(4) an inventory and description of the current 
        family resource programs operating in the State, the 
        current unmet need for the services provided under such 
        programs, including the need for building increased 
        capacity to provide specific family resource services, 
        including respite care, and the intended scope of the 
        State family resource program, the population to be 
        served, the manner in which the program will be 
        operated, and the manner in which such program will 
        relate to other community services and public agencies;
            [(5) evidence that Federal assistance received 
        under this section--
                    [(A) has been supplemented with non-Federal 
                public and private assistance, including a 
                description of the projected level of financial 
                commitment by the State to develop a family 
                resource network; and
                    [(B) will be used to supplement and not 
                supplant other State and local public funds 
                expended for family resource programs;
            [(6) a description of the core services, as 
        required by this section, and other support services to 
        be provided by the program and the manner in which such 
        services will be provided, including the extent to 
        which either family resources, centers, home visiting, 
        or community collaboratives will be used;
            [(7) a description of any public information 
        activities the agency designated in paragraph (1) will 
        undertake for the purpose of promoting family stability 
        and preventing child abuse and neglect, including child 
        sexual abuse;
            [(8) an assurance that the State will provide funds 
        for the initial startup costs associated with specific 
        family resource services, including respite services, 
        and a description of the services to be funded;
            [(9) assurances that the State program will 
        maintain cultural diversity and be culturally 
        competent;
            [(10) a description of the guidelines for requiring 
        parental involvement in State and local program 
        development, policy design, and governance and the 
        process for assessing and demonstrating that parental 
        involvement in program development, operation, and 
        governance occurs;
            [(11) a description of the State and community-
        based interagency planning processes to be utilized to 
        develop and implement family resource programs;
            [(12) a description of the criteria that the State 
        will utilize for awarding grants for local programs so 
        that they meet the requirements of subsection (g);
            [(13) a description of the outreach and other 
        activities the program will undertake to maximize the 
        participation of racial and ethnic minorities, persons 
        with limited English proficiency, individuals with 
        disabilities, and members of other underserved or 
        underrepresented groups in all phases of the program;
            [(14) a plan for providing training, technical 
        assistance, and other assistance to local communities 
        in program development and networking activities;
            [(15) a description of the methods to be utilized 
        to evaluate the implementation and effectiveness of the 
        family resource programs within the State;
            [(16) a description of proposed actions by the 
        State that will facilitate the changing of laws, 
        regulations, policies, practices, procedures, and 
        organizational structures, that impede the availability 
        or provision of family resource services; and
            [(17) an assurance that the State will provide the 
        Secretary with reports, at such time and containing 
        such information as the Secretary may require.
    [(g) Local Program Requirements.--
            [(1) In general.--A State that receives a grant 
        under this section shall use amounts received under 
        such grant to establish local family resource programs 
        that--
                    [(A) undertake a community-based needs 
                assessment and program planning process which 
                involves parents, and local public and 
                nonprofit agencies (including those responsible 
                for providing health, education, vocational 
                rehabilitation, employment training, Head Start 
                and other early childhood, child welfare, and 
                social services);
                    [(B) develop a strategy to provide 
                comprehensive services to families to meet 
                identified needs through collaboration, 
                including public-private partnerships;
                    [(C) identify appropriate community-based 
                organizations to administer such programs 
                locally;
                    [(D) provide core services, and other 
                services directly or through contracts or 
                agreements with other local agencies;
                    [(E) involve parents in the development, 
                operation, and governance of the program; and
                    [(F) participate in the development and 
                maintenance of a statewide network of family 
                resource programs.
            [(2) Priority.--In awarding local grants under this 
        section, a State shall give priority to programs 
        serving low-income communities and programs serving 
        young parents or parents with young children and shall 
        ensure that such grants are equitably distributed among 
        urban and rural areas.
    [(h) Definitions.--As used in this section:
            [(1) Children with disabilities.--The term 
        ``children with disabilities'' has the meaning given 
        such term in section 602(a)(2) of Individuals With 
        Disabilities Education Act.
            [(2) Community referral services.--The term 
        ``community referral services'' means services to 
        assist families in obtaining community resources, 
        including respite services, health and mental health 
        services, employability development and job training 
        and other social services.
            [(3) Culturally competent.--The term ``culturally 
        competent'' means services, supports, or other 
        assistance that is conducted or provided in a manner 
        that--
                    [(A) is responsive to the beliefs, 
                interpersonal styles, attitudes, languages, and 
                behaviors of those individuals receiving 
                services; and
                    [(B) has the greatest likelihood of 
                ensuring maximum participation of such 
                individuals.
            [(4) Family resource program.--The term ``family 
        resource program'' means a program that offers 
        community-based services that provide sustained 
        assistance and support to families at various stages in 
        their development. Such services shall promote parental 
        competencies and behaviors that will lead to the 
        healthy and positive personal development of parents 
        and children through--
                    [(A) the provisions of assistance to build 
                family skills and assist parents in improving 
                their capacities to be supportive and nurturing 
                parents;
                    [(B) the provision of assistance to 
                families to enable such families to use other 
                formal and informal resources and opportunities 
                for assistance that are available within the 
                communities of such families; and
                    [(C) the creation of supportive networks to 
                enhance the childrearing capacity of parents 
                and assist in compensating for the increased 
                social isolation and vulnerability of families.
            [(5) Family resource services.--The term ``family 
        resource services'' means--
                    [(A) core services that must be provided 
                directly by the family resource program under 
                this section, including--
                            [(i) education and support services 
                        provided to assist parents in acquiring 
                        parenting skills, learning about child 
                        development, and responding 
                        appropriately to the behavior of their 
                        children;
                            [(ii) early developmental screening 
                        of children to assess the needs of such 
                        children and to identify the types of 
                        support to be provided;
                            [(iii) outreach services;
                            [(iv) community referral services; 
                        and
                            [(v) follow-up services; and
                    [(B) other services, which may be provided 
                either directly or through referral, 
                including--
                            [(i) early care and education (such 
                        as child care and Head Start);
                            [(ii) respite services;
                            [(iii) job readiness and counseling 
                        services (including skill training);
                            [(iv) education and literacy 
                        services;
                            [(v) nutritional education;
                            [(vi) life management skills 
                        training;
                            [(vii) peer counseling and crisis 
                        intervention, and family violence 
                        counseling services;
                            [(viii) referral for health 
                        (including prenatal care) and mental 
                        health services;
                            [(ix) substance abuse treatment; 
                        and
                            [(x) services to support families 
                        of children with disabilities that are 
                        designed to prevent inappropriate out-
                        of-the-home placement and maintain 
                        family unity.
            [(6) Interdisciplinary governance.--The term 
        ``interdisciplinary governance'' includes governance by 
        representatives from communities and representatives 
        from existing health, mental health, education, 
        vocational rehabilitation, employment and training, 
        child welfare, and other agencies within the State.
            [(7) Outreach services.--The term ``outreach 
        services'' means services provided to ensure (through 
        home visits or other methods) that parents and other 
        caretakers are aware of and able to participate in 
        family resource program activities.
            [(8) Respite services.--The term ``respite 
        services'' means short-term care services provided in 
        the temporary absence of the regular caregiver (parent, 
        other relative, foster parent, adoptive parent, 
        guardian) to children who meet one or more of the 
        following categories:
                    [(A) The children are in danger of abuse or 
                neglect.
                    [(B) The children have experienced abuse or 
                neglect.
                    [(C) The children have disabilities, or 
                chronic or terminal illnesses.
        Services provided within or outside the child's home 
        shall be short-term care, ranging from a few hours to a 
        few weeks of time, per year, and be intended to enable 
        the family to stay together and to keep the child 
        living in the child's home and community.
    [(i) Authorization of Appropriations.--There are authorized 
to be appropriated to carry out this title, $50,000,000 for 
fiscal year 1995.

[TITLE III--CERTAIN PREVENTIVE SERVICES REGARDING CHILDREN OF HOMELESS 
              FAMILIES OR FAMILIES AT RISK OF HOMELESSNESS

[SEC. 301. DEMONSTRATION GRANTS FOR PREVENTION OF INAPPROPRIATE 
                    SEPARATION FROM FAMILY AND FOR PREVENTION OF CHILD 
                    ABUSE AND NEGLECT.

    [(a) Establishment of Program.--The Secretary may make 
grants to entities described in subsection (b)(1) for the 
purpose of assisting such entities in demonstrating, with 
respect to children whose families are homeless or at risk of 
becoming homeless, the effectiveness of activities undertaken 
to prevent--
            [(1) the inappropriate separation of such children 
        from their families on the basis of homelessness or 
        other problems regarding the availability and 
        conditions of housing for such families; and
            [(2) the abuse and neglect of such children.
    [(b) Minimum Qualifications of Grantees.--
            [(1) In general.--The entities referred to in 
        subsection (a) are State and local agencies that 
        provide services in geographic areas described in 
        paragraph (2), and that have authority--
                    [(A) for removing children, temporarily or 
                permanently, from the custody of the parents 
                (or other legal guardians) of such children and 
                placing such children in foster care or other 
                out-of-home care; or
                    [(B) in the case of youths not less than 16 
                years of age for whom such a placement has been 
                made, for assisting such youths in preparing to 
                be discharged from such care into circumstances 
                of providing for their own support.
            [(2) Eligible geographic areas.--The geographic 
        areas referred to in paragraph (1) are geographic areas 
        in which homelessness and other housing problems are--
                    [(A) threatening the well-being of 
                children; and
                    [(B)(i) contributing to the placement of 
                children in out-of-home care;
                    [(ii) preventing the reunification of 
                children with their families; or
                    [(iii) in the case of youths not less than 
                16 years of age who have been placed in out-of-
                home care, preventing such youths from being 
                discharged from such care into circumstances of 
                providing their own support without adequate 
                living arrangements.
            [(3) Cooperation with appropriate public and 
        private entities.--The Secretary shall not make a grant 
        under subsection (a) unless the agency involved has 
        entered into agreements with appropriate entities in 
        the geographic area involved (including child welfare 
        agencies, public housing agencies, and appropriate 
        public and nonprofit private entities that provide 
        services to homeless families) regarding the joint 
        planning, coordination and delivery of services under 
        the grant.
    [(c) Requirement of Matching Funds.--
            [(1) In general.--The Secretary shall not make a 
        grant under subsection (a) unless the agency involved 
        agrees that, with respect to the costs to be incurred 
        by such agency in carrying out the purpose described in 
        such subsection, the agency will make available 
        (directly or through donations from public or private 
        entities) non-Federal contributions toward such costs 
        in an amount equal to not less than $1 for each $4 of 
        Federal funds provided in such grant.
            [(2) Determination of amount of non-federal 
        contribution.--Non-Federal contributions required under 
        paragraph (1) may be in cash or in kind, fairly 
        evaluated, including plant, equipment, or services. 
        Amounts provided by the Federal Government, or services 
        assisted or subsidized to any significant extent by the 
        Federal Government, shall not be included in 
        determining the amount of such non-Federal 
        contributions.

[SEC. 302. PROVISIONS WITH RESPECT TO CARRYING OUT PURPOSE OF 
                    DEMONSTRATION GRANTS.

    [(a) Joint Training of Appropriate Service Personnel.--
            [(1) In general.--The Secretary shall not make a 
        grant under section 301(a) unless the agency involved 
        agrees to establish, with respect to the subjects 
        described in paragraph (2), a program for joint 
        training concerning such subjects, for appropriate 
        personnel of child welfare agencies, public housing 
        agencies, and appropriate public and private entities 
        that provide services to homeless families.
            [(2) Specification of training subjects.--The 
        subjects referred to in paragraph (1) are--
                    [(A) the relationship between homelessness, 
                and other housing problems, and the initial and 
                prolonged placement of children in out-of-home 
                care;
                    [(B) the housing-related needs of families 
                with children who are at risk of placement in 
                out-of-home care; and
                    [(C) resources (including housing-related 
                assistance) that are available to prevent the 
                initial or prolonged placement in out-of-home 
                care of children whose families are homeless or 
                who have other housing problems.
    [(b) Additional Authorized Activities.--In addition to 
activities authorized in subsection (a), a grantee under 
section 301(a) may expend grant funds for--
            [(1) the hiring of additional personnel to provide 
        assistance in obtaining appropriate housing--
                    [(A) to families whose children are at 
                imminent risk of placement in out-of-home care 
                or who are awaiting the return of children 
                placed in such care; and
                    [(B) to youth who are preparing to be 
                discharged from such care into circumstances of 
                providing for their own support;
            [(2) training and technical assistance for the 
        personnel of shelters and other programs for homeless 
        families (including domestic violence shelters) to 
        assist such programs--
                    [(A) in the prevention and identification 
                of child abuse and neglect among the families 
                the programs served; and
                    [(B) in obtaining appropriate resources for 
                families who need social services, including 
                supportive services and respite care;
            [(3) the development and dissemination of 
        informational materials to advise homeless families 
        with children and others who are seeking housing of 
        resources and programs available to assist them; and
            [(4) other activities, if authorized by the 
        Secretary, that are necessary to address housing 
        problems that result in the inappropriate initial or 
        prolonged placement of children in out-of-home care.

[SEC. 303. ADDITIONAL REQUIRED AGREEMENTS.

    [(a) Reports to Secretary.--The Secretary shall not make a 
grant under section 301(a) unless the agency involved agrees 
that such agency will--
            [(1) annually prepare and submit to the Secretary a 
        report describing the specific activities carried out 
        by the agency under the grant; and
            [(2) include in the report submitted under 
        paragraph (1), the results of an evaluation of the 
        extent to which such activities have been effective in 
        carrying out the purpose described in such section, 
        including the effect of such activities regarding--
                    [(A) the incidence of placements of 
                children in out-of-home care;
                    [(B) the reunification of children with 
                their families; and
                    [(C) in the case of youths not less than 16 
                years of age who have been placed in out-of-
                home care, the discharge of such youths from 
                such care into circumstances of providing for 
                their own support with adequate living 
                arrangements.
    [(b) Evaluation by the Secretary.--The Secretary shall 
conduct evaluations to determine the effectiveness of 
demonstration programs supported under section 301(a) in--
            [(1) strengthening coordination between child 
        welfare agencies, housing authorities, and programs for 
        homeless families;
            [(2) preventing placements of children into out-of-
        home care due to homelessness or other housing 
        problems;
            [(3) facilitating the reunification of children 
        with their families; and
            [(4) in the case of youths not less than 16 years 
        old who have been placed in out-of-home care, 
        preventing such youth from being discharged from such 
        care into circumstances of providing their own support 
        without adequate living arrangements.
    [(c) Report to Congress.--
            [(1) Preparation of list.--Not later than April 1, 
        1991, the Secretary, after consultation with the 
        Secretary of Education, the Secretary of Housing and 
        Urban Development and the Secretary of Labor, shall 
        prepare and submit to the Committee on Education and 
        Labor of the House of Representatives and the Committee 
        on Labor and Human Resources of the Senate a list of 
        Federal programs that provide services, or fund grants, 
        contracts, or cooperative agreements for the provision 
        of services, directed to the prevention of homelessness 
        for families whose children are at risk of out of home 
        placement and the incidence of child abuse that may be 
        associated with homelessness, that shall include 
        programs providing--
                    [(A) rent, utility, and other subsidies;
                    [(B) training; and
                    [(C) for inter-agency coordination, at both 
                the local and State and Federal level.
            [(2) Contents of list.--The list prepared under 
        paragraph (1) shall include a description of--
                    [(A) the appropriate citations relating to 
                the authority for such programs;
                    [(B) entities that are eligible to 
                participate in each such program;
                    [(C) authorization levels and the annual 
                amounts appropriated for such programs for each 
                fiscal year in which such programs were 
                authorized;
                    [(D) the agencies and divisions 
                administering each such program;
                    [(E) the expiration date of the authority 
                of each such program; and
                    [(F) to the extent available, the extent to 
                which housing assistance under such programs 
                can be accessed by child welfare and other 
                appropriate agencies.
            [(3) Report.--Not later than March 1, 1993, the 
        Secretary shall prepare and submit to the appropriate 
        committees of Congress a report that contains a 
        description of the activities carried out under this 
        title, and an assessment of the effectiveness of such 
        programs in preventing initial and prolonged separation 
        of children from their families due to homelessness and 
        other housing problems. At a minimum the report shall 
        contain--
                    [(A) information describing the localities 
                in which activities are conducted;
                    [(B) information describing the specific 
                activities undertaken with grant funds and, 
                where relevant, the numbers of families and 
                children assisted by such activities;
                    [(C) information concerning the nature of 
                the joint training conducted with grant funds;
                    [(D) information concerning the manner in 
                which other agencies such as child welfare, 
                public housing authorities, and appropriate 
                public and nonprofit private entities are 
                consulting and coordinating with existing 
                programs that are designed to prevent 
                homelessness and to serve homeless families and 
                youth; and
                    [(E) information concerning the impact of 
                programs supported with grant funds under this 
                title on--
                            [(i) the incidence of the placement 
                        of children into out-of-home care;
                            [(ii) the reunification of children 
                        with their families; and
                            [(iii) in the case of youth not 
                        less than 16 years of age who have been 
                        placed in out-of-home care, the 
                        discharge of such youths from such care 
                        into circumstances of providing for 
                        their own support with adequate living 
                        arrangements.
    [(d) Restriction on Use of Grant.--The Secretary may not 
make a grant under section 301(a) unless the agency involved 
agrees that the agency will not expend the grant to purchase or 
improve real property.

[SEC. 304. DESCRIPTION OF INTENDED USES OF GRANT.

    [The Secretary shall not make a grant under section 301(a) 
unless--
            [(1) the agency involved submits to the Secretary a 
        description of the purposes for which the agency 
        intends to expend the grant;
            [(2) with respect to the entities with which the 
        agency has made agreements pursuant to section 
        301(b)(1), such entities have assisted the agency in 
        preparing the description required in paragraph (1); 
        and
            [(3) the description includes a statement of the 
        methods that the agency will utilize in conducting the 
        evaluations required in section 303(a)(2).

[SEC. 305. REQUIREMENT OF SUBMISSION OF APPLICATION.

    [The Secretary shall not make a grant under section 301(a) 
unless an application for the grant is submitted to the 
Secretary, the application contains the description of intended 
uses required in section 304, and the application is in such 
form, is made in such manner, and contains such agreements, 
assurances, and information as the Secretary determines to be 
necessary to carry out this title.

[SEC. 306. AUTHORIZATION OF APPROPRIATIONS.

    [(a) In General.--For the purpose of carrying out this 
title, there are authorized to be appropriated $12,500,000 for 
fiscal year 1992, and such sums as may be necessary for each of 
the fiscal years 1993 through 1995.
    [(b) Availability of Appropriations.--Amounts appropriated 
under subsection (a) shall remain available until expended.]

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Child and Family Services 
Block Grant Act of 1996''.

SEC. 2. FINDINGS.

    The Congress finds the following:
            (1) Each year, close to 1,000,000 American children 
        are victims of abuse and neglect.
            (2) Many of these children and their families fail 
        to receive adequate protection or treatment.
            (3) The problem of child abuse and neglect requires 
        a comprehensive approach that--
                    (A) integrates the work of social service, 
                legal, health, mental health, education, and 
                substance abuse agencies and organizations;
                    (B) strengthens coordination among all 
                levels of government, and with private 
                agencies, civic, religious, and professional 
                organizations, and individual volunteers;
                    (C) emphasizes the need for abuse and 
                neglect prevention, assessment, investigation, 
                and treatment at the neighborhood level;
                    (D) ensures properly trained and support 
                staff with specialized knowledge, to carry out 
                their child protection duties; and
                    (E) is sensitive to ethnic and cultural 
                diversity.
            (4) The child protection system should be 
        comprehensive, child-centered, family-focused, and 
        community-based, should incorporate all appropriate 
        measures to prevent the occurrence or recurrence of 
        child abuse and neglect, and should promote physical 
        and psychological recovery and social reintegration in 
        an environment that fosters the health, safety, self-
        respect, and dignity of the child.
            (5) The Federal Government should provide 
        leadership and assist communities in their child and 
        family protection efforts by--
                    (A) generating and sharing knowledge 
                relevant to child and family protection, 
                including the development of models for service 
                delivery;
                    (B) strengthening the capacity of States to 
                assist communities;
                    (C) helping communities to carry out their 
                child and family protection plans by promoting 
                the competence of professional, 
                paraprofessional, and volunteer resources; and
                    (D) providing leadership to end the abuse 
                and neglect of the Nation's children and youth.

SEC. 3. PURPOSES.

    The purposes of this Act are the following:
            (1) To assist each State in improving the child 
        protective service systems of such State by--
                    (A) improving risk and safety assessment 
                tools and protocols;
                    (B) developing, strengthening, and 
                facilitating training opportunities for 
                individuals who are mandated to report child 
                abuse or neglect or otherwise overseeing, 
                investigating, prosecuting, or providing 
                services to children and families who are at 
                risk of abusing or neglecting their children; 
                and
                    (C) developing, implementing, or operating 
                information, education, training, or other 
                programs designed to assist and provide 
                services for families of disabled infants with 
                life-threatening conditions.
            (2) To support State efforts to develop, operate, 
        expand and enhance a network of community-based, 
        prevention-focused, family resource and support 
        programs that are culturally competent and that 
        coordinate resources among existing education, 
        vocational rehabilitation, disability, respite, health, 
        mental health, job readiness, self-sufficiency, child 
        and family development, community action, Head Start, 
        child care, child abuse and neglect prevention, 
        juvenile justice, domestic violence prevention and 
        intervention, housing, and other human service 
        organizations within the State.
            (3) To facilitate the elimination of barriers to 
        adoption and to provide permanent and loving home 
        environments for children who would benefit from 
        adoption, particularly children with special needs, 
        including disabled infants with life-threatening 
        conditions, by--
                    (A) promoting model adoption legislation 
                and procedures in the States and territories of 
                the United States in order to eliminate 
                jurisdictional and legal obstacles to adoption;
                    (B) providing a mechanism for the 
                Department of Health and Human Services to--
                            (i) promote quality standards for 
                        adoption services, preplacement, post-
                        placement, and post-legal adoption 
                        counseling, and standards to protect 
                        the rights of children in need of 
                        adoption;
                            (ii) maintain a national adoption 
                        information exchange system to bring 
                        together children who would benefit 
                        from adoption and qualified prospective 
                        adoptive parents who are seeking such 
                        children, and conduct national 
                        recruitment efforts in order to reach 
                        prospective parents for children 
                        awaiting adoption; and
                            (iii) demonstrate expeditious ways 
                        to free children for adoption for whom 
                        it has been determined that adoption is 
                        the appropriate plan; and
                    (C) facilitating the identification and 
                recruitment of foster and adoptive families 
                that can meet children's needs.
            (4) To respond to the needs of children, in 
        particular those who are drug exposed or afflicted with 
        Acquired Immune Deficiency Syndrome (AIDS), by 
        supporting activities aimed at preventing the 
        abandonment of children, providing support to children 
        and their families, and facilitating the recruitment 
        and training of health and social service personnel.
            (5) To carry out any other activities as the 
        Secretary determines are consistent with this Act.

SEC. 4. DEFINITIONS.

    As used in this Act:
            (1) Child.--The term ``child'' means a person who 
        has not attained the lesser of--
                    (A) the age of 18; or
                    (B) except in the case of sexual abuse, the 
                age specified by the child protection law of 
                the State in which the child resides.
            (2) Child abuse and neglect.--The term ``child 
        abuse and neglect'' means, at a minimum, any recent act 
        or failure to act on the part of a parent or caretaker, 
        which results in death, serious physical or emotional 
        harm, sexual abuse or exploitation, or an act or 
        failure to act which presents an imminent risk of 
        serious harm.
            (3) Family resource and support programs.--The term 
        ``family resource and support program'' means a 
        community-based, prevention-focused entity that--
                    (A) provides, through direct service, the 
                core services required under this Act, 
                including--
                            (i) parent education, support and 
                        leadership services, together with 
                        services characterized by relationships 
                        between parents and professionals that 
                        are based on equality and respect, and 
                        designed to assist parents in acquiring 
                        parenting skills, learning about child 
                        development, and responding 
                        appropriately to the behavior of their 
                        children;
                            (ii) services to facilitate the 
                        ability of parents to serve as 
                        resources to one another (such as 
                        through mutual support and parent self-
                        help groups);
                            (iii) early developmental screening 
                        of children to assess any needs of 
                        children, and to identify types of 
                        support that may be provided;
                            (iv) outreach services provided 
                        through voluntary home visits and other 
                        methods to assist parents in becoming 
                        aware of and able to participate in 
                        family resources and support program 
                        activities;
                            (v) community and social services 
                        to assist families in obtaining 
                        community resources; and
                            (vi) followup services;
                    (B) provides, or arranges for the provision 
                of, other core services through contracts or 
                agreements with other local agencies; and
                    (C) provides access to optional services, 
                directly or by contract, purchase of service, 
                or interagency agreement, including--
                            (i) child care, early childhood 
                        development and early intervention 
                        services;
                            (ii) self-sufficiency and life 
                        management skills training;
                            (iii) education services, such as 
                        scholastic tutoring, literacy training, 
                        and General Educational Degree 
                        services;
                            (iv) job readiness skills;
                            (v) child abuse and neglect 
                        prevention activities;
                            (vi) services that families with 
                        children with disabilities or special 
                        needs may require;
                            (vii) community and social service 
                        referral;
                            (viii) peer counseling;
                            (ix) referral for substance abuse 
                        counseling and treatment; and
                            (x) help line services.
            (4) Indian tribe and tribal organization.--The 
        terms ``Indian tribe'' and ``tribal organization'' 
        shall have the same meanings given such terms in 
        subsections (e) and (l), respectively, of section 4 of 
        the Indian Self-Determination and Education Assistance 
        Act (25 U.S.C. 450b(e) and (l)).
            (5) Respite services.--The term ``respite 
        services'' means short-term care services provided in 
        the temporary absence of the regular caregiver (parent, 
        other relative, foster parent, adoptive parent, or 
        guardian) to children who--
                    (A) are in danger of abuse or neglect;
                    (B) have experienced abuse or neglect; or
                    (C) have disabilities, chronic, or terminal 
                illnesses.
        Such services shall be provided within or outside the 
        home of the child, be short-term care (ranging from a 
        few hours to a few weeks of time, per year), and be 
        intended to enable the family to stay together and to 
        keep the child living in the home and community of the 
        child.
            (6) Secretary.--The term ``Secretary'' means the 
        Secretary of Health and Human Services.
            (7) Sexual abuse.--The term ``sexual abuse'' 
        includes--
                    (A) the employment, use, persuasion, 
                inducement, enticement, or coercion of any 
                child to engage in, or assist any other person 
                to engage in, any sexually explicit conduct or 
                simulation of such conduct for the purpose of 
                producing a visual depiction of such conduct; 
                or
                    (B) the rape, molestation, prostitution, or 
                other form of sexual exploitation of children, 
                or incest with children.
            (8) State.--The term ``State'' means each of the 
        several States, the District of Columbia, the 
        Commonwealth of Puerto Rico, the Virgin Islands, Guam, 
        American Samoa, the Commonwealth of the Northern 
        Mariana Islands, and the Trust Territory of the Pacific 
        Islands.
            (9) Withholding of medically indicated treatment.--
        The term ``withholding of medically indicated 
        treatment'' means the failure to respond to the 
        infant's life-threatening conditions by providing 
        treatment (including appropriate nutrition, hydration, 
        and medication) which, in the treating physician's or 
        physicians' reasonable medical judgment, will be most 
        likely to be effective in ameliorating or correcting 
        all such conditions, except that the term does not 
        include the failure to provide treatment (other than 
        appropriate nutrition, hydration, or medication) to an 
        infant when, in the treating physician's or physicians' 
        reasonable medical judgment--
                    (A) the infant is chronically and 
                irreversibly comatose;
                    (B) the provision of such treatment would--
                            (i) merely prolong dying;
                            (ii) not be effective in 
                        ameliorating or correcting all of the 
                        infant's life-threatening conditions; 
                        or
                            (iii) otherwise be futile in terms 
                        of the survival of the infant; or
                    (C) the provision of such treatment would 
                be virtually futile in terms of the survival of 
                the infant and the treatment itself under such 
                circumstances would be inhumane.

                      TITLE I--GENERAL BLOCK GRANT

SEC. 101. CHILD AND FAMILY SERVICES BLOCK GRANTS.

    (a) Eligibility.--The Secretary shall award grants to 
eligible States that file a State plan that is approved under 
section 102 and that otherwise meet the eligibility 
requirements for grants under this title.
    (b) Amount of Grant.--The amount of a grant made to each 
State under subsection (a) for a fiscal year shall be based on 
the population of children under the age of 18 residing in each 
State that applies for a grant under this section.
    (c) Use of Amounts.--Amounts received by a State under a 
grant awarded under subsection (a) shall be used to carry out 
the purposes described in section 3.

SEC. 102. ELIGIBLE STATES.

    (a) In General.--As used in this title, the term ``eligible 
State'' means a State that has submitted to the Secretary, not 
later than October 1, 1996, and every 3 years thereafter, a 
plan which has been signed by the chief executive officer of 
the State and that includes the following:
            (1) Outline of child protection program.--A written 
        document that outlines the activities the State intends 
        to conduct to achieve the purpose of this title, 
        including the procedures to be used for--
                    (A) receiving and assessing reports of 
                child abuse or neglect;
                    (B) investigating such reports;
                    (C) with respect to families in which abuse 
                or neglect has been confirmed, providing 
                services or referral for services for families 
                and children where the State makes a 
                determination that the child may safely remain 
                with the family;
                    (D) protecting children by removing them 
                from dangerous settings and ensuring their 
                placement in a safe environment;
                    (E) providing training for individuals 
                mandated to report suspected cases of child 
                abuse or neglect;
                    (F) protecting children in foster care;
                    (G) promoting timely adoptions;
                    (H) protecting the rights of families, 
                using adult relatives as the preferred 
                placement for children separated from their 
                parents where such relatives meet the relevant 
                State child protection standards; and
                    (I) providing services to individuals, 
                families, or communities, either directly or 
                through referral, that are aimed at preventing 
                the occurrence of child abuse and neglect.
            (2) Certification of state law requiring the 
        reporting of child abuse and neglect.--A certification 
        that the State has in effect laws that require public 
        officials and other professionals to report, in good 
        faith, actual or suspected instances of child abuse or 
        neglect.
            (3) Certification of procedures for screening, 
        safety assessment, and prompt investigation.--A 
        certification that the State has in effect procedures 
        for receiving and responding to reports of child abuse 
        or neglect, including the reports described in 
        paragraph (2), and for the immediate screening, safety 
        assessment, and prompt investigation of such reports.
            (4) Certification of state procedures for removal 
        and placement of abused or neglected children.--A 
        certification that the State has in effect procedures 
        for the removal from families and placement of abused 
        or neglected children and of any other child in the 
        same household who may also be in danger of abuse or 
        neglect.
            (5) Certification of provisions for immunity from 
        prosecution.--A certification that the State has in 
        effect laws requiring immunity from prosecution under 
        State and local laws and regulations for individuals 
        making good faith reports of suspected or known 
        instances of child abuse or neglect.
            (6) Certification of provisions and procedures 
        relating to appeals.--A certification that not later 
        than 2 years after the date of the enactment of this 
        Act, the State shall have laws and procedures in effect 
        affording individuals an opportunity to appeal an 
        official finding of abuse or neglect.
            (7) Certification of state procedures for 
        developing and reviewing written plans for permanent 
        placement of removed children.--A certification that 
        the State has in effect procedures for ensuring that a 
        written plan is prepared for children who have been 
        removed from their families. Such plan shall specify 
        the goals for achieving a permanent placement for the 
        child in a timely fashion, for ensuring that the 
        written plan is reviewed every 6 months (until such 
        placement is achieved), and for ensuring that 
        information about such children is collected regularly 
        and recorded in case records, and include a description 
        of such procedures.
            (8) Certification of state program to provide 
        independent living services.--A certification that the 
        State has in effect a program to provide independent 
        living services, for assistance in making the 
        transition to self-sufficient adulthood, to individuals 
        in the child protection program of the State who are 
        16, but who are not 20 (or, at the option of the State, 
        22), years of age, and who do not have a family to 
        which to be returned.
            (9) Certification of state procedures to respond to 
        reporting of medical neglect of disabled infants.--
                    (A) In general.--A certification that the 
                State has in place for the purpose of 
                responding to the reporting of medical neglect 
                of infants (including instances of withholding 
                of medically indicated treatment from disabled 
                infants with life-threatening conditions), 
                procedures or programs, or both (within the 
                State child protective services system), to 
                provide for--
                            (i) coordination and consultation 
                        with individuals designated by and 
                        within appropriate health-care 
                        facilities;
                            (ii) prompt notification by 
                        individuals designated by and within 
                        appropriate health-care facilities of 
                        cases of suspected medical neglect 
                        (including instances of withholding of 
                        medically indicated treatment from 
                        disabled infants with life-threatening 
                        conditions); and
                            (iii) authority, under State law, 
                        for the State child protective service 
                        to pursue any legal remedies, including 
                        the authority to initiate legal 
                        proceedings in a court of competent 
                        jurisdiction, as may be necessary to 
                        prevent the withholding of medically 
                        indicated treatment from disabled 
                        infants with life-threatening 
                        conditions.
                    (B) Withholding of medically indicated 
                treatment.--As used in subparagraph (A), the 
                term ``withholding of medically indicated 
                treatment'' means the failure to respond to the 
                infant's life-threatening conditions by 
                providing treatment (including appropriate 
                nutrition, hydration, and medication) which, in 
                the treating physician's or physicians' 
                reasonable medical judgment, will be most 
                likely to be effective in ameliorating or 
                correcting all such conditions, except that 
                such term does not include the failure to 
                provide treatment (other than appropriate 
                nutrition, hydration, or medication) to an 
                infant when, in the treating physician's or 
                physicians' reasonable medical judgment--
                            (i) the infant is chronically and 
                        irreversibly comatose;
                            (ii) the provision of such 
                        treatment would--
                                    (I) merely prolong dying;
                                    (II) not be effective in 
                                ameliorating or correcting all 
                                of the infant's life-
                                threatening conditions; or
                                    (III) otherwise be futile 
                                in terms of the survival of the 
                                infant; or
                            (iii) the provision of such 
                        treatment would be virtually futile in 
                        terms of the survival of the infant and 
                        the treatment itself under such 
                        circumstances would be inhumane.
            (10) Identification of child protection goals.--The 
        quantitative goals of the State child protection 
        program.
            (11) Certification of child protection standards.--
        With respect to fiscal years beginning on or after 
        April 1, 1996, a certification that the State--
                    (A) has completed an inventory of all 
                children who, before the inventory, had been in 
                foster care under the responsibility of the 
                State for 6 months or more, which determined--
                            (i) the appropriateness of, and 
                        necessity for, the foster care 
                        placement;
                            (ii) whether the child could or 
                        should be returned to the parents of 
                        the child or should be freed for 
                        adoption or other permanent placement; 
                        and
                            (iii) the services necessary to 
                        facilitate the return of the child or 
                        the placement of the child for adoption 
                        or legal guardianship;
                    (B) is operating, to the satisfaction of 
                the Secretary--
                            (i) a statewide information system 
                        from which can be readily determined 
                        the status, demographic 
                        characteristics, location, and goals 
                        for the placement of every child who is 
                        (or, within the immediately preceding 
                        12 months, has been) in foster care;
                            (ii) a case review system for each 
                        child receiving foster care under the 
                        supervision of the State;
                            (iii) a service program designed to 
                        help children--
                                    (I) where appropriate, 
                                return to families from which 
                                they have been removed; or
                                    (II) be placed for 
                                adoption, with a legal 
                                guardian, or if adoption or 
                                legal guardianship is 
                                determined not to be 
                                appropriate for a child, in 
                                some other planned, permanent 
                                living arrangement; and
                            (iv) a preplacement preventive 
                        services program designed to help 
                        children at risk for foster care 
                        placement remain with their families; 
                        and
                    (C)(i) has reviewed (or not later than 
                October 1, 1997, will review) State policies 
                and administrative and judicial procedures in 
                effect for children abandoned at or shortly 
                after birth (including policies and procedures 
                providing for legal representation of such 
                children); and
                    (ii) is implementing (or not later than 
                October 1, 1997, will implement) such policies 
                and procedures as the State determines, on the 
                basis of the review described in clause (i), to 
                be necessary to enable permanent decisions to 
                be made expeditiously with respect to the 
                placement of such children.
            (12) Certification of reasonable efforts before 
        placement of children in foster care.--A certification 
        that the State in each case will--
                    (A) make reasonable efforts prior to the 
                placement of a child in foster care, to prevent 
                or eliminate the need for removal of the child 
                from the child's home, and to make it possible 
                for the child to return home; and
                    (B) with respect to families in which abuse 
                or neglect has been confirmed, provide services 
                or referral for services for families and 
                children where the State makes a determination 
                that the child may safely remain with the 
                family.
            (13) Certification of confidentiality and 
        requirements for information disclosure.--
                    (A) In general.--A certification that the 
                State has in effect and operational--
                            (i) requirements ensuring that 
                        reports and records made and maintained 
                        pursuant to the purposes of this part 
                        shall only be made available to--
                                    (I) individuals who are the 
                                subject of the report;
                                    (II) Federal, State, or 
                                local government entities, or 
                                any agent of such entities, 
                                having a need for such 
                                information in order to carry 
                                out their responsibilities 
                                under law to protect children 
                                from abuse and neglect;
                                    (III) child abuse citizen 
                                review panels;
                                    (IV) child fatality review 
                                panels;
                                    (V) a grand jury or court, 
                                upon a finding that information 
                                in the record is necessary for 
                                the determination of an issue 
                                before the court or grand jury; 
                                and
                                    (VI) other entities or 
                                classes of individuals 
                                statutorily authorized by the 
                                State to receive such 
                                information pursuant to a 
                                legitimate State purpose; and
                            (ii) provisions that allow for 
                        public disclosure of the findings or 
                        information about cases of child abuse 
                        or neglect that have resulted in a 
                        child fatality or near fatality.
                    (B) Limitation.--Disclosures made pursuant 
                to clause (i) or (ii) shall not include the 
                identifying information concerning the 
                individual initiating a report or complaint 
                alleging suspected instances of child abuse or 
                neglect.
                    (C) Definition.--For purposes of this 
                paragraph, the term ``near fatality'' means an 
                act that, as certified by a physician, places 
                the child in serious or critical condition.
    (b) Determinations.--The Secretary shall determine whether 
a plan submitted pursuant to subsection (a) contains the 
material required by subsection (a), other than the material 
described in paragraph (9) of such subsection. The Secretary 
may not require a State to include in such a plan any material 
not described in subsection (a).

SEC. 103. DATA COLLECTION AND REPORTING.

    (a) National Child Abuse and Neglect Data System.--The 
Secretary shall establish a national data collection and 
analysis program--
            (1) which, to the extent practicable, coordinates 
        existing State child abuse and neglect reports and 
        which shall include--
                    (A) standardized data on substantiated, as 
                well as false, unfounded, or unsubstantiated 
                reports; and
                    (B) information on the number of deaths due 
                to child abuse and neglect; and
            (2) which shall collect, compile, analyze, and make 
        available State child abuse and neglect reporting 
        information which, to the extent practical, is 
        universal and case-specific and integrated with other 
        case-based foster care and adoption data collected by 
        the Secretary.
    (b) Adoption and Foster Care and Analysis and Reporting 
Systems.--The Secretary shall implement a system for the 
collection of data relating to adoption and foster care in the 
United States. Such data collection system shall--
            (1) avoid unnecessary diversion of resources from 
        agencies responsible for adoption and foster care;
            (2) assure that any data that is collected is 
        reliable and consistent over time and among 
        jurisdictions through the use of uniform definitions 
        and methodologies;
            (3) provide comprehensive national information with 
        respect to--
                    (A) the demographic characteristics of 
                adoptive and foster children and their 
                biological and adoptive or foster parents;
                    (B) the status of the foster care 
                population (including the number of children in 
                foster care, length of placement, type of 
                placement, availability for adoption, and goals 
                for ending or continuing foster care);
                    (C) the number and characteristics of--
                            (i) children placed in or removed 
                        from foster care;
                            (ii) children adopted or with 
                        respect to whom adoptions have been 
                        terminated; and
                            (iii) children placed in foster 
                        care outside the State which has 
                        placement and care responsibility; and
                    (D) the extent and nature of assistance 
                provided by Federal, State, and local adoption 
                and foster care programs and the 
                characteristics of the children with respect to 
                whom such assistance is provided; and
            (4) utilize appropriate requirements and incentives 
        to ensure that the system functions reliably throughout 
        the United States.
    (c) Additional Information.--The Secretary may require the 
provision of additional information under the data collection 
system established under subsection (b) if the addition of such 
information is agreed to by a majority of the States.
    (d) Annual Report by the Secretary.--Within 6 months after 
the end of each fiscal year, the Secretary shall prepare a 
report based on information provided by the States for the 
fiscal year pursuant to this section, and shall make the report 
and such information available to the Congress and the public.

 TITLE II--RESEARCH, DEMONSTRATIONS, TRAINING, AND TECHNICAL ASSISTANCE

SEC. 201. RESEARCH GRANTS.

    (a) In General.--The Secretary, in consultation with 
appropriate Federal officials and recognized experts in the 
field, shall award grants or contracts for the conduct of 
research in accordance with subsection (b).
    (b) Research.--Research projects to be conducted using 
amounts received under this section--
            (1) shall be designed to provide information to 
        better protect children from abuse or neglect and to 
        improve the well-being of abused or neglected children, 
        with at least a portion of any such research conducted 
        under a project being field initiated;
            (2) shall at a minimum, focus on--
                    (A) the nature and scope of child abuse and 
                neglect;
                    (B) the causes, prevention, assessment, 
                identification, treatment, cultural and 
                socioeconomic distinctions, and the 
                consequences of child abuse and neglect;
                    (C) appropriate, effective and culturally 
                sensitive investigative, administrative, and 
                judicial procedures with respect to cases of 
                child abuse; and
                    (D) the national incidence of child abuse 
                and neglect, including--
                            (i) the extent to which incidents 
                        of child abuse are increasing or 
                        decreasing in number and severity;
                            (ii) the incidence of substantiated 
                        and unsubstantiated reported child 
                        abuse cases;
                            (iii) the number of substantiated 
                        cases that result in a judicial finding 
                        of child abuse or neglect or related 
                        criminal court convictions;
                            (iv) the extent to which the number 
                        of unsubstantiated, unfounded and false 
                        reported cases of child abuse or 
                        neglect have contributed to the 
                        inability of a State to respond 
                        effectively to serious cases of child 
                        abuse or neglect;
                            (v) the extent to which the lack of 
                        adequate resources and the lack of 
                        adequate training of reporters have 
                        contributed to the inability of a State 
                        to respond effectively to serious cases 
                        of child abuse and neglect;
                            (vi) the number of unsubstantiated, 
                        false, or unfounded reports that have 
                        resulted in a child being placed in 
                        substitute care, and the duration of 
                        such placement;
                            (vii) the extent to which 
                        unsubstantiated reports return as more 
                        serious cases of child abuse or 
                        neglect;
                            (viii) the incidence and prevalence 
                        of physical, sexual, and emotional 
                        abuse and physical and emotional 
                        neglect in substitute care;
                            (ix) the incidence and outcomes of 
                        abuse allegations reported within the 
                        context of divorce, custody, or other 
                        family court proceedings, and the 
                        interaction between this venue and the 
                        child protective services system; and
                            (x) the cases of children reunited 
                        with their families or receiving family 
                        preservation services that result in 
                        subsequent substantiated reports of 
                        child abuse and neglect, including the 
                        death of the child; and
            (3) may include the appointment of an advisory 
        board to--
                    (A) provide recommendations on coordinating 
                Federal, State, and local child abuse and 
                neglect activities at the State level with 
                similar activities at the State and local level 
                pertaining to family violence prevention;
                    (B) consider specific modifications needed 
                in State laws and programs to reduce the number 
                of unfounded or unsubstantiated reports of 
                child abuse or neglect while enhancing the 
                ability to identify and substantiate legitimate 
                cases of abuse or neglect which place a child 
                in danger; and
                    (C) provide recommendations for 
                modifications needed to facilitate coordinated 
                national and Statewide data collection with 
                respect to child protection and child welfare.

SEC. 202. NATIONAL CLEARINGHOUSE FOR INFORMATION RELATING TO CHILD 
                    ABUSE.

    (a) Establishment.--The Secretary shall, through the 
Department of Health and Human Services, or by one or more 
contracts of not less than 3 years duration provided through a 
competition, establish a national clearinghouse for information 
relating to child abuse.
    (b) Functions.--The Secretary shall, through the 
clearinghouse established by subsection (a)--
            (1) maintain, coordinate, and disseminate 
        information on all programs, including private 
        programs, that show promise of success with respect to 
        the prevention, assessment, identification, and 
        treatment of child abuse and neglect;
            (2) maintain and disseminate information relating 
        to--
                    (A) the incidence of cases of child abuse 
                and neglect in the United States;
                    (B) the incidence of such cases in 
                populations determined by the Secretary under 
                section 105(a)(1) of the Child Abuse 
                Prevention, Adoption, and Family Services Act 
                of 1988 (as such section was in effect on the 
                day before the date of enactment of this Act); 
                and
                    (C) the incidence of any such cases related 
                to alcohol or drug abuse;
            (3) disseminate information related to data 
        collected and reported by States pursuant to section 
        103;
            (4) compile, analyze, and publish a summary of the 
        research conducted under section 201; and
            (5) solicit public comment on the components of 
        such clearinghouse.

SEC. 203. GRANTS FOR DEMONSTRATION PROJECTS.

    (a) Awarding of General Grants.--The Secretary may make 
grants to, and enter into contracts with, public and nonprofit 
private agencies or organizations (or combinations of such 
agencies or organizations) for the purpose of developing, 
implementing, and operating time limited, demonstration 
programs and projects for the following purposes:
            (1) Innovative programs and projects.--The 
        Secretary may award grants to public agencies that 
        demonstrate innovation in responding to reports of 
        child abuse and neglect including programs of 
        collaborative partnerships between the State child 
        protective service agency, community social service 
        agencies and family support programs, schools, churches 
        and synagogues, and other community agencies to allow 
        for the establishment of a triage system that--
                    (A) accepts, screens and assesses reports 
                received to determine which such reports 
                require an intensive intervention and which 
                require voluntary referral to another agency, 
                program or project;
                    (B) provides, either directly or through 
                referral, a variety of community-linked 
                services to assist families in preventing child 
                abuse and neglect; and
                    (C) provides further investigation and 
                intensive intervention where the child's safety 
                is in jeopardy.
            (2) Kinship care programs and projects.--The 
        Secretary may award grants to public entities to assist 
        such entities in developing or implementing procedures 
        using adult relatives as the preferred placement for 
        children removed from their home, where such relatives 
        are determined to be capable of providing a safe 
        nurturing environment for the child and where, to the 
        maximum extent practicable, such relatives comply with 
        relevant State child protection standards.
            (3) Adoption opportunities.--The Secretary may 
        award grants to public entities to assist such entities 
        in developing or implementing programs to expand 
        opportunities for the adoption of children with special 
        needs.
            (4) Family resource centers.--The Secretary may 
        award grants to public or nonprofit private entities to 
        provide for the establishment of family resource 
        programs and support services that--
                    (A) develop, expand, and enhance statewide 
                networks of community-based, prevention-focused 
                centers, programs, or services that provide 
                comprehensive support for families;
                    (B) promote the development of parental 
                competencies and capacities in order to 
                increase family stability;
                    (C) support the additional needs of 
                families with children with disabilities;
                    (D) foster the development of a continuum 
                of preventive services for children and 
                families through State and community-based 
                collaborations and partnerships (both public 
                and private); and
                    (E) maximize funding for the financing, 
                planning, community mobilization, 
                collaboration, assessment, information and 
                referral, startup, training and technical 
                assistance, information management, reporting, 
                and evaluation costs for establishing, 
                operating, or expanding a statewide network of 
                community-based, prevention-focused family 
                resource and support services.
            (5) Other innovative programs.--The Secretary may 
        award grants to public or private nonprofit 
        organizations to assist such entities in developing or 
        implementing innovative programs and projects that show 
        promise of preventing and treating cases of child abuse 
        and neglect (such as Parents Anonymous).
    (b) Grants for Abandoned Infant Programs.--The Secretary 
may award grants to public and nonprofit private entities to 
assist such entities in developing or implementing procedures--
            (1) to prevent the abandonment of infants and young 
        children, including the provision of services to 
        members of the natural family for any condition that 
        increases the probability of abandonment of an infant 
        or young child;
            (2) to identify and address the needs of abandoned 
        infants and young children;
            (3) to assist abandoned infants and young children 
        to reside with their natural families or in foster 
        care, as appropriate;
            (4) to recruit, train, and retain foster families 
        for abandoned infants and young children;
            (5) to carry out residential care programs for 
        abandoned infants and young children who are unable to 
        reside with their families or to be placed in foster 
        care;
            (6) to carry out programs of respite care for 
        families and foster families of infants and young 
        children; and
            (7) to recruit and train health and social services 
        personnel to work with families, foster care families, 
        and residential care programs for abandoned infants and 
        young children.
    (c) Evaluation.--In making grants for demonstration 
projects under this section, the Secretary shall require all 
such projects to be evaluated for their effectiveness. Funding 
for such evaluations shall be provided either as a stated 
percentage of a demonstration grant or as a separate grant 
entered into by the Secretary for the purpose of evaluating a 
particular demonstration project or group of projects.

SEC. 204. TECHNICAL ASSISTANCE.

    (a) Child Abuse and Neglect.--
            (1) In general.--The Secretary shall provide 
        technical assistance under this title to States to 
        assist such States in planning, improving, developing, 
        and carrying out programs and activities relating to 
        the prevention, assessment identification, and 
        treatment of child abuse and neglect.
            (2) Evaluation.--Technical assistance provided 
        under paragraph (1) may include an evaluation or 
        identification of--
                    (A) various methods and procedures for the 
                investigation, assessment, and prosecution of 
                child physical and sexual abuse cases;
                    (B) ways to mitigate psychological trauma 
                to the child victim; and
                    (C) effective programs carried out by the 
                States under this Act.
    (b) Adoption Opportunities.--The Secretary shall provide, 
directly or by grant to or contract with public or private 
nonprofit agencies or organizations--
            (1) technical assistance and resource and referral 
        information to assist State or local governments with 
        termination of parental rights issues, in recruiting 
        and retaining adoptive families, in the successful 
        placement of children with special needs, and in the 
        provision of pre- and post-placement services, 
        including post-legal adoption services; and
            (2) other assistance to help State and local 
        governments replicate successful adoption-related 
        projects from other areas in the United States.

SEC. 205. TRAINING RESOURCES.

    (a) Training Programs.--The Secretary may award grants to 
public or private nonprofit organizations--
            (1) for the training of professional and 
        paraprofessional personnel in the fields of medicine, 
        law, education, law enforcement, social work, and other 
        relevant fields who are engaged in, or intend to work 
        in, the field of prevention, identification, and 
        treatment of child abuse and neglect, including the 
        links between domestic violence and child abuse;
            (2) to provide culturally specific instruction in 
        methods of protecting children from child abuse and 
        neglect to children and to persons responsible for the 
        welfare of children, including parents of and persons 
        who work with children with disabilities; and
            (3) to improve the recruitment, selection, and 
        training of volunteers serving in private and public 
        nonprofit children, youth and family service 
        organizations in order to prevent child abuse and 
        neglect through collaborative analysis of current 
        recruitment, selection, and training programs and 
        development of model programs for dissemination and 
        replication nationally.
    (b) Dissemination of Information.--The Secretary may 
provide for and disseminate information relating to various 
training resources available at the State and local level to--
            (1) individuals who are engaged, or who intend to 
        engage, in the prevention, identification, assessment, 
        and treatment of child abuse and neglect; and
            (2) appropriate State and local officials, 
        including prosecutors, to assist in training law 
        enforcement, legal, judicial, medical, mental health, 
        education, and child welfare personnel in appropriate 
        methods of interacting during investigative, 
        administrative, and judicial proceedings with children 
        who have been subjected to abuse.

SEC. 206. APPLICATIONS AND AMOUNTS OF GRANTS.

    (a) Requirement of Application.--The Secretary may not make 
a grant to a State or other entity under this title unless--
            (1) an application for the grant is submitted to 
        the Secretary;
            (2) with respect to carrying out the purpose for 
        which the grant is to be made, the application provides 
        assurances of compliance satisfactory to the Secretary; 
        and
            (3) the application otherwise is in such form, is 
        made in such manner, and contains such agreements, 
        assurances, and information as the Secretary determines 
        to be necessary to carry out this title.
    (b) Amount of Grant.--The Secretary shall determine the 
amount of a grant to be awarded under this title.

SEC. 207. PEER REVIEW FOR GRANTS.

    (a) Establishment of Peer Review Process.--
            (1) In general.--The Secretary shall, in 
        consultation with experts in the field and other 
        Federal agencies, establish a formal, rigorous, and 
        meritorious peer review process for purposes of 
        evaluating and reviewing applications for grants under 
        this title and determining the relative merits of the 
        projects for which such assistance is requested. The 
        purpose of this process is to enhance the quality and 
        usefulness of research in the field of child abuse and 
        neglect.
            (2) Requirements for members.--In establishing the 
        process required by paragraph (1), the Secretary shall 
        appoint to the peer review panels only members who are 
        experts in the field of child abuse and neglect or 
        related disciplines, with appropriate expertise in the 
        application to be reviewed, and who are not individuals 
        who are officers or employees of the Administration for 
        Children and Families. The panels shall meet as often 
        as is necessary to facilitate the expeditious review of 
        applications for grants and contracts under this title, 
        but may not meet less than once a year. The Secretary 
        shall ensure that the peer review panel utilizes 
        scientifically valid review criteria and scoring 
        guidelines for review committees.
    (b) Review of Applications for Assistance.--Each peer 
review panel established under subsection (a)(1) that reviews 
any application for a grant shall--
            (1) determine and evaluate the merit of each 
        project described in such application;
            (2) rank such application with respect to all other 
        applications it reviews in the same priority area for 
        the fiscal year involved, according to the relative 
        merit of all of the projects that are described in such 
        application and for which financial assistance is 
        requested; and
            (3) make recommendations to the Secretary 
        concerning whether the application for the project 
        shall be approved.
The Secretary shall award grants under this title on the basis 
of competitive review.
    (c) Notice of Approval.--
            (1) In general.--The Secretary shall provide grants 
        under this title from among the projects which the peer 
        review panels established under subsection (a)(1) have 
        determined to have merit.
            (2) Requirement of explanation.--In the instance in 
        which the Secretary approves an application for a 
        program under this title without having approved all 
        applications ranked above such application, the 
        Secretary shall append to the approved application a 
        detailed explanation of the reasons relied on for 
        approving the application and for failing to approve 
        each pending application that is superior in merit.

SEC. 208. NATIONAL RANDOM SAMPLE STUDY OF CHILD WELFARE.

    (a) In General.--The Secretary shall conduct a national 
study based on random samples of children who are at risk of 
child abuse or neglect, or are determined by States to have 
been abused or neglected, and such other research as may be 
necessary.
    (b) Requirements.--The study required by subsection (a) 
shall--
            (1) have a longitudinal component; and
            (2) yield data reliable at the State level for as 
        many States as the Secretary determines is feasible.
    (c) Preferred Contents.--In conducting the study required 
by subsection (a), the Secretary should--
            (1) collect data on the child protection programs 
        of different small States (or different groups of such 
        States) in different years to yield an occasional 
        picture of the child protection programs of such 
        States;
            (2) carefully consider selecting the sample from 
        cases of confirmed abuse or neglect; and
            (3) follow each case for several years while 
        obtaining information on, among other things--
                    (A) the type of abuse or neglect involved;
                    (B) the frequency of contact with State or 
                local agencies;
                    (C) whether the child involved has been 
                separated from the family, and, if so, under 
                what circumstances;
                    (D) the number, type, and characteristics 
                of out-of-home placements of the child; and
                    (E) the average duration of each placement.
    (d) Reports.--
            (1) In general.--From time to time, the Secretary 
        shall prepare reports summarizing the results of the 
        study required by subsection (a).
            (2) Availability.--The Secretary shall make 
        available to the public any report prepared under 
        paragraph (1), in writing or in the form of an 
        electronic data tape.
            (3) Authority to charge fee.--The Secretary may 
        charge and collect a fee for the furnishing of reports 
        under paragraph (2).
            (4) Funding.--The Secretary shall carry out this 
        section using amounts made available under section 425 
        of the Social Security Act.

                     TITLE III--GENERAL PROVISIONS

SEC. 301. AUTHORIZATION OF APPROPRIATIONS.

    (a) Title I.--There are authorized to be appropriated to 
carry out title I, $230,000,000 for fiscal year 1996, and such 
sums as may be necessary for each of the fiscal years 1997 
through 2002.
    (b) Title II.--
            (1) In general.--Of the amount appropriated under 
        subsection (a) for a fiscal year, the Secretary shall 
        make available 12 percent of such amount to carry out 
        title II (except for sections 203 and 208).
            (2) Grants for demonstration projects.--Of the 
        amount made available under paragraph (1) for a fiscal 
        year, the Secretary shall make available not less than 
        40 percent of such amount to carry out section 203.
    (c) Indian Tribes.--Of the amount appropriated under 
subsection (a) for a fiscal year, the Secretary shall make 
available 1 percent of such amount to provide grants and 
contracts to Indian tribes and Tribal Organizations.
    (d) Availability of Appropriations.--Amounts appropriated 
under subsection (a) shall remain available until expended.

SEC. 302. GRANTS TO STATES FOR PROGRAMS RELATING TO THE INVESTIGATION 
                    AND PROSECUTION OF CHILD ABUSE AND NEGLECT CASES.

    (a) Grants to States.--The Secretary, in consultation with 
the Attorney General, is authorized to make grants to the 
States for the purpose of assisting States in developing, 
establishing, and operating programs designed to improve--
            (1) the handling of child abuse and neglect cases, 
        particularly cases of child sexual abuse and 
        exploitation, in a manner which limits additional 
        trauma to the child victim;
            (2) the handling of cases of suspected child abuse 
        or neglect related fatalities; and
            (3) the investigation and prosecution of cases of 
        child abuse and neglect, particularly child sexual 
        abuse and exploitation.
    (b) Eligibility Requirements.--In order for a State to 
qualify for assistance under this section, such State shall--
            (1) be an eligible State under section 102;
            (2) establish a task force as provided in 
        subsection (c);
            (3) fulfill the requirements of subsection (d);
            (4) submit annually an application to the Secretary 
        at such time and containing such information and 
        assurances as the Secretary considers necessary, 
        including an assurance that the State will--
                    (A) make such reports to the Secretary as 
                may reasonably be required; and
                    (B) maintain and provide access to records 
                relating to activities under subsection (a); 
                and
            (5) submit annually to the Secretary a report on 
        the manner in which assistance received under this 
        program was expended throughout the State, with 
        particular attention focused on the areas described in 
        paragraphs (1) through (3) of subsection (a).
    (c) State Task Forces.--
            (1) General rule.--Except as provided in paragraph 
        (2), a State requesting assistance under this section 
        shall establish or designate, and maintain, a State 
        multidisciplinary task force on children's justice 
        (hereafter in this section referred to as ``State task 
        force'') composed of professionals with knowledge and 
        experience relating to the criminal justice system and 
        issues of child physical abuse, child neglect, child 
        sexual abuse and exploitation, and child maltreatment 
        related fatalities. The State task force shall 
        include--
                    (A) individuals representing the law 
                enforcement community;
                    (B) judges and attorneys involved in both 
                civil and criminal court proceedings related to 
                child abuse and neglect (including individuals 
                involved with the defense as well as the 
                prosecution of such cases);
                    (C) child advocates, including both 
                attorneys for children and, where such programs 
                are in operation, court appointed special 
                advocates;
                    (D) health and mental health professionals;
                    (E) individuals representing child 
                protective service agencies;
                    (F) individuals experienced in working with 
                children with disabilities;
                    (G) parents; and
                    (H) representatives of parents' groups.
            (2) Existing task force.--As determined by the 
        Secretary, a State commission or task force established 
        after January 1, 1983, with substantially comparable 
        membership and functions, may be considered the State 
        task force for purposes of this subsection.
    (d) State Task Force Study.--Before a State receives 
assistance under this section, and at 3-year intervals 
thereafter, the State task force shall comprehensively--
            (1) review and evaluate State investigative, 
        administrative and both civil and criminal judicial 
        handling of cases of child abuse and neglect, 
        particularly child sexual abuse and exploitation, as 
        well as cases involving suspected child maltreatment 
        related fatalities and cases involving a potential 
        combination of jurisdictions, such as interstate, 
        Federal-State, and State-Tribal; and
            (2) make policy and training recommendations in 
        each of the categories described in subsection (e).
The task force may make such other comments and recommendations 
as are considered relevant and useful.
    (e) Adoption of State Task Force Recommendations.--
            (1) General rule.--Subject to the provisions of 
        paragraph (2), before a State receives assistance under 
        this section, a State shall adopt recommendations of 
        the State task force in each of the following 
        categories--
                    (A) investigative, administrative, and 
                judicial handling of cases of child abuse and 
                neglect, particularly child sexual abuse and 
                exploitation, as well as cases involving 
                suspected child maltreatment related fatalities 
                and cases involving a potential combination of 
                jurisdictions, such as interstate, Federal-
                State, and State-Tribal, in a manner which 
                reduces the additional trauma to the child 
                victim and the victim's family and which also 
                ensures procedural fairness to the accused;
                    (B) experimental, model and demonstration 
                programs for testing innovative approaches and 
                techniques which may improve the prompt and 
                successful resolution of civil and criminal 
                court proceedings or enhance the effectiveness 
                of judicial and administrative action in child 
                abuse and neglect cases, particularly child 
                sexual abuse and exploitation cases, including 
                the enhancement of performance of court-
                appointed attorneys and guardians ad litem for 
                children; and
                    (C) reform of State laws, ordinances, 
                regulations, protocols and procedures to 
                provide comprehensive protection for children 
                from abuse, particularly child sexual abuse and 
                exploitation, while ensuring fairness to all 
                affected persons.
            (2) Exemption.--As determined by the Secretary, a 
        State shall be considered to be in fulfillment of the 
        requirements of this subsection if--
                    (A) the State adopts an alternative to the 
                recommendations of the State task force, which 
                carries out the purpose of this section, in 
                each of the categories under paragraph (1) for 
                which the State task force's recommendations 
                are not adopted; or
                    (B) the State is making substantial 
                progress toward adopting recommendations of the 
                State task force or a comparable alternative to 
                such recommendations.
    (f) Funds Available.--For grants under this section, the 
Secretary shall use the amount authorized by section 1404A of 
the Victims of Crime Act of 1984.

SEC. 303. TRANSITIONAL PROVISION.

    A State or other entity that has a grant, contract, or 
cooperative agreement in effect, on the date of enactment of 
this Act, under the Family Resource and Support Program, the 
Community-Based Family Resource Program, the Family Support 
Center Program, the Emergency Child Abuse Prevention Grant 
Program, or the Temporary Child Care for Children with 
Disabilities and Crisis Nurseries Programs shall continue to 
receive funds under such grant, contract, or cooperative 
agreement, subject to the original terms under which such funds 
were provided, through the end of the applicable grant, 
contract, or agreement cycle.

SEC. 304. RULE OF CONSTRUCTION.

    (a) In General.--Nothing in this Act, or in part B or E of 
title IV of the Social Security Act, shall be construed--
            (1) as establishing a Federal requirement that a 
        parent or legal guardian provide a child any medical 
        service or treatment against the religious beliefs of 
        the parent or legal guardian; and
            (2) to require that a State find, or to prohibit a 
        State from finding, abuse or neglect in cases in which 
        a parent or legal guardian relies solely or partially 
        upon spiritual means rather than medical treatment, in 
        accordance with the religious beliefs of the parent or 
        legal guardian.
    (b) State Requirement.--Notwithstanding subsection (a), a 
State shall have in place authority under State law to permit 
the child protective service system of the State to pursue any 
legal remedies, including the authority to initiate legal 
proceedings in a court of competent jurisdiction, to provide 
medical care or treatment for a child when such care or 
treatment is necessary to prevent or remedy serious harm to the 
child, or to prevent the withholding of medically indicated 
treatment from children with life threatening conditions. 
Except with respect to the withholding of medically indicated 
treatments from disabled infants with life threatening 
conditions, case by case determinations concerning the exercise 
of the authority of this subsection shall be within the sole 
discretion of the State.
                              ----------                              


          SECTION 408 OF THE MISSING CHILDREN'S ASSISTANCE ACT

                    authorization of appropriations

      Sec. 408. [To] (a) In General.--To carry out the 
provisions of this title, there are authorized to be 
appropriated such sums as may be necessary for fiscal years 
1993, 1994, 1995, [and 1996] 1996, and 1997.
    (b) Evaluation.--The Administrator shall use not more than 
5 percent of the amount appropriated for a fiscal year under 
subsection (a) to conduct an evaluation of the effectiveness of 
the programs and activities established and operated under this 
title.
                              ----------                              


         SECTION 214B OF THE VICTIMS OF CHILD ABUSE ACT OF 1990

SEC. 214B. AUTHORIZATION OF APPROPRIATIONS.

    (a) Sections 213 and 214.--There are authorized to be 
appropriated to carry out sections 213 and 214--
            (1) $15,000,000 for fiscal year 1993; and
            (2) such sums as are necessary for fiscal years 
        1994, 1995, [and 1996] 1996, and 1997.
    (b) Section 214A.--There are authorized to be appropriated 
to carry out section 214A--
            (1) $5,000,000 for fiscal year 1993; and
            (2) such sums as are necessary for fiscal years 
        1994, 1995, [and 1996] 1996, and 1997.
                              ----------                              


  CHILD ABUSE PREVENTION AND TREATMENT AND ADOPTION REFORM ACT OF 1978

          * * * * * * *

                   [TITLE II--ADOPTION OPPORTUNITIES

[SEC. 201. CONGRESSIONAL FINDINGS AND DECLARATION OF PURPOSE.

    [(a) Findings.--Congress finds that--
            [(1) the number of children in substitute care 
        increased by nearly 50 percent between 1985 and 1990, 
        as our Nation's foster care population included more 
        than 400,000 children at the end of June, 1990;
            [(2) increasingly children entering foster care 
        have complex problems which require intensive services;
            [(3) an increasing number of infants are born to 
        mothers who did not receive prenatal care, are born 
        addicted to alcohol and other drugs, and exposed to 
        infection with the etiologic agent for the human 
        immunodeficiency virus, are medically fragile, and 
        technology dependent;
            [(4) the welfare of thousands of children in 
        institutions and foster homes and disabled infants with 
        life-threatening conditions may be in serious jeopardy 
        and some such children are in need of placement in 
        permanent, adoptive homes;
            [(5) many thousands of children remain in 
        institutions or foster homes solely because of local 
        and other barriers to their placement in permanent, 
        adoptive homes;
            [(6) the majority of such children are of school 
        age, members of sibling groups or disabled;
            [(7) currently one-half of children free for 
        adoption and awaiting placement are minorities;
            [(8) adoption may be the best alternative for 
        assuring the healthy development of such children;
            [(9) there are qualified persons seeking to adopt 
        such children who are unable to do so because of 
        barriers to their placement; and
            [(10) in order both to enhance the stability and 
        love of the child's home environment and to avoid 
        wasteful expenditures of public funds, such children 
        should not have medically indicated treatment withheld 
        from them nor be maintained in foster care or 
        institutions when adoption is appropriate and families 
        can be found for such children.
    [(b) Purpose.--It is the purpose of this title to 
facilitate the elimination of barriers to adoption and to 
provide permanent and loving home environments for children who 
would benefit from adoption, particularly children with special 
needs, including disabled infants with life-threatening 
conditions, by--
            [(1) promoting model adoption legislation and 
        procedures in the States and territories of the United 
        States in order to eliminate jurisdictional and legal 
        obstacles to adoption; and
            [(2) providing a mechanism for the Department of 
        Health and Human Services to--
                    [(A) promote quality standards for adoption 
                services, pre-placement, post-placement, and 
                post-legal adoption counseling, and standards 
                to protect the rights of children in need of 
                adoption;
                    [(B) maintain a national adoption 
                information exchange system to bring together 
                children who would benefit from adoption and 
                qualified prospective adoptive parents who are 
                seeking such children, and conduct national 
                recruitment efforts in order to reach 
                prospective parents for children awaiting 
                adoption; and
                    [(C) demonstrate expeditious ways to free 
                children for adoption for whom it has been 
                determined that adoption is the appropriate 
                plan.

                       [information and services

    [Sec. 203. (a) The Secretary shall establish in the 
Department of Health and Human Services an appropriate 
administrative arrangement to provide a centralized focus for 
planning and coordinating of all departmental activities 
affecting adoption and foster care and for carrying out the 
provisions of this title. The Secretary shall make available 
such consultant services, on-site technical assistance and 
personnel, together with appropriate administrative expenses, 
including salaries and travel costs, as are necessary for 
carrying out such purposes, including services to facilitate 
the adoption of children with special needs and particularly of 
disabled infants with life-threatening conditions and services 
to couples considering adoption of children with special needs. 
The Secretary shall, not later than 12 months after the date of 
enactment of this sentence, prepare and submit to the 
committees of Congress having jurisdiction over such services 
reports, as appropriate, containing appropriate data concerning 
the manner in which activities were carried out under this 
title, and such reports shall be made available to the public.
    [(b) In connection with carrying out the provisions of this 
title, the Secretary shall--
            [(1) conduct (directly or by grant to or contract 
        with public or private nonprofit agencies or 
        organizations) an education and training program on 
        adoption, and prepare, publish, and disseminate 
        (directly or by grant to or contract with public or 
        private nonprofit agencies and organizations) to all 
        interested parties, public and private agencies and 
        organizations (including, but not limited to, 
        hospitals, health care and family planning clinics, and 
        social services agencies), and governmental bodies, 
        information and education and training materials 
        regarding adoption and adoption assistance programs;
            [(2) conduct, directly or by grant or contract with 
        public or private nonprofit organizations, ongoing, 
        extensive recruitment efforts on a national level, 
        develop national public awareness efforts to unite 
        children in need of adoption with appropriate adoptive 
        parents, and establish a coordinated referral system of 
        recruited families with appropriate State or regional 
        adoption resources to ensure that families are served 
        in a timely fashion;
            [(3) notwithstanding any other provision of law, 
        provide (directly or by grant to or contract with 
        public or private nonprofit agencies or organizations) 
        for (A) the operation of a national adoption 
        information exchange system (including only such 
        information as is necessary to facilitate the adoptive 
        placement of children, utilizing computers and data 
        processing methods to assist in the location of 
        children who would benefit by adoption and in the 
        placement in adoptive homes of children awaiting 
        adoption); and (B) the coordination of such system with 
        similar State and regional systems;
            [(4) provide (directly or by grant to or contract 
        with public or private nonprofit agencies or 
        organizations, including adoptive family groups and 
        minority groups) for the provision of technical 
        assistance in the planning, improving, developing, and 
        carrying out of programs and activities relating to 
        adoption, and to promote professional leadership 
        training of minorities in the adoption field;
            [(5) encourage involvement of corporations and 
        small businesses in supporting adoption as a positive 
        family-strengthening option, including the 
        establishment of adoption benefit programs for 
        employees who adopt children;
            [(6) continue to study the nature, scope, and 
        effects of the placement of children in adoptive homes 
        (not including the homes of stepparents or relatives of 
        the child in question) by persons or agencies which are 
        not licensed by or subject to regulation by any 
        governmental entity;
            [(7) consult with other appropriate Federal 
        departments and agencies in order to promote maximum 
        coordination of the services and benefits provided 
        under programs carried out by such departments and 
        agencies with those carried out by the Secretary, and 
        provide for the coordination of such aspects of all 
        programs within the Department of Health and Human 
        Services relating to adoption;
            [(8) maintain (directly or by grant to or contract 
        with public or private nonprofit agencies or 
        organizations) a National Resource Center for Special 
        Needs Adoption to--
                    [(A) promote professional leadership 
                development of minorities in the adoption 
                field;
                    [(B) provide training and technical 
                assistance to service providers and State 
                agencies to improve professional competency in 
                the field of adoption and the adoption of 
                children with special needs; and
                    [(C) facilitate the development of 
                interdisciplinary approaches to meet the needs 
                of children who are waiting for adoption and 
                the needs of adoptive families; and
            [(9) provide (directly or by grant to or contract 
        with States, local government entities, public or 
        private nonprofit licensed child welfare or adoption 
        agencies or adoptive family groups and community-based 
        organizations with experience in working with minority 
        populations) for the provision of programs aimed at 
        increasing the number of minority children (who are in 
        foster care and have the goal of adoption) placed in 
        adoptive families, with a special emphasis on 
        recruitment of minority families--
                    [(A) which may include such activities as--
                            [(i) outreach, public education, or 
                        media campaigns to inform the public of 
                        the needs and numbers of such children;
                            [(ii) recruitment of prospective 
                        adoptive families for such children;
                            [(iii) expediting, where 
                        appropriate, the legal availability of 
                        such children;
                            [(iv) expediting, where 
                        appropriate, the agency assessment of 
                        prospective adoptive families 
                        identified for such children;
                            [(v) formation of prospective 
                        adoptive family support groups;
                            [(vi) training of personnel of--
                                    [(I) public agencies;
                                    [(II) private nonprofit 
                                child welfare and adoption 
                                agencies that are licensed by 
                                the State; and
                                    [(III) adoptive parents 
                                organizations and community-
                                based organizations with 
                                experience in working with 
                                minority populations;
                            [(vii) use of volunteers and 
                        adoptive parent groups; and
                            [(viii) any other activities 
                        determined by the Secretary to further 
                        the purposes of this Act; and
                    [(B) shall be subject to the condition that 
                such grants or contracts may be renewed if 
                documentation is provided to the Secretary 
                demonstrating that appropriate and sufficient 
                placements of such children have occurred 
                during the previous funding period.
    [(c)(1) The Secretary shall provide (directly or by grant 
to or contract with States, local government entities, public 
or private nonprofit licensed child welfare or adoption 
agencies or adoptive family groups) for the provision of post 
legal adoption services for families who have adopted special 
needs children.
    [(2) Services provided under grants made under this 
subsection shall supplement, not supplant, services from any 
other funds available for the same general purposes, 
including--
            [(A) individual counseling;
            [(B) group counseling;
            [(C) family counseling;
            [(D) case management;
            [(E) training public agency adoption personnel, 
        personnel of private, nonprofit child welfare and 
        adoption agencies licensed by the State to provide 
        adoption services, mental health services 
        professionals, and other support personnel to provide 
        services under this subsection;
            [(F) assistance to adoptive parent organizations; 
        and
            [(G) assistance to support groups for adoptive 
        parents, adopted children, and siblings of adopted 
        children.
    [(d)(1) The Secretary shall make grants for improving State 
efforts to increase the placement of foster care children 
legally free for adoption, according to a pre-established plan 
and goals for improvement. Grants funded by this section must 
include a strong evaluation component which outlines the 
innovations used to improve the placement of special needs 
children who are legally free for adoption, and the successes 
and failures of the initiative. The evaluations will be 
submitted to the Secretary who will compile the results of 
projects funded by this section and submit a report to the 
appropriate committees of Congress. The emphasis of this 
program must focus on the improvement of the placement rate--
not the aggregate number of special needs children placed in 
permanent homes. The Secretary, when reviewing grant 
applications shall give priority to grantees who propose 
improvements designed to continue in the absence of Federal 
funds.
    [(2) Each State entering into an agreement under this 
subsection shall submit an application to the Secretary for 
each fiscal year in a form and manner determined to be 
appropriate by the Secretary. Each application shall include 
verification of the placements described in paragraph (1).
    [(3)(A) Payments under this subsection shall begin during 
fiscal year 1989. Payments under this section during any fiscal 
year shall not exceed $1,000,000. No payment may be made under 
this subsection unless an amount in excess of $5,000,000 is 
appropriated for such fiscal year under section 205(a).
    [(B) Any payment made to a State under this subsection 
which is not used by such State for the purpose provided in 
paragraph (1) during the fiscal year payment is made shall 
revert to the Secretary on October 1st of the next fiscal year 
and shall be used to carry out the purposes of this Act.

                [study of unlicensed adoption placements

    [Sec. 204. The Secretary shall provide for a study (the 
results of which shall be reported to the appropriate 
committees of the Congress not later than eighteen months after 
the date of enactment of this Act) designed to determine the 
nature, scope, and effects of the interstate (and, to the 
extent feasible, intrastate) placement of children in adoptive 
homes (not including the homes of stepparents or relatives of 
the child in question) by persons or agencies which are not 
licensed by or subject to regulation by any governmental 
entity.

                    [authorization of appropriations

    [Sec. 205.(a) There are authorized to be appropriated, 
$10,000,000 for fiscal year 1992, and such sums as may be 
necessary for each of the fiscal years 1993 through 1995, to 
carry out programs and activities under this Act except for 
programs and activities authorized under sections 203(b)(9) and 
203(c)(1).
    [(b) For any fiscal year in which appropriations under 
subsection (a) exceeds $5,000,000, there are authorized to be 
appropriated $10,000,000 for fiscal year 1992, and such sums as 
may be necessary for each of the fiscal years 1993 through 
1995, to carry out section 203(b)(9), and there are authorized 
to be appropriated $10,000,000 for fiscal year 1992, and such 
sums as may be necessary for each of the fiscal years 1993 
through 1995, to carry out section 203(c)(1).
    [(c) The Secretary shall ensure that funds appropriated 
pursuant to authorizations in this Act shall remain available 
until expended for the purposes for which they were 
appropriated.]
                              ----------                              


                ABANDONED INFANTS ASSITANCE ACT OF 1988

AN ACT To authorize the Secretary of Health and Human Services to make 
grants for demonstration projects for foster care and residential care 
  of infants and young children abandoned in hospitals, and for other 
                               purposes.

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

[SECTION 1. SHORT TITLE.

    [This Act may be cited as the ``Abandoned Infants 
Assistance Act of 1988''.

[SEC. 2. FINDINGS.

    [The Congress finds that--
            [(1) throughout the Nation, the number of infants 
        and young children who have been exposed to drugs taken 
        by their mothers during pregnancy has increased 
        dramatically;
            [(2) the inability of parents who abuse drugs to 
        provide adequate care for such infants and young 
        children and a lack of suitable shelter homes for such 
        infants and young children have led to the abandonment 
        of such infants and young children in hospitals for 
        extended periods;
            [(3) an unacceptable number of these infants and 
        young children will be medically cleared for discharge, 
        yet remain in hospitals as boarder babies;
            [(4) hospital-based child care for these infants 
        and young children is extremely costly and deprives 
        them of an adequate nurturing environment;
            [(5) training is inadequate for foster care 
        personnel working with medically fragile infants and 
        young children and infants and young children exposed 
        to drugs;
            [(6) a particularly devastating development is the 
        increase in the number of infants and young children 
        who are infected with the human immunodeficiency virus 
        (which is believed to cause acquired immune deficiency 
        syndrome and which is commonly known as HIV) or who 
        have been perinatally exposed to the virus or to a 
        dangerous drug;
            [(7) many such infants and young children have at 
        least one parent who is an intravenous drug abuser;
            [(8) such infants and young children are 
        particularly difficult to place in foster homes, and 
        are being abandoned in hospitals in increasing numbers 
        by mothers dying of acquired immune deficiency 
        syndrome, or by parents incapable of providing adequate 
        care;
            [(9) there is a need for comprehensive services for 
        such infants and young children, including foster 
        family care services, case management services, family 
        support services, respite and crisis intervention 
        services, counseling services, and group residential 
        home services;
            [(10) there is a need to support the families of 
        such infants and young children through the provision 
        of services that will prevent the abandonment of the 
        infants and children; and
            [(11) there is a need for the development of 
        funding strategies that coordinate and make the optimal 
        use of all private resources, and Federal, State, and 
        local resources, to establish and maintain such 
        services.

[TITLE I--PROJECTS REGARDING ABANDONMENT OF INFANTS AND YOUNG CHILDREN 
                              IN HOSPITALS

[SEC. 101. ESTABLISHMENT OF PROGRAM OF DEMONSTRATION PROJECTS.

    [(a) In General.--The Secretary of Health and Human 
Services may make grants to public and nonprofit private 
entities for the purpose of developing, implementing, and 
operating projects to demonstrate methods--
            [(1) to prevent the abandonment of infants and 
        young children, including the provision of services to 
        members of the natural family for any condition that 
        increases the probability of abandonment of an infant 
        or young child;
            [(2) to identify and address the needs of abandoned 
        infants and young children;
            [(3) to assist abandoned infants and young children 
        to reside with their natural families or in foster 
        care, as appropriate;
            [(4) to recruit, train, and retain foster families 
        for abandoned infants and young children;
            [(5) to carry out residential care programs for 
        abandoned infants and young children who are unable to 
        reside with their families or to be placed in foster 
        care;
            [(6) to carry out programs of respite care for 
        families and foster families of infants and young 
        children described in subsection (b);
            [(7) to recruit and train health and social 
        services personnel to work with families, foster care 
        families, and residential care programs for abandoned 
        infants and young children; and
            [(8) to prevent the abandonment of infants and 
        young children, and to care for the infants and young 
        children who have been abandoned, through model 
        programs providing health, educational, and social 
        services at a single site in a geographic area in which 
        a significant number of infants and young children 
        described in subsection (b) reside (with special 
        consideration given to applications from entities that 
        will provide the services of the project through 
        community-based organizations).
    [(b) Priority in Provision of Services.--The Secretary may 
not make a grant under subsection (a) unless the applicant for 
the grant agrees that, in carrying out the purpose described in 
subsection (a) (other than with respect to paragraph (6) of 
such subsection), the applicant will give priority to abandoned 
infants and young children--
            [(1) who are infected with the human 
        immunodeficiency virus or who have been perinatally 
        exposed to the virus; or
            [(2) who have been perinatally exposed to a 
        dangerous drug.
    [(c) Case Plan With Respect to Foster Care.--The Secretary 
may not make a grant under subsection (a) unless the applicant 
for the grant agrees that, if the applicant expends the grant 
to carry out any program of providing care to infants and young 
children in foster homes or in other nonmedical residential 
settings away from their parents, the applicant will ensure 
that--
            [(1) a case plan of the type described in paragraph 
        (1) of section 475 of the Social Security Act is 
        developed for each such infant and young child (to the 
        extent that such infant and young child is not 
        otherwise covered by such a plan); and
            [(2) the program includes a case review system of 
        the type described in paragraph (5) of such section 
        (covering each such infant and young child who is not 
        otherwise subject to such a system).
    [(d) Administration of Grant.--
            [(1) The Secretary may not make a grant under 
        subsection (a) unless the applicant for the grant 
        agrees--
                    [(A) to use the funds provided under this 
                section only for the purposes specified in the 
                application submitted to, and approved by, the 
                Secretary pursuant to subsection (e);
                    [(B) to establish such fiscal control and 
                fund accounting procedures as may be necessary 
                to ensure proper disbursement and accounting of 
                Federal funds paid to the applicant under this 
                section;
                    [(C) to report to the Secretary annually on 
                the utilization, cost, and outcome of 
                activities conducted, and services furnished, 
                under this section; and
                    [(D) that if, during the majority of the 
                180-day period preceding the date of the 
                enactment of this Act, the applicant has 
                carried out any program with respect to the 
                care of abandoned infants and young children, 
                the applicant will expend the grant only for 
                the purpose of significantly expanding, in 
                accordance with subsection (a), activities 
                under such program above the level provided 
                under such program during the majority of such 
                period.
            [(2) Subject to the availability of amounts made 
        available in appropriations Acts for the fiscal year 
        involved, the duration of a grant under subsection (a) 
        shall be for a period of 3 years, except that the 
        Secretary--
                    [(A) may terminate the grant if the 
                Secretary determines that the entity involved 
                has substantially failed to comply with the 
                agreements required as a condition of the 
                provision of the grant; and
                    [(B) shall continue the grant for one 
                additional year if the Secretary determines 
                that the entity has satisfactorily complied 
                with such agreements.
    [(e) Requirement of Application.--The Secretary may not 
make a grant under subsection (a) unless--
            [(1) an application for the grant is submitted to 
        the Secretary;
            [(2) with respect to carrying out the purpose for 
        which the grant is to be made, the application provides 
        assurances of compliance satisfactory to the Secretary; 
        and
            [(3) the application otherwise is in such form, is 
        made in such manner, and contains such agreements, 
        assurances, and information as the Secretary determines 
        to be necessary to carry out this section.
    [(f) Technical Assistance to Grantees.--The Secretary may, 
without charge to any grantee under subsection (a), provide 
technical assistance (including training) with respect to the 
planning, development, and operation of projects described in 
such subsection. The Secretary may provide such technical 
assistance directly, through contracts, or through grants.
    [(g) Technical Assistance With Respect to Process of 
Applying for Grant.--The Secretary may provide technical 
assistance (including training) to public and nonprofit private 
entities with respect to the process of applying to the 
Secretary for a grant under subsection (a). The Secretary may 
provide such technical assistance directly, through contracts, 
or through grants.

[SEC. 102. EVALUATIONS, STUDIES, AND REPORTS BY SECRETARY.

    [(a) Evaluations of Demonstration Projects.--The Secretary 
shall, directly or through contracts with public and nonprofit 
private entities, provide for evaluations of projects carried 
out under section 101 and for the dissemination of information 
developed as result of such projects.
    [(b) Dissemination of Information to Individuals With 
Special Needs.--
            [(1)(A) The Secretary may enter into contracts or 
        cooperative agreements with public or nonprofit private 
        entities for the development and operation of model 
        projects to disseminate the information described in 
        subparagraph (B) to individuals who are 
        disproportionately at risk of dysfunctional behaviors 
        that lead to the abandonment of infants or young 
        children.
            [(B) The information referred to in subparagraph 
        (A) is information on the availability to individuals 
        described in such subparagraph, and the families of the 
        individuals, of financial assistance and services under 
        Federal, State, local, and private programs providing 
        health services, mental health services, educational 
        services, housing services, social services, or other 
        appropriate services.
            [(2) The Secretary may not provide a contract or 
        cooperative agreement under paragraph (1) to an entity 
        unless--
                    [(A) the entity has demonstrated expertise 
                in the functions with respect to which such 
                financial assistance is to be provided; and
                    [(B) the entity agrees that in 
                disseminating information on programs described 
                in such paragraph, the entity will give 
                priority--
                            [(i) to providing the information 
                        to individuals described in such 
                        paragraph who--
                                    [(I) engage in the abuse of 
                                alcohol or drugs, who are 
                                infected with the human 
                                immunodeficiency virus, or who 
                                have limited proficiency in 
                                speaking the English language; 
                                or
                                    [(II) have been 
                                historically underserved in the 
                                provision of the information; 
                                and
                            [(ii) to providing information on 
                        programs that are operated in the 
                        geographic area in which the 
                        individuals involved reside and that 
                        will assist in eliminating or reducing 
                        the extent of behaviors described in 
                        such paragraph.
            [(3) In providing contracts and cooperative 
        agreements under paragraph (1), the Secretary may not 
        provide more than 1 such contract or agreement with 
        respect to any geographic area.
            [(4) Subject to the availability of amounts made 
        available in appropriations Acts for the fiscal year 
        involved, the duration of a contract or cooperative 
        agreement under paragraph (1) shall be for a period of 
        3 years, except that the Secretary may terminate such 
        financial assistance if the Secretary determines that 
        the entity involved has substantially failed to comply 
        with the agreements required as a condition of the 
        provision of the assistance.
    [(c) Study and Report on Number of Abandoned Infants and 
Young Children.--
            [(1) The Secretary shall conduct a study for the 
        purpose of determining--
                    [(A) an estimate of the number of infants 
                and young children abandoned in hospitals in 
                the United States and the number of such 
                infants and young children who are infants and 
                young children described in section 101(b); and
                    [(B) an estimate of the annual costs 
                incurred by the Federal Government and by State 
                and local governments in providing housing and 
                care for such infants and young children.
            [(2) Not later than April 1, 1992, the Secretary 
        shall complete the study required in paragraph (1) and 
        submit to the Congress a report describing the findings 
        made as a result of the study.
    [(d) Study and Report on Effective Care Methods.--
            [(1) The Secretary shall conduct a study for the 
        purpose of determining the most effective methods for 
        responding to the needs of abandoned infants and young 
        children.
            [(2) The Secretary shall, not later than April 1, 
        1991, complete the study required in paragraph (1) and 
        submit to the Congress a report describing the findings 
        made as a result of the study.

[SEC. 103. DEFINITIONS.

    [For purposes of this title:
            [(1) The terms ``abandoned'' and ``abandonment'', 
        with respect to infants and young children, mean that 
        the infants and young children are medically cleared 
        for discharge from acute-care hospital settings, but 
        remain hospitalized because of a lack of appropriate 
        out-of-hospital placement alternatives.
            [(2) The term ``dangerous drug'' means a controlled 
        substance, as defined in section 102 of the Controlled 
        Substances Act.
            [(3) The term ``natural family'' shall be broadly 
        interpreted to include natural parents, grandparents, 
        family members, guardians, children residing in the 
        household, and individuals residing in the household on 
        a continuing basis who are in a care-giving situation 
        with respect to infants and young children covered 
        under this Act.

[SEC. 104. AUTHORIZATION OF APPROPRIATIONS.

    [(a) In General.--
            [(1) For the purpose of carrying out this title 
        (other than section 102(b)), there are authorized to be 
        appropriated $20,000,000 for fiscal year 1992, 
        $25,000,000 for fiscal year 1993, $30,000,000 for 
        fiscal year 1994, and $35,000,000 for fiscal year 1995.
            [(2)(A) Of the amounts appropriated under paragraph 
        (1) for any fiscal year in excess of the amount 
        appropriated under this subsection for fiscal year 
        1991, as adjusted in accordance with subparagraph (B), 
        the Secretary shall make available not less than 50 
        percent for grants under section 101(a) to carry out 
        projects described in paragraph (8) of such section.
            [(B) For purposes of subparagraph (A), the amount 
        relating to fiscal year 1991 shall be adjusted for a 
        fiscal year to a greater amount to the extent necessary 
        to reflect the percentage increase in the consumer 
        price index for all urban consumers (U.S. city average) 
        for the 12-month period ending with March of the 
        preceding fiscal year.
            [(3) Not more than 5 percent of the amounts 
        appropriate under paragraph (1) for any fiscal year may 
        be obligated for carrying out section 102(a).
    [(b) Dissemination of Information for Individuals With 
Special Needs.--For the purpose of carrying out section 102(b), 
there is authorized to be appropriated $5,000,000 for each of 
the fiscal years 1992 through 1995.
    [(c) Administrative Expenses.--
            [(1) For the purpose of the administration of this 
        title by the Secretary, there is authorized to be 
        appropriated for each fiscal year specified in 
        subsection (a)(1) an amount equal to 5 percent of the 
        amount authorized in such subsection to be appropriated 
        for the fiscal year. With respect to the amounts 
        appropriated under such subsection, the preceding 
        sentence may not be construed to prohibit the 
        expenditure of the amounts for the purpose described in 
        such sentence.
            [(2) The Secretary may not obligate any of the 
        amounts appropriated under paragraph (1) for a fiscal 
        year unless, from the amounts appropriated under 
        subsection (a)(1) for the fiscal year, the Secretary 
        has obligated for the purpose described in such 
        paragraph an amount equal to the amounts obligated by 
        the Secretary for such purpose in fiscal year 1991.
    [(d) Availability of Funds.--Amounts appropriated under 
this section shall remain available until expended.

 [TITLE II--MEDICAL COSTS OF TREATMENT WITH RESPECT TO ACQUIRED IMMUNE 
                          DEFICIENCY SYNDROME

[SEC. 201. STUDY AND REPORT ON ASSISTANCE.

    [(a) Study.--The Secretary shall conduct a study for the 
purpose of--
            [(1) determining cost-effective methods for 
        providing assistance to individuals for the medical 
        costs of treatment of conditions arising from infection 
        with the etiologic agent for acquired immune deficiency 
        syndrome, including determining the feasibility of 
        risk-pool health insurance for individuals at risk of 
        such infection;
            [(2) determining the extent to which Federal 
        payments under title XIX of the Social Security Act are 
        being expended for medical costs described in paragraph 
        (1); and
            [(3) providing an estimate of the extent to which 
        such Federal payments will be expended for such medical 
        costs during the 5-year period beginning on the date of 
        the enactment of this Act.
    [(b) Report.--The Secretary shall, not later than 12 months 
after the date of the enactment of this Act, complete the study 
required in subsection (a) and submit to the Committee on 
Energy and Commerce of the House of Representatives, and to the 
Committee on Labor and Human Resources of the Senate, a report 
describing the findings made as a result of the study.

                     [TITLE III--GENERAL PROVISIONS

[SEC. 301. DEFINITIONS.

    [For purposes of this Act:
            [(1) The term ``acquired immune deficiency 
        syndrome'' includes infection with the etiologic agent 
        for such syndrome, any condition indicating that an 
        individual is infected with such etiologic agent, and 
        any condition arising from such etiologic agent.
            [(2) The term ``Secretary'' means the Secretary of 
        Health and Human Services.]
                              ----------                              


    TEMPORARY CHILD CARE FOR CHILDREN WITH DISABILITIES AND CRISIS 
                         NURSERIES ACT OF 1986

  [TITLE II--TEMPORARY CHILD CARE FOR HANDICAPPED CHILDREN AND CRISIS 
                               NURSERIES

[SEC. 201 SHORT TITLE.

    [This title may be cited as the ``Temporary Child Care for 
Children With Disabilities and Crisis Nurseries Act of 1986''.

[SEC. 202. FINDINGS.

    [The Congress finds that it is necessary to establish 
demonstration programs of grants to the States to assist 
private and public agencies and organizations provide: (A) 
temporary non-medical child care for children with special 
needs to alleviate social, emotional, and financial stress 
among children and families of such children, and (B) crisis 
nurseries for children who are abused and neglected, at risk of 
abuse or neglect, or who are in families receiving child 
protective services.

[SEC. 203. TEMPORARY CHILD CARE FOR HANDICAPPED AND CHRONICALLY ILL 
                    CHILDREN.

    [The Secretary of Health and Human Services shall establish 
a demonstration program of grants to States to assist private 
and public agencies and organizations to provide in-home or 
out-of-home temporary non-medical child care for children with 
disabilities, and children with chronic or terminal illnesses. 
Such care shall be provided on a sliding fee scale with hourly 
and daily rates.

[SEC. 204. CRISIS NURSERIES.

    [The Secretary of Health and Human Services shall establish 
a demonstration program of grants to States to assist private 
and public agencies and organizations to provide crisis 
nurseries for children who are abused and neglected, are at 
high risk of abuse and neglect, or who are in families 
receiving child protective services. Such service shall be 
provided without fee for a maximum of 30 days in any year. 
Crisis nurseries shall also provide referral to support 
services.

[SEC. 205. ADMINISTRATIVE PROVISIONS.

    [(a) Applications.--
            [(1) (A) Any State which desires to receive a grant 
        under section 203 or 204 shall submit an application to 
        the Secretary in such form and at such times as the 
        Secretary may require. Such application shall--
                    [(i) describe the proposed State program, 
                including the services to be provided, the 
                agencies and organizations that will provide 
                the services, and the criteria for selection of 
                children and families for participation in 
                projects under the program;
                    [(ii) contain an estimate of the cost of 
                developing, implementing, and evaluating the 
                State program;
                    [(iii) set forth the plan for dissemination 
                of the results of the projects;
                    [(iv) specify the State agency designated 
                to administer programs and activities assisted 
                under this title and the plans for coordinating 
                interagency support of the program; and
                    [(v) with respect to State agencies 
                described in subparagraph (B), provide 
                documentation of a commitment by all such 
                agencies to develop a State plan for 
                coordination among the agencies in carrying out 
                programs and activities provided by the State 
                pursuant to a grant under section 203.
            [(B) State agencies referred to in subparagraph 
        (A)(v) are State agencies responsible for providing 
        services to children with disabilities or with chronic 
        or terminal illnesses, or responsible for financing 
        services for such children, or both, including State 
        agencies responsible for carrying out State programs 
        that--
                    [(i) receive Federal financial assistance; 
                and
                    [(ii) relate to social services, maternal 
                and child health, comprehensive health and 
                mental health, medical assistance and infants, 
                or toddlers and families.
            [(2) Such application shall contain assurance 
        that--
                    [(A) not more than 5 percent of funds made 
                available under this title will be used for 
                State administrative costs;
                    [(B) projects will be of sufficient size, 
                scope, and quality to achieve the objectives of 
                the program;
                    [(C) in the distribution of funds made 
                available under section 203, a State will give 
                priority consideration to agencies and 
                organizations with experience in working with 
                children with disabilities, with chronically 
                ill children, and with the families of such 
                children, and which serve communities with the 
                greatest need for such services;
                    [(D) in the distribution of funds made 
                available under section 204, the State will 
                give priority consideration to agencies and 
                organizations with experience in working with 
                abused or neglected children and their 
                families, and with children at high risk of 
                abuse and neglect and their families, and which 
                serve communities which demonstrate the 
                greatest need for such services; and
                    [(E) Federal funds made available under 
                this title will be so used as to supplement 
                and, to the extent practicable, increase the 
                amount of State and local funds that would in 
                the absence of such Federal funds be made 
                available for the uses specified in this title, 
                and in no case supplant such State or local 
                funds.
    [(b) Award of Grants.--
            [(1) In reviewing applications for grants under 
        this title, the Secretary shall consider, among other 
        factors, the equitable geographical distribution of 
        grants.
            [(2) In the award of temporary non-medical child 
        care demonstration grants under section 203, the 
        Secretary shall give a preference to States in which 
        such care is unavailable.
            [(3) Of the funds appropriated under section 206, 
        one-half shall be available for grants under section 
        203 and one-half shall be available for grants under 
        section 204.
    [(c) Evaluations.--States receiving grants under this 
title, shall annually submit a report to the Secretary 
evaluating funded programs. Such report shall include--
            [(1)(A) information concerning costs, the number of 
        participants, impact on family stability, the incidence 
        of abuse and neglect, the types, amounts, and costs of 
        various services provided, demographic data on 
        recipients of services, and such other information as 
        the Secretary may require; and
            [(B) with respect to services provided by the 
        States pursuant to section 203, information concerning 
        the number of families receiving services and 
        documentation of parental satisfaction with the 
        services provided;
            [(2) a specification of the amount and source of 
        public funds, and of private funds, expended in the 
        State for temporary child care for children with 
        disabilities or with chronic or terminal illnesses; and
            [(3) a State strategy for expanding the 
        availability in the State of temporary child care, and 
        other family support, for families of children with 
        disabilities or with chronic or terminal illnesses, 
        which strategy specifies the manner in which the State 
        intends to expend any Federal financial assistance 
        available to the State for such purpose, including any 
        such assistance provided to the State for programs 
        described in section 205(a)(1)(B).
    [(d) Definitions.--For the purposes of this title--
            [(1) the term ``Secretary'' means the Secretary of 
        Health and Human Services;
            [(2) the term ``children with disabilities'' has 
        the meaning given such term in section 602(a)(1) of the 
        Individuals with Disabilities Education Act;
            [(3) the term ``crisis nursery'' means a center 
        providing temporary emergency services and care for 
        children;
            [(4) the term ``non-medical child care'' means the 
        provision of care to provide temporary relief for the 
        primary caregiver; and
            [(5) the term ``State'' means any of the several 
        States, the District of Columbia, the Virgin Islands of 
        the United States, the Commonwealth of Puerto Rico, 
        Guam, American Samoa, the Commonwealth of the Northern 
        Mariana Islands, the Marshall Islands, the Federated 
        States of Micronesia, or Palau.

[SEC. 206. AUTHORIZATION OF APPROPRIATIONS.

    [There are authorized to be appropriated for the purposes 
of this title such sums as may be necessary for each of the 
fiscal years 1987, 1988, and 1989, $20,000,000 for each of the 
fiscal years 1990 and 1991, and $20,000,000 for each of the 
fiscal years 1992 through 1995. Amounts appropriated under the 
preceding sentence shall remain available until expended.

[SEC. 207. EFFECTIVE DATE.

    [This title shall take effect October 1, 1986.]
                              ----------                              


SUBTITLE F OF TITLE VII OF THE STEWART B. MCKINNEY HOMELESS ASSISTANCE 
                                  ACT

                  [Subtitle F--Family Support Centers

[SEC. 771. DEFINITIONS.

    [As used in this subtitle:
            [(1) Advisory council.--The term ``advisory 
        council'' means the advisory council established under 
        section 772(e)(2)(K).
            [(2) Eligible entity.--The term ``eligible entity'' 
        means State or local agencies, a Head Start agency, any 
        community-based organization of demonstrated 
        effectiveness as a community action agency under 
        section 210 of the Economic Opportunity Act of 1984 (42 
        U.S.C. 2790), public housing agencies as defined in 
        section 3(b)(6) of the United States Housing Act of 
        1937, State Housing Finance Agencies, local education 
        agencies, an institution of higher education, a public 
        hospital, a community development corporation, a 
        private industry council as defined under section 
        102(a) of the Job Training Partnership Act, a community 
        health center, and any other public or private 
        nonprofit agency or organization specializing in 
        delivering social services.
            [(3) Family case managers.--The term ``family case 
        managers'' means advisers operating under the 
        provisions of section 774.
            [(4) Governmentally subsidized housing.--The term 
        ``governmentally subsidized housing'' means any rental 
        housing that is assisted under any Federal, State or 
        local program (including a tax credit or tax exempt 
        financing program) and that serves a population that 
        predominately consists of very low income families or 
        individuals.
            [(5) Homeless.--The term ``homeless'' has the same 
        meaning given such term in the subsections (a) and (c) 
        of section 103 of the Stewart B. McKinney Homeless 
        Assistance Act (42 U.S.C. 11302 (a) and (c)).
            [(6) Intensive and comprehensive supportive 
        services.--The term ``intensive and comprehensive 
        supportive services'' means--
                    [(A) in the case of services provided to 
                infants, children and youth, such services that 
                shall be designed to enhance the physical, 
                social, and educational development of such 
                infants and children and that shall include, 
                where appropriate nutritional services, 
                screening and referral services, child care 
                services, early childhood development programs, 
                early intervention services for children with, 
                or at-risk of developmental delays, drop-out 
                prevention services, after-school activities, 
                job readiness and job training services, 
                education (including basic skills and literacy 
                services), emergency services including special 
                outreach services targeted to homeless and 
                runaway youth, crisis intervention and 
                counseling services, and such other services 
                that the Secretary may deem necessary and 
                appropriate;
                    [(B) in the case of services provided to 
                parents and other family members, services 
                designed to better enable parents and other 
                family members to contribute to their child's 
                healthy development and that shall include, 
                where appropriate, substance abuse education, 
                counseling, referral for treatment, crisis 
                intervention, employment counseling and 
                training as appropriate, life-skills training 
                including personal financial counseling, 
                education including basic skills and literacy 
                services, parenting classes, training in 
                consumer homemaking, and such other services as 
                the Secretary shall deem necessary and 
                appropriate;
                    [(C) in the case of services provided by 
                family case managers, needs assessment and 
                support in accessing and maintaining 
                appropriate public assistance and social 
                services, referral for substance abuse 
                counseling and treatment, counseling and crisis 
                intervention, family advocacy services, and 
                housing assistance activities, housing 
                counseling and eviction or foreclosure 
                prevention assistance and referral to sources 
                of emergency rental or mortgage assistance 
                payments and home energy assistance, and other 
                services as appropriate.
            [(7) Low income.--The term ``low income'' when 
        applied to families or individuals means a family or 
        individual income that does not exceed 80 percent of 
        the median income for an individual or family in the 
        area, as determined by the Secretary of Housing and 
        Urban Development, except that such Secretary may 
        establish income ceilings that are higher or lower than 
        80 percent of the median for the area on the basis of a 
        finding by such Secretary that such variations are 
        necessary because of prevailing levels of construction 
        costs or unusually high or low individual or family 
        incomes.
            [(8) Secretary.--The term ``Secretary'' means the 
        Secretary of Health and Human Services.
            [(9) Very low income.--The term ``very low income'' 
        when applied to families or individuals means a family 
        or individual income that does not exceed 50 percent of 
        the median income for an individual or family in the 
        area, as determined by the Secretary, except that the 
        Secretary may establish income ceilings that are higher 
        or lower than 50 percent of the median for the area on 
        the basis of a finding by the Secretary that such 
        variations are necessary because of unusually high or 
        low individual or family incomes.

[SEC. 772. GENERAL GRANTS FOR THE PROVISION OF SERVICES.

    [(a) Authority.--The Secretary is authorized to make not 
more than 30 grants to eligible entities in rural, urban and 
suburban areas to pay the cost of demonstration programs 
designed to encourage the provision of intensive and 
comprehensive supportive services that will enhance the 
physical, social, and educational development of low-income 
individuals and families, especially those individuals in very 
low-income families who were previously homeless and who are 
currently residing in governmentally subsidized housing or who 
are at risk of becoming homeless. Such grants shall be of 
sufficient size, scope, and quality to be effective, and shall 
be distributed to various entities including those in or near 
public housing developments, and in low income areas both urban 
and nonurban.
    [(b) Gateway Programs.--The Secretary shall make available 
not more than 5 demonstration grants in each fiscal year for 
Gateway programs in accordance with section 775.
    [(c) Agreements With Eligible Entities.--The Secretary 
shall enter into contracts, agreements, or other arrangements 
with eligible entities to carry out the provisions of this 
section.
    [(d) Considerations by Secretary.--In carrying out the 
provisions of this section, the Secretary shall consider--
            [(1) the capacity of the eligible entity to 
        administer the comprehensive program for which 
        assistance is sought;
            [(2) the proximity of the entities and facilities 
        associated with the program to the low-income families 
        to be served by the program or the ability of the 
        entity to provide mobile or offsite services;
            [(3) the ability of the eligible entity to 
        coordinate and integrate its activities with State and 
        local public agencies (such as agencies responsible for 
        education, employment and training, health and mental 
        health services, substance abuse services, social 
        services, child care, nutrition, income assistance, 
        housing and energy assistance, and other relevant 
        services), with public or private non-profit agencies 
        and organizations that have a demonstrated record of 
        effectiveness in providing assistance to homeless 
        families, and with appropriate nonprofit private 
        organizations involved in the delivery of eligible 
        support services;
            [(4) fiscal and administrative management of the 
        eligible entity;
            [(5) the involvement of project participants and 
        community representatives in the planning and operation 
        of the program to the extent practicable; and
            [(6) the availability and proximity of comparable 
        services provided by Community Action Agencies unless 
        the Community Action Agency is the applicant and 
        intends to expand existing services.
    [(e) Requirements.--
            [(1) In general.--Each eligible entity desiring to 
        receive a grant under this section shall--
                    [(A) have demonstrated effectiveness in 
                providing or arranging for the provision of 
                services such as those required under this 
                section;
                    [(B) to the maximum extent practicable, 
                expand, coordinate, integrate, or contract with 
                existing service providers, and avail itself of 
                other resource and reimbursement mechanisms 
                that may be used to provide services; and
                    [(C) submit an application at such time in 
                such manner and containing or accompanied by 
                such information, including the information 
                required under paragraph (2), as the Secretary 
                shall reasonably require.
            [(2) Application.--Each application submitted under 
        paragraph (1)(C) shall--
                    [(A) identify the population and geographic 
                location to be served by the program;
                    [(B) provide assurances that services are 
                closely related to the identifiable needs of 
                the target population;
                    [(C) provide assurances that each program 
                will provide directly or arrange for the 
                provision of intensive and comprehensive 
                supportive services;
                    [(D) identify the referral providers, 
                agencies, and organizations that the program 
                will use;
                    [(E) describe the method of furnishing 
                services at offsite locations, if appropriate;
                    [(F) describe the manner in which the 
                services offered will be accessed through 
                existing program providers to the extent that 
                they are located in the immediate vicinity of 
                the target population, or will contract with 
                such providers for community-based services 
                within the community to be served, and that 
                funds provided under this section will be 
                utilized to create new services only to the 
                extent that no other funds can be obtained to 
                fulfill the purpose.
                    [(G) describe how the program will relate 
                to the State and local agencies providing 
                assistance to homeless families, or providing 
                health, nutritional, job training, education, 
                housing and energy assistance, and income 
                maintenance services;
                    [(H) describe the collection and provision 
                of data on groups of individuals and geographic 
                areas to be served, including types of services 
                to be furnished, estimated cost of providing 
                comprehensive services on an average per user 
                basis, types and natures of conditions and 
                needs to be identified and assisted, and such 
                other information as the Secretary requires;
                    [(I) describe the manner in which the 
                applicant will implement the requirement of 
                section 773;
                    [(J) provide for the establishment of an 
                advisory council that shall provide policy and 
                programming guidance to the eligible entity, 
                consisting of not more than 15 members that 
                shall include--
                            [(i) participants in the programs, 
                        including parents;
                            [(ii) representatives of local 
                        private industry;
                            [(iii) individuals with expertise 
                        in the services the program intends to 
                        offer;
                            [(iv) representatives of the 
                        community in which the program will be 
                        located;
                            [(v) representatives of local 
                        government social service providers;
                            [(vi) representatives of local law 
                        enforcement agencies;
                            [(vii) representatives of the local 
                        public housing agency, where 
                        appropriate; and
                            [(viii) representatives of local 
                        education providers;
                    [(K) describe plans for evaluating the 
                impact of the program;
                    [(L) include such additional assurances, 
                including submitting necessary reports, as the 
                Secretary may reasonably require;
                    [(M) contain an assurance that if the 
                applicant intends to assess fees for services 
                provided with assistance under this section, 
                such fees shall be nominal in relation to the 
                financial situation of the recipient of such 
                services; and
                    [(N) contain an assurance that amounts 
                received under a grant awarded under this 
                section shall be used to supplement not 
                supplant Federal, State and local funds 
                currently utilized to provide services of the 
                type described in this section.
    [(f) Administrative Provisions.--
            [(1) Administrative costs.--Two percent of the 
        amounts appropriated under this title may be used by 
        the Secretary to administer the programs established 
        under this title and three percent of the amounts 
        appropriated under this title may be used by the 
        Secretary to evaluate such programs and to provide 
        technical assistance to entities for the development 
        and submission of applications for grants under this 
        section.
            [(2) Limitation.--Not more than 30 grants may be 
        made under this subtitle.
            [(3) Amount of grants.--No grant made under this 
        subtitle may exceed $2,500,000 per year nor more than a 
        total of $4,000,000 for 3 years. Funds received under 
        such grants shall remain available until expended.
            [(4) Minimum amount.--No grant made under 
        subsection (a) may be awarded in an amount that is less 
        than $200,000 per year.
    [(g) Family Support Centers.--Each program that receives 
assistance under this section shall establish one or more 
family support centers that operate--
            [(1) in or near the immediate vicinity of 
        governmentally subsidized housing;
            [(2) in urban poverty areas; or
            [(3) in non-urban poverty areas.
Such centers shall be the primary location for the 
administration of the programs and the provision of services 
under this title.

[SEC. 773. TRAINING AND RETENTION.

    [The Secretary shall require that entities that receive a 
grant under section 772 use not more than 7 percent of such 
grant to improve the retention and effectiveness of staff and 
volunteers.

[SEC. 774. FAMILY CASE MANAGERS.

    [(a) Requirement.--Each entity that receives a grant under 
section 772 shall employ, subject to subsection (d), an 
appropriate number of individuals with expertise in the 
provision of intensive and comprehensive supportive services to 
serve as family case managers for the program.
    [(b) Needs Assessment.--Each low-income family that desires 
to receive services from a program that receives assistance 
under this subtitle shall be assessed by a family case manager 
on such family's initial visit to such program as to their need 
for services.
    [(c) Continuing Functions.--Family case managers shall 
formulate a service plan based on a needs assessment for each 
family. Such case manager shall carry out such plan, and remain 
available to provide such family with counseling and referral 
services, to enable such family to become self-sufficient. In 
carrying out such plan the case manager shall conduct 
monitoring, tracking, and follow-up activities, as appropriate.
    [(d) Limitation.--Each family case manager shall have a 
caseload that is of a sufficiently small size so as to permit 
such manager to effectively manage the delivery of 
comprehensive services to those families assigned to such 
manager.

[SEC. 775. GATEWAY PROGRAMS.

    [(a) In General.--The Secretary shall use amounts made 
available in accordance with section 772(b) to make not more 
than 5 demonstration grants to local education agencies who, in 
consultation with the local public housing authority and 
private industry council, agree to provide on-site education, 
training and necessary support services to economically 
disadvantaged residents of public housing.
    [(b) Selection of Grant Recipients.--The Secretary of 
Health and Human Services, in consultation with the Secretary 
of Education, shall select a local education agency to receive 
a grant under subsection (a) if such agency has cooperated with 
the local public housing authority in order to meet the 
following requirements:
            [(1) The local education agency shall demonstrate 
        to the Secretary that training and ancillary support 
        services will be accessed through existing program 
        providers to the extent that they are located in the 
        immediate vicinity of the public housing development, 
        or will contract with such providers for on-site 
        service delivery, and that funds provided under this 
        section will be utilized to purchase such services only 
        to the extent that no other funds can be obtained to 
        fulfill the purpose.
            [(2) The public housing agency shall agree to make 
        available suitable facilities in the public housing 
        development for the provision of education, training 
        and support services under this section.
            [(3) The local education agency shall demonstrate 
        that the recipients of service have been recruited with 
        the assistance of the public housing authority and are 
        eligible individuals in accordance with the priorities 
        established in subsection (c).
            [(4) The local education agency shall demonstrate 
        the ability to coordinate the services provided in this 
        section with other services provided, with the public 
        housing development and private industry council as 
        well as with other public and private agencies and 
        community-based organizations of demonstrated 
        effectiveness providing similar and ancillary services 
        to the target population.
            [(5) The local education agency shall demonstrate 
        that they have, to the fullest extent practicable, 
        attempted to employ residents of the public housing 
        development to carry out the purposes of this section 
        whenever qualified residents are available.
    [(c) Individuals Eligible for Services.--Local education 
agencies receiving grants under this section shall target 
participation in the training and services provided under such 
grants to individuals who--
            [(1) reside in public housing;
            [(2) are economically disadvantaged; and
            [(3) have encountered barriers to employment 
        because of basic skills deficiency including not having 
        a high school diploma, GED, or the equivalent.
    [(d) Priority.--Local education agencies providing services 
under this section shall give priority to single heads of 
households with young dependent children.
    [(e) Mandatory Services.--Any local education agency that 
receives a grant under this section shall establish a Gateway 
program to provide--
            [(1) outreach and information services designed to 
        make eligible individuals aware of available services;
            [(2) literacy and bilingual education services, 
        where appropriate;
            [(3) remedial education and basic skills training;
            [(4) employment training and personal management 
        skill development or referrals for such services; and
            [(5) child care or dependent care for dependents of 
        eligible individuals during those times, including 
        afternoons and evenings, when training services are 
        being provided.
To the extent practicable, child care or dependent care 
services shall be designed to employ public housing residents 
after appropriate training.
    [(f) Permissive Services.--Local education agencies 
receiving grants under this section may make available, as part 
of their Gateway programs--
            [(1) pre-employment skills training;
            [(2) employment counseling and application 
        assistance;
            [(3) job development services;
            [(4) job training;
            [(5) Federal employment-related activity services;
            [(6) completion of high school or GED program 
        services;
            [(7) transitional assistance, including child care 
        for up to 6 months to enable such individual to 
        successfully secure unsubsidized employment;
            [(8) substance abuse prevention and education; and
            [(9) other support services that the Secretary 
        deems to be appropriate.

[SEC. 776. EVALUATION.

    [(a) In General.--The Secretary shall contract for an 
independent evaluation of the programs and entities that 
receive assistance under this title. Such evaluation shall be 
complete not later than the date that is 15 months after the 
date on which the first grants are awarded under this title.
    [(b) Matter to be Evaluated.--The evaluation conducted 
under subsection (a) shall examine the degree to which the 
programs receiving assistance under this title have fulfilled 
the objectives included in the application in accordance with 
section 722(e)(2) in--
            [(1) enhancing the living conditions in low income 
        housing and in neighborhoods;
            [(2) improving the physical, social and educational 
        development of low income children and families served 
        by the program;
            [(3) achieving progress towards increased potential 
        for independence and self-sufficiency among families 
        served by the program;
            [(4) the degree to which the provision of services 
        is affected by caseload size;
            [(5) promoting increases in literacy levels and 
        basic employment skills among residents of public 
        housing developments served by grants under section 
        776; and
            [(6) such other factors that the Secretary may 
        reasonably require.
    [(c) Information.--Each eligible entity receiving a grant 
under this subtitle shall furnish information requested by 
evaluators in order to carry out this section.
    [(d) Results.--The results of such evaluation shall be 
provided by the Secretary to the eligible entities conducting 
the programs to enable such entities to improve such programs.

[SEC. 777. REPORT.

    [Not later than July 1, 1995, the Secretary shall prepare 
and submit, to the Committee on Education and Labor, of the 
House of Representatives and the Committee on Labor and Human 
Resources of the Senate, a report--
            [(1) concerning the evaluation required under 
        section 776;
            [(2) providing recommendations for replicating 
        grant programs, including identifying the geographic 
        and demographic characteristics of localities where 
        this service coordination and delivery system may prove 
        effective;
            [(3) describing any alternative sources of funding 
        utilized or available for the provision of services of 
        the type described in this subtitle; and
            [(4) describing the degree to which entities are 
        coordinating with other existing programs.

[SEC. 778. CONSTRUCTION.

    [Nothing in this subtitle shall be construed to modify the 
Federal selection preferences described in section 6 of the 
United States Housing Act of 1937 (42 U.S.C. 1437d) or the 
authorized policies and procedures of governmental housing 
authorities operating under annual assistance contracts 
pursuant to such Act with respect to admissions, tenant 
selection and evictions.

[SEC. 779. AUTHORIZATION OF APPROPRIATIONS.

    [There are authorized to be appropriated to carry out this 
subtitle, $50,000,000 for fiscal year 1991, $55,000,000 for 
fiscal year 1992, and such sums as may be necessary for each of 
the fiscal years 1993 through 1998.]
                              ----------                              


           CHILD CARE AND DEVELOPMENT BLOCK GRANT ACT OF 1990

                   TITLE VI--HUMAN SERVICES PROGRAMS

  Subtitle A--Authorizations Savings for Fiscal Years 1982, 1983, and 
                                  1984

          * * * * * * *

                 CHAPTER 8--COMMUNITY SERVICES PROGRAMS

          * * * * * * *

          Subchapter C--Child Care and Development Block Grant

SEC. 658A. SHORT TITLE AND GOALS.

    (a) Short Title.--This subchapter may be cited as the 
``Child Care and Development Block Grant Act of 1990''.
    (b) Goals.--The goals of this subchapter are--
            (1) to allow each State maximum flexibility in 
        developing child care programs and policies that best 
        suit the needs of children and parents within such 
        State;
            (2) to promote parental choice to empower working 
        parents to make their own decisions on the child care 
        that best suits their family's needs;
            (3) to encourage States to provide consumer 
        education information to help parents make informed 
        choices about child care;
            (4) to assist States to provide child care to 
        parents trying to achieve independence from public 
        assistance; and
            (5) to assist States in implementing the health, 
        safety, licensing, and registration standards 
        established in State regulations.

[SEC. 658B. AUTHORIZATION OF APPROPRIATIONS.

    [There are authorized to be appropriated to carry out this 
subchapter, $750,000,000 for fiscal year 1991, $825,000,000 for 
fiscal year 1992, $925,000,000 for fiscal year 1993, and such 
sums as may be necessary for each of the fiscal years 1994 and 
1995.]

SEC. 658B. AUTHORIZATION OF APPROPRIATIONS.

    There is authorized to be appropriated to carry out this 
subchapter $1,000,000,000 for each of the fiscal years 1996 
through 2002.
          * * * * * * *

SEC. 658D. LEAD AGENCY.

    (a) Designation.--The chief executive officer of a State 
desiring to receive a grant under this subchapter shall 
designate, in an application submitted to the Secretary under 
section 658E, an appropriate State agency that complies with 
the requirements of subsection (b) to act as the lead agency.
    (b) Duties.--
            (1) In general.--The lead agency shall--
                    (A) administer, directly or through other 
                [State] governmental or nongovernmental 
                agencies, the financial assistance received 
                under this subchapter by the State;
                    (B) develop the State plan to be submitted 
                to the Secretary under section 658E(a);
                    (C) in conjunction with the development of 
                the State plan as required under subparagraph 
                (B), hold at least one hearing in the State 
                with sufficient time and Statewide distribution 
                of the notice of such hearing, to provide to 
                the public an opportunity to comment on the 
                provision of child care services under the 
                State plan; and
          * * * * * * *
            (2) Development of plan.--In the development of the 
        State plan described in paragraph (1)(B), the lead 
        agency shall consult with appropriate representatives 
        of units of general purpose local government. [Such 
        consultations may include consideration of local child 
        care needs and resources, the effectiveness of existing 
        child care and early childhood development services, 
        and the methods by which funds made available under 
        this subchapter can be used to effectively address 
        local shortages.]
          * * * * * * *

SEC. 658E. APPLICATION AND PLAN.

    (a) * * *
    (b) Period Covered by Plan.--The State plan contained in 
the application under subsection (a) shall be designed to be 
[implemented--
            [(1) during a 3-year period for the initial State 
        plan; and
            [(2)] implemented during a 2-year period [for 
        subsequent State plans].
    (c) Requirements of a Plan.--
            (1) Lead agency.--The State plan shall identify the 
        lead agency designated under section 658D.
            (2) Policies and procedures.--The State plan shall:
                    (A) Parental choice of providers.--Provide 
                assurances that--
                            (i) the parent or parents of each 
                        eligible child within the State who 
                        receives or is offered child care 
                        services for which financial assistance 
                        is provided under this subchapter[, 
                        other than through assistance provided 
                        under paragraph (3)(C),] are given the 
                        option either--
                                    (I) * * *
          * * * * * * *
                [except that nothing in this subparagraph shall 
                require a State to have a child care 
                certificate program in operation prior to 
                October 1, 1992] and provide a detailed 
                description of the procedures the State will 
                implement to carry out the requirements of this 
                subparagraph.
                    (B) Unlimited parental access.--[Provide 
                assurances] Certify that procedures are in 
                effect within the State to ensure that child 
                care providers who provide services for which 
                assistance is made available under this 
                subchapter afford parents unlimited access to 
                their children and to the providers caring for 
                their children, during the normal hours of 
                operation of such providers and whenever such 
                children are in the care of such providers and 
                provide a detailed description of such 
                procedures.
                    (C) Parental complaints.--[Provide 
                assurances] Certify that the State maintains a 
                record of substantiated parental complaints and 
                makes information regarding such parental 
                complaints available to the public on request 
                and provide a detailed description of how such 
                record is maintained and is made available.
                    [(D) Consumer education.--Provide 
                assurances that consumer education information 
                will be made available to parents and the 
                general public within the State concerning 
                licensing and regulatory requirements, 
                complaint procedures, and policies and 
                practices relative to child care services 
                within the State.
                    [(E) Compliance with state and local 
                regulatory requirements.--Provide assurances 
                that--
                            [(i) all providers of child care 
                        services within the State for which 
                        assistance is provided under this 
                        subchapter comply with all licensing or 
                        regulatory requirements (including 
                        registration requirements) applicable 
                        under State and local law; and
                            [(ii) providers within the State 
                        that are not required to be licensed or 
                        regulated under State or local law are 
                        required to be registered with the 
                        State prior to payment being made under 
                        this subchapter, in accordance with 
                        procedures designed to facilitate 
                        appropriate payment to such providers, 
                        and to permit the State to furnish 
                        information to such providers, 
                        including information on the 
                        availability of health and safety 
                        training, technical assistance, and any 
                        relevant information pertaining to 
                        regulatory requirements in the State, 
                        and that such providers shall be 
                        permitted to register with the State 
                        after selection by the parents of 
                        eligible children and before such 
                        payment is made.
                This subparagraph shall not be construed to 
                prohibit a State from imposing more stringent 
                standards and licensing or regulatory 
                requirements on child care providers within the 
                State that provide services for which 
                assistance is provided under this subchapter 
                than the standards or requirements imposed on 
                other child care providers in the State.]
                    (D) Consumer education information.--
                Certify that the State will collect and 
                disseminate to parents of eligible children and 
                the general public, consumer education 
                information that will promote informed child 
                care choices.
                    (E) Compliance with state licensing 
                requirements.--
                            (i) In general.--Certify that the 
                        State has in effect licensing 
                        requirements applicable to child care 
                        services provided within the State, and 
                        provide a detailed description of such 
                        requirements and of how such 
                        requirements are effectively enforced. 
                        Nothing in the preceding sentence shall 
                        be construed to require that licensing 
                        requirements be applied to specific 
                        types of providers of child care 
                        services.
                            (ii) Indian tribes and tribal 
                        organizations.--In lieu of any 
                        licensing and regulatory requirements 
                        applicable under State and local law, 
                        the Secretary, in consultation with 
                        Indian tribes and tribal organizations, 
                        shall develop minimum child care 
                        standards (that appropriately reflect 
                        tribal needs and available resources) 
                        that shall be applicable to Indian 
                        tribes and tribal organization 
                        receiving assistance under this 
                        subchapter.
          * * * * * * *
                    (G) Compliance with state and local health 
                and safety requirements.--[Provide assurances] 
                Certify that procedures are in effect to ensure 
                that child care providers within the State that 
                provide services for which assistance is 
                provided under this subchapter comply with all 
                applicable State or local health and safety 
                requirements as described in subparagraph (F).
                    [(H) Reduction in standards.--Provide 
                assurances that if the State reduces the level 
                of standards applicable to child care services 
                provided in the State on the date of enactment 
                of this subchapter, the State shall inform the 
                Secretary of the rationale for such reduction 
                in the annual report of the State described in 
                section 658K.
                    [(I) Review of state licensing and 
                regulatory requirements.--Provide assurances 
                that not later than 18 months after the date of 
                the submission of the application under section 
                658E, the State will complete a full review of 
                the law applicable to, and the licensing and 
                regulatory requirements and policies of, each 
                licensing agency that regulates child care 
                services and programs in the State unless the 
                State has reviewed such law, requirements, and 
                policies in the 3-year period ending on the 
                date of the enactment of this subchapter.
                    [(J) Supplementation.--Provide assurances 
                that funds received under this subchapter by 
                the State will be used only to supplement, not 
                to supplant, the amount of Federal, State, and 
                local funds otherwise expended for the support 
                of child care services and related programs in 
                the State.]
                    (H) Meeting the needs of certain 
                populations.--Demonstrate the manner in which 
                the State will meet the specific child care 
                needs of families who are receiving assistance 
                under a State program under part A of title IV 
                of the Social Security Act, families who are 
                attempting through work activities to 
                transition off of such assistance program, and 
                families that are at risk of becoming dependent 
                on such assistance program.
            (3) Use of block grant funds.--
                    (A) General requirement.--The State plan 
                shall provide that the State will use the 
                amounts provided to the State for each fiscal 
                year under this subchapter as required under 
                subparagraphs [(B) and (C)] (B) through (D).
                    (B) Child care services[.--Subject to the 
                reservation contained in subparagraph (C), the] 
                and related activities.--The State shall use 
                amounts provided to the State for each fiscal 
                year under this subchapter [for--
                            [(i) child care services, that meet 
                        the requirements of this subchapter, 
                        that are provided to eligible children 
                        in the State on a sliding fee scale 
                        basis using funding methods provided 
                        for in section 658E(c)(2)(A)] for child 
                        care services on sliding fee scale 
                        basis, activities that improve the 
                        quality or availability of such 
                        services, and any other activity that 
                        the State deems appropriate to realize 
                        any of the goals specified in 
                        paragraphs (2) through (5) of section 
                        658A(b), with priority being given for 
                        services provided to children of 
                        families with very low family incomes 
                        (taking into consideration family size) 
                        and to children with special needs[; 
                        and].
                            [(ii) activities designed to 
                        improve the availability and quality of 
                        child care.
                    [(C) Activities to improve the quality of 
                child care and to increase the availability of 
                early childhood development and before- and 
                after-school care services.--The State shall 
                reserve 25 percent of the amounts provided to 
                the State for each fiscal year under this 
                subchapter to carry out activities designed to 
                improve the quality of child care (as described 
                in section 658G) and to provide before- and 
                after-school and early childhood development 
                services (as described in section 658H).]
                    (C) Limitation on administrative costs.--
                Not more than 5 percent of the aggregate amount 
                of funds available to the State to carry out 
                this subchapter by a State in each fiscal year 
                may be expended for administrative costs 
                incurred by such State to carry out all of its 
                functions and duties under this subchapter. As 
                used in the preceding sentence, the term 
                ``administrative costs'' shall not include the 
                costs of providing direct services.
                    (D) Assistance for certain families.--A 
                State shall ensure that a substantial portion 
                of the amounts available (after the State has 
                complied with the requirement of section 
                418(b)(2) of the Social Security Act with 
                respect to each of the fiscal years 1997 
                through 2002) to the State to carry out 
                activities under this subchapter in each fiscal 
                year is used to provide assistance to low-
                income working families other than families 
                described in paragraph (2)(F).
            (4) Payment rates.--
                    (A) In general.--The State plan shall 
                [provide assurances] certify that payment rates 
                for the provision of child care services for 
                which assistance is provided under this 
                subchapter are sufficient to ensure equal 
                access for eligible children to comparable 
                child care services in the State or substate 
                area that are provided to children whose 
                parents are not eligible to receive assistance 
                under this subchapter or for child care 
                assistance under any other Federal or State 
                programs and shall provide a summary of the 
                facts relied on by the State to determine that 
                such rates are sufficient to ensure such 
                access. [Such payment rates shall take into 
                account the variations in the costs of 
                providing child care in different settings and 
                to children of different age groups, and the 
                additional costs of providing child care for 
                children with special needs.]
          * * * * * * *

SEC. 658F. LIMITATIONS ON STATE ALLOTMENTS.

    (a) * * *
    (b) Construction of Facilities.--
            (1) In general.--[No] Except as provided for in 
        section 658O(c)(6), no funds made available under this 
        subchapter shall be expended for the purchase or 
        improvement of land, or for the purchase, construction, 
        or permanent improvement (other than minor remodeling) 
        of any building or facility.
          * * * * * * *

[SEC. 658G. ACTIVITIES TO IMPROVE THE QUALITY OF CHILD CARE.

    [A State that receives financial assistance under this 
subchapter shall use not less than 20 percent of the amounts 
reserved by such State under section 658E(c)(3)(C) for each 
fiscal year for one or more of the following:
            [(1) Resource and referral programs.--Operating 
        directly or providing financial assistance to private 
        nonprofit organizations or public organizations 
        (including units of general purpose local government) 
        for the development, establishment, expansion, 
        operation, and coordination of resource and referral 
        programs specifically related to child care.
            [(2) Grants or loans to assist in meeting state and 
        local standards.--Making grants or providing loans to 
        child care providers to assist such providers in 
        meeting applicable State and local child care 
        standards.
            [(3) Monitoring of compliance with licensing and 
        regulatory requirements.--Improving the monitoring of 
        compliance with, and enforcement of, State and local 
        licensing and regulatory requirements (including 
        registration requirements).
            [(4) Training.--Providing training and technical 
        assistance in areas appropriate to the provision of 
        child care services, such as training in health and 
        safety, nutrition, first aid, the recognition of 
        communicable diseases, child abuse detection and 
        prevention, and the care of children with special 
        needs.
            [(5) Compensation.--Improving salaries and other 
        compensation paid to full- and part-time staff who 
        provide child care services for which assistance is 
        provided under this subchapter.

[SEC. 658H. EARLY CHILDHOOD DEVELOPMENT AND BEFORE- AND AFTER-SCHOOL 
                    SERVICES.

    [(a) In General.--A State that receives financial 
assistance under this subchapter shall use not less than 75 
percent of the amounts reserved by such State under section 
658E(c)(3)(C) for each fiscal year to establish or expand and 
conduct, through the provision of grants or contracts, early 
childhood development or before- and after-school child care 
programs, or both.
    [(b) Program Description.--Programs that receive assistance 
under this section shall--
            [(1) in the case of early childhood development 
        programs, consist of services that are not intended to 
        serve as a substitute for a compulsory academic 
        programs but that are intended to provide an 
        environment that enhances the educational, social, 
        cultural, emotional, and recreational development of 
        children; and
            [(2) in the case of before- and after-school child 
        care programs--
                    [(A) be provided Monday through Friday, 
                including school holidays and vacation periods 
                other than legal public holidays, to children 
                attending early childhood development programs, 
                kindergarten, or elementary or secondary school 
                classes during such times of the day and on 
                such days that regular instructional services 
                are not in session; and
                    [(B) not be intended to extend or replace 
                the regular academic program.
    [(c) Priority for Assistance.--In awarding grants and 
contracts under this section, the State shall give the highest 
priority to geographic areas within the State that are eligible 
to receive grants under section 1006 of the Elementary and 
Secondary Education Act of 1965, and shall then give priority 
to--
            [(1) any other areas with concentrations of 
        poverty; and
            [(2) any areas with very high or very low 
        population densities.]

SEC. 658G. ACTIVITIES TO IMPROVE THE QUALITY OF CHILD CARE.

    A State that receives funds to carry out this subchapter 
for a fiscal year, shall use not less than 3 percent of the 
amount of such funds for activities that are designed to 
provide comprehensive consumer education to parents and the 
public, activities that increase parental choice, and 
activities designed to improve the quality and availability of 
child care (such as resource and referral services).

SEC. 658I. ADMINISTRATION AND ENFORCEMENT.

    (a) * * *
    (b) Enforcement.--
            (1) Review of compliance with state plan.--The 
        Secretary shall review and monitor State compliance 
        with this subchapter and the plan approved under 
        section 658E(c) for the State[, and shall have the 
        power to terminate payments to the State in accordance 
        with paragraph (2)].
            (2) Noncompliance.--
                    (A) In general.--If the Secretary, after 
                reasonable notice to a State and opportunity 
                for a hearing, finds that--
                            (i) there has been a failure by the 
                        State to comply substantially with any 
                        provision or requirement set forth in 
                        the plan approved under section 658E(c) 
                        for the State; or
                            (ii) in the operation of any 
                        program for which assistance is 
                        provided under this subchapter there is 
                        a failure by the State to comply 
                        substantially with any provision of 
                        this subchapter;
                the Secretary shall notify the State of the 
                [finding and that no further payments may be 
                made to such State under this subchapter (or, 
                in the case of noncompliance in the operation 
                of a program or activity, that no further 
                payments to the State will be made with respect 
                to such program or activity) until the 
                Secretary is satisfied that there is no longer 
                any such failure to comply or that the 
                noncompliance will be promptly corrected.] 
                finding and shall require that the State 
                reimburse the Secretary for any funds that were 
                improperly expended for purposes prohibited or 
                not authorized by this subchapter, that the 
                Secretary deduct from the administrative 
                portion of the State allotment for the 
                following fiscal year an amount that is less 
                than or equal to any improperly expended funds, 
                or a combination of such options.
          * * * * * * *

SEC. 658J. PAYMENTS.

    (a) * * *
          * * * * * * *
    (c) Spending of Funds by State.--Payments to a State from 
the allotment under section 658O for any fiscal year may be 
[expended] obligated by the State in that fiscal year or in the 
succeeding 3 fiscal years.

SEC. 658K. [ANNUAL REPORT] REPORTS AND AUDITS.

    [(a) Annual Report.--Not later than December 31, 1992, and 
annually thereafter, a State that receives assistance under 
this subchapter shall prepare and submit to the Secretary a 
report--
            [(1) specifying the uses for which the State 
        expended funds specified under paragraph (3) of section 
        658E(c) and the amount of funds expended for such uses;
            [(2) containing available data on the manner in 
        which the child care needs of families in the State are 
        being fulfilled, including information concerning--
                    [(A) the number of children being assisted 
                with funds provided under this subchapter, and 
                under other Federal child care and pre-school 
                programs;
                    [(B) the type and number of child care 
                programs, child care providers, caregivers, and 
                support personnel located in the State;
                    [(C) salaries and other compensation paid 
                to full- and part-time staff who provide child 
                care services; and
                    [(D) activities in the State to encourage 
                public-private partnerships that promote 
                business involvement in meeting child care 
                needs;
            [(3) describing the extent to which the 
        affordability and availability of child care services 
        has increased;
            [(4) if applicable, describing, in either the first 
        or second such report, the findings of the review of 
        State licensing and regulatory requirements and 
        policies described in section 658E(c), including a 
        description of actions taken by the State in response 
        to such reviews;
            [(5) containing an explanation of any State action, 
        in accordance with section 658E, to reduce the level of 
        child care standards in the State, if applicable; and
            [(6) describing the standards and health and safety 
        requirements applicable to child care providers in the 
        State, including a description of State efforts to 
        improve the quality of child care;
during the period for which such report is required to be 
submitted.]
    (a) Reports.--
            (1) Collection of information by states.--
                    (A) In general.--A State that receives 
                funds to carry out this subchapter shall 
                collect the information described in 
                subparagraph (B) on a monthly basis.
                    (B) Required information.--The information 
                required under this subparagraph shall include, 
                with respect to a family unit receiving 
                assistance under this subchapter information 
                concerning--
                            (i) family income;
                            (ii) county of residence;
                            (iii) the gender, race, and age of 
                        children receiving such assistance;
                            (iv) whether the family includes 
                        only 1 parent;
                            (v) the sources of family income, 
                        including the amount obtained from (and 
                        separately identified)--
                                    (I) employment, including 
                                self-employment;
                                    (II) cash or other 
                                assistance under part A of 
                                title IV of the Social Security 
                                Act;
                                    (III) housing assistance;
                                    (IV) assistance under the 
                                Food Stamp Act of 1977; and
                                    (V) other assistance 
                                programs;
                            (vi) the number of months the 
                        family has received benefits;
                            (vii) the type of child care in 
                        which the child was enrolled (such as 
                        family child care, home care, or 
                        center-based child care);
                            (viii) whether the child care 
                        provider involved was a relative;
                            (ix) the cost of child care for 
                        such families; and
                            (x) the average hours per week of 
                        such care;
                during the period for which such information is 
                required to be submitted.
                    (C) Submission to secretary.--A State 
                described in subparagraph (A) shall, on a 
                quarterly basis, submit the information 
                required to be collected under subparagraph (B) 
                to the Secretary.
                    (D) Sampling.--The Secretary may disapprove 
                the information collected by a State under this 
                paragraph if the State uses sampling methods to 
                collect such information.
            (2) Biannual reports.--Not later than December 31, 
        1997, and every 6 months thereafter, a State described 
        in paragraph (1)(A) shall prepare and submit to the 
        Secretary a report that includes aggregate data 
        concerning--
                    (A) the number of child care providers that 
                received funding under this subchapter as 
                separately identified based on the types of 
                providers listed in section 658P(5);
                    (B) the monthly cost of child care 
                services, and the portion of such cost that is 
                paid for with assistance provided under this 
                subchapter, listed by the type of child care 
                services provided;
                    (C) the number of payments made by the 
                State through vouchers, contracts, cash, and 
                disregards under public benefit programs, 
                listed by the type of child care services 
                provided;
                    (D) the manner in which consumer education 
                information was provided to parents and the 
                number of parents to whom such information was 
                provided; and
                    (E) the total number (without duplication) 
                of children and families served under this 
                subchapter;
        during the period for which such report is required to 
        be submitted.
    (b) Audits.--
            (1) Requirement.--A State shall, after the close of 
        each program period covered by [a] an application 
        approved under section 658E(d) audit its expenditures 
        during such program period from amounts received under 
        this subchapter.
            (2) Independent auditor.--Audits under this 
        subsection shall be conducted by an entity that is 
        independent of [any agency administering activities 
        that receive] the State that receives assistance under 
        this subchapter and be in accordance with generally 
        accepted auditing principles.
            (3) Submission.--Not later than 30 days after the 
        completion of an audit under this subsection, the State 
        shall submit a copy of the audit to the legislature of 
        the State and to the Secretary.
            (4) Repayment of amounts.--Each State shall repay 
        to the United States any amounts determined through an 
        audit under this subsection not to have been expended 
        in accordance with this subchapter, or the Secretary 
        may offset such amounts against any other amount to 
        which the State is or may be [entitles] entitled under 
        this subchapter.

SEC. 658L. REPORT BY SECRETARY.

    Not later than July 31, [1993] 1997, and [annually] 
biennially thereafter, the Secretary shall prepare and submit 
to the Committee on [Education and Labor] Economic and 
Educational Opportunities of the House of Representatives and 
the Committee on Labor and Human Resources of the Senate a 
report that contains a summary and analysis of the data and 
information provided to the Secretary in the State reports 
submitted under section 658K. Such report shall include an 
assessment, and where appropriate, recommendations for the 
Congress concerning efforts that should be undertaken to 
improve the access of the public to quality and affordable 
child care in the United States.
          * * * * * * *

SEC. 658O. AMOUNTS RESERVED; ALLOTMENTS.

    (a) Amounts Reserved.--
            (1) Territories and [Possessions] possessions.--The 
        Secretary shall reserve not to exceed one half of 1 
        percent of the amount appropriated under this 
        subchapter in each fiscal year for payments to Guam, 
        American Samoa, the Virgin Islands of the United 
        States, and the Commonwealth of the Northern Mariana 
        Islands[, and the Trust Territory of the Pacific 
        Islands] to be allotted in accordance with their 
        respective needs.
            (2) Indians tribes.--The Secretary shall reserve 
        not more than [3] 1 percent of the amount appropriated 
        under section 658B in each fiscal year for payments to 
        Indian tribes and tribal organizations with 
        applications approved under subsection (c).
          * * * * * * *
    (c) Payments for the Benefit of Indian Children.--
            (1) * * *
          * * * * * * *
            (5) Dual eligibility of indian children.--The 
        awarding of a grant or contract under this section for 
        programs or activities to be conducted in a State or 
        States shall not affect the eligibility of any Indian 
        child to receive services provided or to participate in 
        programs and activities carried [our] out under a grant 
        to the State or States under this subchapter.
            (6) Construction or renovation of facilities.--
                    (A) Request for use of funds.--An Indian 
                tribe or tribal organization may submit to the 
                Secretary a request to use amounts provided 
                under this subsection for construction or 
                renovation purposes.
                    (B) Determination.--With respect to a 
                request submitted under subparagraph (A), and 
                except as provided in subparagraph (C), upon a 
                determination by the Secretary that adequate 
                facilities are not otherwise available to an 
                Indian tribe or tribal organization to enable 
                such tribe or organization to carry out child 
                care programs in accordance with this 
                subchapter, and that the lack of such 
                facilities will inhibit the operation of such 
                programs in the future, the Secretary may 
                permit the tribe or organization to use 
                assistance provided under this subsection to 
                make payments for the construction or 
                renovation of facilities that will be used to 
                carry out such programs.
                    (C) Limitation.--The Secretary may not 
                permit an Indian tribe or tribal organization 
                to use amounts provided under this subsection 
                for construction or renovation if such use will 
                result in a decrease in the level of child care 
                services provided by the tribe or organization 
                as compared to the level of such services 
                provided by the tribe or organization in the 
                fiscal year preceding the year for which the 
                determination under subparagraph (A) is being 
                made.
                    (D) Uniform procedures.--The Secretary 
                shall develop and implement uniform procedures 
                for the solicitation and consideration of 
                requests under this paragraph.
    (d) Data and Information.--The Secretary shall obtain from 
each appropriate Federal agency, the most recent data and 
information necessary to determine the allotments provided for 
in subsection (b).
    (e) Reallotments.--
            (1) * * *
          * * * * * * *
            (4) Indian tribes or tribal organizations.--Any 
        portion of a grant or contract made to an Indian tribe 
        or tribal organization under subsection (c) that the 
        Secretary determines is not being used in a manner 
        consistent with the provision of this subchapter in the 
        period for which the grant or contract is made 
        available, shall be allotted by the Secretary to other 
        tribes or organizations that have submitted 
        applications under subsection (c) in accordance with 
        their respective needs.
          * * * * * * *

SEC. 658P. DEFINITIONS.

    As used in this subchapter:
            (1) Caregiver.--The term ``caregiver'' means an 
        individual who provides a service directly to an 
        eligible child on a person-to-person basis.
            (2) Child care certificate.--The term ``child care 
        certificate'' means a certificate (that may be a check 
        or other disbursement) that is issued by a State or 
        local government under this subchapter directly to a 
        parent who may use such certificate only as payment for 
        child care services or as a deposit for child care 
        services if such a deposit is required of other 
        children being cared for by the provider. Nothing in 
        this subchapter shall preclude the use of such 
        certificates for sectarian child care services if 
        freely chosen by the parent. For purposes of this 
        subchapter, child care certificates shall not be 
        considered to be grants or contracts.
            [(3) Elementary school.--The term ``elementary 
        school'' means a day or residential school that 
        provides elementary education, as determined under 
        State law.]
            (4) Eligible child.--The term ``eligible child'' 
        means an individual--
                    (A) who is less than 13 years of age;
                    (B) whose family income does not exceed 
                [75] 85 percent of the State median income for 
                a family of the same size; and
          * * * * * * *
            (5) Eligible child care provider.--The term 
        ``eligible child care provider'' means--
                    (A) * * *
                    (B) a child care provider that is 18 years 
                of age or older who provides child care 
                services only to eligible children who are, by 
                affinity or consanguinity, or by court decree, 
                the grandchild, great grandchild, sibling (if 
                such provider lives in a separate residence), 
                niece, or nephew of such provider, if such 
                provider [is registered and] complies with any 
                [State] applicable requirements that govern 
                child care provided by the relative involved.
          * * * * * * *
            [(10) Secondary school.--The term ``secondary 
        school'' means a day or residential school which 
        provides secondary education, as determined under State 
        law.]
          * * * * * * *
            (13) State.--The term ``State'' means any of the 
        several States, the District of Columbia, the Virgin 
        Islands of the United States, the Commonwealth of 
        Puerto Rico, Guam, American Samoa, or the Commonwealth 
        of the Northern Mariana Islands[, and the Trust 
        Territory of the Pacific Islands].
            (14) Tribal organization.--[The term]
                    (A) In general.--The term ``tribal 
                organization'' has the meaning given it in 
                section 4(l) of the Indian Self-Determination 
                and Education Assistance Act (25 U.S.C. 
                450b(l)).
                    (B) Other organizations.--Such term 
                includes a Native Hawaiian Organization, as 
                defined in section 4009(4) of the Augustus F. 
                Hawkins-Robert T. Stafford Elementary and 
                Secondary School Improvement Amendments of 1988 
                (20 U.S.C. 4909(4)) and a private nonprofit 
                organization established for the purpose of 
                serving youth who are Indians or Native 
                Hawaiians.
          * * * * * * *
                              ----------                              


               HUMAN SERVICES REAUTHORIZATION ACT OF 1986

          * * * * * * *

 [TITLE VI--CHILD DEVELOPMENT ASSOCIATE SCHOLARSHIP ASSISTANCE PROGRAM

[SEC. 601. SHORT TITLE.

    [This title may be cited as the ``Child Development 
Associate Scholarship Assistance Act of 1985''.

[SEC. 602. GRANTS AUTHORIZED.

    [The Secretary is authorized to make a grant for any fiscal 
year to any State receiving a grant under title XX of the 
Social Security Act for such fiscal year to enable such State 
to award scholarships to eligible individuals within the State 
who are candidates for the Child Development Associate 
credential.

[SEC. 603. APPLICATIONS.

    [(a) Application Required.--A State desiring to participate 
in the grant program established by this title shall submit an 
application to the Secretary in such form as the Secretary may 
require.
    [(b) Contents of Applications.--A State's application shall 
contain appropriate assurances that--
            [(1) scholarship assistance made available with 
        funds provided under this title will be awarded--
                    [(A) only to eligible individuals;
                    [(B) on the basis of the financial need of 
                such individuals; and
                    [(C) in amounts sufficient to cover the 
                cost of application, assessment, and 
                credentialing (including, at the option of the 
                State, any training necessary for 
                credentialing) for the Child Development 
                Associate credential for such individuals;
            [(2) not more than 35 percent of the funds received 
        under this title by a State may be used to provide 
        scholarship assistance under paragraph (1) to cover the 
        cost of training described in paragraph (1)(C); and
            [(3) not more than 10 percent of the funds received 
        by the State under this title will be used for the 
        costs of administering the program established in such 
        State to award such assistance.
    [(c) Equitable Distribution.--In making grants under this 
title, the Secretary shall--
            [(1) distribute such grants equitably among States; 
        and
            [(2) ensure that the needs of rural and urban areas 
        are appropriately addressed.

[SEC. 604. DEFINITIONS.

    [For purposes of this title--
            [(1) the term ``eligible individual'' means a 
        candidate for the Child Development Associate 
        credential whose income does not exceed the 130 percent 
        of the lower living standard income level, by more than 
        50 percent;
            [(2) the term ``lower living standard income 
        level'' means that income level (adjusted for regional, 
        metropolitan, urban, and rural differences and family 
        size) determined annually by the Secretary of Labor and 
        based on the most recent lower living family budget 
        issued by the Secretary of Labor;
            [(3) the term ``Secretary'' means the Secretary of 
        Health and Human Services; and
            [(4) the term ``State'' means each of the several 
        States, the District of Columbia, the Commonwealth of 
        Puerto Rico, Guam, American Samoa, the Virgin Islands, 
        the Commonwealth of the Northern Mariana Islands, the 
        Marshall Islands, the Federated States of Micronesia, 
        and Palau.

[SEC. 605. ADMINISTRATIVE PROVISIONS.

    [(a) Reporting.--Each State receiving grants under this 
title shall annually submit to the Secretary information on the 
number of eligible individuals assisted under the grant 
program, and their positions and salaries before and after 
receiving the Child Development Associate credential.
    [(b) Payments.--Payments pursuant to grants made under this 
title may be made in installments, and in advance or by way of 
reimbursement, with necessary adjustments on account of 
overpayments or underpayments, as the Secretary may determine.

[SEC. 606. AUTHORIZATION OF APPROPRIATIONS.

    [There are authorized to be appropriated to carry out this 
title such sums as may be necessary for fiscal year 1995.]
          * * * * * * *
                              ----------                              


               OMNIBUS BUDGET RECONCILIATION ACT OF 1981

          * * * * * * *

                   TITLE VI--HUMAN SERVICES PROGRAMS

  Subtitle A--Authorizations Savings for Fiscal Years 1982, 1983, and 
                                  1984

          * * * * * * *

                 CHAPTER 8--COMMUNITY SERVICES PROGRAMS

          * * * * * * *

    [Subchapter E--Grants to States for Planning and Development of 
             Dependent Care Programs and for Other Purposes

                    [authorization of appropriations

    [Sec. 670A. For the purpose of making allotments to States 
to carry out the activities described in section 670D, there is 
authorized to be appropriated $13,000,000 for fiscal year 1995.

                              [allotments

    [Sec. 670B. (a) From the amounts appropriated under section 
6701A for each fiscal year, the Secretary shall allot to each 
State an amount which bears the same ratio to the total amount 
appropriated under such section for such fiscal year as the 
population of the State bears to the population of all States, 
except that no State may receive less than $50,000 in each 
fiscal year.
    [(b) For the purpose of the exception contained in 
subsection (a), the term ``State'' does not include Guam, 
American Samoa, the Virgin Islands, the Trust Territory of the 
Pacific Islands, and the Commonwealth of the Northern Mariana 
Islands.

                  [payments under allotments to states

    [Sec. 670C. The Secretary shall make payment, as provided 
by section 6503(a) of title 31, United States Code, to each 
State from its allotment under section 670B from amounts 
appropriated under section 670A.

                           [use of allotments

    [Sec. 670D. (a)(1) Subject to the provisions of subsections 
(c) and (d), amounts paid to a State under section 670C from it 
allotment under section 670B may be used for the planning, 
development, establishment, operation, expansion, or 
improvement by the States, directly or by grant or contract 
with public or private entities, of State and local resource 
and referral systems to provide information concerning the 
availability, types, costs, and locations of dependent care 
services. The information provided by any such system may 
include--
            [(A) the types of dependent care services 
        available, including services provided by individual 
        homes, religious organizations, community 
        organizations, employers, private industry, and public 
        and private institutions;
            [(B) the cost of available dependent care services;
            [(C) the locations in which dependent care services 
        are provided;
            [(D) the forms of transportation available to such 
        locations;
            [(E) the hours during which such dependent care 
        services are available;
            [(F) the dependents eligible to enroll for such 
        dependent care services; and
            [(G) any resource and referral system planned, 
        developed, established, expanded, or improved with 
        amounts paid to a State under this subchapter.
    [(2) The State, with respect to the uses of funds described 
in paragraph (1) of this subsection shall--
            [(A) provide assurances that no information will be 
        included with respect to any dependent care services 
        which are not provided in compliance with the laws of 
        the State and localities in which such services are 
        provided; and
            [(B) provide assurances that the information 
        provided will be the latest information available and 
        will be kept up to date.
    [(b)(1) Subject to the provisions of subsections (c) and 
(d), amounts paid to a State under section 670C from its 
allotment under section 670B may be used for the planning, 
development, establishment, operation, expansion, or 
improvement by the States, directly, or by grant or contract, 
with public agencies or private nonprofit organizations of 
programs to furnish school-age child care services before and 
after school. Amounts so paid to a State and used for the 
operation of such child care services shall be designed to 
enable children, whose families lack adequate financial 
resources, to participate in before or after school child care 
programs.
    [(2) The State, with respect to the uses of funds described 
in paragraph (1) of this subsection shall--
            [(A) provide assurances, in the case of an 
        applicant that is not a State or local educational 
        agency, that the applicant has or will enter into an 
        agreement with the State or local educational agency, 
        institution of higher education or community center 
        containing provisions for--
                    [(i) the use of facilities for the 
                provision of before or after school child care 
                services (including such use during holidays 
                and vacation periods),
                    [(ii) the restrictions, if any, on the use 
                of such space, and
                    [(iii) the times when the space will be 
                available for the use of the applicant;
            [(B) provide an estimate of the costs of the 
        establishment of the child care service program in the 
        facilities;
            [(C) provide assurances that the parents of school-
        age children will be involved in the development and 
        implementation of the program for which assistance is 
        sought under this Act;
            [(D) provide assurances that the applicant is able 
        and willing to seek to enroll racially, ethnically, and 
        economically diverse school-age children, as well as 
        handicapped school-age children, in the child care 
        service program for which assistance is sought under 
        this Act;
            [(E) provide assurances that the child care program 
        is in compliance with State and local child care 
        licensing laws and regulations governing day care 
        services for school-age children to the extent that 
        such regulations are appropriate to the age group 
        served; and
            [(F) provide such other assurance as the chief 
        executive officer of the State may reasonably require 
        to carry out this Act\1\.
    [(c)(1) Except as provided in paragraph (2), of the 
allotment to each State in each fiscal year--
            [(A) 40 percent shall be available for the 
        activities described in subsection (a); and
            [(B) 60 percent shall be available for the 
        activities described in subsection (b).
    [(2) For any fiscal year the Secretary may waive the 
percentage requirements specified in paragraph (1) on the 
request of a State if such State demonstrates to the 
satisfaction of the Secretary--
            [(A) that the amount of funds available as a result 
        of one of such percentage requirements is not needed in 
        such fiscal year for the activities for which such 
        amount is so made available; and
            [(B) the adequacy of the alternative percentages, 
        relative to need, the State specifies the State will 
        apply with respect to all of the activities referred to 
        in paragraph (1) if such waiver is granted.
    [(d) A State may not use amounts paid to it under this 
subchapter to--
            [(1) make cash payments to intended recipient of 
        dependent care services including child care services;
            [(2) pay for construction or renovation; or
            [(3) satisfy any requirement for the expenditure of 
        non-Federal funds as a condition for the receipt of 
        Federal funds.
    [(e)(1) The Federal share of any project supported under 
this subchapter shall be not more than 75 percent.
    [(2) Not more than 10 percent of the allotment of each 
State under this subchapter may be available for the cost of 
administration.
    [(f) Project supported under this section to plan, develop, 
establish, expand, operate, or improve a State or local 
resource and referral system or before or after school child 
care program shall not duplicate any services which are 
provided before the date of the enactment of this subchapter, 
by the State or locality which will be served by such system.
    [(g) The Secretary may provide technical assistance to 
States in planning and carrying out activities under this 
subchapter.

        [application and description of activities; requirements

    [Sec. 670E. (a)(1) In order to receive an allotment under 
section 670B, each State shall submit an application to the 
Secretary. Each such application shall be in such form and 
submitted by such date as the Secretary shall require.
    [(2) Each application required under paragraph (1) for an 
allotment under section 670B shall contain assurances that the 
State will meet the requirements of subsection (b).
    [(b) As part of the annual application required by 
subsection (a), the chief executive officer of each State 
shall--
            [(1) certify that the State agrees to use the funds 
        allotted to it under section 670B in accordance with 
        the requirements of this subchapter; and
            [(2) certify that the State agrees that Federal 
        funds made available under section 670C for any period 
        will be so used as to supplement and increase the level 
        of State, local, and other non-Federal funds that would 
        in the absence of such Federal funds be made available 
        for the programs and activities for which funds are 
        provided under that section and will in no event 
        supplant such State, local, and other non-Federal 
        funds.
The Secretary may not prescribe for a State the manner of 
compliance with the requirements of this subsection.
    [(c)(1) The chief executive officer of a State shall, as 
part of the application required by subsection (a), also 
prepare and furnish the Secretary (in accordance with such form 
as the Secretary shall provide) with a description of the 
intended use of the payments the State will receive under 
section 670C, including information on the programs and 
activities to be supported. The description shall be made 
public within the State in such manner as to facilitate comment 
from any person (including any Federal or other public agency) 
during development of the description and after its 
transmittal. The description shall be revised (consistent with 
this section) until September 30, 1991, as may be necessary to 
reflect substantial changes in the programs and activities 
assisted by the State under this subchapter, and any revision 
shall be subject to the requirements of the preceding sentence.
    [(2) The chief executive officer of each State shall 
include in such a description of--
            [(A) the number of children who participated in 
        before and after school child care programs assisted 
        under this subchapter;
            [(B) the characteristics of the children so served 
        including age levels, handicapped condition, income 
        level of families in such programs;
            [(C) the salary level and benefits paid to 
        employees in such child care programs; and
            [(D) the number of clients served in resource and 
        referral systems assisted under this subchapter, and 
        the types of assistance they requested.
    [(d) Except where inconsistent with the provisions of this 
subchapter, the provisions of section 1903(b), paragraphs (1) 
through (5) of section 1906(a), and sections 1906(b), 1907, 
1908, and 1909 of the Public Health Service Act shall apply to 
this subchapter in the same manner as such provisions apply to 
part A of title XIX of such Act.

                                [report

    [Sec. 670F. Within three years after the date of enactment 
of this subchapter, the Secretary shall prepare and transmit to 
the Senate Committee on Labor and Human Resources and the House 
Committee on Education and Labor a report concerning the 
activities conducted by the States with amounts provided under 
this subchapter.

                              [definitions

    [Sec. 670G. For purposes of this subchapter--
            [(1) the term ``community center'' means facilities 
        operated by nonprofit community-based organizations for 
        the provision of recreational, social, or educational 
        services to the general public;
            [(2) the term ``dependent'' means--
                    [(A) an individual who has not attained the 
                age of 17 years;
                    [(B) an individual who has attained the age 
                of 55 years; or
                    [(C) an individual with a developmental 
                disability;
            [(3) the term ``developmental disability'' has the 
        same meaning as in section 102(7) of the Developmental 
        Disabilities Assistance and Bill of Rights Act;
            [(4) the term ``equipment'' has the same meaning 
        given that term by section 198(a)(8) of the Elementary 
        and Secondary Education Act of 1965;
            [(5) the term ``institution of higher education'' 
        has the same meaning given that term under section 
        1201(a) of the Higher Education Act of 1965;
            [(6) the term ``local educational agency'' has the 
        same meaning given that term under section 14101 of the 
        Elementary and Secondary Education Act of 1965 of the 
        Elementary and Secondary Education Act of 1965;
            [(7) the term ``school-age children'' means 
        children aged five through thirteen, except that in any 
        State in which by State law children at an earlier age 
        are provided free public education, the age provided in 
        State law shall be substituted for age five;
            [(8) the term ``school facilities'' means 
        classrooms and related facilities used for the 
        provision of education;
            [(9) the term ``Secretary'' means the Secretary of 
        Health and Human Services;
            [(10) the term ``State'' means each of the several 
        States, the District of Columbia, the Commonwealth of 
        Puerto Rico, Guam, American Samoa, the Virgin Islands, 
        the Federated States of Micronesia, the Republic of the 
        Marshall Islands, Palau, and the Commonwealth of the 
        Northern Mariana Islands; and
            [(11) the term ``State educational agency'' has the 
        meaning given that term under section 14101 of the 
        Elementary and Secondary Education Act of 1965.

                              [short title

    [Sec. 670H. This subchapter may be cited as the ``State 
Dependent Care Development Grants Act''.]
                              ----------                              


           SECTION 9205 OF THE NATIVE HAWAIIAN EDUCATION ACT

[SEC. 9205. NATIVE HAWAIIAN FAMILY-BASED EDUCATION CENTERS.

    [(a) General Authority.--The Secretary is authorized to 
make direct grants, to Native Hawaiian educational 
organizations or educational entities with experience in 
developing or operating Native Hawaiian programs or programs of 
instruction conducted in the Native Hawaiian language, to 
expand the operation of Family-Based Education Centers 
throughout the Hawaiian Islands. The programs of such centers 
may be conducted in the Hawaiian language, the English 
language, or a combination thereof, and shall include--
            [(1) parent-infant programs for prenatal through 
        three-year-olds;
            [(2) preschool programs for four- and five-year-
        olds;
            [(3) continued research and development; and
            [(4) a long-term followup and assessment program, 
        which may include educational support services for 
        Native Hawaiian language immersion programs or 
        transition to English speaking programs.
    [(b) Administrative Costs.--Not more than 7 percent of the 
funds appropriated to carry out the provisions of this section 
for any fiscal year may be used for administrative purposes.
    [(c) Authorization of Appropriations.--In addition to any 
other amount authorized to be appropriated for the centers 
described in subsection (a), there are authorized to be 
appropriated $6,000,000 for fiscal year 1995, and such sums as 
may be necessary for each of the four succeeding fiscal years, 
to carry out this section. Funds appropriated under the 
authority of this subsection shall remain available until 
expended.]

  Other Matters Required To Be Discussed Under the Rules of the House

          A. Committee Oversight Findings and Recommendations

    In compliance with clause 2(l)(3)(A) of rule XI of the 
Rules of the House of Representatives, the committee reports 
that the need for this legislation was confirmed by the 
oversight hearings of the Subcommittee on Human Resources.
    The Subcommittee on Human Resources received extensive 
testimony on all aspects of welfare reform, and determined that 
the provisions found in the chairman's amendment adopted by the 
committee were the appropriate actions to take to reform the 
Nation's welfare system.

B. Summary of Findings and Recommendations of the Government Reform and 
                          Oversight Committee

    In compliance with clause 2(l)(3)(D) of rule XI of the 
Rules of the House of Representatives, the committee states 
that no oversight findings or recommendations have been 
submitted to the committee by the Committee on Government 
Reform and Oversight regarding the subject of this bill.
                MISCELLANEOUS HOUSE REPORT REQUIREMENTS

                  Congressional Budget Office Estimate

    Clause 2(l)(3)(B) of rule XI requires reports to include an 
estimate by the Congressional Budget Office [CBO]. The estimate 
provided by CBO of the bill as ordered reported by the 
Committee on the Budget (encompassing all the recommendations 
submitted to the Committee on the Budget) is as follows:


                  Miscellaneous Budgetary Information

    Clause 7(a) of rule XIII requires reports to include 
miscellaneous budgetary information. Although the bill provides 
for a net reduction in the Federal budget deficit over 6 years 
of $125 billion, the bill provides for discrete increases in 
new budget authority for specific welfare programs and 
increases in revenue related to the Earned Income Tax Credit.
    If the net increase in new budget authority is summed by 
title for each major program, the bill provides for a gross 
increase in new budget authority of $2.3 billion in fiscal year 
1997 and $8.3 billion over 6 years (with no adjustment for 
overlapping provisions). Most of these increases are 
concentrated on Child Support Enforcement, Child Care, Foster 
Care, and in fiscal year 1997, Medicaid. In aggregate, these 
increases are more than offset by reductions from current law 
levels in Food Stamps, Child Nutrition, Supplemental Security 
Income, the Earned Income Tax Credit, and after fiscal year 
1997, Medicaid.
    Changes in the Earned Income Tax Credit will increase net 
revenue relative to current law levels by $34 million in fiscal 
year 1997 and $1.9 billion over 6 years.
    Pursuant to clause 7(a)(3), a comparison of the total 
estimated funding level for each of the major levels with the 
appropriate levels under current law is displayed in Tables 1, 
2, and 3 of the estimate prepared by the Congressional Budget 
Office. [See consolidated Congressional Budget Office Cost 
Estimate on page 1940.]

                       Inflation Impact Statement

    Clause 2(l)(4) of rule XI requires each committee report on 
a bill or joint resolution of a public character to include an 
analytical statement describing what impact enactment of the 
measure would have on prices and costs in the operation of the 
national economy. This bill will have no inflationary impact on 
prices and costs in the operation of the national economy.

                  Budget Committee Oversight Findings

    Clause 2(l)(3)(A) of rule XI requires each committee report 
to contain oversight findings and recommendations required 
pursuant to clause (2)(b)(1) of rule X. The committee has no 
oversight findings.

 Oversight Findings and Recommendations of the Committee on Government 
                          Reform and Oversight

    Clause 2(l)(3)(D) of rule XI requires each committee report 
to contain a summary of oversight findings and recommendations 
made by the Government Reform and Oversight Committee pursuant 
to clause 4(c)(2) of rule X, whenever such findings have been 
timely submitted. The Committee on Budget has received no such 
findings or recommendations from the Committee on Government 
Reform and Oversight.

                            Committee Votes

    Clause 2(l)(2)(B) of House rule XI requires each committee 
report to accompany any bill or resolution of a public 
character, ordered to include the total number of votes cast 
for and against on each rollcall vote on a motion to report and 
any amendment offered to the measure or matter, together with 
the names of those voting for and against.
    On June 19, 1996, the committee met in open session, a 
quorum being present. The committee ordered reported the text 
of the Welfare and Medicaid Reform Act of 1996 pursuant to the 
reconciliation instructions contained in the conference report 
on H.Con.Res. 178, the Concurrent Resolution on the Budget for 
Fiscal Year 1997.
    The following votes were taken by the committee:
    1. Mr. Hobson made a motion that the committee order 
reported with a favorable recommendation the text of the 
Welfare and Medicaid Reform Act of 1996. The motion was agreed 
to by voice vote.
    2. Mr. Sabo made a motion that the committee direct its 
chairman to request, on behalf of the committee, that if the 
rule for floor consideration of this bill provides for adding 
tax relief, that it be done in a manner that does not cause the 
bill to produce a budget deficit in any fiscal year that is 
greater than the deficit in the current fiscal year (according 
to the most recent CBO estimate). The motion was defeated by a 
rollcall vote of 15 ayes and 21 noes.

----------------------------------------------------------------------------------------------------------------
                   Member                       Aye       No                Member                Aye       No  
----------------------------------------------------------------------------------------------------------------
Mr. Kasich (Chairman).......................  .......       X   Mr. Sabo......................       X   .......
Mr. Hobson..................................  .......       X   Mr. Stenholm..................       X   .......
Mr. Walker..................................  .......       X   Ms. Slaughter.................       X   .......
Mr. Kolbe...................................  .......       X   Mr. Coyne.....................       X   .......
Mr. Shays...................................  .......       X   Mr. Mollohan..................       X   .......
Mr. Herger..................................  .......       X   Mr. Costello..................       X   .......
Mr. Bunning.................................  .......       X   Mrs. Mink.....................       X   .......
Mr. Smith (TX)..............................  .......       X   Mr. Orton.....................       X   .......
Mr. Allard..................................  .......       X   Mr. Pomeroy...................       X   .......
Mr. Miller..................................  .......       X   Mr. Browder...................       X   .......
Mr. Lazio...................................  .......  .......  Ms. Woolsey...................       X   .......
Mr. Franks..................................  .......       X   Mr. Olver.....................       X   .......
Mr. Smith (MI)..............................  .......       X   Ms. Roybal-Allard.............  .......  .......
Mr. Inglis..................................  .......       X   Mrs. Meek.....................  .......  .......
Mr. Hoke....................................  .......       X   Ms. Rivers....................       X   .......
Ms. Molinari................................  .......       X   Mr. Doggett...................       X   .......
Mr. Nussle..................................  .......       X   Mr. Levin.....................       X   .......
Mr. Largent.................................  .......       X   Mr. Thompson..................  .......  .......
Mrs. Myrick.................................  .......       X   ..............................  .......  .......
Mr. Brownback...............................  .......  .......  ..............................  .......  .......
Mr. Shadegg.................................  .......       X   ..............................  .......  .......
Mr. Radanovich..............................  .......  .......  ..............................  .......  .......
Mr. Bass....................................  .......       X   ..............................  .......  .......
Mr. Neumann.................................  .......       X   ..............................  .......  .......
----------------------------------------------------------------------------------------------------------------

    3. Mr. Orton made a motion that the committee direct the 
chairman to request, on behalf of the committee, that the rule 
for floor consideration of this bill include language delaying 
the effective date of any tax relief to be included in such 
bill until CBO certifies that the budget will be in balance by 
the year 2002. The motion was defeated by a rollcall vote of 18 
ayes and 22 noes.

----------------------------------------------------------------------------------------------------------------
                   Member                       Aye       No                Member                Aye       No  
----------------------------------------------------------------------------------------------------------------
Mr. Kasich (Chairman).......................  .......       X   Mr. Sabo......................       X   .......
Mr. Hobson..................................  .......       X   Mr. Stenholm..................       X   .......
Mr. Walker..................................  .......       X   Ms. Slaughter.................       X   .......
Mr. Kolbe...................................  .......       X   Mr. Coyne.....................       X   .......
Mr. Shays...................................  .......       X   Mr. Mollohan..................       X   .......
Mr. Herger..................................  .......       X   Mr. Costello..................       X   .......
Mr. Bunning.................................  .......       X   Mrs. Mink.....................       X   .......
Mr. Smith (TX)..............................  .......       X   Mr. Orton.....................       X   .......
Mr. Allard..................................  .......       X   Mr. Pomeroy...................       X   .......
Mr. Miller..................................  .......       X   Mr. Browder...................       X   .......
Mr. Lazio...................................  .......  .......  Ms. Woolsey...................       X   .......
Mr. Franks..................................  .......       X   Mr. Olver.....................       X   .......
Mr. Smith (MI)..............................  .......       X   Ms. Roybal-Allard.............       X   .......
Mr. Inglis..................................  .......       X   Mrs. Meek.....................       X   .......
Mr. Hoke....................................  .......       X   Ms. Rivers....................       X   .......
Ms. Molinari................................  .......       X   Mr. Doggett...................       X   .......
Mr. Nussle..................................  .......       X   Mr. Levin.....................       X   .......
Mr. Largent.................................  .......       X   Mr. Thompson..................       X   .......
Mrs. Myrick.................................  .......       X   ..............................  .......  .......
Mr. Brownback...............................  .......  .......  ..............................  .......  .......
Mr. Shadegg.................................  .......       X   ..............................  .......  .......
Mr. Radanovich..............................  .......       X   ..............................  .......  .......
Mr. Bass....................................  .......       X   ..............................  .......  .......
Mr. Neumann.................................  .......       X   ..............................  .......  .......
----------------------------------------------------------------------------------------------------------------

    4. Mr. Stenholm made a motion (1) that the committee 
request CBO to determine whether the level of funding provided 
in the welfare portion of the reconciliation bill is sufficient 
to finance the work and job training requirements established 
by that bill; and (2) if CBO determines that the level of 
funding is not sufficient, the committee directs the chairman 
not to request a rule to allow floor consideration of the 
reconciliation bill until the bill has been modified and CBO 
certifies that the modified bill provides funding sufficient to 
meet its work and job training requirements. The motion was 
defeated by voice vote.
    5. Mr. Olver made a motion that the committee direct the 
chairman to request, on behalf of the committee, that the rule 
for floor consideration of this bill not waive or suspend the 
application of clause 5(c) of rule XXI of the Rules of the 
House of Representatives. The motion was defeated by a rollcall 
vote of 18 ayes and 21 noes.

----------------------------------------------------------------------------------------------------------------
                   Member                       Aye       No                Member                Aye       No  
----------------------------------------------------------------------------------------------------------------
Mr. Kasich (Chairman).......................  .......       X   Mr. Sabo......................       X   .......
Mr. Hobson..................................  .......       X   Mr. Stenholm..................       X   .......
Mr. Walker..................................  .......  .......  Ms. Slaughter.................       X   .......
Mr. Kolbe...................................  .......       X   Mr. Coyne.....................       X   .......
Mr. Shays...................................  .......       X   Mr. Mollohan..................       X   .......
Mr. Herger..................................  .......       X   Mr. Costello..................       X   .......
Mr. Bunning.................................  .......       X   Mrs. Mink.....................       X   .......
Mr. Smith (TX)..............................  .......       X   Mr. Orton.....................       X   .......
Mr. Allard..................................  .......  .......  Mr. Pomeroy...................       X   .......
Mr. Miller..................................  .......       X   Mr. Browder...................       X   .......
Mr. Lazio...................................  .......       X   Ms. Woolsey...................       X   .......
Mr. Franks..................................  .......       X   Mr. Olver.....................       X   .......
Mr. Smith (MI)..............................  .......       X   Ms. Roybal-Allard.............       X   .......
Mr. Inglis..................................  .......       X   Mrs. Meek.....................       X   .......
Mr. Hoke....................................  .......       X   Ms. Rivers....................       X   .......
Ms. Molinari................................  .......       X   Mr. Doggett...................       X   .......
Mr. Nussle..................................  .......       X   Mr. Levin.....................       X   .......
Mr. Largent.................................  .......       X   Mr. Thompson..................       X   .......
Mrs. Myrick.................................  .......       X   ..............................  .......  .......
Mr. Brownback...............................  .......  .......  ..............................  .......  .......
Mr. Shadegg.................................  .......       X   ..............................  .......  .......
Mr. Radanovich..............................  .......       X   ..............................  .......  .......
Mr. Bass....................................  .......       X   ..............................  .......  .......
Mr. Neumann.................................  .......       X   ..............................  .......  .......
----------------------------------------------------------------------------------------------------------------

    6. Mr. Pomeroy made a motion that the committee direct the 
chairman to request, on behalf of the committee, that the rule 
for consideration of this bill provide for an amendment to 
restore current law with respect to the cap on the excess 
shelter deduction when calculating food stamp benefits. This 
amendment would retain current law which provides for the 
removal of the cap on the excess shelter deduction after 
December 31, 1996. The additional spending incurred by this 
amendment would be offset by reductions in expenditures for 
corporate welfare. The motion was defeated by a rollcall vote 
of 16 ayes and 21 noes.

----------------------------------------------------------------------------------------------------------------
                   Member                       Aye       No                Member                Aye       No  
----------------------------------------------------------------------------------------------------------------
Mr. Kasich (Chairman).......................  .......       X   Mr. Sabo......................       X   .......
Mr. Hobson..................................  .......       X   Mr. Stenholm..................       X   .......
Mr. Walker..................................  .......  .......  Ms. Slaughter.................       X   .......
Mr. Kolbe...................................  .......       X   Mr. Coyne.....................       X   .......
Mr. Shays...................................  .......       X   Mr. Mollohan..................       X   .......
Mr. Herger..................................  .......       X   Mr. Costello..................       X   .......
Mr. Bunning.................................  .......       X   Mrs. Mink.....................       X   .......
Mr. Smith (TX)..............................  .......       X   Mr. Orton.....................       X   .......
Mr. Allard..................................  .......       X   Mr. Pomeroy...................       X   .......
Mr. Miller..................................  .......       X   Mr. Browder...................  .......  .......
Mr. Lazio...................................  .......       X   Ms. Woolsey...................       X   .......
Mr. Franks..................................  .......       X   Mr. Olver.....................       X   .......
Mr. Smith (MI)..............................  .......       X   Ms. Roybal-Allard.............       X   .......
Mr. Inglis..................................  .......       X   Mrs. Meek.....................  .......  .......
Mr. Hoke....................................  .......  .......  Ms. Rivers....................       X   .......
Ms. Molinari................................  .......       X   Mr. Doggett...................       X   .......
Mr. Nussle..................................  .......       X   Mr. Levin.....................       X   .......
Mr. Largent.................................  .......       X   Mr. Thompson..................       X   .......
Mrs. Myrick.................................  .......       X   ..............................  .......  .......
Mr. Brownback...............................  .......  .......  ..............................  .......  .......
Mr. Shadegg.................................  .......       X   ..............................  .......  .......
Mr. Radanovich..............................  .......       X   ..............................  .......  .......
Mr. Bass....................................  .......       X   ..............................  .......  .......
Mr. Neumann.................................  .......       X   ..............................  .......  .......
----------------------------------------------------------------------------------------------------------------

    7. Mr. Pomeroy made a motion that the committee direct the 
chairman to request, on behalf of the committee, that the rule 
for consideration of this bill provide for an amendment to 
preserve the current meaningful guarantee of nursing home care 
for those seniors who no longer have assets to pay for this 
care. The motion was defeated by a rollcall vote of 16 ayes and 
21 noes.

----------------------------------------------------------------------------------------------------------------
                   Member                       Aye       No                Member                Aye       No  
----------------------------------------------------------------------------------------------------------------
Mr. Kasich (Chairman).......................  .......       X   Mr. Sabo......................       X   .......
Mr. Hobson..................................  .......       X   Mr. Stenholm..................       X   .......
Mr. Walker..................................  .......  .......  Ms. Slaughter.................       X   .......
Mr. Kolbe...................................  .......       X   Mr. Coyne.....................       X   .......
Mr. Shays...................................  .......       X   Mr. Mollohan..................       X   .......
Mr. Herger..................................  .......       X   Mr. Costello..................       X   .......
Mr. Bunning.................................  .......       X   Mrs. Mink.....................       X   .......
Mr. Smith (TX)..............................  .......       X   Mr. Orton.....................       X   .......
Mr. Allard..................................  .......  .......  Mr. Pomeroy...................       X   .......
Mr. Miller..................................  .......       X   Mr. Browder...................  .......  .......
Mr. Lazio...................................  .......       X   Ms. Woolsey...................       X   .......
Mr. Franks..................................  .......       X   Mr. Olver.....................       X   .......
Mr. Smith (MI)..............................  .......       X   Ms. Roybal-Allard.............       X   .......
Mr. Inglis..................................  .......       X   Mrs. Meek.....................  .......  .......
Mr. Hoke....................................  .......       X   Ms. Rivers....................       X   .......
Ms. Molinari................................  .......       X   Mr. Doggett...................       X   .......
Mr. Nussle..................................  .......       X   Mr. Levin.....................       X   .......
Mr. Largent.................................  .......       X   Mr. Thompson..................       X   .......
Mrs. Myrick.................................  .......       X   ..............................  .......  .......
Mr. Brownback...............................  .......  .......  ..............................  .......  .......
Mr. Shadegg.................................  .......       X   ..............................  .......  .......
Mr. Radanovich..............................  .......       X   ..............................  .......  .......
Mr. Bass....................................  .......       X   ..............................  .......  .......
Mr. Neumann.................................  .......       X   ..............................  .......  .......
----------------------------------------------------------------------------------------------------------------

    8. Mr. Sabo made a motion that the committee direct the 
chairman to request, on behalf of the committee, that the rule 
for consideration of this bill allow members to offer 
substitutes and amendments consistent with the balanced budget 
substitutes offered during consideration of the budget 
resolution earlier this year. The motion was withdrawn.

                        Changes in Existing Law

    Clause 2(l)(3)(D) provides that reports include the text of 
statutes that are proposed to be repealed and a comparative 
print of that part of the bill proposed to be amended whenever 
the bill repeals or amends any statute. The required matter is 
included in the report language for each title of the 
legislative recommendations submitted by the appropriate 
authorization committees and reported to the House by the 
Committee on the Budget.

                       Unfunded Mandate Statement

    Section 423 of the Congressional Budget and Impoundment 
Control Act requires a statement of whether the provisions of 
the reported bill include unfunded mandates. The committee 
received a letter regarding unfunded mandates from the Director 
of the Congressional Budget Office. [See consolidated 
Congressional Budget Office Cost Estimate on page 1940.]

                       Views of Committee Members

    Clause (2)(l)(5) of rule XI requires each committee to 
afford a 3-day opportunity for members of the committee to file 
additional minority, or dissenting views and to include the 
view in its report. The views submitted are found at the end of 
this report. Although not technically required under rule XI, 
these views include those submitted by the authorizing 
committees that submitted the reconciliation recommendations 
that comprise the text of the bill.
                COMMITTEE ON AGRICULTURE--MINORITY VIEWS

    House Democrats and Republicans, Senate Democrats and 
Republicans, and President Clinton share a common goal--all 
agree that welfare reform is urgently needed. Reform is needed 
not only for the recipients of welfare, who many times are 
trapped in a cycle of poverty from which they cannot escape, 
but also for the American taxpayers who deserve a better return 
on their investment in our future.
    Over the last year, the food stamp provisions in the 
various welfare reform proposals have come to look very much 
alike. We have reached agreement on dozens of provisions. Yet, 
there continue to be serious policy differences on several key 
issues. It is our hope that there will yet be an opportunity to 
resolve these differences so that we might have real welfare 
reform that works for both low income families and American 
taxpayers. We want congressional passage of a bill that the 
President will sign.
    Determining food stamp reform in the context of budget 
reconciliation causes us to lose sight of the people the Food 
Stamp Program is intended to serve. We must remember that our 
goal is to reform welfare in order to move people toward self-
sufficiency. Reform by itself is a hollow word. Reform for 
reform's sake is meaningless. We aren't OMB, CBO, or GAO. We 
can't work in the vacuum of numbers only. We cannot let the 
bureaucrats with the green eye shades determine what path 
reform will take.
    We are Members of Congress. It is our responsibility to put 
faces with these numbers. We must interject the human element 
into the process in order to ensure that real need is addressed 
in welfare reform. We must ensure that our children and the 
aged and disabled are not left unprotected. We must remember 
that a dollar spent now can actually result in saving thousands 
of dollars later, if we help produce a future taxpayer.
    We must determine the policy that will move people toward 
self-sufficiency. This must be a policy-driven bill, not one 
that is driven by empty, faceless numbers that are wrong as 
many times as they are right.
    Our constituents don't want a hand-out. They wants jobs. 
They want economic development. They want the American dream. 
These are the people we must help. These are the people for 
whom we must redesign these programs to help them achieve their 
desire of becoming successful citizens.
    That is not to say that significant budget savings cannot 
be achieved from real welfare reform. Over the years we have 
achieved significant savings by enacting strong antifraud and 
other measures. The Democratic substitute continues this effort 
by contributing to significant deficit reduction without 
jeopardizing our nutritional safety net. It saves over $18 
billion over a 6-year period. The majority's bill last year was 
intended to achieve $16 billion over 7 years. The minority bill 
this year goes well beyond that level of savings, and yet we 
have been accused of not supporting welfare reform.
    We are particularly concerned that this bill will 
jeopardize the nutritional status of millions of poor families 
because of a basic misunderstanding of how the program works. 
The perception is that this program is out of control, that 
hundreds of thousands of families are added to the food stamp 
rolls every month. The reality is something very different. 
Over the last year and a half, as the economy has improved, 
food stamp participation has actually dropped by over 1 million 
people. This vital program is clearly filling a very real need. 
If the need isn't there, the program doesn't continue to 
expand, but if the need is there, the program is there to meet 
it.
    The block grant provisions in this bill will set funding at 
levels well below that necessary to feed hungry families in 
times of recession or if food prices increase. If block grants 
had been chosen by all States in 1990, the Food Stamp Program 
would have served 8.3 million fewer children.
    To assure adequate nutrition and the good health of our 
poor families, the calculation of food stamp benefits must take 
into account extremely high housing expenses. This bill limits 
this calculation, leaving poor families with children who pay 
more than half of their income for housing with less money to 
buy food. The provision will result in more hungry children. 
Additionally, the importance of a car to get to and from work 
and to look for work should be acknowledged by allowing the 
allowance for a car used for these purposes to be indexed 
annually. Work and work search would be encouraged by such a 
provision.
    We all want families on welfare to be self sufficient. They 
want to be self sufficient. However, the way to make families 
self sufficient is not to deny them food stamps after 4 months 
if they are not working or in a training or workfare program 
while there is no requirement for States to provide a training 
or workfare slot. Eighty percent of the able-bodied recipients 
between the ages of 18 and 50 receive food stamps on a 
temporary basis already; they leave the program within a year. 
What these people need most is the opportunity to work--job 
training, or a job slot. This bill simply kicks them off the 
program, without a helping hand to find a job.
    The American people are not mean-spirited. They do not want 
children to be poor and hungry. This bill will push 1 million 
children below the poverty line. How can we allow such a thing 
to happen? We must remember that we are reforming the programs 
that impact the most vulnerable of our constituents. We must 
remember the faces of the poor and hungry of our Nation.
    Let the record show that the minority strongly supports 
welfare reform, but not at the cost of the Nation's poor 
families and children, not at the cost of the Nation's future.

                                   K. de la Garza.
                                   George E. Brown, Jr.
                                   Sanford D. Bishop, Jr.
                                   Sam Farr.
                                   John Baldacci.
                                   Earl Pomeroy.
                                   Bennie G. Thompson.
                                   Earl F. Hilliard.
                                   Charles W. Stenholm.
                                   Harold L. Volkmer.
                                   Tim Johnson.
                                   Karen L. Thurman.
                                   Ed Pastor.
                                   Cal Dooley.
                                   Eva M. Clayton.
          COMMITTEE ON COMMERCE--MINORITY AND ADDITIONAL VIEWS

 Minority Views of the Democratic Members of the Committee on Commerce 
                   on Title II, Subtitle A (Medicaid)

          ``When I use a word,'' Humpty Dumpty said, in rather 
        a scornful tone, ``it means just what I choose it to 
        mean--neither more nor less.''
          ``The question is,'' said Alice, ``whether you can 
        make words mean so many different things.''
          ``The question is,'' said Humpty Dumpty, ``which is 
        to be master--that's all.''
              --Lewis Carroll, Through the Looking Glass (1872)

    The portion of this bill reported by the Commerce Committee 
repeals the Medicaid program less than 4 months from now, and 
substitutes in its place a block grant of Federal funds to the 
Governors of the several States. The Majority says their block 
grant will provide a guarantee of health care to current 
Medicaid patients. We say it won't. The central question is: 
does the word ``guarantee'' have any real meaning to the 
Majority?
    Medicaid is America's second largest health care program, 
covering almost as many Americans as Medicare. According to the 
Congressional Budget Office (CBO), Medicaid this year will 
cover 36.8 million poor senior citizens, disabled people, 
women, and children at a total cost of $168 billion ($80.8 
billion Federal, $72.2 billion State). By way of comparison, 
CBO estimates that Medicare will cover 37.5 million of 
Americans in fiscal year 1996 at a total cost to the Federal 
government of $199 billion.
    Medicaid is America's largest single purchaser of nursing 
home services and other long-term care. The Federal government, 
through Medicaid, will spend an estimated $30 billion on long-
term care this fiscal year, the States another $22.7 billion. 
Most of the long-term care paid for by Medicaid is delivered in 
nursing homes; Medicaid pays for more than half the nursing 
home care provided in this country. Of the 1.5 million nursing 
home residents nationwide, about two-thirds, or 1 million, are 
covered by Medicaid, mostly at State option.
    This year more than 4 million adults 65 and over will 
receive services from Medicaid. About one-third of these are 
eligible because they are receiving cash assistance through the 
Supplemental Security Income (SSI) program. Others have lost 
nearly all their assets to the high medical or long-term care 
expenses that often accompany illness or disease later in life. 
An estimated 1.9 million seniors are eligible as Qualified 
Medicare Beneficiaries; their incomes are below 120 percent of 
the poverty level, and they receive Medicaid assistance to pay 
their Medicare premiums, co-insurance, and deductibles (but not 
nursing home care or prescription drugs).
    About 6 million disabled individuals and about 7.4 million 
low-income women are eligible for Medicaid in 1996. And 
Medicaid covers about one-fourth of America's children--70 
million in number. Under current law, by the year 2001, all 
American children under 18 who live in families with incomes 
below the Federal poverty line will be eligible for Medicaid 
coverage. Early preventive care, diagnosis, and treatment for 
poor children has traditionally been viewed as a sound 
investment, because it saves on much more expensive and longer 
term adult care and treatment later.
    The Republicans argue that they can cut $72 billion in 
Federal spending from Medicaid over 6 years--and as much as 
$250 billion overall in combined Federal and State spending--
and still provide a guarantee of health care in their block 
grant. They assert that their bill ``guarantees'' health care 
coverage for the same poor elderly, disabled, women, and 
children for whom Medicaid now provides. Can they be right?
    Webster's Third New International Dictionary defines a 
``guarantee'' as ``an agreement by which one person undertakes 
to secure another in the possession of something; an expressed 
or implied assurance of the quality of goods offered for sale 
or the length of satisfactory use to be expected from a product 
offered for sale; something given by way of security.'' It is, 
in other words, a contract--a promise made and kept. Where are 
the guarantees in this bill? Where, for example, does it assure 
that poor elderly Americans will get medically necessary 
nursing home coverage as they do now? Nowhere. In fact, the 
bill's fine print goes out of its way to shred any assurance 
that such coverage must be provided.
    The bill repeals the health care guarantee in current law, 
found in Title XIX of the Social Security Act. The bill States 
that effective October 1--less than 4 months from now--neither 
Title XIX nor the Majority's new block grant may be construed 
``as providing an entitlement, under Federal law in relation to 
the Federal government, to an individual or person (including 
any provider) at the time of provisions or receipt of 
services.'' The bill gives States virtually total discretion to 
specify the amount, duration, and scope of the benefits they 
offer to any individual. In short, there is absolutely no 
assurance that medically necessary physician, hospital, or 
nursing home care will be covered; there is no assurance, to 
paraphrase Webster's, that the ``quality or the length of use 
to be expected'' is guaranteed. The Republican guarantee, if it 
exists as all, is entirely illusory.
    In case there might be any lingering doubt whether this 
bill guarantees anything to the elderly or other poor 
Americans, the bill explicitly prohibits any person from trying 
to enforce any such guarantee against a State in Federal court. 
This bill removes the private right of action that our elderly 
and vulnerable citizens have under current law. This right of 
action is not a provision of the Medicaid law itself, but 
rather is codified at 42 U.S.C. Sec. 1983. Passed during the 
1870s as a Reconstruction statute, section 1983 provides a 
private cause of action against anyone who, under color of 
State law, deprives an individual of ``any rights, privileges, 
or immunities'' secured by the Constitution and Federal laws. 
The Supreme Court has held that in enacting section 1983, 
Congress intended to override State legislation limiting 
individual Federal rights, to offer a remedy where State laws 
were inadequate to protect those rights, and to provide a cause 
of action ``where the remedy, although adequate in theory, was 
not available in practice.'' Private parties have invoked 
section 1983 to challenge State implementation of a wide 
variety of Federal statutes. In other words, people who are not 
receiving a service or protection to which Federal law entitles 
them have a right of action in Federal court to secure that 
service or protection. If this bill is enacted, Medicaid 
beneficiaries will be denied that right.
    The committee's mark-up provides ample evidence that the 
Republicans have no intention of guaranteeing medical care to 
anyone. We offered several amendments that would have clarified 
the Republicans' bill and put them on record as promising a 
real guarantee for Medicaid patients--a real Contract with 
America, for America's most vulnerable citizens and their 
families. Over and over, we asked the Republicans simply to 
``put it in writing.'' Over and over, they refused. We asked 
them to provide:
          (A) A real guarantee of coverage for the elderly 
        needing nursing home care.--The Republican bill repeals 
        the current Federal guarantee of coverage for medically 
        necessary nursing home services for eligible elderly 
        individuals. The amendment would have fully restored 
        the current law guarantee for elderly individuals who 
        (1) require nursing home services and (2) meet the 
        Medicaid eligibility standards in effect in the State 
        as of June 1, 1996. It was defeated on a party-line 
        vote.
          (B) A real guarantee of coverage for elderly 
        Alzheimer's victims.--It was defeated on a party-line 
        vote.
          (C) A real guarantee of coverage for veterans needing 
        nursing home care.--It was defeated on a party-line 
        vote.
          (D) A real guarantee of coverage at least for those 
        elderly beneficiaries now living in nursing homes.--It 
        was defeated on a party-line vote.
          (E) A real guarantee that the elderly can choose 
        their own nursing home, so long as the home is 
        Medicaid-eligible, rather than having the Governor of a 
        State make that decision for them. Even this amendment 
        was defeated on a party-line vote.
          (F) A real guarantee of coverage for children.--The 
        Republican bill repeals the current law Federal 
        guarantee of coverage for medically necessary 
        physician, hospital, and related basic health services 
        for poor children, including the guarantee of treatment 
        services necessary to correct a condition identified 
        during a medical screening under the Early Periodic 
        Screening, Diagnosis, and Treatment (EPSDT) program. 
        The amendment would have fully restored the current law 
        guarantee for eligible children, especially by putting 
        the ``T'' for Treatment back in EPSDT. It was defeated 
        on a party-line vote.
          (G) A real guarantee of coverage for pregnant women 
        and infants.--It was defeated on a party-line vote.
          (H) A real guarantee of coverage for Native 
        Americans, to whom the Nation owes special obligations 
        and responsibilities. This amendment, too, was defeated 
        on a party-line vote.
    And there were more amendments, including continuation of 
coverage for breast and cervical cancer services; continuation 
of parity in benefits for residents of rural areas; 
continuation of the current section 1115 waiver program to 
allow States continued flexibility in trying new approaches to 
providing health care; restoration of current law minimum 
payment standards for hospitals, nursing homes, rural health 
centers, Federally qualified health centers, and managed care 
plans. These were all defeated along party lines.
    The Republicans even defeated an amendment that would have 
curtailed fraud and abuse in at least two respects. The 
amendment restored existing limitations on States treating 
provider ``donations'' and taxes as State Medicaid funds for 
purposes of increasing their Federal dollar match, and it 
extended to State officials handling Federal block grant funds 
the same conflict of interest and ethics rules that now govern 
Federal officials. Instead, the Majority voted to order yet 
another 2-year study of these fraudulent State financing 
schemes. They ignored the conflict of interest problem 
altogether. Then, they ``compromised'' with themselves and 
chose to adopt an amendment that would allow the Secretary 
after the 2-year study is complete to waive the prohibition on 
these ripoffs. Governors will soon be returning to the Federal 
trough for health care money that they will use not for health 
care but to pave roads, build prisons, reduce State taxes, and 
make State deficits look smaller while the Federal deficit 
grows larger.
    Our Republican colleagues last year proudly touted their 
``Contract with America.'' This year's Medicaid legislation, 
like their bill last year, clearly illustrates their 
unwillingness to maintain Medicaid's 30-year old contract with 
the 36 million elderly and vulnerable Americans who depend on 
it. The Majority talks a good game about ``guarantees,'' but 
their bill provides none. Theirs is an empty promise, a 
contract full of loopholes. It does not fulfill a single 
promise--no real guarantee of long-term care for senior 
citizens; no real guarantee of health care for poor women and 
children, or disabled people; no assurance that health services 
will be provided fairly and equally throughout each State, or 
across the country. Instead of providing health security to 
people in desperate need, the Republicans want to provide money 
with few if any meaningful strings attached to the Governors in 
a block grant and let them spend it as they please.
    At the same time, they are saying to middle-class families 
with elderly parents or grandparents in nursing homes, and to 
the other Americans served by Medicaid, that Congress has 
reneged on its commitment to help them. The Majority is saying, 
``You're on your own.'' Today approximately 40 million 
Americans have no health care coverage. The Republican plan 
will inevitably increase this number by taking away the real 
guarantee of health security for 36 million of America's 
senior, disabled people, women, and children.
          ``Impenetrability! That's what I say!''
          ``Would you tell me please,'' said Alice, ``what that 
        means?''
          ``Now you talk like a reasonable child,'' said Humpty 
        Dumpty, looking very much pleased. ``I meant by 
        `impenetrability' that we've had enough of that 
        subject, and it would be just as well if you'd mention 
        what you meant to do next, as I suppose you don't mean 
        to stop here all the rest of your life.''
          ``That's a great deal to make one word mean,'' Alice 
        said in a thoughtful tone.
          ``When I make a word do a lot of work like that,'' 
        said Humpty Dumpty, ``I always pay it extra.''
          ``Oh!'' said Alice. She was too much puzzled to make 
        any other remark.

                                   John D. Dingell.
                                   Henry A. Waxman.
                                   Edward J. Markey.
                                   Cardiss Collins.
                                   Bill Richardson.
                                   John Bryant.
                                   Rick Boucher.
                                   Thomas J. Manton.
                                   E. Towns.
                                   Gerry E. Studds.
                                   Frank Pallone, Jr.
                                   Sherrod Brown.
                                   Bart Gordon.
                                   Elizabeth Furse.
                                   Peter Deutsch.
                                   Bobby L. Rush.
                                   Anna Eshoo.
                                   Ron Klink.
                                   Bart Stupak.
                                   Eliot L. Engel.
   ADDITIONAL VIEWS OF REPRESENTATIVE ELIZABETH FURSE TO H.R. 3507, 
                       MEDICAID RESTRUCTURING ACT

    For a Congress which believes so strongly in innovation at 
the State level, I am disappointed the majority voted down an 
amendment in full committee to H.R. 3507 which would have 
preserved and protected the health care innovation that is 
already taking place in States all across America. My amendment 
would have given States which currently have a Section 1115 
waiver the option of participating in the system created by 
H.R. 3507 or continuing to operate under the Section 1115 
waiver program.
    Oregon spent 4 years carefully constructing the Oregon 
Health Plan. The results have been startling. We have provided 
health care coverage to over 130,000 hardworking people. Our 
per capita health care costs are among the very lowest in the 
country. Access to medical care is keeping people healthier, 
improving the quality of life and saving thousands of dollars.
    Consider the fact that the Oregon Health Plan has:
          Expanded coverage and controlled costs by emphasizing 
        comprehensive care and early intervention using pre-
        paid health plans.
          Reduced welfare caseloads. Twenty percent of people 
        who got off welfare returned to it in order to get 
        health care coverage for their families. Oregon has 
        enjoyed declining caseloads since the waivers were 
        granted in 1993.
          Expanded health coverage to over 130,000 people who 
        previously had no coverage, and fell through the cracks 
        in eligibility criteria.
          Reduced cost shifting. During its first 12 months, 
        Oregon hospitals reported a 30 percent decline in 
        charity care.
          Created a health care delivery system that is 
        remarkably efficient, providing comprehensive care at a 
        cost per beneficiary that is 10 percent below the 
        national average.
    In their rush to reach budget targets in the Medicaid 
program, the bill before our committee would turn its back on 
States which have formulated their own health reforms. It would 
subject States that have already created efficient health care 
delivery systems to the same funding mechanisms as States which 
have done nothing to reduce their costs. In effect, H.R. 3507 
punishes the States who couldn't wait to reform their health 
care systems.
    I am gravely concerned that this bill would seriously 
jeopardize the health of the Oregon Health Plan. For example, 
according to my own Governor's office, this bill would punish 
Oregon for being at the forefront of health care reform. Under 
this bill:
          The Oregon Health Plan would start losing money in 
        1999, less than 3 years away.
          Oregon will face a $400 million shortfall over the 
        next 7 years.
          Oregon will be helpless to respond following a 
        natural disaster (like the floods which devastated 
        Oregon in February of 1996) or an economic recession 
        because the umbrella fund provides no real protection 
        for the States.
    When we last considered Medicaid reform in this committee, 
my Governor wrote to me and said ``This bill would have 
immediate and disastrous consequences for Oregon.'' While the 
majority has attempted to make changes to many of the more 
glaring problems with Medicaid reform in general, such as 
backing off on their original proposal to repeal nursing home 
standards, H.R. 3507 continues to ignore the fact that a number 
of States in America have already reformed their Medicaid 
system. In many ways, the more things change, the more they 
stay the same.
    In Oregon, we didn't ask for Medicaid waivers to do less 
(which is exactly what the Republican bill proposes to do); we 
asked for waivers to do more. In fact, our waiver has allowed 
Oregon to construct a plan which covers many things that basic 
Medicaid doesn't cover: dental services, hospice care, many 
diagnostic and screening services for adults, physical and 
occupations therapy, prescribed drugs, and most transplants. 
Unlike the Republican proposals, the comprehensiveness of care 
for people getting health coverage under Medicaid was assured 
before the plan could go forward.
    My amendment would simply have given any State which has 
enacted health care reform under the Section 1115 waiver 
program the option of continuing their current program. 
Currently, there are nine States which operate a Medicaid 
reform plan under a section 1115 waiver program: Arizona, 
Delaware, Hawaii, Minnesota, Oklahoma, Oregon, Rhode Island, 
Tennessee, and Vermont. In addition, there are four States 
which have section 1115 waivers but are awaiting action by 
their State legislature: Massachusetts, Florida, Ohio 
(implementing July 1, 1996), and Kentucky.
    I am disappointed that my amendment, which would have 
rectified this glaring oversight in H.R. 3507, was defeated on 
a party-line vote. States which have already reduced their 
costs, in partnership with a waiver from the Federal 
Government, should be able to continue their program if they so 
desire. We shouldn't turn the lights out on the health care 
innovation which has already taken place in America.

                                                   Elizabeth Furse.
   COMMITTEE ON ECONOMIC AND EDUCATIONAL OPPORTUNITIES--MINORITY AND 
                            ADDITIONAL VIEWS

Minority Views on Committee Report to Accompany Opportunities Committee 
                     Welfare Reform Recommendations

                            i. introduction

    Fifteen months ago, this committee first considered welfare 
within the legislative vise grip of the first hundred days of 
the new Republican Majority. Since it was a central feature of 
the Republican ``Contract With America,'' the bill was 
considered by this committee with virtually no opportunity for 
careful deliberation or bipartisan agreement. From the outset, 
the bill took a sharply partisan turn, in virtually every 
detail. No matter how sensible and balanced Democratic 
amendments were, they were summarily rejected by the 
Republicans during markup. Here are some examples of those 
amendments:
          An amendment to reverse massive cuts in the school 
        lunch and school breakfast programs;
          An amendment to maintain current minimal safety and 
        health standards for child care facilities;
          An amendment to require States to match Federal funds 
        to pay for child care;
          An amendment to guarantee free school lunch for poor 
        children;
          An amendment to restore the Abandoned Infants 
        Assistance program;
          An amendment to apply welfare savings to pay for 
        deficit reduction;
          An amendment to oblige the States to provide child 
        care for parents required to go to work.
    In the end, this committee reported out a partisan welfare 
bill with weak work requirements and punitive measures against 
the poor and against needy children. And, in the end President 
Clinton justifiably vetoed a harsh Republican welfare reform 
bill, citing, among other reasons, its grossly inadequate level 
of funding for work and child care, its end of the guarantee of 
foster care, and its abandonment of Federal child nutrition 
programs.
    We appreciate the fact that, this time around, the 
committee's Majority has taken a more moderate and bipartisan 
approach with regard to its responsibility for welfare reform. 
Nevertheless, despite adoption of a bill that includes more 
temperate base provisions and remedial amendments, we remain 
opposed to the committee's final product. Once again, programs 
for the poorest in this country are being targeted to meet 
Republican budget priorities. Policy judgement about how best 
to improve welfare services are still not the driving force 
behind Republican welfare reform; the primary motive is to 
achieve more than $50 billion in budget cuts.
    Republican welfare reform continues to be ``weak on work.'' 
Without adequate funding for education, training, and 
employment, most of our Nation's poor will be unable to avoid 
the welfare trap. Even before the adoption of amendments 
increasing work participation rates, the Congressional Budget 
Office (CBO) had already estimated that the new Republican 
proposal (H.R. 3507) is some $9 billion short of what would be 
needed in fiscal years 1999 through 2002 to provide adequate 
money for States to carry out the work program. Moreover, the 
increase in the minimum work hours requirement, without a 
commensurate increase in child care funding, further deepens 
our apprehension about the viability of the work title.
    While H.R. 3507 is far different from its predecessor, it 
contains may changes in child care, child nutrition, and child 
protection laws that were never fully aired in the normal 
deliberative process. No hearing was held in this committee on 
this dramatically different proposal. And, we are very much 
concerned that the committee completely ignored issues relevant 
to the eligibility of immigrants for programs under our 
jurisdiction. We cannot countenance such surrender of the 
committee's jurisdiction.
    We commend our Republican colleagues for steps taken to 
moderate this legislation and to encourage bipartisan give-and-
take. By their about-face, they have validated the decision 
made by President Clinton to veto last year's Republican 
version of welfare reform. The new bill's increased funding for 
child care, preservation of child nutrition programs, and 
additional funding for work support the wisdom of the 
President's earlier judgment.
    We oppose this new version of welfare reform for many 
reasons. For instance, the committee's product is still weak on 
work; funding levels for the work programs remain well below 
what will be necessary, notwithstanding the Castle Amendment 
that provides a $3 billion authorization for supplemental work 
funding in fiscal year 1999.
    In addition, this revised proposal fails to adequately 
address child care needs of parents who may face having to 
leave their children home alone or in dangerous and unsuitable 
child care settings. Welfare reform need not produce such 
untenable choices. The failure of the committee to adopt the 
Mink amendment, which would have prevented States from 
penalizing parents of children under the age of 1 who cannot 
secure child care, further weakens the work requirements.
    Finally, the upheaval of child protection systems caused by 
creation of the Child and Family Services Block Grant will 
cause insecurity for providers and recipients of current 
Federal child protection services. Along with other Federal 
programs, the Abandoned Infants Assistance Act and the Child 
Abuse Prevention and Treatment Act (CAPTA) provide invaluable 
protection and support services for the most vulnerable 
children. We fail to understand what restructuring these 
programs has to do with welfare reform, and note that neither 
the bipartisan Castle/Tanner bill, the Democratic ``Deal'' 
substitute, nor the administration's welfare reform plan 
proposed this kind of drastic overhaul.
    True welfare reform can never be achieved, and welfare 
dependency will never be broken, unless we provide adequate 
education, training, and child care, and jobs that pay a 
livable wage. Anything short of that does great disservice to 
our national sense of compassion and our moral responsibility 
to help the poor help themselves.

                         II. work requirements

    Essential to the success of welfare reform is the delivery 
of job training and employment opportunities in jobs that pay a 
livable wage. It is indeed ironic that our Republican 
colleagues insist on ``tough'' work requirements, and yet they 
fail to adequately finance the true cost of that objective. The 
folly of the original Republican work requirements in H.R. 3507 
has been exacerbated by the adoption of the Talent amendment to 
increase the work participation rates. In the end, States will 
face substantial unfunded mandates as they struggle to meet 
new, federally mandated work participation requirements imposed 
by the Republican proposal. Contrary to the statement in the 
Majority's views suggesting that they have met the National 
Governors Association's concerns regarding realistic work 
goals, we fail to see how the Nation's Governors could be at 
all pleased with the committee's shift toward even more 
unrealistic work requirements. The CBO had already calculated a 
multi-billion dollar short fall in H.R. 3507, as introduced. 
The Castle amendment authorizing $3 billion more work funding 
for fiscal year 1999 offers some relief. However, the current 
attitude of Republican House appropriators with respect to 
training America's workforce leaves us to question whether the 
Castle amendment will ever be financed.
    In their views, the committee's Majority correctly notes 
the critical role of preparing welfare recipients for work, in 
particular, with respect to the importance of job search 
activities. And, yet strangely, the committee adopted an 
amendment slashing the number of weeks that job search can be 
credited as a permissible work activity from 12 weeks to 4 
weeks. The Martinez amendment, providing that 12 weeks of job 
search activities can count where unemployment is above the 
national average, restores some value to the import of job 
search efforts under the committee's plan. Still, it should not 
have been necessary to reverse the deviation from the original 
bill's coverage for 12 weeks, and the Martinez amendment only 
partially corrects a glaring mistake.
    We commend our colleague Tim Roemer (D-IN) for the 
amendment regarding individual responsibility plans. We are 
mystified that 10 committee Republicans opposed an amendment 
that codifies the sensible notion that both individuals and the 
government (Federal and State) have reciprocal obligations. 
Individuals should clearly understand their duty to choose work 
over welfare (and the consequences of their intentional failure 
to make the right choice). And, the State should clearly define 
and meet its obligations to help those individuals who desire 
to stay off welfare. We think it all the more necessary that 
such a plan be reduced to writing. And, we think the State's 
``sole discretion'' to exercise authority over these plans 
concerns how, not whether, the State shall carry out such 
``contracts.'' In their effort to maximize State 
``flexibility'' over welfare, Republican committee members 
resisted such clarifications, and the Majority report skirts 
these issues altogether. Individual responsibility plans should 
be clear, enforceable agreements; otherwise, their value is 
dubious and they will be subject to the vagaries of oral 
representations, vague memories, and State welfare personnel 
changes.
    We are disappointed that our Republican colleagues rejected 
amendments to the work title of the bill which would have 
ameliorated hardships posed by the bill for young parents 
facing entry (or re-entry) into the job market. States should 
not have the option of terminating benefits for a parent of a 
child younger than 1 year old. Our Republican colleagues also 
should have supported Democratic amendments to guarantee health 
care and minimum wage protections for recipients who engage in 
work activities. Without such protections, the viability of the 
work requirements is undermined. The amendments offered by 
Representatives Mink (D-HA) and Becerra (D-CA) on these issues, 
respectively, would have strengthened the bill.

                         III. Child protection

    Child protection systems across the country are overwhelmed 
by the crisis facing families and their children. Despite 
Federal programs, State and local efforts, increased media 
attention, and public awareness, child abuse and neglect 
continues to be a significant problem in the United States. The 
number of substantiated cases of child abuse and neglect rose 
from 798,318 in 1990 to 1,011,626 in 1994--an increase of 
almost 27 percent during that 5-year period. In its April 1995 
report on child abuse and neglect fatalities, the U.S. Advisory 
Board on Child Abuse and Neglect reported that almost 2,000 
infants and young children die from abuse and neglect at the 
hands of parents and caretakers each year. The vast majority of 
these children were under the age of 5 when they died, and 45 
percent were under the age of 1. It is critically important 
that child protection agencies increase their efforts to help 
children earlier in their lives and to move them into new 
permanent families when they cannot safely remain at home or be 
reunited with their families.
    We welcome the decision by the Majority to abandon their 
earlier proposal to eliminate the Federal guarantee of foster 
care and adoption assistance for children who cannot live 
safely at home. We continue to be concerned, however, that the 
remaining block grants in their welfare bill also jeopardize 
children's safety by eliminating any Federal assurance of 
prevention and by abdicating Federal leadership in combating 
abuse and neglect.
    Traditionally, this committee has authorized funds for 
important research and demonstration initiatives on behalf of 
maltreated children that have helped advance the protection of 
children in States across the Nation. This important role would 
be undercut by the Child and Family Services Block Grant which 
would reduce, from 50 percent to 12 percent, the percentage of 
child abuse and neglect funds currently available for research 
and demonstration activities (assuming funding for the programs 
replaced by the block grant would be retained at their fiscal 
year 1997 levels). These research and demonstration activities 
help to provide new approaches to solving child welfare 
problems. The Majority proposes relinquishing the important 
Federal leadership role in funding research, program 
demonstrations, technical assistance, and training that serves 
as an efficient means of enabling all States to improve their 
practices in preventing and treating child abuse and neglect.
    We strenuously object to the Majority's attempt to justify 
its overhaul to child protection laws, particularly its rewrite 
of the Child Abuse and Prevention Treatment Act (CAPTA), by 
placing blame on the Federal Government for the current crisis 
in many State child protection systems. While we readily 
acknowledge that millions of children are left woefully 
unprotected and unaccounted for, no credible evidence exists to 
support the assertion that Federal attention and ``micro-
management'' interfere with State protection of abused and 
neglected children. Nearly two dozen States and the District of 
Columbia have been found by various courts to be in violation 
of Federal and State child protection laws. Shifting greater 
overall responsibility to the States and greatly dismantling 
Federal responsibility is both illogical and irresponsible. 
Staggering increases in the number of abused and neglected 
children, sharp increases in the number of children in foster 
care, and disturbing rises in the levels of child runaways and 
homeless children have not been caused by Federal programs. 
Giving greater responsibility to the States simply defies 
logic. Obviously, many courts, by appointing receivers to 
oversee child protection systems in many States, have reached a 
far different conclusion than our Republican colleagues. For 
the committee's Majority to play the blame game is counter-
productive.
    Proposed Republican cuts in a myriad of safety nets that 
are designed to protect poor families and their children 
increase the likelihood of further strains within those 
families. While child abuse, neglect, and domestic violence 
transcend economic status, there is little reason to doubt that 
increased financial pressures on already struggling families 
further jeopardize the condition of our Nation's children.
    The block grants proposed in the new Republican welfare 
plan would eliminate any assurance of Federal funding for 
prevention. Demands for crisis services will continue to strain 
available resources, and families are likely to continue to get 
no help until their problems bring them to the attention of the 
child protection system. Efforts made in the past several years 
to consolidate and streamline programs to direct attention and 
resources on family-focused, community-based approaches to 
preventing child abuse and neglect will be undercut.
    Recent data suggest that 24 percent of the families where 
abuse has occurred receive no services at all. Thus, it is 
likely that families who could benefit from prevention services 
will once again be told that the system can only help them once 
their children's safety has been jeopardized. Preventive 
services that help fathers reconnect with their children, offer 
parent education initiatives, and provide special services for 
children with disabilities, will again take a back seat to the 
immediate crisis at hand.
    We are relieved that the Majority supported amendments 
offered by committee Democrats to remedy apparently inadvertent 
errors in the original chairman's mark, including (1) omission 
of the Abandoned Infants Assistant Act from the transitional 
protections for current grantees and recipients of child 
protection services under programs otherwise targeted for 
repeal, and (2) restoration of the Federal requirement under 
CAPTA that States provide legal guardians (guardian ad litems) 
for abused and neglected children in court proceedings.
    In the final analysis, new approaches to the serious 
problem of child abuse should not be tacked on a welfare bill. 
In fact, other changes in the welfare bill will jeopardize the 
safety and health of large numbers of poor children. The risks 
are too severe for Congress to alter the child protection 
systems at the same time. The complex and long-standing 
protections for abused and neglected children are far too 
important to be rewritten without separate consideration. A 
welfare reform bill should reform welfare, not try to fix the 
child protection system.

                             IV. child care

    In 1994, 60 percent of women with children younger than 6, 
and 57 percent of women with children younger than 3 were in 
the labor force. In 1991, more than 7 million children younger 
than 5 whose mothers were employed were cared for by someone 
other than a parent. In 1994, 36 States reported keeping child 
care waiting lists. Eight of those States reported lists of at 
least 10,000 waiting children.
    Last year's version of Republican welfare reform provided 
extraordinarily inadequate funds to support child care. 
Fortunately, the new committee bill sharply breaks from that 
embarrassing legislative legacy by providing greater funds for 
child care. It restores the critical Federal mandate that 
States establish and enforce health and safety standards at 
child care centers. In light of the additional pressures this 
bill will have on already overburdened child care systems, 
welfare reform will collapse unless welfare recipients on the 
road to work have access to safe and readily available child 
care.
    We are deeply worried that the Talent amendment to increase 
the minimum average number of work hours will destabilize child 
care funding and, in particular, threaten funding for at-risk 
and transitional child care for poor working families not on 
welfare. Our concerns are most warranted. According to a recent 
report by the Children's Defense Fund, States already 
experimenting with welfare reform are shifting significant 
parts of child care assistance budgets away from the working 
poor, to give more to welfare families. The plan adopted by the 
committee's Majority carries with it the same likely shift in 
child care funding priorities as States strive to meet new 
Federal participation rates to avoid incurring noncompliance 
penalties.
    Finally, we note that H.R. 3507 contains a 20 percent cut 
in the Title XX Social Services Block Grant. Because most 
States use Title XX funds to help finance child care, this cut 
negates the increased child care funding in the new Republican 
proposal.

                           V. child nutrition

    The Majority's views on the changes it proposes in child 
nutrition programs is disturbing insofar as it fails to 
acknowledge the tremendous benefits achieved by the school 
lunch, school breakfast, summer feeding, child care and food 
programs in reducing hunger among our Nation's children, and by 
the WIC program in improving maternal and infant health and 
nutrition. Sadly, once again, the Majority's views blame the 
Federal Government for impeding State progress.
    Last year, the committee Majority entertained rather 
extreme approaches to these nutrition issues. Fortunately, they 
have abandoned their proposed elimination of the Federal school 
lunch program. And, they no longer are fighting to grant broad 
power to States to transfer funds from child nutrition programs 
to other State priorities. Nevertheless, we continue to have 
objections to elements of this year's nutrition changes.
    The proposed cuts in the Summer Food Program are far too 
deep and would seriously jeopardize the continued viability of 
this program. The current plan would reduce the Federal 
reimbursement for summer lunches by 35 cents, per meal. The 
Majority contends that the reimbursement for lunches in the 
Summer Food Program is higher than that for lunches served 
during the school year. However, the Majority fails to consider 
the fact that sponsors and other organizations that operate the 
Summer program incur higher per-meal costs in operating this 
program. The summer lunches cost more because the number of 
lunches served is lower than the number of lunches served 
during the regular school year (there is no benefit derived 
from the same economies-of-scale). Moreover, sponsors of the 
summer program may have to pay custodial costs to open school 
buildings during the summer. Rather than bring the cost of the 
Summer Food Program in line with the regular school year, the 
cuts imposed by the Majority necessarily come at the expense of 
children who rely on these summer meals.
    A survey of summer food sponsors across the country by the 
Food Research and Action Center (FRAC) indicates that 
reductions in meal reimbursement rates will cause a 30 to 35 
percent drop in the number of sponsors. We support increasing 
the participation rate in the Summer Food Program, not diluting 
it. Currently, many low-income areas have no Summer Food 
Program because no school or nonprofit organization has stepped 
forward to operate one. While 12 million low-income children 
receive free school lunches during the school year, only 2 
million low-income children receive meals through the Summer 
Food Program. The Summer Food Program continues the school 
lunch program for poor children in many poor urban and rural 
areas during summer months when school is out. This program is 
as critical to the health of children as the school lunch 
program.
    The committee Majority has developed a two-tier 
reimbursement structure for the Child and Adult Care Food 
Program. The new structure provides lower reimbursements for 
meals served to children in family day care homes operated in 
middle and upper income areas. While the Majority would like to 
believe that this cut will have no adverse affect on low-income 
children, that is simply not the case. To participate in this 
nutrition program, family day care homes must apply through a 
sponsoring organization. The sponsoring organizations apply to 
the States for the meal reimbursements on behalf of the homes 
and receive a Federal payment to defray their administrative 
costs. This payment is based on the number of family day care 
homes a sponsoring organization serves. If cuts proposed by the 
committee's plan cause a substantial drop in the number of day 
care homes that participate in this program, sponsoring 
organizations will be forced to discontinue participation, as 
well. And if sponsoring organizations drop out, many homes in 
poor areas will be shut out of the program because they will 
not have a sponsoring organization through which to work.

                            vi. immigration

    Starkly absent from the Majority action (and in its 
committee views) is any attempt whatsoever to address the grave 
problems in the immigration provisions of H.R. 3507. As stated 
in our introduction, we object to the ``waiver'' of committee 
jurisdiction over consideration of the eligibility of 
immigrants for the child nutrition and education programs long 
under the committee's jurisdiction. It is our responsibility, 
because it is within our expertise and authority, to make the 
difficult policy decisions concerning such matters.
    Most disturbingly, H.R. 3507 dangerously proposes to deny 
subsistence benefits for poor immigrants; nearly all of the 
savings achieved would come from denying benefits to legal 
immigrants. Perversely, H.R. 3507 would pose harm to U.S. 
citizen children by denying WIC benefits to illegal immigrant 
mothers. This kind of policy is unconscionable and pernicious. 
The committee should have debated these critical policy 
concerns in the context of our markup, rather than punting the 
issue to others to carry the ball.
    The child nutrition proposals in H.R. 3507 relative to the 
eligibility of undocumented immigrant children for school lunch 
and school breakfast will turn teachers and administrators into 
quasi-immigration officers as they try to enforce prohibitions 
and restrictions on food assistance for these children. An 
enormous unfunded mandate would be shifted to the States and 
their public schools. We remain hopeful that the final 
Republican welfare plan will include immigration provisions 
much closer to what was in the Democratic ``Deal'' alternative 
concerning such eligibility issues. But, this committee should 
be making those policy decisions.

                                   William L. Clay.
                                   Dale E. Kildee.
                                   Matthew G. Martinez.
                                   Patsy T. Mink.
                                   Xavier Becerra.
                                   Carlos Romero-Barcelo.
                                   Earl Blumenauer.
                                   George Miller.
                                   Major R. Owens.
                                   Donald M. Payne.
                                   Bobby Scott.
                                   Lynn C. Woolsey.
                                   Chaka Fattah.
                      ADDITIONAL VIEWS OF MR. REED

    In the Spirit of bipartisanship, coupled with the positive 
amendments adopted in committee and the hope that the House 
Majority actually wants a welfare plan that the President will 
sign, I supported the committee's limited welfare reform bill. 
However, if the committee's agreements are weakened, or this 
legislation is combined with $72 billion in Medicaid cuts, or 
this legislation fails to protect children, or the Majority 
refuses to work in a bipartisan manner, the bill will not have 
my support on the House floor.
    I offered an amendment during consideration of the bill 
similar to the work requirement provisions included in last 
year's Democratic alternative on welfare reform. At first, the 
committee Majority rejected my amendment on procedural grounds. 
However, after minor changes to address the Majority's 
concerns, I was permitted to offer my comprehensive workfare 
amendment.
    Individual responsibility and real work requirements are at 
the heart of my amendment. Under my amendment, recipients must 
sign an individualized responsibility plan which requires them 
to begin a job search immediately and prohibits them from 
refusing a job. In addition, unlike the Republican bill, my 
amendment creates a workfare program, which provides recipients 
with a job or requires them to engage in community service when 
no private sector job is available. Unfortunately, my amendment 
lost by a close 17 to 22 vote.
    During committee consideration of the bill, however, a 
number of important improvements were made to the committee's 
original proposal, which bespoke a willingness to compromise 
and improve the bill.
    Indeed, the individual responsibility contract provision of 
my amendment was adopted by the committee. My Democratic 
colleague, Mr. Roemer, offered an amendment which would require 
recipients of assistance to sign an individual responsibility 
contract stating the steps that individual will take to find a 
job. This is a positive step forward.
    In addition, an amendment was adopted that would provide $3 
billion in supplemental funding to helps States operate work 
programs. This amendment takes into account the fact that jobs 
are not readily available across this Nation. While this 
amendment was not connected to a workfare program, as I would 
prefer, it was a movement in the proper direction.
    Furthermore, the bill contains $14 billion for child care, 
an increase over current law by $3.6 billion over 6 years. The 
committee also adopted an amendment to ensure that children up 
to age 11 have either direct parental care or other child care. 
I wish the committee had also provided better access to child 
care for people trying to make the transition to work, and I 
want the bill to include such language when it is considered on 
the House floor.
    I also remain strongly concerned with the level of 
resources for work and child care in the bill, and I believe 
that the Majority must address this shortfall in order to 
actually enact real welfare reform.
    Lastly, the bill presented to the Opportunities Committee 
was a vast improvement over last year's monstrosity which block 
granted the school lunch program. While there are changes made 
to child nutrition programs, it is within the Majority's power 
to work in a bipartisan manner to address this and other 
issues.
    Based on these amendments and my hope that the bill itself 
will be improved before it comes to the floor, I voted for the 
bill.
    While it is an arcane matter that many citizens are unaware 
of, the bill considered by this committee is only a limited 
portion of a welfare reform package. The bulk of welfare 
reform, including changes to the AFDC program and Food Stamps, 
is under the jurisdiction of the Ways and Means Committee and 
the Agriculture Committee, respectively. In addition, at 
present, it is the Majority's intent to tie welfare reform to 
$72 billion in Medicaid cuts and the elimination of the 
guarantee of health coverage for our Nation's disabled 
population. This means that the Opportunities Committee and 
hence this bill is not the complete nor final say on welfare 
reform. It could also portend that the Majority may not 
continue to work in a bipartisan fashion.
    It is vital that we reform the welfare system. We must pass 
a responsible reform package that instills individual 
responsibility and moves people off welfare and into work. 
However, we must provide support for the disabled, ensure that 
children do not suffer for the shortcomings, real or imagined, 
of their parents, and provide child care for those with young 
children. A welfare reform bill must also take into account the 
fact that jobs are not readily available in many parts of this 
Nation, including Rhode Island, by providing a workfare 
structure and adequate funding for work programs. I believe 
that this is the type of welfare reform that the American 
taxpayers want.

                                                         Jack Reed.
             COMMITTEE ON WAYS AND MEANS--DISSENTING VIEWS

    The budget resolution for fiscal year 1997 adopted on June 
12, 1996, by the Republican majority in the House of 
Representatives calls for passage of three budget 
reconciliation bills before Congress adjourns in the fall. The 
first of these measures is to be a bill that pairs $53 billion 
in welfare spending reductions with $72 billion in Medicaid 
reductions.
    On June 12, working from the text of the new Republican 
welfare reform bill (H.R. 3507), the Committee on Ways and 
Means considered and ordered reported to the Budget Committee 
its welfare reform recommendations. These recommendations have 
since been incorporated into a budget reconciliation bill by 
the Committee on the Budget, for which this report has been 
written.
    Sadly, we are forced to conclude that the Republican bill 
is still too tough on kids, sets up a work program that just 
won't work, and lets the States raid the Federal Treasury 
without delivering much in return.
    Ironcially, much of today's welfare news is good:
          There are fewer welfare and food stamp recipients 
        today than when President Clinton took office. Welfare 
        rolls are down by nearly 10 percent--that's 1.3 million 
        fewer welfare recipients today than when President Bush 
        left office. And, there are more than one million fewer 
        food stamp recipients, too.
          The poverty rate is down. Although still unacceptably 
        high (14.5 percent of all Americans and 21.8 percent of 
        all children lived in poverty in 1994), the number of 
        Americans in poverty went down between 1993 and 1994 by 
        1.2 million people--after four straight years of 
        increases.
          Teen pregnancy rates are lower in most States. In 30 
        of the 41 States that report statistics teen pregnancy 
        rates are down. Teen birth rates have dropped as well.
          Child support collections have grown. Collections 
        grew by 40 percent from 1992 to 1995, a million more 
        families were served, and paternity establishments are 
        up.
          And, welfare reform is alive and well in the States. 
        Forty States are conducting welfare reform 
        demonstrations approved by President Clinton. No 
        President has been as responsive as Bill Clinton to the 
        Governors' desire to test new ideas. As a former 
        Governor, he knows the problems they face and has cut 
        through Federal red tape to help them--regardless of 
        political party.
    That's all good news for the President. It's even better 
news for American families.
    But, unfortunately, we haven't made much progress on 
national welfare reform. Partisan politics seems to have gotten 
in the way. That's a shame.
    President Clinton has twice sent Congress welfare reform 
proposals. He has sent clear signals about the kind of reform 
he will sign into law. He wants a bill that requires work, 
promotes responsibility, and protects children. He would impose 
tough time limits and work requirements, provide more funding 
for child care, require teen parents to live at home and stay 
in school, and crack down on child support enforcement. That's 
real welfare reform.
    He vetoed the Republican bill (H.R. 4) because it was not 
real welfare reform. He rejected H.R. 4 because:
          It was weak on work.--It did too little to move 
        people from welfare to work, did not guarantee child 
        care, and gutted the earned income tax credit.
          It was tough on children.--It made unacceptably deep 
        cuts that undermined child welfare, school lunches, and 
        aid for disabled children.
          It was a step backward in our efforts to get health 
        care coverage to all Americans.--It eliminated the 
        guaranteed medical coverage that single parents need to 
        move from welfare to entry-level jobs.
    Rather than work with the President to resolve these 
problems, the Republicans chose to spend 6 months criticizing 
his veto and insisting that the Republican conference agreement 
was the only way to reform welfare. Thanks to the Nation's 
Governors, a debate that seemed to have reached a stalemate 
revived, and we are trying again. President Clinton has 
welcomed the bipartisan National Governors' Association 
proposal. He has set only two conditions. He said:
          Don't link welfare to Medicaid changes that cut 
        coverage to children, to pregnant women, to the 
        elderly, and to disabled adults.
          Don't raise taxes on the working poor by cutting the 
        earned income tax credit.
    We remain skeptical about whether our Republican colleagues 
want true bipartisan compromise. Admittedly, this new 
Republican bill corrects some of the worst mistakes of the 
vetoed bill--confirming that the President was right to say NO 
to the last Republican welfare plan.
    But it looks to us like the Republicans want to make 
certain that this bill is also unacceptable to the President 
and to Democratic Governors. Despite President Clinton's 
warning, our Republican colleagues plan to link welfare reform 
to deep Medicaid cuts, have retained the EITC cuts, and have 
refused to guarantee child care for parents going to work. They 
also cut welfare spending by $10 billion more than the 
Governors' had agreed to. That doesn't sound hopeful to us.
    We want one point to be clear. We support welfare reform. 
So does President Clinton. But we also want to make sure that 
needy children aren't the victims of excessive election-year 
posturing.
    Real welfare reform gives poor children a safety net on 
which to rely. It makes certain that children are not punished 
for the mistakes of their parents.
    Real welfare reform also makes certain that States deliver 
on their commitment to protecting children--that kids aren't 
left holding an empty bag when powerful interests pressure 
State governments to spend limited resources on nursing homes--
or roads--or schools--or prisons.
    Real welfare reform also means tough, but fair, work 
requirements. It means making sure everyone who is able to work 
does work, even if the government has to supply the job.
    But most important, real welfare reform means helping some 
very desperate families--and their children--have a vision 
about the future, a sense that they are worth something and can 
do something with their lives, and that it matters to us that 
they have that chance.
    If all this talk about welfare reform is more than 
election-year posturing, then Democrats and Republicans will 
have to work together as partners to accomplish welfare reform. 
So far, our Republican colleagues have chosen to go it alone. 
That's a shame--and a disappointment to the American people.
    During deliberations by the Committee on Ways and Means, 
Democrats were not content to simply sit back and criticize. 
Hour after hour we offered constructive amendments designed to 
correct the most egregious flaws in the Republican bill. Time 
and again our ideas were rejected. As a result we must reject 
this bill. It is too tough on families and children; it sets up 
a welfare-to-work program that just won't work; and it lets the 
States raid the Federal Treasury without delivering much in 
return.

      The Republican Bill Is Still Too Tough on Kids and Families.

1. The Republican majority insisted on raising taxes on 4.3 million 
        working families who earn less than $30,000 per year

    Republicans bristle at suggestions that they favor the rich 
and claim that they are looking out for the average working 
family. Yet, at Chairman Archer's insistence, the welfare 
reform plan adopted by the Committee on Ways and Means will 
increase taxes on millions of Americans who work to support 
their families rather than accept welfare. That's because the 
bill phases out the earned income tax credit (EITC) for working 
families with children more quickly than under present law, 
increasing taxes on 4.3 million families earning between 
$17,000 and $29,000 per year.
    To correct this, Rep. Barbara Kennelly (D-CT) proposed 
striking the tax increase on the working poor. Despite 
unanimous Democratic support, the Kennelly amendment failed on 
a voice vote.
    The committee's recommendations regarding the EITC include 
yet another example of the callousness the Republican majority 
has consistently exhibited toward low-income working families.
    Under current law, 20 million working families are 
bolstered by the tax credit in their daily struggle to make 
ends meet. These families earn no more than $28,000 a year, and 
many make significantly less than that. Three-quarters of these 
workers--16 million families--have children. Twenty percent of 
these families--4.3 million of them--will experience a tax 
increase because of the Republican's inability or unwillingness 
to put themselves in these workers' shoes.
    An earlier version of this welfare bill excluded the EITC 
provision that represents a tax increase for these families. 
But, not long before the committee markup, the Republican 
majority received work that their cuts in the welfare program, 
drastic though they are, did not create sufficient budget 
savings to meet their budget reconciliation target. Their 
solution was to increase taxes on families earning between 
$17,000 and $29,000 per year. Why are these working families 
the target when the Republican majority needs to raise money 
because their welfare cutbacks have fallen short of the budget 
goal?
    The Republican majority could have increased taxes on 
wealthier Americans better able to afford it. They could have 
proposed smaller tax cuts in their budget resolution, thus 
necessitating smaller cuts elsewhere to offset the tax cuts. 
They could have shaved tax breaks they have created and 
preserved for various business interests, such as the oil and 
gas industry. They could have reduced the defense budget. They 
could have identified some of the ``unnecessary government 
spending'' they rail against so often. They could have done any 
number of things instead. But, the Republican majority chose to 
make life more difficult for hard-working parents.
    Democrats are not uncritical proponents of the EITC. It 
should be monitored carefully, administered properly, and 
targeted effectively. We are delighted that the anti-fraud 
measures that President Clinton initiated in 1994 have yielded 
impressive results. We are prepared to support the EITC 
provisions of this bill that build on those initiatives by 
enacting President Clinton's further suggestions to increase 
EITC effectiveness. The provisions to improve EITC compliance 
by extending the application of the math-error procedures and 
to focus EITC benefits on wage earners by disallowing the use 
of capital income and various types of losses are appropriate.
    But, the element of the recommendations that would create a 
second tier in the phasedown range in order to eliminate the 
EITC more quickly is unnecessary. Indeed, it is worse than 
that. It is hardhearted. Insensitive. Callous. It is an 
unadulterated tax increase--something Republicans supposedly 
stand against.
    The taxpayers who will bear the brunt of this tax increase 
are parents who have one child and incomes between $17,300 and 
$25,700 and those with two or more children and incomes between 
$21,300 and $29,000. Those tax increases would total $1.8 
billion--as much as $150 per family. And 360,000 families would 
lose their EITC entirely because the phasedown range would be 
reduced.
    And, this is just the beginning.
    Republicans will defend their proposal to phase down the 
EITC more quickly by claiming that families will receive the 
$500-per-child tax credit that they promise to enact later this 
year in the budget reconciliation bill.
    This is a fiction. And, it is no consolation to families 
who will have their existing tax credit cut by up to $150.
    The budget resolution calls for EITC cuts of $18.5 billion 
in addition to the welfare savings that these committee 
recommendations achieve. The budget resolution also anticipates 
that a nonrefundable $500-per-child tax credit will be enacted.
    Millions of EITC recipients will get no child credit at all 
because their incomes are too low. If the child is not 
refundable, they won't get any benefit.
    Millions more will get a partial credit because they don't 
owe enough income tax to use their full child credit. For 
example, a family with income of $20,000 and two children 
should receive $1000 in child credits, if enacted. But they 
would not because they could not take more in the credit than 
they would own in tax. They would get only $458 instead of 
$1000.
    In order to come up with the additional $18.5 billion in 
EITC cuts, the Republican majority has said they intend to 
enact policy cuts quite similar to those in last year's 
balanced budget bill. That would result in additional EITC cuts 
of $356 for that $20,000 family with 2 children.
    So, it is disingenuous of the Republican majority to try to 
lull low-income working families into accepting major cuts in 
the EITC by promising $500-per-child credits that most of those 
families will never receive.
    Republican Director of the Office of Management and Budget 
under President Bush, Dick Darman, coined a memorable phrase 
about unacknowledged tax increases. It went something like 
this: ``If it looks like a duck and walks like a duck and 
quacks like a duck, it's a duck.'' The Republicans' so-called 
second-tier phase-down of the EITC looks and walks and quacks 
like a duck, alright. It is an unambiguous tax increase on 4.3 
million low-income families, a downpayment on the much larger 
tax increases the Republicans intend to inflict on them later 
this year. The Republicans may use soundbites like ``welfare 
reform,'' ``improved targeting,'' ``personal responsibility,'' 
``moving from welfare to work,'' but none of these phrases mask 
the reality of a tax increase.

2. The Republican majority insisted on putting at least 1 million 
        American children and 2 million parents at risk of losing their 
        health insurance

    Lack of health coverage is a prime reason many parents are 
forced to choose welfare over work. Over the past decade, this 
committee--under Democratic leadership--has taken steps to 
correct this problem by making certain that when a welfare 
recipient goes off welfare and goes to work, health coverage 
continues. After all, a productive employee is one that does 
not have to worry about whether her child will get needed 
health care.
    The Republican welfare reform philosophy is to leave 
questions about health coverage entirely to State Governors. 
Time and again they will ask us to trust the Governors. Be 
careful to read the fine print of the Republican plan. What 
``trusting the Governors'' really means is eliminating the 
guarantee of health coverage for parents and children. It means 
that millions of Americans will be at risk of losing the health 
coverage that gives them peace of mind.
    Republicans were embarrassed to learn from the Democrats 
that their plan would not guarantee Medicaid even for those 
families who would continue to be eligible for cash welfare. 
They were equally stunned to learn that their plan eliminated 
the assurance of health coverage for families who leave welfare 
for work. They corrected these flaws but refused Democratic 
attempts to assure health coverage for at least 3 million other 
families who have it now but may lose it if the Republican bill 
becomes law.
    Rep. Sander Levin (D-MI) offered an amendment to make 
certain that all those families who are now eligible for 
Medicaid retain that eligibility--so that welfare reform does 
not increase the number of uninsured Americans. The Republican 
majority said no.
    Rep. Pete Stark (D-CA) offered an amendment to require that 
Medicaid be continued for any family that loses welfare 
eligibility because of a time limit on benefits. Despite 
unanimous Democratic support, the Republican majority said, no, 
and the Stark amendment was rejected.
    Without the Stark and Levin amendments, at least one 
million children may lose their Medicaid coverage. Even more 
children could suffer if the States choose to narrow 
eligibility for cash welfare, as they are encouraged to do 
under the new block grant.

3. The Republican majority insisted on punishing children for the 
        mistakes of their parents

    Three times the Democrats tried to get the Republicans to 
soften the punishments that extend to children if their parents 
cannot find work to support the family. Three times the 
Republicans voted no, insisting on punishing children for the 
mistakes of their parents.
    Rep. Charles Rangel (D-NY) offered an amendment to assure 
that an arbitrary time limit is not imposed on a parent who 
``plays by the rules'' but still cannot find a job. Under the 
Rangel amendment if the parent does all that the State asks in 
terms of training, education, and work but there is still no 
job available, the time limit on benefits would not apply. The 
Republican majority said no to the Rangel amendment, choosing 
instead to punish the children.
    Rep. Sander Levin (D-MI) proposed to require that vouchers 
be paid to help children in any States that limit welfare 
payments to less than 60 months; after 5 years, States would 
have the option to pay vouchers. This policy is a feature of 
the bipartisan ``Tanner-Castle'' welfare reform bill (H.R. 
3266). The Republican majority said no to the Levin amendment.
    As a last resort, Rep. Sander Levin (D-MI) asked his 
Republican colleagues to support the voucher policy that they 
had all endorsed in H.R. 4, the welfare reform bill that 
President Clinton vetoed. H.R. 4 would have permitted vouchers 
to support just the children after both parent and child have 
received welfare for 60 months. The Republicans flip-flopped, 
rejecting their own policy, and again chose not to protect the 
children.

4. The Republican majority insisted on denying benefits to virtually 
        all legal immigrants regardless of their circumstances

    The Republican bill bars legal immigrants from receiving 
supplemental security income (SSI) and food stamps and 
authorizes States to bar immigrants from the Temporary 
Assistance for Needy Families Block Grant (AFDC), the Title XX 
Social Services Block Grant, and Medicaid. The bill would 
impose these bans retroactively on those already receiving 
benefits, cutting off over one million legal immigrants 
regardless of their circumstances. Among those denied benefits 
are over half a million elderly and disabled SSI recipients, 
including 10,000 disabled children.
    Rep. Charles Rangel (D-NY) offered an amendment which would 
have prospectively deemed the income of a sponsor to the legal 
immigrant until citizenship for purposes of applications for 
SSI and family assistance, assuring protection for people whose 
sponsor's have died or lost their income. Democrats would have 
continued eligibility to Medicaid coverage, thus protecting 
small children who fall ill. Democrats would also have 
protected abused children by exempting them from the impact of 
the provision. By continuing the current-law exemption for 
applicants who became disabled after they enter the country, 
Democrats would have assured that a legal immigrant who gets 
hit by a truck, for example, and is unable to work would not 
have been left without help. Moreover, Democrats would have 
assured that an immigrant who has worked hard and paid taxes 
for 20 quarters would be eligible for benefits. The Democrats 
are interested in fair and humane treatment of legal 
immigrants. The Republican majority rejected the Rangel 
amendment by voice vote.

5. Democrats protected emergency assistance for low-income elderly and 
        disabled people affected by the Republican cut in SSI

    The Republican welfare bill eliminates the first month of 
benefits for all future SSI applicants. As a result, nearly one 
million low-income elderly and disabled people who apply for 
SSI benefits each year all will receive reduced benefits.
    Rep. John Lewis (D-GA) successfully amended to bill to 
assure that where an individual faces a financial emergency 
that individual may receive an advance on his or her first 
month's payment. The payment would have to be repaid through 
deductions in the recipent's check over the next 6 months.
    It is a small comfort that at least a portion of the 
hundreds of thousands of elderly and disabled people who will 
be hurt by this provision will get emergency relief, thanks to 
the Lewis amendment.

6. The Democrats protected low-income elderly women from cuts in SSI

    The Republican welfare bill vetoed by the President and the 
bill offered by Republicans in the Subcommittee on Human 
Resources included a provision increasing the retirement age 
for low-income elderly under the SSI program from age 65 to age 
67. The Republican bill would have driven a hole through the 
safety net for low-income senior citizens, especially women. 
When fully implemented, the provision would have denied 
assistance to more than 100,000 poor elderly in any month. Many 
of those affected would have been women who have only modest 
Social Security benefits.
    As a result of an amendment offered by Rep. Sander Levin 
(D-MI), Democrats successfully altered the Subcommittee bill to 
delete the provision and maintain SSI protection for the aged. 
This will assure that women who stay home to raise their 
children and workers who spend an entire lifetime in the work 
force at low wages will not be unfairly deprived of the most 
minimal SSI payments in their old age.

7. The Democrats kept Republicans from making the most drastic cuts in 
        SSI benefits to disabled children

    Under the Republican bill vetoed by the President, 
Republicans would have denied or reduced SSI benefits to nearly 
one million disabled children. Under pressure from the 
Democrats and the bipartisan National Governors' Association, 
the Republicans backed off of much of their extreme position. 
Democrats were successful in offering an amendment to assure 
that, in applying the new definition of childhood disability, 
the Commissioner of Social Security take into account the 
combined effects of all physical and mental impairments. In 
addition, the Commissioner would be required to provide for the 
evaluation of children who are too young to test.
    Democrats believe that the SSI disabled children's program 
needs to remain abuse-free, but they do not believe that 
hundreds of thousands of severely disabled children should be 
made to suffer. The Democrats have consistently favored 
targeting and eliminating abuse while protecting vulnerable 
disabled children.

              The Republican Work Program Just Won't Work

1. The Republican majority rejected every Democratic attempt to craft a 
        welfare-to-work program that will work

    Work, training and child care are the cornerstones of any 
successfully welfare reform strategy. Four times, Democrats 
tried to correct fundamental flaws in the Republican bill. All 
were rejected.
    Rep. Richard Neal (D-MA) proposed a comprehensive amendment 
to fix the Republican work program, using provisions of the bi-
partisan ``Castle-Tanner'' bill. Mr. Neal's amendment would 
have increased funding for the work-related elements of the 
bill, tightened the rules used to measure whether a State 
succeeds with its work program, and required an individual 
responsibility contract between the State and the welfare 
recipient. Despite unanimous Democratic support, the Neal 
amendment was rejected by voice vote.
    Rep. Bill Coyne (D-PA) offered an amendment that would make 
certain that work pays better than welfare. The Coyne amendment 
simply would have required that the earned income tax credit--
which is paid to low-income taxpayers as an incentive to work--
not be counted against the family when determining welfare 
eligibility. Without this correction, the family won't get 
ahead--every dollar of EITC the family earns will reduce its 
cash assistance. The Republcan majority said no.
    Reps. Phil English (R-PA) and Gerald Kleczka (D-WI) tried 
to make certain that States may not allow welfare recipients to 
displace current workers, replace workers terminated just to 
fill the vacancy with a welfare recipient, or replace someone 
laid off. Two versions of the amendment were offered. Both were 
rejected by the Republican majority.
    Finally, yet another attempt at bipartisan cooperation was 
rejected when Reps. Nancy Johnson (R-CT) and Barbara Kennelly 
(D-CT) offered an amendment to prohibit States from penalizing 
the parents of a child who is under 10 years of age if they 
cannot work because no child care is available, noting that in 
many communities it is simply not safe to leave young children 
to fend for themselves while mom is at work. The amendment was 
rejected.

   The Republican Bill Lets States Raid the Federal Treasury without 
                       Delivering Much in Return

1. The Republican majority refused to hold States accountable for the 
        promises they make to America's children

    The battle cry of Republican welfare reform initiatives is 
State flexibility. In their myopic view of the world, the only 
way to achieve that goal is block grants to the States with no 
strings attached. Democrats share the desire to give States 
more flexibility but as long as the Federal Government plays 
``banker'' to the States for welfare programs, Democrats will 
insist that smart business sense prevail. No blank checks will 
be written, no sweetheart deals tolerated, and no empty State 
promises permitted.
    Democrats made three significant attempts to hold States 
accountable in the new Republican world of block grants. 
Republicans rejected each amendment.
    Rep. Harold Ford (D-TN) offered a straight-forward 
amendment to extend certain basic protections to families under 
the block grant. The Ford amendment would have required 
objective eligibility and benefit decisions, made certain that 
States treat similar families alike, and mandated prompt 
impartial hearings when disputes arise between the State and 
the family. Republicans said no to a level playing field for 
families. Instead, they stacked the deck against families and 
in favor of State governments.
    Similarly, Rep. Richard Neal (D-MA) offered an amendment 
that would have granted the Secretary of Health and Human 
Services (HHS) the authority to enforce the promises made in 
the State plan. The Republican bill specifically prohibits HHS 
from doing anything more than reviewing the paperwork to see if 
the plan includes everything required by law. The Republicans 
intentionally bar the Secretary from making certain that the 
State actually does what it says in its plan. Once again, the 
Republican majority said no to families, insisting on a stacked 
deck in favor of States.
    And, Rep. Sander Levin (D-MI) offered an amendment to 
modify the contingency fund that is available to States in the 
event of a severe recession. In the Republican plan a 
contingency fund is supposed to be triggered in times of 
economic difficulty--but, as proposed, the fund is too small to 
weather even a modest recession. The Republicans said no to the 
Levin amendment, promising to reconsider later if problems 
arise. Unfortunately, it is poor children who will pay the 
price if action is delayed.

                      Setting the record straight

    Our Republican colleagues have used the opening pages of 
this legislation to make rhetorical arguments about the need 
for this bill. Presented as ``findings'' some are actual facts. 
Others are interpretations of facts, written to support just 
one point of view in the welfare debate. Left unchallenged, the 
future reader of this important legislation would have to 
conclude that there was universal agreement with each of these 
statements. Simply stated, there is not. And we wish to supply 
this additional information to complete the record.
    First, if we were to write our own statement of findings--
mixing fact with rhetoric as the Republicans have done--about 
the Republican welfare reform measure, we would choose a list 
something like the following:
          The number of individuals receiving aid to families 
        with dependent children (AFDC)--what most people think 
        of as welfare--has remained relatively steady since 
        1971.
          The Department of Health and Human Services (HHS) 
        projects that only 10.2 million children will receive 
        AFDC benefits by fiscal year 2006.
          The policies contained within the new Republican bill 
        could push millions of additional children into 
        poverty.
          Research indicates that the associations between 
        welfare-benefit levels and out-of-wedlock pregnancy 
        generally are small and apply only to whites.
          Evidence linking welfare benefits with rising 
        nonmarital fertility is not consistent and does not 
        suggest that welfare represents an important factor in 
        recent increases in childbearing outside of marriage.
          Despite the rise in the birth rate for teen mothers 
        that occurred in the late 1980s, the teen birth rate is 
        lower now than it was in the 1950s and 1960s.
          The number of welfare recipients has dropped by 1.3 
        million since January 1993.
    We note, for the record that data about nonmarital births 
are particularly tricky to understand. The large increase in 
the number of nonmarital births, particularly among teens, has 
contributed to the perception that the provision of welfare 
benefits encourages nonmarital births in general and teen 
births in particular.
    There has also been growing research which indicates that 
out-of-wedlock and teen birth negatively impact the health, 
educational attainment, and long term adulthood success of 
children born under these circumstances. Some conclude, then, 
that by simply eliminating welfare benefits and/or putting 
conditions for receipt of welfare benefits upon teens and 
children born out-of-wedlock, the rate of nonmarital and teen 
births will decrease, thus decreasing negative impacts upon 
children. The association between welfare receipt and behavior, 
however, is not clearly documented.
    The new Republican bill focuses specifically on this 
connection between welfare dependency and out-of-wedlock 
pregnancy and birth, whereas Democrats focus on eliminating 
obstacles to self-sufficiency, such as providing real work 
opportunities and reliable child care, while at the same time, 
encouraging and reinforcing responsible parenting. There is no 
evidence that the unfavorable economic, social, and educational 
outcomes often attributed to out-of-wedlock and teen births are 
actually the result of the birth, rather than the result of 
preexisting circumstances, such as growing up in poverty, 
having limited educational opportunities, and access to 
prenatal and child care.
    Again for the record, we take issue with the following six 
``findings'' in the Republican welfare reform bill:

Republican claim No. 1

          ``* * * it is the sense of Congress that prevention 
        of out-of-wedlock pregnancy and reduction in out-of-
        wedlock birth are very important Government interests 
        and the policy contained in part A of title IV of the 
        Social Security Act (as amended by section 103(a) of 
        this Act) is intended to address the crisis.'' (H.R. 
        3507, Section 101(9), p. 15)
    Title IV-A of the Social Security Act was designed to 
protect the well-being poor families with dependent children in 
times of crisis. There is bipartisan agreement that conditions 
for poor people in the country have deteriorated, that there 
are increasing numbers of poor children (from 1979 to 1994 the 
number of poor children increased from 8.6 million to 13.2 
million), and that the current welfare system discourages work 
and responsibility, breaks up families, and fails to move 
people from poverty to independence.
    However, there is no evidence that the policies contained 
in the new Republican bill, which would amend Title IV-A of the 
Social Security Act, will successfully address these crises. 
The Republicans have not proven that the current welfare system 
is to blame for the conditions they cite. Furthermore, it is 
unclear which provisions in the new Republican bill would 
remedy the problems.
    For example, State flexibility is a central tenant of the 
Republican bill. But, there is no evidence that the lack of 
State flexibility in current law has prohibited States from 
addressing these problems and that increasing State flexibility 
would enable States to be more successful in decreasing 
problems.
    Similarly, the Republican majority contends that 
implementing a family cap on welfare benefits would lead to 
decreased nonmarital birth and increased self-sufficiency. New 
research findings on the impact of the New Jersey cap on AFDC 
births do not support the contention that the family cap policy 
has an effect on the number of AFDC births.
    Finally, the Republicans majority proposes to reduce out-
of-wedlock births by paying States that reduce rates of 
illegitimacy a bonus. It is unlikely that the small amount of 
bonus money that is offered to States to reduce out-of-wedlock 
births will enable them to implement programs that will 
actually change the trends in out-of-wedlock births.
    The reform effort contained within the new Republican bill 
is not guaranteed to address the problems, and may only 
exacerbate the problems of poor children and their families. 
Analysis of bills similar to this one found that more--not 
fewer--children could be made poor. We await a similar of this 
bill by the Clinton administration and would be alarmed if the 
probability of this reform effort was more poor children.

Republican claim No. 2

          ``The number of individuals receiving aid to families 
        with dependent children has more than tripled since 
        1965.'' (H.R. 3507, Section 101(5), p. 10)
    The number of recipients receiving AFDC has, in fact, 
remained relatively steady since 1971. The number of recipients 
more than doubled from 1965 to 1971 (from 4.4 billion to 10.0 
billion), and then has remained relatively consistent since 
that time. Why are we enacting legislation in 1996 to address 
the increase in recipients which occurred in the 1960s? Most 
recent data from March 1996 indicates that there are 12.8 
billion recipients, as compared to the 10.0 billion recipients 
in 1971,\1\ only a 27 percent increase over these 25 years. In 
fact, caseloads have been decreasing since President Clinton's 
policy to enact State waivers. After the increase in recipients 
from 1989 to 1992, a result of policies enacted by the previous 
administration, caseloads have fallen from 13.6 million to 12.8 
million.
---------------------------------------------------------------------------
    \1\ Data for 1965: House Document No. 93-78 (part 1). Historical 
Statistics of the United States: Colonial Times to 1970: U.S. 
Department of Commerce, Bureau of the Census. Data from 1970: Committee 
on Ways and Means, U.S. House of Representatives, Overview of 
Entitlement Programs: 1993 Green Book.




Republican claim No. 3

          ``The Department of Health and Human Services has 
        estimated that 12,000,000 children will receive AFDC 
        benefits within 10 years.'' (H.R. 3507, Section 
        101(5)(B), pp. 9-10)
    Most current HHS caseload projections estimate only 10.2 
million children will receive benefits by fiscal year 2006. 
This recalculation is based upon recent and projected decreases 
in the overall caseload of AFDC recipients, as reported in the 
President's fiscal year 1997 budget.

Republican claim No. 4

          ``The increase in the number of children receiving 
        public assistance is closely related to the increase in 
        births to unmarried women.'' (H.R. 3507, Section 
        101(5)(C), page 11)
    Research has been conducted to assess whether the 
generosity of welfare benefits over time and among States has 
contributed to the growth in the incidence of out-of-wedlock 
birth. While there is inconsistency in results, associations 
between welfare benefit levels and out-of-wedlock pregnancy 
generally are small and apply only to whites. ``In sum, the 
evidence linking welfare benefits with rising nonmarried 
fertility is not consistent and does not suggest that welfare 
represents an important factor in recent increases in 
childbearing outside of marriage.'' \2\
---------------------------------------------------------------------------
    \2\ ``Report to Congress on Out-of-Wedlock Childbearing,'' U.S. 
Department of Health and Human Services, September 1995, p.xiv.
---------------------------------------------------------------------------
    Another argument that cannot be substantiated is that an 
increase in benefits over time would encourage out-of-wedlock 
births. Welfare benefits have increased, but inflation has 
eroded the value of these benefits. The real value of AFDC and 
food stamps has decreased by 25 percent since 1970.\3\
---------------------------------------------------------------------------
    \3\ 1993 Green Book.
---------------------------------------------------------------------------
    If welfare benefits influence childbearing decisions, it is 
likely that out-of-wedlock births would be higher in States 
where higher benefits are provided. In fact, nonmarital births 
are more common in States with lower benefit levels.\4\
---------------------------------------------------------------------------
    \4\ Sawhill, Isabel V. ``Welfare Reform: An analysis of the 
Issues.'' Urban Institute, Washington, D.C., p. 52.
---------------------------------------------------------------------------

Republican claim No. 5

          ``The increase of out-of-wedlock pregnancies and 
        births is well documented'' (H.R. 3507, Section 101(6), 
        page 11)
    There has been an increase in the nonmarital birth rate, 
but it is also much smaller than its increased share of the 
total birth rate. The principal causes of the growth in the 
share of births attributable to nonmarital births are not based 
simply upon an increase in out-of-wedlock births, but on 
declining marriage rates and declining birth rates among 
married women. Between 1960 and 1990 the percentage of women of 
childbearing age who were married at any point in time declined 
from 71 percent to 55 percent; the annual birth rate for 
married women dropped from 16 percent to 9 percent.\5\
---------------------------------------------------------------------------
    \5\ Center on Social Welfare Policy and Law (1966). ``Welfare 
Myths: Fact or Fiction? Exploring the Truth About Welfare.''
---------------------------------------------------------------------------
          Note.--Reductions in the number of total births, 
        especially the number of wedlock births, can increase 
        the out-of-wedlock birth ratio without any change in 
        out-of-wedlock births. The simultaneous drop in wedlock 
        births, combined with the rise in out-of-wedlock 
        births, has led to an inflation of the perceived 
        increase in out-of-wedlock births. The out-of-wedlock 
        birth rate, the number of out-of-wedlock births per 
        1,000 women, is a more accurate measure of the rise of 
        out-of-wedlock births.

Republican claim No. 6

          ``It is estimated that the rate of nonmarital teen 
        pregnancy rose 23 percent [from 1976 to 1991].''
    Despite the rise in the teen birth rate that occurred in 
the late 1980s, the teen birth rate is lower now than it was in 
the 1950s and 1960s. Most recently, from 1991 to 1993, the 
birth rate for teens aged 15-19 declined 4 percent. In 1960, 
there were 586,966 births to teens aged 15-19, as compared to 
501,093 in 1993.



    Nonmarital births have increased among teens, but there 
have also been significant increases among women of all ages. 
From 1970 to 1990, nonmarital birth among teen increased from 
2.2 percent to 4.2 percent. The birth rate for single women in 
their early 20's is higher than the rate for single teens, 
increasing from 3.8 percent to 6.5 percent from 1970 to 1990.
                                   Sam M. Gibbons.
                                   Pete Stark.
                                   L.F. Payne.
                                   Andrew Jacobs, Jr.
                                   John Lewis.
                                   Richard E. Neal.
                                   Ben Cardin.
                                   Harold Ford.
                                   Charles B. Rangel.
                                   Robert T. Matsui.
                                   Barbara B. Kennelly.
                                   Jim McDermott.
                                   William J. Coyne.
                                   Sander M. Levin.
                                   Michael R. McNulty.
    COMMITTEE ON THE BUDGET--MINORITY VIEWS ON THE FIRST REPUBLICAN 
                         RECONCILIATION PACKAGE

    On June 19, 1996, the Budget Committee considered the first 
of a three-step reconciliation process required by the 
conference report on the 1997 budget resolution. As we know, 
that budget increases the Federal deficit next year for the 
first time in 4 years. It does this because the new Republican 
majority insists on passing large tax cuts before it deals with 
the level of spending needed to meet the commitments it makes. 
In fact, under this new Republican budget the deficit will 
increase from $130 billion this year to $153 billion next 
year--a whopping 1-year increase of $23 billion.
    Over the last year the new Republican majority has learned 
a great deal about the Federal budget and it has made some 
improvements upon the proposals that were before us in the 
Contract With America budget of a year ago. The mean-spirited 
attacks on school lunch and child nutrition programs have been 
dropped. Some of the ignorant and misguided attacks on student 
aid and Head Start have been dropped. The outrageous rip-offs 
that comprised most of the Contract With America's tax package 
have been somewhat reduced. Nevertheless, the policy proposals 
contained in this year's budget remain dangerously radical and 
out of touch with the American populace and should be rejected.
    The new Republican budget is little changed from the 
package rejected last year by the President. Repackaging it in 
a three-part reconciliation process does not alleviate its 
fundamental flaws. And, by choosing to include welfare reform, 
Medicaid, and the child tax credit in the first reconciliation 
bill, the new majority exposes its basic cynicism about the 
budget.
    Because the Ways and Means Committee failed to act on the 
tax cut, the first reconciliation bill reported by the Budget 
Committee is limited to only welfare reform and Medicaid 
changes. It is unclear, however, whether this is the package 
that will ultimately be considered on the floor. Not only do we 
not know if or when we are going to see a tax package, we don't 
know what will be in a tax package. We also don't know if this 
first reconciliation bill will remain as a welfare/Medicaid 
package or if it will be split into two separate bills. If 
split into two separate bills, it is not clear that each of 
those bills would be governed by the terms of a reconciliation 
process.

                             Welfare Reform

    There is almost universal agreement that the present 
welfare system needs reform. Most people agree that any serious 
effort at welfare reform must be designed to help move people 
who are able to work off the welfare rolls and onto the work 
rolls.
    The first reconciliation bill incorporates much of last 
year's Republican welfare plan that passed Congress and was 
vetoed by the President. This year's package contains $48 
billion of cuts in welfare-related programs, predominately 
hitting food stamp and SSI recipients and legal immigrants. It 
also includes $5 billion of cuts in the Earned Income Tax 
Credit (EITC), for total cuts of $53 billion. These reductions, 
when combined with the additional EITC cuts of $18.5 billion 
that are reconciled for the third part of this process, remain 
too steep. The structural changes proposed contain serious 
flaws.
    The package eliminates all individual guarantees for 
assistance to needy families and replaces them with a series of 
block grants to States. The States are then allowed to make 
deep cuts in their share of funding for welfare benefits, 
thereby producing a double hit on the most vulnerable among us. 
While the budget purports to help people move from ``welfare to 
work,'' it simply does not contain the resources needed to 
sustain a serious effort to encourage work. And its grants of 
wide scale flexibility for States when combined with its 
reductions in State maintenance of effort will most certainly 
exacerbate pressures among States to ``race to the bottom.''

                                Medicaid

    The Republican plan for Medicaid has the potential to cause 
as much or more harm than the welfare reform package. Medicaid 
is the basic program whereby the Federal Government helps 
States provide health care for the poorest and most vulnerable 
people in our Nation. This reconciliation bill cuts Federal 
Medicaid funding by $72 billion. To make matters worse, the 
Republican proposal allows States to drain large amounts of 
money out of the system by significantly reducing the States' 
``maintenance of effort'' and ``match'' requirements. By so 
weakening the State's share of the program, the Republican plan 
will allow more than $250 billion to be siphoned off from heath 
care services for the poor.
    The majority's plan would send a loosely defined block 
grant back to the States without the current guarantees of care 
for low-income children, pregnant women, disabled people, or 
senior citizens. By relying heavily on the Republican Governors 
for the design of their new Medicaid package, the Republican 
Congress has proposed a program that allows States to reduce 
their financial commitment to the program without any guarantee 
that poor people and seniors will receive the health care 
taxpayers are paying for. Clearly, the Medicaid program could 
benefit from large-scale regulatory reform, but this is just 
plain ridiculous.

                                Tax Cuts

    Perhaps the most interesting feature of this reconciliation 
package is its deliberate failure to meet the revenue directive 
which allowed for the now famous $500 per child tax credit. It 
is not clear whether this tax cut will appear magically in the 
Rules Committee, on the floor, in conference, in a later 
reconciliation bill, as a separate bill, or not at all. 
Clearly, the presence of a tax cut at this stage of the 
reconciliation process complicates all attempts to bring the 
deficit down in the near future.

                          Whither the Process

    Normally, the budget resolution would require an omnibus 
reconciliation bill that combines all of the entitlement and 
tax changes into a single piece of legislation. This year the 
majority chose not to do an omnibus bill, but rather to break 
reconciliation into three separate bills. This procedure is not 
only highly unusual, but it begs the question: Why these three 
bills? Achieving more deficit reduction is certainly not the 
answer to this question. The first reconciliation bill was 
designed to include the tax cuts. Thus the first bill out of 
the starting block would dramatically increase the deficit. 
This stands in stark contrast to the Republican budget-
balancing concerns of last year, when the Congressional Budget 
Office was required to certify that the budget would reach 
balance before tax cuts could be considered.
    The future of this year's process is not yet clear. The 
final form of the first reconciliation bill has not yet been 
decided. And while the budget resolution spells out what should 
be in reconciliation bills two and three, it is difficult to 
have confidence that the majority will follow the resolution's 
guidance. Reconciliation is normally a complicated and 
difficult legislative process. But this year the majority has 
turned it into a tortured dance that is spinning out of 
control. Even their leaders don't know where it will end.
    One thing is clear--it is not possible to make credible 
reforms in welfare, Medicaid, Medicare and other spending 
programs and pass a large tax cut without increasing the 
Federal budget deficit.

                                   Martin O. Sabo.
                                   Sander Levin.
                                   Allan B. Mollohan.
                                   Jerry F. Costello.
                                   William J. Coyne.
                                   Glen Browder.
                                   Louise M. Slaughter.
                                   Bennie G. Thompson.
                                   Lloyd Doggett.
                                   Charlie Stenholm.
                                   Earl Pomeroy.
                                   Lynn N. Rivers.
                                   John W. Olver.
                                   Carrie P. Meek.
                                   Lynn C. Woolsey.
                                   William H. Orton.
                                   Lucille Roybal-Allard.
                                   Patsy T. Mink.
          DISSENTING VIEWS FROM REPRESENTATIVE CARRIE P. MEEK

    I am dismayed that part of the majority's bill designed to 
move people from welfare to work contains a tax increase on 
more than 4 million Americans who have already chosen work over 
welfare. But I am not surprised that the majority is now 
raising taxes on these working families to help pay for a tax 
cut for the wealthy later this year.
    The bill reported by the Committee on the Budget, H.R. 
3507, cuts the earned income tax credit by $5 billion over 6 
years. Later this year the Republicans will offer us the final 
$15 billion in cuts in the EITC in order to meet their 
reconciliation target of a $20-billion cut over 6 years.
    H.R. 3507 increases taxes on working families. It raises 
taxes on families with one child who have annual incomes 
between $17,340 and $25,750, and it also increases taxes for 
other working families who have annual incomes between $21,360 
and $29,261.
    H.R. 3507--unlike last year's reconciliation bill--does not 
contain the $500 child tax credit to help offset these tax 
hikes on working Americans.
    The Department of the Treasury estimates that H.R. 3507 
will raise taxes on 4.3 million working families.
    Rule XXI(5)(c) of the House of Representatives says that no 
bill ``carrying a Federal income tax rate increase shall be 
considered as passed or agreed to unless so determined by a 
vote of not less than three-fifths of the Members voting.''
    The Republican majority inserted this provision in the 
House's rules with great pride at the beginning of this 
Congress. Then they claimed they were protecting working 
Americans from a tax increase.
    However, 9 months later the Republican majority waived this 
three-fifths rule when the House approved, last October, a $23 
billion cut in the EITC as part of last year's reconciliation 
bill.
    Now we are again considering a reconciliation bill. On a 
party line vote, the Committee on the Budget rejected a motion 
instructing the chairman to ask the Committee on Rules to not 
again waive this three-fifths provision when H.R. 3507 is 
brought to the floor.
    The Republican majority is so eager to raise taxes on more 
than4 million people who have chosen work over welfare that it 
will deliberately ignore its own procedural rules.
                                                    Carrie P. Meek.

                                
