[House Report 107-466]
[From the U.S. Government Publishing Office]



107th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     107-466

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



 
  PROVIDING FOR CONSIDERATION OF H.R. 4737, PERSONAL RESPONSIBILITY, 
                 WORK, AND FAMILY PROMOTION ACT OF 2002

                                _______
                                

May 15, 2002.--Referred to the House Calendar and ordered to be printed

                                _______
                                

Ms. Pryce of Ohio, from the Committee on Rules, submitted the following

                              R E P O R T

                       [To accompany H. Res. 422]

    The Committee on Rules, having had under consideration 
House Resolution 422, by a record vote of 8 to 4, report the 
same to the House with the recommendation that the resolution 
be adopted.

                SUMMARY OF PROVISIONS OF THE RESOLUTION

    The resolution provides for the consideration of H.R. 4737, 
the Personal Responsibility, Work, and Family Promotion Act of 
2002, under a modified closed rule. The rule waives all points 
of order against consideration of the bill.
    The rule provides two hours of debate in the House, with 50 
minutes equally divided and controlled by the chairman and 
ranking minority member of the Committee on Ways and Means, 40 
minutes equally divided and controlled by the chairman and 
ranking minority member of the Committee on Education and the 
Workforce, and 30 minutes equally divided and controlled by the 
chairman and ranking minority member of the Committee on Energy 
and Commerce.
    The rule makes in order the amendment printed in this 
report, if offered by Representative Cardin of Maryland or his 
designee, which shall be considered as read, and shall be 
separately debatable for one hour equally divided and 
controlled by the proponent and an opponent. The rule waives 
all points of order against the amendment printed in the 
report.
    Finally, the rule provides one motion to recommit with or 
without instructions.

                            COMMITTEE VOTES

    Pursuant to clause 3(b) of House rule XIII the results of 
each record vote on an amendment or motion to report, together 
with the names of those voting for and against, are printed 
below:

Rules Committee record vote No. 94

    Date: May 15, 2002.
    Measure: H.R. 4737.
    Motion by: Mr. Frost.
    Summary of motion: To grant an open rule for H.R. 4737.
    Results: Defeated 4 to 8.
    Vote by Members: Linder--Nay; Pryce--Nay; Diaz-Balart--Nay; 
Hastings (WA)--Nay; Myrick--Nay; Sessions--Nay; Reynolds--Nay; 
Frost--Yea; Slaughter--Yea; McGovern--Yea; Hastings (FL)--Yea; 
Dreier--Nay.

Rules Committee record vote No. 95

    Date: May 15, 2002.
    Measure: H.R. 4737.
    Motion by: Mr. Frost.
    Summary of motion: To strike all after the resolved clause 
and insert: that upon the adoption of this resolution it shall 
be in order without intervention of any point of order to 
consider in the House the bill (H.R. 4737) to reauthorize and 
improve the program of block grants to States for temporary 
assistance for needy families, improve access to quality child 
care, and for other purposes. The bill shall be considered as 
read for amendment. The previous question shall be considered 
as ordered on the bill and on any amendment thereto to final 
passage without intervening motion except: (1) two hours of 
debate on the bill, with 50 minutes equally divided and 
controlled by the chairman and ranking minority member of the 
Committee on Ways and Means, 40 minutes equally divided and 
controlled by the chairman and ranking minority member of the 
Committee on Education and the Workforce, and 30 minutes 
equally divided and controlled by the chairman and ranking 
minority member of the Committee on Energy and Commerce. No 
amendment shall be in order except the amendment in the nature 
of a substitute printed in the report of the Committee on Rules 
accompanying this resolution, if offered by Representative 
Cardin of Maryland or his designee, which shall be in order 
without intervention of any point of order, shall be considered 
as read, and shall be separately debatable for one hour equally 
divided and controlled by the proponent and an opponent. After 
disposition of the amendment, the previous question shall be 
considered as ordered on the bill as it may have been amended 
to final passage without intervening motion except one motion 
to recommit with or without instructions.
    Results: Defeated 4 to 7.
    Vote by Members: Linder--Nay; Diaz-Balart--Nay; Hastings 
(WA)--Nay; Myrick--Nay; Sessions--Nay; Reynolds--Nay;Frost--
Yea; Slaughter--Yea; McGovern--Yea; Hastings (FL)--Yea; Dreier--Nay.

Rules Committee record vote No. 96

    Date: May 15, 2002.
    Measure: H.R. 4737.
    Motion by: Mr. Frost.
    Summary of motion: To make in order the amendment offered 
by Mr. Becerra, to remove the five-year ban in the Personal 
Responsibility and Work Opportunity Reconciliation Act of 1996 
that prevents states from using federal Temporary Assistance 
for Needy Families (TANF) funds to serve legal immigrants in 
the U.S. require that the sponsor's income be deemed in 
determining a legal immigrant's eligibility for TANF during the 
individuals first three years in the U.S.
    Results: Defeated 5 to 6.
    Vote by Members: Linder--Nay; Diaz-Balart--Yea; Hastings 
(WA)--Nay; Myrick--Nay; Sessions--Nay; Reynolds--Nay; Frost--
Yea; Slaughter--Yea; McGovern--Yea; Hastings (FL)--Yea; 
Dreier--Nay.

Rules Committee record vote No. 97

    Date: May 15, 2002.
    Measure: H.R. 4737.
    Motion by: Mr. Frost.
    Summary of motion: To make in order the amendment offered 
by Mrs. Clayton, to strike the food stamp program from the 
superwaiver and strike the proposed five state block grant of 
the food stamp program.
    Results: Defeated 4 to 7.
    Vote by Members: Linder--Nay; Diaz-Balart--Nay; Hastings 
(WA)--Nay; Myrick--Nay; Sessions--Nay; Reynolds--Nay; Frost--
Yea; Slaughter--Yea; McGovern--Yea; Hastings (FL)--Yea; 
Dreier--Nay.

Rules Committee record vote No. 98

    Date: May 15, 2002.
    Measure: H.R. 4737.
    Motion by: Mr. Frost.
    Summary of motion: To make in order the amendment offered 
by Mr. George Miller of California, to increase the funding for 
Child Care and Development Block Grant by $11.5 billion over 
the next 5 years. Increase the quality set-aside in CCDBG from 
4 percent to 12 percent and create an incentive grant program 
for states to increase their provider payment rates. Expand 
services to nearly one million more low-income working 
families.
    Results: Defeated 4 to 8.
    Vote by Members: Linder--Nay; Price--Nay; Diaz-Balart--Nay; 
Hastings (WA)--Nay; Myrick--Nay; Sessions--Nay; Reynolds--Nay; 
Frost--Yea; Slaughter--Yea; McGovern--Yea; Hastings (FL)--Yea; 
Dreier--Nay.

Rules Committee record vote No. 99

    Date: May 15, 2002.
    Measure: H.R. 4737.
    Motion by: Mrs. Slaughter.
    Summary of motion: To make in order the amendment offered 
by Mrs. Clayton, to require states, in submitting their state 
TANF plan to the Secretary of HHS, to document the steps that 
they will undertake to address TANF implementation in rural 
areas.
    Results: Defeated 4 to 8.
    Vote by Members: Linder--Nay; Pryce--Nay; Diaz-Balart--Nay; 
Hastings (WA)--Nay; Myrick--Nay; Sessions--Nay; Reynolds--Nay; 
Frost--Yea; Slaughter--Yea; McGovern--Yea; Hastings (FL)--Yea; 
Dreier--Nay.

Rules Committee record vote No. 100

    Date: May 15, 2002.
    Measure: H.R. 4737.
    Motion by: Mrs. Slaughter.
    Summary of motion: To make in order the amendment offered 
by Mr. Frank, to add to TANF the federal civil rights 
protections contained in Section 201(f) of the Charitable 
Choice provisions of H.R. 7 and a section disallowing the pre-
emption of state and local civil rights laws.
    Results: Defeated 4 to 8.
    Vote by Members: Linder--Nay; Pryce--Nay; Diaz-Balart--Nay; 
Hastings (WA)--Nay; Myrick--Nay; Sessions--Nay; Reynolds--Nay; 
Frost--Yea; Slaughter--Yea; McGovern--Yea; Hastings (FL)--Yea; 
Dreier--Nay.

Rules Committee record Vote No. 101

    Date: May 15, 2002.
    Measure: H.R. 4737.
    Motion by: Mr. McGovern.
    Summary of motion: To make in order the amendment offered 
by Mr. Frank and Mr. LaFalce, to strike references in title VII 
of H.R. 4700 to the United States Housing Act of 1937 and the 
McKinney-Vento Homelessness Act so that waiver authority for 
qualified programs granted under the bill would not apply to 
public housing or homelessness programs.
    Results: Defeated 4 to 8.
    Vote by Members: Linder--Nay; Pryce--Nay; Diaz-Balart--Nay; 
Hastings (WA)--Nay; Myrick--Nay; Sessions--Nay; Reynolds--Nay; 
Frost--Yea; Slaughter--Yea; McGovern--Yea; Hastings (FL)--Yea; 
Dreier--Nay.

Rules Committee record Vote No. 102

    Date: May 15, 2002.
    Measure: H.R. 4737.
    Motion by: Mr. McGovern.
    Summary of motion: To make in order the amendment offered 
by Mr. Holt, to authorize a longitudinal study of employment 
and earnings of TANF leavers. Require states to include 
disability status in the information they report about TANF 
families. Mandate an annual report to Congress that includes 
greater detail about state programs funded under TANF and the 
reasonsindividuals leave state TANF programs. Authorize a 
longitudinal study of applicants and recipients to determine the 
factors that contribute to positive employment and family outcomes.
    Results: Defeated 4 to 8.
    Vote by Members: Linder--Nay; Pryce--Nay; Diaz-Balart--Nay; 
Hastings (WA)--Nay; Myrick--Nay; Sessions--Nay; Reynolds--Nay; 
Frost--Yea; Slaughter--Yea; McGovern--Yea; Hastings (FL)--Yea; 
Dreier--Nay.

Rules Committee record vote No. 103

    Date: May 15, 2002.
    Measure: H.R. 4737.
    Motion by: Mr. McGovern.
    Summary of motion: To make in order en bloc, all of the 
amendments offered by Ms. Jackson-Lee.
    Results: Defeated 4 to 8.
    Vote by Members: Linder--Nay; Pryce--Nay; Diaz-Balart--Nay; 
Hastings (WA)--Nay; Myrick--Nay; Sessions--Nay; Reynolds--Nay; 
Frost--Yea; Slaughter--Yea; McGovern--Yea; Hastings (FL)--Yea; 
Dreier--Nay.

Rules Committee record vote No. 104

    Date: May 15, 2002.
    Measure: H.R. 4737.
    Motion by: Mr. McGovern.
    Summary of motion: To make in order the amendment offered 
by Mr. Kennedy of Rhode Island, to protect the integrity of the 
programs that participate in superwaiver projects under Title 
VII by requiring that the superwaiver actually be used to 
deliver coordinated services in rough proportion to the 
programs' contributions of funding, not to reprogram dollars to 
new purposes.
    Results: Defeated 4 to 8.
    Vote by Members: Linder--Nay; Pryce--Nay; Diaz-Balart--Nay; 
Hastings (WA)--Nay; Myrick--Nay; Sessions--Nay; Reynolds--Nay; 
Frost--Yea; Slaughter--Yea; McGovern--Yea; Hastings (FL)--Yea; 
Dreier--Nay.

Rules Committee record vote No. 105

    Date: May 15, 2002.
    Measure: H.R. 4737.
    Motion by: Mr. McGovern.
    Summary of motion: To make in order the amendment offered 
by Mr. Kildee, to strike the superwaiver and the food stamp 
block grant provisions in the bill (Title VII).
    Results: Defeated 4 to 8.
    Vote by Members: Linder--Nay; Pryce--Nay; Diaz-Balart--
Nay;Hastings (WA)--Nay; Myrick--Nay; Sessions--Nay; Reynolds--Nay; 
Frost--Yea; Slaughter--Yea; McGovern--Yea; Hastings (FL)--Yea; Dreier--
Nay.

Rules Committee record vote No. 106

    Date: May 15, 2002.
    Measure: H.R. 4737.
    Motion by: Mr. McGovern.
    Summary of motion: To make in order the amendment offered 
by Mr. Kind, to provide a state option to include non-custodial 
parents (fathers) who are paying current child support payments 
and are receiving only employment services in its worker 
participation rate.
    Results: Defeated 4 to 8.
    Vote by Members: Linder--Nay; Pryce--Nay; Diaz-Balart--Nay; 
Hastings (WA)--Nay; Myrick--Nay; Sessions--Nay; Reynolds--Nay; 
Frost--Yea; Slaughter--Yea; McGovern--Yea; Hastings (FL)--Yea; 
Dreier--Nay.

Rules Committee record vote No. 107

    Date: May 15, 2002.
    Measure: H.R. 4737.
    Motion by: Mr. McGovern.
    Summary of motion: To make in order the amendment offered 
by Ms. Lee, to provide $100 million per year to allow states to 
implement a comprehensive approach to sex education in the 
schools that includes information about both abstinence and 
contraception from both a values and public health perspective. 
The program would complement the three year abstinence-only-
until-marriage programs that receive federal funding, including 
one reauthorized in the bill. Includes education on both 
abstinence and contraception for the prevention of unwanted 
teen pregnancy and sexually transmitted infections, including 
HIV/AIDS.
    Results: Defeated 4 to 8.
    Vote by Members: Linder--Nay; Pryce--Nay; Diaz-Balart--Nay; 
Hastings (WA)--Nay; Myrick--Nay; Sessions--Nay; Reynolds--Nay; 
Frost--Yea; Slaughter--Yea; McGovern--Yea; Hastings (FL)--Yea; 
Dreier--Nay.

Rules Committee record vote no. 108

    Date: May 15, 2002.
    Measure: H.R. 4737.
    Motion by: Mr. McGovern.
    Summary of motion: To make in order the amendment offered 
by Mr. George Miller of California, to provide stronger 
protections against non-displacement of workers.
    Results: Defeated 4 to 8.
    Vote by Members: Linder--Nay; Pryce--Nay; Diaz-Balart--Nay; 
Hastings (WA)--Nay; Myrick--Nay; Sessions--Nay; Reynolds--Nay; 
Frost--Yea; Slaughter--Yea;McGovern--Yea; Hastings (FL)--Yea; 
Dreier--Nay.

Rules Committee record vote No. 109

    Date May 15, 2002.
    Measure: H.R. 4737.
    Motion by: Mr. McGovern.
    Summary of motion: To make in order the amendment offered 
by Ms. Mink, to provide for referral of the individual who has 
been subjected to domestic violence for services to address the 
violence and provides that if the work-eligible individual is 
unable to comply with the program requirements due to sexual or 
domestic violence, assistance to the individual and family 
shall not be reduced or terminated.
    Results: Defeated 4 to 8.
    Vote by Members: Linder--Nay; Pryce--Nay; Diaz-Balart--Nay; 
Hastings (WA)--Nay; Myrick--Nay; Sessions--Nay; Reynolds--Nay; 
Frost--Yea; Slaughter--Yea; McGovern--Yea; Hastings (FL)--Yea; 
Dreier--Nay.

Rules Committee record vote No. 110

    Date: May 15, 2002.
    Measure: H.R. 4737.
    Motion by: Mr. Hastings of Florida.
    Summary of motion: To make in order the amendment offered 
by Mr. Payne, to provide that grandparents not be required to 
adhere to traditional work requirements that are proposed in 
the reauthorization of TANF.
    Results: Defeated 4 to 8.
    Vote by Members: Linder--Nay; Pryce--Nay; Diaz-Balart--Nay; 
Hastings (WA)--Nay; Myrick--Nay; Sessions--Nay; Reynolds--Nay; 
Frost--Yea; Slaughter--Yea; McGovern--Yea; Hastings (FL)--Yea; 
Dreier--Nay.

Rules Committee record vote No. 111

    Date: May 15, 2002.
    Measure: H.R. 4737.
    Motion by: Mr. Hastings of Florida.
    Summary of motion: To make in order the amendment offered 
by Ms. Solis, to allow states to have the option of exempting 
parents caring for a child who is either under the age of 
three, disabled, or seriously ill from the direct work 
requirements of TANF.
    Results: Defeated 4 to 8.
    Vote by Members: Linder--Nay; Pryce--Nay; Diaz-Balart--Nay; 
Hastings (WA)--Nay; Myrick--Nay; Sessions--Nay; Reynolds--Nay; 
Frost--Yea; Slaughter--Yea; McGovern--Yea; Hastings (FL)--Yea; 
Dreier--Nay.

Rules Committee record vote No. 112

    Date: May 15, 2002.
    Measure: H.R. 4737.
    Motion by: Mr. Hastings of Florida.
    Summary of motion: To make in order the amendment offered 
by Mr. Wu, to exempt, on a state determined case-by-case basis, 
individuals from the TANF requirements for up to one year if 
they do not have a high school diploma or equivalency, or are 
illiterate, or do not speak proficient English. To exempt such 
TANF recipients from 24-hour work requirement, states must 
require such individuals to be enrolled in a basic education 
program designed to rectify their education deficiencies and to 
participate in a combined 40 hours of activity per week 
consistent with the goals of the TANF program.
    Results: Defeated 4 to 8.
    Vote by Members: Linder--Nay; Pryce--Nay; Diaz-Balart--Nay; 
Hastings (WA)--Nay; Myrick--Nay; Sessions--Nay; Reynolds--Nay; 
Frost--Yea; Slaughter--Yea; McGovern--Yea; Hastings (FL)--Yea; 
Dreier--Nay.

Rules Committee record vote No. 113

    Date: May 15, 2002.
    Measure: H.R. 4737.
    Motion by: Mr. Hastings of Florida.
    Summary of motion: To make in order the amendment offered 
by Mr. Scott, to amend the Charitable Choice provision in the 
TANF statute (Section 103) regarding religious organizations 
operating publicly funded programs from discriminating against 
employees (whose salaries are paid with public funds) based on 
religion. The amendment makes a reasonable exception for 
employees who were employed with the religious organization 
prior to the awarding of the contract.
    Results: Defeated 4 to 8.
    Vote by Members: Linder--Nay; Pryce--Nay; Diaz-Balart--Nay; 
Hastings (WA)--Nay; Myrick--Nay; Sessions--Nay; Reynolds--Nay; 
Frost--Yea; Slaughter--Yea; McGovern--Yea; Hastings (FL)--Yea; 
Dreier--Nay.

Rules Committee record vote No. 114

    Date: May 15, 2002.
    Measure: H.R. 4737.
    Motion by: Mr. Hastings of Florida.
    Summary of motion: To make in order the amendment offered 
by Ms. Solis, to require states to collect and report 
demographic data (including race, gender, educational, level, 
and primary language) on welfare recipients, individuals 
diverted from welfare and families leaving welfare. Require 
states to describe in their state plans how they will comply 
with civil rights and nondiscrimination laws and how they will 
train caseworkers to work with diverse clientele. Require the 
Secretary of Health and Human Services to carry out a 
longitudinal study of TANF applicants and recipients to 
determine the factors that contribute to finding good jobs.
    Results: Defeated 4 to 7.
    Vote by Members: Linder--Nay; Diaz-Balart--Nay; Hastings 
(WA)--Nay; Myrick--Nay; Sessions--Nay; Reynolds--Nay; Frost--
Yea; Slaughter--Yea; McGovern--Yea; Hastings (FL)--Yea; 
Dreier--Nay.

Rules Committee record vote No. 115

    Date: May 15, 2002.
    Measure: H.R. 4737.
    Motion by: Mr. Hastings of Florida.
    Summary of motion: To make in order the amendment offered 
by Ms. Tauscher, to provide states with an incentive to 
exercise their option to increase the hours of participation 
per week of their welfare participants. States that choose to 
exercise this option would be entitled to increase child care 
funding as follows: if a state's caseload reaches 35 hours per 
week, the state's child care funding would be increased by 10 
percent and if a state's caseload reaches 40 hours per week, 
the state's child care funding would be increased by 25 
percent.
    Results: Defeated 4 to 7.
    Vote by Members: Linder--Nay; Diaz-Balart--Nay; Hastings 
(WA)--Nay; Myrick--Nay; Sessions--Nay; Reynolds--Nay; Frost--
Yea; Slaughter--Yea; McGovern--Yea; Hastings (FL)--Yea; 
Dreier--Nay.

Rules Committee record vote No. 116

    Date: May 15 2002.
    Measure: H.R. 4737.
    Motion by: Mr. Hastings of Florida.
    Summary of motion: To make in order the amendment offered 
by Ms. Woolsey, to add ``the placement of women in 
nontraditional occupations'' to the list of activities that can 
be counted towards the Bonus to Reward Employment Achievement. 
Limits the use of the Bonus money to the same activities than 
can be counted towards the Bonus. States which receive funds 
from the Bonus to Reward Employment Achievement can only use 
such funds for employment entry, job retention, increased 
earnings and placement of women in nontraditional occupations.
    Results: Defeated 4 to 8.
    Vote by Members: Linder--Nay; Pryce--Nay; Diaz-Balart--Nay; 
Hastings (WA)--Nay; Myrick--Nay; Sessions--Nay; Reynolds--Nay; 
Frost--Yea; Slaughter--Yea; McGovern--Yea; Hastings (FL)--Yea; 
Dreier--Nay.

Rules Committee record vote No. 117

    Date: May 15, 2002.
    Measure: H.R. 4737.
    Motion by: Mr. Hastings of Florida.
    Summary of motion: To make in order the amendment offered 
by Ms. Woolsey, to require each state under the self-
sufficiency standard to: calculate and describe a self-
sufficiency standard, include in each family's self-sufficiency 
plan an assessment of what services the family needs, such as 
education and training, child care, transportation, etc. to 
move that family to achieve the self-sufficiency standard, 
refer the family to those services; requires states to submit 
an annual report to the Secretary of HHS showing the ways the 
state has used its TANF funds to move families toward self-
sufficiency, the total family income for families which left 
welfare that year, and the public benefits received by families 
that left welfare that year.
    Results: Defeated 4 to 8.
    Vote by Members: Linder--Nay; Pryce--Nay; Diaz-Balart--Nay; 
Hastings (WA)--Nay; Myrick--Nay; Sessions--Nay; Reynolds--Nay; 
Frost--Yea; Slaughter--Yea; McGovern--Yea; Hastings (FL)--Yea; 
Dreier--Nay.

Rules Committee record vote No. 118

    Date: May 15, 2002.
    Measure: H.R. 4737.
    Motion by: Mr. Hastings of Florida.
    Summary of motion: To make in order the amendment offered 
by Mr. Wu, to extending existing state federal welfare waivers 
for the duration of the TANF authorization (through 2007).
    Results: Defeated 4 to 8.
    Vote by Members: Linder--Nay; Pryce--Nay; Diaz-Balart--Nay; 
Hastings (WA)--Nay; Myrick--Nay; Sessions--Nay; Reynolds--Nay; 
Frost--Yea; Slaughter--Yea; McGovern--Yea; Hastings (FL)--Yea; 
Dreier--Nay.

Rules Committee record vote No. 119

    Date: May 15, 2002.
    Measure: H.R. 4737.
    Motion by: Ms. Pryce.
    Summary of motion: To report the resolution.
    Results: Passed 8 to 4.
    Vote by Members: Linder--Yea; Pryce--Yea; Diaz-Balart--Yea; 
Hastings (WA)--Yea; Myrick--Yea; Sessions--Yea; Reynolds--Yea; 
Frost--Nay; Slaughter--Nay; McGovern--Nay; Hastings (FL)--Nay; 
Dreier--Yea.

                 SUMMARY OF THE AMENDMENT MADE IN ORDER

    Cardin--Democratic Substitute. Expands state flexibility to 
provide training and education to welfare recipients (such 
activities would count for up to 24 months against a state's 
participation requirement). Increases to 70 percent the number 
of welfare recipients that are required to be engaged in work-
related activities. Provides states with an employment credit 
that would reduce a state's participation requirement according 
to the number of welfare recipients that have left welfare for 
work over the last six months. Maintains the current-law 
requirement on total participation hours (30 per week with a 
State option to go higher) with a requirement that 24 hours be 
in certain activities. Maintain the current 20-hour requirement 
for mother with young children. Maintains the current five-year 
time limit on TANF benefits. Increases mandatory funding for 
child care by $11 billion over the next five years and increase 
TANF for inflation. Removes various barriers to serving legal 
immigrants, including the current ban on states providing 
Federally-funded TANF benefits to immigrant families. Includes 
reducing poverty and increasing self-sufficiency as a new 
purpose of the TANF program and provide financial bonuses to 
states reducing child poverty.

                  TEXT ON THE AMENDMENT MADE IN ORDER

  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Next Step in Reforming Welfare 
Act''.

SEC. 2. TABLE OF CONTENTS.

  The table of contents of this Act is as follows:

Sec. 1. Short title.
Sec. 2. Table of contents.
Sec. 3. Amendment of Social Security Act.

                 TITLE I--CONTINUATION OF CERTAIN GRANTS

Sec. 101. Family assistance grants.
Sec. 102. Bonus to reward high performance States.
Sec. 103. Extension of supplemental grants.
Sec. 104. Additional grants for States with low Federal funding per poor 
          child.
Sec. 105. Contingency Fund.
Sec. 106. Eligibility of Puerto Rico, the United States Virgin Islands, 
          and Guam for the supplemental grant for population increases, 
          the Contingency Fund, and mandatory child care funding.
Sec. 107. Direct funding and administration by Indian tribes.

                       TITLE II--POVERTY REDUCTION

Sec. 201. Additional purpose of TANF program.
Sec. 202. Child poverty reduction grants.
Sec. 203. Review and conciliation process.
Sec. 204. Replacement of caseload reduction credit with employment 
          credit.
Sec. 205. States to receive partial credit toward work participation 
          rate for recipients engaged in part-time work.
Sec. 206. TANF recipients who qualify for supplemental security income 
          benefits removed from work participation rate calculation for 
          entire year.
Sec. 207. State option to include recipients of substantial child care 
          or transportation assistance in work participation rate.
Sec. 208. Effective date.

                 TITLE III--REQUIRING AND REWARDING WORK

Sec. 301. Effect of wage subsidies on 5-year limit.
Sec. 302. Child care.
Sec. 303. Competitive grants to improve access to various benefit 
          programs.
Sec. 304. Assessments for TANF recipients.
Sec. 305. Applicability of workplace laws.
Sec. 306. Work participation requirements.
Sec. 307. Hours of work-related activities.
Sec. 308. State option to require receipients to engage in work for 40 
          hours per week.
Sec. 309. Revision and simplification of the transitional medical 
          assistance program (tma).
Sec. 310. Ensuring TANF funds are not used to displace public employees.

      TITLE IV--HELPING WELFARE LEAVERS CLIMB THE EMPLOYMENT LADDER

Sec. 401. State plan requirement on employment advancement.
Sec. 402. Employment Advancement Fund.
Sec. 403. Elimination of limit on number of TANF recipients enrolled in 
          vocational education or high school who may be counted towards 
          the work participation requirement.
Sec. 404. Counting of up to 2 years of vocational or educational 
          training (including postsecondary education), work-study, and 
          related internships as work activities.
Sec. 405. Limited counting of certain activities leading to employment 
          as work activity.
Sec. 406. Clarification of authority of States to use TANF funds carried 
          over from prior years to provide TANF benefits and services.
Sec. 407. Definition of assistance.

      TITLE V--PROMOTING FAMILY FORMATION AND RESPONSIBLE PARENTING

Sec. 501. Family Formation Fund.
Sec. 502. Distribution of child support collected by States on behalf of 
          children receiving certain welfare benefits.
Sec. 503. Elimination of separate work participation rate for 2-parent 
          families.
Sec. 504. Ban on imposition of stricter eligibility criteria for 2-
          parent families; State opt-out.
Sec. 505. Extension of abstinence education funding under maternal and 
          child health program.

           TITLE VI--RESTORING FAIRNESS FOR IMMIGRANT FAMILIES

Sec. 601. Treatment of aliens under the TANF program.
Sec. 602. Optional coverage of legal immigrants under the medicaid 
          program and SCHIP.
Sec. 603. Eligibility of disabled children who are qualified aliens for 
          SSI.

                TITLE VII--ENSURING STATE ACCOUNTABILITY

Sec. 701. Inflation adjustment of maintenance-of-effort requirement.
Sec. 702. Ban on using Federal TANF funds to replace State and local 
          spending that does not meet the definition of qualified State 
          expenditures.

  TITLE VIII--IMPROVING INFORMATION ABOUT TANF RECIPIENTS AND PROGRAMS

Sec. 801. Extension of funding of studies and demonstrations.
Sec. 802. Longitudinal studies of employment and earnings of TANF 
          leavers.
Sec. 803. Inclusion of disability status in information States report 
          about TANF families.
Sec. 804. Annual report to the Congress to include greater detail about 
          State programs funded under TANF.
Sec. 805. Enhancement of understanding of the reasons individuals leave 
          State TANF programs.
Sec. 806. Standardized State plans.
Sec. 807. Study by the Census Bureau.
Sec. 808. Access to welfare; welfare outcomes.

                        TITLE IX--EFFECTIVE DATE

Sec. 901. Effective date.

SEC. 3. AMENDMENT OF SOCIAL SECURITY ACT.

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

                TITLE I--CONTINUATION OF CERTAIN GRANTS

SEC. 101. FAMILY ASSISTANCE GRANTS.

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

SEC. 102. BONUS TO REWARD HIGH PERFORMANCE STATES.

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

SEC. 103. EXTENSION OF SUPPLEMENTAL GRANTS.

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

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

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

SEC. 105. CONTINGENCY FUND.

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

SEC. 106. ELIGIBILITY OF PUERTO RICO, THE UNITED STATES VIRGIN ISLANDS, 
                    AND GUAM FOR THE SUPPLEMENTAL GRANT FOR POPULATION 
                    INCREASES, THE CONTINGENCY FUND, AND MANDATORY 
                    CHILD CARE FUNDING.

  (a) Supplemental grant for population increases.--
          (1) In general.--Section 403(a)(3)(D)(iii) (42 U.S.C. 
        603(a)(3)(D)(iii)) is amended by striking ``and the 
        District of Columbia.'' and inserting ``, the District 
        of Columbia, Puerto Rico, the United States Virgin 
        Islands, and Guam. For fiscal years beginning after the 
        effective date of this sentence, this paragraph shall 
        be applied and administered as if the term `State' 
        included the Commonwealth of Puerto Rico, the United 
        States Virgin Islands, and Guam for fiscal year 1998 
        and thereafter.''.
          (2) Grant payment disregarded for purposes of section 
        1108 limitation.--Section 1108(a)(2) (42 U.S.C. 
        1308(a)(2)) is amended by inserting ``, or any payment 
        made to the Commonwealth of Puerto Rico, the United 
        States Virgin Islands, or Guam under section 
        403(a)(3)'' before the period.
  (b) Contingency Fund.--
          (1) In general.--Section 403(b)(7) (42 U.S.C. 
        603(b)(7)) is amended by striking ``and the District of 
        Columbia'' and inserting ``, the District of Columbia, 
        the Commonwealth of Puerto Rico, the United States 
        Virgin Islands, and Guam.''.
          (2) Grant payment disregarded for purposes of section 
        1108 limitation.--Section 1108(a)(2) (42 U.S.C. 
        1308(a)(2)), as amended by subsection (a)(2) of this 
        section, is amended by inserting ``or 403(b)'' after 
        ``403(a)(3)'' before the period.
  (c) Child Care Entitlement Funds.--
          (1) In general.--Section 418(d) (42 U.S.C. 618(d)) is 
        amended by striking ``and the District of Columbia'' 
        and inserting ``, the District of Columbia, the 
        Commonwealth of Puerto Rico, the United States Virgin 
        Islands, and Guam''.
          (2) Amount of payment.--
                  (A) General entitlement.--Section 418(a)(1) 
                (42 U.S.C. 618(a)(1)) is amended by striking 
                ``the greater of--'' and all that follows and 
                inserting the following:
                  ``(A) in the case of the Commonwealth of 
                Puerto Rico, the United States Virgin Islands, 
                and Guam, 60 percent of the amount required to 
                be paid to the State for fiscal year 2001 under 
                the Child Care and Development Block Grant Act 
                of 1990; or
                  ``(B) in the case of any other State, the 
                greater of--
                          ``(i) 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 expenditures 
                        for child care under subsections (g) 
                        and (i) of section 402 (as in effect 
                        before October 1, 1995); or
                          ``(ii) the average of the total 
                        amounts required to be paid to the 
                        State for fiscal years 1992 through 
                        1994 under the subsections referred to 
                        in clause (i).'';
                  (B) Allotment of remainder.--Section 
                418(a)(2)(B) (42 U.S.C. 618(a)(2)(B)) is 
                amended to read as follows:
                  ``(B) Allotments to states.--Of the total 
                amount available for payments to States under 
                this paragraph, as determined under 
                subparagraph (A) of this paragraph--
                          ``(i) an amount equal to 65 percent 
                        of the amount required to be paid to 
                        each of the Commonwealth of Puerto 
                        Rico, the United States Virgin Islands, 
                        and Guam for fiscal year 2001 under the 
                        Child Care and Development Block Grant 
                        Act of 1990, shall be allotted to the 
                        Commonwealth of Puerto Rico, the United 
                        States Virgin Islands, and Guam, 
                        respectively; and
                          ``(ii) the remainder shall be 
                        allotted among the other States based 
                        on the formula used for determining the 
                        amount of Federal payments to each 
                        State under section 403(n) of this Act 
                        (as in effect before October 1, 
                        1995).''.
          (3) Grant payment disregarded for purposes of section 
        1108 limitation.--Section 1108(a)(2) (42 U.S.C. 
        1308(a)(2)), as amended by subsections (a)(2) and 
        (b)(2) of this section, is amended by striking ``or 
        403(b)'' and inserting ``, 403(b), or 418''.
  (d) Effective Date.--The amendments made by this section 
shall take effect on October 1, 2002, and shall apply to 
expenditures for fiscal years beginning with fiscal year 2003.

SEC. 107. DIRECT FUNDING AND ADMINISTRATION BY INDIAN TRIBES.

  (a) Tribal Family Assistance Grant.--Section 412(a)(1) (42 
U.S.C. 612(a)(1)) is amended by striking ``1997, 1998, 1999, 
2000, and 2001'' and inserting ``2003 through 2007''.
  (b) Grants for Indian Tribes That Received JOBS Funds.--
Section 412(a)(2) (42 U.S.C. 612(a)(2)) is amended by striking 
``1997, 1998, 1999, 2000, and 2001'' and inserting ``2003 
through 2007''.

                      TITLE II--POVERTY REDUCTION

SEC. 201. ADDITIONAL PURPOSE OF TANF PROGRAM.

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

SEC. 202. CHILD POVERTY REDUCTION GRANTS.

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

SEC. 203. REVIEW AND CONCILIATION PROCESS.

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

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

  (a) Employment Credit To Reward States in Which Families 
Leave Welfare for Work; Additional Credit for Families With 
Higher Earnings.--
          (1) In general.--Section 407(a) (42 U.S.C. 607(a)), 
        as amended by section 503 of this Act, is amended by 
        adding at the end the following:
          ``(2) Employment credit.--
                  ``(A) In general.--The minimum participation 
                rate otherwise applicable to a State under this 
                subsection for a fiscal year shall be reduced 
                by the number of percentage points in the 
                employment credit for the State for the fiscal 
                year, as determined by the Secretary--
                          ``(i) using information in the 
                        National Directory of New Hires, or
                          ``(ii) with respect to a recipient of 
                        assistance under the State program 
                        funded under this part who is placed 
                        with an employer whose hiring 
                        information is not reported to the 
                        National Directory of New Hires, using 
                        quarterly wage information submitted by 
                        the State to the Secretary not later 
                        than such date as the Secretary shall 
                        prescribe in regulations.
                  ``(B) Calculation of credit.--
                          ``(i) In general.--The employment 
                        credit for a State for a fiscal year is 
                        an amount equal to--
                                  ``(I) twice the average 
                                quarterly number of families 
                                that ceased to receive cash 
                                payments under the State 
                                program funded under this part 
                                during the most recent 4 
                                quarters for which data is 
                                available and that were 
                                employed during the calendar 
                                quarter immediately succeeding 
                                the quarter in which the 
                                payments ceased, plus, at State 
                                option, the number of families 
                                that received a non-recurring 
                                short-term benefit under the 
                                State program funded under this 
                                part during the preceding 
                                fiscal year and that were 
                                employed in during the calendar 
                                quarter immediately succeeding 
                                the quarter in which the non-
                                recurring short-term benefit 
                                was so received; divided by
                                  ``(II) the average monthly 
                                number of families that include 
                                an adult who received cash 
                                payments under the State 
                                program funded under this part 
                                during the preceding fiscal 
                                year, plus, if the State 
                                elected the option under 
                                subclause (I), the number of 
                                families that received a non-
                                recurring short-term benefit 
                                under the State program funded 
                                under this part during the 
                                preceding fiscal year.
                          ``(ii) Special rule for former 
                        recipients with higher earnings.--In 
                        calculating the employment credit for a 
                        State for a fiscal year, a family that, 
                        during the preceding fiscal year, 
                        earned at least 33 percent of the 
                        average wage in the State (determined 
                        on the basis of State unemployment 
                        data) shall be considered to be 1.5 
                        families.
                  ``(C) Publication of amount of credit.--Not 
                later than August 30 of each fiscal year, the 
                Secretary shall cause to be published in the 
                Federal Register the amount of the employment 
                credit that will be used in determining the 
                minimum participation rate applicable to a 
                State under this subsection for the immediately 
                succeeding fiscal year.''.
          (2) Authority of secretary to use information in 
        national directory of new hires.--Section 453(i) (42 
        U.S.C. 653(i)) is amended by adding at the end the 
        following:
          ``(5) Calculation of employment credit for purposes 
        of determining state work participation rates under 
        tanf.--The Secretary may use the information in the 
        National Directory of New Hires for purposes of 
        calculating State employment credits pursuant to 
        section 407(a)(2).''.
  (b) Elimination of Caseload Reduction Credit.--Section 407(b) 
(42 U.S.C. 607(b)) is amended by striking paragraph (3) and 
redesignating paragraphs (4) and (5) as paragraphs (3) and (4), 
respectively.

SEC. 205. STATES TO RECEIVE PARTIAL CREDIT TOWARD WORK PARTICIPATION 
                    RATE FOR RECIPIENTS ENGAGED IN PART-TIME WORK.

  Section 407(c)(1)(A) (42 U.S.C. 607(c)(1)(A)), as amended by 
section 307 of this Act, is amended by adding at the end the 
following flush sentence:
                ``For purposes of subsection (b)(1)(B)(i), a 
                family that does not include a recipient who is 
                participating in work activities for an average 
                of 30 hours per week during a month but 
                includes a recipient who is participating in 
                such activities during the month for an average 
                of at least 50 percent of the minimum average 
                number of hours per week specified for the 
                month in the table set forth in this 
                subparagraph shall be counted as a percentage 
                of a family that includes an adult or minor 
                child head of household who is engaged in work 
                for the month, which percentage shall be the 
                number of hours for which the recipient 
                participated in such activities during the 
                month divided by the number of hours of such 
                participation required of the recipient under 
                this section for the month.''.

SEC. 206. TANF RECIPIENTS WHO QUALIFY FOR SUPPLEMENTAL SECURITY INCOME 
                    BENEFITS REMOVED FROM WORK PARTICIPATION RATE 
                    CALCULATION FOR ENTIRE YEAR.

  Section 407(b)(1)(B)(ii) (42 U.S.C. 607(b)(1)(B)(ii)) is 
amended--
          (1) in subclause (I), by inserting ``who has not 
        become eligible for supplemental security income 
        benefits under title XVI during the fiscal year'' 
        before the semicolon; and
          (2) in subclause (II), by inserting ``, and that do 
        not include an adult or minor child head of household 
        who has become eligible for supplemental security 
        income benefits under title XVI during the fiscal 
        year'' before the period.

SEC. 207. STATE OPTION TO INCLUDE RECIPIENTS OF SUBSTANTIAL CHILD CARE 
                    OR TRANSPORTATION ASSISTANCE IN WORK PARTICIPATION 
                    RATE.

  (a) In General.--Section 407(a)(1) (42 U.S.C. 607(a)), as 
amended by sections 503 and 306 of this Act, is amended by 
inserting ``(including, at the option of the State, a family 
that includes an adult who is receiving substantial child care 
or transportation benefits, as defined by the Secretary, in 
consultation with directors of State programs funded under this 
part, which definition shall specify for each type of benefits 
a threshold which is a dollar value or a length of time over 
which the benefits are received, and take account of large one-
time transition payments, except any family taken into account 
under paragraph (2)(B)(i)(I))'' before the colon.
  (b) State Option.--Section 407(b)(1)(B)(i) (42 U.S.C. 
607(b)(1)(B)(i)) is amended--
          (1) in clause (i), by inserting ``plus, at the option 
        of the State, the number of families that include an 
        adult who is receiving substantial child care or 
        transportation benefits, as determined under section 
        407(a)(1)'' before the semicolon.
          (2) in subclause (ii)(I), by inserting ``including, 
        if the State has elected to include families with an 
        adult who is receiving substantial child care or 
        transportation benefits under clause (i), the number of 
        such families'' before the semicolon.
  (c) Data Collection and Reporting.--Section 411(a)(1)(A) of 
such Act (42 U.S.C. 611(a)(1)(A)) is amended in the matter 
preceding clause (i) by inserting ``(including any family with 
respect to whom the State has exercised its option under 
section 407(a)(1))'' after ``assistance''.

SEC. 208. EFFECTIVE DATE.

  (a) In General.--Except as provided in subsection (b), the 
amendments made by sections 204 through 207 shall take effect 
on October 1, 2003.
  (b) State Option To Phase-in Replacement of Caseload 
Reduction Credit With Employment Credit and Delay Applicability 
of Other Provisions.--A State may elect to have the amendments 
made by sections 204(b) and 205 through 207 of this Act not 
apply to the State program funded under part A of title IV of 
the Social Security Act until October 1, 2004, and if the State 
makes the election, then, in determining the participation rate 
of the State for purposes of sections 407 and 409(a)(3) of the 
Social Security Act for fiscal year 2004, the State shall be 
credited with \1/2\ of the reduction in the rate that would 
otherwise result from applying section 407(a)(2) of the Social 
Security Act (as added by section 204(a)(1) of this Act) to the 
State for fiscal year 2004 and \1/2\ of the reduction in the 
rate that would otherwise result from applying such section 
407(b)(2) to the State for fiscal year 2004.

                TITLE III--REQUIRING AND REWARDING WORK

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

  Section 408(a)(7) (42 U.S.C. 608(a)(7)) is amended by adding 
at the end the following:
                  ``(H) Limitation on meaning of `assistance' 
                for families with income from employment.--For 
                purposes of this paragraph, at the option of 
                the State, a benefit or service provided to a 
                family during a month under the State program 
                funded under this part shall not be considered 
                assistance under the program if--
                          ``(i) during the month, the family 
                        includes an adult or a minor child head 
                        of household who has received at least 
                        such amount of income from employment 
                        as the State may establish; and
                          ``(ii) the average weekly earned 
                        income of the family for the month is 
                        at least $100.''.

SEC. 302. CHILD CARE.

  (a) Increase in Entitlement Funding.--Section 418(a)(3) (42 
U.S.C. 618(a)(3)) is amended--
          (1) by striking ``and'' at the end of subparagraph 
        (E);
          (2) by striking the period at the end of subparagraph 
        (F) and inserting a semicolon; and
          (3) by adding at the end the following:
                  ``(G) $3,967,000,000 for fiscal year 2003;
                  ``(H) $4,467,000,000 for fiscal year 2004;
                  ``(I) $4,967,000,000 for fiscal year 2005;
                  ``(J) $5,467,000,000 for fiscal year 2006; 
                and
                  ``(K) $5,967,000,000 for fiscal year 2007.''.
  (b) Amendments to the Child Care and Development Block Grant 
Act of 1990.--
          (1) Authorization of appropriations.--Section 658B of 
        the Child Care and Development Block Grant Act of 1990 
        (42 U.S.C. 9858) is amended to read as follows:

``SEC. 658B. AUTHORIZATION OF APPROPRIATIONS; AMOUNTS AVAILABLE FOR 
                    INCENTIVE GRANTS TO IMPROVE QUALITY OF CHILD CARE 
                    SERVICES.

  ``(a) Authorization of Appropriations.--There are authorized 
to be appropriated to carry out this subchapter $2,350,000,000 
for fiscal year 2003 and such sums as may be necessary for 
fiscal years 2004 through 2007.
  ``(b) Amounts Available for Incentive Grants To Improve 
Quality of Child Care Services.--Of the amount made available 
to carry out this subchapter, $500,000,000 shall be used for 
each of the fiscal years 2003 through 2007 to make grants under 
section 658H.''.
          (2) State plan requirements.--Section 658E(c)(2) of 
        the Child Care and Development Block Grant Act of 1990 
        (42 U.S.C. 9858c(c)(2)) is amended--
                  (A) in subparagraph (A)--
                          (i) in clause (ii) by striking 
                        ``and'' at the end;
                          (ii) in clause (iii) by adding 
                        ``and'' at the end; and
                          (iii) by inserting after clause (iii) 
                        the following:
                          ``(iv) in order to help ensure that 
                        parents have the freedom to choose 
                        quality center-based child care 
                        services, the State shall make 
                        significant effort to develop contracts 
                        with accredited child care providers in 
                        low-income and rural communities;'';
                  (B) 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, and describe how the State will 
                inform parents 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 other low-income parents about 
                eligibility for assistance under this 
                subchapter.'';
                  (C) by amending subparagraph (H) to read as 
                follows:
                  ``(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, 
                families with children with disabilities and 
                other special needs, low-income families not 
                receiving cash assistance under a State program 
                under part A of title IV of the Social Security 
                Act, and families that are at risk of becoming 
                dependent on such assistance.''; and
                  (D) by adding at the end the following:
                  ``(I) Availability of staff.--Describe how 
                the State will ensure that staff from the lead 
                agency described in section 658D will be 
                available, at the offices of the State program 
                funded under part A of title IV of the Social 
                Security Act, to provide information about 
                eligibility for assistance under this 
                subchapter and to assist individuals in 
                applying for such assistance.
                  ``(J) Eligibility redetermination.--
                Demonstrate that each child that receives 
                assistance under this subchapter in the State 
                will receive such assistance for not less than 
                1 year before the State redetermines the 
                eligibility of the child under this subchapter.
                  ``(K) Supplement not supplant.--Provide 
                assurances that the amounts paid to a State 
                under this subchapter shall be used to 
                supplement and not supplant other State or 
                local funds expended or otherwise available to 
                support payments for child care assistance and 
                to increase the quality of available child care 
                for eligible families under this subchapter.''.
          (3) Payment rates.--Section 658E(c)(4)(A) of the 
        Child Care and Development Block Grant Act of 1990 (42 
        U.S.C. 9858c(c)(4)(A)) is amended--
                  (A) by striking ``such access'' and inserting 
                ``equal access to comparable quality and types 
                of services''; and
                  (B) by adding at the end the following:
                          ``(i) Market rate surveys (that 
                        reflect variations in the cost of child 
                        care services by locality) shall be 
                        conducted by the State not less often 
                        than at 2-year intervals, and the 
                        results of such surveys shall be used 
                        to implement payment rates that ensure 
                        equal access to comparable services as 
                        required by this subparagraph.
                          ``(ii) Payment rates shall be 
                        adjusted at intervals between such 
                        surveys to reflect increases in the 
                        cost of living, in such manner as the 
                        Secretary may specify.
                          ``(iii) Payment rates shall reflect 
                        variations in the cost of providing 
                        child care services for children of 
                        different ages and providing different 
                        types of care.''.
          (4) Child care accountability improvements.--Section 
        658G of the Child Care and Development Block Grant Act 
        of 1990 (42 U.S.C. 9858e) is amended to read as 
        follows:

``SEC. 658G. CHILD CARE ACCOUNTABILITY IMPROVEMENTS.

  ``(a) Activities To Improve the Quality of Child Care.--A 
State that receives funds to carry out this subchapter shall 
reserve and use not less than 12 percent of the funds for 
improvements in the quality of child care services provided in 
the State and in political subdivisions of the State.
          ``(1) Not less than 35 percent of the funds reserved 
        under this subsection shall be used for activities that 
        are designed to increase the quality and supply of 
        child care services for children from birth through 3 
        years of age.
          ``(2) Funds reserved under this subsection shall be 
        used for 1 or more activities consisting of--
                  ``(A) providing for the development, 
                establishment, expansion, operation, and 
                coordination of, child care resource and 
                referral services;
                  ``(B) making grants or providing loans to 
                eligible child care providers to assist the 
                providers in meeting applicable State and local 
                child care standards and recognized 
                accreditation standards;
                  ``(C) improving the ability of State or local 
                government, as applicable, to monitor 
                compliance with, and to enforce, State and 
                local licensing and regulatory requirements 
                (including registration requirements) 
                applicable to child care providers;
                  ``(D) providing training and technical 
                assistance in areas relating to the provision 
                of child care services, such as training 
                relating to promotion of health and safety, 
                promotion of good nutrition, provision of first 
                aid, recognition of communicable diseases, 
                child abuse detection and prevention, and care 
                of children with disabilities and other special 
                needs;
                  ``(E) improving salaries and other 
                compensation paid to full-time and part-time 
                staff who provide child care services for which 
                assistance is made available under this 
                subchapter;
                  ``(F) making grants or providing financial 
                assistance to eligible child care providers for 
                training in child development and early 
                education;
                  ``(G) making grants or providing financial 
                assistance to eligible child care providers to 
                support delivery of early education and child 
                development activities;
                  ``(H) making grants or providing financial 
                assistance to eligible child care providers to 
                make minor renovations to such providers' 
                physical environments that enhance the quality 
                of the child care services they provide;
                  ``(I) improving and expanding the supply of 
                child care services for children with 
                disabilities and other special needs;
                  ``(J) increasing the supply of high quality 
                inclusive child care for children with and 
                without disabilities and other special needs;
                  ``(K) supporting the system described in 
                paragraph (2);
                  ``(L) providing technical assistance to 
                family child care providers and center-based 
                child care providers to enable them to provide 
                appropriate child care services for children 
                with disabilities; and
                  ``(M) other activities that can be 
                demonstrated to increase the quality of child 
                care services and parental choice.''.
  ``(b) Child Care Resource and Referral System.--The State 
shall use a portion of the funds reserved under subsection (a) 
to support a system of local child care resource and referral 
organizations coordinated by a statewide, nonprofit, community-
based child care resource and referral organization. The local 
child care resource and referral system shall--
          ``(1) provide parents in the State with information 
        and support concerning child care options in their 
        communities;
          ``(2) collect and analyze data on the supply of and 
        demand for child care in political subdivisions within 
        the State;
          ``(3) develop links with the business community or 
        other organizations involved in providing child care 
        services;
          ``(4) increase the supply and improve the quality of 
        child care in the State and in political subdivisions 
        in the State;
          ``(5) provide (or facilitate the provision of) 
        specialists in health, mental health consultation, 
        early literacy services for children with disabilities 
        and other special needs, and infant and toddler care, 
        to support or supplement community child care 
        providers;
          ``(6) provide training or facilitate connections for 
        training to community child care providers; or
          ``(7) hire disability specialists, and provide 
        training and technical assistance to child care 
        providers, to effectively meet the needs of children 
        with disabilities.
          (5) Incentive grants to states.--The Child Care and 
        Development Block Grant Act of 1990 (42 U.S.C. 9858 et 
        seq.) is amended by inserting after section 658G the 
        following:

``SEC. 658H. INCENTIVE GRANTS TO STATES.

  ``(a) Authority.--
          ``(1) In general.--The Secretary shall use the amount 
        made available under section 658B(b) for a fiscal year 
        to make grants to eligible States in accordance with 
        this section.
          ``(2) Annual payments.--The Secretary shall make an 
        annual payment for such a grant to each eligible State 
        out of the allotment for that State determined under 
        subsection (c).
  ``(b) Eligible States.--
          ``(1) In general.--In this section, the term 
        `eligible State' means a State that--
                  ``(A) has conducted a survey of the market 
                rates for child care services in the State 
                within the 2 years preceding the date of the 
                submission of an application under paragraph 
                (2); and
                  ``(B) submits an application in accordance 
                with paragraph (2).
          ``(2) Application.--
                  ``(A) In general.--To be eligible to receive 
                a grant under this section, a State shall 
                submit an application to the Secretary at such 
                time, in such manner, and accompanied by such 
                information, in addition to the information 
                required under subparagraph (B), as the 
                Secretary may require.
                  ``(B) Information required.--Each application 
                submitted for a grant under this section 
                shall--
                          ``(i) detail the methodology and 
                        results of the State market rates 
                        survey conducted pursuant to paragraph 
                        (1)(A);
                          ``(ii) describe the State's plan to 
                        increase payment rates from the initial 
                        baseline determined under clause (i);
                          ``(iii) describe how the State will 
                        increase payment rates in accordance 
                        with the market survey results, for all 
                        types of child care providers who 
                        provide services for which assistance 
                        is made available under this 
                        subchapter;
                          ``(iv) describe how rates are set to 
                        reflect the variations in the cost of 
                        providing care for children of 
                        different ages, different types of 
                        care, and in different localities in 
                        the State; and
                          ``(v) describe how the State will 
                        prioritize increasing payment rates for 
                        care of higher-than-average quality, 
                        such as care by accredited providers, 
                        care that includes the provision of 
                        comprehensive services, care provided 
                        at nonstandard hours, care for children 
                        with disabilities and other special 
                        needs, care in low-income and rural 
                        communities, and care of a type that is 
                        in short supply.
          ``(3) Continuing eligibility requirement.--The 
        Secretary may make an annual payment under this section 
        to an eligible State only if--
                  ``(A) the Secretary determines that the State 
                has made progress, through the activities 
                assisted under this subchapter, in maintaining 
                increased payment rates; and
                  ``(B) at least once every 2 years, the State 
                conducts an update of the survey described in 
                paragraph (1)(A).
          ``(4) Requirement of matching funds.--
                  ``(A) In general.--To be eligible to receive 
                a grant under this section, the State shall 
                agree to make available State contributions 
                from State sources toward the costs of the 
                activities to be carried out by a State 
                pursuant to subsection (d) in an amount that is 
                not less than 20 percent of such costs.
                  ``(B) Determination of state contributions.--
                State contributions shall be in cash. Amounts 
                provided by the Federal Government may not be 
                included in determining the amount of such 
                State contributions.
  ``(c) Allotments to Eligible States.--The amount made 
available under section 658B(b) for a fiscal year shall be 
allotted among the eligible States in the same manner as 
amounts are allotted under section 658O(b).
  ``(d) Use of Funds.--An eligible State that receives a grant 
under this section shall use the funds received to 
significantly increase the payment rate for the provision of 
child care assistance in accordance with this subchapter up to 
the 150th percentile of the market rate survey described in 
subsection (b)(1)(A).
  ``(e) Evaluations and Reports.--
          ``(1) State evaluations.--Each eligible State shall 
        submit to the Secretary, at such time and in such form 
        and manner as the Secretary may require, information 
        regarding the State's efforts to increase payment rates 
        and the impact increased rates are having on the 
        quality of, and accessibility to, child care in the 
        State.
          ``(2) Reports to congress.--The Secretary shall 
        submit biennial reports to Congress on the information 
        described in paragraph (1). Such reports shall include 
        data from the applications submitted under subsection 
        (b)(2) as a baseline for determining the progress of 
        each eligible State in maintaining increased payment 
        rates.
  ``(f) Payment Rate.--In this section, the term `payment rate' 
means the rate of reimbursement to providers for subsidized 
child care.''.
          (6) Administration, enforcement, and evaluation.--
        Section 658I of the Child Care and Development Block 
        Grant Act of 1990 (42 U.S.C. 9858g) is amended--
                  (A) in the heading by striking ``and 
                enforcement'' and inserting ``, enforcement, 
                and evaluation'';
                  (B) in subsection (a)(3) by inserting before 
                the period at the end ``and including the 
                establishment of a national training and 
                technical assistance center specializing in 
                infant and toddler care and their families''; 
                and
                  (C) by adding at the end the following:
  ``(c) Federal Administration and Evaluation Activities.--The 
Secretary shall--
          ``(1) establish a national data system through 
        grants, contracts or cooperative agreements to develop 
        statistics on the supply of, demand for, and quality of 
        child care, early education, and non-school-hours 
        programs, including use of data collected through child 
        care resource and referral organizations at the 
        national, State, and local levels; and
          ``(2) prepare and submit to Congress an annual report 
        on the supply of, demand for, and quality of child 
        care, early education, and non-school-hours programs, 
        using data collected through State and local child care 
        resource and referral organizations and other 
        sources.''.
          (7) Reports.--Section 658K(a) of the Child Care and 
        Development Block Grant Act of 1990 (42 U.S.C. 
        9858i(a)) is amended--
                  (A) in paragraph (1)(B)--
                          (i) in clause (ix) by striking 
                        ``and'' at the end;
                          (ii) in clause (x) by adding ``and'' 
                        at the end; and
                          (iii) by inserting after clause (x) 
                        the following:
                          ``(xi) whether the child care 
                        provider is accredited by a national or 
                        State accrediting body;''; and
                  (B) in paragraph (2)--
                          (i) in the matter preceding 
                        subparagraph (A) by striking 
                        ``aggregate data concerning'';
                          (ii) in subparagraph (D) by striking 
                        ``and'' at the end;
                          (iii) in subparagraph (E) by adding 
                        ``and'' at the end; and
                          (iv) by indenting the left margin of 
                        subparagraphs (A) through (E) 2 ems to 
                        the right and redesignating such 
                        subparagraphs as clauses (i) through 
                        (v), respectively;
                          (v) by inserting after clause (v), as 
                        so redesignated, the following:
                          ``(vi) findings from market rate 
                        surveys, disaggregated by the types of 
                        services provided and by the sub-State 
                        localities, as appropriate;''; and
                          (vi) by inserting before clause (i), 
                        as so redesignated, the following:
                  ``(A) information on how all of the funds 
                reserved under section 658G were allocated and 
                spent, and information on the effect of those 
                expenditures, to the maximum extent 
                practicable; and
                  ``(B) aggregate date concerning--''.
          (8) Definitions.--Section 658P(4)(C) of the Child 
        Care and Development Block Grant Act of 1990 (42 U.S.C. 
        9858n(4)(C)) is amended--
                  (A) in clause (i) by striking ``or'' at the 
                end;
                  (B) in clause (ii) by striking the period and 
                inserting ``; or''; and
                  (C) by adding at the end the following:
                          ``(iii) is a foster child.''.
          (9) Conforming amendments.--The Child Care and 
        Development Block Grant Act of 1990 (42 U.S.C. 9858 et 
        seq.) is amended--
                  (A) in section 658E(c)(3)--
                          (i) in subparagraph (B) by striking 
                        ``through (5) of section 658A(b)'' and 
                        inserting ``through (6) of section 
                        658A(c)''; and
                          (ii) in subparagraph (D) by striking 
                        ``1997 through 2002'' and inserting 
                        ``2003 through 2007'';
                  (B) in section 658K(a)(2) by striking 
                ``1997'' and inserting ``2003''; and
                  (C) in section 658L--
                          (i) by striking ``July 31, 1998'' and 
                        inserting ``October 1, 2004'';
                          (ii) by striking ``Economic and 
                        Educational Opportunities'' and 
                        inserting ``Education and the 
                        Workforce''; and
                          (iii) by striking ``Labor and Human 
                        Resources'' and inserting ``Health, 
                        Education, Labor, and Pensions''.
  (c) Applicability of State or Local Health and Safety 
Standards to Other TANF Child Care Spending.--Section 402(a) 
(42 U.S.C. 602(a)) is amended by adding at the end the 
following:
          ``(8) Certification of procedures to ensure that 
        child care providers comply with applicable state or 
        local health and safety standards.--A certification by 
        the chief executive officer of the State that 
        procedures are in effect to ensure that any child care 
        provider in the State that provides services for which 
        assistance is provided under the State program funded 
        under this part complies with all applicable State or 
        local health and safety requirements as described in 
        section 658E(c)(2)(F) of the Child Care and Development 
        Block Grant Act of 1990.''.
  (d) Availability of Child Care for Parents Required to 
Work.--Section 407(e)(2) (42 U.S.C. 607(e)(2)) is amended by 
striking ``6'' and inserting ``13''.

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

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

SEC. 304. ASSESSMENTS FOR TANF RECIPIENTS.

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

SEC. 305. APPLICABILITY OF WORKPLACE LAWS.

  Section 408 (42 U.S.C. 608) is amended by adding at the end 
the following:
  ``(h) No individual engaged in any activity funded in whole 
or in part by the TANF program shall be subjected to 
discrimination based on race, color, religion, sex, national 
origin, age, or disability, nor shall such an individual be 
denied the benefits or protections of any Federal, State or 
local employment, civil rights, or health and safety law 
because of such individual's status as a participant in the 
TANF program.''.

SEC. 306. WORK PARTICIPATION REQUIREMENTS.

  Section 407(a)(1) (42 U.S.C. 607(a)), as amended by section 
503 of this Act, is amended to read as follows:
          ``(1) In general.--A State to which a grant is made 
        under section 403 for a fiscal year shall achieve a 
        minimum participation rate equal to not less than--
                  ``(A) 50 percent for fiscal year 2003;
                  ``(B) 55 percent for fiscal year 2004;
                  ``(C) 60 percent for fiscal year 2005;
                  ``(D) 65 percent for fiscal year 2006; and
                  ``(E) 70 percent for fiscal year 2007 and 
                each succeeding fiscal year.''.

SEC. 307. HOURS OF WORK-RELATED ACTIVITIES.

  Section 407(c)(1)(A) (42 U.S.C. 607(c)(1)(A)) is amended by 
striking ``20'' and inserting ``24''.

SEC. 308. STATE OPTION TO REQUIRE RECEIPIENTS TO ENGAGE IN WORK FOR 40 
                    HOURS PER WEEK.

  Section 407(c)(1)(A) (42 U.S.C. 607(c)(1)(A)) is amended by 
adding at the end the following flush sentence:
                ``At the option of a State, the State may 
                require, a recipient not referred to in 
                paragraph (2)(B) to engage in work for an 
                average of 40 hours per week in each month in a 
                particular fiscal year.''.

SEC. 309. REVISION AND SIMPLIFICATION OF THE TRANSITIONAL MEDICAL 
                    ASSISTANCE PROGRAM (TMA).

  (a) Option of Continuous Eligibility for 12 Months; Option of 
Continuing Coverage for Up to an Additional Year.--
          (1) Option of continuous eligibility for 12 months by 
        making reporting requirements optional.--Section 
        1925(b) (42 U.S.C. 1396r-6(b)) is amended--
                  (A) in paragraph (1), by inserting ``, at the 
                option of a State,'' after ``and which'';
                  (B) in paragraph (2)(A), by inserting 
                ``Subject to subparagraph (C)--'' after ``(A) 
                Notices.--'';
                  (C) in paragraph (2)(B), by inserting 
                ``Subject to subparagraph (C)--'' after ``(B) 
                Reporting requirements.--'';
                  (D) by adding at the end the following new 
                subparagraph:
                  ``(C) State option to waive notice and 
                reporting requirements.--A State may waive some 
                or all of the reporting requirements under 
                clauses (i) and (ii) of subparagraph (B). 
                Insofar as it waives such a reporting 
                requirement, the State need not provide for a 
                notice under subparagraph (A) relating to such 
                requirement.''; and
                  (E) in paragraph (3)(A)(iii), by inserting 
                ``the State has not waived under paragraph 
                (2)(C) the reporting requirement with respect 
                to such month under paragraph (2)(B) and if'' 
                after ``6-month period if''.
          (2) State option to extend eligibility for low-income 
        individuals for up to 12 additional months.--Section 
        1925 (42 U.S.C. 1396r-6) is further amended--
                  (A) by redesignating subsections (c) through 
                (f) as subsections (d) through (g); and
                  (B) by inserting after subsection (b) the 
                following new subsection:
  ``(c) State Option of Up to 12 Months of Additional 
Eligibility.--
          ``(1) In general.--Notwithstanding any other 
        provision of this title, each State plan approved under 
        this title may provide, at the option of the State, 
        that the State shall offer to each family which 
        received assistance during the entire 6-month period 
        under subsection (b) and which meets the applicable 
        requirement of paragraph (2), in the last month of the 
        period the option of extending coverage under this 
        subsection for the succeeding period not to exceed 12 
        months.
          ``(2) Income restriction.--The option under paragraph 
        (1) shall not be made available to a family for a 
        succeeding period unless 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) as of the end of 
        the 6-month period under subsection (b) does not 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.
          ``(3) Application of extension rules.--The provisions 
        of paragraphs (2), (3), (4), and (5) of subsection (b) 
        shall apply to the extension provided under this 
        subsection in the same manner as they apply to the 
        extension provided under subsection (b)(1), except that 
        for purposes of this subsection--
                  ``(A) any reference to a 6-month period under 
                subsection (b)(1) is deemed a reference to the 
                extension period provided under paragraph (1) 
                and any deadlines for any notices or reporting 
                and the premium payment periods shall be 
                modified to correspond to the appropriate 
                calendar quarters of coverage provided under 
                this subsection; and
                  ``(B) any reference to a provision of 
                subsection (a) or (b) is deemed a reference to 
                the corresponding provision of subsection (b) 
                or of this subsection, respectively.''.
  (b) State Option To Waive Receipt of Medicaid for 3 of 
Previous 6 Months To Qualify for TMA.--Section 1925(a)(1) (42 
U.S.C. 1396r-6(a)(1)) is amended by adding at the end the 
following: ``A State may, at its option, also apply the 
previous sentence in the case of a family that was receiving 
such aid for fewer than 3 months, or that had applied for and 
was eligible for such aid for fewer than 3 months, during the 6 
immediately preceding months described in such sentence.''.
  (c) Elimination of Sunset for TMA.--
          (1) Subsection (g) of section 1925 (42 U.S.C. 1396r-
        6), as redesignated under subsection (a)(2), is 
        repealed.
          (2) Section 1902(e)(1) of such Act (42 U.S.C. 
        1396a(e)(1)) is amended by striking ``(A) 
        Nothwithstanding'' and all that follows through 
        ``During such period, for'' in subparagraph (B) and 
        inserting ``For''.
  (d) CMS Report on Enrollment and Participation Rates Under 
TMA.--Section 1925, as amended by subsections (a)(2) and (c), 
is amended by adding at the end the following new subsection:
  ``(g) Additional Provisions.--
          ``(1) Collection and reporting of participation 
        information.--Each State shall--
                  ``(A) collect and submit to the Secretary, in 
                a format specified by the Secretary, 
                information on average monthly enrollment and 
                average monthly participation rates for adults 
                and children under this section; and
                  ``(B) make such information publicly 
                available.
        Such information shall be submitted under subparagraph 
        (A) at the same time and frequency in which other 
        enrollment information under this title is submitted to 
        the Secretary. Using such information, the Secretary 
        shall submit to Congress annual reports concerning such 
        rates.''.
  (e) Coordination of Work.--Section 1925(g), as added by 
subsection (d), is amended by adding at the end the following 
new paragraph:
          ``(2) Coordination with administration for children 
        and families.--The Administrator of the Centers for 
        Medicare & Medicaid Services, in carrying out this 
        section, shall work with the Assistant Secretary for 
        the Administration for Children and Families to develop 
        guidance or other technical assistance for States 
        regarding best practices in guaranteeing access to 
        transitional medical assistance under this section.''.
  (f) Elimination of TMA Requirement for States That Extend 
Coverage to Children and Parents Through 185 Percent of 
Poverty.--
          (1) In general.--Section 1925 is further amended by 
        adding at the end the following new subsection:
  ``(h) Provisions Optional for States That Extend Coverage to 
Children and Parents Through 185 Percent of Poverty.--A State 
may (but is not required to) meet the requirements of 
subsections (a) and (b) if it provides for medical assistance 
under this title (whether under section 1931, through a waiver 
under section 1115, or otherwise) to families (including both 
children and caretaker relatives) the average gross monthly 
earning of which (less such costs for such child care as is 
necessary for the employment of a caretaker relative) is at or 
below a level that is at least 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.''.
          (2) Conforming amendments.--Such section is further 
        amended, in subsections (a)(1) and (b)(1), by inserting 
        ``, but subject to subsection (h),'' after 
        ``Notwithstanding any other provision of this title,'' 
        each place it appears.
  (g) Requirement of Notice for All Families Losing TANF.--
Subsection (a)(2) of such section is amended by adding after 
and below subparagraph (B), the following:
        ``Each State shall provide, to families whose aid under 
        part A or E of title IV has terminated but whose 
        eligibility for medical assistance under this title 
        continues, written notice of their ongoing eligibility 
        for such medical assistance. If a State makes a 
        determination that any member of a family whose aid 
        under part A or E of title IV is being terminated is 
        also no longer eligible for medical assistance under 
        this title, the notice of such determination shall be 
        supplemented by a one-page notification form describing 
        the different ways in which individuals and families 
        may qualify for such medical assistance and explaining 
        that individuals and families do not have to be 
        receiving aid under part A or E of title IV in order to 
        qualify for such medical assistance.''.
  (h) Extending Use of Outstationed Workers To Accept 
Applications for Transitional Medical Assistance.--Section 
1902(a)(55) (42 U.S.C. 1396a(a)(55)) is amended by inserting 
``and under section 1931'' after ``(a)(10)(A)(ii)(IX)''.
  (i) Effective Dates.--(1) Except as provided in this 
subsection, the amendments made by this section shall apply to 
calendar quarters beginning on or after October 1, 2001, 
without regard to whether or not final regulations to carry out 
such amendments have been promulgated by such date.
  (2) The amendment made by subsection (g) shall take effect 6 
months after the date of the enactment of this Act.
  (3) In the case of a State plan for medical assistance under 
title XIX of the Social Security Act which the Secretary of 
Health and Human Services determines requires State legislation 
(other than legislation appropriating funds) in order for the 
plan to meet the additional requirements imposed by the 
amendments made by this section, the State plan shall not be 
regarded as failing to comply with the requirements of such 
title solely on the basis of its failure to meet these 
additional requirements before the first day of the first 
calendar quarter beginning after the close of the first regular 
session of the State legislature that begins after the date of 
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.

SEC. 310. ENSURING TANF FUNDS ARE NOT USED TO DISPLACE PUBLIC 
                    EMPLOYEES.

  (a) Welfare-to-Work Worker Protections.--Section 403(a)(5)(I) 
(42 U.S.C. 603(a)(5)(I)) is amended--
          (1) by striking clauses (i) and (iv);
          (2) by redesignating clauses (v) and (vi) as clauses 
        (iv) and (v), respectively; and
          (3) by inserting before clause (ii) the following:
                          ``(i) Nondisplacement.--A State shall 
                        establish and maintain such procedures 
                        as are necessary to do the following 
                        with respect to activities funded in 
                        whole or in part under this part:
                                  ``(I) Prohibit the placement 
                                of an individual in a work 
                                activity specified in section 
                                407(d) from resulting in the 
                                displacement of any employee or 
                                position (including partial 
                                displacement, such as a 
                                reduction in the hours of 
                                nonovertime work wages, or 
                                employment benefits, or fill 
                                any unfilled vacancy, or 
                                performing work when any other 
                                individual is on layoff from 
                                the same or any substantially 
                                equivalent job).
                                  ``(II) Prohibit the placement 
                                of an individual in a work 
                                activity specified in section 
                                407(d) which would impair any 
                                contract for services, be 
                                inconsistent with any 
                                employment-related State or 
                                local law or regulation, or 
                                collective bargaining 
                                agreement, or infringe on the 
                                recall rights or promotional 
                                opportunities of any worker.
                                  ``(III) Maintain an impartial 
                                grievance procedure to resolve 
                                any complaints alleging 
                                violations of subclause (I) or 
                                (II) within 60 days after 
                                receipt of the complaint, and 
                                if a decision is adverse to the 
                                party who filed such a 
                                grievance or no decision has 
                                been reached, provided for the 
                                completion of an arbitration 
                                procedure within 75 days after 
                                receipt of the complaint or the 
                                adverse decision or conclusion 
                                of the 60-day period, whichever 
                                is earlier. The procedures 
                                shall include a right to a 
                                hearing. The procedures shall 
                                include remedies for violations 
                                of the requirement that shall 
                                include termination or 
                                suspension of payments, 
                                prohibition of the participant, 
                                reinstatemt of an employee, and 
                                other appropriate relief. The 
                                procedures shall specifiy that 
                                if a direct work activity 
                                engaged in by a recipient of 
                                assistance under the State 
                                program funded under this part 
                                involves a placement in a State 
                                agency or local government 
                                agency pursuant to this section 
                                and the agency experiences a 
                                net reduction in its overall 
                                workforce in a given year, 
                                there is a rebuttable 
                                presumption that the placement 
                                has resulted in displacement of 
                                the employees of the agency in 
                                violation of this 
                                subparagraph.''.
  (b) State Plan Requirement.--Section 402(a) (42 U.S.C. 
602(a)) is amended by adding at the end the following:
          ``(5) A plan that outlines the resources and 
        procedures that will be used to ensure that the State 
        will establish and maintain the procedures described in 
        section 403(a)(5)(I)(i).''.

     TITLE IV--HELPING WELFARE LEAVERS CLIMB THE EMPLOYMENT LADDER

SEC. 401. STATE PLAN REQUIREMENT ON EMPLOYMENT ADVANCEMENT.

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

SEC. 402. EMPLOYMENT ADVANCEMENT FUND.

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

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

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

SEC. 404. COUNTING OF UP TO 2 YEARS OF VOCATIONAL OR EDUCATIONAL 
                    TRAINING (INCLUDING POSTSECONDARY EDUCATION), WORK-
                    STUDY, AND RELATED INTERNSHIPS AS WORK ACTIVITIES.

  Section 407(d)(8) (42 U.S.C. 607(d)(8)) is amended to read as 
follows:
          ``(8) not more than 24 months of participation by an 
        individual in--
                  ``(A) vocational or educational training 
                (including postsecondary education), at an 
                eligible educational institution (as defined in 
                section 404(h)(5)(A)) leading to attainment of 
                a credential from the institution related to 
                employment or a job skill;
                  ``(B) a State or Federal work-study program 
                under part C of title IV of the Higher 
                Education Act of 1965 or an internship related 
                to vocational or postsecondary education, 
                supervised by an eligible educational 
                institution (as defined in section 
                404(h)(5)(A)); or
                  ``(C) a course of study leading to adult 
                literacy, in which English is taught as a 
                second language, or leading to a certificate of 
                high school equivalency, if the State considers 
                the activities important to improving the 
                ability of the individual to find and maintain 
                employment.''.

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

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

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

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

SEC. 407. DEFINITION OF ASSISTANCE.

  (a) In General.--Section 419 (42 U.S.C. 619) is amended by 
adding at the end the following:
          ``(6) Assistance.--
                  ``(A) In general.--The term `assistance' 
                means payment, by cash, voucher, or other 
                means, to or for an individual or family for 
                the purpose of meeting a subsistence need of 
                the individual or family (including food, 
                clothing, shelter, and related items, but not 
                including costs of transportation or child 
                care).
                  ``(B) Exception.--The term `assistance' does 
                not include a payment described in subparagraph 
                (A) to or for an individual or family on a 
                short-term, nonrecurring basis (as defined by 
                the State).''.
  (b) Conforming Amendments.--
          (1) Section 404(a)(1) (42 U.S.C. 604(a)(1)) is 
        amended by striking ``assistance'' and inserting 
        ``aid''.
          (2) Section 404(f) (42 U.S.C. 604(f)) is amended by 
        striking ``assistance'' and inserting ``benefits or 
        services''.
          (3) Section 408(a)(5)(B)(i) (42 U.S.C. 
        608(a)(5)(B)(i)) is amended in the heading by striking 
        ``assistance'' and inserting ``aid''.

     TITLE V--PROMOTING FAMILY FORMATION AND RESPONSIBLE PARENTING

SEC. 501. FAMILY FORMATION FUND.

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

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

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

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

  Section 407 (42 U.S.C. 607) is amended--
          (1) in subsection (a), by striking paragraph (2); and
          (2) in subsection (b)--
                  (A) by striking paragraphs (2) and (3);
                  (B) in paragraph (4), by striking 
                ``paragraphs (1)(B) and (2)(B)'' and inserting 
                ``paragraph (1)(B)'';
                  (C) in paragraph (5), by striking ``rates'' 
                and inserting ``rate''; and
                  (D) by redesignating paragraphs (4) and (5) 
                as paragraphs (2) and (3), respectively.

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

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

SEC. 505. EXTENSION OF ABSTINENCE EDUCATION FUNDING UNDER MATERNAL AND 
                    CHILD HEALTH PROGRAM.

  (a) In General.--Section 510(d) (42 U.S.C. 710(d)) is amended 
by striking ``2002'' and inserting ``2007''.
  (b) Purpose of Allotments.--For each of the fiscal years 2003 
through 2007, section 510(b)(1) of the Social Security Act is 
deemed to read as follows: ``(1) The purpose of an allotment 
under subsection (a) to a State is to enable the State to 
provide abstinence education, and at the option of the State--
          ``(A) programs that the State defines as an 
        appropriate approach to abstinence education that 
        educates those who are currently sexually active or at 
        risk of sexual activity about methods to reduce 
        unintended pregnancy or other health risks; and
          ``(B) where appropriate, mentoring, counseling, and 
        adult supervision to promote abstinence from sexual 
        activity, with a focus on those groups which are most 
        likely to bear children out-of-wedlock.''.
  (c) Medically and Scientifically Accurate Information.--For 
each of the fiscal years 2003 through 2007, there is deemed to 
appear in the matter preceding subparagraph (A) of section 
510(b)(2) of such Act the phrase ``a medically and 
scientifically accurate educational'' in lieu of the phrase 
``an educational'', and there is deemed to appear after and 
below subparagraph (H) of such section the following:
``For purposes of this section, the term `medically accurate', 
with respect to information, means information that is 
supported by research, recognized as accurate and objective by 
leading medical, psychological, psychiatric, and public health 
organizations and agencies, and where relevant, published in 
peer review journals.''.
  (d) Effective Models for Programs.--For each of the fiscal 
years 2003 through 2007, section 510 of such Act is deemed to 
have at the end the following subsection:
  ``(e)(1) None of the funds appropriated in this section shall 
be expended for a program unless the program is based on a 
model that has been demonstrated to be effective in reducing 
unwanted pregnancy, or in reducing the transmission of a 
sexually transmitted disease or the human immunodeficiency 
virus.
  ``(2) The requirement of paragraph (1) shall not apply to 
programs that have been approved and funded under this section 
on or before April 19, 2002.''.
  (e) Comparative Evaluation of Abstinence Education 
Programs.--
          (1) Study.--The Secretary of Health and Human 
        Services (referred to in this subsection as the 
        ``Secretary'') shall, in consultation with an advisory 
        panel of researchers identified by the Board on 
        Children Youth and Families of the National Academy of 
        Sciences, conduct an experimental study directly or 
        through contract or interagency agreement which 
        assesses the relative efficacy of two approaches to 
        abstinence education for adolescents. The study design 
        should enable a comparison of the efficacy of an 
        abstinence program which precludes education about 
        contraception with a similar abstinence program which 
        includes education about contraception. Key outcomes 
        that should be measured in the study include rates of 
        sexual activity, pregnancy, birth, and sexually 
        transmitted diseases.
          (2) Report.--Not later than 5 years after the date of 
        the enactment of this Act, the Secretary shall submit a 
        report to Congress the available findings regarding the 
        comparative analysis.
          (3) Funding.--For the purpose of carrying out this 
        subsection, there are authorized to be appropriated 
        such sums as may be necessary for each of the fiscal 
        years 2003 through 2007.

          TITLE VI--RESTORING FAIRNESS FOR IMMIGRANT FAMILIES

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

  (a) Exception to 5-Year Ban for Qualified Aliens.--Section 
403(c)(2) of the Personal Responsibility and Work Opportunity 
Reconciliation Act of 1996 (8 U.S.C. 1613(c)(2)) is amended by 
adding at the end the following:
                  ``(L) Benefits under the Temporary Assistance 
                for Needy Families program described in section 
                402(b)(3)(A).''.
  (b) Benefits Not Subject to Reimbursement.--Section 423(d) of 
the Personal Responsibility and Work Opportunity Reconciliation 
Act of 1996 (8 U.S.C. 1138a note) is amended by adding at the 
end the following:
          ``(12) Benefits under part A of title IV of the 
        Social Security Act except for cash assistance provided 
        to a sponsored alien who is subject to deeming pursuant 
        to section 408(h) of the Social Security Act.''.
  (c) Treatment of Aliens.--Section 408 (42 U.S.C. 608) is 
amended by adding at the end the following:
  ``(h) Special Rules Relating to the Treatment of 213A 
Aliens.--
          ``(1) In general.--In determining whether a 213A 
        alien is eligible for cash assistance under a State 
        program funded under this part, and in determining the 
        amount or types of such assistance to be provided to 
        the alien, the State shall apply the rules of 
        paragraphs (1), (2), (3), (5), and (6) of subsection 
        (f) of this section by substituting `213A' for `non-
        213A' each place it appears, subject to section 421(e) 
        of the Personal Responsibility and Work Opportunity 
        Reconcilation Act of 1996, and subject to section 
        421(f) of such Act (which shall be applied by 
        substituting `section 408(h) of the Social Security 
        Act' for `subsection (a)').
          ``(2) 213A alien defined.--An alien is a 213A alien 
        for purposes of this subsection if the affidavit of 
        support or similar agreement with respect to the alien 
        that was executed by the sponsor of the alien's entry 
        into the United States was executed pursuant to section 
        213A of the Immigration and Nationality Act.''.
  (d) Effective Date and Applicability.--
          (1) Effective date.--The amendments made by this 
        section shall take effect October 1, 2002.
          (2) Applicability.--The amendments made by this 
        section shall apply to benefits provided on or after 
        the effective date of this section.

SEC. 602. OPTIONAL COVERAGE OF LEGAL IMMIGRANTS UNDER THE MEDICAID 
                    PROGRAM AND SCHIP.

  (a) Medicaid Program.--Section 1903(v) (42 U.S.C. 1396b(v)) 
is amended--
          (1) in paragraph (1), by striking ``paragraph (2)'' 
        and inserting ``paragraphs (2) and (4)''; and
          (2) by adding at the end the following new paragraph:
  ``(4)(A) A State may elect (in a plan amendment under this 
title) to provide medical assistance under this title, 
notwithstanding sections 401(a), 402(b), 403, and 421 of the 
Personal Responsibility and Work Opportunity Reconciliation Act 
of 1996, for aliens who are lawfully residing in the United 
States (including battered aliens described in section 431(c) 
of such Act) and who are otherwise eligible for such 
assistance, within either or both of the following eligibility 
categories:
          ``(i) Pregnant women.--Women during pregnancy (and 
        during the 60-day period beginning on the last day of 
        the pregnancy).
          ``(ii) Children.--Children (as defined under such 
        plan), including optional targeted low-income children 
        described in section 1905(u)(2)(B).
  ``(B) In the case of a State that has elected to provide 
medical assistance to a category of aliens under subparagraph 
(A), no debt shall accrue under an affidavit of support against 
any sponsor of such an alien on the basis of provision of 
assistance to such category and the cost of such assistance 
shall not be considered as an unreimbursed cost.''.
  (b) SCHIP.--Section 2107(e)(1) (42 U.S.C. 1397gg(e)(1)) as 
amended by section 803 of the Medicare, Medicaid, and SCHIP 
Benefits Improvement and Protection Act of 2000, as enacted 
into law by section 1(a)(6) of Public Law 106-554, is amended 
by redesignating subparagraphs (C) and (D) as subparagraph (D) 
and (E), respectively, and by inserting after subparagraph (B) 
the following new subparagraph:
                  ``(C) Section 1903(v)(4) (relating to 
                optional coverage of categories of permanent 
                resident alien children), but only if the State 
                has elected to apply such section to the 
                category of children under title XIX.''.
  (c) Effective Date.--The amendments made by this section take 
effect on October 1, 2002, and apply to medical assistance and 
child health assistance furnished on or after such date.

SEC. 603. ELIGIBILITY OF DISABLED CHILDREN WHO ARE QUALIFIED ALIENS FOR 
                    SSI.

  (a) In General.--Section 402(a)(2) of the Personal 
Responsibility and Work Opportunity Reconciliation Act of 1996 
(8 U.S.C. 1612(a)(2)) is amended by inserting after 
subparagraph (K) the following new subparagraph:
                  ``(L) SSI exception for disabled children.--
                With respect to eligibility for benefits for 
                the specified Federal program described in 
                paragraph (3)(A), paragraph (1) shall not apply 
                to a child who is considered disabled for 
                purposes of the supplemental security income 
                program under title XVI of the Social Security 
                Act.''.
  (b) Effective Date.--The amendment made by this section shall 
take effect on October 1, 2002, and apply to benefits furnished 
on or after such date.

                TITLE VII--ENSURING STATE ACCOUNTABILITY

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

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

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

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

  TITLE VIII--IMPROVING INFORMATION ABOUT TANF RECIPIENTS AND PROGRAMS

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

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

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

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

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

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

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

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

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

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

SEC. 806. STANDARDIZED STATE PLANS.

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

SEC. 807. STUDY BY THE CENSUS BUREAU.

  (a) In General.--Section 414(a) (42 U.S.C. 614(a)) is amended 
to read as follows:
  ``(a) In General.--The Bureau of the Census shall implement a 
new longitudinal survey of program dynamics, developed in 
consultation with the Secretary and made available to 
interested parties, to allow for the assessment of the outcomes 
of continued welfare reform on the economic and child well-
being of low-income families with children, including those who 
received assistance or services from a State program funded 
under this part, and, to the extent possible, shall provide 
State representative samples.''.
  (b) Appropriation.--Section 414(b) (42 U.S.C. 614(b)) is 
amended by striking ``1996,'' and all that follows through 
``2002'' and inserting ``2003 through 2007''.

SEC. 808. ACCESS TO WELFARE; WELFARE OUTCOMES.

  Section 411 (42 U.S.C. 611) is amended by adding at the end 
the following:
  ``(c) Annual Reports on Welfare Access and Outcomes.--
          ``(1) State reports.--Not later than January 1 of 
        each fiscal year, each eligible State shall collect and 
        report to the Secretary, with respect to the preceding 
        fiscal year, the following information:
                  ``(A) The number of applications for 
                assistance from the State program funded under 
                this part, the percentage that are approved 
                versus those that are disapproved, and the 
                reasons for disapproval, broken down by race.
                  ``(B) A copy of all rules and policies 
                governing the State program funded under this 
                part that are not required by Federal law, and 
                a summary of the rules and policies, including 
                the amounts and types of assistance provided 
                and the types of sanctions imposed under the 
                program.
                  ``(C) The types of occupations of, types of 
                job training received by, and types and levels 
                of educational attainment of recipients of 
                assistance from the State program funded under 
                this part, broken down by gender and race.
          ``(2) Use of sampling.--A State may comply with this 
        subsection by using a scientifically acceptable 
        sampling method approved by the Secretary.
          ``(3) Report to the congress.--Not later than June 1 
        of each fiscal year, the Secretary shall prepare and 
        submit to the Committee on Ways and Means of the House 
        of Representatives and the Committee on Finance of the 
        Senate, publish in the Federal Register, and make 
        available to the public a compilation of the reports 
        submitted pursuant to paragraph (1) for the preceding 
        fiscal year.''.

                        TITLE IX--EFFECTIVE DATE

SEC. 901. EFFECTIVE DATE.

  (a) In General.--Except as provided in sections 208 and 
502(f) and in subsection (b) of this section, the amendments 
made by this Act shall take effect on October 1, 2002, and 
shall apply to payments under parts A and D of title IV of the 
Social Security Act for calendar quarters beginning on or after 
such date, without regard to whether regulations to implement 
the amendments are promulgated by such date.
  (b) Delay Permitted if State Legislation Required.--In the 
case of a State plan under section 402(a) or 454 of the Social 
Security Act which the Secretary of Health and Human Services 
determines requires State legislation (other than legislation 
appropriating funds) in order for the plan to meet the 
additional requirements imposed by the amendments made by this 
Act, the State plan shall not be regarded as failing to comply 
with the requirements of such section 402(a) or 454 solely on 
the basis of the failure of the plan to meet such additional 
requirements before the 1st day of the 1st calendar quarter 
beginning after the close of the 1st regular session of the 
State legislature that begins after the date of the enactment 
of this Act. For purposes of the previous sentence, in the case 
of a State that has a 2-year legislative session, each year of 
such session shall be deemed to be a separate regular session 
of the State legislature.

                                  
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